by Blaž Zgaga (Nacional), Michael Bird (The Black Sea), contributions by Stefano Vergine (L’Espresso), Goran Kapor and Mihailo Jovović (Vijesti)

– A 14K Triad high ranking member Paul Phua, according to FBI testimony, has been controlling the elite Sveti Stefan hotel in Montenegro since 2013

– Paul Phua also bought the country’s Adriatic coastal Hotel Maestral in 2015, using suspicious deposits worth 23 million euro from Vietnamese and online-betting related companies stored in a small private bank owned by his Greek partner Petros Stathis, who is an associate of Phua’s multi-million investments in the Nato member country of Montenegro

– Phua was investigated by the Swiss authorities in 2014 into a case of money laundering at least 190 million euros through Swiss banks, which ended up mostly in Phua’s investment companies

– Phua planned to meet the President of Montenegro Milo Đukanović secretly in his elite hotel Aman in Venice, Italy, in March 2014, while Prime Minister of Montenegro Duško Marković personally opened the Hotel Maestral in 2017 with Phua

– Phua owns Maestral behind a Dubai shell company, but after Petros Stathis’s private bank opened an office in Dubai in 2016, investments from the UAE in Montenegro skyrocketed to more than 100 million euro in 2017, probably through Universal Capital Bank

During the World Cup 2018 in Russia this summer there was a large-scale cross-border police anti-illegal operation investigation in many Asian countries coordinated by Interpol’s Organized and Emerging Crime Directorate. Under the Interpol operation “Soga VII” (short for soccer gambling) more than 14,900 raids at illegal gambling dens across China – including Hong Kong and Macao – Malaysia, Thailand and Singapore were conducted. Interpol estimates they have handled 1.6 billion Dollars worth of bets. Therefore, during a competition where the best national football teams fought for the FIFA World Cup Trophy on Russian stadiums, there was another, much more shadowy competition between organized criminal groups and state authorities concerning huge financial benefits from illegal betting.

On the request of EIC partner, the Hong Kong’s Organized Crime and Triad Bureau explained that “Hong Kong Police (HKP) searched a total of 103 locations, leading to 82 successful raids and the arrest of 242 persons, aged between 17 and 87. The offences involved were “engaging in bookmaking”, “betting with a bookmaker”, “dealing with proceeds known or believed to represent proceeds of an indictable offence” and “operating illegal gambling establishments”. Police also seized betting records totaling $130 million, $4 million in cash of suspected criminal proceeds and 46 sets of computers in the operation. Investigation by the Organized Crime and Triad Bureau is underway.”

Asian police forces took online betting crimes seriously and the money earned during this criminal activity is illicit by default.

After successful raids, Interpol also added “to date, the combined seven ‘Soga’ operations have resulted in more than 30,000 arrests, the seizure of some $57 million in cash and the closure of more than 3,700 illegal gambling dens which handled almost 8 billion Dollars worth of bets.”

Similar illegal betting operations valued at hundreds of million euro happened four years earlier, during the World Cup 2014 in Brazil. But that time, Macao police and the US Federal Bureau of Investigations (FBI) were successful in arresting one of the main global providers of online betting websites and a poker king. His name is Wei Seng Phua.

Now 54-years old, born in Malaysia, and more commonly known under name Paul Phua, he has run one of the biggest online betting website IBCbet.com [now known as MaxBet.com] for years, but he seems to be also behind many other affiliated betting websites like 12bet.com. Maxbet denied Paul Phua is or was their owner. 12bet.com did not respond for comments. According to the FBI he is a high ranking member of 14-K Triads, one of the largest and most violent Hong Kong based triad societies, which is responsible for large-scale drug trafficking around the world, most of it heroin and opium from China or Southeast Asia.

In Football Leaks 70 million documents obtained by Der Spiegel and shared with Nacional, The Black Sea and other EIC partners there were few documents which reveal Paul Phua connections with online betting and money laundering. But during a subsequent journalistic investigation, EIC partners obtained many court files and other documents which show how suspected high-ranking 14-K Triad member Paul Phua operates and how he bought the most precious hotels on the Adriatic coast of Nato member country of Montenegro.

According to a report by the Qatar-based International Center for Sports Security seen by Nacional: “Intelligence indicators point to Montenegro as the centre of an international money laundering system used by Asian [organised crime groups] OCGs to launder proceeds from criminal activities. Companies linked to Phua and to his business associate the Greek national Petros Stathis are central to this illegal activity through a number of companies linked to the First Financial Bank of Montenegro.”

First Financial Bank, which started in 2007 and changed its name in 2014 to Universal Capital Bank, and has been owned by Stathis since October 2013.

Montenegro’s government seems to be blind to Phua’s suspicious activities. Moreover, the Prime Minister Duško Marković personally attended opening ceremony of Maestral Resort & Casino in 2017, which is owned by Phua and his Greek partner Petros Stathis. According to FBI transcripts the President of Montenegro Milo Đukanović was due to meet with Paul Phua in March 2014 in Venice, Italy.

Đukanović, who has been at the helm of small former Yugoslav republic for last 27 years, with seven mandates as the Prime Minister and now President for the second time, was indicted by the prosecutor of Italian city of Bari in 2003, after an Italian anti-mafia police unit investigation about his involvement in a billion-euro worth cigarette smuggling scheme in collaboration with Italian mafia groups Camorra and Sacra Corona Unita. Diplomatic immunity saved Đukanović from an arrest warrant and prosecution in Italy. However, his previous involvement in a smuggling case with the Italian mafia and now with a Chinese Triad seems not to have been any obstacle to his attendance at the Nato Brussels summit in 2018, where he sat behind the same table with many European leaders such as Angela Merkel, Jean-Claude Juncker and other heads of European states and, of course, with US President Donald Trump.

