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Sheldon In Stripes?

So there is an investigation of Las Vegas Sands for violation of the Foreign Corrupt Practices Act. Given Sand's use of politics in the US, and the general view of corruption in Asia, everyone seems to be leaping to conclusions. Some of those conclusions are putting Sheldon Adleson in stripes. All too hasty?

Gifts would not be unusual necessity to conduct business in Asia. A rule of thumb I used is to give some token at a business meeting that is proportional to what you are asking for. The idea is to maintain the mood of cooperation, or the "Han" as I knew it in my time in Korea. Meeting for the first time? How about a book on the history of your company? Getting a $50 million contract signed? Perhaps a bottle of Johnnie Walker Blue? Don't go overboard with the "Han", you might run afoul of local corruption laws (such as they are in Asia).

So do I think Sands gave something? I would say most likely, but just the smallest amount to seem polite (we all know Sands watches the bottom line). I would venture it would something so small that only famed corporate prude Michael Moore would consider damnable, make the average American double take, and make the average veteran in Asia go "That's it? Cheapskate!".

The problem here for Sands is the gift went to a public official. This is a big no-no to the US since the late 70s when the FCPA was passed in response to bribes paid by the likes of Lockheed and Chiquita (yes, the latter example was popularly called "banana-gate"). The law, to be uncharitably brief, makes it illegal for a US company to give anything, gift or bribe, to a foreign governmental official.

Here comes the first problem, what is a government official for LV Sands? This might seem rather prosaic, but is a good question in Macau and subsequently Hong Kong. In Macau, and more expansively in Hong Kong, private companies, or a mix of public/private ownership, do many things we consider wholly "public" services. While nationalized companies are covered under FCPA, I do not know if the public/private contradictions that occur in the region would make the employees government officials.

The second big question in FCPA is why was exchange initiated, and what was the result? First the exchange has to have a "business nexus" (US v. Kay, 359 F.3d 738). For example, the company would be not liable if an employee bought policeman's ball tickets at a traffic stop. However, if the employee were a FedEx driver, in a FedEx van, and working a FedEx route, the story would be different. So whatever Sands did, it would have to be related to its business in some way.

As to what happened, the transaction must have the intent or effect of the government official act in a corrupt manner (Id.). This rather clear requirement. FCPA does not cover, for example, paying an "extra fee" to have normal services rendered in expedited manner (15 USCS § 78dd-1). The official has to do, or not do, something contrary to his duties. This can be the most difficult thing for the US Department of Justice to prove, assuming they get this far. China's opaque interactions between Beijing and Macau and the general opaque Chinese power structure, might make difficult to prove a shirking of duty.

To bring home the last paragraph, lets address the big enchilada on many Macau watchers minds today. Did Sheldon bribe Macau for the gaming operator's concession? My first reaction is "Hell No!" First, Sands, as brash as it is, is way too shrewd, if not too cheap, to do that. Why induce with present riches when you can promise greater elusive future riches, like turning the marshland into Vegas?

Going back to the assumption that something was given to somebody though, it becomes interesting. By all accounts Sands spent a good amount of time lobbying China directly in Beijing. However, authorities in Macau, out of the loop of the goings on in Beijing, issued the concession. There would need to be some evidence that Sands gave something in Beijing, which caused Beijing to lean on Macau to give the license to Sands. The catch is, Beijing was rather public that any concession awarded by Macau had little to no connection with Beijing (lest getting more rambunctious Hong Kong upset). China cannot give such evidence (if such exists) without being caught in a lie. So China now has a disincentive to cooperate with the FCPA investigation in this hypothetical.

It's all developing, exciting, and we never even got to the scienter required to get prison stripes. Finally, if you need a law clerk for the summer Shelly...


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