Romney supporter, Sheldon Adelson's alleged "prostitution strategy" in his Macau Casino
Billionaire casino operator and big super-pac contributor is helping to pick our president, thanks to Citizens United.
A former top China executive at Las Vegas Sands Corp. LVS +3.65% suggested in a court filing made public Thursday that there was potential wrongdoing by company executives, including allegations that chairman Sheldon Adelson approved a "prostitution strategy" at the casino operator's Macau properties.
The filing in Nevada District Court in Las Vegas by Steve Jacobs, the executive, is one of the most explosive yet in a continuing legal dispute between Mr. Jacobs and his former employer. Mr. Jacobs and his attorney accused the casino operator of withholding documents Mr. Jacobs is seeking in order to establish jurisdiction in his wrongful termination lawsuit, which was first filed in 2010.
In a statement Thursday, Las Vegas Sands spokesman Ron Reese said the company has "consistently maintained that the allegations of misconduct and wrongdoing by Jacobs against the company and its senior management are baseless." Mr. Reese's statement added, "Mr. Adelson has always objected to and maintained a strong policy against prostitution on our properties, a fact that Mr. Jacobs knows to be true, and any accusation to the contrary represents a blatant and reprehensible personal attack on Mr. Adelson's character."
Mr. Jacobs has already accused the company of firing him for objecting to Mr. Adelson's illegal demands, which allegedly included extorting senior government officials in Macau, threatening Chinese banks and using the services of a Macau lawyer despite concerns his retention posed risks to the Foreign Corrupt Practices Act, which bans bribery by U.S. companies abroad. The company denies the allegations.
In the latest court filing Mr. Jacobs broadened his list of potential allegations against company executives with a seven-page declaration.
Mr. Jacobs is seeking the documents to establish that Las Vegas-based executives such as Mr. Adelson and Las Vegas Sands President Mike Leven had enough control over casinos in Macau, the fast-growing Chinese gambling enclave, to warrant trying his wrongful termination suit in Las Vegas. The company is seeking Macau jurisdiction.
The new filing, coupled with previous allegations, highlights how problematic the lawsuit by Mr. Jacobs, a Harvard graduate and former hotel executive from Tennessee, could be for Las Vegas Sands and for Mr. Adelson. The case comes at a sensitive time for the billionaire gambling mogul, who has emerged as a top Republican campaign donor in the U.S. elections this year.
Las Vegas Sands said last year it believes the wrongful termination case prompted investigations into the company by the U.S. Securities and Exchange Commission and by the U.S. Department of Justice into possible violations of the Foreign Corrupt Practices Act. The company said it is cooperating with the federal investigations.
Among the documents Mr. Jacobs is seeking are those he says would reveal "control and direction" by Las Vegas Sands executives "over acts of prostitution on Sands China's properties."
In the filing, Mr. Jacobs alleged that senior executives were concerned about a project Mr. Jacobs launched after he arrived in Macau in May 2009, called "Operation Clean Sweep," designed to rid the casino floor of loan sharks and prostitution. The executives were concerned with his plan because "the prior prostitution strategy had been personally approved by Adelson," Mr. Jacobs alleged in the filing. The filing didn't provide details on the purported "prostitution strategy."
According to the filing, executives confirmed by email Mr. Adelson's involvement in the strategy and highlighted its "success." Mr. Jacobs says he put hard copies of those emails in a folder labeled "Outrageous" in his office drawer.
Prostitution at Sands China made headlines in December 2010 when police rounded up more than 100 suspected prostitutes at the company's flagship Venetian Macao casino-resort while Mr. Adelson was in town. At the time, the company said in a statement: "The company provided information regarding prostitution-related activities to authorities well in advance of their raid in December 2010. We believe that information was helpful in the development of their case."
Mr. Jacobs also asked for documents he says showed the company offered special deals through an elite "Chairman's Club" to a select group of high-rolling gamblers that included known leaders of Chinese organized-crime rings known as Triads, according to the filing. Mr. Adelson controlled the club and sent personal letters to its members, Mr. Jacobs said in the filing.
Mr. Jacobs is also seeking documents he said in the filing show that Mr. Leven argued in favor of employing illegal construction workers. The Chinese territory's tight controls on foreign labor have caused headaches for casino operators and other businesses eager to expand in the territory.
Las Vegas Sands was particularly hard-hit by the restrictions. Mr. Leven told Mr. Jacobs that the growth of unit Sands China Ltd. would be at risk without the hiring and use of illegal construction workers, according to the filing. Mr. Leven decided to move employees from the Macau payroll to separate books in Singapore, where the company also operates a casino-resort, to circumvent the issue, said Mr. Jacobs in the filing.
Regarding the allegations of the Chairman's Club and the illegal employment, Mr. Reese, the Las Vegas Sands spokesman, said, "We consistently strive to comply with all applicable law—here and in the other jurisdictions in which we operate." He declined to comment further.
Write to Alexandra Berzon at alexandra.berzon@wsj.com
A version of this article appeared June 29, 2012, on page B5 in the U.S. edition of The Wall Street Journal, with the headline: Sands Suit Alleges 'Prostitution Strategy'.
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