Genting faces over €550 million?fraud lawsuit in the US??

Jenny Ortiz October 15, 2024

Share it :

Genting faces over €550 million?fraud lawsuit in the US??

Genting Group’s US subsidiary, Genting Americas Inc (GAI), is facing a legal battle after being accused of fraudulent activities. The Miami-based Capo family, owners of RAV Bahamas Ltd, has filed a lawsuit seeking RM2.6 billion (€554 million) in damages. The family claims that Genting orchestrated a “massive and coordinated fraud” by offloading nearly a billion dollars of debt onto Resorts World Bimini, a small island resort and casino in the Bahamas. ?

Control over BB Entertainment

Genting Americas holds a majority 78 percent stake in BB Entertainment Ltd, which operates Resorts World Bimini, while RAV Bahamas owns the remaining 22 percent. The lawsuit accuses Genting of using its control over BB Entertainment’s financial operations to conceal liabilities and push costs onto the resort. According to RAV, the resort has been turned into a financial wasteland, burdened by hundreds of millions of dollars in illegitimate debt over the past decade.

Claims of financial mismanagement

The lawsuit further alleges that Genting used vague accounting practices to hide the true extent of the financial difficulties at the resort. Despite generating an average annual revenue of $22 million (€20.2 million), the resort has reportedly accumulated liabilities of nearly $900 million (€826.4 million). RAV Bahamas has also accused Genting of denying full access to BB Entertainment’s financial records and refusing independent audits, obstructing any attempt to assess the true financial state of the venture.

Genting Malaysia denies allegations

In response, Genting Malaysia Bhd, the parent company of Genting Americas, has dismissed the lawsuit as baseless and without merit. The company insists it will vigorously defend itself in court, pointing to its audited financial reports as evidence of transparency. Analysts have also voiced their support for Genting Malaysia, noting that the company’s financial statements, audited by PwC, do not suggest any signs of fraud. ?

Financial impact and outlook

Despite the lawsuit, financial experts believe that the case is unlikely to have an immediate impact on Genting Malaysia’s share price or overall operations. While the legal proceedings could drag on for some time, Genting Group’s financial position remains strong, with substantial assets and cash reserves. Investors are not expected to react drastically, and analysts suggest that Genting has the financial capacity to settle the lawsuit if necessary.

The broader outlook for Genting Malaysia remains positive, supported by a growing influx of foreign tourists and stable business operations across its properties.?