Philippine casino operator Bloomberry Resorts has requested that a federal judge order a US gaming company to hand over documents it claims could confirm allegations of fraud.
Bloomberry is on the hook for $296 million after an arbitration panel in Singapore determined in 2016 it had wrongfully terminated a contract with Las Vegas-based Global Gaming Asset Management (GGAM).
GGAM has sued Bloomberry in New York in a bid to get its multi-billionaire owner, Enrique Razon, to pay up.
But now Bloomberry claims GGAM committed fraud during the arbitration tribunal by deliberately withholding documents “in an attempt to conceal … illegal conduct.”
What’s the Back Story?
In 2011, GGAM signed a five-year deal to manage the operation of Bloomberry’s Solaire Resort in Manila on its completion. The US company also purchased an 8.7 percent stake in the $1.2 billion project, which opened in 2013 and was immediately profitable.
But just six months after the grand opening, Bloomberry terminated the agreement, ultimately withholding “tens of millions of dollars in fees and other consideration owed,” according to GGAM.
Additionally, GGAM alleges Razon, who is the Philippines second richest man, used his personal relationships in the Philippine stock market to prevent the Las Vegas-based firm from selling its interest in Solaire. It’s an “obstructive effort Razon continues to this day,” according to the US company.
Bloomberry claims it terminated the management agreement because the American company had “not spent any material time in attending to the management of Solaire and … failed to perform its obligations.”
‘Unexplained Transfers’
But now Razon’s company says it found out after the arbitration tribunal decision that its management agreement with GGAM had been “undermined by violations of Philippine and US law.”
Bloomberry alleges GGAM concealed violations of federal anti-bribery laws during their partnership. These involved GGAM’s “pursuit of a ‘business strategy’ that centered on a Chinese government official exerting influence over commercial actors for [GGAM’s] benefit in exchange for renumeration,” according to the Philippine company.
Bloomberry cites two unexplained transfers of $25,000 from GGAM to the office of its then-President for Asia, Eric Chiu. “This happened at the same time the official was meeting with Mr. Chiu in Macau and conferring such benefits,” Bloomberry said in court filings.
LVS Saga
Razon’s company uncovered these potential irregularities after a 2017 investigation by the US Securities Exchange Commission (SEC) into the activities of US casino giant LVS Corp in Macau in the 2000s. SEC was focusing on possible violations of the Foreign Corrupt Practices Act allegedly involving Chiu, then an LVS director, and other executives of the US casino giant.
LVS eventually paid a $6.96 million criminal penalty to the US Department of Justice as part of a non-prosecution agreement. As a condition of the deal, LVS admitted that certain company directors “knowingly and willfully failed to implement a system of internal accounting controls to adequately ensure the legitimacy of payments.”
Per the settlement filing, LVS also admitted to paying an unnamed Chinese business consultant $5.8 million “without any discernible legitimate business purpose” from 2006 to 2009.
GGAM was founded by ex-LVS directors, including Chiu and former COO and President Bill Weidner. Bloomberry alleges in court documents that GGAM continued a strategy of bloating the pockets of Chinese government officials during the Solaire partnership in violation of FCPA.
‘Serious Questions’
That is unproven. But Bloomberry says its defense in the case rests on “serious factual questions” which it hopes the documents it’s seeking from GGAM will resolve. It also claims the arbitration panel in Singapore would have ruled differently had GGAM provided these documents to the panel.
In the meantime, GGAM is asking the court to confirm the arbiters’ award, and it wants it to be enforced against Razon’s US assets.
GGAM says these assets are concealed through a vast network of shell companies and include Steve Wynn’s former residence at the Plaza, purchased by Razon for $24.4M, according to court documents.
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