The GOP, China and Sheldon Adelson

The story behind the casino magnate's enormous wealth, his questionable dealings in Macau and his relationship to Mitt Romney.

Mitt Romney promises that as president he would be tougher on China than Barack Obama, the man he hopes to replace in the White House. He vows that he wouldn’t coddle Beijing’s communist leaders and would demand they cancel their expanding list of trade restrictions, give the currency an honest value and stop abusing human rights. He also promises to expand the U.S. Pacific fleet to discourage any expansionist ideas they may hold.

But when it comes to campaign cash that flows, indirectly at least, partly from China with perhaps illegal origins, he seems bent on taking all he can get, even though that money supply depends largely upon the continued goodwill of those who command the Chinese Communist Party.

The issue centers on the relationship of Romney and the Republican Party with Sheldon Adelson, the casino multibillionaire who has pledged up to a startling $100 million to defeat Obama and put in office a president he expects to be much friendlier to Israel, one of his lifelong concerns. The main source of the Adelson billions has become Macau, a city on the southern coast near Hong Kong that is the only Chinese territory where its wealthy citizens can gamble legally—and where many, it is commonly believed, find its thirty-five casinos convenient for laundering cash acquired by less-than-honest means. The Adelson political contributions come as he is being investigated by the state of Nevada, the U.S. Department of Justice, and the Securities and Exchange Commission for possible bribery of mainland and Macau officials, which would be in violation of the Foreign Corrupt Practices Act. (He denies all allegations strenuously.)

Sheldon Adelson controls four of Macau’s biggest and most spectacular casinos, and they have become the main profit center of the traded companies he heads—the Las Vegas Sands Corp. and its listed subsidiary, Sands China Ltd. Forbes earlier this year estimated his net worth at $24.9 billion, seventh highest in the United States and fourteenth in the world. The Adelson fortune did not originate with gambling—his first big venture was helping found Comdex, the annual computer-industry show held in Las Vegas, which he cashed out at great profit. By then, he was part owner of Las Vegas’s aging Sands Hotel and Casino; the $862 million Comdex sale let him tear it down and replace it with a lavish casino and resort hotel he titled The Venetian, inspired by a honeymoon trip to Venice with his second wife. It was the first Las Vegas casino built as a destination center, not just a comparatively bare-bones place for losing money. Rivals derided this decision at the time, but The Venetian proved a huge success.

Then Adelson discovered Macau.

A bit of history is relevant. Macau (or Macao) was a Portuguese trading outpost from the 1500s and had been a commercial gambling center long before China regained sovereignty in 1999. But its casinos, dominated by one family, were considered somewhat sleazy ventures marred by prostitution, money laundering, corruption and assorted other ills (including Chinese criminal gangs called triads). These casinos were relatively small-time operations that relied mostly on punters from nearby Hong Kong; few mainland citizens were allowed to visit Macau after the communists came to power in 1949.

But in 2002, with Macau as a special administrative region of China, that all changed. Its government, short of cash and with Beijing’s approval, ended the gambling monopoly and invited outsiders to upgrade its gaming facilities and image—and provide more tax revenue. Adelson’s company, along with such others as MGM Mirage and Wynn Resorts, leaped at the chance. They saw increasingly affluent China as their real market and hoped to lure to their tables many from the richest portion of that nation’s 1.3 billion people. And they did. Last year, there were some sixteen million mainland visits to Macau; the gambling turnover was more than five times that of Las Vegas and is the world’s largest.

The first Adelson venture in Macau was an expanded version of his Las Vegas Venetian. Its huge main hall offers assorted games for the commonplace gambler, while high-stakes VIP rooms cater to the truly wealthy. On a floor high above the main hall, singing Chinese and other gondoliers give patrons leisurely cruises along three indoor canals lined with faux-Venetian shop fronts that offer the globe’s leading luxury brands. Costumed sopranos occasionally fling open upper-floor windows and belt out a song or two under a fake blue sky. Macau had never seen the like, but the newest Adelson complex—the $4.4 billion Sands Cotai Central, which opened in April—is even grander. It offers 540 gaming tables, forty VIP rooms, 5800 hotel rooms managed by Conrad, Holiday Inn and Sheraton, plus twenty restaurants—all protected by a nearly three-ton gold and bronze statue of the “God of Fortune.”

But it has not been an entirely smooth ride for either Sands China or Adelson. He has faced two main problems.