Off With Their Heads or At Least Whack Them About

In a very embarrassing moment for Crown Resorts, eighteen of its employees were arrested for industriously rounding up high-rolling gamblers in China for its casino in Australia.  There are very few details. We know only that three of the eighteen are Australian nationals; they are in detention, but have not been charged.* It was reported that they committed “gambling related” crimes, although no one except the Chinese seems to know exactly what that means.  But we are told that Crown had previously been warned to stop trying to attract high rollers from China to gamble in Australia and had ignored the warning.*

According to an Associated Press report, casino gambling is illegal on the mainland and Chinese law prohibits agents from organizing groups of more than 10 Chinese citizens to gamble abroad.  Apparently, agents of gaming companies have been dancing around the letter of that law looking for loop holes by superficially promoting travel rather than gamblingIn the wake of the corruption crackdown in China, gamblers are afraid to go to Macau. Operators from other countries have been trying to deliver those frightened high rollers to their properties.  The efforts are apparently successful as casinos from Cambodia, Korea, Vietnam, Philippines and Australia have been claiming their new-found customers have had a significant impact on revenues.

Certainly the $2 billion in gaming revenue that evaporated from Macau in the wake of the crackdown on corruption is attractive, but the risks are significant.  The President of the People’s Republic of China and General Secretary of the Communist Part of China, Xi Jinping is dedicated to freeing China of the evil of corruption.  He is quite proud of his accomplishments and wants everyone to know about his work.  Chinese state television is showing a documentary series on President Xi’s anti-corruption campaign called “Always on the Road.”* Xi is committed to continuing his efforts until all of the “powerful tigers and lowly flies” have been found and punished. The part of the campaign that trapped Crown Resorts is called “breaking the chain;” its goal is to sever the personal and financial relationships between Chinese gamblers and foreign interests.

The president of China is a man of metaphors; “tigers and flies” and “breaking the chain” are the ones he has used in his war on corrupt officials who have taken their ill begotten gains to the gaming tables.  But Xi has started to use a new metaphor for his overall policy that will probably prove to be much more important to anyone doing business in China or with its citizens than the other metaphors he has used.  Xi is comparing his tenure to the “Long March.”*  October 21st was the 80th anniversary of the famous “Long March.”  The march is a symbol of the communist party’s willingness to fight on, to pay any price for a worthy goal and never surrender to the forces of evil.  It is the path to victory.  Xi is fighting a very long campaign, not just against corrupt officials who gamble, but against everyone and everything that might limit his power.  This is not a passing phase and ignoring it is unwise.

The Australian press is beginning to take the Crown incident very seriously. There is speculation that the arrests are part of a larger policy to control the South China Seas.  That may or may not be the case, but it is certain that what has happened to the VIP gamblers in Macau and the Crown employees is part of a much bigger picture.  The president of China wants to control China; under his leadership, China wants to control its citizens at home and abroad and to control the money they spend.  Trying to trick the Chinese and evade their laws is a very dangerous game for any gaming company to play.  Although this time, it is highly unlikely that anything serious will happen to the Crown employees beyond getting their hands slapped.  However, those who continue to ignore the warnings might be risking their heads.  A significant number of party officials have gone to prison for life and some have been executed.  This is not a game; it is the Long March.  Only ten percent of those who started the long march survived.  It is, as we used to say in the 60s, a heavy metaphor man, very heavy.

*Chinese authorities detained 18 employees of Crown Resorts Ltd…The detentions signal the government in Beijing is again focusing on overseas casino operators that have marketing operations in China, after arresting gaming workers at two South Korean companies last year. Bloomberg, 10-18-16

*Chinese authorities warned Crown Resorts Ltd. last year to halt its efforts to attract high rollers from the mainland to gamble overseas…Police had been investigating Crown for several months as part of an operation targeting gambling-related activities dubbed “Duanlian” — or “to break the chain” — with the goal of terminating personal and financial links between foreign casino operators and Chinese clients, according to the person familiar with the case. Bloomberg, 10-18-16

*Chinese state television is airing a documentary series on President Xi Jinping’s signature anti-corruption campaign in prime time this week, unveiling new footage and salacious details of high-profile corruption cases ahead of a key Communist Party meeting. The eight-episode series, called “Always On the Road,” is being beamed daily to hundreds of millions of Chinese homes. Xi, who has pledged that his battle against official graft will never be eased. Macau Daily Times, 10-19-16

*Xi has declared the party must emulate the march’s spirit in pursuit of his “Chinese Dream,” a vaguely defined promise of national rejuvenation, and the party’s centenary goal to build a “moderately prosperous society” by 2021. “We, the new generation, should accomplish our new Long March,” he said.  Japan Times, 10-21-16



1 Response to “Off With Their Heads or At Least Whack Them About”

  1. 1 Bill HANIGAN October 26, 2016 at 9:58 pm

    Whilst initially the Australian press (or least the tabloids) put the arrests down to Australia’s perceived position on the South China Sea the general view now is that Crown were given ample warnings and this incident may have been sparked by the only white face amongst the three (or round eyes as per chinese) pursuing a Chinese bureaucrat for a $15 million debt in a Melbourne casino. A similar incident with Rio Tinto a few years back saw a number of executives jailed for a “corruption” after the Rio board knocked back a takeover bid from Chinalco.
    There is considerable chatter regarding Xi’s plan for an unprecedented third term. He is undoubtedly the most powerful chinese premier since Mao.

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