5 things I learned in Day 3 of probe into world’s largest bank heist

Solaire has defied the popular claim that casinos are the “blackhole” in anti-money laundering efforts. Junket agents play major role in cleaning or washing illegal funds via casinos. Chinese businessman Kim Wong seems to be the common thread among the different groups involved in the heist.

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Screenshot of ANC’s livestream of the March 29 Philippine Senate investigation on the world’s largest bank heist and money laundering scheme. Shown here is Chinese businessman Kim Wong who seems to be the common denominator int he different groups involved in the $81 million bank heist and money laundering scandal.

 

I monitored the 3rd Senate hearing on one of the biggest money laundering scandals in recent history. US$81 million, which is equivalent to some P2.8 billion, is no joke, after all.  To make sure I don’t forget what I learned from the 5-hour probe, I’m summarising—and sharing—the lessons in a listiclestyle below.

 
1. Brave casino vs play-safe bank

It appears Solaire has defied the popular claim that casinos are the “blackhole” in anti-money laundering efforts. Solaire’s Atty Benny Tan told the senators that as soon as their attention was called that some of the millions-dollar-worth stolen Bangladesh funds found their way into their casino gaming tables, the company officials acted quickly.

“We have frozen the P107,350,602 balance in their chips. We have also confiscated various denominations of cash in their rooms amounting to P1,347,069,” Tan said mid-way into the 5-hour long Senate hearing on March 29, 2016.

Senators Serge Osmeña and Teofisto Guingona III were pleasantly surprised and commended the Ricky Razon-controlled Bloomberry Resorts, the owner and operator of Solaire casino.

This came after the senators, particularly Osmeña and Guingona, got exasperated after grilling the RCBC top officials over the same issue. RCBC president Lorenzo Tan and legal chief Macel Estavillo who insisted they cannot just unilaterally freeze their clients’ bank accounts without a court order. (A court order did come weeks after but by then, the $81 million funds have long been withdrawn.)

Anti-money laundering officials have long complained that casinos should be among those institutions covered since officials said they become blind once the illegal funds enter the casino system. Banks and remittance firms, on the other hand, are covered and subjected to intense regulation…yet the dirty money was successfully laundered thru these two.

2. Junket agents play major role in cleaning or washing illegal funds via casinos 

I loved it that details of how the different roles in a casino business are played were discussed at the hearing. I’ve always believed that casinos have to be a willing participant to pull off a heist. Apparently not. Junket agents are key.

Junket agents are the ones who bring in th.e foreigner high-rollers to, in this case, Manila casinos. Two casinos were used: High-end Solaire and the modest Midas Hotel and Casino, both in Metro Manila cities. Macau agents are an easy prey (or willing heist participants) since business in that island is dying.

Junket agents earn from commission whether the gambler wins or loses (rules depend per casino). Agents can monitor how their players are doing via the “dead chips,” or those plastic round chips that they get pieces of after paying for their equivalent in cash (or via credit line from junket operator) at the casino counter.

These are “dead” since there are rules on how they can encash it. Winning chips are easily encashable, but the dead chips, which is in effect the player’s capital, cannot be encashed immediately. In Solaire, the agents have a “rule” that the dead chips can only be cashed in after they have been “rolled” (used for gambling) at least 6 times. The agents can monitor that thru the casino’s digital records of the activity of the chips.

But Sen. Osmeña said the agents—not the casinos—can change that “rule” and just allow the player to cash the chips even if the player hasn’t played 6x yet. That way, that player, assuming he is in on the heist, can more easily “wash” the dirty, illegal money and off he goes with the cash.

In this case of a heist, it does seem that the junket agents have to be working closely also with the junket operators. The latter are businessmen who usually advance money or extend credit to high rollers, as well as provide the hotel rooms, logistics of going to the Manila casinos from, say Macau, and the VIP rooms where the private gambling away from the prying eyes of mere mortals happens (no, we’re not talking about baccarat or some lowly gambling machines here. Those are for the masses.) VIP rooms are only for gamblers who play with a minimum of P25,000 to maximum of P1.5 million bets each game, at least in Solaire. Consider these “services” that the junket operators provide as insurance and, well, convenience.

