April 3 (Bloomberg) -- Las Vegas Sands Corp. owes a middleman for its gaming license in Macau, which the casino operator’s founder and chairman Sheldon Adelson called the “brass ring in the merry-go-round,” according to a lawyer for Hong Kong businessman Richard Suen.
Opening statements started today in state court in Las Vegas in a second trial over Suen’s allegations that Adelson breached a 2001 agreement to pay him and his associates $5 million and 2 percent of the net income from the company’s Macau casinos if it was awarded a permit. Suen is seeking as much as $328 million in damages.
Suen claims that meetings he arranged between Adelson and Chinese officials, including the mayor of Beijing and the vice premier responsible for Hong Kong and Macau, were instrumental in leading Edmund Ho, the former chief executive of the Macau Special Administrative Region, to award the company a gaming license in 2002.
Ho, according to Suen, initially had expressed misgivings about Las Vegas Sands’s large-scale plans.
“This is a case about not paying your debts even if you have the means to do so,” John O’Malley, a lawyer for Suen, told jurors. “Las Vegas Sands should pay a debt that now has been owing for many, many years.”
At Suen’s suggestion, before meeting with the Chinese officials in July 2001, Adelson called Republican lawmakers to “see what he could learn” about a pending U.S. House of Representatives resolution to discourage the U.S. Olympics Committee to vote for Beijing’s bid to host the 2008 Olympics, O’Malley said in his opening statement.
After talking to then House Majority Whip Tom DeLay, who was a co-sponsor of the resolution, Adelson told the mayor of Beijing that he didn’t have to worry about the House voting on it, O’Malley said.
“As a result of that call, Mr. Adelson learned or understood that the bill would either be killed or not voted on” before the vote in Moscow later that same month on Beijing hosting the Olympics, O’Malley said.
O’Malley said the goodwill Adelson generated by calling his political connections at the time of the Olympics bid was important to Chinese officials helping Las Vegas Sands getting awarded the Macau license.
The Nevada Supreme 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. The appellate court found that the judge presiding over the previous trial had incorrectly allowed so-called hearsay evidence linking the meetings in Beijing with the award of the gaming license.
Richard Sauber, a lawyer for Las Vegas Sands, said in his opening statement that Suen can’t prove his claim that he “delivered” the Macau license by setting up a 40-minute meeting with officials in Beijing.
Las Vegas Sands obtained its license after meeting with Edmund Ho independently of Suen, participating in a tender process supervised by Macau officials, and getting a subconcession from a group of Hong Kong financiers that had won one of the concessions to build casinos that Las Vegas Sands would operate, Sauber told the jurors.
“Mr. Suen had nothing what to do with any of these activities,” Sauber said. “There was no interference from China -- this was an independent decision.”
Adelson is scheduled to testify tomorrow.
Las Vegas Sands has faced other claims by middlemen or former partners who claim they helped it win the concession in Macau. Through Sands China Ltd., the company operates four casino resorts in the former Portuguese colony, which is now the world’s biggest gambling hub.
The company in 2009 agreed to pay $42.5 million to three men who said they helped set up a partnership between Las Vegas Sands and a Hong Kong-based group with which the casino operator originally gained a license.
The casino operator 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.
Suen seeks about $98 million in past damages and $230 million in future damages based on Las Vegas Sands’s profit from its Macau casino resorts, according to the March 22 filing.
Las Vegas Sands has argued that the meetings Suen helped arrange with Chinese officials in Beijing weren’t instrumental to the local Macau government’s decision to award it a license and that the region’s special status precludes the Chinese central government from dictating who would be awarded a license.
Before the Portuguese colony became part of the People’s Republic of China in 1999, gambling in Macau was a monopoly concession that since 1962 had been in the hands of a company controlled by billionaire Stanley Ho. In 2001, the Macau government invited bids for casino concessions to boost growth through competition.
Las Vegas Sands has said in court filings that 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’s company SJM Holdings Ltd. and the Galaxy/Las Vegas Sands group were awarded the three concessions issued by the Macau government in 2002. Las Vegas Sands later that year got a subconcession from Galaxy to build its own casinos in Macau.
Revenue from the gaming industry in Macau rose 14 percent to $38 billion last year. Casino revenue in the region, where 60 percent of the visitors come from mainland China, exceeds that of the Las Vegas Strip by more than six times, according to data compiled by Bloomberg.
Las Vegas Sands said March 1 that an internal investigation found it probably violated certain provisions of the U.S. Foreign Corrupt Practices Act, which prohibits bribing foreign government officials to gain a commercial advantage. 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.
The case is Suen v. Las Vegas Sands Corp., 04A493744, Nevada District Court, Clark County (Las Vegas).
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