Sands shares plunge on SFC probe
Shares in Sands China, the Macau unit of billionaire Sheldon Adelson's Las Vegas Sands, plunged yesterday after the company said it was being investigated by Hong Kong's Securities and Futures Commission (SFC).
In the latest twist in a bribery probe into the company's practices in Macau, Sands China said in statement that the stock market regulator had asked it to 'produce certain documents', without giving details.
A person familiar with the case clarified that the SFC's actions were related to the continuing US government investigation into the Macau company's parent under the Foreign Corrupt Practices Act.
Steven Jacobs, who was fired from his job running Sands China last July, alleged in a Nevada lawsuit that Adelson forced him to use 'improper leverage' against senior Macau officials. That prompted the US Securities and Exchange Commission (SEC) and Department of Justice to investigate Las Vegas Sands.
Hong Kong-listed shares of the company, which operates the Venetian Macao, fell 6 per cent to HK$17.36. The stock has fallen 9 per cent since Las Vegas Sands disclosed the corruption inquiry at the end of February.
'With the SFC investigation, you have another layer of cause for concern' for investors in Sands China, said William McGovern, a former SEC enforcement division chief now working at the Hong Kong office of American law firm Kobre & Kim.
While Sands China shareholders may have initially viewed Jacobs' lawsuit as revenge by a deposed executive, or dismissed the US inquiry into Las Vegas Sands as an issue separate from the Macau subsidiary, the Hong Kong regulator's involvement means there is 'more to be worried about', McGovern added.
The SFC's interest in the matter also signals it will be easy for US authorities to get co-operation from their Hong Kong counterparts.
SEC staff would have to go through the Hong Kong regulator to seize documents from Sands China's Hong Kong office, or interview witnesses resident here, McGovern said.
Jacobs has alleged in court filings that Adelson made 'outrageous' demands on him to curry favour with Macau officials to push forward the company's development plans.
He also criticised his former boss for employing Leonel Alves, a member of Macau's Executive Council.
Under American law, it is illegal for US companies to make payments to foreign government officials.
Adelson said at a gaming conference earlier this week that Jacobs' case amounted to 'blackmail and extortion'.
A Sands China spokesman could not be reached.