Scrutiny for Casino Mogul’s Frontman in China

The New York Times

By MICHAEL LUO, NEIL GOUGH and EDWARD WONG

Published: August 13, 2012

When Sheldon Adelson, the casino magnate, needed something done in China, he often turned to his company’s “chief Beijing representative,” a mysterious businessman named Yang Saixin.

Mr. Yang arranged meetings for Mr. Adelson with senior Chinese officials; acted as a frontman on several ambitious projects for Mr. Adelson’s company, the Las Vegas Sands Corporation; and intervened on the Sands’s behalf with Chinese regulators. Mr. Yang even had his daughter take Mr. Adelson’s wife, Miriam, shopping when she was in Beijing.

“Adelson and I had a good relationship,” Mr. Yang said in a recent interview in Hong Kong. “He should thank me.”

Mr. Yang joined the Sands in 2007 as the company worked to protect its interests in Macau, where its gambling revenues were mushrooming, and pressed ahead with plans for a resort in mainland China. Boasting of ties to the People’s Liberation Army and China’s security apparatus, Mr. Yang was hired for his guanxi, that mixture of relationships and favors that is critical to opening doors in China, according to former executives.

But today, Mr. Yang, along with tens of millions of dollars in payments the Sands made through him in China, is a focus of a wide-ranging federal investigation into potential bribery of foreign officials and other matters in China and Macau, according to people with direct knowledge of the inquiries.

The investigations are unfolding as Mr. Adelson has become an increasing presence in this year’s presidential election, contributing at least $35 million to Republican groups. On Tuesday, Mitt Romney’s running mate, Representative Paul D. Ryan, is to appear at a fund-raiser at the Sands’s Venetian casino in Las Vegas; Mr. Adelson is likely to attend, a person close to him said.

In the political arena, Mr. Adelson is perhaps best known as a hawkish defender of Israel. But whatever the outcome of the inquiries involving his businesses in China, an examination of those activities suggests a keen interest in Washington’s China policy and highlights the degree to which politics and profits are often intertwined for Mr. Adelson.

The Sands has faced a conundrum in China as a casino company whose fortunes are heavily dependent on its operations in a country where gambling is illegal, except in Macau. The company relies on the good will of Chinese officials, who mete out approvals and have the power to curtail the flow of mainland visitors. As a result, Mr. Adelson has sought to use financial clout and connections to exert political influence at the highest levels of government.

On the front lines of those efforts was Mr. Yang, who was paid $30,000 a month by the company before he was fired in 2009, he said. At times, he acted as Mr. Adelson’s personal guide to the Chinese establishment. Among the dignitaries he took Mr. Adelson to see was Wan Jifei, a leading international trade official whose father had been vice premier. That led to a lunch with other trade officials at the Great Hall of the People on Tiananmen Square.

The Sands later hired Mr. Wan’s daughter, Bao Bao, a socialite and jewelry designer, to do public relations. And the trade agency Mr. Wan ran became a partner in the Sands’s biggest venture, the Adelson Center for U.S.-China Enterprise.

Mr. Yang denies resorting to bribery and says he actually lost money on his dealings with the Sands.

“I’m really being bullied because I helped Venetian and Adelson do so many things,” he said. “I’m in the middle, and on both sides everybody’s pointing at me.”

The broad outlines of the mainland China investigation were reported last week by The Wall Street Journal. But a review of more than a thousand pages of corporate records in China, as well as interviews with former Sands executives and others, provides a more detailed picture.

The documents show that the Sands paid out more than $70 million to companies tied to Mr. Yang for the trade center and for a Chinese basketball team the Sands sponsored. But several million dollars appear to be unaccounted for after the projects were suddenly shut down by the company, The New York Times found.

What became of any missing money and whether any of it wound up in the hands of Chinese officials are among the questions being examined by the Federal Bureau of Investigation, the Justice Department and the Securities and Exchange Commission.

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Companies’ Ills Did Not Harm Romney’s Firm

The Boston headquarters of Bain Capital, a firm that usually found a way to make money from companies it controlled even when they ultimately went bankrupt.

