Originally published on Jan. 19, 2017 at 5:51 p.m.
Las Vegas Sands Corp. has agreed to pay nearly $7 million in criminal penalties in connection with business it conducted in Macau and China, the Justice Department and FBI announced today.
The Department of Justice said certain Sands executives admitted they “knowingly and willingly” failed to institute a system of checks and balances to ensure payments made to a consultant promoting the company’s brand in Macau and China were legitimate and that it continued to make payments to the consultant despite red flags raised by its finance staff and an outside auditor.
This is the third of three fines Sands has faced the start of 2016 over its business practices in Macau and China. In April, Sands agreed to pay a fine of $9 million in response to Securities and Exchange Commission allegations over its accounting practices in China, for a total of $16 million in federal fines over Foreign Corrupt Practices Act charges.
"The company is pleased that its cooperation and long-term commitment to compliance were recognized in reaching this resolution," said Sands spokesperson Ron Reese in a statement. "We are equally pleased that all inquiries related to these issues have now been completely resolved."
Reese also disputes the DOJ's characterization of the penalties, saying they are "monetary" and not "criminal."
"It is a criminal penalty," said U.S. DOJ spokesperson Nicole Navas in an email, in response to a question whether the penalties are monetary or criminal in nature.
The SEC complaint found the Sands didn’t properly document several major money transfers, including money for a consultant to buy a professional Chinese basketball team that would wear the logo of The Venetian Macau casino. The consultant, who represented himself as a former member of the Chinese government, received around $60 million from the casino giant between 2006 and 2009 for the purpose of promoting the company’s brand.
Sands then agreed in May to pay a $2 million state fine to settle two counts of violating Nevada gambling regulations. The Nevada complaint points to the April SEC order and says the company didn’t properly vet and report a high roller who had suspicious patterns of transferring money.
The Nevada settlement didn’t admit fault, but Nevada Gaming Commission Chairman Tony Alamo said the complaint “reads awful” and the allegations were “like amateur hour,” according to the Las Vegas Sun.
The DOJ said that Sands admitted that it paid the business consultant about $5.8 million without “any discernible legitimate purpose.” It also noted that Sands terminated a finance employee who sought to warn the company about the payments.
As part of a non-prosecution agreement, Sands will pay $6.96 million in criminal penalties, which the department said is a reduction of about 25 percent from applicable fines. The department said that Sands fully cooperated with the investigation, conducting its own internal investigation, voluntarily collecting and organizing evidence and providing documents to the government.
Though hefty, the $16 million that Sands will pay the SEC and DOJ is one of the smaller fines levied against a company in response to Foreign Corrupt Practices Act charges. Siemens was fined $800 million in 2008 after pleading guilty to violating the internal controls and books and records provision of the act.
The DOJ said that Sands has since engaged in “extensive remedial measures,” including overhauling its internal compliance and audit systems and making staffing changes.
This story has been updated to include a statement from the Sands, and to correctly state that the company has been fined three times since the start of 2016, not this year.
This story has been updated to include a response from a spokesperson from both Sands and the U.S. DOJ.