Arrests in Macao and Las Vegas trial

Paul Phua, a Malaysian with Montenegro citizenship, is a multi-millionaire bookmaker who was convicted for running an illegal betting scheme in Malaysia during the European Football Championships in 2004, according to the Malaysian press. He was arrested in Macao on 18 June 2014 for illegal sport bets on the World Cup in 2014, together with 21 suspects.

Officially, he was released on bail two days later, but there are credible indications he bribed his way out of jail in Macao. Immediately after his release Paul Phua, boarded his $48 million worth private jet Gulfstream 550 and flew alone to Las Vegas to meet his son Darren and his associates in Ceasars Hotel and Casino. There they set up “wire room” in three Villas where illegal wagers are made and monitored. A hotel employee said he never saw any guests ordering such a huge amount of laptops and other electronic equipment. After a few days of observations by the Nevada Gaming Board Control and FBI, the hotel technicians cut the internet connections to one of the villas, and illegal bettors called for help to restore the internet. Among hotel staff was also one FBI special agent entering the room undercover. With information he collected, the FBI received a house search warrant on suspicion of crimes. However, this police trick was a main reason why a trial against Paul Phua later collapsed at the court.

 

On 9 July 2014, when FBI agents searched their rooms, there were many online bets opened during the World Cup 2014 semi-finals between Netherlands and Argentina. The agents saw a live match of semifinals on big screens and many laptops and phones around Phua and his associates, connected mostly to betting websites IBCbet.com and SBObet.com. Bets were in the millions of dollars. For example only one bet on Croatian national team from 23 June 2014, when it lost to Mexico 1 to 3, was worth 19 million of unknown currency.

Phua and his associates were not held in detention, but were voluntarily interviewed after a house search. Soon they were indicted for crimes of transmission of wagering information and of operating an illegal gambling business at the US District Court of Nevada. During this trial the FBI reveal that Phua is known to be a high ranking member of Triads.

“On or about June 18, 2014, Wei Seng Phua, who is known by law enforcement to be a high ranking member of the 14K Triad, was arrested in Macau, along with more than twenty other ìndividuals, for operating an illegal sport book gambling business. The 14K Triad is known by law enforcement to be a criminal organization engaged in an ongoing illegal criminal enterprise,” Minh Pham, special agent with the FBI told duly sworn to the Magistrate Judge of the US District Court for the District of Nevada in 14 July 2014.

“Prior to their arrests, Phua and his associates transacted hundreds of millions of dollars in illegal bets on the World Cup Soccer Tournament. Most of their bets were made through use of the wires, that is online or over the phone. Phua posted bail in Macau and was released. The conditions of his release remain unknown,” added this FBI agent, assigned to the organized crime squad, where he has been involved with several investigations including illegal gambling operations.

FBI filed also an evidence Nr 49 to this trial at the court under title: “Triad Paul Phua”.

On 14 July 2014, in an initial appearance of the defendants at a Las Vegas Court also prosecuting attorney Kimberly Frayn states that, from the evidence, Phua owns and operates offshore gaming website IBC, where his associates were signed in, gaming and checking on their wins. Frayn adds that Phua is, according to sources in law enforcement, “a known documented member of the 14K Triad… an international criminal organization that conducts an ongoing criminal enterprise.”

The Defence council David Chesnoff argues that the Ceasars Palace guests were engaging in “transactions with other people who were outside the country who were betting”, but did not know that what they were doing was illegal.

Phua was granted a $2 million bail, forced to stay in Las Vegas, and the cops monitored him electronically for ten months, and impounded his $48 million jet.

But the case collapsed on a basis that FBI violated their privacy when agent under cover entered their room to obtain search warrant at the court. On 1 June 2015, a judge dismissed conspiracy and illegal gambling charges against Phua.

Phua denies guilt and being a member of Triads or any other criminal organisation. Phua, through Montenegrin company he controls, even issued Hong Kong based private intelligence company Hill & Associates to whitewash his name and his connections to Triads. However, evidence in this paid report seen by Nacional were made in a way – we didn’t find that information on the Internet, so he is not a Triad member.

Paul Phua did not respond to our questions.

In both Macau and the United States Paul Phua evaded conviction. However, Paul Phua’s legal victory in his own case did not prevent other members of his inner ring, including his son Darren Phua, to enter plea deals with US prosecution for crime of “transmission of wagering information”.

On 6 March 2015 Darren Phua signed a plea deal for accessory after the fact to the crime of transmission of wagering and he agreed to pay a 100,000 Dollars fine. According to this plea deal, the U.S. government confiscated also Darren’s 84 laptop, tablets and other electronic devices, including 54 mobile phones.

Which normal person has 54 mobile phones with him in one single moment? Nobody, except those who are aiding in illegal betting. This shows the dimensions of global communications needed during online betting for World Cup tournaments. Also the revenues are huge as they can rise into the hundreds of million of euros.

Darren Phua did not respond to our questions.

Swiss money-laundering investigation

According to an investigative report by the Swiss private economic crime intelligence and electronic forensic company, ordered by Swiss IHAG bank, Phua’s betting websites IBCbet.com (Maxbet.com today) and 12bet.com are part of a money-laundering network.

