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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

News report turns heads, but licensed gaming companies are always under investigation

15 August 2012

LAS VEGAS -- In reality, Nevada's licensed casino companies are always under investigation.

So an international media report Monday that Las Vegas Sands Corp. is being probed by the Nevada Gaming Commission and Control Board over bribe payment allegations in mainland China isn't much of a revelation.

Nor is there much new in reports on the allegations, some of which are a decade old.

Still, the Reuters news agency turned heads Monday with its report.

On Tuesday, Control Board Chairman Mark Lipparelli would not directly comment on Las Vegas Sands, which reportedly is also being investigated by the U.S. Department of Justice and the Securities and Exchange Commission over its business dealings in China.

Lipparelli said the board doesn't comment on whether there is a "pending investigation" against a gaming company.

"It's up to the company to prove its suitability at the time it applies for licensing," Lipparelli said. "It's also up the company to continue to prove its suitability well after the license has been granted."

Gaming sources, however, said the control board has asked the company to produce information related to the bribery allegations - the same information the company probably would be asked to give federal investigators.

It's unclear when that request was made. According to current and former state gaming regulators, control board agents regularly monitor a publicly traded gaming company's activities and can request documentation or background information at any time as a normal business practice.

Gaming attorneys said the language is spelled out in a company's Order of Registration, a licensing requirement.

Such regulatory inquiries are handled by a gaming company's compliance committee, an independent board that usually includes people with gaming experience, such as retired gaming regulators and executives. Companies in other industries often have compliance committees, but tend to deal only with narrow legal issues.

A gaming compliance committee handles far more complex issues that are unique to the heavily regulated industry, such as ensuring a casino operator does business only with individuals and companies the state considers suitable.

Sources said gaming agents are probably also looking at other potential hot-button issues in the casino industry, including the legal fallout from the split between Wynn Resorts Ltd. and former shareholder Kazuo Okada and the federal indictment of longtime gaming industry lobbyist Harvey Whittemore related to allegations of illegal political campaign contributions.

But any investigation involving Las Vegas Sands is sure to get far more attention because of Chairman Sheldon Adelson's involvement in national politics. In recent weeks, the Wall Street Journal, The New York Times, Investors Business Daily and ProPublica, as well as Reuters, have published detailed reports about Adelson's business practices.

The 79-year-old billionaire and his wife have attracted attention by donating more than $30 million to benefit Republicans in the current election cycle, including $10 million to a super PAC supporting presumptive Republican presidential nominee Mitt Romney.

On Tuesday, Adelson hosted a "briefing" at The Venetian for Romney donors and presumptive Republican vice presidential nominee Paul Ryan.

While his political involvement has made Adelson a lightning rod, it's unclear how extensive the official investigations may be.

Much of the information that has surfaced in news reports stems from a wrongful termination lawsuit filed in Clark County District Court by former Sands China CEO Steve Jacobs in October 2010. Four months later, the Department of Justice requested documents from Sands related to its compliance with the Foreign Corrupt Practices Act, which bars American companies from paying bribes to foreign officials to gain business advantage.

Las Vegas Sands spokesman Ron Reese said the company "has consistently denied the allegations" made by Jacobs but declined to say more.

"There is not much we can say publicly," Reese said. "Certainly, the company is cooperating with any inquiry and will continue to do so."

Some of the acts recounted in media reports happened a decade ago and include allegations brought forward in a 2008 District Court trial in a lawsuit involving Hong Kong businessman Richard Suen.

Suen sued Las Vegas Sands in 2004 and alleged nonpayment for his work in helping the company obtain a Macau gaming subconcession in 2002.

A jury determined Suen did introduce company officials to Chinese government leaders in the run-up to the licensing process and awarded him a $43.8 million judgment against the company following a 29-day trial. The Nevada Supreme Court vacated the judgment in 2010 and sent the case back to District Court for a retrial, which is pending.

According to testimony in the Suen trial, Adelson, as a favor to the Chinese government, asked former U.S. House Majority Whip Tom DeLay to kill a nonbinding resolution condemning China's bid to host the 2008 Summer Olympics. Trial testimony showed that the resolution wasn't going to be put up for a vote, in any event, but Adelson and the company still took credit for the death of the politically embarrassing condemnation.

That incident and other activities were aired in national media reports at the time but resulted in no criminal charges. Still, they haunt Adelson and his company.
News report turns heads, but licensed gaming companies are always under investigation is republished from CasinoVendors.com.