In China, relationships, or guanxi, can make or break an empire. Adelson's relationships in Macau and China were frayed. George Koo, a member of the Las Vegas Sands board of directors, wrote in a confidential memo that Adelson's behavior had offended political figures in both Macau and China.
Koo quoted a prominent Macau official as saying Adelson had "slapped the table in front of Edmund Ho," Macau's chief executive. "Supposedly, Ho has said that he will not see SGA anymore," the memo said, using Adelson's initials.
Accompanied by Alves, Koo met with the Macau chief executive over lunch. According to Koo's memo, Ho expressed his regret that Adelson "has burned so many bridges with Beijing," the memo said.
According to Koo's account, a top Chinese official overseeing Macau named Liao Hui was so angry at Adelson that he refused to meet with him. It is not clear from the memo what caused the rupture, but Koo said Adelson turned to "the Israeli military to arrange a meeting with Liao," who initially agreed but then said he would only send his deputy. No meeting ever took place, the document says.
Weidner, who resigned as president of Las Vegas Sands in March 2009, said in an interview that Adelson was "out of his element" dealing with Chinese officials.
Weidner recalled struggling to explain Adelson's style to the Chinese, once comparing his boss to a famous emperor who became angry with China's scholars and buried them alive with their books. "I would tell them: 'He is brilliant. Sometimes, like the emperor, he is brutal.'"
Leonel Alves seemed to be an ideal person to smooth relations.
A Macau native, born of a Portuguese father and a Chinese mother, the attorney had been a fixture in the local scene for decades and was nimble in the face of shifting political tides.
In the years leading up to Portugal's handover of its onetime colony to China in 1999, he was among a select group of local residents chosen to serve on the transition team.
Alves became a Chinese citizen and dedicated himself to learning China's official dialect, Mandarin, to complement his fluency in Portuguese, English, and Cantonese. His legal practice was already successful. He boasted to local reporters of his car collection, which included a Ferrari and a BMW M3.
Las Vegas Sands put Alves' law firm on retainer in midsummer 2008, naming him as an outside counsel. Documents show his firm was to be paid $37,500 a month for 80 hours of work, with additional hours to be billed at a rate of more than $550 an hour.
Over the years, the Justice Department has made it clear that American companies can employ foreign officials. But companies have been told they must take great care and create safeguards to prevent such officials from using their position or political standing to gain commercial advantage.
T. Markus Funk, a partner at the Perkins Coie law firm and co-chair of the American Bar Association Global Anti-Corruption Initiatives Task Force, declined to discuss the specifics of the Las Vegas Sands inquiry. But he said companies generally avoid hiring sitting local officials as lobbyists or representatives because of the risk that they will improperly end up wielding their influence.
"It would be a huge red flag," Funk said. "If you are paying someone because you think they are going to have a questionable backroom discussion, essentially a quid pro quo relationship, that's a no-no. You can get yourself in big trouble pretty quickly."
In response to written questions, Alves said in an email that his political career has never conflicted with "my profession as a lawyer." He said his office had "been scrutinized by the Chinese and American authorities like few have in Macau, and no authority has ever had any suspicion."
Alves noted that his multiple government posts did not "confer to me any executive and administrative power" or the ability to "influence" what he described as "the relevant authorities."
US companies sometimes ask the Justice Department in advance for an opinion on whether a particular hire constitutes a violation of the law. It is not known if Las Vegas Sands posed such a question about Alves. Funk, a former federal prosecutor, said that a company following "best practices" would look closely at both the size of the proposed payments and the procedures put in place to assure compliance.
"I'd want to make sure the individual is getting paid an appropriate scale," Funk said. "I'd want to get some assurance he was familiar with the FCPA and had agreed to abide by its terms. I'd want a code of conduct in place and I'd want to see detailed billing statements."
One of the first issues Alves addressed was Las Vegas Sands' request for permission from local authorities to sell a mall and 300 luxury apartments it had built next to one of its casinos, the Four Seasons Macau.
