Las Vegas Sands: The Payments Continued After Finance Raised the Alarm

In the Las Vegas Sands FCPA case, the company agreed to an approximately $9 million Securities and Exchange Commission civil penalty in a proceeding related to consultant-payment accounting failures. In its later criminal non-prosecution agreement, Sands admitted paying approximately $5.8 million to a consultant without any discernable legitimate business purpose, according to the Justice Department. Finance staff and an outside auditor had warned about unaccounted funds, yet the payments continued.

The Justice Department described Las Vegas Sands as a Nevada-based gaming and resort company. Its January 19, 2017 announcement described the company’s admissions in connection with a criminal non-prosecution agreement. The admissions concerned certain executives’ knowing and willful failure to maintain controls over the consultant’s payments and prevent false entries in the company’s books.

The Consultant Payments and the Warnings

The payments Sands admitted making ran from 2006 through 2009. The consultant’s role was to help promote the company’s brand in Macao and China.

The warnings concerned money already entrusted to the consultant. The Justice Department described the company’s response in a sentence that puts the failure squarely inside the business:

We see the absurdity in that response: the company had people asking where the money had gone, including someone outside its own staff, yet it kept sending more. An unanswered accounting question became a repeated spending decision.

What Conduct Can Violate the FCPA?

Sands admitted failures to control consultant payments and prevent false entries under the Foreign Corrupt Practices Act. Those admissions show why books and records and internal accounting controls belong together: the company needed controls that addressed whether the consultant’s payments were legitimate and prevented their false recording.

The 2022 Journal of Forensic and Investigative Accounting article How to Avoid Inadvertently Violating the Foreign Corrupt Business Practices Act Abroad explains why the accounting matters. The books show how money was spent; controls govern who can authorize that spending. The article notes that a company can answer for its books even when no bribe is proved.

That distinction makes a finance employee’s knowledge useful on its own terms. The false entry, the unresolved consultant balance and the decision to send another payment each concern something the company controlled. We look at what those decisions reveal about the people authorizing and recording the money.

What the Warning Adds to the Payment Record

A payment record shows money moving, while a warning helps establish what decision-makers knew about it. In Sands’ admitted account, finance staff and an outside auditor had already questioned the consultant’s handling of funds when the company continued paying.

For finance and accounting staff, the useful knowledge may be the difference between an entry that looks ordinary and an explanation that never satisfied the people reviewing it. An invoice, approval or ledger entry can tell one part of the story. The questions raised about the payment, the answers given and the spending that followed tell another.

We connect those parts when assessing the payment trail. The engagement explains what the consultant was retained to do, while the ledger shows how the company described the expense. Someone familiar with the work may explain why that description did not fit the services, or why management’s response left finance’s question unanswered.

An Olympic Invitation Shows the Same Control Problem

BHP Billiton faced Securities and Exchange Commission accounting allegations over hospitality at the Beijing Olympics, including approval records that failed to reflect changing business relationships. BHP settled the agency’s books-and-records and internal-controls allegations in 2015. The useful parallel is the gap between what the paperwork said and what people inside the business knew.

The Securities and Exchange Commission alleged that BHP began negotiating with a minister to extend and modify a joint venture’s nickel exploration permit. The minister and his wife later attended the Olympics as the company’s guests. The order describes the missing response to the new negotiations:

The Commission alleged that the controls did not require that fresh review. At Sands, the admitted failure involved continued payments after warnings about funds the consultant had not accounted for. Both accounts make the response to new information central to understanding the controls: an existing form or a consultant already engaged does not answer the next question the business learns it must ask.

The SEC Resolution and the Justice Department Agreement

The Securities and Exchange Commission filed its order against Sands on April 7, 2016. The Justice Department announced the separate criminal non-prosecution agreement the following January, describing Sands’ admissions about the consultant payments and false recording.

The FBI’s Las Vegas field office investigated the criminal case, and the Justice Department’s Criminal Division Fraud Section prosecuted it. The Securities and Exchange Commission assisted the investigation and brought its own related proceeding.

The Justice Department described extensive changes to Sands’ compliance and audit functions, including new leaders in legal, compliance, internal audit and financial oversight roles. Those changes reached the functions that should have questioned, controlled and accurately recorded the payments in the first place.

Why an Insider’s Knowledge Matters

The people asking questions inside a company can influence more than an individual payment. A March 2019 working paper hosted by MIT Sloan, Do Corporate Whistleblower Laws Deter Accounting Fraud?, examined companies exposed to state False Claims Acts through state pension-fund investment. It found a 5% to 9% reduction in estimated accounting-fraud likelihood following that exposure.

In a smaller sample, the paper found little evidence that greater investment in internal auditing explained the reduction. Its findings point to the incentive created by the prospect of a whistleblower coming forward. Alongside Sands’ account of warnings and continued payments, that is a useful distinction: adding an audit function and responding to what people know are different things.

The study concerns government-fraud reward laws, a separate setting from Sands’ Foreign Corrupt Practices Act resolutions. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. If you watched foreign consultant payments go out unexplained, we assess the Foreign Corrupt Practices Act issues and whistleblower reward questions with you.

You Know Why Finance Questioned the Payment

If you know why a consultant’s payments failed scrutiny and who kept approving them, speak to one of our Whistleblower Experts about how those payments kept going out. We build the case with you and bring in whistleblower lawyers who know the Foreign Corrupt Practices Act and understand consultant payments, accounting records and management decisions. We stay with you through the whole journey, working to build your strongest whistleblower case.