By Sudeshna Sarkar, IANS
Kathmandu : The battle for the control of Nepal's casino industry, a prime tourist attraction worth billions of rupees, has heated up between an Indian and an American contender, with both now staking their claims in a Hong Kong court.
The fate of eight casinos – seven in Kathmandu and one in Pokhara city, a popular tourist destination – hangs in balance as Hong Kong's high court hears the dispute between Indian Rakesh Wadhwa and his American business partner Richard Doyle Tuttle.
The dispute took a fresh twist last week when a dissolved company that had earlier held majority shares in the casinos was revived after almost a decade.
The eight casinos, located on the premises of eight five-star hotels, are run by Nepal Recreation Center (NRC), the only company with direct foreign investment licensed to manage casinos in Nepal.
While Tuttle and his family holds 20 percent shares in NRC, the rest was held by Cannosa Investment Ltd, a company registered in Hong Kong.
However, after Tuttle and Wadhwa fell out over the management of the casinos, it was discovered that Cannosa no longer existed, having been dissolved in 1997.
When the news reached Nepal this year, it created a furore and raised questions about the ownership of the casino kingdom.
Tuttle says he owns the casinos since he also held over 87 percent of the shares in Cannosa. However, Wadhwa is disputing the claim, saying Tuttle sold his shares to a Hong Kong company called Dartford.
After it was discovered that the Hong Kong government had dissolved Cannosa in 1997 because it had failed to submit annual returns, Wadhwa went to Hong Kong and had a new company registered with the same name.
The battle grew fiercer with Wadhwa staking claim to NRC on the ground that the new Cannosa had inherited the assets of the old one.
While his claim was recognised by Nepal's department of industries, Tuttle moved Hong Kong high court, saying he had never sold his shares to Dartford but had given them to the company to hold in a trust.
A fresh twist occurred this month when Hong Kong's registrar of companies accepted Wadhwa's petition to revive the old Cannosa.
Now the irony is that though there are two Cannosas, no one knows which owns Nepal's casinos. The issue can be resolved only after the Hong Kong high court gives its verdict over Dartford's shares. This will determine who holds majority shares in Cannosa and therefore controls Nepal's casinos.
While the legal battle is being fought in Hong Kong, there's a propaganda war in Nepal, increasing labour trouble in the casinos and even the occasional outbreak of violence, none of which bodes any good for the gaming industry that employs over 3,000 people.