BY MATT WARD
Three multi-million-dollar lawsuits against Las Vegas Sands and owner Sheldon Adelson have shone a light on events leading up to the company's casino expansion into Macau. Potentially, they expose a grittier side to the company's foreign business practices.
The lawsuits -- two filed in District Court and one in Federal Court -- allege a series of broken promises and possibly questionable business practices by Adelson and top Las Vegas Sands executives in their rush to secure Macau's final casino concession in 2002.
HONG KONG CONNECTION
Richard Suen is a Hong Kong businessman with connections to top Chinese officials. A principal with a company called Round Square Ltd., Suen contacted Las Vegas Sands executives in mid-2000 to alert them to openings in Macau's gambling market and the opportunities for American companies there.
According to a lawsuit filed Oct. 15, 2004, Suen alleges that he agreed to Las Vegas Sands' offer of a $5 million success fee and 2 percent of net profit from any resort built after obtaining a gambling concession. That offer was allegedly faxed to him by LVS President William Weidner on July 16, 2001. In September 2001, the offer was amended to $5 million cash and a 2 percent ownership stake in any casino the company would own in Macau.
In pursuit of his fee, Suen says he performed a number of duties, including introducing LVS executives (including Adelson) to top Chinese officials. According to a joint case conference report, filed in District Court June 16, 2006, Suen met with Adelson several times in Hong Kong, discussed compensation and later introduced the American casino operator to, among others, heads of Chinese trade and tourism councils, the mayor of Beijing, and the vice premier of China.
The report goes on to highlight how successful the meeting between Adelson, Weidner and senior Chinese officials was -- so much so that the vice premier subsequently invited Adelson's company to expand its business in China.
COMMUNICATION BREAKDOWN
Suen alleges that he submitted LVS' gaming application in Macau, under a power of attorney from Weidner. But documents entered as evidence in the case show a stream of ambiguous communications between Suen and Weidner.
As early as August 2001, Weidner warned Suen in a faxed letter that, during a meeting with Macau Chief Executive Edward Ho, LVS' sales pitch where executives promoted themselves as experts in bringing conventions and trade shows to the island, had been a failure.
"The advantage of expanding Macau's market attraction through conventions, trade shows, and tourism would be reason enough to grant a license to our entity," Weidner wrote Suen. "Unfortunately, in our meeting with Edward Ho, our advantages were perceived as disadvantages."
Weidner then tells Suen that the Hong Kong businessman essentially gave LVS executives bad advice when he told them to use their status as convention operators to make their pitch to Ho. "Given our fundamental differences of opinion ... we will not be relying on you or your group to help in a bid for a Macau gaming license."
A month later, according to the series of faxes, Weidner asks Suen about Macau's tax situation and other issues. "Have we heard anything about tax rates ... or the government's right to confiscate the casino after 25 years per the current legislation," Weidner asked Suen, in a fax dated Sept. 19, 2001.
Six days later, Weidner tells Suen that there won't be any success fee, confirming, however, that there indeed had been an agreement. "We will not in the future reject overtures by others," he wrote. "If we directly secure our own equity partner, we are open to negotiating an equitable reimbursement to you for all of your time and effort in your failed attempt, but the success fee we had discussed earlier would not be applicable."
ADELSON UTILIZES NEVADA LAW According to a Suen's own deposition, the businessman waited until LVS secured its license before seeking payment. When he did, he was totally rebuffed, he alleges.
"I called up Mr. Weidner and, you know, said, 'Bill, now that you have the license and I think, you know, is time for you to perform your side of the agreement,'" Suen testified. "And which I have answer from Mr. Weidner, 'No way. We did all the work. You did nothing, we're not paying you anything.'"
Suen says Weidner then refers the Hong Kong businessman to Adelson. Suen calls Adelson and is told, "Okay, yes, Richard, we have a bit of a problem. Is the impropriety," according to Suen's testimony. "I still remember that word," Suen said, "because I have to look it up."
Adelson then says, per Suen's testimony, that to pay Suen would violate Nevada Gaming Control Board regulations. "But don't worry about it. We will come up with another way of paying you that makes it all legal," Adelson allegedly told Suen, according to the latter's deposition.
Depositions taken of Adelson, Weidner, and other LVS executives and business partners have been sealed.
SAME ALLEGATIONS, DIFFERENT CASE
Attorneys in a case that is eerily similar to Suen's are fighting to keep parts of any depositions in their case unsealed.
Clive Jones, Darryl "Dax" Turok and Cliff Cheong filed suit against LVS on Jan. 26, 2006, essentially alleging that they had received the same treatment as Suen had from LVS. After work helping LVS secure a Macau license, they claim to have been stiffed.
Just as Weidner had promised Suen, LVS began entertaining offers from other companies that could put up capital for a Macau development. Among them was Asian American Entertainment Corp., a company owned by Taiwan's China Development Industrial Bank.
LVS executives essentially agreed to pursue a license with AAEC, which would act as their backer. But after extending a letter of agreement a few times from October 2001 through January 2002, LVS abruptly ended its relationship with AAEC, partnering at the eleventh hour with Galaxy Entertainment Group for purposes of securing a casino concession.
The bank filed a $750 million breach of contract suit in Nevada Federal Court on Feb. 5. Allegations made in Jones' lawsuit charge that LVS and AAEC's partnership ended when Macau officials decided against allowing a Taiwanese company from owning a casino. The Chinese Government considers Taiwan a renegade province that it should govern.
The Jones case dovetails into this third case, because Jones, Turok, and Cheong allege that they fostered the last-minute relationship between LVS and Galaxy, hoping to secure a 5 percent ownership stake in any deal as payment.
On or about Feb. 3, 2002, Jones, Turok, Cheong and Weidner (as well as other LVS executives) met with Galaxy's owners in Hong Kong. Then the group traveled to Macau for a meeting with Edward Ho arranged by Cheong, according to court records.
Five days later, Macau gaming officials announced that the Galaxy/LVS partnership won the last of three gambling concessions. AAEC alleges this is proof the concession process was somehow rigged in LVS' favor, since Galaxy had already failed in its solo bid earlier in the process, according to court records.
Jones, Turok and Cheong's attorneys are currently in discovery against Sands' chief attorney, Las Vegas litigator Sam Lionel. The latter did not return a phone call seeking comment. Jones' attorneys also deferred comment.
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