When Steven C. Jacobs was the CEO of Sheldon Adelson’s Sands China casino operations in Macau, he made one thing very clear to his billionaire boss: Putting Leonel Alves on the payroll as legal counsel may “pose serious risks.” But Adelson ignored Jacobs’ advice and hired Alves, a Macau legislator who has worked for companies with connections to organized crime in China.
He fired Jacobs instead.
Among the perils foreseen by Jacobs – which have materialized in full since he filed a wrongful termination lawsuit against Adelson in 2010 – are ongoing investigations of Sands China by the U.S. Department of Justice and the Securities and Exchange Commmission, spurred in part by the hotel casino’s payments to Alves.
The Alves probe only represents one aspect of the federal investigation into Adelson’s overseas affairs. But the financial relationship between Alves and Sands China may violate the Foreign Corrupt Practices act, which could in turn cost Adelson his casino operating license as a penalty for venal acts — and taint the millions of dollars he has donated to support the presidential candidacies of Mitt Romney and Newt Gingrich.
According to Jacobs, Adelson purportedly hired Alves in 2009 to act as a conduit to government officials in Macau and Beijing. At the time, Adelson and his Las Vegas Sands Corp. were weighed down by $11 billion in debt and business was suffering from the global economic maelstrom. Then Alves received an offer for a lucrative backdoor deal.
Emails obtained by the Wall Street Journal show that Alves wrote to Jacobs about “someone high ranking in Beijing” who proposed that Las Vegas Sands pay a $300 million bribe to win the government’s approval for the construction of a luxury apartment complex in Macau — and to kill a lawsuit against Sands China claiming that the casino operator improperly terminated a contract with the Taiwanese businessman Marshall Hao.
In one email, Alves quoted a Beijing official who told him to “talk to Mr. Adelson and find an agreement, ASAP, for the lawsuit.” He wrote to Jacobs: “At the same time, he told me there is a way to get the necessary permission to allow the sale of the serviced apartments,” Alves wrote to Jacobs. He also wrote that “there is an amount to be agreed by Mr. Adelson in order to settle the two issues.”
The Las Vegas Sands denied making bribes or receiving improper benefits. Alves complained that the Journal‘s report was “taken out of context” and “not accurate.”
The public record tells little about Alves, but his myriad connections with China’s elites extend beyond politics. He is a legal adviser to China Star Entertainment Limited, for instance, a Hong Kong film production company and distributor owned and operated by one Charles Heung.
Heung happens to be the son of the Sun Yee On triad’s founder, Heung Chin. Yet today, the son of one of China’s most notorious gangsters denies any involvement with the sordid world of Sun Yee On, which boasts more than 60,000 members and powerful connections with the upper echelons of Chinese politics. The films that Heung bankrolls often portray the criminal environment in which his father thrived – a world of money laundering, illegal arms sales, prostitution, violence-tinged debt collection and — of course– gambling. Despite Heung’s pleas of innocence, a 1992 Senate Permanent Subcommittee on Investigations report on Asian crime identified him as an official of the triad—an accusation rejected by Heung.
But when Heung applied for a Canadian visa in 1995, he was rejected due to evidence that placed him “on the ruling council” of the Sun Yee On triad. In a 1994 New York Chinatown racketeering case, a former Sun Yee On member testified that Heung was one of “the top guys, the biggest” in the society.
The connection with Hueng is not the only tie between Alves and reputed gangsters. From 2006 to 2008, Alves was listed as a solicitor for Galaxy Entertainment Group, a Hong Kong-based casino operator.
In 2002, when Sands China first won its casino license in Macau, it was partnered with Galaxy — but Nevada gaming regulators ended the relationship due to Galaxy’s controversial “VIP room” practices at the Sands in Macau.
Back in 2007, William Weidner, the former president of the Sands in Las Vegas, cited the difficult nature of the relationship between Galaxy and his former company during a deposition in an unrelated case. “These guys want to do VIP rooms the way they … do them in Macau where the … triad guys run them, because they’re the only ones that can grant and collect credit in mainland China, and they smuggle [Chinese currency] across the border,” he said. “I can’t do that business. That’s the way they want to do it, so I can’t do it.”
The link between underground crime societies and Macau’s gambling industry is no surprise. But why Adelson insisted on hiring Alves — even after he was warned of the consequences — is still unknown. The associations and business relationships Adelson sought in Alves could, depending on what the DOJ and SEC find, become the leviathan that topples the Adelson empire.
Part 2: To be continued….