Las Vegas Sands (NYSE:LVS) is looking for a new auditor. PwC (PricewaterhouseCooper) has had a very long running relationship of 25-year with Sands Chief Executive Sheldon Adelson finally threw in the towel in the nicest way possible.
The all important year-end audit is complete and they were working on Q1 which will be completed. But the new firm will have the rest of the year to find its feet and give the all important sign-off.
So why does a large reputable accounting firm resign from almost $9 million in audit, tax and other fees. Las Vegas Sands had been subject to increasing regulatory scrutiny for money laundering and bribes.
Many point out that Mr. Adelson’s challenging demeanor and demands on the auditors led to a deterioration in the relationship. It sounds like Mr. Adelson has been difficult to deal with.
PwC finally got into the life boat and is rowing away. It also should be pointed out that Mr. Adelson has been vigorously financing his political views which may not have been appreciated in the current White House.
Lets take a quick look at the board. 8 independent directors. The average age of the board is 67 and average tenure is 7 years. There is an old guard who has been on the board along with Mr Adelson from 2004 some nine years ago.
The board has two individuals who have a background in accounting.
Irwin Siegel CPA and was the Partner in charge of Deloitte Touche specializing in the hospitality industry. Wow that guy should have a very good sense of what is going on. Chairman of Audit Committee
George Koo is currently a special advisor to the China Services Group of Deloitte Touche. He also headed the group up from 1999-2008. Hey he should also have a very good sense of what is going on.
Irwin Chafetz is an old loyalist former vice-president of Las Vegas Sands with background in Interface-Group and Comdex. Big factor in Mr Adelson’s past.
Charles Koppleman has been with EMI and Martha Stewart Omnimedia. He gets entertainment but probably not a heavy weight in accounting.
Victor Chaltiel who is a Franco-American business person who in 2011 ran for Mayor of Las Vegas. Conservative standard-bearer.
Charles Forman has a substantial background in trade shows and Comdex which is Las Vegas is important. Again a former connection with Mr. Adelson.
Jeffrey Schwartz who heads up Global Logistic Properties which trades on the Singapore Exchange. They are the largest platform of logistical facilities in Asia. Sits on Audit Committee. Las Vegas Sands won an important license for a casino in Singapore.
Jason Ader is the founder and CEO of Ader Investment a NYC based investment advisor and merchant bank specializing in hospitality and real estate. Formerly senior managing director of Bear Stearns and before that a vice-president at Smith Barney. (remember those guys they earned your business the old-fashioned way) He sits on the Audit Committee.
So who knew what and when. Victor Chaltiel is too new. The two Deloitte Touche Alum’s got some splaining to do.
Mr Adelson is reputed to be very wealthy. The value of Las Vegas Sands shares has fluctuated but Forbes had him down as the third richest man in the US and the sixteenth richest man on earth. The stock market does fluctuate.
Bottom line: Although board is saying there seem to be some improprieties it should not have reached the point where auditors are resigning and walking away from huge professional fees. Money talks and PricewaterhouseCooper took a walk.
The board is not strong enough and it came to an auditor resignation.
George Gutowski writes from a caveat emptor perspective.