Sheldon Adelson landed Chinese government support in his quest for a lucrative gaming franchise in Macau in 2001 after relaying assurances from a Republican Party boss that a congressional measure opposing Beijing's bid for the 2008 Olympics would "never see the light of day," according to court testimony in a civil suit in Las Vegas.
The Los Angeles Times reported yesterday that the intelligence came out of a phone call between Adelson and then-U.S. Rep. and Majority Whip Tom DeLay (R-Texas). Adelson, owner of the Venetian hotel and casino, was then in Beijing, conferring with government officials about their plans to expand the gaming and entertainment sector in Macau.
Grateful Chinese authorities came to Adelson's rescue at least twice thereafter when it appeared his bid was in jeopardy, according to testimony.
The role of that phone call in helping Adelson land a lucrative Macau gaming concession was disclosed in a civil suit brought by a Hong Kong middleman, Richard Suen, who took credit for introducing Adelson and his investment partners to key Chinese officials. Last month, a Las Vegas jury awarded Suen 43.8 million US dollars for what it concluded was his role in Adelson's successful campaign for the Macau concession.
Suen said he had set up a series of meetings between Adelson and high-level Chinese officials in July 2001, only to get stiffed by Las Vegas Sands Inc., corporate owner of the Sands Expo and Convention Centre and the Venetian on the Las Vegas Strip. Suen had sued for $100 million.
"We gave Mr. Adelson the opportunity to show his political power," Suen testified, adding, "We got them the license."
In its verdict, handed up late last month after a six-week trial, the jury agreed that Suen played an essential, if somewhat nebulous, role in obtaining Sands' gaming license in Macau. Lawyers for the Las Vegas mogul vow to appeal.
A few facts related to the still-murky affair are undisputed. One is that the Sands' 20-year concession to operate casinos in Macau is a gold mine.
The company's two Macau resorts, Sands and Venetian, have generated nearly four billion US dollars in casino revenue to date. Sands is planning to spend 12 billion US dollars to open six more Macau resorts.
Suen's Los Angeles-based attorney, John O'Malley of Fulbright & Jaworski, contends that the move, or at least the Chinese perception, provided Adelson and Sands with a nearly bottomless reserve of "guanxi," a sort of personal networking built around an exchange of favours.
The keystone of the relationship was a trip to Beijing that Suen arranged for Adelson and his top lieutenant, Sands president William P. Weidner, in July 2001.
At the time, Macau's reputation was that of "a seedy backwater of a gambling den," Adelson recalled from the stand, the Los Angeles Times quoted him as saying. "Prostitution infested, crime infested... everything wrong that would never happen in a state like Nevada, ever."
Adelson had a vision of Macau as "the Las Vegas of the East," Weidner testified. If that were to happen, Adelson's convention, hotel and casino experience plainly would be a plus in the competition for the three licenses, or concessions, that were to be offered in 2002.
According to the Los Angeles Times, the trial testimony suggested that Macau officials twice went out of their way to rescue the Sands bid from near certain failure – when it became clear that the company's proposed financing partner, a bank with close connections to Taiwan's ruling Kuomintang Party, would be unacceptable to the Chinese regime, Macau's top administrative officer personally "married" Sands to a more palatable partner, a hotel company owned by a wealthy Hong Kong family. When that alliance broke down, the authorities intervened again by offering Sands a separate concession.
In the end, for one of the coveted concessions, Sands beat out two American bidders with greater experience running casinos, MGM Mirage and a joint venture of Mandalay Bay Resorts, which has since been acquired by MGM Mirage, and Park Place Entertainment.
The others went to Stanley Ho, Wynn Resorts and Galaxy Entertainment, Sands' former
Hong Kong partner.
Sands executives contend that their proposal for a string of mega-resorts was a “perfect fit” with Macau's ambitions. They testified that Suen's efforts had nothing to do with their victory and that they kept dealing with him for more than three years because he was a personal friend of Adelson's brother Leonard.
But Suen countered, "We got them the license," he said, "because of my guanxi."
For Adelson, Suen is not the last legal challenge arising from the Macau projects.
Three other middlemen who also claim to have helped arrange the gaming approvals have a separate lawsuit scheduled for trial in Las Vegas state court in December. The Suen verdict "will help us," said their lawyer, Donald Campbell, because it established that go-betweens with the Chinese are entitled to compensation.
Campbell's clients are seeking at least 450 million US dollar compensation.