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After six years in courtrooms on opposite sides of the globe, Las Vegas Sands honcho Sheldon Adelson has agreed to settle a wrongful termination case filed in 2010 by Steven Jacobs, the former CEO of Sands China Ltd. The Chinese subsidiary oversees the company’s investments in Macau.
Macau-based Sands China Ltd. issued a statement saying it had reached “a comprehensive and confidential settlement” with Jacobs, who claimed he was fired because he refused to participate in or cover up illegal activities by the global company as it developed its presence in Macau. The Wall Street Journal later reported the damages were in the $75 million range, and could actually reach $100 million.
Adelson has repeatedly denied Jacobs’s allegations, and the Sands Corp. said it fired Mr. Jacobs because he did not fulfill the terms of his contract. Under the terms of the settlement, Jacobs will drop all claims against the Sands, its subsidiaries and Adelson, according to a filing.
But accusations of illegal and unsavory conduct as the price of doing business could have lasting and wide-ranging implications for the industry, the Journal reported. The high-profile case “didn’t have to happen had it not been for a clash of big egos,” said George Koo, a former member of Las Vegas Sands’ board of directors.
And Jim Dowling, a consultant on anti-money-laundering policies for casinos, said the case “brought attention to casino operators and regulators—like ‘Whoa, what’s this? We need to take a look at this.’ Both sides started looking at it.” Red flags were also raised by the reported multimillion-dollar award. Employment attorney Steven Pearlman said it was “unusual, to put it mildly.”
As a result of issues raised by the lawsuit, the U.S. Securities and Exchange Commission and the Justice Department launched an investigation into whether the company violated the Foreign Corrupt Practices Act, reported ABC News. Adding to the mystery, the Sands Corp. could not account for more than $62 million in payments through a series of transactions from 2006 through at least 2011, the SEC contended.
The Sands Corp. has since paid a $9 million settlement to the SEC and a $2 million settlement to Nevada gaming regulators, but did not admit or deny culpability in the cases. The company has also reportedly incurred more than $100 million in legal fees.
After he was fired in 2010, Jacobs said the termination was payback because he would not promote prostitution or spy on Chinese politicians in order to bribe them. Jacobs alleged that Adelson asked him to use “improper leverage” and conduct “secret investigations of high-ranking Macau officials” in an attempt to learn how they could be compromised. Jacobs claimed the billionaire “burned many bridges” with Chinese officials and “alienated outsiders.”
In 2012, Jacobs said in a court filing that Adelson approved a “prostitution strategy” at the company’s Macau properties, an allegation Adelson called “shockingly outrageous and utterly false.”
The suit dragged on because the parties continued to battle over whether the case should be heard in Las Vegas or in Asia.
Another bizarre allegation was contained in excerpts from the so-called Vickers report, made public in 2015 by the UK Guardian newspaper. The reports indicated that Chinese officials suspected Adelson’s Macau casinos “were used by U.S. intelligence agents to entrap and blackmail Chinese officials.”
“Many of the officials we contacted were of the view that U.S. intelligence agencies are very active in Macau and that they have penetrated and utilized the US casinos to support their operations,” said the report, also uncovered by the Investigative Reporting Program at the University of California, Berkeley.
Las Vegas Sands Corp. owns 70 percent of Sands China, which operates four casinos in Macau and contributes most of the company’s revenues. Macau, the world’s premier gaming jurisdiction, is now in the second year of an historic recession.
