Alvin Chow has announced that he is stepping down as CEO of Suncity Group Holdings Limited in Macau. The billionaire made the announcement yesterday as he sat in a Macau prison on charges that he ran a cross-border illegal gambling company through his legal operations.
Chau in SunCity
Chau faces several criminal charges in Macau as well as in Wenzhou for allegedly running illegal cross-border gambling operations in Asia. Zhejiang provincial authorities allege that Chau's fortune was derived in part from illegal online casino activities and illegal gambling advertising among Chinese residents.
Chow also announced his intention to step down as chairman and chief executive of the company, according to a document filed by Suncity on the Hong Kong Stock Exchange.
The company has also informed investors of Chau's resignation. This raises serious questions about the group's financial performance in developing casino resorts in the Philippines, Russia and Vietnam.
"Shareholders and potential investors of the company are advised to exercise caution when dealing with Suncity," the company said. Suncity did not say when Chau might officially give up the other titles.
Suncity faces challenges as shares fall
Suncity's warnings have prompted investors to exit the company and sell their shares. Suncity shares have lost more than 48% in value since Chau's arrest in Macau.
Chau is providing most of Suncity's financing for integrated resorts under construction in the Russian Far East as well as the Philippines. Suncity is currently building a $1 billion casino-resort complex at Westside City Resorts World. The company is also continuing to develop the Tigre de Cristal casino in Vladivostok.
Chow will soon leave the company, which he founded in 2007, to become its chief operating officer. The organisation may be left without the capital it needs to continue its development projects.
Suncity distances itself from its founder
According to the company's filing to the stock exchange, "The Group is dependent on the financial support of Mr Chow and his related companies. Should the Group lose Mr Chow's support for any reason, the Group's financial position, business and operations will suffer."
Suncity Group Holdings announced another important component. It said it had nothing to do with the charges against Chow.
The prosecutor's office accused Chau through his Sun City Gaming Promotion Company Limited (SCGPCL) of proxy betting in Wenzhou. However, according to the company's statement, the person is not related to Suncity Group. It states that it has no control or influence over SCGPCL. Thus, Suncity Group is not legally liable with regard to the Wenzhou allegations.
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The board said that, other than the possible interruption of financial support from it, Chau's arrest has no "material adverse effect on the financial position, business or operations" of the company.
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