Here's Why Las Vegas Sands Gets An 'F' For Corporate Governance

sheldon adelsonSheldon Adelson

Photo: Bloomberg

Las Vegas Sands Corp.’s chairman and CEO Sheldon Gary Adelson is under more scrutiny for his business dealings in Macau – but investors who hold the casino operator’s stock should not be surprised. Las Vegas Sands has had corporate governance problems for years.Federal and Nevada investigators are looking at some of the methods the Republican donor used in Macau to save his company and help build a personal fortune estimated at $25 billion, ProPublica said in an article Monday.  Adelson instructed a top executive to pay about $700,000 in legal fees to Leonel Alves, a Macau legislator whose firm was serving as an outside counsel to Las Vegas Sands, the investigative media outlet reported.

GMI Ratings has long warned that it had concerns about Las Vegas Sands. In the first place, control of the company is largely in the hands of Adelson, who, along with his wife, controls roughly 57% of shares. As the controlling shareholder, Adelson elects the entire board. Of the eight members, four are independent. Adelson and COO Michael Levin are the board’s two executive directors; directors Irwin Chafetz and Charles Forman are not independent because of relationships with companies and trusts affiliated with or controlled by Adelson. Adelson also serves on the Nominating and Corporate Governance Committee, further increasing his already substantial influence over the selection and election of directors.

There are many transactions between the company or its subsidiaries and entities controlled by Adelson. These include aircraft agreements, administrative agreements, and the purchase of restaurants owned by entities affiliated with Adelson. There are also ongoing concerns related to compensation arrangements between the company and Adelson (for example, it cost the company about $2.6 million in 2011 to provide security to Adelson and his immediate family).

Las Vegas Sands has employed Adelson’s wife Miriam as its director of community involvement since August 1990. In conjunction with the company’s government relations department, she oversees and facilitates partnerships with key community groups and other charitable organisations. Las Vegas Sands paid her approximately $50,000 during 2011. During 2011, the company also employed Adelson’s son-in-law as the vice president of corporate strategy, rewarding him with around $596,000 for his services.

The company’s financial statements reflect an AGR score of 60, indicating higher accounting and governance risk than 40% of comparable companies. In June 2009 the AGR was a 9, showing more risk than most.

The company has already been accused of crime more than once. After his dismissal as Sands China’s chief executive officer in 2010, Steven Jacobs filed a lawsuit for wrongful termination against Sands China and Las Vegas Sands. Jacobs alleges that he was fired because of conflicts with Adelson, who sought to conduct business with Macau authorities and local banks in a variety of ways that were possibly illegal. For example, Adelson allegedly demanded that Jacob use improper “leverage” against senior officials of Macau in order to obtain ownership of the Four Seasons Apartments in the area.

Prior to this case, one of Sands’ overseas units paid around $1.6 million in 2010 to China’s State Administration of Foreign Exchange related to payments the company had made to counterparties and other vendors.

In part due to such issues, GMI Ratings gives Las Vegas Sands an F on its corporate governance overall.


Region:  North America
Sector: Cyclical Consumer Goods / Services
Industry: Casinos / Gaming
Market Cap: $ 35,781.0mm (Large Cap)
ESG Rating:  F
AGR:   Average (60)




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