The company's original agreement with the government did not allow it to break up the property into separate pieces for sale. If Sands could amend the agreement, it would open the way to raise billions.
On August 12, 2008, Alves wrote an email to Luis Melo, who was then Las Vegas Sands' in-house counsel in Macau. He wrote that he was planning to meet with local officials to "monitor and apply pressure" to what he called the "revision process" of the "land concession contract." It is not known whether the meeting took place or what, if anything, Alves said to other officials in the government.
In late September, the secretary of Macau's Land, Public Works, and Transport Bureau declared that Las Vegas Sands had to abide by its original contract with Macau, which did not permit the property to be sold separately.
"The terms in the concession contract are very clear and any move must be according to what is written in the contract," he said, according to a report in the Macau Daily Times.
Once again, local law posed challenges to the company's plans. And once again, Alves stepped forward to help.
That statement came at a critical moment for Las Vegas Sands. With the collapse of Lehman Brothers in the United States, even the most solvent companies were finding it impossible to borrow. At the end of September, Adelson staked his company $475 million of his own money.
In October, planning officials handed Las Vegas Sands much of what it was seeking. They said they would allow the property to be divided into four parts: the casino, the apartment complex, the mall, and a parking garage. Each could be sold separately. In their decision, Macau officials said they were trying to help Las Vegas Sands address its need for more capital.
The company portrayed the decision as a victory and said it "paves the way" for the sale of the 300 luxury apartments.
The company's financial condition continued to worsen. It halted construction on its massive projects in Cotai. In November 2008, Adelson kicked in another $525 million of his own money. That month, the company told investors it was in danger of defaulting on $5.2 billion in loans. Such a default, auditors warned, could threaten the company's survival.
Ultimately, Las Vegas Sands did not sell the apartment building or mall. (It continues to seek final permission to sell individual apartments.) The company moved to raise capital through another route: an initial public offering of stock on the Hong Kong exchange that, it was hoped, would bring in billions of dollars.
Once again, local law posed challenges to the company's plans. And once again, Alves stepped forward to help.
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One key to Las Vegas Sands' survival in Macau was its ability to whisk customers from Hong Kong to the doors of its casinos. The long-established ferry route unloads its passengers in downtown Macau, about a three-mile drive from Adelson's casinos in Cotai.
Las Vegas Sands had created its own ferry service, Cotai Waterjets, which dropped gamblers at a dock just a short shuttle ride from its casinos.
But the future of Cotai Waterjets was unclear. A competing ferry service had filed a complaint alleging the government had improperly awarded the concession to Las Vegas Sands without competitive bidding.
In February 2009, a Macau court agreed, voiding the contract.
Alves set to work. In the spring of 2009, he arranged what a billing invoice from his firm describes as "meetings and contacts with the Macau Government."
On October 19, 2009, Alves met with Edmund Ho, Macau's chief executive, and Fernando Chui Sai On, Ho's soon-to-be successor. (Ho was the Macau official who had purportedly refused to meet with Adelson.)
It is not known what was discussed. Alves billed Las Vegas Sands for two hours of his time, according to his invoice.
Also that day, Alves billed for more than an hour of phone calls with company executives, his invoices show.
Las Vegas Sands was explicit about what was at stake, telling Hong Kong investors in a public filing that loss of the ferry concession "could result in a significant loss of visitors to our Cotai Strip properties." This would have a "material adverse effect on our business," the company said.
Within days of Alves' meeting with Ho, Las Vegas Sands won a stunning victory. Ho issued an administrative regulation that allowed ferry contracts to be awarded without competitive bidding. The court rulings against the company were moot. Las Vegas Sands retained control of its route and ultimately obtained several new ones.
Attempts to reach Ho were unsuccessful.
The initial public offering launched in late November 2009, raising $2.5 billion for Las Vegas Sands.
Alves remains a member of the Executive Council. He declined to discuss his interactions with Ho or the council.
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Just as Sands was resolving several of its thornier legal issues, a dispute erupted among its executives over Alves that had far-reaching consequences.
It began on Oct. 20, 2009, shortly before the ferry decision was announced, with a seemingly routine event: Alves' firm submitted bills for its recent work.
