A gambling concession in Chinese island Macau has been licensed to print money for billionaire Sheldon Adelson–helping make him one of America’s richest men. But a Las Vegas jury’s ruling this Saturday raises questions about how he got his hands on these lucrative rights.
The jury found Adelson’s Las Vegas Sands owes Hong Kong businessman Richard Suen USD 43.8 million for his role in the company’s success. Suen sued Las Vegas Sands for USD 100 million, alleging the company cheated him out of 2% of its Macau operation’s net profit and a USD 5 million success fee in return for help navigating the Chinese political hierarchy. „He is thrilled,“ said John O’Malley, a partner at Fulbright & Jaworski’s Los Angeles office who represented Suen. „He believes justice has been done.“
Las Vegas Sands have long dismissed the claims that have arisen in this suit–and three others–alleging the company cheated middlemen and fixers for their murky assistance in getting to the tiny Chinese island of Macau.
In a securities filing Las Vegas Sands made in May 2007, the casino company claimed that when it came to the lawsuit filed against it by Suen, „the probability of an unfavorable outcome in this matter is remote.“ Now, whatever one might think about the merits of these various claims, the suits seem more serious.
The company scored an early victory by getting a lawsuit, filed by a former banking partner in its Macau venture, tossed out by a judge. Adelson and Las Vegas Sands, which hired prominent Houston lawyer Rusty Hardin, clearly were hoping to bolster their legal position by first winning the case against Suen.
But Suen’s case was bolstered by faxes, including a letter signed by the company’s chief operating officer, Bill Weidner, suggesting he had an agreement. The company denied there was a contract, but meetings arranged by Suen for Adelson to talk to high-ranking Chinese officials like Qien Qichin, China’s former vice premier, seemed to sway the jury.
Adelson owns 69% of Las Vegas Sands, which saw its valuation on the New York Stock Exchange soar since getting the Macau sub-concession in 2002. The company generated USD 1.8 billion in revenues there in 2007.
Losing the lawsuit, however, is the latest in a string of new difficulties facing the company, which lost USD 11.2 million in the first quarter, compared with a net income of USD 90.9 million a year earlier. The stock is now trading at just over USD 66, about half what it was in September 2007. „The company will file the appropriate post-trial motions with the trial judge,“ Las Vegas Sands said in a statement. „If unsuccessful, we will vigorously pursue an appeal. We, and our attorneys, are confident we would prevail in such an appeal.“
The Suen verdict seems to bolster the chances of Clive Bassett Jones and two other middlemen who claim they are owed 5% of the Macau operations in exchange for helping Las Vegas Sands find a Hong Kong license partner. That case is set to go to trial in state court in Las Vegas in the coming months.
In addition, a trial in Israel featuring Moshe Hananel, an Israeli tour operator who once worked for Adelson, recently finished in Tel Aviv. Hananel claims opening gaming operations in Macau was his idea and that he is owed 12% of the business. Adelson and the Sands have denied any wrongdoing in both those cases, and Adelson is suing Hananel for defamation and claiming harassment. Expect a verdict in the fall.