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CasinoLeaks Macau: our analysis

Written by Andrew W Scott

This article first appeared in the May/Jun 2012 issue of World Gaming magazine.

Members of the casino industry from Macau to Las Vegas have been scratching their collective heads since the February launch of a new website, The site points the finger at the Macau gaming industry and expounds for hundreds of pages ad nauseam on how terrible Macau and everyone connected to it is.

My initial response was to ignore this website as simply anonymous muckraking unworthy of a dignified response, and most likely fuelled by jealousy, greed, China-hatred or some other dishonorable motivation. However, as time has passed, other publications have reported on the site, and it’s been the subject of numerous conversations I’ve had with gaming and media figures alike.

While the existence of the site has been widely reported, there has been little in the way of analysis or investigation into the people behind it or the real reason for its existence. With the publication of this article, all that is about to change. The article is necessarily long given our thorough analysis and the complexity of the subject matter.

What is CasinoLeaks Macau?

While obviously styling its name on the controversial whistle-blowing website WikiLeaks, CasinoLeaks Macau isn’t a leak site at all. It claims at some point in the future it will be, but of course that is contingent on whether anybody actually leaks anything to it.

As it stands right now, CasinoLeaks Macau is simply a huge research project, re-organizing publicly available information, and re-presenting it in a holier-than-thou tone. It smears the Macau gaming industry, throwing as much dirt at it as possible. The site is littered with innuendo, veiled assertions and weasel words. Its staple tactic is to attempt to connect the Macau gaming industry with organized crime in any way possible.

In some cases the information on the site is more than a decade old. It is predominantly sourced from corporate filings in various countries including Macau, Hong Kong and Singapore. There are also references to various newspaper articles that have been published over the years. These articles range from uncontentious reporting to wild speculation.

CasinoLeaks Macau describes itself as “an independent, critical website sponsored by the International Union of Operating Engineers (IUOE) and dedicated to shedding light on areas of the Macau gaming world that industry stakeholders – government regulators, casino operators, financial institutions – have worked to keep out of the public eye.”

Ostensibly, the website is the brainchild of Mr Jeff Fiedler, the IUOE’s Director of Special Projects and Initiatives, whatever that means. The office of the IUOE is located at 1125 17th Street Northwest, Washington DC in the United States, just 500 meters from the White House. I’ll have more to say about the potential political connection later.

So what is the IUOE? First of all, its only claim to being “international” is that some of its members come from Canada. The union is essentially American, and claims to have 400,000 members. It says 1,000 of these are casino stationary engineers in Nevada. What’s a stationary engineer? That’s the guy who comes to replace the blown light bulb in your hotel room, or fixes your faulty air-conditioning.

Why would the IUOE create such a website? Fiedler has been quoted as saying, “It is in the interests of our stationary engineer members that their bosses, especially senior management, are honest and not involved in anything untoward. We believe that the job security of our members is based, at least in part, on completely law-abiding bosses.” He’s also said, “The IUOE is simply concerned that triad involvement in gaming in Macau, which now has a significant US presence, will infect the American gaming system. We believe it has already reduced the standards of Nevada gaming authorities. And since these operators are expanding to other states the potential for weakening the entire regulatory system is quite real. We want to prevent this.” Fiedler has described the Macau regulatory system as “completely without rigor”.

Who is really behind CasinoLeaks Macau and why?

In addition to his union position, Fiedler has a high-level China-related appointment in the US government, and a life-long obsession with China-bashing, both of which I’ll get to later. Despite these obvious connections to China, he claims CasinoLeaks Macau is entirely the work of, and motivated by, the IUOE.

I do not believe him for one moment.

The connection between the Macau gaming industry and the working conditions of one quarter of one percent of the union’s members (if we are to believe the IUOE’s own figures) is so spurious it’s laughable. It really is an insult to our intelligence to attempt to draw this long bow.

I asked a very well known gaming analyst who works for a major bank his opinion on how much it would cost to create the website. His response was, “maybe two million US dollars!” Personally I think it would be hundreds of thousands, but despite our disagreement on precise quantum, there is no doubt it was a very expensive exercise to put the site together. I can imagine a small army of researchers working for close to a year, not to mention numerous legal searches and fees. And the cost is ongoing, as CasinoLeaks Macau continues to publish. Someone is financing all this.

