LVS Las Vegas Sands Corp

By Aruna Viswanatha,Alexandra Berzon and Kate O'Keeffe 

Casino giant Las Vegas Sands Corp. will pay $9 million to settle Securities and Exchange Commission allegations that its Chinese operations had poor accounting controls from 2006 through at least 2011, the agency said Thursday.

The allegations focused primarily on the company's sponsorship of a Chinese basketball team, plans for a business center in Beijing, and a ferry deal in Macau.

The SEC said the gambling company, controlled by Republican megadonor Sheldon Adelson, transferred more than $62 million to a consultant in China, often without supporting documents or appropriate authorization, and "despite knowledge by senior LVSC management that they could not account for significant funds previously transferred to the consultant."

The settlement, which also requires an independent monitor for the company for two years, ends one piece of a saga that started more than five years ago, when a former Sands executive set off a firebomb by alleging improprieties in Macau, a Chinese territory that is the world's largest gambling hub.

The allegations by Sands's former top Macau executive, Steve Jacobs, prompted the SEC and the Justice Department to investigate whether the company had violated the Foreign Corrupt Practices Act, which bars U.S. companies from bribing officials of foreign governments.

While the Justice Department investigation is still open, it appears unlikely that it will result in any criminal charges, according to people familiar with the matter.

Sands said it is continuing to respond to the Justice Department inquiry.

A wrongful termination lawsuit filed by Mr. Jacobs in 2010 that includes bribery allegations is scheduled to go to trial this summer. The company has denied wrongdoing in that matter and says Mr. Jacobs was fired for legitimate reasons.

Mr. Jacobs's attorneys said in a statement that they are looking forward to introducing evidence on the alleged FCPA issues in court.

The SEC didn't accuse Sands of paying bribes, but said it violated provisions of the law that require companies to maintain proper controls. The company neither admitted nor denied the allegations, according to the settlement.

In a statement issued Thursday, the company said it has enhanced its financial controls and anticorruption policies.

"The projects were orchestrated through a consultant whose activities under a former company president and other former employees were not sufficiently monitored," the statement said.

The former Sands president, William Weidner, said in an interview with The Wall Street Journal that he isn't responsible for any wrongdoing alleged by the SEC. He said that while he oversaw the projects in question, he didn't supervise the accountants and lawyers who handled the payments and structured the deals.

The Wall Street Journal first reported on the deals criticized by the SEC in a 2012 story.

Among them was Las Vegas Sands's 2007 effort to buy a professional basketball team in China to improve its image. Since Chinese authorities barred gambling companies from buying teams, the company had a consultant do it for them and subsequently fired an executive who had raised concerns about the transaction, the SEC said.

The SEC also flagged the company's use of the consultant, who claimed to be a former Chinese government official, to buy portions of a Beijing building from a Chinese state-owned company to develop a business center bearing Mr. Adelson's name, the SEC said.

Employees raised concerns that the Beijing real-estate deal was done solely for "political purposes," but the company still transferred $61 million in connection with the deal, the SEC said. After the Adelson Center project was cancelled, the company got back around $44 million of that sum from the consultant.

The SEC also took issue with a 2007 deal in which it alleges Sands signed a contract with a high-speed ferry company partially owned by a Chinese state-owned company in the hopes that it would be "politically advantageous," according to the settlement.

Sands's internal auditors found that the ferry company, which shuttled gamblers to Macau, provided meals to government officials and gave them envelopes filled with cash around Lunar New Year, the settlement said.

Mr. Adelson sued Wall Street Journal reporter Kate O'Keeffe for libel in 2013. A spokeswoman for the Journal, which wasn't named in the suit, said the newspaper would continue to vigorously defend Ms. O'Keeffe.

Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com and Alexandra Berzon at alexandra.berzon@wsj.com

(END) Dow Jones Newswires

April 08, 2016 02:16 ET (06:16 GMT)

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