New York Times
By MICHAEL LUO and JULIE CRESWELL
Published: June 22, 2012

Cambridge Industries, an automotive plastics supplier whose losses had been building for three consecutive years, finally filed for bankruptcy in May 2000 under a mountain of debt that had ballooned to more than $300 million.

Yet Bain Capital, the private equity firm that controlled the Michigan-based company, continued to religiously collect its $950,000-a-year “advisory fee” in quarterly installments, even to the very end, according to court documents.

In all, Bain garnered more than $10 million in fees from Cambridge over five years, including a $2.25 million payment just for buying the company, according to bankruptcy records and filings with the Securities and Exchange Commission. Meanwhile, Bain’s investors saw their $16 million investment in Cambridge wiped out.

That Bain was able to reap revenue from Cambridge, even as it foundered, was hardly unusual.

The private equity firm, co-founded and run by Mitt Romney, held a majority stake in more than 40 United States-based companies from its inception in 1984 to early 1999, when Mr. Romney left Bain to lead the Salt Lake City Olympics. Of those companies, at least seven eventually filed for bankruptcy while Bain remained involved, or shortly afterward, according to a review by The New York Times. In some instances, hundreds of employees lost their jobs. In most of those cases, however, records and interviews suggest that Bain and its executives still found a way to make money.

Mr. Romney’s experience at Bain is at the heart of his case for the presidency. He has repeatedly promoted his years working in the “real economy,” arguing that his success turning around troubled companies and helping to start new ones, producing jobs in the process, has prepared him to revive the country’s economy. He has fended off attacks about job losses at companies Bain owned, saying, “Sometimes investments don’t work and you’re not successful.” But an examination of what happened when companies Bain controlled wound up in bankruptcy highlights just how different Bain and other private equity firms are from typical denizens of the real economy, from mom-and-pop stores to bootstrapping entrepreneurial ventures.

Bain structured deals so that it was difficult for the firm and its executives to ever really lose, even if practically everyone else involved with the company that Bain owned did, including its employees, creditors and even, at times, investors in Bain’s funds.
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Romney’s Bain Capital Invested In Companies That Moved Jobs Overseas

Washington Post

By Tom Hamburger, Thursday, June 21, 7:53 PM

Mitt Romney’s financial company, Bain Capital, invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India.

During the nearly 15 years that Romney was actively involved in running Bain, a private equity firm that he founded, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components, according to filings with the Securities and Exchange Commission.

While economists debate whether the massive outsourcing of American jobs over the last generation was inevitable, Romney in recent months has lamented the toll it’s taken on the U.S. economy. He has repeatedly pledged he would protect American employment by getting tough on China.

“They’ve been able to put American businesses out of business and kill American jobs,” he told workers at a Toledo fence factory in February. “If I’m president of the United States, that’s going to end.”

Speaking at a metalworking factory in Cincinnati last week, Romney cited his experience as a businessman, saying he knows what it would take to bring employers back to the United States. “For me it’s all about good jobs for the American people and a bright and prosperous future,” he said.

For years, Romney’s political opponents have tried to tie him to the practice of outsourcing American jobs. These political attacks have often focused on Bain’s involvement in specific business deals that resulted in job losses.

But a Washington Post examination of securities filings shows the extent of Bain’s investment in firms that specialized in helping other companies move or expand operations overseas. While Bain was not the largest player in the outsourcing field, the private equity firm was involved early on, at a time when the departure of jobs from the United States was beginning to accelerate and new companies were emerging as handmaidens to this outflow of employment.

Bain played several roles in helping these outsourcing companies, such as investing venture capital so they could grow and providing management and strategic business advice as they navigated this rapidly developing field.

Over the past two decades, American companies have dramatically expanded their overseas operations and supply networks, especially in Asia, while shrinking their workforces at home. McKinsey Global Institute estimated in 2006 that $18.4 billion in global information technology work and $11.4 billion in business-process services have been moved abroad.

While the export of jobs has been disruptive for many workers and communities in the United States, outsourcing has been a powerful economic force. It has often helped lower the prices that American consumers pay for products and created a global supply chain that has made U.S. companies more nimble and profitable.

