Las Vegas Sands pays $9 million to settle China, Macau FCPA offenses
Thursday, April 7, 2016 at 2:28PM
Richard L. Cassin in Andrew Ceresney, China, Chinese Basketball Association, Las Vegas Sands, Macau, Sheldon Adelson, Travel and Entertainment

Image courtesy of LVSLas Vegas Sands Corp. agreed Thursday to pay a $9 million penalty to settle charges that it violated the Foreign Corrupt Practices Act by failing to properly authorize or document millions of dollars in payments to a consultant hired to help it do business in China and Macau.

An SEC investigation found that Las Vegas Sands Corp. (LVS) spent more than $62 million on a consultant. But the payments often lacked supporting documentation or proper approvals and weren't accurately recorded in the books and records.

The consultant acted as an intermediary to hide the company’s role in the purchases of a basketball team and a building in China, where casino gambling isn’t permitted. 

At one point, LVS couldn't account for more than $700,000 transferred to the consultant for team expenses. But the company continued to transfer millions of dollars to him. 

The SEC settled the enforcement action wth an internal administrative order and didn't go to court.

Billionaire Sheldon Adelson founded LVS in 1988 and still runs it.

The SEC's order found that LVS violated the internal controls and books and records provisions of the FCPA.

LVS consented to the SEC’s order without admitting or denying the findings.

According to the SEC,

In addition to the $9 million penalty, LVS agreed to retain an independent consultant for two years to review its FCPA-related internal controls, recordkeeping, and financial reporting policies and procedures and its ethics and compliance functions. 

Andrew J. Ceresney, head of the SEC's enforcement division, said, "Las Vegas Sands failed to implement controls to prevent tens of millions of dollars from being paid out without appropriate documentation or authorization.”

In the administrative order, the SEC said LVS cooperated with the investigation.

[T]he LVSC Audit Committee retained outside counsel to conduct an internal investigation. The LVSC Audit Committee provided significant cooperation with the Commission’s investigation by sharing in real-time the facts discovered during the course of its internal investigation and provided information that may not have been otherwise available to the Staff; facilitating the interviews of certain key foreign witnesses; voluntarily producing translations of key documents; and producing large volumes of business, financial, and accounting documents in response to requests.

LVS hired a new general counsel and new heads of internal audit and compliance, the SEC said.

The company set up a new board of directors compliance committee and increased the compliance and accounting budgets.

It updated its code of business conduct, anti-corruption policy, guidelines regarding comps for government officials, and expense reimbursement policy.

LVS put in place "enhanced anti-corruption training and an electronic procurement and contract management system," the SEC said.

It also started enhanced screening of third parties and new hires.

The SEC said it had help in its investigation from the DOJ, the FBI, and the Nevada Gaming Control Board.

LVS trades on the New York Stock Exchange under the symbol LVS.

*      *     *

The SEC's Securities Exchange Act of 1934 Release No. 77555 and Administrative Proceeding File No. 3-17204 (both dated April 7, 2016) In the Matter of Las Vegas Sands Corp. are here (pdf).

_____

Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
See website for complete article licensing information.