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EXCLUSIVE

DRUG RING RUN
FROM SKYCITY

AT THE OFFICE: Ri Tong Zhou on the deck of the SkyCity VIP lounge
the night before he was arrested.

Judge warns casino after hearing how crime-ring chief controlled a multimillion-dollar P ring from its VIP lounge
BY JARED SAVAGE
A multimillion-dollar drug syndicate used
SkyCity Casino’s VIP lounge as an office
to plan P deals across the upper North
Island.
The gang’s ringleader, Ri Tong Zhou,
41, was this week jailed for 15 years after
admitting more than 30 methamphetamine-related charges, including the
supply of more than $3 million worth of P
in just two months.
In remarks made before sentencing,
one of the country’s highest-ranking
judges, Justice Rhys Harrison, strongly
criticised SkyCity for the way it had been
used by the drug dealers.
He noted that anti-gambling lobbyists
had warned that the casino could become
a ‘‘scene for large-scale criminal activity
or a meeting place for people who commit
serious crimes’’.
The court was told that Zhou ran a
sophisticated distribution network, often
using the VIP lounge at SkyCity as a hub
to discuss the buying and selling of
methamphetamine.
Money and drugs even changed hands
in the basement carpark, said Crown prosecutor Ross Burns.
Justice Harrison told Zhou: ‘‘It is of
concern, as Mr Burns has noted today,
that much of your dealing was transacted
through the medium of the VIP lounge or
basement carpark at the SkyCity Casino.
You used both as offices.’’
The judge then took the unusual step of
ordering that his sentencing notes be sent
to SkyCity chief executive Nigel Morrison.
Detective Sergeant Lloyd Schmid was
the officer in charge of the year-long inves-

‘Much of your dealing
was transacted
through the medium
of the VIP lounge or
basement carpark at
the SkyCity Casino.
You used both as
offices.’
JUSTICE RHYS HARRISON (RIGHT) TO
RI TONG ZHOU DURING SENTENCING.

tigation that ended in 13 people being
arrested and millions of dollars worth of P
and cash being seized.
A summary of facts presented to the
court said that during 2006, police
investigated a large-scale drug ring run by
an Asian organised crime syndicate,
headed by a mystery man nicknamed Xiao
Pang in China.
The inquiry uncovered criminals
involved in the supply and distribution of
methamphetamine, particularly in Auckland, Waikato and the Bay of Plenty.
Police tapped more than 13,500 phone
calls between October and December 2006.
In that time, Zhou supplied 3.8kg of
methamphetamine worth up to $3.7
million.
The summary said Zhou used one of
his drug dealers, Jia Wang, to gamble

money earned from his drug dealing to
conceal it.
This was effectively money
laundering.
He would pay Wang with methamphetamine or vouchers he received from
SkyCity Casino as a VIP customer.
She has been sentenced to five years in
prison by Justice Patricia Courtney for
her role in the drug ring.
Zhou also used another drug dealer to
deliver P to the VIP room at SkyCity to
give to his customers as complimentary
samples.
In July 2007, police and the Department
of Internal Affairs admitted New Zealand
casinos had a problem with organised
crime, particularly money laundering and
loan sharks.
A report made public by then-Minister

of Internal Affairs Rick Barker revealed
criminal activity at SkyCity had been
under investigation for at least 10 months.
Internal Affairs and police had ‘‘a significant amount of evidence’’ that
predominantly Asian groups ‘‘were
frequenting New Zealand casinos for the
purposes of criminal networking, money
laundering and social gambling using
illegitimate funds’’.
Mr Morrison was unavailable for comment yesterday, but SkyCity’s general
counsel, Peter Treacy, said Justice
Harrison’s notes had been received.
‘‘SkyCity does not condone this stuff at
all,’’ Mr Treacy said.
‘‘We don’t want the bad guys in our
casino, we don’t need their custom. We
have zero tolerance for it.’’
Since the police investigation finished,

