Another TVB Drama In The Making
By Shai Oster and Kate O'Keeffe, Wall Street Journal
HONG KONG—A behind-the-scenes power struggle for control of one of the world's greatest casino empires has burst into the open, revealing deep fissures in the family of ailing 89-year-old billionaire Stanley Ho.
Opposing members of Mr. Ho's sprawling family publicly accused each other of trying to seize Mr. Ho's controlling 18% stake in SJM Holdings Ltd., the Hong Kong-listed operator of his flagship Macau casinos. The stake is estimated to be worth $1.7 billion.
On Tuesday, rival family representatives released personal communications from Mr. Ho and his four families to prove their cases in the fight to gain a controlling stake in Lanceford Co., a vehicle that holds nearly one-third of the company that controls SJM. The stake stands to benefit from a gambling boom in Macau, where revenue is expected to rise some 30% this year to about $35 billion, compared with $7 billion on the Las Vegas Strip.
The most recent chapter of the Ho saga began Monday, with the release of regulatory filings showing that Mr. Ho split his stake, roughly in two, with slightly less than half going to the children of the woman he considers his second wife and the rest to the woman known as his third wife, leaving Mr. Ho with nearly nothing.
Ho's lawyers said he "discovered much to his horror" that his 100 percent ownership of Lanceford Co. — which holds the 32 percent stake in SJM's parent company — had been diluted after new shares were issued, reducing his share to 1 percent, the South China Morning Post reported Tuesday.
Half of the shares in Lanceford were then transferred to a company owned by Ho's third wife and the other half to another company owned equally by the five children by his second wife.
But Mr. Ho, through lawyers claiming to represent him, later denied he approved the share distribution and accused his third wife and the children of his second wife of stealing his shares without his knowledge, according to a letter provided by these lawyers.
A regulatory filing by SJM on Tuesday confirmed that Mr. Ho is contesting the restructuring.
"It would appear the assets at Lanceford have been hijacked by members of the second and third family insofar as shares were issued to the effect to dilute Stanley to nothing," said Gordon Oldham, a senior partner at Oldham, Li & Nie, Mr. Ho's lawyers. Mr. Oldham said in an interview Tuesday morning that Mr. Ho had always made it clear he wanted his assets to be held in a trust for the four families in equal share and would file a lawsuit unless the shares were returned.
"This has always been my intention and wish," Mr. Ho wrote in a letter dated Jan. 5 that was provided by his lawyers at the time and addressed to Daisy Ho, a daughter from his second wife.
Early on Wednesday morning in Hong Kong, representatives of Mr. Ho's second and third wives released two Chinese-language statements, one of them handwritten purportedly by Mr. Ho, saying that the tycoon was no longer represented by his lawyer and that the share transfer hadn't been made under any undue influence and that the splitting of his empire was final.
Trading in SJM shares was suspended Tuesday. Royal Bank of Scotland Group PLC gambling analyst Philip Tulk said shares in SJM, which have more than tripled in the past year, could fall when trading resumes. "Ever since I've been covering this company, the concern has been about Stanley's succession plan. Those worries seemed to be going away, but now they look like they could come back with a bang," Mr. Tulk said.
The verbal back and forth could develop into a protracted legal battle among members of the tycoon's family, said Billy Ma, a lawyer specializing in probate and succession cases and a member on the Hong Kong Law Society's Probate Committee. "Any move at this stage can potentially unleash a chain of lawsuits. This is about a huge amount of money," he said.
A domestic dispute could distract SJM's management just as it faces tough competition and important decisions about expansion into Cotai, a newly developed part of Macau. "Without consensus among the major shareholders, it will be difficult for management to make decisions. If they can't make quick decisions on investment opportunities on Cotai, the company could lose market share to competitors," said Davis Fong, director of the Institute for the Study of Commercial Gaming at the University of Macau.
The company said in a regulatory filing the quarrel wouldn't affect company management or strategy.
SJM controls about one-third of Macau's gambling market. The company's properties include 17 casinos, four slot-machine lounges and two hotels.
At the center of the fracas are two of the most prominent and powerful businesswomen in Asia, part of one of the most complicated family dynasties in business. Mr. Ho's relatives include three women whom he and others refer to as his wives, plus their children and the children of an earlier companion, who died in 2004.
On one side of the battle is Angela Leong, Mr. Ho's fourth wife, a former dancer and member of the Macau legislature who holds a top management position in casino operator SJM.
On the other side is Pansy Ho, one of Mr. Ho's five children from his second wife. She has launched her own gambling franchise and is managing director of Shun Tak Holdings Ltd., the listed property and real-estate company founded by her father. Pansy's siblings Daisy and Maisy hold executive positions at Shun Tak as well. Pansy's brother, Lawrence Ho, has set up a rival Macau casino.
Depending on which side wins, Ms. Leong could emerge with an even bigger stake and the upper hand in the casino. Or, the second wife's children, led by Pansy Ho, could have a larger and possibly controlling block in SJM.
