By Harriet Alexander
A bombshell probity report has revealed that the Hong Kong investor crucial to the survival of Star Entertainment restructured its businesses and gave false information to regulators to conceal its relationship with a notorious junket operator.
But Annastacia Palaszczuk’s government waved through Chow Tai Fook Enterprises [CTFE] as a suitable casino operator, smoothing the way for its keenly anticipated Queens Wharf Brisbane development to proceed, after stating that the evidence did not support a finding of deliberate concealment.
The casino and Queens Wharf complex in Brisbane.Credit: Glenn Campbell
CTFE consummated the sanitation of its reputation earlier this month by signing a deal to buy out Star’s stake in the $4 billion development, and along with its partner, Far East Consortium, is now set to supersede Star as the biggest casino operator in Queensland.
Until now, the findings from the investigation into CTFE’s links to jailed “junket king” Alvin Chau have been hidden from public view.
CTFE took legal action last year to prevent this masthead from reporting on the findings, supported by the Queensland government, which tipped off the company that this masthead had seen a copy of the report and agreed to act as a witness in the case.
A redacted copy of the report, released by the Crisafulli government on Thursday night, demonstrates the elaborate methods taken by CTFE to hide its relationship with Chau, the founder of Suncity Group, who was sentenced to 18 years in prison after being convicted of fraud and organised crime in 2023.
It also details the misleading answers given by its executives to the regulator when questioned about their connections.
CTFE is a multi-billion dollar conglomerate owned by the Chengs, one of the wealthiest families in Asia, and operates a lengthy portfolio of jewellery, hotel, transport and casino businesses across the world. In Australia, it owns Alinta Energy and Victoria’s Loy Yang B power station.
In 2022, the Queensland government ordered an investigation into the company following media allegations, including that it shared an interest in a Vietnam casino with Chau.
Lawyers for the company had told investigators from Queensland’s Office of Liquor and Gaming Regulation (OLGR) that CTFE was no longer associated with Chau or the Vietnam project. Both parties had exited the company that was set up to buy equity in the Vietnam project years earlier, the lawyers advised.
“Junket king” Alvin Chau was sentenced in 2023 to 18 years in jail for fraud and organised crime activities.Credit: AP Photo/Vincent Yu
“CTFH disposed of its entire controlling stake … in April 2016 to Alpha Era Investments Limited [which is] owned by a third party wealthy and well-connected investor,” the lawyers wrote.
“Chow Tai Fook group is not involved in the ownership, management, administration or financing of any persons associated with Suncity, Mr Alvin Chau or their associates.”
But confronted by further evidence uncovered by OLGR and independent consultant PKF Integrity Services in late 2023, CTFE conceded that the company had only sold half its share in the Vietnam project to Alpha Era, and the other half to a company owned by Chau. One of its executives had remained on the executive committee for the Vietnam project.
And the links between CTFE and Alpha Era were surprisingly close. Successive owners of Alpha Era were employees of the CTF group, and CTFE funded their purchase of the company through initially undocumented loans based on a “handshake agreement”, which were outstanding in the amount of $US388 million ($617 million) as of October 2023. CTFE briefly owned the company after the first owner died.
Star’s new Queens Wharf precinct in Brisbane.Credit: Glenn Campbell
CTFE also provided significant managerial, administrative and legal support to Alpha Era, and a CTFE executive was authorised to sign documents on behalf of the owner.
Investigators from PKF’s integrity division questioned five senior executives at CTFE over one week in November to flesh out these revelations. Those who gave evidence included Dr Henry Cheng, the company’s chair and Cheng family patriarch, Patrick Tsang, the chief executive officer of CTFE and husband of Cheng’s niece Selena.
The executives maintained that the company was not involved in the Vietnam project, merely lending $US 338 million to a friend who worked in the company, and distanced themselves from Chau.
Chief executive Patrick Tsang said he was aware of allegations against Chau, but the company relied on third-party advisors to do the appropriate vetting.
“Obviously we know Alvin Chau,” Tsang said.
“If we roll back to that period of time, he is one of the more successful players in Macau. He has a reputation, he has girlfriends, he goes out with movie stars. He’s like a celebrity. Do we know of the news surrounding him? Yes, we are aware of that … But at that time, he’s licensed to operate globally, right?”
Tsang denied suggestions that CTFE had set up Alpha Era to distance itself from the Vietnam project.
The investigative team also probed the group’s connections to Chinese triads, which allegedly used a CTFE subsidiary, “New World Developments” as a venue for meetings and front for money laundering. But it found that the allegation was unsubstantiated.
Chief executive Henry Cheng denied allegations that he had a relationship with alleged triad boss Kwok Wing Hung– known as Shanghai Boy– who has been variously charged with intimidation, blackmail, assault and criminal damage, but not convicted.
Cheng’s lawyers said the pair had only met once in an “unplanned chance encounter … at a dinner venue”, but the pair had not spoken and had no further contact.
But PKF found the allegation that CTF Group had a concealed relationship with a person not of good repute, Alvin Chau, through an ongoing interest in the Vietnam project, was substantiated.
Its report also examined whether CTFE, Tsang and Cheng were suitable to run a casino “having regard to character, honesty and integrity” as required by law, and found that they had each provided misleading information to the regulator.
“In our opinion, CTFE provided incorrect, incomplete and/or inconsistent information in its submission to OLGR,” the report concluded.
But the Queensland government announced on May 2 that it had approved CTFE to retain its 25 per cent stake in Queens Wharf, stating there was insufficient evidence to find CTFE or its associates unsuitable to hold a casino licence, following further advice from Kings Counsel.
The allegation that Chau was of poor repute lacked probative value given it was based on rumour and suspicion, and therefore CTFE had no motive to intentionally conceal its relationship with him, former attorney-general Yvette D’Ath determined.
“The attorney-general found that CTFE lacked candour and fulsomeness in several dealings with OLGR and previously adopted a narrow interpretation of OLGR’s requests for information,” her statement on May 2 said.
“This is understood to be based on differences in cultural and organisational expectations. However, the evidence falls short of establishing that the concealment was deliberate.
“The attorney-general noted CTFE’s apology and assurances about future communication
with the regulator.”
Chow Tai Fook Enterprises [CTFE] and its partner Far East Consortium agreement to buy Star Entertainment Group’s stake in Brisbane’s $4 billion Queens Wharf casino precinct earlier this month rescued the cash-strapped Star from financial collapse.
It said in a statement after the release of the investigation report that it remained committed to Queens Wharf and looked forward to playing its part in the redevelopment.
“We have always respected the important role of the [regulator] and participated faithfully in its investigations, offering up key executives for interviews and sharing commercial-in-confidence information. We were assured, in return, that the resulting report would remain confidential,” the company said.
“When that confidential report was leaked to the media, we reluctantly took action to protect our commercial interests, as any company in the circumstances would.“
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