Okada Review Finds Wynn Resorts Probe ‘Deeply Flawed’

An independent review commissioned by Kazuo Okada’s lawyers found that Wynn Resorts Ltd. (WYNN)’s investigation that cost the Japanese billionaire his 20 percent stake in the casino operator was “deeply flawed.”

The review by former Homeland Security Secretary Michael Chertoff found that Wynn Resorts’ independent investigation, conducted by former FBI Director Louis Freeh, was “structurally deficient, one-sided, and seemingly advocacy-driven,” Okada’s Universal Entertainment Corp. (6425) said today in a statement.

“This confirms what I have maintained since the day the Freeh report was issued and the Wynn Board moved to strip me of my stake in a company I helped found,” Okada said in the statement. “It’s obvious that the biased report was part of Steve Wynn’s campaign to eliminate me as a rival to his power within Wynn Resorts.”

Wynn Resorts last year forcibly redeemed the shares of its largest shareholder for $1.9 billion, about $800 million less than what Okada says was their market value. Las Vegas-based Wynn Resorts, citing the Freeh report, alleged Okada was “unsuitable” as a controlling shareholders because of “prima facie violations” of U.S. anti-bribery laws.

The review by Chertoff found that Freeh’s law firm “viewed itself as an advocate first and an impartial investigator second” in preparing the report. Freeh and his colleagues “cherry-picked evidence and stretched to reach conclusions that would be helpful to the Wynn Resorts Board,” according to today’s statement.

$135 Million Gift

Okada, 70, is the chairman of Tokyo-based Universal Entertainment. He helped Steve Wynn finance the casino operator that went public in October 2002 and was its largest individual shareholder until February of last year. He has said Steve Wynn wanted him out because he opposed a $135 million gift to the University of Macau.

Okada, who resigned from Wynn Resorts’ board of directors ahead of a shareholders vote to oust him earlier this year, faces a U.S. criminal investigation of possible bribery related to his Philippine casino project, according to an April 8 filing by the Justice Department in Nevada state court in Las Vegas.

The Justice Department asked the judge to halt the lawsuit, in which Wynn Resorts accuses Okada of breach of fiduciary duty and Okada seeks to undo the redemption of his shares, in so far as it pertains to the same allegations that are under investigation, according to the filing.

The U.S. is also investigating Wynn Macau Ltd.’s donation to the University of Macau Development Foundation.

The case is Wynn Resorts v. Okada, A-12-656710-B, Clark County District Court, Nevada (Las Vegas).

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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