UPDATE 2-Macau’s Sands China under investigation by HK regulator

* Sands China says SFC requests documents

* Shares drop 6 percent in Hong Kong

* Likely related to U.S. lawsuit

(Adds detail, lawyers comment)

By Farah Master

HONG KONG, March 31 (Reuters) – Sands China Ltd ,
the Macau unit of billionaire Sheldon Adelson’s Las Vegas Sands
Corp , said on Thursday it is being investigated by the
Hong Kong Securities and Futures Commission for alleged
regulatory breaches, the latest twist in a case that involves
allegations of corruption and bribery.

Sands China, one of six casino companies licenced to operate
in the world’s biggest gambling market, said it has been asked
to provide certain documents to the SFC.

The announcement comes nearly a month after U.S.
anti-corruption agencies launched an investigation into its Las
Vegas parent.

A company spokeswoman told Reuters on Thursday she was not in
a position to comment.

Hong Kong-listed shares of the $19 billion gambling company
fell 6 percent in afternoon trading on Thursday. Analysts said
it was too early to say what the impact of the investigation
will be, given the limited information available.

“It’s always going to be an overhang because this issue is
going to go on for a little while and there is no certainty. The
stock will react everytime something comes out, but it is
obviously not good news,” said Huei Suen Ng, analyst at CLSA in
Hong Kong.

Casino mogul Adelson’s firm is being sued for breach of
contract in Nevada courts by his former Sands China chief
executive, Steve Jacobs. Jacobs has accused the company of,
among other things, seeking to use “improper leverage” against
senior Macau government officials.

Lawyers said the SFC case in Hong Kong was likely to be a
disclosure issue related to the U.S. investigation and the
Foreign Corrupt Practices Act (FCPA).

“It’s most likely to relate to Sands China not having
properly disclosed price sensitive information. The SFC has been
focusing very hard on disclosure issues recently,” said one Hong
Kong-based lawyer who specializes in litigation.

“Given the FCPA investigation, it may be that they haven’t
fully met their obligations with regards to what and when they
should have told their shareholders or broader issues relating
to problems with the board’s governance.”

Sands China, operator of The Venetian complex in Macau,
competes in the former Portuguese colony with MGM Resorts
International and Wynn Macau Ltd , a unit of
Steve Wynn’s, Wynn Resorts Ltd .

MACAU MARKET

Sands has an about 20 percent share of Macau’s lucrative
gambling market, where revenue streams are at least four times
higher than those in Las Vegas. The share is second only to the
30 percent share held by tycoon Stanley Ho’s SJM Holdings Ltd
.

Macau has been a center for smuggling and crime throughout
its history, but in recent years has sought to upgrade its
rough-edged image with a frenzy of neon lights and Playboy
bunnies, bolstered by mainland gamblers that flock to China’s
only legal casino gambling destination.

Analysts said the investigation by Hong Kong regulators was
to be expected.

“If it is just Steve Jacobs again, I don’t think it is a big
issue. The SFC has to respond to the FBI and the SEC in the
States, so if it is not really new news, I am not that worried
about it,” said Gabriel Chan, an analyst at Credit Suisse in
Hong Kong.

An investigative report by Reuters earlier in March disclosed
that while Jacobs, a 47-year-old Harvard graduate, played a key
role in the success of Sands China, he clashed with Adelson over
several issues, including whether to hire more so-called junket
operators.

Junket companies are known in many cases to be connected to
Macau’s triad underworld and are the middlemen who bring
high-rolling VIPs from the mainland to gamble in Macau. The
operators offer them legal debt payment services to avoid
China’s strict debt collection laws.

Adelson has lashed out at his former employee over the past
week, publicly saying Jacobs’ case is not serious.

“It is pure threatening, blackmail and extortion. That is
what it is all about,” he was quoted as saying by Macau media.

(Editing by Matt Driskill)

UPDATE 2-Macau’s Sands China under investigation by HK regulator