This document, obtained by EIC partner, is part of the court file of a trial against the former head of state of tiny the Republic of San Marino Claudio Podeschi. He was sentenced in 2017 for money laundering during Phua’s purchase of non-resident Ambassadorship of San Marino to Montenegro.

“A detailed analysis of the transactions between the companies led us to the conclusion that the main revenue generated by the conglomerate comes from activities related to professional offering of money laundering services,” authors of the Swiss report concluded in September 2012.

This report analyzed transactions of 21 companies with bank accounts in this Swiss banks related to Paul Phua, Khong Yoong Mark Yong (Mark Yong) from Singapore and Carlos Luis Salas Porras (Carlos Salas), a lawyer from Costa Rica, between February 2011 and April 2012. These three individuals were “central persons” in the investigation which included 15 individuals mostly from Asia, with their personal documents presented in this report.

The report was soon analysed by the Money Laundering Reporting Office (MROS), the main Switzerland federal police unit to combat money-laundering, and then passed to the Swiss federal prosecutors office.

“The evaluation of the account records edited by IHAG revealed that over 74 accounts of a total of 30 different customer relationships, all of which were on offshore companies, were credited with a large number of transactions of immense volume,” prosecutors concluded.

They focused on six companies, registered in British Virgin islands with very high money-laundering risk, all connected to Phua, Yong and Salas mentioned above.

“Over a period of two years around 190 million US Dollars were transferred via Black Sea Pearl Ltd., Blue Torch Ventures Inc., Clear Hill Management Ltd., Eagle Ray Investments Inc., Ornate Investments Inc. and Quickcore Holding Ltd. alone. Considering that these six companies had a central role in the flow of assets across Switzerland, over a period of three years, assets totaling several hundred million would have been shifted across six banks in Switzerland,” Swiss prosecutors wrote.

These six companies which served as “payment solutions companies” then forwarded funds to Nero Enterprises Ltd., another BVI company owned by Phua, and to Philippines based company Pacific Sea Invests S.A., which has a Philippines license to run another online betting website owned by Phua – 12bet.com. This online betting provider has been sponsor of many football clubs from FC Sevilla (Spain) to Birmingham City FC, Wigan Athletic, Crystal Palace and Newcastle United FC (England). 12bet is official partner of Arsenal FC today.

12bet.com did not respond to the question as to whether Phua was its owner.

Swiss investigators reconstructed that Nero Enterprises Ltd. later forwarded money to two “wealth management” or “investment companies” Mellington International Ltd and Really Useful Services Ltd, both registered in the BVI and owned by Paul Phua.

But in the final report, which analyzed loads of suspicious transactions worth hundreds of millions euros connected to Phua’s companies, Swiss prosecutors wrote “it is almost impossible, based on the nested structure chosen by those responsible, to reconstruct the overall flow of money at a reasonable cost, to identify the beginning of the cash flow and to check its legality.”

Then they concluded that concrete evidence that the persons appearing in the bank records are classified in a criminal milieu or that their actual activity contains elements of a crime and thus a predicate offense of money laundering, are missing. “The Office of the Attorney General of Switzerland does not consider it likely that these can be obtained in a next step on the international legal aid route.” So they closed this investigation without any prosecution on 11 July 2014, just two days after FBI raid in Las Vegas and few weeks before this information was splashed across Asian media and gambling websites by the end of same month.

Paul Phua did not respond to questions. Carlos Salas answered: “I am not knowledgeable about any investigation. None of the companies mentioned were owned by me. I had no role in any transactions you refer to. Your understanding is completely incorrect.” Mark Yong was unreachable for comments.

Online betting in particular carries a risk of money laundering. According to June 2017 report coordinated by The French Institute for International and Strategic Affairs among seven universities and other partners, prepared for European Commission with a title “Preventing criminal risks linked to the sports betting market” it works quite simply.

Firstly, a criminal opens a betting account with a well-known online betting company and makes some deposits with dirty money. The criminal has multiple avenues to make such payments, depending on the bookmaker. Secondly, they then bet with the highest possible pay-out rate (online sports betting, as well as casino and poker, mostly offer pay-outs over 90 percent). Thirdly, winnings can be then transferred to the bank account of the criminal’s choosing. The money now appears increasingly legitimate. And finally, if the criminal repeats this operation several times with different operators and/or bank accounts, they increase the perception of legitimacy for the illicit money.

Paul Phua’s betting site IBCbet (Maxbet today) is among the biggest in Asia with a huge turnover and incomes, but with quite small margins. This suits Swiss investigators findings that they might be also money-laundering tool.

An academic who analyzed operations of IBCbet and who wish to remain anonymous confirmed this. “IBCbet makes such weak margins that I am surprised the company made any profits. They have such low margins they could be used for money laundering,” he said to EIC partner.

Paul Phua Profile, document obtained by San Marino police during search at Claudio Podeschi house, shows vast dimensions of his online empire. This unsigned draft which looks like Phua’s Investments CV with full details of Phua’s network was created in Milan, Italy, on 14 November 2013. It reveals information about his alleged entrepreneurial activities, software development and online business (12bet, IBCbet, OneWorks, SMS Group, GWI Group), his 207 million Dollars investments in mines in Mongolia and China and 250 million Dollars investments into real estates and hotel developments in Europe and USA. Profile ends with Phua’s charity activities, mostly in Vietnam.

