In the Matter of Las Vegas Sands Corp. (2016)

• Case Name
• In the Matter of Las Vegas Sands Corp. (2016)

• Date Filed
• 04/07/2016

• Enforcement Agency
• SEC

• Countries
• China, Macau

• Foreign Official
• Unnamed Chinese foreign officials.

• Date of Conduct
• 2006 to 2011

• Nature of Business
• Las Vegas Sands Corp., a Nevada corporation, owns and operates integrated resorts and casinos in Asia and the United States through a network of subsidiaries.  Las Vegas Sands maintains a class of publicly traded securities on the New York Stock Exchange.

• Influence to be Obtained
• According to the SEC, from 2006 to at least 2011, Las Vegas Sands failed to devise and maintain a reasonable system of internal accounting controls over its operations in China and Macao.  The allegations generally concern Las Vegas Sands’s use of a Chinese consultant (the “Consultant”) to execute a series of business transactions described below. 
  
  In 2007, Las Vegas Sands sought to purchase a basketball team with the purported purpose of improving the company’s image in China and attracting visitors to the company’s casinos.  However, the Chinese Basketball Association prohibited gaming companies such as Las Vegas Sands from owning a team.  According to the SEC, to circumvent the regulatory prohibition, the Consultant was tasked with serving as a straw man—surreptitiously purchasing the basketball team on behalf of Las Vegas Sands—to conceal Las Vegas Sands’s ownership of the team.  In March 2007, a Las Vegas Sands subsidiary in China allegedly transferred over $6 million to an entity associated with the Consultant without any agreement covering such transfer to purchase the basketball team.  The SEC claims that the company later paid an additional $8 million to the Consultant to cover the costs of operating the team without any documentation. 
  
  From 2006 through 2008, Las Vegas Sands allegedly used the Consultant as an intermediary to purchase a building in Beijing from a Chinese state-owned entity to ostensibly develop a business center for U.S. companies.  The SEC claims that Las Vegas Sands’s decision to purchase the property was intended to curry favor with Chinese officials.  According to the SEC, approximately $43 million in payments were made to the Consultant without research, analysis, or prior approval.  Approximately $900,000 was paid to an entity controlled by the Consultant and recorded as “property management fees” when no services were actually performed.  Further, the SEC claims that approximately $1.4 million was recorded as “arts and crafts” when the entity had never provided any artwork. 
  
  In 2007, Las Vegas Sands contracted with a ferry company to transport customers from China and Hong Kong to Macao.  The SEC asserts that the ferry company was owned in-part by another Chinese stated-owned ferry company and a shipping company that was indirectly controlled by the Consultant and the chairman of another stated-owned entity.  According to the SEC, the ferry company, with the approval of Las Vegas Sands, provided meals, gifts, and entertainment to government officials in order to secure routes for the ferry.  Although the company’s audit department detected the improper payments, it allegedly failed to elevate the issue within the company.

• Enforcement
• On April 7, 2016, the SEC announced that it had resolved an FCPA enforcement action against Las Vegas Sands for violations of the FCPA’s books-and-records and internal controls provisions.  According to the cease-and-desist order, Las Vegas Sands agreed to pay a $9 million civil penalty and to appoint an independent compliance monitor for a period of two years.

• Amount of the Value
• Approximately $62 million.

• Amount of Business Related to Payment
• Not Stated

• Intermediary
• Consultant

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 9,000,000

• Compliance Monitor
• Yes

• Reporting Requirements
• Yes (2 Years)

• Case is Pending?
• No

• Total Combined Monetary Sanction
• $ 15,960,000

• Related Enforcement Actions
• In re Las Vegas Sands Corp. (2017)
  

Las Vegas Sands Corp. 

• Citation
• In the Matter of Las Vegas Sands Corp., Admin. Proc. File No. 3-17204 (Apr. 7, 2016).

• Date Filed
• 04/07/2016

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records
  • Internal Controls

• Other Statutory Provision
• None

• Disposition
• Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States