More Legal Trouble for Adelson

More Legal Trouble for Adelson May 11, 2015

Shelden Adelson, the billionaire backer of conservative candidates all over the country (to the tune of $150 million in the last election, almost certainly more this time around), is in more legal hot water over his ties to Chinese organized crime in Macau, where his casino makes gobs of money for him.

He’s being sued for wrongful termination by Steven Jacobs, the former CEO of his Macau operation, and at issue at the trial will be the bribes he allegedly had to give to Chinese government officials and organized crime figures in order to get his casino license and bring in the high rollers. Adelson took the witness stand last week and made claims that are flatly contradicted by documents obtained by the Investigative Reporting Program and statements from his executives.

Adelson accused Jacobs of “squealing like a pig to the government” and of blackmail in taking his accusations to the US authorities.

They include the allegation that Las Vegas Sands paid what amounted to bribes intended to influence the Macau authorities and the government in Beijing and that the casino did business with a notorious triad leader.

If these allegations are shown to be true, then Adelson’s gambling licences could be in jeopardy because associations with organised crime could prompt action by Nevada’s gambling authorities, always sensitive to Las Vegas’s history with the mafia…

The casino magnate repeatedly told the court his company “was not doing business” with Cheung Chi Tai, a Hong Kong-born leader of the Wo Hop To triad. Cheung is barred from entering the US because of his “affiliation to organised crime”, a source in the homeland security department told the IRP.

“We had no direct relationship with Cheung Chi Tai,” Adelson testified.

In court, Adelson steadfastly maintained that Cheung was merely a gambler and of no great significance to the company. That characterisation of the relationship is likely to come under strong challenge at a full trial.

The casino industry in Macau has for decades used what are known as “junket operators” to bring in high rollers from other parts of China who gambled in “VIP rooms” in return for a substantial cut of the take.

Although junkets are a legal business enterprise, organized crime has extensively infiltrated them, according to a 2003 investigative report on the triads commissioned by the Las Vegas Sands and obtained by the IRP.

“The companies and individuals who operate the [VIP] rooms are either triads or fronts for the triads,” said the report. It added that “the triads became an ongoing presence in the Macau casinos” from the 1980s.

“Put simply, triad groups operating the VIP rooms are effectively able to make 5% to 10% on every dollar of chips that customer purchases. In addition, triad societies are often employed by the room operators for protection and they also provide ancillary services such as drugs, prostitution and loan sharking to patrons of the rooms,” the report said.

Cheung was the major stakeholder in a junket company called Neptune which began running a VIP room at Sands Macau in 2005, according to Hong Kong court records.

On the witness stand, Adelson played down Cheung’s connection with Sands’ Macau casinos.

“To the best of my knowledge, he was a minority shareholder in one of the junket rackets,” he said.

But documents obtained by the IRP show that in 2008 one of the Sands casinos in Macau, the Venetian, extended $32m in credit to Cheung’s junket company. Cheung is named as the guarantor in the documents, headed “Venetian Macau Limited Junket Credit Agreement”.

Two years later, another Sands internal document said that Cheung was admitted to the casino’s exclusive Chairman’s Club, which normally comes with a personal letter from Adelson. Among the benefits are “extremely large lines of credit”, according to court records filed by Jacobs.

Las Vegas Sands is Adelson’s own company, so this means his own company knew of those connections more than a decade ago. Which means Adelson is lying. And there’s more:

Adelson is also likely to face difficult questions about his denial that his company had ties to a senior Chinese official, Ng Lap Seng, who was described in court as “a courier” for Sands Macau and a link man to the Chinese government.

“I heard that he was a real estate developer or that he was the head of the real estate developers association or something,” Adelson testified.

Ng is perhaps better known as a member of the Chinese People’s Political Consultative Committee, a political advisory body in China dominated by the Communist party.

Adelson told the court he was not aware of any association between Las Vegas Sands and Ng.

“I know of nobody in the company who had dealings with Ng,” he said…

A 2010 internal email obtained by the IRP reveals that Jacobs wrote to the company’s legal counsel requesting a background check on Ng. In the email, Jacobs describes Ng as “Leonel’s contact with Beijing and the one who delivered msg from SGA”. SGA are Adelson’s initials and how he is regularly referred to in company communications.

Leonel is a reference to Leonel Alves, a Macau legislator and lawyer who was hired by Sands Macau. Jacobs tried to block a $700,000 payment to Alves by Las Vegas Sands because he said it was far above prevailing rates and smacked of buying influence. Company lawyers warned that it could breach US anti-bribery laws.

Jacobs has alleged that Alves was hired to buy influence with Beijing through Ng, including repairing damaged relations between Adelson and Chinese officials.

The Las Vegas Sands investigative report from 2003 also names Ng. It says he is “highly regarded” by the Chinese government and has good contacts within it. It describes him as a hotel owner who is “believed to be a triad member and has been the focus of several investigations over the years”.

So once again, Adelson is lying. Bribing foreign officials is a felony in this country. Adelson may be going down, though it will likely take years for this to work its way through the courts.

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