Scandal hits Macau Sands casino
HONG KONG, 2 March 2011 – The Macau unit of casino giant Las Vegas Sands has come under a US criminal investigation after its sacked head alleged he was told to spy on government officials in the Asian gambling hub.
Sands confirmed Wednesday it had received a subpoena from the US Securities and Exchange Commission (SEC) for documents relating to compliance with the Foreign Corrupt Practices Act.
The law, which prohibits US companies from bribing foreign officials, carries a penalty of as much as five years in prison.
The US Justice Department (DOJ) was “conducting a similar investigation” into the company, which has shifted the focus of its business away from the stagnant US market to Macau, the world’s biggest gambling hub.
Macau, the only city in China that allows casino gambling, saw about US$23.5 billion wagered at its gaming tables last year, four times the Las Vegas Strip.
Sands said the US probe “emanated” from a wrongful termination lawsuit filed in October by Steven Jacobs, the sacked chief executive of its Macau unit, who claimed the US operator’s billionaire founder Sheldon Adelson made “repeated and outrageous demands” on him.
Those demands included arranging “secret investigations” of Macau officials to use as leverage against negative policy decisions and threatening to withhold business from “prominent Chinese banks” if they refused to use “influence” on senior officials.
Jacobs also said he was forced to keep secret “truthful and material information” from Sands’ board, including allegations of ties between the company and Macau’s notorious triad gangs, long reputed to operate in the city’s casinos.
Adelson “repeatedly threatened” to sack Jacobs when he baulked at the demands, the claim said.
The company has denied the allegations, calling Jacobs a “disgruntled former executive” sacked for good cause.
Sands said it would “vigorously defend” any claims that it broke US anti-bribery laws, while a spokeswoman for the firm’s Macau subsidiary told AFP on Wednesday that the firm would cooperate with US regulators.
News of the probe sent Sands China’s share price tumbling on Wednesday with the stock down 6.8% at HK$17.74 ($2.28) by midday in Hong Kong.
Gaming analyst Jonathan Galaviz described the investigation as a “very serious matter” and warned it “could easily widen into a larger probe of other US companies doing business in Macau” if American laws were violated.
“It’s very likely that Macau will be having DOJ and SEC investigators walking around town and interviewing locals there pretty soon,” he told AFP.
Less than two months after the lawsuit, Macau’s vice squad conducted a sex-trade raid on Sands’ flagship Venetian hotel and officials turned down the company’s bid for a piece of land on the city’s lucrative Cotai Strip.
Macau, a former Portuguese colony returned to China in 1999, fell under the spotlight of US gaming regulators last year when New Jersey’s gambling watchdog released a previously confidential report that alleged gambling tycoon Stanley Ho had links with Macau’s criminal underworld — a claim he has denied.
New Jersey told US operator MGM Mirage to cut its business ties with Ho’s daughter Pansy due to her business links with her father, or risk losing its state gaming licence.
MGM instead instead said it would sell its 50 percent stake in an Atlantic City casino-resort and quit New Jersey so it could keep its casino-hotel in Macau.
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