Gambling company worked to build defense ahead of litigation, potential whistleblowers
BY MATT WARD
Las Vegas Sands and its top executives were concerned that litigation surrounding the company's 2002 gambling concession in Macau. Their worry was that it might reveal a potential violation of U.S. federal law. Sands was sufficiently fretful that, shortly after winning the Chinese license, a top Washington, D.C. law firm was tasked to help prepare a defense. This revelation comes from recently filed court documents.
Records in three separate civil suits against the casino operator have sharpened the picture of how Sands was able to win its Macau gambling concession, despite myriad political and financial obstacles, becoming the first American operator to open a casino on Chinese soil.
The most significant revelations so far are that Sands was forced to drop its early partner in the bid, Asian American Entertainment Corp., because of the potential political fallout from the latter's Taiwanese ownership; and that Sands President William Weidner testified during a deposition that Macau's government "married" the Las Vegas company with Galaxy Entertainment Group at the last minute.
THE TRIAD CARD
Weidner alleged that the Hong Kong company that had ties to organized crime groups. The marriage didn't satisfy Nevada standards and led the Macau government to create a special subconcession category to fix the issue.
Asked about Weidner's triad accusation, outgoing Galaxy consultant Larry J. Woolf responded, "They're not tied in. They're a publicly traded company. There's no direct link."
The newest revelations show that Sands executives went to great lengths to avoid claims that it had violated the Foreign Corrupt Practices Act, a federal law that punishes companies for engaging in illegal activities, such as bribery, when doing business overseas. Sands execs were worried they could be hit with civil claims in court, or worse, face questioning by the U.S. Justice Department, documents show.
The records are the foundation of a contentious legal squabble taking place at District Court between lawyers for the plaintiffs -- Clive Jones, Darryl "Dax" Turok and Cliff Cheong -- and Sands over what records should remain privileged in the case. At the heart of the battle are depositions given by Weidner and CEO Sheldon Adelson that are currently under seal, as well as correspondence between Sands executives and the Washington D.C. law firm Miller & Chevalier.
AFFIDAVIT OF HARRIS FREIDUS
Attorney Harris Freidus worked on issues related to Sands' participation in the Macau gambling-tender process for law firm Paul Weiss Rifkind Wharton & Garrison in 2001 and 2002. In an affidavit taken May 11 by Sands attorneys, Freidus describes how he was immediately concerned about future litigation when Macau granted a gambling license to the Galaxy-Sands partnership.
"I was immediately concerned that certain disaffected parties might sue the Venetian (Sands' casino-hotel in Las Vegas) and that those parties might attempt to interest the Justice Department in investigating the award of the concessions in Macau," Freidus testified under oath. "Though we were firmly convinced that the process was scrupulously proper, there was no doubt that others would be interested in trying to attack the business dealings."
Freidus testified that he and others felt the immediate need to contact outside experts to review the entire process and lay a foundation to dispute any claims. He says he referred Sands, through its chief legal counsel David Friedman, to Miller & Chevalier.
"I believed it was in the best interest of the Venetian to consult outside legal counsel about the FCPA (Foreign Corrupt Practices Act) issues that would potentially arise in litigation," he said.
THE EXPERTS
Few documents have been released detailing communications between Sands executives and Miller & Chevalier attorneys. Sands attorneys have argued that communications between the Washington law firm and its client are protected under attorney-client privilege. But the company's lawyers were recently forced to turn over a list of 108 documents in the possession of the Washington lawyers. The list comes with one-line descriptions about the documents' contents, so that the plaintiffs attorneys could argue against the merits of the privilege.
The list was made public in early May and reveals that the firm was doing extensive work on FCPA issues for Sands. It shows that executives reached out to Miller & Chevalier as early as Feb. 26, 2002, not long after winning the license in Macau. Communications with the firm appear to end in early 2004.
Miller & Chevalier, according to its Web site, "is recognized as having one of the country's preeminent Foreign Corrupt Practices Act (FCPA) and anti-corruption practices. This group has advised and assisted dozens of corporations with their FCPA compliance programs."
The company also states that litigation arising from FCPA issues is "uncommon historically." But, the company further describes its expertise regarding such issues, which are similar to those being faced by Sands in the three lawsuits.
"Such issues have included ... potential FCPA liability as an affirmative defense to breach of contract, and the effect of FCPA issues in contractual disputes with terminated consultants or third parties," the firm's site relates.
By September 2002, Miller & Chevalier were ready to bring plaintiffs Jones, Turok and Cheong to Washington to be deposed. According to the list of confidential records, an undated outline was titled "of questions for interview of Turok, Jones & Cheong on FCPA issues."
The depositions, as far as the records show, took place four years before the three men filed suit. Their lawyers now want to talk to the Washington firm, according to motions in the case.
Lawyers on both sides of this particular case have declined to comment about specifics. The discovery process is ongoing and a trial date is set for early 2008. Sam Lionel, Sands' lead counsel, has said in previous interviews that the company did not violate the FCPA when bidding for the Macau concession.
Randall Sayre, a member of the Nevada Gaming Control Board, and formerly its chief investigator, says he has not heard of any FCPA issues related to Sands' Macau bid. Violating the FCPA would constitute a violation of Nevada gambling regulation and could lead to sanctions. |
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