The firm said it was charging at triple the previously agreed rate to account for the work it had done on the public offering, scheduled for the following month. In an email, Las Vegas Sands' in-house lawyer in Macau, Luis Melo, objected, noting the invoices were "not in accordance" with the letter which spelled out the financial terms of Alves' retainer.
The issue reached the desk of J. Alberto Gonzalez-Pita, general counsel at Las Vegas Sands headquarters in Nevada. In an email, Gonzalez-Pita expressed concern about a sudden request for more money from an outside lawyer who was also a foreign official, saying such a payment would require "a lot of explaining."
With the bill still unpaid, Alves submitted his resignation effective in February 2010.
An internal email shows he continued to report privately to Adelson, delivering at least one message from the company's chairman and CEO to Macau's government.
Separately, he also pushed to return to Sands China.
In March, Alves submitted a new proposal, asking to be paid $125,000 a month with no obligation to provide billing details, internal records show.
Gonzalez-Pita, the Las Vegas general counsel, rejected the idea. "It's outrageous," he wrote. "Our corporate retainer with Paul Weiss is almost three times less per month," he said, referring to the company's outside counsel, New York-based Paul, Weiss, Rifkind, Wharton & Garrison.
Gonzalez-Pita elaborated a week later.
"I continue to believe this proposal to be inappropriate, unrealistic, extraordinarily expensive and way above market," he wrote to Jacobs, the CEO of Sands China who had originally been recruited to handle the IPO. "Been a long time since I've seen a lawyer or a firm make as naked a power play as has LA," Leonel Alves. "He sure has chutzpah."
Jacobs decided against rehiring Alves. "Let's talk about a replacement for outside counsel," he wrote in a March 10, 2010, email to Melo, Sands China's general counsel in Macau.
"The transition will not be easy…and has a high probability of becoming messy…but it is the right thing to do for the business," he wrote.
Jacobs told Alves that he would not be retained, emails show.
The same day, Jacobs informed colleagues that he had paid the disputed invoices after Alves submitted a more detailed account of the work he had done on the public offering. Jacobs wrote to Gonzalez-Pita that he had been "instructed by SGA and MAL to pay and close out the matter."
The initials SGA and MAL are used within the company to refer to Sheldon G. Adelson and Michael A. Leven, the president of Las Vegas Sands.
"I am sorry that this was not communicated to you but I am glad that FCPA outside counsel did not highlight any substantial issue with the payment," Jacobs wrote.
Gonzalez-Pita replied that Jacobs was mistaken and that the company's outside lawyer had identified the payments as a possible violation of the US anti-bribery law.
"Unfortunately," Gonzalez-Pita wrote to Jacobs: "FCPA counsel did highlight a problem" with paying Alves anything more than his normal fees "plus a commercially reasonable premium."
"While I can appreciate that you received instructions to make the payment," Gonzalez-Pita wrote on March 12. "I wish you would have advised me so I could have intervened."
Gonzalez-Pita resigned from the company in April 2010.
On July 23, Las Vegas Sands fired Jacobs. A month later, the company dismissed Melo and the rest of the legal team in Macau, according to the lawsuit Jacobs subsequently filed in Nevada.
In that action, Jacobs said he was dismissed for refusing Adelson's "illegal demands," including an order that he fire Melo and replace him with Alves. Las Vegas Sands said in court briefs that it fired Jacobs for disobeying orders and working on unauthorized deals.
The company rehired Alves as outside counsel in the fall of 2010, a position he still holds. It is not known how much he is being paid.
In April of this year, Sands China opened Cotai Central, the $4 billion project it had temporarily abandoned in 2008, when the company stood at the brink. Within six hours of the opening, Sands China reported, more than 84,000 people pushed through the new casino's doors.
Matt Isaacs and Lowell Bergman reported on this story for the Investigative Reporting Program of the University of California and PBS Frontline. Some of their work was underwritten by a grant from the Nathan Cummings Foundation. Engelberg is managing editor of ProPublica.