Just stop for a moment and think about it. You’re a union. You have limited resources. Suddenly you decide to embark on an incredibly expensive and complex campaign, working in multiple languages and multiple countries, because of the activities in a country on the other side of the planet of some of the employers of a tiny fraction of your members? I don’t think so, Mr Fiedler.

Why not choose some other more relevant activity of his members’ employers to investigate? If this is such an important project, why is there not a single word about it on the IUOE website? Perhaps Mr Fiedler doesn’t want his members knowing what he is doing in their name, or ostensibly spending their money on?

So what is the real reason behind CasinoLeaks Macau? Who stands to benefit? Is it political or commercial? Over the last few months I’ve heard a number of theories.

Theory number 1: desperate wannabe operator

Macau is the world’s most lucrative single city gaming market, and grows by 20 to 30 percent every year. Potential new operators look on with envy at what now seems to be a closed shop, with the six established concessionaire companies holding licenses to operate Macau’s 35 approved casinos. The head of the DICJ (Macau’s gaming regulator), Mr Manuel Joaquim das Neves, has said he expects all existing licenses to be extended when they expire, 8 to 10 years from now. He has also said it will be hard for new operators to enter the market any time soon.

The theory proposes the forces behind CasinoLeaks Macau are potential new operators hoping the mud-slinging will open up opportunities for new players to enter the market. The two biggest gaming operators in the world that are not in Macau are Harrahs and Genting.

Harrahs in particular have been desperate to get into Macau for many years, but have established nothing more in the city other than an admittedly very nice golf course. But it seems far too risky to me. If the Macau Government ever learned Harrahs was behind CasinoLeaks Macau, it could easily spell the end of their golf course, not to mention the end of any chance they ever had to have a gaming presence in Macau.

Genting, which owns the Resorts World properties in Singapore and Manila and other gaming assets around the world, has an Asian soul, not an American one. In my opinion, this kind of US-style overt muckraking simply isn’t their style.

Judgment call: an initially seductive theory, unlikely to be true in practice.

Theory number 2: sneaky hedge fund

This theory posits that a greedy hedge fund, keen on a big future capital gain, would like to make a play on Macau gaming stocks. One problem: those stocks have recently risen sharply and are now very expensive. The hypothesis has the hedge fund establishing CasinoLeaks Macau to exert downward pressure on stock prices, so they can buy at a trough. After the big buy-up, the hedge fund closes CasinoLeaks Macau (or better still discredits it completely) and the stocks rebound. Voilà, big profit!

However, I see a problem with this theory: would the far-right leaning white collar banker types that run hedge funds work in cahoots with far-left leaning unionists? Very unlikely. Also under this theory, what does the IUOE have to gain?

Judgment call: the sort of thing some sneaky hedge funds might do, but unlikely to be through the vehicle of a union.

Former Sands China CEO, Steve Jacobs

Former Sands China CEO, Steve Jacobs

Theory number 3: Steve Jacobs

It’s Steve Jacobs! Personally I am sick of hearing about Steve Jacobs. For the uninitiated, Steve Jacobs was CEO of Sands China Limited (SCL) from August 2009 to July 2010. This company operates Sands Macau, the Venetian Macau, the Plaza and, since April, Sands Cotai Central. Jacobs’ relationship with SCL abruptly ended when his boss Sheldon Adelson fired him. The two men are now embroiled in a bitter legal feud, with Jacobs claiming unfair dismissal.

There is no doubt Jacobs is dishing dirt on SCL and Adelson in the media. Personally I’m not a fan of this kind of disloyalty to a former employer, and WGM has never reported any of Jacobs’ assertions.

There’s a problem with the Jacobs theory: CasinoLeaks Macau doesn’t specifically attack Adelson or SCL, it appears to be going after the industry as a whole. It would seem an expensive and vague tactic on Jacobs’ part, and if anything serves to normalize the behavior Jacobs alleges SCL engaged in, given the context of the wider Macau gaming industry.

Judgment call: easy to blame Jacobs, but his legal fund is probably best spent elsewhere.

As one very senior gaming identity in Macau said to me, “Every time you come up with a theory as to who is really behind it, then you come up with a reason why it can’t be that person!”

