Lao People’s Democratic Republic seeks federal court’s help for issuance of subpoena
Bridge Capital LLC co-owner John K. Baldwin is under criminal and tax investigations in Lao People’s Democratic Republic (Formerly Laos) for allegedly bribing Lao PDR officials over $300,000 that caused termination of an audit and also cost the Lao government $70 million in lost tax revenue over a five-year period from the operations of Baldwin group’s casino, according to court documents.
In addition, the Lao PDR also produced an email from Baldwin, allegedly instructing his staff to pay a $120,000 bribe to a Cambodian official to obtain a Cambodian lottery license.
Saipan Tribune contacted the Bridge Capital LLC for comment yesterday, but no one answered the phone.
Attorney William M. Fitzgerald disclosed the pending criminal investigation against Baldwin as counsel for the government of the Lao PDR filed on Friday in the U.S. District Court for the NMI an application for issuance of subpoena.
Fitzgerald asked the federal court to allow Lao PDR to serve a subpoena pursuant to the United Nations Convention Against Corruption and U.S. statute on Bridge Capital located in Saipan, and on Bridge Capital chief financial officer David Jensen, in connection with the criminal and tax investigations in Laos and in connection with two international arbitration proceedings pending in Singapore.
The lawyer disclosed that both the Lao proceedings and the arbitration proceedings directly involve entities owned and/or controlled by Baldwin and Shawn Scott, who own Bridge Capital LLC.
Fitzgerald said in order to locate the evidence needed to establish criminal activity in the Lao PDR and to support its claims and defenses before the international arbitral tribunal, and to facilitate the Lao proceedings against Sanum Investments Limited and Savan Vegas and Casino Co. Ltd., Lao PDR requests the federal court issue the subpoenas.
Fitzgerald said the subpoenas will permit Lao PDR to obtain copies of the documents being sought from Bridge Capital LLC.
Bridge Capital LLC is the parent company of Sanum Investments Limited and Lao Holdings N.V.
Sanum is a company organized in Macau. Lao Holdings was incorporated in Aruba in 2012 and inserted into the ownership chain to gain access to the Netherlands/Lao PDR Bi-lateral investment treaty, according to Fitzgerald.
The lawyer said Sanum and Lao Holdings are parties in the arbitrations and that Sanum is the target of the Lao proceedings.
Lao Holdings owns the Savan Vegas and Casino Co. Ltd. located in Savannakhet, Laos.
In 2007, the Lao PDR signed a concession agreement with Sanum, granting it a 50-year concession to build and operate the Savan Vegas casino.
The casino was opened in 2009. Savan Vegas is now owned 80 percent by the Baldwin group and 20 percent by the Lao PDR, according to Fitzgerald.
The lawyer said that, in January 2014, Lao PDR learned that Baldwin had caused an employee of Savan Vegas and Casino to deposit $300,000 in cash into the bank account of a Ms. Sengkeo Phimmasone, a Lao citizen that Baldwin calls a “consultant” on July 12, 2012.
Fitzgerald said the timing is crucial because two days later a significant decision by a Lao PDR official that was favorable to Savan Vegas and unfavorable to the Lao PDR happened—the termination of an Ernst & Young audit.
The Lao PDR alleged that that the $300,000 was deposited in cash into the “consultant’s” account for her to pay bribes to Lao PDR officials.
The “consultant’s” bank records allegedly show she withdrew $300,000 in several cash withdrawals over the next month and at the same time, $29,400 in cash was also deposited into her account and that sum was immediately wired to her bank account in the Bank of America in the U.S.
Fitzgerald said Baldwin submitted an affidavit in the arbitrations on May 9, 2014, in which he stated that he did direct his employee to carry $300,000 cash in a suitcase from his bank in Cambodia, flying across an international border to Vientiane on July 11, 2012, so that the money could be deposited in the “consultant’s” account on the following day.
Baldwin stated that the cash was a loan to his friend, the consultant.
Fitzgerald said Baldwin’s testimony was patently impossible to believe as he has no loan agreement, no repayment evidence, no paper of any kind to evidence that the cash deposit was a “loan.”
The lawyer said just last month, the Lao government discovered that in 2009, a bribe of $30,000 was paid to the director general of the Tax Department in exchange for a flat tax agreement that granted the Savan Vegas and Casino a flat tax of $750,000 per year instead of tax at the rate code rate.
“This bribe has cost the government $70 million in lost tax revenue over the five-year period of the flat tax agreement,” he said.
Fitzgerald said that in May 2012, the Lao PDR had ordered an audit of the Savan Vegas and retained Ernst & Young to conduct the audit.
He said after Ernst & Young had spent over a month investigating the casino financial records, a Lao PDR official called the Ernst & Young on the phone and ordered the firm to cease gathering documents from the casino and to complete their report within the week.