Melco Crown (MPEL) Offices Raided, Authorities in Taiwan Freeze Funds!

 I was the first to write about the filthy dealings inside Melco Crown back in July, available here, so it was quite a delight when I saw this article yesterday,

PACKER CAUGHT UP IN ASIAN CASINO RAID

A couple quotes;

James Packer-backed Melco Crown Entertainment is under investigation over allegedly illegal transfers of $170 million in gambling funds between Taiwan and Macau.

Taiwanese authorities are investigating whether MCE International, a subsidiary of James Packer’s Asian joint venture Melco Crown Entertainment, improperly channelled funds on behalf of Taiwanese gamblers.

Last week, MCE International’s offices in Taipei were searched and its bank accounts frozen in relation to the alleged transfers, according to reports.

Packer’s Australian-listed gambling company Crown has a one-third stake in Melco Crown Entertainment. He is also its co-chairman and a non-executive director.

http://www.brw.com.au/

I can’t help but wonder if this has anything to do with the recent revelation that Bo Xilai may have been using Macau to do his money laundering.  If you’re not familiar with the Bo Xilai, it’s a fascinating story. 

Briton Killed in China Had Spy Links

Wall Street Journal  November 6, 2012,

As far as how Heywood and Xilai’s laundered such large amounts of money out of the China for so long remains a mystery, but some speculate it was through Macau. 

“Chinese prosecutors building a corruption case against Bo Xilai are believed to be investigating whether the fallen politician laundered an illicit fortune through Macau”.  theaustralian.com.au/

The fact that it was the offices in Taiwan is VERY interesting.  Its odd that a company like Melco would even get involved in handling these type of transactions when  Macau claims 75% of gambling revenue is brought in from Junkets—who handle bringing in the high rollers, extending credit, and collecting debt. 

To all of a sudden start assuming this risk makes little sense unless this money actually are flows from different line of business…  A type of business which is likely the only reason certain billionaire hedge fund managers own stakes in Macau—they’re shorting china. 

More on this in the next couple days…especially as it ties back in to Harbinger Group and Spectrum Brands. 

Have a wonderful weekend,

Donald Shekels

  

Warning:  Recent Upgrades = Bankers looking to sell

Self dealing banks like Goldman Sachs and Deutche Bank obviously are anxious to find buyers for Melco Crown.  Wonder why.  Its amazing people still fall for this bullshit.

Melco Crown Entertainment Limited Upgraded to “Buy” at Goldman Sachs

Posted by Alphonse Anthony on Jan 7th, 2013

Deutsche Bank Reiterates Buy on Melco Crown Entertainment ...

Daily Political-Jan 14, 2013

Wells Fargo Reiterates Outperform on Melco Crown Entertainment ...

Jags Report-Jan 11, 2013

Accounting Games: Spectrum Brands and Harbinger Group Inc.

It’s the same game as it was back in 2005-2008 with Falcone and the related parties in Spectrum Brands.  I went back in the fillings and charted the revenue overlayed with net income for the 2nd chart, and the 1st chart is Goodwill and Intangibles.

I’ve written in previous entities about some of the ridiculous accounting gimmicks this concern uses to inflate revenue figures (capital expenditures).  Anyways what I want to display graphically is how it played out back in 2006, 2007, and 2008 where they started writing down the Goodwill and Intangibles they had been tacking on in years prior, then how the game was up in feb 2009 when they filled for bankruptcy and wiped out equity holders.

 Here is a chart I found of the bond ratings I thought was interesting to look at with the previous two.

The mergers and acquisitions I mentioned above which resulted in bogus accounting fluff (but not before insiders sold millions in stock), I figured i'd present a couple of the timelines here.

Harbinger Group Inc, Spectrum Brands, and Philip Falcone’s next LightSquared

Harbinger Group Inc, Spectrum Brands, and Philip Falcone’s next LightSquared

I really have to say the more I look into this the more it looks to me like Falcone got his hand caught in the cookie jar.  In this report I will highlight some fillings and market assumptions I find to be a problem.  I have put in bold and underlined the relevant points in the paragraphs to save time.

I suggest you read my first write up on HGI, SPB, and F&G first.  

The Bear Case against Philip Falcone, Harbinger Group Inc, and Spectrum Brands

I’ll jump back and forth but a couple highlights scattered within:

• A fully disclosed rigged game; insiders have absolute control, motives counter to shareholders, almost zero fiduciary duty owed to equity holders, players with history of self dealing, and the comical disclosure about destroying documents.
• What could/will start the domino affect and lead to collapse of house of cards.
• Is Falcone to Fidelity and Guaranty Life like Jon Corzine was to MF Global?

Famous CDO Manager and his Biz in Melco's Subsidiaries...Donald Puglisi with Puglisi & Associates

As you can see from the article below this guy's cup of tea is subprime backed CDO’s.  I find his name, Donald Puglisi, in Melco’s  fillings as far back as 2006; so my question is: how likely is it that this guy wasn’t hired for his Structured Finance expertise?  Take this together with the billion dollar “Project”, distressed debt players Oaktree and Silverpoint capital undertook for Melco, along with investment Banks lending and structuring deals for melco which bear a strikingly resemblance to how CDO’s are financed, ramped up, and managed      
     ***9-6-2012  Update for Muddy Waters (See below)