Melco Resorts and Entertainment Limited have successfully fended off a legal challenge relating to an inquest focused on their suitability to purchase a stake in Crown Resorts Limited.
GGRAsia, citing a story from The Australian Financial Review newspaper, reported that Melco drew the attention of The New South Wales Independent Liquor and Gaming Authority after penning a $1.2 billion deal in May that was to see it gain a near 20% stake in Crown Resorts Limited which would be paid for in two installments.
Murky family ties:
The investigation is focused on determining whether the deal could amount to a ‘breach’ of Crown’s gaming license due to the proximity of Lawrence Ho Yau Lung to the matter. He is the Chairman and Chief Executive Officer of Melco Resorts and Entertainment Limited and also, notably the son of 98-year-old Macau casino mogul Stanley Ho Hung Sun. Stanley himself has faced prohibition in Australia where he was banned from investing in legal casinos due to suspicion that his gambling empire owes a lot of its successes to links with organized crime groups.
Hard limits:
GGRAsia’s report details how Melco filed an action with the Supreme Court of New South Wales last month on the heels of a request by the regulator for access to documents it claimed were legally privileged. The argument was based on their position that the regulator is not entitled to access the papers in question, as the New South Wales Independent Liquor and Gaming Authority do not possess the same far-reaching authority as an Australian Royal Commission.
Firm ruling:
On Monday, the state’s highest court decided that the regulator had gone beyond the scope of its authority in demanding the restricted information and that the ‘privileges including legal professional privilege’ of Melco Resorts and Entertainment Limited had not been ‘abrogated for the purposes of the inquiry.’
A hollow victory?
The ruling, while significant won’t have any bearing on Melco’s immediate plans as they have already announced the cancellation of the second acquisition installment, citing the ‘impact of the coronavirus epidemic’ as well as the need to use capital on ‘core assets’ as reasons. This move leaves Melco Resorts and Entertainment Limited a stake of 9.99% in Crown Resorts Limited, which is a shareholding that does not require approval from the New South Wales Independent Liquor and Gaming Authority.