Jeffrey L Fiedler

Jeffrey L Fiedler

Theory number 4: Politically fuelled China-bashing from Jeff Fiedler and the Democrats

The previous three theories are commercial, and none of them really make sense. It’s difficult to find a commercial motive where the perceived gain from the creation of CasinoLeaks Macau would justify the enormous expense.

Theory number 4 moves into the political sphere. Now we are in a realm where wasteful expenditure is an everyday occurrence!

Fiedler is a member of the US-China Economic and Security Review Commission, a US federal body that monitors and investigates the “national security implications of the bilateral trade and economic relationship between the United States and China”, and reports annually to the US Congress on these implications. Former Democrat House Speaker Nancy Pelosi appointed Fiedler to his fourth two-year term on the Commission on December 23 last year.

To get a feel for the flavor of the Commission, here’s a taste of some of its recommendations to Congress:

  • Urge the Department of the Treasury to designate China as a currency manipulator.
  • Request consultations at the WTO (World Trade Organization) on China’s noncompliance with its obligations under WTO articles of accession, including denial of national treatment, export restrictions, and illegal subsidies. If China’s noncompliance is not adequately resolved through such consultations, Congress should encourage The Office of the United States Trade Representative to file a formal WTO complaint.
  • Require the Department of Defense to report on the adequacy of the US military’s capacity to withstand a Chinese air and missile assault on regional bases.

Way back in 1992, Mr Fiedler co-founded the Laogai Research Foundation, an organization that described itself as “devoted to studying the forced labor camp system in China”. When the Foundation’s Executive Director, Harry Wu, was detained in China in 1995, Fiedler coordinated the campaign to win his release.

Since then, Mr Fiedler has created a veritable cottage industry in relation to his “expert status” on all things China. He has served on, or testified to, a litany of task forces, assemblies, committees, sub-committees, study groups and conferences on China, no doubt mostly at the expense of the US public purse or his union members.

Here is a brief look at just a few of the things Mr Fiedler has done in his time:

  • Supported revocation of “Most Favored Nation” status for China, citing multiple human rights violations including the harvesting of prisoners’ organs and religious persecution.
  • Called the Chinese government “internationally irresponsible” for claimed missile sales to Pakistan and conducting military exercises near Taiwan.
  • Said China should be punished for their non-compliance with a Memorandum of Understanding between the two countries regarding forced labor.
  • Complained about China’s People’s Liberation Army conducting business in the US. He said, “Allowing Chinese military companies to do business in the United States is ridiculous as a matter of policy. It is tantamount to subsidizing the modernization of the Chinese military.”
  • Described China as “a supernationalist military and political giant.”

Some more “pearls of wisdom” directly from the mouth of Mr Fiedler:

  • “The reality [is] that the communist party still holds the reins of power in China and … will continue to oppress the people of China without fear of consequence.”
  • “China has a dismal record of compliance with bilateral and international agreements.”
  • “When the government believes a protest is getting out of hand or must be stopped it uses the People’s Armed Police. This is a force of some 1.4 million, whose growth from 300,000 in the early 1980s mirrors remarkably the Party’s increasing concern with the impact of economic change … The Chinese government … is prepared to use force to suppress workers.”
  • “Relations between the PRC and the US should not be strained by [CasinoLeaks Macau’s] stories, mostly because there are so many things already straining relations between the two countries.”

Are these the words you would expect from a member of a commission responsible for policy regarding the security relationship between the two most powerful nations on earth? It sounds to me like yet another case of the US trying to police the world.

Democrat and former house speaker Nancy Pelosi, who appointed Fiedler to his current role, has also criticized China, calling on all “freedom loving people” to denounce China for its position on Tibet, and on the Chinese government to “respect the fundamental freedoms of all the people in China”.

Even US President Barack Obama mentioned China no less than five times in this year’s State of the Union address, referring to China’s “unfair trade practices” and her growing global ascendancy. Sour grapes, anyone?

It’s no secret that at least two of the men behind the “new Macau”, Steve Wynn and Sheldon Adelson, are not Obama’s greatest fans. Mr Adelson and his wife even donated US$10 million to Newt Gingrich’s Republican Presidential nomination campaign. Throwing some mud at the Macau gaming industry might indirectly rub off on the Republicans.

