China feared CIA used Macau casinos to trap officials: Report

July 23, 2015 09:04
The report suggests Sheldon Adelson alienated Chinese officials by some of his actions and pronouncements. Photo: Bloomberg

China feared that casinos in Macau owned by Sheldon Adelson, a billionaire US gambling magnate and major donor to the Republican Party, were used by US intelligence agents to entrap and blackmail Chinese officials.

Citing a report by a private investigator in 2010, the Guardian said Beijing believed US-owned establishments in the former Portuguese colony were working in league with the CIA.

“Many of the [Chinese] officials we contacted were of the view that US intelligence agencies are very active in Macao and that they have penetrated and utilised the US casinos to support their operations,” the “highly confidential” report said.

The investigation was commissioned by Sands China Ltd. (01928.HK), the Macau branch of Adelson’s company, amid concern that the local government was increasingly hostile to the gambling industry and Sands in particular.

The report, dated June 25, 2010, was uncovered by the Investigative Reporting Program at the University of California, Berkeley.

It was among a collection of Sands documents filed with a Las Vegas court that is hearing a civil action by the former head of its Macau casinos, who is suing the firm for wrongful dismissal.

“A reliable source has reported that central Chinese government officials firmly believe that Sands has permitted CIA/FBI agents to operate from within its facilities,” the report said.

"These agents apparently ‘monitor mainland government officials’ who gamble in the casinos.

“This source also reported that several PRC government bodies have reported ‘evidence’ of ‘US agents’, operating from Sands, ‘luring’ and entrapping mainland government officials, involved in gaming, to force them to cooperate with US government interests.”

The report does not say that Sands was complicit in US intelligence activity, only that Chinese officials believed it.

The corporate investigator, who is not named in the report, said his information is based on influential sources, including three people in the Beijing office responsible for overseeing Macau and Hong Kong affairs, two Chinese foreign ministry sources and powerful Chinese businessmen with close ties to Beijing.

Sands described the report as “a collection of meaningless speculation”.

“As for the document’s narrative that Sands is a front for US intelligence efforts, well that sounds like an idea for a movie script,” said Ron Reese, the company’s senior vice president for global communications and corporate affairs.

The report said China had grown increasingly disturbed at the scale of gambling by its mainland residents travelling to Macau, particularly government officials.

“A source of considerable concern is, according to a well-placed Beijing government contact, an internal Central Government agency report that estimates some US$2 billion is annually gambled away by serving Chinese government officials visiting Macao,” it said.

A year ago, a government crackdown on corruption in Macau included strict enforcement of a longstanding ban on travel to the gambling haven by public officials and high-spending punters, hitting casino profits.

But the investigator's report indicates Beijing had a further source of anxiety: that officials who gambled, and particularly those who lost and ran up debts, would be open to pressure and inducements by foreign intelligence agencies.

The Chinese saw this as part of an effort by the United States to influence events in Macau.

The report says Beijing refused to allow the US to open a consulate in the territory because it regarded it as an attempt to interfere in local politics.

Chinese suspicions of US intentions in the territory were not new.

The report said that Beijing balked at US pressure after the Sept. 11, 2001, terrorist attacks to tighten regulation of Macau banks to combat money laundering, seeing it as “unwarranted intervention” in the city's affairs.

“Chinese officials viewed these requests as being akin to submission to ‘US government inspection’ of Chinese sovereign interests,” it said.

The report said Beijing was “shocked” and “stunned” at the detail and accuracy of a 2005 US government report that identified Macau as a key connection in money laundering by North Korea.

“There is a widely held perception amongst officials that Sands serves the interests of the US government in Macao,” the report concluded.

Sands commissioned the report at a time when Adelson, according to his testimony in court, was deeply concerned about increasing restrictions on the growth of the gambling industry in Macau and difficulties he was running into selling property.

At the time, Sands' casinos in Macau were headed by Steven Jacobs, who is now suing the firm and Adelson for wrongful dismissal.

The report – which was discovered among documents produced by Sands as part of its case against Jacobs –suggested that Sands' and Adelson’s fractious relations with the Chinese were in part of their own making.

“Another reliable source reported that historically Sands had made use of a ‘middleman’ to develop PRC government relationships," the report said.

"This Beijing source believes that this middleman had apparently ‘opened the PRC door’ for Sands through the late 1990s.

"According to this source Sands, however, reportedly failed to pay a previously agreed fee to this individual.

"Furious with this snub, this middleman began actively lobbying against Sands after 2004.” 

It also said Adelson alienated officials when he made an “assertive and provocative statement” in which he boasted that the expansion of his casino would change Macau’s development and elevate the city to a new level.

The report said Chinese officials interpreted this as an attempt to compete with their authority.

In his legal claim against Adelson, Jacobs describes the billionaire as having “burned many bridges” with Chinese officials and as having “alienated outsiders”.

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