Nepal’s casino battle escalates as pioneer hits back

By Sudeshna Sarkar, IANS

Kathmandu : The long drawn-out and bitter battle for the control of Nepal’s casino industry, worth millions of rupees, escalated further with the American partner going to court to stop a decision that favours his former protégé, an Indian investor.


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American Richard Doyle Tuttle, rumoured to have been close to Nepal’s powerful palace in the past and the pioneer who took over the management of the kingdom’s first casino to start a chain, Thursday moved the appellate court in the Kathmandu valley challenging a decision by the Registrar of Companies that favours his former partner and now bitter rival, Indian Rakesh Wadhwa.

On Tuesday, after a nearly 10-month tussle, the Registrar of Companies said it recognised Wadhwa as the main foreign investor in the company licensed to run Nepal’s chain of eight casinos and dissolved the company’s earlier board of directors, where Tuttle was the chairman.

It was a severe blow to Tuttle who in 1992 had founded the company Nepal Recreation Center (NRC) — the only firm licensed to run casinos in Nepal.

The battle has been a complicated one, reaching even the courts of Hong Kong since NRC’s parent company, which held 80 percent of its shares, was a Hong Kong registered firm called Cannosa Investments Ltd.

Tuttle earlier held 80 percent of Cannosa’s shares. However, the trouble started after he transferred his shares to a trust. Wadhwa says he bought the shares and the two are fighting it out in Hong Kong’s court.

Tuttle says the Registrar of Companies can’t dissolve any board. Only the directors and shareholders can do it. Also, he says that though he still holds 20 percent shares in NRC, the Registrar of Companies did not notify him before dissolving the board.

“It is a very, very bad decision,” the 67-year-old told IANS. “It will send out a very negative signal to foreign investors. We have to live with Nepal’s laws but they have to consider from where the investor is coming.”

Tuttle says Nepal’s authorities should base their decision on the verdict given by the Hong Kong court that will determine who holds the majority shares in NRC.

Tuttle’s lawyers have asked the Lalitpur Appellate Court for an immediate stay on the announcement of the Registrar of Companies while the hearing challenging the decision is expected to start next week.

Nepal’s casino industry employs over 7,000 people and pays the government Nepali Rs.120 million (about $2 million) in royalty annually besides income tax, value added tax (VAT) and other taxes.

It went through a lean period during the insurgency when tourists, the mainstay of the casinos, stayed away from Nepal.

Now, though there is peace, the Maoist trade union is trying to get a stronghold in the casinos and there has been repeated labour trouble.

The continuing fight between the two major investors could boomerang on the industry itself.

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