Posted on: October 15, 2021, 09:51h.
Last updated on: October 15, 2021, 10:21h.
A Taiwanese businessman’s US$12 billion breach of contract claim against LVS Corp is “exaggerated,” according to Sands China CFO Sun MinQi.
As reported by GGRAsia, Sun told a Macau courtroom Friday the figure had been arrived at by faulty accounting, and did not reflect the reality of LVS’s business in Macau.
The lawsuit is the longstanding case brought against LVS by Marshall Hao, whose Asian American Entertainment Corp Ltd (AAEC) partnered with the US casino giant when it was looking to enter Macau 20 years ago.
In 2001, LVS and AAEC submitted a joint bid for a Macau gaming licensing. This was shortly after the Chinese special administrative region’s government opted to liberalize the previously monopolistic casino market.
Later, LVS switched to Galaxy Entertainment Group, and it was this partnership that won the license. In the ensuing decade, LVS’s Macau arm, Sands China, helped the group to grow into the richest casino operator in the world.
18 Years of Profits
AAEC says this was breach of contract. Its claim for $12 billion in “lost earnings” is based on 70 percent of Sands China’s profits in the gambling hub. That dates from the launch of the Sands Macao in 2004 through to 2022, the year the license expires.
LVS disputes not only its obligation to AAEC, but also the size of the proposed award.
Sun said Friday the figure was based on a misunderstanding of the financial statements submitted annually to the city’s casino regulator. Those do not consider things like capital expenditures and associated depreciation and amortization costs.
Sun said the group’s aggregate capital spending in Macau has been US$15 billion, which was largely plowed into the construction and development of new integrated resorts on the Cotai Strip.
The claim also failed to account for interest payment expenses, taxation-related items, and a host of other hidden costs, Sun added.
He also noted Venetian Macao had experienced “huge losses” in 2020 and in the first half of 2021, which had not been factored into AAEC’s projected figures.
According to court documents, Hao claims LVS would not have been able to successfully negotiate the complex licensing process without his early consultation. He also claims he advised LVS that a Venice-themed casino like the one it had recently opened in Las Vegas would work well in Macau.
Earlier this week the court heard from David Green, who was part of the consulting team hired by the Macau government to assess the license bids.
Testifying for the defense, Green said that when bids were being considered, LVS’s experience as a casino operator in Las Vegas vastly outweighed any contribution that could have been made by its local licensing partners.