By Kate O’Keeffe
DOW JONES NEWSWIRES
HONG KONG (Dow Jones)–A Las Vegas Sands Corp. (LVS) unit said Thursday it is being investigated by Hong Kong’s securities regulator, adding to a list of U.S. federal and state authority probes of the casino company.
Sands China Ltd. (1928.HK) said in a statement to the Hong Kong stock exchange that the Securities and Futures Commission has asked the company to produce “certain documents” for an investigation into alleged breaches of the Securities and Futures Ordinance.
The Hong Kong-listed company said it was “not permitted to comment further at this time.” Las Vegas Sands spokesman Ron Reese and the SFC declined to comment.
Hong Kong’s Securities and Futures Ordinance, which took effect in 2003, gave the SFC more power over listed companies, including the ability to make criminal prosecutions.
“The main focus for companies regarding the Securities and Futures Ordinance is the issue of filing false or misleading statements to the stock exchange,” said David Webb, prominent shareholder activist and founder of Webb-site.com.
The news comes after Las Vegas Sands said in its annual report filed earlier this month that it had received a subpoena from the U.S. Securities and Exchange Commission requesting the company to produce documents related to its compliance with the Foreign Corrupt Practices Act and that the Justice Department “is conducting a similar investigation.” The law prohibits U.S. companies from making payments to foreign officials to get or keep business.
The U.S. gambling giant said it believed the subpoena stemmed from allegations in a wrongful-termination lawsuit filed in October against the company by its former head of Macau operations, Steve Jacobs. The Nevada Gaming Control Board said it has also initiated an investigation into the same matter.
In the case, filed in a Nevada court in October against Las Vegas Sands and its Macau subsidiary, Steve Jacobs accuses the company of wrongfully terminating his employment because he wouldn’t comply with what he says were illegal demands from his boss, Las Vegas Sands Chief Executive Sheldon Adelson.
Among its allegations, the suit accuses Adelson of ordering Jacobs to use “improper leverage” against senior Macau government officials to help the company secure rights to sell apartments at its Four Seasons property.
Jacobs was asked to arrange “secret investigations” on the officials so that any negative information obtained could be used against them, the filing said.
Jacobs also alleges that Adelson wanted him to continue using the services of a Macau attorney, Leonel Alves, despite concerns his employment could risk violation of the Foreign Corrupt Practices Act. Alves is a member of the Macau government’s Executive Council.
According to the document, Adelson also ordered 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.”
Further, the suit accuses Adelson of insisting 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.
Las Vegas Sands has denied the allegations, with Adelson commenting on the U.S. investigations at an investors’ conference this week: “When the smoke clears I am absolutely a thousand percent positive that there won’t be any fire below it.”
It is unclear whether the Hong Kong regulator’s investigation is linked to the U.S. investigations or any of the suit’s allegations, but news of the investigation comes as regulators in both places heighten their oversight of companies.
U.S. regulators have been stepping up enforcement of the FCPA. Eight of the top 10 largest settlements under the law occurred last year, according to a report by law firm Hogan Lovells, which represents companies in FCPA matters.
Hong Kong has been getting tougher on market misconduct. In 2009 a judge handed down the longest sentence for insider trading in the territory’s history when it gave former Morgan Stanley banker Du Jun seven years in prison and fined him HK$23.3 million (about US$3 million) for insider trading.
Shares of Sands China closed 5.7% lower at HK$17.36 compared to the benchmark Hang Seng Index’s 0.3% rise.
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