Giovanni Lega, Phua’s Italian lawyer based in Milan, who was interrogated at San Marino trial as a witness, did not respond to question, if he or his law office are authors of this profile.

Claudio Podeschi and his Slovenian partner Biljana Baruca were sentenced to eight and four years in prison by San Marino court in 2017. Both appealed to the higher court. But in August 2017, a new indictment by the San Marino prosecutors followed. Paul Phua and Claudio Podeschi are indicted for corruption and Podeschi and Baruca for money laundering.

Phua thus appears to have created a complex network of many offshore companies to hide his investments, which could also be a really useful for money laundering and hiding millions of euros of proceeds from online betting, which is prohibited in many countries.

23 million euro deposits from Philippines and Vietnam for loan to purchase of hotel in Montenegro

In the Swiss report, one of the main companies which collected Phua’s money and invested it further was Really Useful Services Ltd, registered in the BVI. But a company with a very similar name – Really Useful d.o.o.- was founded by Phua Phua in Montenegro in November 2010. He was listed as an owner of this company until December 2013, then he was replaced by Emmanouil Pairaktaridis, who is understood to be partner of Petros Stathis, a Greek businessman and banker, who is main Phua’s partner in Montenegro.

According to a San Marino court file on alleged money-laundering during Phua’s acquisition of an ambassadorial position in Montenegro, this company Really Useful d.o.o. transferred €740.000 to Montenegrin businessman Siniša Ivančević, who forwarded this sum to another Montenegrin company First Financial Holdings d.o.o., which finally transferred this sum to San Marino company R.P. S.r.l. where alleged bribes were collected. This suspicious transaction happened between October 2012 and February 2013, when Phua was owner of Really Useful company. Additionally, San Marino prosecutors argue that an additional 2.5 million euro in bribes has been transferred from Phua’s BVI company Black Sea Pearl Ltd., which was investigated by Swiss prosecutors.

But financial accounts of the Montenegrin Really Useful for the last four years reveal that this company, with only one employee, had a huge amount of money. From 2014 to 2016 the company had 34 to 37 million euro long term loans in its balance sheet, which dropped to five million euro in 2017.

Paul Phua did not respond to questions as to whether Really Useful Services (BVI) transferred any money to Really Useful (Montenegro). Siniša Ivanćević did not respond to questions.

This is only the first small example of suspicious activities by Paul Phua and his Greek partners in Montenegro, the smallest former Yugoslav republic, which was a safe haven for many Russian investors in 90’s, later for Thai fugitive ex-Prime Minister Thaksin Shinawatra and Greek shipping magnate Victor Restis, and finally for a Triad-suspected affiliate.

Shinawatra owned Manchester City and sold it to Sheikh Mansour in 2008 before moving to Montenegro, where he also received citizenship. He collaborated with Victor Restis, whose partner in Montenegro at that time was another Greek businessman, Petros Stathis.

Since 2013 Stathis has been the majority owner of the small Universal Capital Bank, registered in the capital Podgorica, which played an important role in Paul Phua’s acquisition of Maestral Resort and Casino in 2015 and its renovation.

Hotel Maestral, located in Pržno, was owned for years by the Slovene state owned gambling company HIT d.d, which had a long record of collaboration with the ex-communist Slovene secret service and now dissolved Italian mafia group Mala Del Brenta from Venice. Hit owned branch Hit Montenegro d.o.o., which main assets was Hotel Maestral with a casino on one of the most beautiful parts of the Montenegro coast.

However, this hotel became an interesting opportunity for the investment of Paul Phua, and as the court and corporate registry documents show, in a complex transaction which took two years, he was using his online betting company, which came with a money laundering risk, to assist in financing a loan of Petros Stathis’s company, which officially bought the hotel and remained a cover for two years, until the public opening of the hotel in 2017, attended also by Prime Minister of Montenegro Duško Marković.

According to a Swiss report and Paul Phua investment profile, created in Milan, the company Firstright Developments Ltd, registered in the Philippines, is the main company which controls the website IBCbet (Maxbet today) and is owned by Paul Phua. It has an online gambling license issued by First Cagayan Leisure and Resort Corporation and Cagayan Economic Zone Authority from the Philippines. 

However, according to the Swiss report, the Philippines Firstright Developments is owned by a company with the same name registered in Costa Rica, with an Asian office in the Philippines. Phua’s profile additionally reveals it is owned by another company, Complete Network Pte Ltd. ICIJ’s Offshore Leaks database shows this is a BVI company owned and managed by Mark Yong, a man who was – beside Paul Phua and Carlos Salas – at the centre of the Swiss money-laundering investigation.

Audited annual report of Universal Capital Bank for 2015 reveals that Firstright Developments Limited gave a 6.2 million euro deposit in this bank. It was listed as related party to the bank. In the same period another Asian company Noble Power Group Limited, registered in Vietnam, gave another 16.8 million euro deposit to this bank. Also this company is listed as a related party in audited annual report of one of the smallest bank in Montenegro. So, bank got a a significant financial injection of 23 million euro of deposits, what was significant sum for this small bank. According to its quarterly detailed reports, published by the Central Bank of Montenegro, an amount of “deposits of clients” raised between July and September 2015 from 58.6 million euro to 82.5 million euro, thus for 23.9 million euro. 

This is confirmed also by the cash-flow report of the bank which increased from 11,7 million euro to 34.8 million euro in the category “Inflows/outflows from deposits and other liabilities”. These 23 million euro deposits from the Philippines/Costa Rica-based Firstright Developments, connected to Phua and his partners Mark Yong and Carlos Salas, and of the Vietnam company, was a significant bonus for bank liquidity.

