The great casino cash-in: the Sun King (and his shady past)

From humble beginnings, Sol Kerzner has built up a massive business empire, and is set to benefit from Britain's new supercasino. But controversy has never been far away. By Paul Vallely

Thursday 01 February 2007 01:00

The cowboy outfit - complete with Stetson hat, hand-tooled boots and initialled belt - given by Philip Anschutz, the owner of the Millennium Dome, to John Prescott at his Colorado ranch, may turn out to have cost him a good deal more than the £11,000 reported last year. It may have cost him the chance to run Britain's only unlimited-stakes Las Vegas-style supercasino.

Yet, if so, there is one man in the Anschutz camp who probably isn't too bothered. His partner in the enterprise was the South African billionaire Sol Kerzner, whose Bahamas-based gambling group, Kerzner International, was to run the Dome casino. Mr Kerzner, you see, knows a thing or too about gambling, so he hedged his bets. As well as the Greenwich bid he put himself at the head of the Manchester consortium which, to everyone's surprise, won.

Sol Kerzner is now poised to become the most powerful man in the British gambling industry, and the fact is raising eyebrows.

Questions are being asked about how Manchester, which came bottom in the original assessment of the final shortlist, trumped Greenwich, which came top. Conspiracy theories are rife, not just because Manchester is a Labour safe haven which will give the Government's casino revolution an easy ride, but also because Kerzner's local partner, ASK Developments, recently gave £5,000 to the Manchester Central constituency Labour Party.

Yet Mr Kerzner is an easy target. He is not just, as the Daily Mail expostulated yesterday, vulgar and brash and apt to begin his telephone calls with the words: "So what the fuck is going on?". He is a small man with big wives. And his $3.8bn business empire is of Byzantine complexity with a maze of listed and unlisted companies, interlocking shareholdings and directorships, management fee conduits, family trusts and control pyramids across four continents.

Oh, and one other thing. He has a history of secretive donations to political parties - and, it has been claimed, and found proven by one legal authority, of paying bribes to politicians.

Just the kind of chap, critics suggest, that New Labour would regard as a "fit and proper person" to supervise a massively controversial experiment in the liberalisation of gambling.

So, consider the man's track record. He was born in Johannesburg in 1935, the son of Russian immigrants, who was regularly beaten up for being Jewish. But young Sol, always small for his age - and still towered over by the women in his life - was a fighter. He took up boxing and eventually became welterweight champion at the University of Witwatersrand, where he studied accountancy.

His parents ran a small boarding house in Durban but he saw greater potential and borrowed money from his accountancy clients to build South Africa's first five-star hotel, the Beverly Hills on a deserted beach north of Durban. Within two years it was a favourite with international tourists and his business career had begun. From it he began to build a chain of hotels.

His big breakthrough came when South Africa's apartheid government began to bestow "independence" on its black homelands. Trading on the white government's puritanism he opened his first casino hotel on the very day that Bophuthatswana, just two-and-a-half hours' drive from Johannesburg, was given its independence.

Two years later came Sun City with its 400 slot machines, show girls, porn cinemas and prostitutes - a place where blacks and whites could drink, gamble and even have sex together in an opulent over-the-top setting with international stars such as Frank Sinatra and Elton John.

To outsiders it became "Sin City". A monument to the worst excesses of apartheid years, it was targeted by anti-apartheid campaigners. But it made Kerzner "the richest man in Africa" and earned him the nickname of the Sun King. When a rival firm threatened to build a $55 million casino resort that would dwarf Sun City, the adroit Kerzner engineered a merger with it.

He became a political wheeler-dealer too. Unsubstantiated accusations of him bribing a homeland leader to secure a gaming licence dogged him for years, before they were dismissed by the South African Attorney-General. But in 1986 came fresh allegations - that he bribed the prime minister of Transkei, George Matanzima, to gain exclusive gambling concessions.

A decade later the authorities in New Jersey uncovered proof that one of his companies transferred £600,000 to a middle man for Matanzima. He eventually admitted paying the money, but insisted it was extorted from him. Then in 1996 a South African provincial commission uncovered systematic corruption within a development corporation that owned half the equity in his Bophuthatswana operations.

He was making other payments too. Before the elections at which power in South Africa transferred from white to black in 1994, he gave cash to both the ANC and the National Party. Eventually Nelson Mandela confirmed a payment of 2m rand (£140,000). "Sol," he said, "is by far the greatest entrepreneur in this country's tourist business. [The Kerzners are] an example of a family not only interested in their own enrichment, but willing to give something back."

