Sands China files criminal suit against Jacobs
US officials are probing casino operator Las Vegas Sands’ operations in Macau over questions about whether it broke anti-bribery laws, Michael Leven, Sands China’s acting chief executive officer, confirmed to Macau Daily Times yesterday, revealing that the company has filed a criminal suit in Macau against former CEO Steve Jacobs.
On Tuesday, the US-based gaming giant said in its annual report it had received a subpoena from the US Securities and Exchange Commission (SEC) on February 9 requesting that it supply documents relating to its compliance with the Foreign Corrupt Practices Act. The law prohibits US companies and their intermediaries from making improper payments to foreign officials to win or retain business.
The US Justice Department was also “conducting a similar investigation”, said the parent company of Sands China.
Las Vegas Sands said it believed the subpoena stemmed from allegations in a lawsuit filed against it by its former head of Macau operations.
“We believe that this emanated from accusations made in Jacobs’ lawsuit,” Leven, who is also president and chief operating officer of Las Vegas Sands, told MDTimes.
“If you read the subpoena, it looks like it was almost directly from the allegations made on that lawsuit. There are some other mentions on the subpoena about triads and things like that, but we think that’s cover,” he added.
“We assume this, because the SEC does not tell what they are investigating.
“We don’t know if they [launched the probe] because someone told them something. We’re making the assumption it was the Jacobs’ lawsuit.”
According to Sands China’s CEO, the process will take several years. “It’s a voluminous amount of information, they go back probably five years at least.”
“We are cooperating with the [US] government in every way possible. There is an enormous amount of legal activity that goes on for a long time,” Leven said.
“The good news for us is that it will help us prove that Jacobs’ lawsuit is fallacious.”
Leven again denied the allegations laid out in the wrongful termination claim filed in Nevada by Sands China former executive. Jacobs claimed Sands’ billionaire founder Sheldon Adelson made “repeated and outrageous demands”.
Those claims included arranging “secret investigations” into Macau officials to use as leverage against negative policy decisions and threatening to withhold business from “prominent Chinese banks” if they refused to use “influence” on senior government officials.
Las Vegas Sands in July 2010 removed Jacobs as CEO of Sands China. It subsequently said he had exceeded his authority and failed to keep the company’s board informed of important business decisions.
Furthermore, Leven disclosed yesterday that Sands China has “filed a criminal complaint in Macau for defamation and with evidence of extortion, which complicates Mr Jacobs’ situation”. The lawsuit was filed on January 21, he told MDTimes.
Las Vegas Sands also claims that Jacobs’ lawsuit should be resolved in Macau’s courts, since he was hired by Sands China. Jacobs’ position is that the US court is the appropriate forum since Venetian Macau is controlled by Adelson from his Las Vegas offices.
A decision on that should be made in Las Vegas “on March 15”, Leven said.
Leven also assured that local authorities are not probing Sands China. “Nothing is going on in Macau. We met with Government officials, who have indicated to Mr Adelson they support his position. I’m comfortable on this with any [local] officials,” he said.
Macau’s secretary for Economy and Finance Francis Tam Pak Yuen said yesterday this is an issue between Sands China and one of its employees. Nonetheless, the Government asked for a full report from the gaming operator, Tam stressed, quoted by local broadcaster TDM.
Investors pounded Sands China’s share price yesterday, with the stock down about 7.5 percent at HKD 17.62 in morning trade in Hong Kong, after Tuesday’s announcement. It closed at HKD 17.86, down 6.2 percent.
Shares of Sands China slumped to a two-month low, even though the company said its 2010 net profit more than tripled to USD 666.5 million (HKD 5.12 billion).
Analysts said that while investor sentiment was weak, there was unlikely a direct impact on the company’s Macau business.
Aaron Fischer, head of Consumer and Gaming at CLSA, said they were not adjusting their earnings estimate for Sands China.
“This news does not come as a major surprise and we are not aware of any investigations taking place in Macau,” he said quoted by Reuters.
Carlo Santarelli, an analyst at Wells Fargo, said quoted by media that “the headline risk will serve as an overhang on shares in the near term, until more on the matter is known”.
http://www.macaudailytimes.com.mo/macau/...l-suit-against-Jacobs.html |
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