Between 2006 and 2011, as a result of LVSC's failure to devise and maintain a reasonable system of internal controls over its operations in China and Macao, funds totaling more than USD 62 million were allegedly transferred to a consultant over a series of transactions under circumstances that frequently lacked supporting documentations or appropriate authorization. Most of the transfer allegedly occurred despite knowledge by senior LVSC management that they could not account for significant funds previously transferred to the consultant in an environment where significant bribery risks were present. Furthermore, some of these funds were allegedly improperly recorded in LVSC's books and records as proper payments when no such services or properties were purchased.
Although LVSC sought to establish operations in China, the company was allegedly subject to significant marketing and ownership restrictions in China as a gaming company. In 2006, LVSC allegedly hired Yang Saixin, a Chinese consultant allegedly claiming to be a former Chinese government official with political connections that would provide assistance to LVSC, allegedly to liaise with governmental bodies, provide advice and assistance with approval processes and serve as an intermediary to obscure LVSC's role in certain transactions. For example, LVSC allegedly purchased and operated a basketball team, transactions barred to gaming companies in China, and purchased a building in Beijing from a Chinese state-owned entity allegedly to obtain favorable political influences through Yang's company.
In addition, Sheldon Adelson, CEO of LVSC, allegedly instructed a top executive to pay about USD 700,000 in legal fees to Leonel Alves, a Macao legislator and member of the Chinese People's Political Consultative Conference, whose firm was serving as outside counsel to LVSC in Macao.
On 20 December 2011, the Wall Street Journal reported that the Securities and Futures Commission in Hong Kong had notified SCL that it conducted an investigation of undisclosed allegations relating to SCL and that it would not take any regulatory action against it. The article stated that it is unclear whether this investigation was in any way related to the investigations of the DOJ and SEC, and it is also unknown if any allegations of bribery were investigated.
In its Form 10-K filed with the SEC on 1 March 2013, LVSC disclosed that its Audit Committee reached certain preliminary findings, including that there were likely violations of the books and records and internal controls provisions of the FCPA. In response to news reports following the filing, LVSC insisted that it only referred to the accounting provisions of the FCPA and that no violations of the FCPA's anti-bribery provisions have occurred.
On October 20, 2010, Steve Jacobs, former chief executive at Sands China Ltd. ("SCL") in Macau, filed a complaint against LVSC and SCL in District Court, Clark County, Nevada alleging breach of contract and breach of the implied covenant of good faith and fair dealing and tortious discharge. Jacobs alleged that Jacobs was fired for bringing light to LVSC's improper business practices in Macau.
On 16 March 2011, Jacobs filed an amended complaint, alleging defamation per se against LVSC, SCL and adding Adelson as a defendant.
On 31 May 2016, LVSC agreed to pay between USD 75 million and 100 million to resolve all legal claims in Nevada state and federal cases brought by Jacobs against LVSC, Venetian Macau Ltd. and Sheldon Adelson.
In its SEC Form 10-K filed on 1 March 2011, LVSC disclosed that it had been advised by the U.S. Department of Justice ("DOJ") that the DOJ was conducting an investigation similar to the SEC.
On 19 January 2017, the SEC announced that LVSC, admitting its responsibility over the acts of its then officers, directors, employees, and agents, entered into a non-prosecution agreement to settle resolve the DOJ's investigation into the company's FCPA violations in China and Macao. As part of the agreement, LVSC agreed to pay a criminal penalty of USD 6,960,000, to continue its cooperation with the DOJ in any of the agency's ongoing investigations and prosecutions, including those against individuals, in related matters, enhance its compliance program, and to report implementation of such to the DOJ.
In coming to the settlement, the DOJ noted that, although LVSC did not receive voluntary disclosure credit for not voluntarily and timely disclosing the matters, the company did receive a full credit for its cooperation with the investigation and extensive remedial measures, including dismissing individuals and affiliates implicated in the conduct, updating its policies, and enhancing its compliance program and internal controls. The monetary penalty reflects a discount of 25% off of the US Sentencing Guidelines fine range.
In its SEC Form 10-K filed on 1 March 2011, LVSC disclosed that the U.S. Securities and Exchange Commission ("SEC") had subpoenaed the company on 9 February 2011 regarding possible violations of the U.S. Foreign Corrupt Practices Act ("FCPA"). In the same filing, LVSC also disclosed that it had been advised by the U.S. Department of Justice ("DOJ") that it was conducting a similar investigation.
On 7 April 2016, LVSC consented to the entry of SEC's cease-and-desist order to settle charges that it violated the books and records and internal control provisions of the FCPA by failing to properly authorize or document millions of dollars in payments to a consultant facilitating business activities in China and Macao. Without admitting or denying the findings, LVSC agreed to pay a USD 9 million civil penalty and retain an independent consultant for two years to review its FCPA-related internal controls, record-keeping, and financial reporting policies and procedures and its ethics and compliance functions.
In LVSC's public filings, the company disclosed its belief that the US investigation may have emanated from the lawsuit filed by Steven C. Jacobs' wrongful termination suit.