Okada Review Finds Wynn Resorts Probe ‘Deeply Flawed’

An independent review commissioned by Kazuo Okada’s lawyers found that Wynn Resorts Ltd.’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 concluded 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. 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 us of our stake in a company we 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 that 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 Wynn wanted him out because he opposed a $135 million gift to the University of Macau.

Okada, who resigned from Wynn Resorts’ board ahead of a shareholder 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 civil case in which Wynn Resorts accuses Okada of breach of fiduciary duty and Okada seeks to undo the redemption of his shares, insofar as it pertains to the same allegations that are under investigation, according to the filing.

Donation Probe

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

“We stand by the facts and documents set forth in our report, which have not been credibly challenged or contested by Mr. Chertoff’s generalizations and desire for different conclusions,” Freeh’s company, Freeh Group International Solutions LLC, said in an e-mailed statement.

“Due to the ongoing criminal investigation regarding Universal in this matter, we are not able to make any further statement at this time.”

Deanna Pettit-Irestone, a spokeswoman for Wynn Resorts, said in an e-mail that the company wouldn’t comment on the Chertoff review.

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

(Updates with Freeh statement in 10th paragraph.)
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