LVS Las Vegas Sands Corp

By Chris Kirkham and Alexandra Berzon 

Casino giant Las Vegas Sands Corp. agreed Thursday to pay a $6.96 million criminal penalty to settle a U.S. Justice Department investigation into violations of the antibribery law over payments the company made to a business consultant in China.

The DOJ didn't accuse Sands of paying bribes but said it violated provisions of the law that require companies to maintain proper controls.

The agreement closes a long-running episode that entangled the company in state and federal investigations, and cost it tens of millions of dollars.

Ron Reese, a Sands spokesman, said the company is "pleased that its cooperation and long-term commitment to compliance were recognized in reaching this resolution. We are equally pleased that all inquiries related to these issues have now been completely resolved."

As part of the nonprosecution agreement with the Justice Department, the company admitted it paid approximately $5.8 million to the consultant, a former Chinese government official, between 2006 and 2009 even though there was no "discernible legitimate business purpose."

The gambling company, controlled by Republican donor Sheldon Adelson, also acknowledged it failed to monitor and account for those payments.

Separately, Sands last year paid $9 million to settle a U.S. Securities and Exchange Commission investigation into similar dealings with the same business consultant. The consultant was involved in helping secure the company's sponsorship of a Chinese basketball team and securing an office building in Beijing, along with other business ventures.

Sands also settled a related matter last year with the Nevada gambling regulators, paying $2 million to the state. A.G. Burnett, chairman of the Nevada Gaming Control Board, said the agency will review the DOJ settlement.

The DOJ's investigation originated from statements made in a wrongful-termination lawsuit from a former Macau executive. The executive alleged in the lawsuit that began more than six years ago that the company was engaging in improprieties in Macau, the Chinese gambling hub.

The company settled the wrongful termination case with that employee last year for more than $75 million.

The Wall Street Journal first reported on the deals criticized by the DOJ in a 2012 article. The company first said in SEC filings in 2013 that an internal board review had showed it likely had violated accounting provisions of the Foreign Corrupt Practices Act, the law that bans bribery of foreign officials, because it didn't have proper accounting controls related to the deals.

As part of the agreement, federal officials said Sands will continue cooperating with the DOJ in any ongoing investigations or prosecutions related to the business dealings and will continue to update the DOJ on its compliance efforts.

In a DOJ document released Thursday, the agency said the nonprosecution agreement doesn't apply to any of the individuals involved in the case.

Part of the questionable payments stemmed from a deal involving the purchase of a Chinese basketball team. In 2007, Sands was interested in purchasing a team as a way to promote its operations in Macau, but learned it was unable to do so under league rules because it is a gambling company, according to DOJ documents. The company arranged to pay the consultant to buy the team, but employees started to notice irregularities into how the money was being accounted for, according to the DOJ.

The company brought in an accounting firm to investigate the payments, but encountered resistance from the consultant and an executive of its Macau subsidiary, according to the DOJ.

By the time the accounting firm was told to complete its investigation in early 2008, the firm still couldn't account for $700,000 in payments to the consultant, according to DOJ documents outlining the agreement.

In a separate transaction, companies controlled by Sands wired $3.6 million to one of the consultant's companies as prepayment on a building lease in Beijing, even though the consultant provided no documentation to support that he had purchased the building, according to the agreement.

When an outside lawyer and a Sands finance employee raised concerns about the irregularities, a Sands executive in China had them removed and replaced with less-experienced employees, according to the agreement.

The DOJ said Sands no longer employs any of those involved in the investigation and credited the company with completing "extensive remedial measures," including an expansion of its compliance and auditing departments.

Write to Chris Kirkham at chris.kirkham@wsj.com and Alexandra Berzon at alexandra.berzon@wsj.com

(END) Dow Jones Newswires

January 20, 2017 01:09 ET (06:09 GMT)

Las Vegas Sands (NYSE:LVS)
Historical Stock Chart
From Mar 2024 to Apr 2024

Las Vegas Sands (NYSE:LVS)
Historical Stock Chart
From Apr 2023 to Apr 2024