Fiedler already has tasted power from this kind of muckraking. He formerly ran a website targeting Ms Pansy Ho, who in 2009 was deemed an “unsuitable” business partner for MGM by New Jersey gaming regulators. This forced MGM to make an “us or them” choice between their Atlantic City casino operations and their MGM Macau joint venture with Ho. Unsurprisingly to everyone, except perhaps the inward-looking Americans, MGM chose the vastly more lucrative Macau market, and abandoned New Jersey.

If Fiedler’s CasinoLeaks Macau website forces Nevada casino licensees to make similar “us or them” choices between their US and Macau properties, some of his union members in Nevada might find themselves out of work! Intelligence agencies refer to these types of unintended consequences as “blowback”, and it’s something the US has been creating for itself for years.

Judgment call: this China-bashing from a decades-long career China-basher is the most plausible reason yet to explain the existence of CasinoLeaks Macau.

The Macau gaming industry response

While Mr Fiedler and CasinoLeaks Macau have been making a lot of noise, the response from the Macau gaming industry has ranged from muted to non-existent. Since founding its Facebook page on February 17 this year, CasinoLeaks Macau has garnered a mere 37 “likes”, despite the IUOE’s claimed 400,000 members.

DICJ supremo Mr Neves has described the liberalization of Macau’s gaming industry in 2002 as a success despite the criticism from overseas. Responding to CasinoLeaks Macau, a DICJ spokesman said, “We will not be responding specifically to any of the matters raised by CasinoLeaks Macau. It has no standing to raise issues regarding the operation of Macau’s casino regulatory system, and its motives for doing so are questionable.”

A very senior figure at one of Macau’s most powerful junkets told me, “much of the information is way out of date, some of it goes back to the ’90s and is about people that haven’t had anything to do with Macau for many years.” He said he has had a brief look at the site, but he didn’t think the junkets as a whole had taken much notice of it.

Sheldon G Adelson

Sheldon G Adelson

At the opening of Sands Cotai Central on April 11, I had the opportunity to speak to the Chairman and CEO of Las Vegas Sands, Mr Sheldon Adelson, about the CasinoLeaks Macau website. Here is our exchange:

Andrew W Scott: Mr Adelson, are you personally aware of the CasinoLeaks Macau website, and if so, what is your reaction to it?

Sheldon G Adelson: I’ve heard of it. I’ve read about it.

AWS: What’s your reaction to it?

SGA: Well, it’s a typical underhanded, dirty trick on the part of the unions to attack somebody they can’t unionize. They have attacked me in foreign countries outside of the United States before, because my employees are treated so well, they don’t want to become unionized. The unions can’t handle that. The employees are very happy without being in the union and they don’t want to pay union dues for something they perceive they are not getting.

Obviously, they [CasinoLeaks Macau] have a disagreement with MGM in Las Vegas and they’re trying to attack them here [in Macau] by coming up with accusations. Our job as an operator is to obey the rules of the gaming authority and that’s what we do. Gaming authorities license the responsible people in any company. When those companies are publicly held companies, they can’t keep track of who owns a share or two shares or a thousandth of one percent. But the union guys are coming up with accusations that are totally and completely unfounded, they’re designed specifically to cause damage or reputational harm to some company. We’re not a target of that, but we’ll respond appropriately if we are targeted. We just obey the law.

AWS: The reason for the existence of that website seems quite spurious. There is a view in Macau that perhaps the purported reason for the website’s existence is not the real reason, it’s not valid. The real reason might be a political or commercial interest. Do you have a view on that?

SGA: It’s not a valid reason. The reason for it is very simple. It’s an underhanded, circuitous way of getting back at somebody they can’t unionize. And typically they can’t unionize because the employees don’t want to belong to the union.

AWS: For a union that claims 400,000 members, and by their own admission only 1,000 of their members happen to be employed in Nevada, it seems like an incredible amount of energy, finances and resources to expend. Clearly they have spent hundreds of thousands of dollars, perhaps millions, on research. It seems a bit out of proportion.

SGA: It does. If I were one of their union members, I would go after them for spending my money feverously. There’s no validity to it. I’ve never read it, and I have no intention of looking at it.

Our interview with Mr Fiedler

In an attempt to get some more information about CasinoLeaks Macau, I contacted Mr Fielder, and he agreed to an interview. It was no surprise to learn he had just been in Las Vegas for a week. Here’s the transcript of our conversation:

Andrew W Scott: How long did it take to make the website? I would imagine it was a lot of work?