But who was behind the Vietnamese company? And how it is possible that the Vietnamese company decided to bank with one of the smallest banks in one of smallest European states, where it deposited 16.8 million euro?

According to the Vietnam registry Noble Power Group Limited (tax number: 0311592969-002) shared an address in Ho Chi Minh City and tax number with Hong Ma Joint Stock Company (tax number: 0311592969). The company registry shows this is owned by Nguyen Ngoc My, labeled in the Vietnam press as “trillion woman”, thus one of the richest women in that country.

What does this Vietnamese company and rich owner do with Montenegro? Since May 2015 Phua’s partner Carlos Salas was director of the Hong Kong based gambling company Success Dragon International Limited, registered in Bermuda, which operated casinos in Vietnam. Another major shareholder, with 27 percent in 2015, was Mark Yong, the second Phua partner from the Swiss investigation, besides Salas.

The company owned by Nguyen Ngoc My built the Hotel Opera close to Da Nang airport in Vietnam and signed an “Opera management agreement” on 10 December 2015 with Success Dragon International Limited for managing gambling slots in this 20 storey 5-star hotel. A few months later Success Dragon exchanged shares with Nguyen Ngoc My. It obtained 45 percent shares of hotel, and Nguyen Ngoc My obtained 15 percent shares in Success Dragon. She was listed as a shareholder in the company annual accounts for 2015/16, but later she was deleted as this deal in the Opera hotel was cancelled. Nevertheless, in the audited annual accounts of Montenegrin UCB bank, the 16.8 million Euro deposit remained.

Is Phua connected with the company Success Dragon? The company has been known under this name since 2015. Previously it was named C Y Foundation, and Phua owned 16 percent shares at least from 2012 to 2015. In 2013, the company was raided by Hong Kong anti-corruption agents.

And what happened to these 23 million Euro deposited by Philippine/Costa Rican and Vietnamese companies all managed and owned by associates of Paul Phua?

In July 2015 the Slovene press reported that Hotel Maestral and its parent company Hit Montenegro was sold to Montenegrin company Monte Rock d.o.o. The sole owner of this company was Petros Stathis, and according to UCB bank annual account this company, again listed as a related company to the bank, received a 15 million euro loan from UCB in 2015. The cash flow statements show the loan was given in the last quarter of the year, between October and December 2015.

Firstly, in July 2015 Monte Rock acquired 25 percent shares of Hit Montenegro from Slovene company Daimond d.o.o., which was in bankruptcy. So a Slovene lawyer was needed to represent Monte Rock in the court auction for these shares. Stathis signed with Slovene lawyer Miro Senica, who has been indicted for money laundering in another case in Slovenia, and is a partner of former Slovene minister of interior Katarina Kresal, who resigned after allegations of corruption in 2011. As a sole interested party at a court auction, Monte Rock obtained 25 percent shares for only 1.1 million Euro.

Another 75 percent was acquired by Monte Rock directly from the Hit Group. A Share Transfer Agreement was signed on 25 November 2015 and 20 million euro should have ended up at the bank account in Slovenia a day after the transfer of shares some day in December 2015. HIT received this payment in the Slovenian NKBM bank, which found itself in 2017 in a scandal because of money laundering for the Italian mafia.

Annual accounts of Monte Rock reveal it had only 9,000 euro assets in 2014, but the next year, the number of assets in the form of long-term loans raised to 35 million euro, which corresponds with 20 million price for 75 percent shares and 15 million euro loan from UCB. An additional sum was needed for the renovation of this hotel.

In this way Petros Stathis became a formal owner of Hit Montenegro and Hotel Maestral, but he actually served just as a front for Paul Phua.

Monte Rock was later renamed to Fasamo d.o.o., but in May 2017 51 percent shares of this Montenegrin company, which owned renovated and renamed Maestral Resort and Casinos was bought by another company with a similar name from Dubai United Arab Emirates. The name of this company is Fasamo Limited which paid 12,420,000 euro for a majority share. The sole owner of the UAE company is Paul Phua.

On 15 July 2017 an opening celebration of renovated hotel followed. Co-owners of hotel Paul Phua and Petros Stathis were joined by the Prime Minister of Montenegro Duško Marković. “The Maestral hotel has been recognised in Europe and beyond as one of the symbols of Montenegro’s tourism,” said the Prime Minister. “Today we see it in a new design, as a prestigious example of construction on the Montenegrin coast… and the best confirmation of Montenegro and its investment potential.”

With 196 rooms and 18 suites, the hotel was set to become a haven for gambling and a magnet for poker enthusiasts, with slot machines, roulette, gaming tables and VIP tournaments.

Speaking about the Maestral hotel and its owners, Marković declared that the government appreciated the efforts, trust and partnership of the company Monte Rock, which has ploughed €50 million into the hotel over two years, since it purchased the property from the Slovenian state gaming company, the HIT group.

“Our partners [in the hotel] have strongly contributed to achieving international standards in the field of hotel management and sustainable development,” he added.

Such lavish praise was accompanied by a ribbon-cutting ceremony, where Marković stood alongside the investor, the 54-year old Malaysian Paul Phua.

After this final operations and opening celebrations also board of directors changed on 16 October 2017. Among seven new members four or majority are coming from Asia and are related to Paul Phua.

They met for the first time a day later, when Paul Phua and Petros Stathis reveals how they planned and executed this hotel takeover together.

