NAGACORP'S bid to become the first casino on the Singapore Exchange (SGX), and the

first listed company with primarily Cambodian assets, failed on September 8.

The Initial Public Offering (IPO) was expected to raise around $60 million.

The Monetary Authority of Singapore (MAS) announced it had refused to register the

company, owned by Malaysian Chen Lip Keong, on its exchange.

A statement said it was "not in the public interest" to list the company

because of concerns over the company's lack of "legal and supervisory framework

for the regulation of casinos and the prevention of money laundering".

It added that the corporation "does not possess an established track record

of independent audits of the effectiveness of its internal controls for addressing

money laundering risks".

Christiana Tan, spokesperson for MAS, said the decision was based on recommendations

by the international Financial Action Task Force (FATF), a watchdog on money laundering

and terrorist financing.

In Singapore the move has been viewed as a rebuff to the loose listing policies of

the SGX which has become one of the world's fastest growing exchanges by courting

dubious listings from Chinese and Indonesian firms.

Nagacorp has until September 18 to appeal the decision. Other options could also

see the company seek a listing on the casino-friendly Hong Kong exchange.

IPO manager Choo Chee Kong did not return the Post's phonecall and refused to comment

on the matter to Singapore's financial press.

The casino also failed in a bid to be listed on the Malaysian exchange three years

ago when authorities rejected Lip Keong's attempt to make it part of his publicly

listed Petaling Tin company.

The company, which recently incorporated in the loosely regulated Cayman Islands,

heralded its attempt to go public by flying more than 200 businesspeople from Singapore

to the Le Royal Hotel in Phnom Penh on September 4 and sponsoring a keynote address

by Prime Minister Hun Sen.

The group was treated to a tour of the $47 million NagaWorld complex which will eventually

include eight levels of gaming halls, several arcades, a 5-star hotel, two retail

areas, a spa, a ballroom, a business center, a karaoke lounge and a variety of restaurants

and bars.

The lavish casino boasts an indoor river and a stylized 'sky-scape' ceiling boasting

moving clouds and regular sunsets and sunrises. The casino is scheduled to move its

operations there by the end of the year.

The company has recorded a profit every year since 1996, according to the prospectus.

It took in $61.7 million last year and registered a net profit of $29.9 million.

Revenues grew by 16 percent over the last two years, up from $46.2 million in 2000.

To maintain this profitability, the company stated that future revenues were assured

by the "term and nature" of its gaming rights.

In 1999 the license was renegotiated to give the casino exclusive gaming rights within

200 km of Phnom Penh until 2015. Nagacorp's license will permit it to continue operating

until 2065.

In his keynote address Hun Sen congratulated the company for fostering investment

in Cambodia and declared the country "open for business".

It was to be the first company almost exclusively invested in Cambodia to list on

a stock exchange and Singapore's first publicly traded casino.

One investor from a prominent Singapore investment firm predicted the company would

"do very well" and draw Malaysian and Chinese customers. He considered

the possibility of money laundering at the casino just business as usual. "For

investors, that's the only way you go in Asia," he said.

But fear of money laundering eventually sank the proposal.

Money laundering is often used to turn crime profits into legitimate income by exchanging

cash for gambling chips. These can be exchanged for "clean" checks accompanied

by certifying documents.

The UN Office of Drugs and Crime reported in April that money laundering through

casinos was likely to be on the increase in Cambodia.

An anti-money-laundering commission was proposed under Cambodia's anti-drugs law

and a sub-decree drafted more than a year ago, but it is yet to become law.

The commission would be headed by Hun Sen and casinos would be required to report

any large transactions to it.

In June 2003, the FATF issued recommendations that casinos operate under a comprehensive

regulatory regime to enforce "anti-money-laundering and terrorist-financing

measures".

Nagacorp recognized that concern in its prospectus.

"Given that our casino operations are not presently formally regulated by the

Cambodian Government, our casino may be more of a target for money laundering transactions,"

it stated. "Third parties may attempt to carry out money laundering transactions

which we may not be able to detect or prevent."

However, it stated that it would address investor and regulatory concerns with an

independent auditing scheme to prevent such transactions.

"We have in place certain internal controls that can assist in monitoring money

laundering," it stated. "We will ... appoint a suitably qualified external

third party [to address] the risk of fraud, cheating and money laundering."

During the Le Royal Hotel meeting, the Governor of the National Bank, Chea Chanto,

assured investors that the government had taken measures against money laundering.

"All relevant institutions, including the Justice Ministry, are now carrying

out duties against money laundering based on the law," he said.

He identified measures including recording the identity of customers using commercial

banks, keeping transaction records for 10 years, banning commercial banks from operating

anonymous accounts and monitoring suspicious transactions.