This article was reprinted with permission
from FCPA Professor
Las Vegas Sands has been the subject of much
FCPA scrutiny since October 2010 when Steven Jacobs (the former President
of the company's Macau operations) filed a civil cause against the company in
Nevada State court alleging various causes of action, including facts
implicating the Foreign Corrupt Practices Act. (See here for the 2010
post highlighting the action).
This post
from September 2012 highlighted various reporting of the Las Vegas Sands
("LVS") FCPA scrutiny,and that of its CEO Sheldon Adelson, in ProPublica,
the Wall Street Journal and the New York Times.
Last Friday, LVS disclosed in an SEC
filing, in pertinent part, as follows.
"On February 9, 2011, LVSC received a subpoena from the
Securities and Exchange Commission (the "SEC") requesting that the Company
produce documents relating to its compliance with the Foreign Corrupt Practices
Act (the "FCPA"). The Company has also been advised by the Department of
Justice (the "DOJ") that it is conducting a similar investigation. It is the
Company's belief that the subpoena may have emanated from the lawsuit filed by
Steven C. Jacobs described above. After the Company's receipt of the subpoena
from the SEC on February 9, 2011, the Board of Directors delegated to the Audit
Committee, comprised of three independent members of the Board of Directors,
the authority to investigate the matters raised in the SEC subpoena and related
inquiry of the DOJ. As part of the annual audit of the Company's financial
statements, the Audit Committee advised the Company and its independent
accountants that it had reached certain preliminary findings, including that
there were likely violations of the books and records and internal controls
provisions of the FCPA and that in recent years, the Company has improved its
practices with respect to books and records and internal controls."
(emphasis added).
Given the intense prior media coverage
of LVS's FCPA scrutiny, the recent disclosure spread like
wild-fire this past weekend. However, the reporting was not the media's
finest FCPA moment.
As is clear from a basic reading of the FCPA, the law has
two provisions. The FCPA's anti-bribery provisions and the books and
records and internal control provisions. These later provisions are among
the most generic substantive legal provisions one can find and are often
implicated in situations that have nothing to do with bribery and corruption.
It is also clear from a basic reading of the LVS's
disclosure that it says "likely violations of the books and records and
internal controls provisions."
Notwithstanding the above, the
Wall Steet Journal's lead paragraph stated as follows.
"Las Vegas Sands Corp. told the Securities and Exchange
Commission that an internal review found the casino operator had likely
violated the Foreign Corrupt Practices Act, a federal law that bans bribing
public officials abroad."
The
New York Times's lead paragraph stated as follows.
"The Las Vegas Sands Corporation, an international
gambling empire controlled by the billionaire Sheldon G. Adelson, has informed
the Securities and Exchange Commission that it likely violated a federal law
against bribing foreign officials."
ProPublica's
lead paragraph stated as follows.
"Last week's admission by Sheldon Adelson's casino
company that it had "likely" violated provisions of the federal law barring
U.S. companies from bribing foreign officials raises some intriguing
questions."
The media of course plays an important role in our modern
society. However, with that role comes a duty to get things right,
particularly so in this day and age when reporting by high-profile media
outlets spread like wild-fire on the internet.
The recent reporting of LVS's latest disclosure
(and several other examples could also be cited in the FCPA context) was
not the media's finest FCPA moment.
Thus, LVS was justified in its Sunday
press release titled "LVS Fires Back at Misleading and Sensationalistic
Reporting of Company's Most Recent Financial Disclosure" which stated as
follows.
"Las Vegas Sands Corp. today fired back at various
media headlines and press reports that have suggested that the company violated
any of the anti-bribery provisions of the Foreign Corrupt Practices Act
(FCPA). The company did not report any violations of the anti-bribery
provisions of the FCPA and it said news reports stating otherwise, such as
the headline in today's New York Times which described the matter by saying "Casino
Says it Likely Cheated," are both inflammatory and defamatory. The company said
it will vigorously defend itself against that type of uninformed and misleading
reporting. In the company's 10-K disclosure filed with the Securities and
Exchange Commission(SEC) last Friday it made no such statement and insists no
violations of the anti-bribery provisions of the FCPA have occurred.
Instead, the company said that in its preliminary findings the company's Audit
Committee had advised that there were "likely violations" of the books and
records and internal controls provisions (i.e. "accounting provisions") of the
FCPA. A potential violation of the accounting provisions could range anywhere
from a single transaction recorded incorrectly to other errors in the
accounting records. Additionally, the company's independent auditors - who have
been auditing the company for more than a decade - issued an unqualified
opinion on the financial statements for the year ended December 31, 2012. Those
financial statements also included the disclosure that any violations of the
accounting provisions have not had a material impact on the financial
statements of the company and did not warrant any restatement of its past
financial statements."
Read more articles on the FCPA by Mike
Koehler at FCPA
Professor.
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