Fired executive levels new charges at Las Vegas Sands, Adelson

By Steve Green

Wednesday, May 25, 2011 | 4:48 p.m.

Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson tried to intimidate the Reuters international news service into retracting a story about the company by falsely claiming it was defamatory, a new court filing alleges.

The filing was made Tuesday in Clark County District Court in Las Vegas in the hotly-litigated lawsuit pitting Las Vegas Sands’ fired Macau executive, Steven Jacobs, against Las Vegas Sands, its Macau subsidiary Sands China Ltd. and Adelson.

After he was fired last year, Jacobs sued in hopes of winning stock options and severance pay he had been denied because Sands China fired him as CEO for cause. His allegations of wrongdoing by Adelson and the company are believed to have prompted investigations in the United States and China as well as several shareholder lawsuits

In the latest legal dustup in the case, attorneys for Jacobs filed papers Tuesday responding to a counterclaim filed against him by Las Vegas Sands denying Jacobs’ allegations of wrongdoing and saying he was fired for violations of company policy, for working on unauthorized deals and because he was slow to separate the company from a Chinese organized crime figure. The counterclaim also accused Jacobs of extortion, saying that after he was fired he threatened to go public with damaging information unless he was paid.

In their response Tuesday, attorneys for Jacobs denied all these allegations.

They wrote that after Reuters published an investigatory story in March 2010 called "Special Report: High-rollers, triads and a Las Vegas giant,’’ a background report investigation was commissioned by the company about triad (organized crime) figure Cheung Chi Tai, who was a central part of the Reuters story.

Reuters reported that testimony in a trial indicated that despite being a triad member, he was in charge of one of the VIP rooms at the Sands Macau casino in China and an investor in casino junket companies that attract high rollers to casinos.

The point of the Reuters story was that Las Vegas Sands’ alleged relationship with Cheung Chi Tai could potentially violate gaming laws. Las Vegas Sands executives have said the company works to stay in compliance with gaming laws.

"Jacobs denies that the background investigation was done solely for due diligence purposes to `discover’ ties of Las Vegas Sands to Cheung Chi Tai as those ties were well known to Las Vegas Sands Chairman Sheldon Adelson, well before the Reuters’ article,’’ Jacobs court filing said.

The response to the counterclaim says Jacobs "raised important issues with respect to the Sands China Board not being fully informed as to information discovered; just as others raised issues regarding a scheme concocted by Adelson to intimidate and mislead Reuters and its investigative journalists as to the accuracy of the March 2010 article by sending Reuters a demand for retraction which falsely claimed defamation.’’

"Las Vegas Sands has brought and alleged its counterclaim as part of a bad faith defense to among other things conceal its employment relationship with Jacobs, conceal its relationship with Cheung Chi Tai and other related or similar parties, conceal the truth of those relationships from the Reuters investigative reporters, conceal Adelson’s pervasive control of the Las Vegas Sands-related entities, including his personal demand that Leonel Alves be hired as general counsel for Sands China Ltd. and conceal material cost overruns and timing delays from the Sands China board and Sands China Ltd.’s shareholders,’’ the response said.

The relationship between Sands China and Alves, a local lawmaker in Macau, is thought to be part of the probes under way by regulators, as Jacobs has alleged Alves’ retention by Sands China "posed serious risks under the criminal provisions of the United States code commonly known as the Foreign Corrupt Practices Act,’’ an anti-bribery statute.

Attorneys for Adelson, Las Vegas Sands and Sands China have not yet responded to these latest allegations.

After losing a motion for dismissal, Sands China appealed to the Nevada Supreme Court – technically it filed a petition for writ of mandamus -- and is now attempting to have the lawsuit proceedings be put on hold until that appeal is resolved.