Bloomberg News

Adelson Returns to Stand in $328 Million Macau Deal Suit

April 08, 2013

Adelson Returns to Stand in $328 Million Suit Over Macau Deal

The sign for the Sands Macao hotel and casino is displayed behind Fisherman's Wharf in Macau. Photographer: Daniel J. Groshong/Bloomberg

Las Vegas Sands Corp. (LVS) Chairman Sheldon Adelson returned to the witness stand, saying if he didn’t defend the lawsuit brought by a Hong Kong businessman, there would be a line around the block with people suing him.

Adelson, 79, testified for a third day in the Nevada state court trial over Richard Suen’s claims that he’s owed $328 million for helping the company win a license in 2002 to operate casinos in the former Portuguese colony. Adelson attributed the success of Sands in Macau to vision and expertise rather than to any of Suen’s efforts.

“Zero,” Adelson said in response to Las Vegas Sands lawyer Richard Sauber’s question what contribution Suen made to Las Vegas Sands getting its license to operate in Macau and its subsequent efforts to develop and build its casino resorts.

“Everybody thought I was crazy,” Adelson said about his plans to build the Venetian Macau, now the biggest casino resort in the world, in what was at the time a swamp across from Macau’s peninsula where, he said, the city’s gambling dens and massage parlors were concentrated.

Even his “good friend” Steve Wynn, the chairman and chief executive officer of Wynn Resorts Ltd. (WYNN:US), which operates its own casinos in Macau, expressed doubts about the location of Las Vegas Sands’ signature resort that opened in 2007, Adelson said. The Venetian Macau was partly financed with profits from Sands Macau, the first casino in the city he built, Adelson said.

Second Trial

This is the second time Suen’s claims have gone to trial. The Nevada Supreme Court in 2010 reversed a $43.8 million jury award in favor of Suen and sent the case back for a new trial. Suen alleged he had an agreement that he and his associates would get $5 million and 2 percent of Sands’ Macau net income if the company was awarded a license.

Suen claimed that meetings he arranged between Adelson and Chinese officials, including the mayor of Beijing and the vice premier responsible for Hong Kong and Macau, were instrumental in leading Edmund Ho, the former chief executive of the Macau Special Administrative Region, to award the company a gaming license in 2002.

Adelson, who finished his testimony today, said that the central government in Beijing wasn’t involved in awarding the gaming concessions in 2002. He said it was done through a tender process overseen by the Macau local government.

“There’s no interference, there’s no influence, there’s nothing,” Adelson said.

Macau Monopoly

Adelson said Suen, a business friend of his brother Leonard Adelson, claimed he had connections and could deliver a license if the Macau government ended the monopoly that gambling mogul Stanley Ho had had in the territory since 1962.

“It was my brother nagging me about it,” Adelson said today in response to written questions that Clark County District Judge Rob Bare had invited the jurors to ask at the end of Adelson’s testimony.

Once the Macau government decided to go through a tender process to award the concessions in the fall of 2001, Suen’s claim to be able to provide an exclusive license was no longer relevant, Adelson said.

“If it’s going to be open to anybody, there’s nothing you can do for me that I can compensate you for,” Adelson said.

Wasn’t ‘Kosher’

Suen, 60, testified that he became friends with Lenny Adelson around 1994. Lenny Adelson was trying to sell frozen fish in China at the time and Suen warned him about a potential business partner who he thought wasn’t “kosher,” Suen said under questioning from his lawyer, John O’Malley.

Suen, a Hong Kong native, said he has been involved in various business enterprises, including the toy trade, importing power cable and computers into China, and real estate. These businesses helped him build contacts with government officials in the People’s Republic of China, Suen said.

After Macau became a special administrative region of China in 1999, Suen said he learned from his contacts that the local government would liberalize gaming in the enclave. That seemed a “logical” plan because of the lackluster state of the monopolized gaming industry in Macau at the time, Suen said.

“Gaming was going nowhere,” Suen said. “It was seedy, it was small-time, it was invested with criminal activity.”

‘Very Interested’

Suen called Lenny Adelson in the summer of 2000 and told him that if his brother was interested in a Macau gaming license he had the resources and connections to help him get one, Suen testified. He met Sheldon Adelson, who happened to in Hong Kong at the time, a few days later, Suen said.

“He was very interested,” Suen said. “He said, wow, I can turn Macau in the Las Vegas of the Far East,” Suen said.

Suen testified he and his team, which included the son of a senior Communist Party official, had the “guanxi,” or relationships, to introduce Adelson to the most powerful people in China who could influence which companies would be awarded a gaming license in Macau.

Suen had no expertise in public relations or finding investors, Adelson testified last week. Las Vegas Sands won the right to operate casinos in Macau, without Suen’s involvement, by joining the bid of a Hong Kong investor group that got one of the three gambling concessions awarded in 2002, Adelson said.

The company had earlier joined forces with a Taiwanese bank that would finance the casinos in Macau managed by Las Vegas Sands. When the Macau government rejected that proposal, three weeks before the winning bids were announced, Las Vegas Sands was paired, as management company, with Galaxy Entertainment Group Ltd. (27), the Hong Kong investors.

‘Triad Member’

The venture with Galaxy was set up after Adelson was approached by a “messenger” he assumed was from Edmund Ho, Adelson testified.

The venture with Galaxy didn’t work out because, among other reasons, the Hong Kong group didn’t want to disclose its partners, which turned out to include the son of a reputed “triad member from years earlier,” Adelson said. The Macau government allowed Las Vegas Sands to build its own casinos under a subconcession from Galaxy, Adelson said.

In 2009, Las Vegas Sands paid $42.5 million to settle a lawsuit brought by three businessmen, including the “messenger.” Darryl Turok, who said they put the company in touch with Galaxy in January 2002.

‘Inaccurate Statements’

Galaxy, in a statement to the Hong Kong stock exchange today, said a number of press articles on April 7 referred to “certain inaccurate statements” about the company made by Adelson during legal proceedings. Galaxy is investigating the statements, it said, without providing details.

Galaxy is still seeking legal advice and won’t be able to comment further, Peter Caveny, vice president of the company’s investor relations division, said today. Las Vegas Sands declined to comment on the Galaxy filing.

Suen approached Adelson after Las Vegas Sands got the sub- concession in December 2002 seeking compensation for helping win the right to operate casinos, Adelson said last week.

“I said you haven’t done anything, why should I pay you any compensation?” Adelson testified.

Adelson said that, at the urging of his brother Lenny, he offered Suen a position as procurement agent so he could “earn a lot of money.” That offer had nothing to do with Suen’s claim that he was entitled to be paid for helping to deliver the Macau sub-concession, Adelson said.

The case is Suen v. Las Vegas Sands Corp. (LVS:US), 04A493744, Nevada District Court, Clark County (Las Vegas).

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • WYNN
    (Wynn Resorts Ltd)
    • $147.47 USD
    • -2.63
    • -1.79%
  • LVS
    (Las Vegas Sands Corp)
    • $56.56 USD
    • 0.12
    • 0.21%
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