Romney campaign officials repeatedly declined requests to comment on Bain’s record of investing in outsourcing firms during the Romney era. Campaign officials have said it is unfair to criticize Romney for investments made by Bain after he left the firm but did not address those made on his watch. In response to detailed questions about outsourcing investments, Bain spokesman Alex Stanton said, “Bain Capital’s business model has always been to build great companies and improve their operations. We have helped the 350 companies in which we have invested, which include over 100 start-up businesses, produce $80 billion of revenue growth in the United States while growing their revenues well over twice as fast as both the S&P and the U.S. economy over the last 28 years.”

Until Romney left Bain Capital in 1999, he ran it with a proprietor’s zeal and attention to detail, earning a reputation for smart, hands-on management.

Bain’s foray into outsourcing began in 1993 when the private equity firm took a stake in Corporate Software Inc., or CSI, after helping to finance a $93 million buyout of the firm. CSI, which catered to technology companies like Microsoft, provided a range of services including outsourcing of customer support. Initially, CSI employed U.S. workers to provide these services but by the mid-1990s was setting up call centers outside the country.

Two years after Bain invested in the firm, CSI merged with another enterprise to form a new company called Stream International Inc. Stream immediately became active in the growing field of overseas calls centers. Bain was initially a minority shareholder in Stream and was active in running the company, providing “general executive and management services,” according to SEC filings.

By 1997, Stream was running three tech-support call centers in Europe and was part of a call center joint venture in Japan, an SEC filing shows. “The Company believes that the trend toward outsourcing technical support occurring in the U.S. is also occurring in international markets,” the SEC filing said.

Stream continued to expand its overseas call centers. And Bain’s role also grew with time. It ultimately became the majority shareholder in Stream in 1999 several months after Romney left Bain to run the Salt Lake City Olympics.

Bain sold its stake in Stream in 2001, after the company further expanded its call center operations across Europe and Asia.

The corporate merger that created Stream also gave birth to another, related business known as Modus Media Inc., which specialized in helping companies outsource their manufacturing. Modus Media was a subsidiary of Stream that became an independent company in early 1998. Bain was the largest shareholder, SEC filings show.

Modus Media grew rapidly. In December 1997, it announced it had contracted with Microsoft to produce software and training products at a center in Australia. Modus Media said it was already serving Microsoft from Asian locations in Singapore, South Korea, Japan and Taiwan and in Europe and the United States.

Two years later, Modus Media told the SEC it was performing outsource packaging and hardware assembly for IBM, Sun Microsystems, Hewlett-Packard Co. and Dell Computer Corp. The filing disclosed that Modus had operations on four continents, including Asian facilities in Singapore, Taiwan, China and South Korea, and European facilities in Ireland and France, and a center in Australia.

“Technology companies, in particular, have increasingly sought to outsource the business processes involved in their supply chains,” the filing said. “. . . We offer a range of services that provide our clients with a one-stop shop for their outsource requirements.”

According to a news release issued by Modus Media in 1997, its expansion of outsourcing services took place in close consultation with Bain. Terry Leahy, Modus’s chairman and chief executive, was quoted in the release as saying he would be “working closely with Bain on strategic expansion.” At the time, three Bain directors sat on the corporate board of Modus.

The global expansion that began while Romney was at Bain continued after he left. In 2000, the firm announced it was opening a new facility in Guadalajara, Mexico, and expanding in China, Malaysia, Taiwan and South Korea.

In addition to taking an interest in companies that specialized in outsourcing services, Bain also invested in firms that moved or expanded their own operations outside of the United States.

One of those was a California bicycle manufacturer called GT Bicycle Inc. that Bain bought in 1993. The growing company relied on Asian labor, according to SEC filings. Two years later, with the company continuing to expand, Bain helped take it public. In 1998, when Bain owned 22 percent of GT’s stock and had three members on the board, the bicycle maker was sold to Schwinn, which had also moved much of its manufacturing offshore as part of a wider trend in the bicycle industry of turning to Chinese labor.

