Las Vegas Sands Corp. States That FCPA Violation Is ‘Likely’
By: John A. Schwab
On Friday, Las Vegas Sands Corporation filed its 10-K with the Securities and Exchange Commission and, in its discussion of ongoing litigation, announced that the preliminary investigation revealed “that there were likely violations of the books and records and internal control provisions of the FCPA.” The company balanced these remarks by stating that the findings do not have “a material impact” on the financial statements of the company and restatement of past financial statements is not warranted.
The investigation began when, on February 9, 2011, Las Vegas Sands received a subpoena from the SEC requesting documents related to its compliance with the FCPA. The company was aware that the DOJ conducting a similar inquiry which may have resulted from litigation brought by a former CEO of a Las Vegas Sands subsidiary. The subpoena prompted the company to authorize its audit committee to investigate alleged FCPA violations. While the audit committee found “likely violations” of the FCPA, the 10-K noted that the company had “improved its practices with respect to books and records and internal controls” and, while it was “cooperating with all investigations,” it was “unable to determine the probability of the outcome of this matter.”
The company emphasized that it did not state that it had violated the anti-bribery provisions of the FCPA, but the “likely violations” were of the accounting provisions of the FCPA.
After media reports targeted Las Vegas Sands for FCPA violations, including a New York Times headline stating “Casino Says It Likely Cheated,” Las Vegas Sands issued a press release on Sunday directed at “misleading and sensationalistic reporting.” The company emphasized that it did not state that it had violated the anti-bribery provisions of the FCPA, but the “likely violations” were of the accounting provisions of the FCPA. The press release focused on the New York Times article which it characterized as “inflammatory and defamatory”. Later that day, the New York Times clarified its article and admitted that “No Sands-owned ‘casino’ said that ‘it likely cheated.’”
The past two years have witnessed significant developments in FCPA enforcement. DOJ set records in 2010 and 2011 for the number of cases resolved, and for the length of prison sentences achieved in criminal prosecutions under the Act. In 2011, however, there was a rise in the number of FCPA matters taken to trial, a trend that is expected to continue. It is estimated that 87 companies are currently under investigation for FCPA violations. While the largest settlements to date have been with foreign companies, most of the companies currently under investigation are believed to be American companies, including Eli Lilly, Medtronic, Pfizer, Alcoa, Goldman Sachs and Wal-Mart.