By Kate O’Keeffe
The Wall Street Journal
HONG KONG—The former chief executive of Sands China Ltd. says in a lawsuit that he was wrongfully fired after refusing to carry out Las Vegas Sands Corp. Chairman Sheldon Adelson’s illegal demands, allegations that were promptly denied by the U.S. company.
A copy of the suit, filed Wednesday in a Clark County court in Nevada, was seen by The Wall Street Journal on Friday.
The allegations come as Las Vegas Sands is in the process of expanding its presence in Asia as revenues from its Las Vegas operations remain stagnant. Earlier this year, Las Vegas Sands, which has three casinos in Macau, opened its first casino in Singapore. It is also eyeing potentially lucrative markets in Asia such as Japan.
Sands China, the Macau unit of Las Vegas Sands, in July removed Steve Jacobs as chief executive, without publicly giving a reason for his departure. He was named to head the business just a year earlier and oversaw the unit’s US$2.5 billion initial public offering in November 2009.
Mr. Jacobs claimed in the lawsuit that his performance was vital in turning around the Macau unit and its parent, whose shares plummeted at the height of the global financial crisis, but later recovered as the Macau business thrived.
Mr. Jacobs on Friday declined to comment on the wrongful termination suit, which seeks millions of dollars in unpaid salaries, bonuses and stock options from Las Vegas Sands and its Hong Kong-listed unit.
Las Vegas Sands spokesman Ron Reese said Friday: “While Las Vegas Sands does not typically comment on legal matters, we categorically deny these baseless and inflammatory allegations.” He added that Mr. Adelson had no additional comment on the suit.
Among its allegations, the suit accuses Mr. Adelson of ordering Mr. Jacobs to use “improper leverage” against senior Macau government officials to help the company secure rights to sell apartments at its Four Seasons property. Mr. Jacobs was asked to arrange “secret investigations” on the officials so that any negative information obtained could be used against them, the filing said.
According to the document, Mr. Adelson also ordered Mr. Jacobs to threaten to withhold business from major Chinese banks “unless they agreed to use influence with newly elected senior government officials of Macau” to get “favorable treatment” on government-imposed labor quotas and table limits that could derail its expansion projects.
Macau overtook the Las Vegas Strip as the biggest gambling market in the world in 2006 and this year it is on track to rake in around four times the Strip’s revenue. However, the breakneck pace of growth has raised concerns of a bubble forming in the casino industry.
To cool the market, Macau’s government earlier this year announced a tight cap on the number of gambling tables as well as heavy restrictions on foreign workers, essential for large construction projects in the city’s labor-starved market. The regulations have posed serious challenges for Sands China’s expansion projects.
Further, the suit accuses Mr. Adelson of insisting Mr. Jacobs withhold information from Sands China’s board about “material financial events, corporate governance and corporate independence,” preventing it from having a chance to rule on whether such information should be disclosed to the Hong Kong Stock Exchange.
The Hong Kong Stock Exchange and the Securities and Futures Commission declined to comment Friday.
Las Vegas Sands terminated Mr. Jacobs on July 23 and he was told he wouldn’t receive severance, the suit said. About two weeks later, Sands sent Mr. Jacobs a letter saying his termination was because he exceeded his authority and failed to keep the companies’ board of directors informed of important business decisions, according to the complaint.
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