Stanley Ho couldn't be reached for comment. Ms. Leong during an interview with a local radio station declined to comment on the latest power struggle but added that Stanley Ho was in good health and clear-minded. Other family members either couldn't be reached or declined to comment.
Questions over Mr. Ho's legacy began when he fell ill in August 2009 and underwent brain surgery. He retreated from day-to-day management and began slowly doling out portions of his Byzantine holdings to his large family.
Pansy and the fourth wife, Ms. Leong, didn't get along, according to a person close to the Ho family. When Mr. Ho cemented his fourth wife's position at SJM by handing her a 7% stake late in 2010, Pansy aligned with the third wife to counter Angela's rising power, according to the person familiar with the family. Together, the two asked Stanley Ho for a greater share of Sociedade de Turismo e Diversoes de Macau SA, the privately held company that owns more than half of casino operator SJM.
The dynastic troubles seem to have been conducted via formal letters, mobile-phone text messages and sporadic family meetings.
In a Jan. 5 letter provided by Mr. Ho's lawyers at the time and addressed to Daisy Ho, one of his second wife's children, Mr. Ho complains that he tried to talk about distributing his estate many times, but "without my consent and knowledge" his shares were nearly liquidated. "I have tried to call you and contact you through [text messages] and your secretary in order to come personally to explain to me what is going on. However, you have not responded so I have no other way but through this letter to command you come to my house," he wrote.
In a letter dated Jan. 7, Daisy Ho responded, addressing him as "Dear Dad." "Firstly, I want to apologise for not being able to see you on Wednesday afternoon as I was very tied up," she wrote, adding that her sister and wife No. 3 did meet him later that evening, "and I am glad that any misunderstanding there might have been has been cleared up."
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The tycoon issued a statement through his third wife, Ina Chan Un- chan, saying: "This is a family matter. We don't need any lawyer to be involved in it. We can resolve it on our own."
With her daughter Florinda Ho Chiu- wan by her side, Chan read out a brief statement from her husband after inviting the media into her opulent home on The Peak at 8pm before issuing a more detailed version at 11pm.
The move was aimed at ending media speculation about a falling out between the tycoon's second and third wives on one side, and his fourth wife on the other over Monday's announcement of a restructuring in the shareholding of his stakes in SJM Holdings (0880) and its parent Sociedade de Turismo e Diversoes de Macau.
"I heard on TV that the distribution of shares was done against my will and that fraudulent documents were made by my family members. There was even talk of robbery," Ho said. "I am very unhappy and frustrated about this. I made the decision to distribute my stakes of SJM and STDM with 100 percent sincerity. Nobody forced me to make such a decision.
"I voluntarily distributed my stakes in the companies to my family members, hoping that all of them will work hard and make contributions to charities and society."
He added: "All of you have to treat your brothers and sisters nice and value harmony. You cannot
"I reaffirm my decision on the distribution of the shares, and this will not be changed. I have given thorough consideration to making this reasonable and with goodwill."
And he warned: "If anybody uses memos carrying my signatures to change or amend the distribution of shares then these documents are not true and, therefore, cannot be used as legal documents."
The tycoon also sacked his lawyer - Gordon Oldham of Oldham, Li & Nie. "He no longer represents me. I have delegated [third wife] Ina to be in charge of the matter and I hope everyone will value harmony, which brings wealth. I feel great today and am in a stable mood. I hope my family members will accept my arrangement."
Ho spent the night at his third wife's home. Earlier, he went to the home of second wife Lucina Ho King-ying in Jardine's Lookout.
The dispute arose after Oldham reportedly said Ho accused his second and third family members of "robbery" and that they "hijacked" him in a dispute over his distribution of his fortune. The two met at lunchtime yesterday.
Oldman said Ho has always made clear that when he dies, he wants his assets split equally among his four families. "The two families were trying to run away with the crown of jewels," he claimed.
Ho's visits to his wives were sparked by a letter the tycoon signed acknowledging his gift of the shares of STDM to his third and second families in the presence of lawyers and doctors on January 7, which was in reply to a Stanley Ho letter dated January 5.
The letter, written by daughter Daisy Ho Chiu-fung, was made public yesterday. She wrote: "Following your distribution of SJMH shares to Angela Leong [the fourth wife], Ina [the third wife], Mom and all of us children are grateful that you reaffirmed your instructions to gift the STDM shares to Mom and Ina, so as to preserve harmony within the family and aggregate control over STDM. Further, the share allocation at Lanceford was done in accordance with your instructions."
SJM is suspended from trading. The company announced on Monday that Stanley Ho will offload his 31.7 percent stake in STDM to Lanceford, which third wife Chan owns 50.55 percent, and second wife Lucina's children have 49.95 percent.
In December, he transfered 7.7 percent of SJM shares to Leong and appointed her managing director.
Lanceford issued a statement saying: "It is regrettable that Oldham, Li & Nie rushed to publicise these matters without checking the underlying facts in connection with the relevant transactions and we reserve our rights against that firm."
Leong said as a director of SJM, she could not comment. Chan said she was not qualified to comment.