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Howard Stutz

Las Vegas Sands, outside auditing firm part ways

30 April 2013

LAS VEGAS -- Las Vegas Sands Corp. parted ways with the company’s longtime outside auditing firm but analysts said Monday that investors shouldn’t speculate beyond the announcement.

In a filing with the U.S. Securities and Exchange Commission late Friday, Las Vegas Sands said Pricewaterhouse Coopers had resigned as the company’s auditor on April 23. Las Vegas Sands said in the filing there had not been any “reportable disagreements” with the auditing firm going back to 2011.

In March, Las Vegas Sands told investors in a regulatory filing that an internal audit concluded there were “likely violations of the books and records and internal provisions” of the Foreign Corrupt Practices Act.

RBC Capital Markets gaming analyst John Kempf said the disclosure by Las Vegas Sands of the likely violations, without notifying Pricewaterhouse Coopers, created some hostilities between the companies.

“While the resignation of the company’s auditor certainly raises some red flags, it is our understanding that personal disagreements led to a deterioration of the relationship between Las Vegas Sands and Pricewaterhouse,” Kempf said. “We believe the fact that Pricewaterhouse is resigning without issuing a qualified opinion or accusing Las Vegas Sands of violating any laws or practices confirms this view.”

Las Vegas Sands has been the subject of investigations by the U.S. Department of Justice and the SEC over potential Foreign Corrupt Practices Act allegations that were raised in a lawsuit filed by the former chief executive of the company’s Macau casino operations. The case is pending trial in Clark County District Court.

A spokesman for Las Vegas Sands told Bloomberg News that Pricewaterhouse Coopers has worked for the company since 2004 and the worked for company chairman Sheldon Adelson for 25 years.

In the SEC filing, Las Vegas Sands said Pricewaterhouse’s audits of the company’s consolidated financial statements fiscal years 2011 and 2012, “contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.”

JP Morgan gaming analyst Joe Greff told investors said the timing of the announcement, a few days before Las Vegas Sands reports first-quarter earnings this week and in the middle of Foreign Corrupt Practices Act investigations, “looks bad.” However, he expects another major accounting firm to be hired quickly.

“We think this is likely a situation where a service provider reviewed the amount of fees its client pays in relation to services rendered and decided to quit the account,” Greff said in a report to investors. “Given what is stated in the (filing) and based on our conversation with the company, we don’t believe there is anything wrong with Las Vegas Sands’ accounting or financials that caused Pricewaterhouse to quit.”

Shares of Las Vegas Sands closed at $55.67 on Monday on the New York Stock Exchange, down 50 cents or 0.89 percent.