Las Vegas Sands Corp. has acknowledged in its annual report that it “likely” violated US law in connection with past business dealings in China.
It is the first public admission of possible wrongdoing by the US-listed, Las Vegas-based gambling giant (NYSE: LVS), which has been the target of ongoing investigations by the US Securities and Exchange Commission and the Justice Department. These are reported to center on activities dating back several years to the company’s initial expansion into Macau. They include an abortive attempt to set up a trade center in Beijing and plans to sponsor a Chinese basketball team, both subsequently abandoned. Also under scrutiny are several millions of dollars LVS paid through a Chinese middleman allegedly to help establish good relations with key figures in the government of the PRC.
In the Friday filing with the SEC, the company reported that its audit committee and independent accountants had determined that “there were likely violations of the books and records and internal controls provisions” of the Foreign Corrupt Practices Act, which forbids US companies and individuals from bribing officials abroad. It wasn’t known whether this would result in any losses, the filing states. “The company is cooperating with all investigations,” it said.
LVS’ activities in China came to the attention of US authorities after Steven Jacobs, who was fired in 2010 as president of the company’s Hong Kong-listed Macau subsidiary (HKSE: 1928), sued for wrongful termination. In legal papers filed in Nevada state court in Las Vegas he charges that he was pressured to exercise improper leverage against government officials in China. He alleges also that the company allowed organized crime figures to operate in its Macau casinos and that prostitutes were provided to high rollers on the approval of Chairman and CEO Sheldon Adelson.
Mr Adelson, the company’s controlling shareholder and a billionaire many times over, is already a figure of some controversy in the States by virtue of his financial and political clout. A leading donor to the Republican Party, he was reported to have personally intervened with GOP leaders in Congress to stall a resolution opposing China’s bid for the 2008 Summer Olympics on the basis of its human rights record.
He became the largest individual contributor in the history of American politics during the 2012 electoral cycle, giving more than US$60 million to eight Republican candidates, including failed presidential hopefuls Newt Gingrich and Mitt Romney.
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