Genting shares rallied early Monday morning following the announcement over the weekend that Star Cruises had pulled out from the integrated resort project at Sentosa.

The counter later reversed course - to close 3 per cent lower at 80.5 cents.

The move by Star Cruises is aimed at addressing concerns about the possible involvement of gaming tycoon Stanley Ho in the Sentosa project.

This has been the most drastic move taken by Genting so far to distance itself from gaming tycoon Stanley Ho.

Under a deal announced last month, Mr Ho is part of a group of investors who are taking a 6.99 per cent interest in Star Cruises.

In return, Genting and Star Cruises would take a stake in an upcoming project in Macau managed by Mr Ho.

Singapore authorities were quick to seek clarification over the deal.

And last week, they made it clear that Genting-Star would not automatically get the casino licence for Sentosa, despite getting the right to build the resort.

Over the weekend - Genting sold off its 25 per cent stake in the Macau project to Star Cruises.

And Star withdrew from the Sentosa project - leaving Star to focus on Macau, and Genting on Sentosa.

The move did not come as a total surprise - but some industry watchers have described it only a half-hearted attempt to placate Singapore concerns.

On the one hand, Genting wants to ensure it can pass the strict probity checks, and be granted a casino licence here.

And on the other, it still wants to keep its interest in Macau.

Analysts pointed out that the Casino Control Act gives the authorities wide-ranging powers to check on practically any relationship they so choose.

This means in the case of Sands, probity checks could go all the way to the US to verify all of the operator's business interests and its associates in any part of the world.

In the case of Genting, the problem appears to be Stanley Ho's 6.99 per cent interest in Star Cruises and his unproven links to the triads in Macau.

Sources say the authorities' main interest is in ensuring that no undesirable persons or entities are bank-rolling the Singapore casinos or have an undue influence in their operation.

Even after a casino licence has been approved, there's a five per cent limit on the equity an undesirable entity can acquire through the open market.

Beyond this the authorities can direct the said entity to dispose of its interest to a permitted level or risk losing the casino licence.

The integrated resort operators can only apply for the casino licence after at least 50 per cent of the project has been completed. - CNA/yy