Las Vegas Sands has agreed to pay $9 million to settle an investigation by the U.S. Securities and Exchange Commission into its relationship with a consultant in China who allegedly acted as a “beard” to obscure the casino operator’s role in business deals.
The SEC on Thursday said Las Vegas Sands violated the Foreign Corrupt Practices Act by failing to properly authorize or document more than $62 million of payments to the consultant between 2006 and 2011.
While the agency did not allege corrupt intent or bribery, it said in an administrative order that most of the payments “occurred despite knowledge by senior LVSC management that they could not account for significant funds previously transferred to the consultant in an environment where significant bribery risks were present.”
“This lack of controls impacted other transactions, such as gifts and entertainment for foreign officials, employee and vendor expense reimbursements, and customer comps,” the order stated.
Casino gambling is banned in China, but Las Vegas Sands operates in Macao, where gambling is legal, through its Sands China Ltd. subsidiary. According to the SEC, the consultant served as a “beard” to conceal Las Vegas Sands’ effort to buy a basketball team in China and acquire part of a Beijing building owned by a government-owned enterprise.
Between July 2007 and February 2008, about $43 million was allegedly transferred to the consultant to purchase the real estate, which Las Vegas Sands wanted to develop as a business center. The owner of the building “would not approve a direct relationship with a gaming company,” the SEC said.
In a statement, Las Vegas Sands’ billionaire owner Sheldon Adelson said he was “pleased to have the matter resolved” and the company is committed to a “world class” compliance program.
Las Vegas Sands has said the SEC’s investigation arose from a wrongful termination lawsuit by former Sands China CEO Steven Jacobs, who alleged he was fired in part for resisting Adelson’s demands to engage in illegal activity.
“Publicly traded companies must have appropriate financial controls in place to ensure that expenses are paid for bona fide services,” Andrew J. Ceresney, director of the SEC Enforcement Division, said in a news release.