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ISSUE 141 - Jan  2014
The Macau property market is changing. Vote. What is your opinion on likely price fluctuations for the second half of this year?
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Stanley and the Pirates

Posted: 4/1/2006 2:37:00 AM
Rating:     0% (0 votes)

Type the words 'Stanley Ho' into Google's search engine, and it comes back with 5,280,000 matches. And that doesn't include the Chinese language entries. So much has been written about the pre-eminent figure in Macau gambling, that it's difficult to sort fact from fiction.
Depending on what you read or who you listen to, he's either a risk taker who's kept some shady company over the years, or an entrepreneur of great vision and great philanthropy. As a result, most biographical references to him are either quite unflattering, or simply gushing. The truth, one suspects, as with most human beings, is somewhere between these two extreme positions.

There's one thing he most certainly is, and that's rich – very rich. Forbes.com's list of The World's Richest People 2006 estimates his net worth at US$ 6.5 billion – a jump of nearly US$ 3 billion compared with 2005. It makes him not only one of the richest men in Asia but in the whole world.
He's also a survivor. At the age of 84, and four years after the ending of his 40 year gaming monopoly, the businesses he founded retain their lead position in the Macau market, though whether they can hold that place once Wynn and the Venetian open for business remains a key question.
The whiff of controversy has never been far from him during his long and varied career. Whispers that some of his Macau gaming operations had unknowingly been infiltrated by criminal gangs of triads have never been proven. There were however frequent and sometimes fatal gunfights in and around some of the casinos for which he was concessionaire before the handover to China in 1999.
Despite his tag as 'Mr Macau', Stanley Ho is actually from a Hong Kong clan that has had a central role in the making of modern China. His grandfather Sir Robert Hotung was a Hong Kong businessman who helped to fund the revolutionary movement of Dr Sun Yat-sen. Sun went on to overthrow the last Chinese emperor and founded the Republic of China.

Sir Robert's grandson has also made his own mark on history – as the creator, for better or worse, of modern Macau – turning a colonial backwater with a moribund economy into a regional and world tourism destination. Some believe his venues such as the Hotel Lisboa have been left looking tired and old fashioned since the arrival of competition from Las Vegas, but his company still dominates the market, and his influence and investments are everywhere.
When you arrive by jetfoil from Hong Kong, you're travelling on one of his ferries; when you land at Macau International Airport, you're touching down on runway he partly owns; when you turn on the television the electricity is supplied by a company in which his business partner Chung Yu-tung has an interest. If you happened to be watching Asia Television Ltd (ATV) he had a stake in that too until quite recently.

His defenders say it's very easy for people who've never created a single job in their lives to sit on the sidelines and snipe. They also point to his support for scores of charities in Macau, Hong Kong and overseas. It was probably inevitable however that anyone with such financial, and some say at times political power, was going to attract comment – not all of it positive.
The engine of Stanley Ho's gambling revenues, and the basis of his fortune, has been the network of VIP rooms sub-contracted to other operators within casinos where he is the main concession holder.
This source of wealth has also in the end become his achilles heel. In a globalised economy, with stock markets and banks worried about money laundering and other financial crime, there's nervousness about such high volume cash businesses being outside the direct control of the company legally liable for their operation.
The decision to hand over control of Melco to his son Lawrence may be as much to do with regulatory concerns as it is the inevitable need for a succession.

Although Stanley Ho was born into wealth in 1921, by the time he was 13, his clan's fortune had reportedly been lost and his father bankrupted in the stock market collapse that rippled through the world economy after the Wall Street Crash of 1929.
There's a story, possibly apocryphal, that soon after his father's ruin, young Stanley went for treatment at a dentist who was a family relation. The dentist made a tactless reference to Ho's plight, and the boy ran home crying. When he saw his mother, he reportedly told her: "I must become a successful man," and promised to be wealthy within 10 years.

It's said he was not naturally gifted academically, but realised that education would be the key to social advancement, and managed to gain a scholarship to Hong Kong University. While there he showed the value of hard work and application (although Forbes.com describes him as a 'university drop out') by reportedly becoming fluent in English, Portuguese and Japanese. (By this time the Japanese had launched a full-scale invasion of the Chinese Mainland, taking advantage of the bitter divisions between the Communists and the Nationalists in the years following the overthrow of the Emperor.) Even in those days, Stanley understood the value of covering all the angles.
When the Japanese occupied Hong Kong in 1941, the family fortunes reportedly suffered again. At this point, Stanley's history gets a little hazy. It's said that he 'moved' to Macau to work in a trading company. Others say he fled there. Portugal remained neutral during the Second World War, and its colony Macau was never officially occupied by Japan, so for any ambitious young man, doing business in Macau would have clearly been preferable to rationing and military rule in Hong Kong.

