Inside Asian Gaming

October 2012 | INSIDE ASIAN GAMING 5 Feature by the government and the verdict reached even before the case was heard. The ST Group, a Lao diversified conglomerate founded in 1994, is a well-connected company, he claims, and probably has the power to force interference in the judicial process. “It was clear that it was a complete sham in the court,” says Mr Jordahl. The Thanaleng Slot Club takeover may simply have been a matter of greed, he says. The property was starting to make a significant sum of money, netting US$2 million - $3 million a month, and the contract was about to change. Sanum was about to become 60% owner and ST 40%; the split had been ST 60% and Sanum 40%. He adds that the Savan Vegas tax assessment may have something to do with the original agreement between the government and Sanum. The casino has a 50-year monopoly in three provinces—Savannakhet, Bolikhamxay, and Khammouan—and Jordahl speculates that the government thought it would be better to put Savan Vegas out of business, end the monopoly and issue more licenses. Mr Jordahl believes that Laos is shooting itself in the foot. Sanum claims to have invested US$85 million in the country and to be the fifth largest employer there. The business created is now in jeopardy. And if the country is found not to have respected the rule of law and its international obligations, future investments could be threatened. He adds that many people in Laos agree with Sanum. They understand that the reputation of the country could be damaged if it is found that the cases were in fact decided as a result of government interference and pressure from ST. Mr Jordahl says that the judges had no choice, as they would have been replaced if they had reached the wrong conclusion in the case. Others are afraid to say anything because of possible repercussions. “Nobody wants to put their hand up,” says Mr Jordahl, “for fear of getting it chopped off.” According to Mr Jordahl, the government has been ignoring Sanum and not willing to open dialogue. But he also notes that it may be now starting to take notice. As of early October, Savan Vegas was still in operation and Sanum’s other two slot clubs, one on the Vietnam border at Lao Bao and the other at the Savannakhet Ferry Terminal, are still up and running. Mr Jordahl believes that all the pressuremight be having an effect.The case has receivedquite a bit of Presented a mammoth tax bill—Savan Vegas Hotel & Entertainment Complex held hostage for unpaid debts. The area is now being developed as a commercial and cultural center and being downgraded to a “specific economic zone” from a special economic zone. Then, the Thanaleng Slot Club, at the first Friendship Bridge, which links Thailand and Laos at Vientiane Prefecture, was forcibly taken from Macau’s Sanum Investments by ST Group, the local partner in the club. Vientiane Commercial Court also ordered Sanum to pay ST US$5 million in damages as a result of the dispute. That was followed by Savan Vegas being presented with a surprise $23 million tax bill by the Lao Tax Department; Seizure of the property was imminent at press time. According to Jody Jordahl, the president of Sanum Investments, the foreign investor in Savan Vegas, the government is asking for three different taxes to be paid: a construction tax, a fee for overtime at the border crossings and a tax on junket operators. He says that all the claims are without merit and that the taxes don’t have to be paid either because specific agreements with the government exempt the casino—as with the construction tax—or because the tax is not due under Lao law. “They are charging retroactive taxes that are incorrect based on our agreements,” Mr Jordahl says, adding that some of the taxes are also incorrect “based on an easy reading of the tax law.” Sanum has asked for international arbitration by the The International Centre for Settlement of Investment Disputes, a World Bank entity. Mr Jordahl believes that Laos is compelled to comply because of the bilateral investment protection treaties it has signed with the Netherlands and China. Lao Holdings, a Dutch company, is Sanum’s parent, and Sanum itself is a Macau company, allowing it to seek protection under China-Lao treaties. According toMr Jordahl, the judgment against Sanumwas forced