According to minutes of boards of directors of HIT Montenegro on 17 October 2017 Stathis explained: “This is something that started with my idea, long time ago, when I heard this hotel was on sale, and I met Mr. Phua and asked him for his help. Almost after two years now, we are in a good position to make things happen and make better.” And Phua added: “So now for two years after takeover, what we achieved, we have extra customers/players from China, Asia and South-East Asia. All customers that came here want to come back. We will also start a company in Macau, Hong Kong to service these customers from Asia.”

On 12 November 2018, two weeks ago, Fasamo Limited became 100 percent owner of Montenegrin Fasamo which owns Maestral Resort & Casino.

But why such complex financial transaction with 23 million euro deposits from Philippines gambling company and Vietnam company was needed? Which then resulted in 15 million euro loan from small private bank of Petros Stathis? Why yet another bypass from Dubai? As Firstright Developments Ltd is gambling company which website IBCbet (Maxbet) is prohibited in many countries, and with 100 percent money laundering risk according to Swiss investigators there is a high possibility that this money was of illicit origin, and thus all this scheme has been created to launder illicit proceeds.

Using deposits of illicit money to obtain loans as legitimate source of money is one of the known methods of money laundering, all that is needed is a bank willing to do this. This does not seem to be a big problem as Stathis was a majority shareholder of tiny Universal Capital Bank, which serves mostly his and Phua’s business interests for years.

Expert from one of European anti-money-laundering authorities, who wishes to remain anonymous and who reviewed this Maestral acquisition scheme, confirmed there is a suspicion of money laundering in this case.

In response to detailed questions sent by EIC partner to Petros Stathis, he said, also in the name of Universal Capital Bank, that “allegations” that Stathis is “public front for Paul Phua’s personal investments in real estate and some other industries” are false and he expressly and emphatically denied this. Stathis firmly denied that he and Paul Phua used Universal Capital Bank for laundering of money from illegal betting sites. He also states that Phua has no ownership interest and no involvement whatsoever in UCB’s operations.

Stathis said also “assertions” that “millions of euros of ‘cash’ was deposited with UCB are utter nonsense” and explained that UCB bank is regulated by the Central Bank of Montenegro and has been always fully compliant with all financial and anti-money laundering laws and regulations. “This has been confirmed by various government agencies in Montenegro, including the Central Bank, as well as Administration for Prevention of Money Laundering and Terorism financing,” he explained.

Carlos Salas denied that he has been in the past or present or at anytime owner of any betting website. “This a complete absurdity and completely incorrect and false allegations.” On question about deposits in UCB bank he responded “I have no idea, knowledge or understanding of any of the companies or transactions you mention. I was not involved in any of these companies or transactions I have no knowledge of anything you mention, I do not know anything about banks in Montenegro, deposits or transactions.” But on question on his role in Success Dragon International he said: “I was the director of Success Dragon (a public listed company) as public documents demonstrate. The company did reach an agreement in relation to horse racing parlors in Vietnam, as public disclosures demonstrate, such transaction done completely and absolutely in compliance with all regulation and legality, which transaction in any case was aborted due to non-compliance by the local counter-party in Vietnam. At no point did that transaction involve such Noble Power company, not any transactions in Montenegro, nor I have any knowledge about the dealings of the Vietnamese company that you refer to.”

Paul Phua and Darren Phua did not respond to our questions. Nor did My Ngoc Nguyen and Prime Minister of Montenegro Duško Marković. Mark Yong was unreachable for comments.

The Central Bank of Montenegro explained that the solvency ratio of Universal Capital Bank (UCB), as a relevant indicator of capital adequacy, “was far above the statutory limits and adequately supported risk profile of the Bank. Moreover, at the end of 2017 and during 2018, the Bank additionally strengthened its capital increasing supplementary elements of own funds in the form of payment of subordinated debt and issue of hybrid instruments.” The Central bank made also two two on-site examinations of the UCB. One in 2016 and another in 2018 for the portion of Bank’s compliance with regulations from the area of the prevention of money laundering and terrorist financing.

“Pursuant to the Banking Law, Reports on Examination are confidential, and as such cannot be publicly disclosed. Also, the Central Bank submits the part of the Report to the Administration for the Prevention of Money Laundering and Terrorist Financing.”

Also Montenegrin Administration for the Prevention of Money Laundering and Terrorism Financing responded. It said: “there are no cash deposits in huge amounts reported by UCB bank in 2015, done by any entity originated from destinations mentioned (Philippines, Costa Rica and Vietnam)” and “there are no cash deposits which have been marked as suspicious by our analytics, other domestic authorities or our foreign partners.”

In 2015 and later on, we received many reports from UCB bank, but the reports had not consisted cash transactions of high level marked as suspicious, neither SWIFT transfers from entities from the destinations of Philippines, Costa Rica and Vietnam.

“We don´t have information that any of incoming transfers to UCB bank in Montenegro had been subject of a suspension by renominated European banks which are corespondent banks for UCB international payments,” they added.

Iconic luxury hotel Sveti Stefan under Phua’s control since August 2013

Maestral is not Paul Phua’s first investment in hotels in Montenegro. His partner Petros Stathis has the following statement on his personal website: “He [Stathis] managed to make the takeover of the “Aman Sveti Stefan” from a Japanese fund and became the co-owner of the most prestigious hotel project in the region.” There is no information available on the Internet as to who is the other co-owner. According to Paul Phua’s profile, obtained by San Marino police, it is Paul Phua who owns majority share of the elite Sveti Stefan.

