Could the Hospitality Industry be the Latest to Fall Under the FCPA


Las Vegas Sands announced it is under investigation

Last month, the Las Vegas Sands Corp. announced that it received a subpoena from the SEC and that the Department of Justice (“DOJ”) opened an investigation regarding potential Foreign Corrupt Practices Act (“FCPA”) violations surrounding its operations in Macau, China. The impetus for the investigation appears to have come from a wrongful termination suit brought by the former CEO of Sands China. That suit alleges, in part, that the former CEO was terminated for resisting the continued use of a particular Macau attorney, who is also a member of the local government, despite concerns that the retention posed serious FCPA risks, instructions to use improper "leverage" against government officials to obtain strata-title to a property in Macau, and refusing to pressure Sands' Chinese banks to use their influence with government officials to assist the company. And, this is at least the second time the FCPA has touched the hospitality industry. In 2007, York International, a global provider of heating, ventilation and air conditioning, paid $22 million in penalties for a variety of unlawful payments, including payments made to secure construction contracts for luxury hotels in the United Arab Emirates.

Broadly, the FCPA prohibits paying, providing or offering anything of value, directly or indirectly via agents or other third parties, to a foreign government official for the purpose of assisting in obtaining or retaining business. In addition, the FCPA requires all companies publicly traded on U.S. exchanges to reflect accurately all payments in their books and records and to maintain adequate FCPA controls.

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Published In: Administrative Agency Updates, Criminal Law Updates, International Trade Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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