Where's the Money?

The Venetian in Macau is bigger than the one in Sin City

A good indication China's economy is slowing down is to look at Macau's casino tables.

The gambling capital's revenues only rose 7.3 percent to 26.08 billion patacas last month, the slowest growth since July 2009.

This has led to Macau gaming stocks falling slightly on Friday.

"One of the main reasons is the slowdown in VIP revenue. I do not rule out the possibility of a slowdown in the China economy as a factor," said a Hong Kong stock analyst.

It could also be that the casinos haven't collected all the debts from their VIP customers, at least two of them come from mainland Chinese banks.

Yang Kun, an executive vice-president of Agricultural Bank of China, was detained a few days ago in Beijing by the Central Commission for Discipline Inspection of the Communist Party of China.

It was because the commission received complaints about illegal gambling activities in Macau that were linked to Yang, as well as the misuse of a bank client's account.

The amount of money he allegedly misused is unclear, but one source said: "It must be a big case involving big money, given the high level of Yang's position and the quick action taken by the government. He was internally advised not to travel abroad, even just a trip to Hong Kong."

Another source said Yang went to Macau several times with business friends and the group lost money during at least one gambling trip there. Because Yang and his friends owed large sums to the casinos, complaints emerged and later came to the attention of the anti-corruption commission.

Yang had worked at Agricultural Bank of China for more than 20 years and was considered a rising star...

Meanwhile another banker was also caught for similar allegations.

Brand manager He Juxin of China Minsheng Bank was detained by police in Beijing as he is linked to Yang's case.

Both He and Yang are believed to have close ties to a businessman named Wang Yaohui, chairman of conglomerate Zhonghui Guohua Industry Group.

In addition to being Minsheng Bank's top executive in charge of brand and marketing, he is also the director of the Minsheng Art Museum, which was established and funded by the bank to collect and exhibit valuable artwork.

Apparently He and Wang share an interest in art; sources also said Wang, with Yang's help, obtained loans from Agricultural Bank of China to shore-up money-losing property projects in Beijing and finance the chairman's personal hobbies, including gambling and buying art.

Now that the three are being investigated, how many others have fallen into similar situations?

It's only a matter of time before more debts will be revealed and increasing indications that Beijing must really clean house and rid itself of corruption and graft for good.

It can't keep functioning as it is right now forever... can it?

15 Years Later, New Rules for the CE

The Chief Executive of Hong Kong should regard himself as "the chief servant of the people".

That's the finding of an independent committee that spent three months looking into the scandals Chief Executive Donald Tsang was embroiled in earlier this year, caught hanging out with tycoons on a yacht in Macau, to a cheap deal to rent a penthouse in Shenzhen.

The committee, led by former chief justice Andrew Li Kwok-nang, said Tsang would have been open to prosecution for accepting favours from tycoons under a new law it is proposing, as for the past 15 years there have been no guidelines for the chief executive to follow.

Chief Executive-elect Leung Chun-ying welcomed the recommendations and pledged to implement them as soon as possible.

The committee is proposing it be a criminal offense for the chief executive to solicit or accept any advantage without the permission of a statutory independent committee. In turn, offering an advantage to the chief executive without lawful authority or a reasonable excuse would also be considered an offense.

It added the chief executive must follow the rules at least as strict as those for political appointees and top civil servants.

"It would be a criminal offense for the chief executive to accept any advantage, including any gift, hotel accommodation, any purchase or rental of premises at an undervalued price, any passage, whether on a commercial airplane, private jet or private yacht without the permission of the committee," Li said. "We advise the chief executive to follow the maxim, 'if in doubt,' don't."

The maximum penalty would be one year's imprisonment and a fine of HK$100,000.

It seems the description covers practically all the wrong doings Tsang did in his years as CE.

And it's pretty amazing he and former chief executive Tung Chee-hwa were able to get away with having no rules apply to them at all for the past 15 years until now, when a news photographer happened to catch Tsang on a luxury yacht in Macau.

"The present system is totally inappropriate and has a fundamental defect that it exempts the chief executive from the strict regime applied to politically appointed officials and civil servants," Li said, adding Hong Kong's leader should not be above the law.

The former chief justice refused to comment on whether Tsang set a bad example, and instead said improving the system was the key.

Earlier Tsang had said he followed his own "internal rule" when accepting benefits.

"The absence of documentation on such a matter is not consistent with the proper conduct of public administration," Li said. If the new rules are implemented, all gifts would be recorded in a register and made available to the public.

Tsang is a career civil servant and still he did not feel he had to follow the rules or establish them formally as chief executive. Being a church boy didn't deter him from taking advantage of his standing at all either.

While all these new regulations are great, Tsang will not be subject to them.

What is hard to understand is that before 1997 no one went over the rules and regulations of the chief executive and realized there was a major loophole in terms of accountability?

