MBS hires law firm to probe transfer of $1.4b in gamblers' money by staff

MBS said it continues to work closely with its regulators to monitor its compliance with all legal obligations.
MBS said it continues to work closely with its regulators to monitor its compliance with all legal obligations.ST PHOTO: SHINTARO TAY

Marina Bay Sands (MBS) has appointed a top law firm to investigate whether its employees were right in transferring more than US$1 billion (S$1.4 billion) of gamblers' money to third parties, according to people familiar with the matter. Concerns about money laundering have been raised.

The review by Davinder Singh Chambers comes after a patron sued MBS last year, alleging that $9.1 million of his money was transferred to other gamblers without his knowledge. It adds to the scrutiny of the firm by the United States Department of Justice and Singapore authorities.

Once the client sued MBS, several authorities started looking at how MBS handled and monitored third-party transfers. Such transactions are legal when authorised. Groups of wealthy gamblers in Asia use them to pool winnings and losses at different casinos.

The transfers are sometimes made through so-called junket operators, which provide transportation, hotels and credit to high rollers. In Macau, the junkets allow Chinese gamblers to get around strict capital controls by pledging assets on the mainland in exchange for credit at casinos.

But junkets and transfers can have pitfalls too. An earlier probe by MBS and the Hogan Lovells law firm found instances in which employees had pre-signed or photocopied authorisation forms, according to the people. It also uncovered cases in which original documents were destroyed, the people said.

During the Hogan Lovells review covering the period from 2013 to 2017, more than 3,000 letters of authorisation were used to endorse transfers of funds from patrons to third parties worth about $1.4 billion, according to the people.

Of the transactions scrutinised in the Hogan Lovells review, letters authorising transfers worth $365 million from multiple patrons bore signatures that appeared to be similar, facilitating numerous transfers, one of the people said.

MBS, Las Vegas Sands' Singapore unit, is among the most profitable in billionaire Sheldon Adelson's gaming empire. It called on Hogan Lovells' team that specialises in corporate investigations and contentious regulatory matters after Singapore's Casino Regulatory Authority (CRA) started its probe following the 2019 suit by patron Wang Xi.

The lawsuit was settled out of court in June this year, with the casino agreeing to reimburse the full amount. There was a "non-admission" of liability from both sides.

 
 

The US Attorney's Office, meanwhile, interviewed a former compliance chief of MBS in July as part of the Justice Department's probe into whether anti-money laundering procedures had been breached in handling high rollers, people familiar with the matter said.

Davinder Singh Chambers, which specialises in dispute resolution and international arbitration, was appointed after Singapore police began a probe of third-party transfers.

MBS said in a statement that when issues regarding the handling of client transfers were raised, the company thoroughly reviewed the matter and concluded that no patron funds were transferred in a manner that was contrary to the client's intent. "MBS continues to work closely with its regulators to monitor MBS' compliance with all legal obligations," the casino said.

Las Vegas Sands dropped 4.2 per cent in New York on Wednesday, after earlier plunging as much as 8.9 per cent, the most since March. The shares were down 25 per cent this year as at Tuesday's close.

A representative for Davinder Singh Chambers declined to comment. The Singapore Police Force said it is inappropriate to comment as investigations are ongoing.

In response to media queries, the CRA said it has completed investigations into allegations that MBS carried out unauthorised transfers from a patron's account. While it concluded the casino did not breach requirements in that case, "there were weaknesses in MBS' casino control measures pertaining to fund transfers", CRA said in a statement.

 
 

The regulator "takes a serious view of such matters and had directed MBS to strengthen its control measures, which MBS has since undertaken", it said.

"CRA will continue to exercise close oversight to ensure that MBS' measures are effective."

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A version of this article appeared in the print edition of The Straits Times on September 18, 2020, with the headline 'MBS hires law firm to probe transfer of $1.4b in gamblers' money by staff'. Print Edition | Subscribe