Legal Dispute Strands Casino Boat at Border

Its decks were a playground for Phnom Penh’s high rollers, but the aging cruise ship that once housed the NagaCorp casino is now a pawn in an international legal battle and stuck at a most unglamorous locale—the Vietna­mese border. 

Though NagaCorp moved its casino operations onshore late last year, the boat remains entangled in multimillion-dollar litigation between the Malaysian company and the boat’s Singaporean owner, Unicentral Corporation.

With court cases pending, police have blocked Unicentral’s efforts to get the boat out of Cambodia for a dry-dock inspection. Authorities stopped the ship about two weeks ago where the Mekong River crosses the border, in Kandal province, Sok Phal, head of the Ministry of Interior’s Central Security Department, said Thursday.

NagaCorp attorney Long Dara agreed this week.

“It’s important that the property stay in the country until the court case is settled,” he said.

In line with a historically thorny relationship, Unicentral is suing NagaCorp for some $11 million in lost rental payments dating from late 2001 to September 2003, com­pany consultant David Cha­nai­wa said this week.

NagaCorp in turn is pursuing a $105 million defamation suit filed against Unicentral in 2001, alleging that the company blackened its name and is now partly responsible for its rejection by the Singapore stock exchange last year.

Unicentral says NagaCorp isn’t playing fair, charging that the most recent police action has less to do with law than with the casino operator’s chummy relationship with the government.

Chanaiwa alleged that a senior minister is manipulating the courts to keep the so-called “Singapore Heritage” ship in the country—a bad omen for foreign investors wary of government officials overriding the law to protect vested interests.

“Under any circumstances, they cannot stop that vessel,” said Chanaiwa, who says he plans one day to make the ship a main tourist attraction here. He said the ship is far past due for a proper inspection, necessary for maintenance, insurance and licensing.

Its condition worsens every day it is denied passage to a proper port in Ho Chi Minh City, Chanaiwa said.

“What message does this send to investors?” he said.

The two parties’ contract hands jurisdiction to Singapore, and a ruling by that country’s High Court in December 2001—when NagaCorp’s lease agreement expired—gave Unicentral the right to repossess the ship.

That decision was then channeled through the Phnom Penh court, where it triggered a rash of appeals and apparently entered a legal morass.

Most recently, Phnom Penh Municipal Court ruled in favor of Unicentral, ordering late last month that the ship be allowed to travel to Vietnam for repairs in accordance with the country’s maritime law. That ruling has also been appealed by NagaCorp.

Unicentral’s argument for the boat’s release appears to be also backed by Prime Minister Hun Sen’s adviser Ket Thol. In a December 2002 memo to Hun Sen, Ket Thol wrote that court procedure around the case had gone completely awry: Cases involving the decisions of another country’s courts should go straight to the Appeals Court or Supreme Court, bypassing municipal and provincial courts, according to a copy of the memo.

He concluded that the latter courts should respect the Singapore court’s decision.

“Investors have the right to choose court jurisdiction as they like…and this case is the first step to acquiring the trust of businessmen in the future,” he wrote.

However, trust is scant in the Unicentral-NagaCorp relationship, and NagaCorp is particularly piqued over its failed bid in September to be listed on the Singaporean stock exchange.

The rejected bid cost the company tens of millions of dollars and was a black eye as well for the Cambodian government, which strongly backed NagaCorp as the first company here to be listed on a developed country’s exchange.

At the time, Singaporean authorities cited a lack of internal audits at the NagaCorp casino and concerns about money laundering. NagaCorp officials believe Unicentral’s public complaints also damaged their chances of getting listed.

“We want our name back…. We want to restore our reputation,” Long Dara said.

Thus far, NagaCorp has scored only a questionable victory in its defamation suit. A January 2003 decision by Municipal Judge Kong Sarith ordered Unicentral to pay $5 million in damages and gave NagaCorp permission to confiscate property—including the boat—if Unicentral fails to pay.

That case is also under appeal.

Regardless, both sides say money isn’t the issue. Chanaiwa maintains any monetary award to Unicentral will go to charity, and NagaCorp officials say they are willing to compensate Unicentral for 22 months of unpaid rent and drop their court case, allowing the boat to go free.

In return, NagaCorp just requires a public apology, said Michael Nen, the company’s vice president of public affairs.

“We don’t want $5 million [as awarded in the defamation suit]. That’s not worth our reputation,” Nen said.

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