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Las Vegas Sands' effort hits snag in court

5 October 2007

by Matt Ward

LAS VEGAS, Nevada -- A District Court judge Wednesday set back efforts by casino operator Sheldon Adelson to keep sealed pretrial depositions and other business information that his attorneys said could threaten the billionaire's growing Chinese operations.

Rusty Hardin and Sam Lionel, attorneys for the Las Vegas Sands Corp., argued during a hearing in a case filed more than 18 months ago that releasing the sealed information could put the casino operator's Macau gaming license in jeopardy.

The depositions and other information were provided by the casino owner and his executives in response to three separate lawsuits working their way through state and federal courts in Las Vegas. All three cases involve contract disputes with allegations that Adelson reneged on promises to compensate individuals for their help in Adelson's 2002 acquisition of a lucrative Macau casino concession.

Adelson was the first American to open a gaming facility in China, recouping his entire $265 million investment in the Sands Macau one year after it opened in 2004.

Although most of the information is still under seal, plaintiffs in a lawsuit filed against the Sands by three businesspeople who claim they helped Adelson obtain his license to operate in Macau, are trying to get the information unsealed for their case.

Wednesday's ruling followed an August decision by Bonnie Bulla, the discovery commissioner in the case filed against the Sands by Clive Jones, Darryl Turok and Cliff Cheong, to allow most of the evidence gathered in the case, including a video deposition of Adelson, to remain confidential.

She ruled then that the evidence could be kept confidential despite repeated failures by Adelson's attorneys to prove how the information could harm the billionaire and his businesses if it was made public.

"The burden (to prove harm) was allowed to shift impermissibly to the plaintiff in this case," Judge Kenneth Cory ruled.

Defendants seeking to keep pretrial evidence secret normally must prove they would be irreparably harmed by the release of such information.

The case will now be returned to Bulla's courtroom, where Adelson's legal team will get a third chance to argue for keeping the casino owner's deposition and those of many current and former Sands executives secret.

"It's been extraordinarily difficult. There are former executives who we have a right, even an obligation to talk to, who won't talk to us. ... It (secrecy and confidentiality of records) has been pervasive, literally affecting every aspect of the case," plaintiff's attorney Don Campbell said.

In an ironic twist, some of the same information being sought in the Jones-Turok-Cheong case has already seeped out in a related case, filed by Richard Suen and Round Square Co. and set for trial in February. Suen is a Hong Kong businessman and longtime friend of Adelson's brother, Lenny Adelson. Suen approached the casino operator's brother about applying for a Macau casino concession. Suen also has deep ties to high-ranking officials within the Chinese government. He claims in his case that he introduced Adelson and other Sands executives to the very officials who would later figure prominently in the company's acquisition of a Macau gaming concession.

The case was filed in October 2004 and the casino company tried to keep information from it out of the public eye as well. Some confidential information, however, was accidentally made public earlier this year by Adelson's own attorneys.

The filings accidentally unsealed in the Suen case have since been resealed, although some information did leak out in news reports.

The Business Press, a sister publication of the Review-Journal, reported that Las Vegas Sands President Bill Weidner confirmed in his deposition that he and Adelson were summoned to Beijing at the behest of top Chinese communist leaders in 2001. The leaders, including China's then-Vice Premier Qian Qichen and former Beijing Mayor Liu Qi, learned of Adelson's longtime connections to the Republican Party. They also knew he coveted a Macau concession.

According to court records in the Suen case, Adelson was asked to use his connections to help kill legislation in the U.S. House of Representatives that would have potentially prevented China from winning its bid to host the upcoming 2008 Olympics.

According to depositions taken in the Suen case, Adelson called upon then-House Majority Leader Tom DeLay in 2001 to stall legislation sponsored by California Democrat Tom Lantos to keep the U.S. Olympic Committee from voting for China's bid. The legislation was part of an American response to China's holding 24 members of the U.S. military for 11 days after their surveillance plane crashed on Chinese territory earlier that year.

Also according to testimony taken in the Suen case, DeLay killed the Lantos legislation and Adelson's Washington public relations firm, Patton Boggs, was instructed by Weidner to "suggest" to the Chinese Embassy that Adelson was "involved in the process" that eventually defeated the bill.

Macau's casino patriarch, Stanley Ho, may have confirmed the importance of Adelson's assistance to the Chinese government when he told a Las Vegas Sands executive vice president that, "by the way, that Olympic thing, I think you guys won the bid ... that's what I hear back from my guys in Beijing," according to a deposition from Sands executive Brad Stone that was made public in the Suen case.

Adelson eventually won his bid in 2002 despite a series of unrelated snafus, including that Las Vegas Sands initially partnered with a company that was based in Taiwan, China's political nemesis.

Instead of being rejected for political reasons, the gaming company was at the last minute "married" by Macau's leader to Galaxy Entertainment Group, according to Weidner's testimony, and the Taiwanese company's own bid was rejected. Nevada gaming regulators, however, nixed the Galaxy combination after the Hong Kong company repeatedly failed to show regulators their ownership records.

Then, Macau officials, specifically Chief Executive Edmund Ho, abruptly altered the island's gaming law to allow for three subconcessions in addition to three original concessions, creating an extra-legal environment that allowed the Las Vegas Sands to operate as an independent subconcession holder, a method employed specifically to accommodate the Las Vegas operator and no other company, according to legal expert James Tong, a witness in the Suen case.

Today, the Las Vegas company has the largest market share of any gaming operator in the world. In 2001, Las Vegas Sands was only the fifth-largest casino operator. Adelson has also become the third-richest man in America, according to Forbes magazine, due mostly to his successful efforts in Asia.

For Campbell, Adelson's riches may be the only obstacle that keeps his clients from winning their fight, and what keeps the public from scutinizing further Adelson's efforts in Macau.

"It's always a concern when someone has unlimited resources to prolong litigation," the attorney said.

When asked Wednesday whether Adelson's efforts on behalf of the Chinese government to influence U.S. politics would come to light in his own case, he said: "We're not allowed to talk to you about it."

Campbell's case was set for trial in March. It was recently postponed to November 2008.

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