Another Bain investment was electronics manufacturer SMTC Corp. In June 1998, during Romney’s last year at Bain, his private equity firm acquired a Colorado manufacturer that specialized in the assembly of printed circuit boards. That was one of several preliminary steps in 1998 that would culminate in a corporate merger a year later, five months after Romney left Bain. In July 1999, the Colorado firm acquired SMTC Corp., SEC filings show. Bain became the largest shareholder of SMTC and held three seats on its corporate board. Within a year of Bain taking over, SMTC told the SEC it was expanding production in Ireland and Mexico.

In its prospectus that year, SMTC explained that it was in a strong position to meet the swelling demand from other manufacturers for overseas production of circuit boards. The company said that communications and networking companies “are dramatically increasing the amount of manufacturing they are outsourcing and we believe our technological capabilities and global manufacturing platform are well suited to capitalize on this opportunity.”

Just as Romney was ending his tenure at Bain, it reached the culmination of negotiations with Hyundai Electronics Industry of South Korea for the $550 million purchase of its U.S. subsidiary, Chippac, which manufactured, tested and packaged computer chips in Asia. The deal was announced a month after Romney left Bain. Reports filed with the SEC in late 1999 showed that Chippac had plants in South Korea and China and was responsible for marketing and supplying the company’s Asian-made computer chips. An overwhelming majority of Chippac’s customers were U.S. firms, including Intel, IBM and Lucent Technologies.

A filing with the SEC revealed the promise that Chippac offered investors. “Historically, semiconductor companies primarily manufactured semiconductors in their own facilities,” the filing said. “Today, most major semiconductor manufacturers use independent packaging and test service providers for at least a portion of their . . . needs. We expect this outsourcing trend to continue.”

Research editor Alice Crites contributed to this article.

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GE To Pay 23 Million Dollars After Iraq Bribery Charges

GE to pay 23 million dollars after Iraq bribery charges

Via: Raw Story- By Agence France-Presse
Tuesday, July 27th, 2010 — 12:57 pm

US industrial titan General Electric has agreed to pay over 23 million dollars to settle allegations that it bribed Iraqi officials, a US financial watchdog said on Tuesday.

GE had been accused by the Securities and Exchange Commission of being part of “a 3.6 million dollar kickback scheme with Iraqi government agencies to win contracts to supply medical equipment and water purification equipment.”

Four subsidiaries of the Connecticut-based company were accused of bribing officials at the Iraqi ministries of health and oil, trading cash, computer equipment and medical supplies to win lucrative contracts.

The SEC said the four GE units — two of which were not part of the firm when the alleged bribery took place — earned around 18.4 million dollars as a direct result of the kickbacks.

“Bribes and kickbacks are bad business, period,” said Robert Khuzami, the head of the SEC’s Division of Enforcement.

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Has Madoff Investigation Broadened?

Is Madoff Probe Expanding?

TPM Muckraker- By Zachary Roth – March 11, 2009, 2:22PM

Bernard Madoff is set this week to plead guilty to orchestrating a massive Ponzi scheme. But could we be in line for more guilty pleas before this is all over?

The Daily Beast reports:

[T]he [Madoff] investigation … has broadened to include a number of suspected co-conspirators, according to federal officials involved in the case.

The Daily Beast story — written by Lucinda Franks, whose byline identifies her as a Pulitzer-Prize winning journalist who was formerly on the staff of the New York Times — also reports that, according to sources, “several members of Madoff’s inner circle transferred assets to their wives, transactions thought to be laundered through an English bank.”

There are said to be three groups of possible co-conspirators, who could potentially be charged either criminally by the Justice Department, or civilly by the SEC.

In the first group are employees of Madoff’s firm who concocted false trades and sent out phony statements to thousands of unsuspecting clients.The second group is comprised of principals in feeder funds such as Cohmad Securities Corp. and Fairfield Greenwich Group, which funneled investor dollars to Madoff and received large fees for steering this business. If they were aware of Madoff’s fraud, they could face criminal charges; if they were not, they could be hit with civil charges for a lack of due diligence.

