LAS VEGAS (CN) - Las Vegas Sands shareholders say the board of directors violates the Foreign Corrupt Practice Act by doing business in foreign countries where "requests for improper payments are not discouraged," exposing the gambling giant to "costly investigations" by the Justice Department and SEC.
The Foreign Corrupt Practice Act prohibits companies from making "improper payments to foreign officials to obtain or retain business," according to the derivative lawsuit in Clark County Court.
"To prevent such bribes and kickbacks from occurring the FCPA requires that covered companies establish and maintain a system of accounting controls to ferret out and ultimately prevent such illicit payments."
But shareholders say they have been "kept in the dark about the precise nature and scope of the company's possible liability" for alleged violations of the act.
Sands disclosed in March that investigations of its possible violations could "adversely affect the company's operations and financial condition," the complaint states. On that news, the price of Sands shares dropped by 6.3 percent in a day.
"Sands has been severely damaged by defendants' misconduct," o the complaint states. "Yet, incredibly, the board has not commenced legal action, or taken other steps, to recover damages for Sands against its wayward fiduciaries."
The Sands casino in Macau, offshore China, accounts for two-thirds of Sands' worldwide revenues, shareholders say.
Sands China CEO Steven Jacobs sued the company for breach of contract last summer after it fired him. Sands alleged, in essence, that use of improper "leverage" in China and Macau was understood to be part of his job, despite the company's disingenuous claim to be shocked - shocked! - that such things went on. (See pp. 12-14 of the complaint.)
The shareholders complaint says that Sands director traced their subpoena from the SEC to allegations in Jacobs' Oct. 20, 2010 lawsuit.
Named defendants are Sheldon Gary Adelson, Michael A. Leven, Charles D. Forman, Irwin A. Siegel, Irwin Chafetz, George P. Koo, Jeffrey Schwartz and Jason Ader.
Named plaintiffs Nasser Moradi, Richard Buckman, Douglas Tomlinson and Matt Abbeduto seek damages for breach of fiduciary duty, abuse of control, waste of corporate assets and conspiracy
They are represented by Joshua Reisman with Reisman Sorokac.
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