The casino group which was once partly-owned by Melco Crown Entertainment of James Packer put the international off-shore law firm Appleby under pressure, demanding it to skip the checks of shareholder identities. The checks are one of the key measures when it comes to prevention of terrorism financing.
At the time when it was owned by Mr. Packer and Lawrence Ho, Melco Crown Entertainment was in a process of creating a joint venture in partnership with US hedge funds in order to fun the construction of Macau-based Studio City casino, which was estimated to $3.2 billion. Originally, the casino was set to start operation in 2015, but the secret sources used for funding the project made Appleby share some concerns. Despite the fact that the law firm issued some warnings on the matter, the project received an approval.
The Packer-controlled Melco Crown was focused on setting up companies in the British Virgin Islands, where the tax regime is much more favourable to operators. Reportedly, Melco pressed Appleby law firm to skip the checks on the shareholders’ identities.
Melco Crown’s Refusal to Provide Legally Required Information
According to the e-mails revealed to the public, Appleby received the threats from Melco Crown in 2011 and in 2013, respectively, after Melco Crown Entertainment refused to provide the new joint venture’s thorough list of shareholders to the law firm. The secrecy surrounding the two hedge funds’ investors which held 40% in the joint venture made the Appleby law firm raise a red flag that something was not right about the funding of the project.
The 2013 refusal made by Melco Crown to provide the names of investors in the hedge funds caused some concerns inside Appleby. At the time of the second refusal, one of the compliance officers in the British Virgin Islands office of Appleby, Denice Cline, shared that such an action could put the operation license of the firm at risk.
It also became clear that Ms. Cline have tried to attract Melco’s attention towards Appleby’s Anti-Money Laundering and Countering the Financing of Terrorism by sending an e-mail to the company. Moreover, a summary of the British Virgin Islands anti-money laundering regulations were forwarded by her to the operator. Despite the law firm’s efforts, Appleby never received the information about the two hedge funds it had asked for.
Will Melco Crown’s Actions Hurt Appleby’s Reputation?
How can the Melco Crown’s pressure on Appleby actually hurt the reputation of the law firm? First, the findings about the corporation’s refusal to provide the required information to the law firm came as an illustration of the methods used by large industry behemoths to bend their off-shore service providers, using their large influence for their own purposes, no matter if it comes to prior legal requirements.
On the other hand, some other concerns related to the law firm’s ability to meet the necessary standards occurred. After all, compliance breaches are serious accusations, which could definitely raise concerns about the actions of the law firm and its compliance policy.