by Bart Key
During my latest rendezvous with Sur and Ward in Pattaya, we reviewed where we were so far, Sur being very pleased with how his first phase had progressed. My investment company had prospered beyond expectations thanks to the investment directions I received in code from Daniel. My company now had built up a substantial nest egg which could be used to finance Sur’s second phase, one which would involve me entering the ferrying business.
Somewhat coincidentally, I had met a fellow club member named Chen who came from a family which owned a large ferry company operating out of multiple ports including Hong Kong and Macau. Chen and I occasionally played handball together and one day after a game, I asked him out of the blue if he and his father would like to join me for lunch the next day as I had a business proposal I thought they might find interesting. Since we rarely discussed business, Chen was a bit surprised by my overture but also curious. He called his father and they accepted my invitation.
The next day, after being seated at one of Hong Kong’s exclusive Chinese restaurants, we exchanged traditional toasts and I moved directly to the business at hand. I was prepared to make an offer to purchase the family’s Macau port facilities, four of their more modern ferries and the rights to ferry passengers out of their Hong Kong port to and from the Macau port terminal. I quoted a cash price I knew to be to be generous. If they were interested, I wanted to commence negotiations as soon as possible to finalize the terms.
From the surprised looks on their faces, it was obvious they had been caught off guard but Chen’s father recovered quickly and politely responded they would consider my offer. Two days later, Chen called with the news that his family had decided to accept my proposal. The deal closed about two weeks later after we had ironed out the details. I would take over custody and operation of the purchased assets thirty days later.
Sur was beside himself with how well everything had gone and had Ward ask me in code to meet them in Pattaya to celebrate. When I arrived Ward, Cory and Sur were already there and Cory had arranged for the chartering of a small yacht. For three days the four of us just lounged around on the deck in the sun occasionally diving off the side to swim to one of the many islets we encountered. There was lots of great Thai food, fine wine and even some excellent weed that Cory had managed to score. Each night I slept like a baby.
I felt reinvigorated when I returned which was fortunate because very soon I was to take charge of my new business and become the new boss of the captains, crews and support workers associated with operation of my four ferries. The day I took over, the first thing I did was raise their pay. I also let it be known that I intended to meet each of them in person in the near future. For the next couple of months, I spent countless hours getting to know them, taking stock of their various skills and noting how dependable they were. Because of the importance of inclusiveness, I also informed them of my future plans for modernizing and increasing the size of our fleet.
Once operations seemed to be moving along smoothly and with morale now running high, I purchased two new and faster ferries available on the market and placed orders for two more to be delivered the following year. My objective was to become the carrier of choice for well-healed gamblers traveling between Hong Kong and Macau. Consistent with targeting that group, I set up a cross-marketing arrangement with three of Macau’s largest casinos. In exchange for their promoting my company’s ferry services, their establishments would be advertised by various means at my terminals and on the ferries themselves. Within two years, my company would operate eight modern ferries between Hong Kong and Macau, all offering first class services and accommodations for the moneyed gambling crowd. Our strategy worked as we broke even our first year and were nicely profitable after that.
At about the same time my ferry company commenced operations, Chen’s father made him the manager of the family’s ferry company which was much larger than mine as it serviced a number of ports other than Macau. He and I would often lunch together at the club and trade notes as to the do’s and don’ts of the ferry business. Soon we became good friends and started hanging out together. He taught me how to play a better game of handball and I taught him how to play a meaner game of basketball. We also started double dating and taking in the Hong Kong nightclub scene. As he had access to the family’s small yacht, sometimes the two of us and our dates would take it out for the day. Other times, just the two of us would take in the seamier side of the City which could result in our having perhaps too much of a good time. Several years ago, Chen had moved out of his parent’s home and into a luxury condo. I decided it was time for me to do the same and bought a condo a couple of floors above his.
One day, Chen informed me that his parents would like to invite me over for dinner at their home. I was honored as this would be my first time in experiencing firsthand how the wealthiest Chinese families lived. His parents resided in a beautiful mansion located within a guarded enclave. After cocktails were served in the library, the four of us retired to the dining room and sat down at one end of a rectangular dining table which could seat twelve. Uniformed staff members served us at least a half-dozen small courses together with several great wines. Chen’s parents were delightful and asked all about my growing up in America. It was apparent they were pleased by the close friendship Chen and I had developed. He had confided in me that, about the same time I offered to purchase the Macau ferry assets, his family had learned of an opportunity to buy the banking assets of another Hong Kong Chinese family. So the proceeds from our transaction came at a perfect time to be used in purchasing these assets.
