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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Las Vegas Sands lawsuit: Licensing process described

2 May 2008

LAS VEGAS, Nevada -- A Macau government official said mainland Chinese leaders had zero input on the steps the Special Administrative Region undertook to liberalize gaming in 2002, which led to Las Vegas Sands Corp. winning a shared gambling license.

Jorge Oliveira, the commissioner for legal affairs for the Macau Gaming Commission, testified Thursday in Clark County District Court in a 2-week-old civil lawsuit where Hong Kong businessman Richard Suen claims he's owed millions of dollars by Las Vegas Sands for helping the company in its licensing efforts.

Oliveira, under questioning from Las Vegas Sands attorney Rusty Hardin, said on several occasions the Communist Chinese government didn't dictate Macau's casino license selection process.

"Macau was not told what to do," Oliveira said. "There was no involvement from the mainland government."

Attorneys for Suen contend that his efforts in setting up a series of July 2001 meetings in Beijing between Chinese government leaders and Las Vegas Sands executives played a key role in the company winning the concession it shared with Hong Kong-based Galaxy Entertainment in February 2002.

Las Vegas Sands, however, could not come to an agreement with Galaxy and Oliveira was the Macau official who decided to allow the two companies to split, with Sands earning its own subconcession. Oliveira is expected to testify about that decision when he returns to the witness stand today.

Oliveira, 48, a native of Portugal, moved to Macau in 1989 to help in the transitional period when Macau was moving from a Portuguese colony to a Special Administrative Region of the People's Republic of China. Oliveira said he remained after the transition as the director of Macau's legal affairs office. Macau's capitalistic system remained intact even though the region is governed by China.

He said only 18 national laws of China apply to Macau.

In 2007, Macau casinos reported gaming revenues of $10.3 billion, surpassing the annual revenues produced by the Strip. Oliveira told jurors 80 percent of Macau's budget comes from gaming taxes, roughly 39 percent of casino revenues.

Oliveira said he played a role in drafting the provisions that allowed gambling to continue in Macau after the transition at the end of 1999. He said it was clear to anyone watching the process that Macau was going to liberalize casino gaming, removing a monopoly that had existed since the 1960s. Controversial Hong Kong billionaire Stanley Ho operated Macau's 11 casinos and Oliveira testified that Macau officials wanted something different than the small, dingy casinos operated by Ho.

"The framework was that we wanted integrated resorts, something more than just casinos," Oliveira said.

Under Hardin's questioning, Oliveira testified the bidding process for three Macau gaming concessions was open and that certain criteria needed to be met.

"You wouldn't need to go to a secret meeting in Beijing?" Hardin asked Oliveira.

"Everybody would have known. The discussions were very open," Oliveira said.

Oliveira served as one of the members of the nine-person Tender Commission, all of whom were Macau government officials.

He said 21 casino proposals were submitted and three were rejected immediately. Las Vegas Sands was offered up as the management portion of a bid submitted by a Taiwanese group that was ultimately rejected. However, Oliveira said the Tender Commission was favorable to what the Las Vegas Sands executives had proposed.

From Jan. 31, 2002, to Feb. 1, 2002, Oliveira said he received a series of correspondences from Las Vegas Sands, saying the company had severed ties with its Taiwanese partner and was joining the Galaxy bid as the management team. In earlier testimony, Las Vegas Sands President Bill Weidner said Las Vegas Sands was asked to join the Galaxy bid by Macau's chief executive, Edmund Ho.

In early February 2002, Galaxy, Wynn Resorts and Stanley Ho were awarded the concessions.

Oliveira testified he didn't know Suen and could not recognize the names of any of his business associates. After the jury left the courtroom, Oliveira walked over to Suen and shook hands, introducing himself.

Oliveira's testimony delayed Suen's third day on the witness stand. The government official is traveling back to Macau on Saturday. Oliveira told jurors he is not being paid for his testimony by the company, but Las Vegas Sands agreed to pay for his travel expenses.