This is supported also by changes in the company ownership, which are hidden in offshore countries, and FBI transcripts. Once upon a time the 15th century fortress was a holiday destination for the Yugoslav royal family, and it was used by Marshall Tito to host Hollywood giants like Orson Welles, Elisabeth Taylor and Sophia Loren in the 1960s. It is still popular destination among a new generation of actors such as Brad Pitt and Angelina Jolie.

But how did Phua get control over an elite hotel which is on long-term lease from government of Montenegro till 2049 for 1.1 million euro annually?

In 2007 this most iconic Montenegrin hotel was given on lease to Montenegrin company Adriatic Properties, solely owned by Aidway Investments, registered in the British Virgin Islands. Adriatic Propertis was incorporated by the founders of the global Aman hotel chain with legal assistance from Milo Đukanović’s sister Ana Kolarević, who was the lawyer of this company till 2013. In 2010, the company received 37 million euro loan from the European Bank for Reconstruction and Development for the renovation of Sv. Stefan, but in November 2010, the Greek businessman Victor Restis owned Aidway Investments and thus Adriatic Company behind another Cyprus-based company, First Balkan Resorts Ltd.

When the FBI made searches in Las Vegas of Paul Phua and his associates in July 2014 and made forensic analyses of their phones, a lot of transcripts between them were revealed, which helps show their concealed businesses.

According to one of the FBI transcripts sent on 12 August 2013 by Hing Chuan Ngie, also knowns as David Ngie, to Darren Phua, son of Paul Phua, they discussed an acquisition of St. Stefan hotel. “For now we pay 18 M [million] Euro to own 51% of the company that owned Aman in Saint Stefano,” David Ngie wrote. “Who own the remaining 49%?,” Darren asked. “Petros the Greek that visited Macau several times,” answered Ngie. Petros Stathis is the only person who suits this description.

The discussion continued on 21 August 2013. Ngie wrote to Darren: “We intend to acquire the company that holds 100% of the Aman property in Montenegro… We acquire 51% of Balkan Ltd that hold 100% of Adriatic Properties ltd which owns 100% of the Aman property. It is a long term investment being hotel base and peak season only 3 moths (summer) in a year but there is a bonus of selling the free hold apartments – 60 units that we intend to build in phase 2. Can’t really comment till I look at the financial figures.”

Besides Sveti Stefan, they also discussed the acquisition of the nearby Kraljičina Plaža hotel, which is now on long-term lease by the Government of Montenegro till 2097. The old hotel will be demolished and a new hotel is planned to be built by the company Adriatic Properties.

However, changes in the boards of directors of Adriatic Properties, the main Montenegrin company which has a concession on the elite hotel Sveti Stefan, reveals changes in ownership hidden offshore. On 22 August 2013 Siniša Ivančević, a Montenegrin who transferred 740,000 euros from Phua’s Really Useful company to San Marino, according to prosecutors, become one of three members of the board, where he stayed until December 2014.

Also Phua’s profile created in Milan, Italy, in November 2013 and obtained by San Marino police reveals Paul Phua held 51 percent of Sveti Stefan. “Agreement not finalized”, it is added to this line.

However, it seems finalization in which Phua might receive a bigger share of ownership followed soon. 

In October 2015 Cyprus company First Balkan Resorts Ltd was replaced as the sole owner of Aidway Investments with a Gibraltar company, Blue Essence Holdings Ltd. The beneficial owner of this company was hidden behind another Gibraltar company Mekagus Limited, owned by Riverside Enterprise Ltd, registered in the Seychelles, where it is impossible to check the corporate registry.

A change in the board of the Montenegrin company Adriatic Properties in October 2016 show that it received a new member – Hing Chuan Ngie or David Ngie, who explained in 2013 to Darren Phua about the plans to buy the company which leases Sveti Stefan hotel.

Paul Phua did not answer questions as to whether he is the beneficial owner of this Seychelles company and if he is the owner of the company which has a long-term lease on the St. Stefan. Nor did Darren Phua, David Ngie, Siniša Ivančević or Petros Stathis respond to these questions.

A similar cooperation between Stathis and Phua exists also at other Aman luxury hotels. When Stathis published on his website the following statement: “His [Stathis] excellent relationship with AMAN Resorts made him decide to invest in two more projects with the group, which are “AMAN Cavtat” in Croatia and “Aman Venice” at the canal Grande, Venice, Italy. ‘Aman Venice’ opened its doors during 2013 and is already a reference point among hoteliers for its high aesthetics and special architecture. Petros Stathis has also invested in a big property outside the city of New York, USA consisting of 2,000 acres in which he is exploring the opportunity to build the first ‘AMAN Country Club’ in the world. Currently he is also checking the opportunity to develop ‘AMAN’ resorts in Dubai, UAE and Cuba.”

But Paul Phua’s profile from November 2013, which is obviously the most accurate information on Phua’s company networks and investments, shows these information under Phua’s “properties”: Italy, Veneto, Aman Venice Hotel & Spa, value: $52 million; Montenegro, Sveti Stefan, Aman Montenegro, value: $104 million, USA, New York, Aman Broadland, $20 million.” In Venice and New York, the Aman hotels were owned 85 percent by Junlo Properties Ltd, owned by Phua, and 15 percent by Mantex Ltd owned by Stathis, according to the same document. Both Junlo Properties and Mantex are registered in Gibraltar and appeared in the San Marino international legal assistance request sent to the UK in November 2014 in connection with a money laundering investigation.

