Kazuo Okada Under Criminal Investigation, U.S. Says
Stock Chart for Wynn Resorts Ltd (WYNN)
Universal Entertainment Corp. (6425) Chairman Kazuo Okada faces a U.S. criminal investigation related to his Philippine casino project, sending the gaming company’s shares down as much as 18 percent.
The U.S. asked to intervene in a lawsuit brought by Wynn Resorts Ltd. (WYNN), which accused Okada of making improper payments to Philippine gaming regulators. The Justice Department said in an April 8 filing in state court in Las Vegas that it doesn’t want the civil case to disrupt its criminal investigation into the same underlying allegations.
Okada has pushed to expand in the Philippines where the government is setting up a new casino center that would compete with Macau, where Wynn Resorts gets most of its revenue. Okada, who became a billionaire selling machines for Japanese pachinko parlors, won one of four provisional gaming licenses awarded for the Manila hub in 2008. New resorts could help the Southeast Asian nation’s gaming market expand five fold to $10 billion by 2017, its chief regulator estimates.
Wynn Resorts last year forcibly redeemed Okada’s 20 percent stake in the Las Vegas-based company and sued him for breach of fiduciary duty. Okada, who resigned as a director of Wynn Resorts in February, was being probed by the U.S. Federal Bureau of Investigation regarding his Philippine casino permit, the Asian country’s gambling authority said in January.
Wynn Resorts gets more than 71 percent of its annual revenue from Macau, the world’s largest gambling hub.
The possible violations of the U.S. Foreign Corrupt Practices Act by a controlling shareholder could threaten Wynn Resorts’ gaming license in Nevada and other jurisdictions, the casino operator has said in court filings.
The Justice Department said in its filing that it contacted lawyers for Okada and Wynn Resorts about its request to halt evidence gathering related to Okada’s activities in the Philippines.
Okada’s lawyers have said they would probably oppose the request “in whole or in part,” according to the filing. Wynn Resorts won’t oppose its request, the Justice Department said.
The U.S. request to stay the case with regard to any overlap with its investigation is scheduled to be considered April 16 by Clark County District Judge Elizabeth Gonzalez, according to the court’s docket.
Universal Entertainment fell as much as 18 percent today in Tokyo and closed down 16 percent at 1,666 yen.
The company has been denying the wrongdoing, “so it hadn’t been fully reflected in the stock price,” Kenichi Hirano, general manager at Tachibana Securities Co. in Tokyo, said in a phone interview. The report on the investigation caused the stock to plummet, he said.
Universal is cooperating fully with all investigations, according to Eric Andrus, a spokesman for Okada who works for RLM Finsbury in New York.
Michael Weaver, a spokesman for Wynn Resorts, and Michael Passman, a Justice Department spokesman, declined to comment on the government’s filing.
The FCPA bars companies or individuals regulated or based in the U.S. from paying bribes to foreign officials to win business. Foreign companies and nationals also can be prosecuted if their corrupt acts were committed in the U.S.
$40 Million Payments
Universal Entertainment, based in Tokyo, said Feb. 5 that a third-party committee was investigating payments made through its U.S. unit, Aruze USA Inc., in the Philippines. The committee was looking at $40 million in payments, according to the statement.
The FBI is examining Okada’s pursuit of his Philippine gaming license, any tax benefits he received and the flow of funds involved, Cristino Naguiat, chairman and chief executive of the Philippine Amusement & Gaming Corp., the gambling authority, said in January.
The case is Wynn Resorts v. Okada, A-12-656710-B, Clark County District Court, Nevada (Las Vegas).
Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.