March 19 (Bloomberg) -- Las Vegas Sands Corp. is facing its second trial in a case brought by a Hong Kong businessman who says the casino operator run by billionaire Sheldon Adelson owes him for obtaining a license to operate in Macau.
A trial is scheduled for next week in state court in Nevada over claims by Richard Suen that he helped Las Vegas Sands win a license to run a casino in the Macau territory in 2002 and that the company reneged on an agreement to pay him a “success fee.” A Nevada appeals court in 2010 reversed a $43.8 million jury award two years earlier in favor of Suen and sent the case back for a new trial.
Clark County District Court Judge Rob Bare, at a hearing today in Las Vegas, denied Las Vegas Sands’ request to throw out Suen’s claims ahead of the new trial, saying it’s possible for a jury to find that the meetings Suen helped set up with Chinese officials in Beijing were necessary for the company to obtain the Macau concession.
“A jury could say why were various members of Sands and Mr. Adelson involving themselves in those meetings,” Bare said.
Adelson was present at the hearing on pretrial motions and left after the judge decided to let the jury trial proceed. The judge also ruled against a Las Vegas Sands request to limit the damages Suen could seek under his deal with the company.
“Our position from the beginning was that Suen brought nothing to the table but snake oil,” Stephen Peek, a lawyer for Las Vegas Sands, said at the hearing. Jury selection is to start March 27 with opening statements the following week. Adelson will take the stand April 4, according to court minutes.
Las Vegas Sands has faced other claims by middlemen or former partners who claim they helped it win the concession in Macau, where the company, through Sands China Ltd., operates four casino resorts in the former Portuguese colony and the world’s biggest gambling destination.
Las Vegas Sands in 2009 agreed to pay $42.5 million to three men who said they partnered Las Vegas Sands with a Hong Kong-based group with which the casino operator originally gained a license. The company also faces a lawsuit seeking as much as $376 million in Macau by Asian American Entertainment Corp., a Taiwanese-backed venture with which Las Vegas Sands was pursuing a license before it teamed up with the Hong Kong group.
On March 1, Las Vegas Sands said an internal investigation found it probably violated certain provisions of the U.S. Foreign Corrupt Practices Act, which prohibits illegal payments to foreign government officials. The Securities and Exchange Commission and the Justice Department opened probes after a lawsuit by the former chief executive officer of Sands China.
The former executive, Steven Jacobs, alleged Adelson wanted him to use “improper leverage” on Macau officials. The company has said it didn’t violate the anti-bribery provisions of the FCPA and that the probable violations relate to the law’s books and records and internal control provisions.
Las Vegas Sands has downplayed Suen’s involvement in obtaining the gaming license, including his work with friends to arrange a meeting between Adelson and Chinese officials in Beijing.
Suen has claimed that it was through “guanxi,” a Chinese term for personal or human relationships, that he and his friends helped paved the way with Chinese government and Communist Party officials for the Macau license approval.
The company countered that Suen never provided evidence that linked the Beijing meetings with Macau officials selecting Las Vegas Sands to operate a casino.
Suen said that in 2000, when he learned the Chinese government would be issuing new gaming licenses for Macau, he sought a meeting with the Sands chief executive officer through his brother Lenny Adelson, with whom he had been friends and business partners since 1994, to discuss the “Macau opportunity.”
Suen and his business associates arranged a meeting in Beijing in 2001 between Adelson and Chinese Vice Premier Qian Qichen, at which the Vice Premier told Adelson he welcomed Las Vegas Sands’ investment in Macau, Suen said in court filings.
On the same trip, Suen and his associates had arranged for Adelson to meet with Beijing Mayor Liu Qi. Adelson, who had called U.S. Representative Tom DeLay before the meeting at Suen’s suggestion, assured the mayor he didn’t have to worry about the U.S. House of Representatives voting on a resolution that might hurt Beijing’s bid to host the 2008 Olympics, according to Suen’s court filing.
Adelson’s success in landing the Macau gaming license is due in part to his apparent assistance in sidetracking the House resolution, which was aimed at discouraging the U.S. Olympic Committee from supporting China’s bid on human rights grounds, Suen said in a Sept. 18, 2009, filing.
Las Vegas Sands said in court filings that Adelson made the call to “his friend” DeLay, a Texas Republican who was then Majority Whip, to inquire about the resolution. DeLay found out that because of scheduling issues, the resolution wouldn’t come up for a vote until after the International Olympic Committee’s vote on Beijing’s bid, according to the filings.
Suen said that following the July 2001 “incredible” meetings in Beijing, Las Vegas Sands offered him and his group a deal, which evidence from the first trial showed was worth as much as $96.2 million if Las Vegas Sands received a Macau gaming license.
The Nevada appeals court, in reversing the jury verdict, found that the trial judge was wrong to allow evidence from a deposition by former Las Vegas Sands President William Weidner that linked Adelson’s purported part in the Olympic bid with Las Vegas Sands winning a gaming license.
In the deposition played before the jury during the 2008 trial, Weidner recalled how a Las Vegas Sands executive vice president ran into Stanley Ho, a Macau gambling mogul, at a players’ party in Hong Kong before the Macau casino concessions had been granted.
“By the way that Olympic thing, I think you guys won the find, that Olympic thing. That’s what I hear from my guys in Beijing,” Ho told the Las Vegas Sands executive, according to Weidner’s deposition testimony cited in the appeals court ruling.
The appeals court said the statement contained layers of hearsay, out-of-court statements that can’t be used as evidence, without which the jury might have concluded that there was no connection between the Beijing meetings and the award of the Macau license.
The appeals court also said the trial judge had been wrong not to instruct the jury that it could assume government is operating according to the law, not breaking it.
Las Vegas Sands has argued that under Macau’s status as a special administrative region of China, similar to Hong Kong, the government in Beijing can’t interfere in Macau’s affairs except on issues of foreign affairs and national defense. As such, Beijing officials have no influence on who gets a gaming license in Macau.
Without clear evidence to the contrary, the trial judge should have presumed that the Chinese and Macau governments followed the law that forbids Chinese interference in Macau’s internal affairs, Las Vegas Sands argued on appeal.
Las Vegas Sands said it obtained the Macau license after it took the suggestion of the local government and joined the bid by Galaxy Entertainment Group Ltd., backed by two “prominent and wealthy Hong Kong families” who had the wherewithal to invest in Macau and lacked casino expertise.
Wynn Resorts Ltd., Stanley Ho and the Galaxy/Las Vegas Sands group were awarded the three concessions issued by the Macau government in 2002.
Galaxy dropped out of the venture because it was reluctant to comply with Las Vegas Sands disclosure requirements under Nevada law, leaving Las Vegas Sands to fund its Macau development itself, the company said. The Macau government and Galaxy agreed to give Las Vegas Sands a subconcession rather than soliciting new bidders, the company said.
Suen alleged that Macau Chief Executive Edmund Ho, because of the goodwill Suen had generated, gave the Las Vegas Sands bid preferential treatment, “to the detriment of other well-qualified candidates because he knew Las Vegas Sands had been favorably received by the highest authorities in Beijing.”
The case is Suen v. Las Vegas Sands Corp., 04A493744, Nevada District Court, Clark County (Las Vegas).
To contact the reporter on this story: Edvard Pettersson in the Los Angeles federal court house at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Hytha at email@example.com.