After a year of hands-on management of my ferry company, I became satisfied that I could turn over its daily operations to an experienced manager. This allowed me to turn much of my attention back to investing. As my investment company’s available capital had been depleted with the purchase of the ferry assets, I needed to replenish it. The day was coming when Sur would give me the green light to begin his third phase which would be to build Macau’s largest casino and hotel complex on the vacant lands adjoining our Macau port facilities. Sur’s mind always seemed to work at warp speed as he continuously had a plan to expand one of his existing businesses or start a new one. Meanwhile I would continue visiting the Macau casinos to observe everything I could about how they functioned.
•
With Li’s ferry company now doing well, our connection to the Macau casino scene was in place. It was time to start thinking about when to make our next move. For a while now, Ward and then Li had been observing the operations of Macau’s larger gambling houses for purposes of learning who patronized them, their nationalities, when were the busiest times, what kinds of security measures were employed and what entertainment was the most popular. At my end, sometime ago I had retained consultants to advise me on the economics associated with luxury gambling establishments. This information had been very useful when making my decision to open a much smaller casino in Costa Rica. With Li now more active again in his investment activities, we could concentrate on building up capital again which this time could be used to finance the planning and permitting stages of what would become the Jade Palace Resort and Casino. It would be my task to provide the hugely expensive constructions costs.
As my practice was never to dip into my securities portfolio, one solution to financing these considerable construction costs would be to sell my oil company. It was a propitious time to sell it anyway as there rumblings about that some of the larger international energy companies were hungry for acquisitions. So I consulted with Ryan, Mason and Josh to get their takes. All were in agreement that it was a good time to sell. We also reasoned that any acquiring company likely would want to purchase the company intact as this would allow retention of our professional staff, considered in the industry as being the most talented and successful in finding new fields. Sure enough, after the word was put out, one of the larger international energy companies made a cash offer to purchase the company and its su
bsidiaries. After lengthy and tough negotiations, final terms were worked out. Mason and Josh both decided to retire whereas Ryan accepted an offer to become an executive vice president of the acquiring company. By this time, all three were wealthy as a result of generous bonuses I had paid them over time. After closing, I was left with a mountain of cash. A large percentage of the net proceeds went to David for investment and the remainder was invested in short term bonds so that I would have capital readily accessible for building my Hong Kong resort.
The evening after closing, Mason invited me to dinner as he had done a number of times in recent years. Sherry now was considered one of the country’s leading physicians on children’s cancer and sat on the board of a prestigious medical research institute. Over cocktails, the three of us reminisced about our college days and the paths taken by each of us since then. With my oil company now sold, I probably wouldn’t being seeing them as often anymore. We hugged as I left and agreed to stay in touch.
•
The Jade Palace project took almost five years to become a reality. The planning and permitting stages by themselves took nearly two years. Being totally immersed in the project and managing my investment company at the same time kept me more busy than I had ever been before. I lost track of the countless and lengthy meetings with consultants, architects, lawyers and contractors. Thank goodness I had a talented staff which could handle most of the administrative details. Whenever critical decisions had to be made, Sur would send Ward to be at my side and assist. My comfort level soared when he was at my side. Technically, he was my security consultant but in reality he was my confidante. In order to cloak our close relationship, we avoided socializing together publicly.
As my investment capital began accumulating at a satisfactory rate, I was in the position to cover the considerable costs of planning and permitting the project. David and Sur were in the final stage of arranging to provide the capital needed to finance the construction phase. I shuddered when I thought how much wealth Sur would be committing to the project.
When the planning stage was nearly completed, I ordered the permitting process to get started. Operating a Macau casino required a concession from the syndicate which owned the sole gambling license issued by the Island’s government. As one might guess, many members of the syndicate were Chinese tycoons residing in Hong Kong. I had met a couple of them thanks to introductions by Chen’s father. The reasons I used to support my company’s being granted the concession were simple and straightforward. When completed, the resort would be the largest hotel in Macau as would its casino. The complex was expected to draw in high rollers from all over Asia including many who might otherwise visit gambling meccas elsewhere like Las Vegas or Monte Carlo. Finally, our project would generate numerous jobs for both Hong Kong and Macau workers during both the construction and operations stages.
At that time, It was widely anticipated that both Hong Kong and Macau would return to the Chinese fold sometime in the future but would continue having separate political and economic systems. While Macau’s monopolistic licensing system was likely to be replaced, it was considered probable that the Chinese were not likely to interfere with the Island’s hugely successful gambling industry and indeed could be expected to promote its continued growth. As it turned out, our timing for requesting our concession could not have been better as the syndicate granted it sooner than we had anticipated. I had strong suspicions that Chen and his father had assisted in smoothing the way. In Hong Kong society, great deference is given to the top Chinese families.
Construction took nearly two years. For investors in large structures, one of the crucial construction periods is the cement and steel phase. There had been a number of instances in Asia where substandard steel and cement had been substituted for those specified. Per Ward’s advice, I hired a reputable European engineering firm to closely monitor and test the quality of the steel and cement used in our project. Any found out of compliance were immediately rejected and required to be replaced by the contractor at its own cost plus a penalty. After a few rejections, non-compliance ceased.