3. Connecting the dots: Who knows who

Some names mentioned: Wei Kang Xu is an agent, as well as Dingxi Zi from Macau. Kim Wong, who was present at the Senate hearing, is a junket operator.

One of Wong’s clients is Shuhua Gao, who owes Wong P450 million after a series of losses in Solaire. Gao was going to sell his land in Beijing to pay Wong, but Gao reportedly said he needed to open a dollar bank account in Manila to course the funds from Beijing. Wong, who has been pestered by RCBC branch manager Deguito for business, referred Gao to the aggressive bank manager. The three–Wong, Gao and Deguito—met at Wong’s office at Midas Hotel in May 2015, and the RCBC branch manager suggested Gao opens a corporate account instead of an individual account. A corporate account needs 5 individuals. (Note: So far, there seems to be no corporate account opened.) Wong said Deguito promised to “take care” of the account opening. The 5 individuals in that account opening exercise turns out to be all fake, the RCBC and Anti-Money Laundering Council would later discover, citing IDs used in what was supposed to be the most basic part of the required know-your-client bank process.

Meantime, Gao, who has referred about 18 players to Solaire already, introduced Wei Kang Xu and Dingxi Zi who are supposedly planning to invest in the Philippines. They alerted Wong and Deguito that a large amount is coming soon. Indeed, in early February, a series of inward remittances to those fake accounts would receive a total of $81 million. Wong said he was not surprised but that only required that all the funds are used to play in the casinos, Solaire and Midas.

Wong seems to be the common thread among the different groups involved in the heist: Gao, who is the link to Chinese Wei Kang Xu and Macau nationale  Dingxi Zi, both involved in VIP-style gambling, is Wong’s friend. Wong’s company, Eastern Hawaii, was among those used to acquire chips in Solaire and Midas casinos. He admits to introducing Gao to Deguito who opened the fictitious accounts in RCBC Jupiter branch where Deguito is the one in-charge of. And the man on top, RCBC president Lorenzo Tan? He is a ‘casual’ friend from way back. So is Salud Bautista, who is president of Philrem, which converted the dollars that reached RCBC into pesos.

4. Where the $81 million funds went

What we know so far:

The $81 million that reached the RCBC bank accounts in the bank’s Jupiter branch where the manager is Deguito were sent to remittance firm Philrem owned by couple Michael and Salud Bautista to be converted from dollars into pesos. Philrem coursed the convertion thru RCBC’s Treasury via its bank account in another branch (not in Jupiter branch).

This means the illegal funds entered the RCBC system twice: as an inward remittance from the New York account of Bangladesh central bank, and as a forex transaction by Philrem, a 3rd party.

Of the $81 million, $63 million went thru Solaire and Midas. Here’s a breakdown based on Wong’s account:

>> $29 million went to Solaire.

>> $21 million went to Midas.

>> Php400 million and $5 million via Kim Wong. Of the P400 million, P80 million was delivered by Philrem’s Salud Bautista to Wong in Solaire; P20 million was delivered by Deguito to Wong also, and P300 million was picked up by Wong at the house of the Bautista couple.

The balance of $17 million remains unaccounted for. Wong said Philrem still has the amount, but the Bautista couple said they delivered everything to the Chinese group (Xu, Zi and Gao) in Solaire.

Unfortunately, there are no more CCTV footages of this “delivery” since Solaire keeps them only for 14 days, as required by Pagcor.

Wong says he has in his possession some $4.63 million due him as the “bangka” when his players lose while gambling in the casino. This amount was what remains from the $5 million Wong received from Philrem. Wong told the senators he is willing to give this up for safekeeping. The senators were considering returning this to Bangladesh.

5. The P1 billion threshhold

RCBC says the head office gets a trigger if some P1 billion funds go thru their system (as a deposit or withdrawal), prompting an elevation of any transaction, suspicious or not, to the more senior officials. But the frontline officials have their own discretion and may use their instinct when dealing with these big amounts.

Lorenzo Tan and Atty Macel Estavillo stuck to their message: the rogue branch manager made bad judgement calls.

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