Jeffrey L Fiedler: Yeah. It took, I would guess, the better part of a year. It’s all perfectly true too, taken from documents.

AWS: Do you have a figure on how much it cost to put it all together?

JLF: No I haven’t tracked it, but, you know, it was people plus documents.

AWS: In addition to yourself, how many people work on the site?

JLF: There’s possibly three other people.

AWS: How often have you been publishing new information on the site?

JLF: Every single day.

AWS: There must be some people spending a considerable amount of time on it then. What do you say to people who ask how is the IUOE doing all this?

JLF: I say you have stereotypes of unions and that’s your problem not mine.

AWS: What’s the connection between Macau and the IUOE? They seem a long way apart.

JLF: Well there are Americans there!

AWS: Are any of your union members working in Macau?

JLF: They are all in the United States and Canada.

AWS: Have you had any feedback from your membership about this project?

JLF: Our members like it. Once I explain it to them, they understand it readily. We’re importing loose regulation into the United States as a result of Macau.

AWS: Have you gone on an education campaign to advise your membership about it?

JLF: Not really.

AWS: How many of your 400,000 members would know of the existence of the website. I notice CasinoLeaks Macau is not referred to on the IUOE website or in the IUOE magazine. Have you mentioned it in any newsletter, or advised them in any other way?

JLF: The casino members are the most interested members.

AWS: So have you advised those members?

JLF: We communicate with our members here in Las Vegas regularly. It’s Las Vegas-centric, at the moment.

AWS: When you say you communicate with your Las Vegas-based members, have you got feedback from them specifically about CasinoLeaks Macau?

JLF: Yeah, I mean, well … they’re liking it. Anything that sort of, educates them about … our members understand the real Las Vegas, okay? They’re not uneducated to the sort of “ways” of Las Vegas, and they’re not that surprised about the behavior of American operators in Macau. They didn’t know much about Macau, they now know a lot more.

[If you can understand this answer, you’re a better person than me!]

AWS: How have you let those casino members know about the site?

JLF: In our shop meetings. We have membership meetings and we meet a lot of members.

AWS: Is there anything in writing?

JLF: We have a crew of people who are out in the shops all the time, and we’re training shop stewards up and it’s part of their education process. They all know. It’s word of mouth really rather than writing. I mean they all know about it and they’re visiting the website and reading it.

AWS: Have you been to Macau much yourself?

JLF: Not lately.

AWS: When was the last time you were in Macau?

JLF: I was probably last in Macau in 2005 or 2006.

AWS: Coming back to the cost, all sorts of wild numbers are being thrown around, I thought it was better just to ask you directly, you must have some idea?

JLF: I would estimate that, it would sort of cost, say, less than US$100,000 without the salaries of the people who work on it, which I don’t really count because they would have been working on something else anyway.

AWS: Is it really just being financed by the Union? No other source?

JLF: No. No other source. There are all sorts of weird conspiracy theories running around Macau and Hong Kong. They’re not true. People prefer the more complicated answer.

AWS: What do you say to people who point to the fact that you’re on the US-China Economic and Security Review Commission.

JLF: All that means is that I have a better understanding of China than many other people. This has nothing to do with the United States government or the China Commission.

AWS: Could you see why some people might think that, given your position?

JLF: Well, it’s not a full-time position, and the China commission does a lot of things. I happen to work for a Union that represents casino workers. They have stereotypes about unions. They don’t think unions are capable of this, and they are.

AWS: Are you saying that the stereotype is that unions are incapable of doing this kind of research?

JLF: Right.

AWS: You previously had a similar website about Pansy Ho.

JLF: Yes, that’s how it started. Then we started digging deeper.

AWS: About CasinoLeaks Macau, who was the very first person to propose such a website. Was it you?

JLF: Me, yeah.

I found Mr Fiedler evasive throughout the interview, especially when I touched on the cost of the website. It’s hard to believe he would embark on such a project with no idea of the expense. My feeling was that he was either hiding something, or, if he is being truthful, then he is being reckless with his members’ funds.

CasinoLeaks Macau is clearly the work of interests who think their efforts will achieve some goal. In our opinion, these efforts will fail. This kind of very American tactic does not wash in Asia, and the most likely outcome is that after an initial phase of curiosity, the website will be ignored by anyone who matters.