Sheldon Adelson, chairman and chief executive of Macau casino operator Sands China Ltd, on Tuesday told a Nevada court that he should have dismissed a former Sands China CEO, Steve Jacobs, sooner because he “tried to kill the company”.
It is said to be the first time Mr Adelson (pictured) has directly faced in court Mr Jacobs’ allegations of wrongful termination.
This particular hearing is procedural, focusing on whether the wrongful termination claim from the ex-Sands China executive can be heard in Nevada. The location of the hearing matters because Mr Jacobs is seeking to recover 2.5 million Sands China stock options that were denied him when he was dismissed in July 2010 for what the firm said was “cause”, including unauthorised deal making. It has been reported that it would be harder for Mr Jacobs to recover the stock options if he is forced to bring a separate lawsuit outside the United States.
The judge in this week’s hearing at a U.S District Court in Las Vegas has allowed some evidence relating to the personal conflict between the two men to be given – despite the objections of Sands China’s lawyers.
Mr Adelson said in Tuesday’s court session that during Mr Jacobs’ tenure from 2009 to 2010, the executive had unilaterally decided to cut out the junket operators that bring most of the Chinese VIPs and other Asian high roller gamblers to Macau. In 2014, VIP gambling accounted for 60.5 percent of gross gaming revenue (GGR) in the territory, but in previous years the percentage has been even higher.
In March 2011, at the JP Morgan Gaming, Lodging, Restaurant and Leisure Management Access Forum in Las Vegas, Mr Adelson had said Mr Jacobs acted against management instructions, damaging relations with Macau junket operators.
“One of the reasons why we fired him [was because] we told him not to get involved with direct premium players [i.e. VIP play without the middle man junket operator] the way he wanted to,” said Mr Adelson, who is also chairman and CEO of Sands China’s parent Las Vegas Sands Corp. “He kicked off all the junket reps. Now, we have to build back the relationship,” he added.
Nine months earlier, in a filing to the U.S. Securities and Exchange Commission in May 2010 – and prior to Mr Jacobs’ dismissal – Las Vegas Sands had indicated that it was actively pursuing “direct” VIP business in Macau.
“…we are focused on growing our share of the premium players segment via direct marketing efforts and by leveraging our Paiza brand and luxury amenities that enable us to differentiate our properties from those of our competitors, who typically rely more on gaming promoters for their VIP players,” said the parent.
“Our management estimates that our premium player table revenues generate a gross margin that is approximately 1.0 to 1.5 times higher than our typical VIP player table revenues,” added the May 2010 filing.
James Pisanelli, a lawyer representing Mr Jacobs, asked Mr Adelson during Tuesday’s hearing about a February 2010 email in which Michael Leven, then the president and chief operating officer of Las Vegas Sands, appeared to credit Mr Jacobs with saving the parent company.
On November 6, 2008, Las Vegas Sands’ auditor, PricewaterhouseCoopers LLP had expressed doubt about the parent’s ability to continue as a going concern. A few weeks later the auditor lifted its warning. But it came at a time of global financial crisis when the casino firm was already committed to multibillion U.S. dollar capital expenditure in Macau and Singapore.
Mr Jacobs, an executive with a background in corporate turnarounds, was hired as CEO of Sands China in August 2009 and had a role in restructuring the operational costs of the Macau unit.
“The Titanic hit the iceberg,” Mr Leven is said to have written in the email. “He arrived and not only saved the passengers, he saved the ship.”
Mr Adelson stated in his Tuesday evidence he had not seen that email from Mr Leven prior to Mr Jacobs being dismissed. “Mike Leven will come in and say he made a mistake,” Mr Adelson said.
Mr Adelson’s testimony follows several days of evidence in the procedural hearing, which is due to continue.
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Summit Ascent, lead developer of Tigre de Cristal