Las Vegas Sands Corp. has agreed to pay a $9 million civil penalty to settle charges that it broke the law by neglecting to appropriately authorize or document millions of dollars it paid to an overseas consultant.
The Securities and Exchange Commission announced the penalty today in discussing the results of a more than five-year investigation into whether Sands violated the Foreign Corrupt Practices Act, which bans the bribery of officials in other countries.
The SEC said it found that Sands had “inaccurate books and records” and that it “frequently lacked supporting documentation or proper approvals” for upwards of $62 million paid to a consultant in Asia. The consultant helped “obscure the company’s role in certain business transactions,” including the purchase of a basketball team and a building in mainland China, according to an SEC statement.
In China, gambling is only allowed in Macau, a special administrative region where Sands has multiple resorts. The company also runs the Venetian, Palazzo and Sands Expo and Convention Center in Las Vegas, as well as properties in Pennsylvania and Singapore.
The SEC said in its statement that, at one point, Sands was not able to account for more than $700,000 given to the consultant for “team expenses,” yet the company “continued to transfer millions of dollars to him.” Some of the consultant payments were inappropriately recorded, including some “supposedly spent on artwork for the building when none was actually purchased,” the SEC said.
“Publicly traded companies must have appropriate financial controls in place to ensure that expenses are paid for bona fide services,” Andrew Ceresney, director of the SEC’s enforcement division, said in the statement. “Las Vegas Sands failed to implement controls to prevent tens of millions of dollars from being paid out without appropriate documentation or authorization.”
Sands said in a statement that the SEC made no finding of bribery or corrupt intent by the company, which did not admit or deny any of the investigation’s findings. Sands also reiterated its belief that the SEC investigation stemmed from allegations made in an ongoing wrongful-termination lawsuit the company has been vigorously fighting for years.
Sands also reiterated its belief that the SEC investigation stemmed from allegations made in an ongoing wrongful-termination lawsuit that the company has been vigorously fighting for years. The company said that none of the allegations from that lawsuit were the basis for the SEC’s findings (although an attorney on the other side of the case called that claim “silly”, according to Reuters).
Sands said the conclusion of the SEC investigation was also consistent with the preliminary findings of its audit committee.
CEO Sheldon Adelson said in the statement that his company was pleased that the investigation had been resolved and that Sands was committed to a “world-class compliance program that builds on the strong policies we already have in place.”
“While we started corrective action on this particular matter prior to the initiation of the government investigations, we understand that running an industry-leading compliance operation takes time, resources and the full support of senior management — I’m proud to say our company has exactly that,” Adelson said. “We will build on this experience, which has reemphasized to our 50,000 team members worldwide the same values I have made the foundation of my seven decades in business — integrity and reputation matter.”
For two years, Sands will retain an independent consultant who will review the company’s internal controls related to the Foreign Corrupt Practices Act as well as its recordkeeping and “financial reporting policies and procedures and its ethics and compliance functions,” according to the SEC.