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Best of Howard Stutz

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Howard Stutz
 

Sands exec testifies he tried to negotiate deal with Suen

22 April 2008

LAS VEGAS, Nevada -- Las Vegas Sands Corp. President Bill Weidner attempted throughout 2001 to negotiate a financial arrangement with a Hong Kong businessman who was trying to help the casino operator obtain a gambling license in Macau.

Weidner, testifying in a Clark County District Court civil trial Monday, said he and Richard Suen exchanged more than 20 letters and faxes in 2001 over a potential success fee. Las Vegas Sands won a lucrative shared gaming concession from the Macau government in 2002. Suen filed a lawsuit two years later, claiming he's owed millions for his efforts.

Suen, who was introduced to Las Vegas Sands by company Chairman Sheldon Adelson's brother, Leonard, told Weidner in a letter dated July 14, 2001, that he had an investor who was willing to fund 49 percent of a potential Macau casino project. Suen wanted a $40 million success fee plus expenses if Las Vegas Sands won the gambling concession. He told Weidner the partner was willing to pay $20 million of the fee.

Weidner countered two days later with a proposal that would have given Suen a $5 million success fee and 2 percent of the net profits generated by the casino venture. Weidner said Las Vegas Sands didn't want a partner at the time.

"It was the beginning of the negotiating process," Weidner said. "Richard was telling me things we needed to do to get a license and he was asking me to go to Sheldon with his proposal."

Weidner said Suen wanted Las Vegas Sands to make investments in Beijing, such as building a convention center, something the company was opposed to doing.

Under questioning by Suen attorney Jeff Dykes of Denver, Weidner laughed when asked what the net profits were today from the company's Macau casinos. Las Vegas Sands operates the Sands Macau and the $2.4 billion Venetian Macau, which opened in August.

"The Venetian Macau currently does not generate a profit," Weidner said. "We are a net negative in Macau. We have well over $3 billion in building already with another $3 billion on the way and another $6 billion after that. It will be years before we see net profitability." Weidner bristled when Dykes said Las Vegas Sands had earnings of $800 million in Macau last year, using the accounting term for cash flow. Weidner, who has been president of the company since 1995, said the attorney was not accounting for depreciation, taxes and other payments when trying to calculate what Suen's payments might have been under Weidner's 2001 proposal.

"The math you're doing is misleading the jury," Weidner said. "It's a meaningless calculation. You are using a number that does not equate to profitability. (Cash flow) is meaningless in terms of net profitability. Yes, we will see profitability in the future."

Weidner, the No. 2 executive at Las Vegas Sands, spent about three hours on the witness stand and is expected to return today.

He told jurors he first visited Macau about 1980 while on a trip to Hong Kong to drum up high-roller business. At the time, he was employed by Caesars in Atlantic City. He made a couple of more visits to Macau between 1980 and 1997. By 2000, he became aware of rumblings that the Chinese government might open up gaming in the enclave, removing a monopoly that belonged to Hong Kong billionaire Stanley Ho.

"It was still too unstable and uncertain," Weidner said. "There were rumors but nothing concrete."

A one point in 2000, Adelson suggested Weidner meet with Suen, who was a business partner and friend of the chairman's brother. Weidner testified that Adelson told him, "he may be able to help."

Weidner traveled to Macau in late September 2000 and met with Suen. The jury was shown a photograph of Weidner and Suen at the Ruins of St. Paul, a Macau landmark.

Suen eventually arranged some meetings with Chinese government officials in July 2001. But before that meeting, Adelson and Weidner attended a meeting in Macau with Edmund Ho, the chief administrator of Special Administrative Region, about casino prospects. The meeting was arranged by a Hong Kong businesswoman who was a friend of Adelson. Suen did not know about the visit.

"Richard had told us that Edmund Ho was not meeting with any applicants for a gaming license," Weidner said.

Ho wanted a casino on a smaller scale than what Las Vegas Sands had been proposing, Weidner said.

In his July 16 letter to Suen, Weidner told him of the three-hour meeting with Ho and asked him to set up another meeting. "Part of the communication was to find out if he was BSing me," Weidner said. "I wanted to let him know I met with Edmund Ho when he said we couldn't."

Weidner's testimony varied from Adelson's concerning the company's efforts to stop Congress from voting on a nonbinding resolution in 2001 that would have asked the U.S. Olympic Committee to vote against China's bid to host the 2008 Summer Olympic Gaming in Beijing.

Adelson, on behalf of the Beijing mayor, contacted House Majority Leader Tom Delay to ask about the legislation. Following the call, Adelson was told the bill would not come up for a vote.

Weidner then contacted the company's Washington, D.C.-based lobbying firm with instructions to tell the Chinese embassy that Las Vegas Sands was involved with keeping the vote from happening. He said Beijing officials were grateful.

Outside of court Monday, Weidner said he thinks a corporate furor caused by Adelson's testimony about a possible breach of fiduciary responsibilities has blown over. Weidner acknowledged he met with corporate and board executives after Adelson had testified Friday.

"It all got straightened out by the end of the day," Weidner said. "The rules of good corporate governance were followed. When information like that comes out, you have to make sure the concept of breach of fiduciary duty is fully investigated."