Akihabara News (Tokyo) — Japan’s casino industry in general, and Wakayama in particular, have narrowly dodged what might have been a major scandal with the arrest in China of Suncity Group CEO Alvin Chau.
It raised eyebrows from the beginning in July 2019 when Macau’s leading junket operator, Suncity, signaled that it would join the race to build an Integrated Resort (IR) including a casino at Wakayama’s Marina City.
It had been anticipated that Japan would try to construct a squeaky clean gambling regime in their country, and while Suncity was undoubtedly one of the most dynamic gambling companies in Asia, with sky-high ambitions and a growing track record of financial success, it was also widely believed that it had deep links with Chinese organized crime. It just didn’t seem like the kind of company that would be welcome in Japan.
But the early indications were that Suncity might rock the cynics after all. By August 2019 it had opened an attractive Japanese-language website promoting its IR bid, and this was followed in September 2020 with the opening of a beautiful open office in Wakayama city and sponsorship of the Wakayama Trians, the local professional basketball team.
In part because the Covid pandemic took most of their competition out of the race, only Suncity and the Clairvest Group joined the Wakayama request-for-proposal (RFP) process in May 2020.
Suncity was by far the more dynamic and credible bidder, and in fact the Wakayama selection committee rated the Suncity bid much higher than the Clairvest bid.
But then something occurred in the background in May of this year. The Wakayama prefectural government delayed announcing the winner. Next came a shocking statement from Chau that Suncity was pulling out of the race which it was about to win.
After deep consideration, we have made this difficult decision under the enormous impact on the industry due to the spread of the new coronavirus infection. Many companies anticipate a long period of uncertainty, and the IR certification process in Japan appears set to take a lot longer than expected. Many things remain unclear, but we must consider the risks as a business operator.
This explanation made no sense. If the pandemic was the factor which induced Suncity to withdraw, then it wouldn’t have come in May 2021. This was transparently a pretext and not the real reason why the company suddenly gave up on its Wakayama bid, where it had already expended so much time and money.
Moreover, the firm retained its non-gambling resort development projects in Okinawa and Hokkaido, which likely would have been linked to the Wakayama IR’s services had they all moved forward.
Media organizations tied to the Asian gambling industry, however, took Chau’s explanation at face value and didn’t dig any further.
Behind the scenes, Suncity was ruthless about pulling advertising in order to influence editorial policies, and it was just too much of a major player in the industry to want to alienate.
The only media outlet which hinted at the truth of the matter was the Asahi Shinbun, which is not subject to the same economic pressures to lay off Suncity.
The Asahi reported, somewhat obliquely, that the Macau firm had been unable to shake rumors that it had organized crime links, and accusations in Australia that Suncity was linked to money laundering had become the final straw.
We may surmise—though the hard evidence is still pending—that someone in the Japanese government let the authorities in Wakayama know that Suncity would not be accepted as a casino operator in Japan. This in turn led to Suncity’s withdrawal with its face-saving, but not very convincing, explanation.
The Australian Transaction Reports and Analysis Centre (AUSTRAC), a financial regulator, had concluded as early as 2016 that Alvin Chau had been a member of the Triads in charge of loan-sharking and gambling, but he later broke away to form his own gang, which presumably developed into the Suncity Group.
This weekend, Chinese authorities arrested Chau and about ten of his colleagues on charges of conducting illegal cross-border gambling and a money laundering syndicate.
While Chau’s arrest may well involve a political agenda on the part of the Chinese government to clip the wings of Macau’s gambling industry, and it probably does not represent fresh evidence against the Suncity boss, it nevertheless highlights how much of a legal gray area that the Macau junket industry had been operating within for a long time.
Chau’s arrest is an epic news story in Macau, but it will probably have only a few ripples in Japan: Six months ago, Suncity was given its IR walking papers by the Japanese authorities, and by that margin they have just avoided a political bullet.
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