Casino king makes right Macau call

Casino king makes right Macau call



Billionaire 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 Las Vegas civil suit.

The intelligence came out of a phone call between Adelson and then-House of Representatives Majority Leader Tom DeLay, a Republican. Adelson, owner of the Venetian hotel and casino, was then in Beijing conferring with government officials about their plans to expand gaming and entertainment 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 Chi-tat, who took credit for introducing Adelson and his investment partners to key Chinese officials.

In May, a Las Vegas jury awarded Suen US$43.8 million (HK$341.6 million) for what it concluded was his role in Adelson's successful campaign for the Macau concession.

Suen, of Hong Kong-incorporated Round Square Company, 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, corporate owner of the Sands Expo and Convention Center and the Venetian on the Las Vegas Strip. Suen had sued for US$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 in May after a six- week trial, the jury agreed that Suen played an essential, if somewhat nebulous, role in obtaining the Sands' gaming license in Macau. Lawyers for the Las Vegas mogul vow to appeal.

Adelson, to be sure, can afford the financial toll. The 74-year-old founder and chairman of Las Vegas Sands ranked third in 2008 on the Forbes 400 list of richest Americans with a net worth, the magazine estimated, at US$28 billion.

The son of a Boston cab driver made his fortune as owner of the fabled high-tech convention Comdex, selling it to Japanese investors for more than US$800 million in 1995. He pioneered development of Las Vegas as a convention town, refashioning the Sands as a convention center and eventually converting it into the Venetian.

He also came to be a leading financial backer of the Republican Party.

Public records show that Adelson, his wife Miriam and his corporation contributed a combined US$695,000 to Republican candidates and committees over the 12-year span before he pulled DeLay out of a Fourth of July barbecue in 2001 with a cell phone call from Beijing.

A few facts related to the 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 - the Sands Macao, opened in 2004, and the Venetian Macao, opened in 2007 - have generated nearly US$4 billion in casino revenue to date. Sands is planning to spend US$12 billion to open six more Macau resorts.

Another is that a 2001 congressional resolution opposing the Beijing Olympic bid vanished from the US House agenda days before the International Olympic Committee was scheduled to vote on the site of the 2008 Summer Games. That happened shortly after Adelson called DeLay to inquire about the measure.

Finally, it is clear that Las Vegas Sands took credit with Beijing for killing the resolution - instructing its Washington, DC, lobbyists to "suggest that we were involved in the process," a high-ranking Sands executive said in court.

Suen's attorney, John O'Malley, contends that the move, or at least the Chinese perception, provided Adelson and the Sands with a nearly bottomless reserve of guanxi, a sort of personal networking built around an exchange of favors.

The keystone of the relationship was a trip to Beijing that Suen arranged for Adelson and his top lieutenant, Sands president William 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. "Prostitution infested, crime infested ... everything wrong that would never happen in a state like Nevada, ever."

Beijing was pondering how to clean up its new possession. During an audience with Vice Premier Qian Qichen, Adelson and Weidner learned that the regime hoped to develop Macau into a major entertainment and business destination. Officials were even willing to set aside their traditional antipathy to gambling to achieve that goal.

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.

A crucial meeting was held with Liu Qi, then the mayor of Beijing and head of its campaign to win the Olympics. Criticism of China's human- rights record was threatening to derail the bid, which was scheduled for an IOC vote a week later.

Chief among the regime's concerns was a resolution in the House urging US Olympic officials to vote the bid down.

"Can you help us with the Olympics?" Liu asked, according to Adelson's testimony.

"Under the category of not leaving any friendship stone unturned," Adelson said, "I made a few calls."

One call was to DeLay, who said he personally favored the resolution. He also said he was about to confer with his fellow GOP House leaders. Three hours later, Weidner testified, DeLay called back to say that because of a logjam in the agenda, the Olympics resolution would be pushed off until after the IOC vote.

The thrust of his message, Weidner recalled, was: "You tell your mayor, it can be assured that this bill will never see the light of day."

No evidence at the trial established that DeLay or the GOP leadership in the Republican- dominated House moved the bill back to help Adelson. DeLay's representatives did not return calls last week.

It is unclear whether the resolution, which was not binding on US Olympic officials, would have wrecked Beijing's chances.

"Did the Chinese think that [Adelson] had been helpful in the Olympics? Yeah, I'm sure they did," defense attorney Rusty Hardin told the jury. "Did the Venetian people try to play on them thinking that? Of course, they did."

Indeed, 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, would be unacceptable to Beijing, Macau's top administrative officer personally "married" the 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 US bidders with greater experience running casinos - MGM Mirage and a joint venture of Mandalay Bay Resorts (since acquired by MGM Mirage) and Park Place Entertainment. The others went to Stanley Ho Hung- sun, then the established Macau gaming magnate; Wynn Resorts; and Galaxy Entertainment, Sands' former Hong Kong partner.

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 US$450 million.