There are less than 30 days left to go before Tsang leaves office and he leaves behind a legacy of free-spending ways and cozying up to tycoon buddies for a good here and there.

Makes Grandpa Tung look like a saint.

Ah the perks of being a CE.

Hong Kong's Two Worlds

The Martian Pink diamond sold at almost double its estimate

Today the Hang Seng Index saw the worst May performance in 14 years, thanks to the fears of the euro zone going down the drain and the Chinese economy screeching to a halt.

The index closed down 0.32 percent to close at 18,629.52 Thursday and the downward trend led to Graff Diamonds pulling its $1 billion initial public offering that was due to set its price tomorrow.

If listed, it would have been Asia's biggest IPO so far this year, but the sparkling gems of the London-based jeweller were not enough to calm investors' fears. "Consistently declining stock markets proved to be a significant barrier to executing the transaction at this time," Graff said in a statement.

So Graff will have to wait for the next window of opportunity and who knows when that will be...

Then there are reports retail rents have peaked now that companies are not willing or able to pay double or triple the original rent in the last three years. Abercrombie & Fitch still have yet to open its flagship store and it's paying almost $1 million in rent each month for its prime Central location. Imagine how many polo shirts and jeans it has to sell on a daily basis.

"Until recently, retailers were willing to pay higher rents for shops in prime locations because retail sales were growing at such a high rate," said Joe Lin, senior director of retail services at property consultancy CBRE.

"But they have turned cautious this year because of the slowdown in retail sales and tourist arrivals from the mainland."

However if you look at the ultra luxury market though, there's gobs of money exchanging hands.

Earlier this week Christie's set a record price for pink diamonds with the sale of the "Martian Pink" diamond. The 12-carat gem was named by Harry Winston in 1976, the same year the Viking I spacecraft landed on Mars.

The auction house had estimated the diamond would sell at a high guesstimate of HK$95 million -- and after six minutes of frenzied bidding, it actually sold for a gob smacking HK$135 million ($17.4 million). It is the largest round fancy intense pink diamond to be sold at auction.

Christie's also sold a 6.04-carat Burmese ruby ring for a record $3.3 million, or $551,000 per carat.

There's lots of money here, but it's the uber rich who are holding the purse strings will the rest of us plebeians are eking out a living.

Hong Kong is of two different words -- a stock index that's plummeting and a buoyant auction scene setting record prices.

What gives?

Are You Happy at Work?

We predicted this year the economy would not be doing so well with China slowing down and Europe going in slow-motion implosion.

And so instead of turning to productivity rates, a recent report in Hong Kong has looked at how happy employees are.

The Happiness at Work Index is the first for the city and was a survey jointly conducted by the Productivity Council and Lingnan University and it found people were marginally less happy at work than overall.

On a scale from zero to 10, the average work happiness of the 1,328 people who participated in the survey was 6.7 points, 0.2 points below the general happiness score.

A score of seven is considered "happy", and anywhere between four and six means neutral and below that is unhappy.

So for the small sample of respondents, 6.7 is pretty decent.

For some reason Hong Kong surveys have such small numbers of participants... surely in a city of seven million people they can get more data...

But I digress.

The survey defines work happiness as looking forward to going to work every day.

What's interesting is that the results showed that respondents with higher education were not necessarily happier at work, while those with secondary school education or less were happiest (6.7), followed by university graduates (6.6). Those with diplomas, high diplomas or associate degrees were the least happy at 6.5.

"This must have something to do with their level of societal recognition," said Lingnan Professor Ho Lok-sang, lead researcher of the study.

Another reason may be university graduates not being able to find jobs in their preferred fields and are stuck doing menial or low-paying jobs they are over qualified to do.

The survey does not indicate a link between the type of industry and the degree of employees' happiness.

Productivity Council general manager Raymond Cheng said: "This means a particular enterprise's culture matters more than which industry a person is in."

He suggested companies should take greater measures to encourage staff to learn from mistakes and involve employees more in business decisions -- methods that cost nothing and could bring staff closer together.

Another observation in the survey was that among small and mid-sized companies, the larger the workplace, the more its employees tended to be unhappy. And in Hong Kong these companies make up 98 percent of all local employers.

Meanwhile in large companies that have 100 or more employees, "more resources and better-defined systems" result in happier workers, said Ho.

He said it was worrying that most top-level managers interviewed in the survey had no regard for communication. It's perhaps because of their belief that they need to assert authority and the way to do that was to issue commands rather than involve staff to formulate better solutions for doing things. This is even more prevalent in mainland Chinese companies.

Nevertheless, Cheng noted that: "The happier your staff, the better the company's performance will be."

Wonder how many Hong Kong companies are actually going to heed these words of advice.

But in what may be the beginning of a rough patch, perhaps now would be a good time to implement some changes.