But the entrepeneur could see his days in South Africa were numbered. The ANC moved to legalize gambling with laws that required him to forfeit seven out of his 17 existing licenses. He sold the hotel chain, and later Sun City, and looked elsewhere.

In 1985 he left South Africa and moved to Britain, where he was tempted to try his luck. In 1986 he applied to the Gambling Commission for a licence, but withdrew the application without explanation. Rumours were that he was not welcome. He turned his attention to the Bahamas and bought a small casino-resort on Paradise Island.

From there he expanded to the US mainland. In 1994 he bought a £300m casino hotel in Atlantic City and then, following his South African homeland precedent, he opened the world's second largest casino on a reservation belonging to the tribe formerly known as the Mohicans.

The US authorities investigated him and found he had committed bribery, but said it was unfair to disqualify him for something a decade earlier. He had, they said, " clearly and convincingly demonstrated good character, honesty and integrity".

The way was now open for a move into other jurisdictions and he invested one last time in South Africa, launching alongside Sun City a family playground and entertainment centre, Lost City (complete with artificial rain forest) where the corridors leading to the main casino featured children's versions of the slot machines which packed the main "treasure hall". But in the main his eyes were elsewhere.

In the years that followed he built a lavish empire that stretches across four continents to include the US, Mexico, Dubai, Mauritius, the Maldives, Singapore, Las Vegas and now Britain. The resort in the Bahamas, which became his headquarters, was transformed into a high kitsch super-deluxe Disneyesque "Atlantis" resort with 2,317 rooms, a 50,000 square-foot casino, 60 acres of pools, a marine animal park, a six-storey Mayan temple and 35 restaurants run under the names of some of the most sought after chefs in the world. It is the nation's second largest employer after the government.

From there he runs a business which includes the exclusive international chain of One & Only Hotels, with suites that cost more than $4,500 a night and servants who come round to clean the grains of sand from guests' sunglasses. The South African now spends his time travelling between them and his homes in Chelsea, the south of France and Cape Town.

En route he has acquired a celestial set of celebrity acquaintances: guests at his 70th birthday at his villa in Monaco included Liza Minnelli, Shirley Bassey, Bono and Tracey Emin.

With the succession of businesses has also come a succession of wives.

His first marriage, to Maureen Adler, with whom he had three children, ended in divorce in the early 1970s. His second, to Shirley Besthier, came to an end in 1978, when she killed herself leaving behind a three-year-old son and a ten-month-old daughter.

His third was to South Africa's first Miss World, Anneline Kriel - the 1992 Miss Universe pageant was held at his ornate and lavish Palace Hotel in South Africa. There were allegations of a stormy parting, details of which were reported in a book by the South African financial journalist Allan Greenblo which Kerzner had suppressed in 1997, and then again in 2002, claiming in court that the details on his business and marital affairs were defamatory.

His fourth bride was to have been the Californian supermodel Christina Estrada but he left her in 2000 and married her equally long-legged best friend Heather Murphy, who was then, at 33, half his age. His latest wife last year persuaded the former 60-a-day smoker, who gave up in 1989 when he had a heart attack at the age of 54, to check into the Betty Ford Clinic to curb his legendary whisky consumption. He rebelled because he was forced to share a, do his own laundry and was not allowed to bring with him his butler, Ricardo.

But behind the high life the high business continued. Most recently, as part of a $1.5bn project in Dubai - where another 2,000-room Atlantis is under construction on a man-made island in the shape of a mammoth palm tree - he has put together a consortium that includes the Dubai government, the bankers Goldman Sachs, and New York's most powerful property developer, Stephen Ross, which has bought back Kerzner International, previously quoted on the New York stock exchange, and turned it into a private company.

The typical Kerzner touch is that the deal has ended up with him controlling 24 per cent of the new firm while at the same time pocketing $418m through the sale. "Sol's consistent approach has been not to risk his own money but to take slices of the action as it progressed," as Allan Greenblo said.

Targeting Tony Blair's government as "the soft moral underbelly of Europe" for an industry barred from most European countries is only his latest coup. The Gaming Board granted him a British gambling licence in 2004 to run a small casino in Northampton. Now he is poised for the big one.

Two years back he was declared the city's preferred operator for Britain's one and only supercasino. He will have to tender again for it now.

But it would be a brave gambler, or a foolish one, who would put money on him losing.

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