It was during WWII that an incident reportedly occurred that had a major influence on his path to success. This is the famous 'pirate attack' story, where a young Stanley is said to have fought off a seaborne gang armed with guns while he was aboard one of the company's cargo vessels, and saved a huge amount of his employer's cash from being stolen. In gratitude for his diligence and honesty, he was reportedly given a 1 million pataca bonus, which became the basis for his first major investment. It's a romantic and memorable story, often dutifully repeated in biographical references, but without access to independent witnesses, it's difficult to to be clear about the details.
In 1943, with the Japanese still installed in the British governor's residence, the fledgling entrepreneur is said to have invested his money in a Hong Kong kerosene supplier, and also a construction company.

The next 18 years are also a little hazy in the public records, but by 1961 Ho had some important business partners including Hong Kong entrepreneur Henry Fok (who has more recently been influential in Mainland politics as vice chairman of the National Committee of the Chinese People's Political Consultative Conference) and the famous Macau gambler Yip Hon and the latter's brother-in-law Teddy Yip.
By this time Ho also had access to enough cash to make a successful bid of HK$ 3.19 million (US$ 410,000) for the Macau gaming monopoly concession when it became available that year. One of the reasons for the bid's success was said to be the promises the partners made about promoting tourism and developing Macau's infrastructure. This emphasis is revealed by the title of the parent company set up in 1962 to oversee the franchise – Sociedade de Turismo e Diversoes de Macau (STDM).

Under Ho and Yip's management, the company built the Lisboa Hotel and casino and by 1972 it was the biggest gaming establishment in the city and famous around the world.
In the same year, Ho also set up Shun Tak Holdings Ltd, which was listed in Hong Kong. Shun Tak, now run by his daughter Pansy Ho, owns one of the world's largest fleets of high-speed jetfoils, ferrying passengers between Hong Kong and Macau. Pansy Ho also has a sub concession (in equal partnership with MGM Mirage) from STDM's successor SJM, for a casino resort in the territory.
"As STDM added to its casino and general business portfolio and its contribution to Macau's economy increased, so, reportedly, did Ho's political influence."

There's a joke recounted by Paulo Jorge Reis, a former deputy director of information under the colonial government, that sums up how some of the Portuguese felt about the situation.
"Stanley Ho used to sit at the right hand side of the governor, and a senior official from China used to sit on the left. "When the governor needed money he turned to his right. Then the governor would turn to his left to ask permission to spend it."

His political influence was openly acknowledged in 1987, when he was asked to join a committee advising on the handover of Macau to China in 1999. His influence in Beijing later waned when he angered the central authorities by suggesting Hong Kong should be administered by the United Nations after the end of colonial government.
In 1989, STDM expanded into horse racing, taking control of the Macau Jockey Club, and Ho became its chairman and chief executive officer. He still holds the chairmanship today.
The 90s saw STDM's investments moving into Macau's transport system. In 1991 it established the territory's Ka-Ho (Free) Port, including container operations. An oil terminal was opened in 1995, and in the same year the company invested in the new US$ 1.1 billion airport built by the departing Portuguese administration. The following year the STDM-backed Macau World Trade Center (sic) opened. In 1998, the year before the handover, Ho had a Macau street name after him – the first living resident to be so honoured. The same year he started Asia's first legal soccer and basketball lottery called Macau SLOT (Sociedade de Lotarias e Apostas Mutuas de Macau).
June 1997 was the beginning of the end of Ho's golden age as the monopoly casio operator. Although the Sino-Portuguese Joint Liaison Group agreed that year to confirm Ho's casino monopoly until 2001, the price was a near two-point rise in taxation on the STDM's gross casino earnings from 30 per cent to 31.8 per cent. Until this agreement, Beijing had the option to end Ho's monoply in 1999.

Modern Era
As the 21st century dawned, Ho's umbrella company continued to invest in infrastructure, including the Macau Tower Convention and Entertainment Centre, which opened in December 2001 and at 338 metres high is one of the world's tallest towers.
The digital age has seen a casino web site, drho888.com named after him, and it even features photographs of him and his wife Angela. His casino operating company SJM points out however that the web site has nothing to do with its operations. It is technically illegal for Macau and Hong Kong citizens to bet with i-gaming companies that do not fall within local jurisdiction.
Now in the autumn of his life, Stanley Ho is far from a spent force, but even a man of his wealth and energy (he has had four consorts who have borne him a total of 17 children) cannot turn back the biological tide, and a process of succession is inevitable. Whether his legacy can be built on in the face of global competition will be the key question.

by Michael Grimes


Facts on Figure April 2010

Home truths

A comprehensive study into Macau's property market says flexibility and caution should be the watchwords as officials shape the future of public and private housing. But most of all, home ownership should be promoted.

Lap of luxury

The Waterside in One Central on the edge of Nam Van Lake is the jewel in the crown of Macau Property Opportunities Funds portfolio. Leasing has just started and prospects are looking good .

Winning bet

A couple of hiccups aside, the Macau Property Opportunities Fund has sailed through the global financial crisis, seeing its asset value increase. The company believes its investment choices have left them well positioned. A Hong Kong listing would make sense, they say, but investors will have the final say.
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