As each floor of the structure was constructed, the exterior and interior work began. The hotel portion was to be seven stories tall and would have three large wings surrounding the mammoth casino. All our accommodations would be suites with the larger ones located on the top two floors. Our nightly rates would be expensive as we anticipated that most of our patrons would be affluent gamblers and their families desiring deluxe accommodations. Throughout the construction phase, our Macau ferry terminal stayed open. When the resort was completed, there would be a pedestrian walkway leading directly from our terminal to the new casino.
•
After Li bought my family’s Macau ferry assets, he and I started hanging out together and became good friends. We were alike in so many ways. Both of us had advanced business degrees, his from Stanford and mine from Cambridge. We had both played soccer in college and both of us had been born in Hong Kong of mixed parentage. We were about the same age and both workaholics. Neither of us gave any thought to abandoning bachelorhood and we loved cavorting with the ladies. Disco was the rage in the Hong Kong nightclubs at the time and dancing the night away was common. As we both lived in the same condo complex, we and our girlfriends of the moment sometimes would get together the next morning for breakfast at either his place or mine. Sometimes, just the two of us would party at some of the wilder clubs and bordellos located within Hong Kong’s seedier area and at other times we would spend a weekend at one of Macau’s larger casinos. Though neither of us was into gambling, just for the hell of it we would play blackjack or craps in competition with each other to see who could win the most with a set amount of chips.
During the negotiations for the sale of our ferry assets, my father took a liking to Sur and my parents invited him to dinner at their home. Li considered this a special event and was humbled at being asked. During the evening, he turned on his considerable charm as only he could do and answered happily my parents inquiries about his family and upbringing in America. They learned that his mother was now his only living close relative as both his father and grandmother were now deceased. Li adored his mom and tried to visit her in Denver at least once a year. She also had visited him a couple of times in Hong Kong. I met her a couple of times and thought she was delightful. As she grew older, Sur hinted that perhaps she might want to consider moving back to Hong Kong so they could be closer. But she would not hear of it. Colorado was her home now and she loved living there. Li also offered to buy her a nicer house but she was quite content with the one she had, the same one in which Li had grown up. Li told my parents that she nagged him constantly about his not being married. After he said that, I looked up at them and rolled my eyes as if to say “where have I heard that before?”
One day my father asked if I thought Li might have any interest in joining forces in future investment projects. I told him I didn’t think so as he had mentioned to me more than once his preference to avoid partnerships of any kind. However, I knew he had an investment advisor in Singapore that he was very close to and communicated with often. As our family rarely invested in market securities, I could ask Li if he might introduce me to this advisor as we might want to seek his advice as well. My father had never considered investing in the markets much as he thought it to be just another type of gambling. But considering Li’s obvious success, he agreed it wouldn’t hurt for me to at least get to know Sur’s consultant. When I approached Sur to see if he might introduce me, he was all for it and insisted on doing it personally. A couple of days later, we flew on my father’s jet to Singapore and sat down with Daniel for lunch. He was very friendly and knew of my family asking me about its history.
I related that my father’s parents had been born on the Chinese mainland and had immigrated to Hong Kong seeking a better life. My grandfather hired on a as a crew member on a small ferry which transported passengers between Kowloon and H
ong Kong. He eventually became the ferry’s skipper and saved up until he had enough for a down payment on his own ferry. He did well and when he died, my father inherited his ferry operation and skillfully managed it until it grew from one ferry to twenty-six operating out of several Asian ports. My mother’s parents were British and when she was very young they moved to Hong Kong where her father managed a small bank. She attended high school and college in England and now was a lecturer of English literature at one of Hong Kong’s small liberal arts colleges. After my father and mother were married, they had three children of which I was the oldest and the only son. All three of us were home-schooled by my mother and when I reached eighteen, I attended Cambridge College in England for five years. After returning permanently to Hong Kong, I started working side by side with my father who, by that time, had spread out into other businesses particularly real estate and banking. Recently, I had taken over management of the family’s ferry business. When Daniel asked how I had come to know Li, I responded that we had met at our club and that following his purchase of my family’s Macau ferry assets, we became good friends.
Daniel then proceeded to describe his background and professional history, I asked if he would consider advising my family on market investments and he responded that it would be his pleasure.
On our flight back, I reflected on my friendship with Li. We were both fiercely competitive, not just in the business world, but in everything we did. When we played handball, neither of us gave any quarter to the other. In the beginning that meant I won almost every game. But now his skills had improved and he won almost as much as I did. On the basketball court, we usually played on the same team. Li had taught me how to good naturedly taunt the opponent and defend aggressively. After our games, we usually would have a beer somewhere and plan what wild times we hoped to have over the coming weekend.