The Las Vegas Sands agreed on Tuesday to settle its 6-year old wrongful termination case with former Sands China CEO, Steve Jacobs. In the settlement, the former Macau executive was paid more than $75 million, according to the Wall Street Journal.
Mr. Jacobs alleged the Las Vegas Sands Corp. fired him for objecting to illegal demands made by Sheldon Adelson, his employer at the time. The Las Vegas Sands, which Sheldon Adelson founded, claimed that Jacobs was fired, because he was not fulfilling the terms of his employment.
June 2016 Trial Date
The case was set to go to trial in the middle of June. Any such trial was likely to have shed light on the inner workings of Las Vegas Sands Corp's international practices. Also, the 80-year old Sheldon Adelson had been ordered to take the stand for up to 49 hours of questioning in the case.
Sheldon Adelson's Legal Wranglings
Adelson had tried to have the case tossed. When that did not work, he had tried to have the judge removed from the case. Adelson's lawyers claimed she was too close to the case, because of another case in which reporters working for Adelson's newspapers had been asked to investigate the judge.
According to documents, Mr. Jacobs agreed to drop all legal claims against Adelson, the Las Vegas Sands, or any of its subsidiaries. When asked to comment on the case, a lawyer for Steve Jacobs declined. In such cases, non-disclosure agreements are often in place.
20/20 Hindsight
Hindsight would suggest that the case should have been settled out of court years ago. Steve Jacobs and Sheldson Adelson have given depositions in the case. Charges made by Jacobs have caused federal investigations to be launched. All in all, legal fees for those cases and the Jacobs lawsuit cost LVS over $100 million, in addition to the price paid on Tuesday.
The case caused a great deal of public relations damage to the Las Vegas Sands, as well. Steve Jacobs characterized LVS's practices in China as seedy and unethical, if not illegal. The case itself brought unwanted attention.
Settling Out of Court
Over the months, Sands executives and rival Las Vegas executives have expressed a desire for an out-of-court settlement. George Koo, who sat on the Las Vegas Sands board of directors from 2008 to 2014, said the case became a personal affair. After hearing about the settlement, Koo told WSJ, "It didn't have to happen had it not been for a clash of big egos."
Sheldson Adelson had pressing reasons to settle out of court, besides those listed above. Sands China is about to open up a new casino in Macao. LVS does not want to embarrass Macau officials, or officials in mainland China. The new casino is a multi-billion dollar investment. Meanwhile, Chinese officials already have cracked down on the gaming industry of China. Further antagonizing of them makes no sense.
Also, Sheldon Adelson is seeking to build a $1.5 billion football stadium in Las Vegas. He has pledged $150 million to the project, while Oakland Raiders owner Mark Davis has pledged another $500 million. That leaves the city of Las Vegas to provide another $700 million in funds, so Adelson does not need any PR nightmares ongoing, with such a public project at stake.
Steve Pearlman Gives Perspective
Steven Pearlman, an attorney who handles whistleblower cases for the Proskauer Rose LLP law firm, said the $75 million to $100 million figure in the settlement is remarkable. Pearlman said cases usually are settled for a few million dollars, even when it involves executives. When asked to comment on the size of the payoff, Pearlman said, "To call it unusual is to put it mildly."
Federal Investigator Shocked by the Payout
Others were more expressive in their surprise. One federal investigator, when told how much Steve Jacobs collected in the settlement, spoke an expletive. Federal investigators with the Justice Department and the Securities and Exchange Commission had investigated whether Las Vegas Sands had violated the Foreign Corrupt Practices Act -- part of the aforementioned fallout from the Jacobs case.
Tuesday's settlement is unlikely to end those whispers. Federal investigators are likely to look at the settlement and wonder what the Las Vegas Sands had to hide. Given all the legitimate PR and personal discomfiture reasons Sheldon Adelson had to settle out of court, one can see why a billionaire would sign a check and be done with the troubles. But federal officials might not see it that way.
