The Chinese arm of U.S. billionaire Sheldon Adelson's gambling empire is being investigated by Macau privacy authorities over its handling of documents related to a lawsuit by its former CEO, who claims the company has links to crime bosses and encourages prostitution as part of its business strategy.
Sands China Ltd. said Wednesday it was notified by Macau's privacy watchdog that an official investigation has been launched into the alleged transfer of "certain data" from the Asian gambling city to the U.S.
The former CEO, Steve Jacobs, was fired in July 2010 and filed a wrongful dismissal lawsuit three months later. He accuses the company of breach of contract and pushing him into illegal activity in Macau. The suit has drawn interest from U.S. Justice Department and Securities and Exchange Commission investigators for possible violation of the Foreign Corrupt Practices Act.
Sands China revealed no other details about the privacy investigation. The probe follows statements by Jacobs in U.S. legal filings that Las Vegas Sands Corp., which is the parent company of Sands China, withheld documents related to his wrongful dismissal lawsuit.
Jacobs' legal team has been seeking the documents from Las Vegas Sands, which the company's lawyers initially said could not be moved out of Macau. But they revealed recently that the files had been transferred in error more than a year ago, without notifying Macau or U.S. authorities.
Macau has stringent privacy regulations that require consent and notification of authorities before personal data can be transmitted out of the territory.
A judge in the U.S. has scheduled hearings for Aug. 30 and 31 on possible sanctions against Sands and its lawyers for failure to disclose the information to the other side.
In a June 27 legal filing, Jacobs claimed Adelson, a billionaire philanthropist who has pledged to back U.S. Republican presidential candidate Mitt Romney with $100 million, personally approved a strategy of using prostitution to boost revenues at his casinos in the Chinese territory.
His lawyers say Las Vegas Sands has failed to turn over documents and emails that show the strategy was directed by senior management.
They also say Las Vegas Sands' legal team has not turned over other documents involved in the lawsuit. They say those documents include records of misuse of work permits and the hiring of illegal workers in Macau as well as emails and records of Adelson controlling an exclusive club giving favored members including known or suspected organized crime figures exclusive access to Sands China's most luxurious accommodations.
Sands' attorneys fought back, saying the allegations were false and accusing Jacobs of sinking to a "new low" in his efforts to tarnish Adelson's reputation.
The former Portuguese colony on the southern edge of China is the world's biggest gambling market, raking in $33.5 billion in casino revenue last year. Sands also operates casinos in Singapore as well as the Venetian and Palazzo casinos on the Las Vegas Strip but its four Macau casinos account for the bulk of the company's revenue.
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