Okada Faces Ouster Vote by Wynn Macau Board Over Improper Payment Claims
Wynn Macau Ltd. (1128) will hold an emergency meeting of its board to discuss removing Japanese billionaire Kazuo Okada after parent Wynn Resort Ltd. (WYNN) accused him of illegal payments to Philippine gambling regulators.
“I don’t think the time has been confirmed yet, but we are talking about” an emergency meeting in Macau, said Allan Zeman, vice chairman of the unit. “I’m still waiting to hear from the lawyers here.”
Wynn Resorts Chairman and Chief Executive Steve Wynn will convene an emergency meeting with Wynn Macau directors on Friday, Reuters reported earlier today, citing people it didn’t identify. Okada, the 69-year-old chairman of Universal Entertainment Corp. (6425), has denied Wynn’s allegation he violated U.S. laws by making payments to members of the Philippine Amusement and Gaming Corp.
Universal Entertainment owned 20 percent of Wynn Resorts through a U.S.-based unit and is building a $2.3 billion gambling resort in Manila.
The Las Vegas-based casino operator on Feb. 19 said it redeemed the Universal unit’s stake for about 30 percent less than the market price and asked Okada to quit the board over the alleged payments.
Universal reiterated yesterday it will take legal action against Wynn’s moves, which it called “outrageous.” Nobuyuki Horiuchi, a spokesman for Tokyo-based Universal, declined to comment today on the planned emergency meeting in Macau.
Universal Entertainment shares rose 6 percent to 1,800 yen at the 3 p.m. close of trade in Tokyo, while Wynn Macau fell 3.1 percent to HK$19.96 as of 2:53 p.m. in Hong Kong.
Prior to Wynn’s forced redemption, Okada had sued the company to gain access to financial documents related to Wynn’s HK$1 billion ($129 million) donation to the University of Macau Development Foundation.
A hearing due today on Okada’s suit over the donation documents was postponed until March 8 at the request of lawyers, Mary Ann Price, a spokeswoman for the Nevada state court in Las Vegas, said today in a telephone interview. Charles Sipkins, a spokesman for Wynn, and Horiuchi declined to comment on the postponement.
Okada said in his Jan. 11 petition for a ruling to inspect Wynn’s books and records that he objected to the May 2011 pledge to the University of Macau Development Foundation. The donation appeared to be unprecedented in the university’s history and there had been no discussion whether the gift was appropriate use of corporate funds, according to the petition.
Wynn said Feb. 13 that the U.S. Securities and Exchange Commission, following Okada’s lawsuit, had asked the company to preserve information related to the University of Macau donation “in connection with an informal inquiry.”
Wynn Resorts accused Okada of violating U.S. anti- corruption laws and making cash payments and gifts valued at about $110,000 to Philippine gambling regulators, including putting up Philippine Amusement and Gaming Corp. Chairman Cristino Naguiat Jr. in a $6,000-a-day suite in Macau, according to a report prepared for Wynn Resorts and filed Feb. 19 with a lawsuit against Okada in state court in Nevada.
Okada, his associates and companies made three dozen improper payments, including a four-day stay for Naguiat in the most expensive room at Wynn Resorts Macau, according to a 47- page Freeh Sporkin & Sullivan LLP report commissioned by Wynn. The room, known as Villa 81, covers 7,000 square feet, the report said.
The report details 36 charges between May 2008 and June 2011 when Okada, his associates and companies made payments that “directly benefited” senior officials of the Philippine gaming regulator, including two chairmen and their family members. One payment, for $4,642, benefited Jose Miguel “Mike” Arroyo, the husband of former Philippines President Gloria Arroyo, according to the report.
Philippine lawmakers may investigate the gifts received by Naguiat, Congressman Teddy Casiño said by phone in Manila today. Casiño said he will file a resolution to open the inquiry today or tomorrow. There was “nothing inappropriate” about the accommodations, Naguiat said yesterday, calling it an “industry practice.”
Fitch ratings affirmed its ’BB’ issuer default rating on Wynn Resorts, while it revised its outlook on Wynn Resorts to “stable” from “positive,” according to its statement today.
“The major risk is that investigations surrounding the dispute reveal unsuitable conduct with respect to Wynn, thereby jeopardizing its existing gaming licenses, or its potential attractiveness as a bidder in new gaming market opportunities,” Fitch said.
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