It seems wherever Stathis is listed as an owner, there is also his secret partner Paul Phua with a majority share behind.

Dubai expansion

Universal Capital Bank was founded in 2007 and has been majority owned by Petros Stathis since 2013. In a few periods, minority owners were either suspicious Estonian companies or Azerbaijani poker players hidden behind a Maltese company. But it seems this private bank primarily serves the business interests of Petros Stathis and Paul Phua. Besides one branch in Podgorica, where it has its headquarters, it has only two branches – the first in hotel Sveti Stefan, and the second in Maestral Resort and Casinos, both owned by Paul Phua.

In 2016 a representative office of Universal Capital Bank was founded in Dubai, United Arab Emirates, and Stathis plans to open new branches in India and Singapore. “UCB plan to support its growth in international and investment banking through the establishment of these three selected locations (UAE, India, and Singapore) to which main clients are oriented,” Stathis wrote on his personal website. He also founded the consulting company SDS Management in Dubai.

But since 2016, the United Arab Emirates has become the biggest foreign investor in Montenegro. The money flow from UCB shows that in 2017 deposits in this bank increased with almost 100 millions euro and the balance sheet of the bank grew from 116 million to 229 million euro or 97 percent.

The Montenegro state investment agency reported in January 2018 that “the United Arab Emirates (UAE) is the largest foreign investor in Montenegro, investing 92.8 million euros in the first 11 months of last year… This country, according to the Central Bank of Montenegro, has invested the most in companies and banks. In the past few years, they invested in many significant projects in Montenegro, and one of the major UAE investments was the construction of Capital Plaza in Podgorica, for which they invested 140 million euros. Also, investors from the Emirates have invested in the last two years at the nautical settlement Porto Montenegro in Tivat, and substantial funds have been invested in the construction of the New Tobacco Combine [cigarette factory], which is due to begin next month.”

Paul Phua did not respond as to whether he or his companies are in any way connected with UAE investments in Montenegro. Also Stathis did not respond for comment on same question.

In September 2016 one of betting sites BET-ibc.com, a “partner” of Maxbet (former IBCbet), which is owned by a Seychelles company Semsis International Ltd and which offers also VIP betting with bigger amounts of bets and higher anonymity, was redesigned and a change of management and operations appeared listed by April 2017. “Bet-ibc.com is operated by E-Gambling Montenegro d.o.o. in exclusive cooperation with Semsis International as service provider. E-Gambling Montenegro certifies that under the concession and approval (no. 02/01-118/4), organize and operate games of chance in Montenegro on website www.bet-ibc.com.” This disclaimer was on the website as we went to press.

E-Gambling Montenegro was founded in 2011 by Milovan Maksimović, cousin of the President of Montenegro Milo Đukanović, through a BVI company, Royale Online Limited, and Merig International, a Seychelles company registered at the same address as BET-IBC’s owner Semsis International in Providence on the island of Mahe in the Seychelles. In October 2016, Maksimović’s offshore company left E-Gambling Montenegro, which has since been solely owned by Merig International. The company lost its license in July 2017 and had to officially halt its operations in online betting in February 2018, according to the Montenegrin gambling administration. Maksimović denied any of his involvement in online gambling and with E-Gambling Montenegro to Vijesti in 2015.

An official inspection in 2015 revealed that E-Gambling Montenegro started to issue its own licenses to many online betting sites, in behaviour against the terms of the concession, and against the law. However, this did not prevent dozens of online betting sites mentioning this non-existent license today. One of them is BET-ibc which strongly promotes Maxbet (former IBC-bet). Let us remember, the ownership of the St. Stefan hotel leasing company is also hidden behind a Seychelles company.

Phua did not answer if he is the beneficial owner of E-Gambling International, nor did he answer if his relations with Prime Minister Duško Marković and the President Milo Đukanović helped this company in obtaining a Montenegrin gambling license in the past. E-Gambling Montenegro, whose website is operational today, did not respond either.

Secret meeting of the Prime Minister and high ranking Triads member

But Paul Phua had probably at least once secretly met with the President of Montenegro Milo Đukanović in Aman hotel in Venice. According to an FBI transcript, David Ngie emailed Darren Phua on 1 March 2014 stating: “Latest update Boss will also be in Venice on the 19th March to meet up PM – Milo. Please keep this infor P n C as it may be sensitive to some people. This mean we will be in Montenegro for 2 days n Petros will arrange logistic to take us to Venice.” The boss of Ngie and Darren was Paul Phua and then Prime Minister Milo was Milo Đukanović. “P n C” stands for “private and confidential”.

This seems to be really sensitive issue also for the Montenegro government, as it didn’t respond to many questions and freedom of information requests made by Vijesti for travel orders of then Prime Minister, which should be publicly available documents unless classified as secret. The government office responded only, that Đukanović led a session of government on 19th March and then he appeared on 22nd March in Brussels. On day 19 March 2014 it was Wednesday, but meetings of the Government of Montenegro are generally held each Thursday. This could mean only that session was a day earlier as Đukanović possibly traveled on 19th March late in the afternoon or evening or a day later to meeting with Phua. Flights records of governmental VIP plane are not available anymore, but for these two days of 20 and 21 March the President Đukanović whereabouts remains unknown.

Both Đukanović and Phua did not respond to questions as to whether they met in Venice in March 2014 and what was the purpose of such a meeting.

A version of this article also appears in “The Black Sea”.

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