Too hot to handle

Feisty lawyer Lorna Patajo-Kapunan and Macau gambling tycoon Stanley Ho go a long way back.

Kapunan has served as special counsel for the ailing 89-year-old Ho in the Philippines, whose companies including Elixir Gaming Technologies which is run by his son Lawrence Ho, supply PAGCOR-run Philippine casinos with slot machines. Kapunan is also a director of Elixir, listed as EGT in the New York Stock Exchange.

Ho is currently embroiled in a much-publicized family feud, where the rival branches of his family are fighting for control of his casinos and other billion-dollar businesses.

But of course controversy is not new to Ho. Who can forget the BW Resources Corp. stock scandal that almost led to the collapse of the Philippine stock market? Ho was implicated in the scandal as he was BW’s chairman when its stocks plunged. When Ho accepted the chairmanship upon the invitation of BW president Dante Tan, the BW stocks were worth P107 having skyrocketed from P2.04. The day after Ho became chair, investors lost their shirts when BW stocks plunged to P68 per share. Tan and others were accused of stock manipulation.

Kapunan was already lawyering for Ho then. She was (and maybe still is) a board director of Value Convergence Holdings, a finance company in Hong Kong owned by Ho.

There were allegations that she committed the ultimate treason among lawyers when she supplied her then law partner, the late Senator and former Presidential candidate Raul Roco, confidential lawyer-client information which Roco used to launch a Senate investigation into BW Resources stock scandal. Or maybe she did it to protect and absolve her client Ho. But in 2004, Roco once again got dibs on the information that Ho was in the Philippines visiting the casinos in Clark and he criticized Ho’s visit in press statements. Kapunan was still his partner then, and in fact, she was also his campaign chief of staff.

And just like Ho, controversy seems to follow Kapunan anywhere she goes. She was named one of the defendants in a multi-million dollar securities fraud case filed by four American hedge funds against Elixir Gaming.

The hedge funds Prime Mover Capital Partners of New York and three funds run by the managers of Los Angeles-based Strata Fund LP claim that Elixir and its officials, including its president and chief executive Lawrence Ho and board directors including Kapunan, made false and misleading statements about its gaming participation business in its filings with the Securities and Exchange Commission (SEC), press releases, and other industry and investor conferences and meetings and that the investors then bought the securities at the inflated prices and later suffered economic losses when the price of the company’s securities dropped.

The hedge funds are asking the US District Court for Southern New York to award compensatory damages plus interest, in addition to their legal costs, after shares of Elixir fell by more than 90 percent.

The complaint claims Kapunan along with other Elixir officials went to San Francisco in September 2007 to personally meet and convince the hedge funds to invest in the company. Prime Mover and the three Strata Funds said they invested millions of dollars in Elixir.

Ho, Kapunan and the others, they allege, exaggerated the profitability of its new business involving the lease of slot machines in multiple venues in Asia, each of which would generate $125 daily. Elixir officials must have known at the time that it could not support this assertion, they said.

This false assertion, according to the complaint, was supposedly based on extensive investigation and operational data obtained from Pagcor.

It was also alleged that defendants also boasted, falsely, that because of the influence of Ho and his family, Melco (the parent company of Elixir) and Elixir enjoyed a particularly close relationship with Pagcor that would greatly facilitate the company’s entry into the Philippine market.

Elixir claimed that it would place 5,530 new model slot machines in multiple casinos in Asia, including the Philippines, Cambodia and Vietnam.

Counsel Daniel Osborn said though that Elixir overstated the number of slot machines under contract and actually placed in the casinos; overstated the financial result of the slot machines that had been placed previously; and falsely stated that each machine was equipped with computer software capable of tracking the revenue generated by each slot machine, when no such software had been installed.

Elixir in a statement said it would vigorously defend itself against these allegations.

Complainants in the case include Prime Mover Capital Partners L.P., Strata Fund L.P., Strata Fund Q.P.L.P and Strata Offshore Fund Ltd. while the defendants are Elixir Gaming Technologies, Inc., Melco International Development Limited, Elixir Group Limited, Lawrence Ho, Gordon Yuen, Joe Pisano, David Reberger, Mark Newberg, Clarence Hung, Walter Stowe, Martha Vleck, Arnaldo Galassi, Lorna Patajo-Kapunan, John Crawford, Vincent DiVito, Robert Miodunski and Paul Harvey.

Melco International, also known as Melco Group, is a joint venture partner in the Macau casino market with Australias Crown Ltd. Elixir International is itself a subsidiary of another Melco company called Elixir Group which in turn is a wholly owned subsidiary of Melco International.

Elixir Group is in turn the majority shareholder of Elixir Gaming, a company specializing in providing slot machines to hotels and clubs in east and Southeast Asia, including the Philippine casinos run by the Pagcor.

Meanwhile, Melco Group said it owned a 39.84 percent stake in Elixir Gaming.

Lawrence Ho is the chairman and chief executive of Melco International. He is one of the 16 children of Stanley Ho.

The US Securities Exchange Act of 1934 gives shareholders the right to bring a private action in federal court to recover damages the shareholder sustained as a result of securities fraud.

Not so hidden agenda

An inter-faith rally tagged as “Filipinos! Unite for Life! will be held today, February 13, from 4 to 7 pm at the PICC compound aimed at dramatizing opposition to the passage of the Reproductive Health bill. Interested parties are asked to bring candles.

The rally, organizers say, is a fight for the life of the unborn child, a fight for women’s health, a fight for the Filipino family, a fight for the right to educate one’s one child, a fight for freedom of speech and of choice, and a fight for the chastity of the youth.

They point out that the RH Bill recognizes life only from the time of implantation and will legalize the abortion of life on its first few days through the use of abortifacients; will spend taxes to give women IUDs, contraceptives and injectibles which have been shown to be related to serious illnesses such as thrombosis, cancers, osteoporosis, etc.; and teaches the people especially the children that only they have the right to their bodies (meaning spouses can have themselves sterilized without spousal knowledge while children can avail of reproductive health services without their parent’s knowledge)

They add that the bill mandates sex education which will completely change the values of children in the nine years that they will learn about “safe sex”, gender rights, reproductive rights, etc; is an affront to freedom of speech since it will punish anyone who “maliciously engages in misinformation about the intent or provisions of the bill” with fines and imprisonment; forces employers and health care workers to provide “reproductive health care which includes sterilization and ‘emergency menstrual regulation’ to all including children or suffer fines and imprisonment; and will encourage premarital and extra-marital sex since its only concern is that these are done with so called “safe practices”.

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