Philippine Authority Says Okada Faces FBI Probe on Permit
Japanese billionaire Kazuo Okada faces a U.S. Federal Bureau of Investigation probe, adding to a Philippines justice department inquest into how he got a casino permit, the chairman of the Asian nation’s gambling authority said in an interview.
The FBI wants to know the process Okada used to obtain his license, the tax benefits given to him and the flow of funds involved, said Cristino Naguiat, chairman and chief executive of the Philippine Amusement & Gaming Corp. gambling authority.
“We haven’t engaged in wrongdoing,” Nobuyuki Horiuchi, spokesman at Okada’s Universal Entertainment Corp., said yesterday by phone.
Okada holds one of four casino licenses the Philippines awarded in 2008 and 2009 to build and operate a Manila gambling and entertainment complex the government is developing to compete with Macau and Singapore. A Hong Kong affiliate of Universal Entertainment paid at least $30 million to a Philippine consultant, while seeking tax breaks and ownership waivers on the Philippine gambling license, Reuters reported in November, citing former Universal employees and company records.
“We were informed of the FBI investigation and we are always open to agencies that would like to investigate,” Naguiat said in a Manila interview yesterday. Okada, Universal’s chairman, could lose his gambling license should the Philippines justice department probe uncover wrongdoing, he said. Okada also owned about 68 percent of the Tokyo-based company through Okada Holdings as of Sept. 30, according to data compiled by Bloomberg.
Universal Entertainment dropped 3.4 percent, the biggest decline since Dec. 6, to 1,545 yen at the close of trading in Tokyo. The broader Topix index fell 2 percent. Robinsons Land (RLC) Corp., Philippines billionaire John Gokongwei’s development company and partner with Okada casino partner, fell 2.7 percent to 21.3 pesos as of the close in Manil.
The Philippine justice department is also investigating bribery allegations against Okada, presidential spokesman Edwin Lacierda said Nov. 19. Bridget Pappas, a Las Vegas-based FBI spokeswoman said by e-mail the bureau follows a policy of neither confirming nor denying the existence of investigations.
Universal said on Jan. 7 said that it formed an independent panel to look into reports by Reuters and Japan’s Asahi newspaper that the company made illegal payments to benefit the Philippine casino resort.
“We haven’t received any detailed report from our Philippines unit as to what sort of contact the FBI made to our company,” Horiuchi of Universal said. “If the FBI contacts us in the future, we plan to fully cooperate with the investigation.”
Universal filed a lawsuit Dec. 4 in Tokyo District Court against Thomson Reuters, calling the newswire’s article about illegal payments a “fabrication” and seeking 200 million yen ($2.3 million) in damages.
Okada amassed a fortune making machines for pachinko, an upright pinball game played as a form of gambling in Japan. He was also an early backer of Wynn Resorts Ltd. (WYNN) until last year, when Wynn seized his almost 20 percent stake at a 30 percent discount to market value and accused the Japanese magnate of “improper payments” to officials in the Philippines.
Okada has sued Wynn in the U.S. and Japan, while the Las Vegas-based casino operator removed Okada from the board of its Macau affiliate and has vowed to oust him as a director of the parent company at a special shareholder meeting Feb. 22.
Clark County District Judge Elizabeth Gonzalez, at a Jan. 15 hearing in Las Vegas, denied Okada’s request to dismiss Wynn Resorts’ claims that he breached his duty as a corporate director.
The Philippines is counting on Okada’s project and three other gambling developments, collectively known as Pagcor Entertainment City, to boost tourist traffic that lags regional neighbors including Indonesia and Thailand.
Naguiat said the country won’t be stopped by the bribery allegations against Okada in meeting its goal of joining neighbors Macau and Singapore as Asia’s gambling centers.
“There were negative feedbacks and people were expecting it,” Naguiat said. “But then analysts are bullish and positive on the future of Entertainment City. We have to move forward and let us not be stopped by” the issues on Okada.
The opening of these casino resorts, scheduled at about one a year in the next four years, will increase the nation’s gaming revenue to $10 billion by 2016 or 2017, from about $2 billion in 2012, Naguiat said.
The nation’s tourist attractions and beaches will help the country compete with Singapore and Macau, which don’t have the same resources in drawing players in the region, Naguiat said. “We offer a complete package,” he said.
The Chinese market is “critical” for gaming revenues to reach $10 billion in three to four years, Naguiat said. Chinese players will account for about 20 percent of the nation’s gaming revenues then, he said.
The bribery allegations have not stopped other casino operators from expressing interest in obtaining Philippine gaming permits, according to Naguiat.
Galaxy Entertainment Group Ltd. (27) and SkyCity Entertainment Group Ltd. (SKC) and a couple of Las Vegas-based casinos are among those that expressed interest since the bribery allegations involving Okada erupted, he said.
Amid the bribery allegations, Universal in December partnered with Gokongwei to build the $2.3 billion gaming resort complex in Manila, which includes luxury hotels, restaurants, commercial facilities, a budget hotel and residences. Partner Robinsons Land said Dec. 20 the complex will be completed in 2014.
Okada competitors include Philippine billionaire Andrew Tan and Genting Hong Kong Ltd. (GENHK), which plan to jointly open a local casino in 2016. Philippine billionaire Henry Sy and Melco Crown Entertainment Ltd. (6883) are set to start another one in 2014.
The Philippines drew 2.14 million tourists in the first half of 2012, trailing Thailand’s 10.5 million, and Indonesia’s 3.87 million, according to government data.
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