Mr Treacy said, SkyCity had improved its
surveillance and sharing intelligence with
Internal Affairs and police.
Asked how Zhou could have used
SkyCity as his ‘‘office’’ despite the thousands of closed-circuit surveillance
cameras in the casino, he said he could not
answer that because he had not seen the
police evidence.
‘‘I can’t speculate on something that
happened two years ago. But we are getting better at swapping information with
the authorities.’’
Internal Affairs national compliance
manager Debbie Despard said casino operators were expected to report any suspicious activity.
‘‘It’s fair to say SkyCity is a lot better at
that today than when this happened. I
would be extremely surprised if this happened again,’’ she said.
Despite the criminal actions of Zhou
and his associates in the casino, Internal
Affairs did not take any action against
SkyCity.
Ms Despard said this was because
there was no specific requirement in gambling legislation, just an ‘‘expectation that
a responsible operator would ensure the
casino environment is safe’’.
Internal Affairs Minister Richard
Worth said the Government expected
casino operators to be recognised as
having world-class crime-free and
corruption-free status.

INSIDE
■ Drug ring exposed — A5

Minister’s get-tough letter puts heat on SOEs
BY CLAIRE TREVETT
AND GRANT BRADLEY
The Government is planning a shakeup of state-owned enterprises after
criticising them for what it says is poor
financial performance.
In a letter to all board chairpersons,
SOE Minister Simon Power said the
Government had ‘‘cause for concern’’
about ‘‘relatively poor and declining’’
results at 15 companies, and believed
change was required.
Mr Power said profits for the

second half of last year were down 50
per cent.
The letter ‘‘invites’’ the board
leaders to a meeting with shareholding
ministers — Mr Power and Finance
Minister Bill English — on April 9.
It effectively puts board members
on notice that their jobs are up for
review, saying the first priority is
increasing the commercial expertise of
the boards — the reason ACC Minister
Nick Smith gave for sacking his board
chairman, Ross Wilson, this week.
New appointments are due in late

INSIDE
■ ACC threatens NZ’s credit rating,
warns Smith — A3, B1
April or early May. Mr Power said he
would not comment on whether major
changes would be made.
The ministers want to set clear financial targets, which boards will be
held accountable for achieving.

They also want greater financial
openness, and a continuous disclosure
requirement similar to that covering
stock exchange-listed companies could
be applied to large SOEs.
The letter indicates the Government will not let SOEs ease the pain of
the recession by not paying dividends.
It plans to discuss its dividend
expectations with each SOE, and
reserves the right to direct them to pay
a dividend as a last resort.
‘‘The relatively poor (and declining)
financial performance of SOEs,

coupled with the challenging economic
conditions, has brought us to the conclusion that change in the SOE portfolio is urgent and essential,’’ the letter
says.
In the year to June 31 last year, the
18 SOEs, excluding Ontrack, made
profits of $639 million.
Yesterday, taxpayer-owned power
company Meridian Energy — usually a
big dividend payer to the Government
— reported a 15 per cent fall in profit.
Mr Power said he and Mr English
were concerned about all SOEs, which

range from property valuer Quotable
Value to the power generators.
‘‘I think shareholders representing
$24 billion of taxpayers’ money have an
obligation to make sure entities are
obtaining a decent financial return.’’
Wayne Brown, chairman of
Transpower and the telecommunications and broadcasting SOE Kordia
Group, said the letter from Mr Power
was a perfectly appropriate pursuit of
commercial objectives and was what
he expected from an owner.
‘‘It’s not a problem for me.’’

MAN, 21, CHARGED WITH
KILLING 5-WEEK-OLD BABY

A 21-year-old Taupo man has been
arrested and charged with the murder
of a 5-week-old boy who died in
Auckland’s Starship hospital last
Saturday.
Jayrhis Ian Te Koha Lock-Tata was
first admitted to Taupo Hospital with
head injuries on March 5, then
transferred to the Starship.
A post-mortem examination found
Jayrhis died as a result of nonaccidental head injuries
The arrested man, who is
unemployed, is to appear in the Taupo
District Court today.
NZPA

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