ChinaOpinion pieces for the press

JAMES PACKER GAMBLED AND LOST

By February 20, 2017 No Comments

 

There is a scene towards the end of Kostantinos Gavros’s 1982 film, Missing, in which a hard-edged US military officer tells Ed Horman, played by Jack Lemmon, ‘Suppose I went up to your town and started messing around with the Mafia and I wind up dead in the East River and my wife or my father complains to the police because they didn’t protect me. They really wouldn’t have much of a case, would they? You play with fire, you get burned.’

James Packer, gambling tycoon, played with fire in China and has just been burned. Eighteen of his staff from Crown have been arrested, three of them top Australian executives. Crown’s share price has tumbled. As it single biggest shareholder, with more than 48% of the stock, Packer, lost half a billion dollars in the process. Does he have much of a case?

China has laws; lots of them. One of those laws stipulates that one cannot explicitly advertise gambling in China. The eighteen Crown staff are alleged to have violated that law by seeking to entice high rollers, so-called ‘whales’ to gambling resorts in Australia, given some of the recent strictures on resorts in Macau. In other words, they seem to have been messing around with the Mafia. They are now likely, at least metaphorically, to wind up dead in the East River.

While Packer and his Crown colleagues meet and confer about how to handle this problem; and he expresses concern about and support for his detained staff, what are the rest of us to make of the situation? We should recall to mind that the law is more than usually an ass in China; since the Communist Party chooses with studied arbitrariness when or whether to uphold its own laws; and there is nothing available in China resembling what we in Australia or elsewhere in the West think of as ‘due process’.

The superficial and naïve interpretation of the eighteen arrests is that unscrupulous foreigners fell afoul of a perfectly clear Chinese law and deserve the penalties they will now get. Xi Jinping has been cracking down on corruption and these arrests are of a piece with his sweeping anti-corruption campaign. But to leave the matter here would be to overlook everything that really matters about the case.

Given that the Party chooses very selectively when and how to enforce its own laws, we need to ask why it has in this specific case. Given that the detainees will not receive a fair trial, we will be left wondering about the truth of the matter. And given that some of those detained and facing prison are Australian citizens, we need to think about the understanding we have with China regarding such incarcerations.

There are now a large number of very wealthy people in China, including a great many of the Communist Party elite. They have indulged, many of them, in gambling for a long time, especially through Stanley Ho’s casinos in Macau.  What is it that makes the enticing of such whales to other gambling precincts unwelcome? Are they not at liberty to spend or throw away their own money as they see fit? Well, no, not altogether. And one reason for that is that so many of them are gambling with ill-gotten gains. Gambling casinos have been a means for laundering such gains.

There have also been reports that the immediate trigger for the for the arrests was irritation among powerful figures in China at Crown’s attempts to collect the gambling debts that an unnamed Chinese tycoon incurred at a Melbourne casino – to the tune of $15 million. Who’d have thought that strings might be pulled back in the mother country and Crown hit hard to teach it a lesson?

Well, anyone familiar with how the Chinese Communist Party does business, frankly. Did James Packer and his people not foresee such a possibility? They deal in risk. It seems that here they failed to calculate the odds. In truth, if we talk of whales and such, the New York Mafia are little minnows compared with the Chinese Communist Party. If he was strangely unaware of this before now, Mr Packer has just been brutally reminded of that reality.

‘I am respectful that these detentions have occurred in another country and are therefore subject to their sovereign rules and investigative processes’, he has stated for public consumption. It’s a good bet that, behind closed doors, he has been swearing violently in the manner we all associate with his late father. It will be interesting to observe how the game now plays out.

Those who do business in China will remember the raid on Rio Tinto’s offices in Shanghai a few years ago and the imprisonment of Stern Hu; as well as the trumping up of charges against Matthew Ng and his long imprisonment in Guangzhou. Crown’s Jason O’Connor may fare better, because the Communist Party tends to treat Chinese expatriates more harshly than ‘round eyes’. But the process is unlikely to be any fair or more transparent.

How does the ‘justice’ system work in China in such cases? The charges are poorly specified; the defence counsel is not provided with the charge sheet of evidence until shortly before the trial,; the detainees are pressured into making confession while in prison; the trial is not accessible to the press; and even consular access to foreign prisoners can be hard to obtain. Expect all these ‘rules’ to apply in the Crown case.

Does all this mean that those who do business in China must learn more than ever to ‘keep their noses clean’? Well, it’s not clear how exactly that is to be done, Chinese law being what it is. What stands out is that, despite calls in China since the late 1970s for the ‘rule of law’ to replace the arbitrary rule of power holders, no such thing has occurred. Until it does, doing any kind of business in China will remain something of a gamble.