Board will hear complaints against Venetian contractor

Gary Thompson

Friday, Nov. 26, 1999 | 10:48 a.m.

Lehrer McGovern Bovis Inc., which oversaw construction of the $1.5 billion Venetian hotel-casino, faces a hearing on complaints that could lead to revocation of its license to do business in Nevada.

The New York-based general contractor has been served with a complaint by the Nevada State Contractors' Board alleging it failed to pay subcontractors it had hired for work on the Italian-themed Strip casino.

Bovis and the Venetian are embroiled in a dispute over which company is responsible for massive cost overruns during construction of the 3,000-suite resort. Venetian officials have sued Bovis for $50 million-plus in damages, alleging it failed to complete construction on time and on budget.

Bovis has countersued the Venetian for $146 million, the amount it says it is owed by the hotel-casino for changes in the scope of the project. In all, more than $300 million of liens were filed against the Venetian by Bovis and other construction companies alleging they haven't been paid for materials supplied to or work done on the resort.

The Venetian "bonded around" those liens earlier this month, a procedure that removed the threat of foreclosure from the property. The lien claims have been consolidated into a single court case that is being heard by Senior Judge James Brennan.

But some lien claimants filed complaints with the state Contractors' Board, as well. Board investigators originally scheduled a hearing for Dec. 16 on whether the complaints warrant imposition of penalties ranging from a reprimand to suspension or revocation of Bovis' contractor's license here.

But Bovis requested that the hearing be continued until Jan. 12, a board official said. Bovis spokesman Sam Singer confirmed that the company had asked for a continuance and is waiting to hear back from the board. A spokesman for Venetian owner Sheldon Adelson said the hotel-casino's lawyers "are reviewing the matter."

The complaints were filed by four Las Vegas companies -- Recreation Development Corp., Century Steel, Steel Engineers Inc. and Winaire Inc. -- that claimed they supplied work, materials or both to Bovis and either weren't paid at all or received only partial payments from the general contractor.

RDC said it's still owed $866,778, while the other three companies said they are owed amounts ranging from $13,213 to $34,455.

The Contractors' Board complaint alleged Bovis "willfully or deliberately failed to pay monies when due ... or falsely denied that amount due, with intent to secure a discount upon such indebtedness, when (it) had the capacity to pay or when (it) had received sufficient funds" from the Venetian to cover subcontractors' bills.

Bovis has offered some financially distressed subcontractors settlements of 30 to 80 percent of the amounts claimed on their liens, say lawyers involved in the lien litigation. They said Bovis has offered either a straight buyout of the claims for a discount or a smaller amount of cash up front and a share in any money Bovis might recover from the Venetian if its claims against the hotel-casino are upheld.

"This is a work scope dispute and really doesn't have to do with nonpayment," Singer said. "We've been negotiating with these folks in good faith, despite the fact any money that may be owed is owed by Mr. Adelson."

The complaint ordered Bovis to "show cause why (its) contractors license should not be disciplined." Bovis can present evidence and subpoena witnesses as part of its presentation.

Singer said any possible board action wouldn't impact the company's ability to conduct business in other states nor affect its recently announced merger with an Australian real-estate management firm because that deal has already closed.

Bovis, formerly a subsidiary of Peninsular & Oriental Steamship Navigation Co., was sold to Lend Lease Corp. of Sydney last month for $472 million. P&O is a guarantor on the contract Bovis had with the Venetian that called for a maximum price of $652 million to complete construction on the Strip resort.