The US subsidiary of Malaysian gaming giant Genting Bhd is being sued for more than US$600 million by a key partner over allegations it has been dumping group liabilities onto its Resorts World Bimini (RWB) property in the Bahamas.
RAV Bahamas, which owns 22% of RWB operating entity BB Entertainment, filed a lawsuit with the US District Court for the Southern District of Florida last Monday alleging Genting – owner of a majority 78% – has turned the IR into a “financial wasteland” by dumping onto it almost a billion dollars in debt, according to local media outlet The Tribune.
The lawsuit describes Genting’s alleged actions as “a massive and co-ordinated fraud” that has left assets contributed to RWB by RAV Bahamas as “essentially worthless”. It also accuses Genting of “depriving” the joint venture of profits and says the Malaysian firm “has deliberately kneecapped” its efforts to dig deeper by denying full access to the books.
The Tribune notes that the historical financial records of BB Entertainment include a US$151.3 million loss in 2022, a US$114.2 million loss in 2021 and US$105.6 million loss in 2020.
By end-2022 the operating entity had accrued liabilities of US$885.2 million, the majority of which is described as borrowings from BB Investment Holdings, the entity through which Genting holds its majority interest and which is interest bearing.
“To date, BB Entertainment has not distributed any profits to RAV from this venture because Genting Americas, who controls BB Entertainment’s finances, has used BB Entertainment as its financial wasteland,” the lawsuit states.
“Through its stranglehold over BB Entertainment and its finances, Genting Americas has used BB Entertainment to conceal a medley of fraudulent activities.”
Claiming that it has been forced to absorb costs and expenses “illegitimately shifted” to BB Entertainment’s accounts, RAV adds in the lawsuit, “What is clear is that Genting Americas’ fraudulent accounting practices have drowned BB Entertainment in hundreds of millions of dollars in illegitimate debt.
“Only a massive and coordinated fraud could dump nearly a billion dollars of debt on a small island resort where RAV had already developed most of the significant infrastructure. Genting Americas buried the nearly-billion-dollar liabilities in consolidated statements using vague categories of expenses to conceal the fraud from RAV.
“Genting Americas, at every turn, has deliberately kneecapped RAV’s efforts to obtain clarity into the financials, including denying RAV full access to BB Entertainment’s financial records and denying its requests for an independent audit.
“This lawsuit seeks the damages that Genting Americas’ continuing fraud has caused, which include but are certainly not limited to rendering RAV’s contribution to BB Entertainment – the 20 acres of land – entirely worthless.”
BB Entertainment was formed as a 50/50 joint venture in 2012 to further develop RAV’s existing Bimini Bay, with RAV contributing the 20 acres of land upon which RWB now sits before Genting assumed majority control in 2015. RWB comprises a 10,000 square-foot casino, 305 hotel rooms, restaurants, lounges and a jetty to dock cruise ships.
According to the report, RAV’s lawsuit also accused Genting of trying to sell the property without addressing alleged misallocations in BB Entertainment’s financial records.
“Because the estimated value of BB Entertainment’s resort is substantially less than the approximately US$900 million in liabilities that remain on BB Entertainment’s financials, Genting Americas has effectively deprived RAV of the entire value of RAV’s over 20-acre contribution without having ever received any return for that contribution,” it said.
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