The third group is the target of an investigation that’s still in its early stages into money laundering through British banks, in which US and British authorities are cooperating. This group consists of solicitors, accountants, and others in London who may have assisted Madoff in transferring funds from client accounts to a Madoff entity that lists Ruth Madoff, brother Peter Madoff, and sons Mark and Andrew Madoff among its board members.

It’s not clear from any of this that any specific members of Madoff’s family, or his inner circle, are in immediate legal jeopardy.

But the Wall Street Journal appears to be thinking along similar lines (sub req). It notes:

Prosecutors alleged Tuesday that Mr. Madoff hired numerous employees with “little or no prior pertinent training or experience in the securities industry” and caused them to “communicate with clients and generate false and fraudulent documents.”

Its report doesn’t go as far as the Daily Beast‘s. The Journal says it’s still unclear whether prosecutors believe these people knew they were involved in a fraudulent scheme, and doesn’t explicitly say that the investigation has broadened beyond Madoff himself.

But it’s noticeable that the paper does take the time to lay out what’s known about the possible involvement in the scheme of five of Madoff’s relatives and associates — including his wife Ruth, who has hired her own lawyer, and his brother Peter, who was the chief compliance officer for Madoff’s firm.

With Madoff’s guilty plea soon to be safely in the bag, are these reports an indication of where prosecutors are going next?

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Allen Stanford: 21st Century Great Gatsby?

Is Allen Stanford The 21st Century’s Jay Gatsby?

TPM Muckraker- By Zachary Roth – February 16, 2009, 4:25PM

It looks like Allen Stanford, the billionaire Texan banker whose investment firm is being probed by the Feds, has a positively Gatsbyesque yearning to be accepted into high society.

As we knew, Stanford calls himself “Sir” Allen Stanford, on account of a knighthood he was awarded by the former prime minister of Antigua, where his business is based. But it looks like maybe that wasn’t quite good enough for Stanford, since until recently he was claiming, falsely, that the knighthood was presented by the British Royal family.

Check out this report (via Nexis), from last November in the Mail on Sunday of London:

Texan-born billionaire Sir Allen Stanford’s corporate website claims that, after he became a citizen of the Commonwealth territory of Antigua, it appointed him a ‘Knight Commander of the Most Distinguished Order of the Nation’.’He was presented [with] this honour by His Royal Highness Prince Edward, Earl of Wessex,’ states the website.

However, The Mail on Sunday has learned that the Prince had nothing to do with the honour and that it was not approved by the Queen.

…

A Buckingham Palace spokesman said it was a coincidence that the knighthood ceremony, conducted by an Antiguan political appointee, took place during a celebration of the island’s independence, at which Prince Edward was a guest.

‘It is incorrect to say that the Earl of Wessex knighted this person while in Antigua,’ said the spokesman.

Stanford’s personal web site now says only that the Earl of Wessex attended the ceremony at which the “royal knighthood” was bestowed. (Though the “royal” part still seem dubious, since Buckingham Palace has disavowed any role in the proceeding.)

The whole tale is reminiscent of Stanford’s claim to be descended from the founder of Stanford University. The school has denied the link.

MORE HERE

Scenes from the Great Gatsby movie:

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Bernie Was The Life Of The Party For 10 Years..

Scribe says, Watch your back, Bernard Madoff

Alleged socialite swindler Bernie Madoff, who continues to live in the lap of luxury while his victims fume, might be better off in jail.

Because as long as the accused chiseler is out walking the street, he might get shot!

So says Laurence Leamer, author of “Madness Under the Royal Palms: Love and Death Behind the Gates of Palm Beach.”

Leamer, who has had an up-close look at the Madoff scandal and its effect on the uber-rich rubes, said Bernie’s victims reportedly include a laundry list of dangerous characters – any one of whom may want revenge on the alleged mastermind of the $50 billion Ponzi scheme.

“There’s a Russian oligarch who six months ago tried to get his money out and Bernie wouldn’t give it to him,” he said. “There’s also a report that he had $300 million in Colombian drug money. You don’t want to irritate these people.”

True dat.

Madoff is due in court in NYC today where the government will again try to lock him up while prosecutors investigate charges that he bilked scores of investors in a massive, decades-long scam.

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