Okada turns tables on Wynn, files countersuit
MANILA, Philippines—The corporate battle between casino giant Wynn Resorts and Universal Entertainment Corp. took a new twist on Tuesday, after the latter sued the Las Vegas-based firm for trying to push the Japanese group out of the partnership through a share buyback at a steeply discounted price.
In a press statement, Universal Entertainment—headed by Japan’s pachinko king, Kazuo Okada—said its suit against Wynn and its owner, Steve Wynn, also included complaints for violations of Nevada RICO (racketeer-influenced and corrupt organizations) statute, federal securities laws and fraud, among others.
“We are taking this action to protect our investment from what we believe to be an unconscionable course of conduct perpetrated by Steve Wynn and the Wynn Resorts board of directors to facilitate Mr. Wynn’s agenda of maintaining his absolute control over Wynn Resorts and in order to enrich himself,” Okada said in the statement.
“Our lawsuit contends that after having lost control of his previous ventures in Las Vegas, Mr. Wynn has undertaken this campaign to suppress dissenting views on the Wynn Resorts board, particularly with regard to Wynn Resorts’ unprecedented, inadequately explained and wasteful $135 million donation to the University of Macau, so that this venture would not end with the same result,” he added.
Okada’s suit comes a few weeks after Wynn Resorts sued the Japanese businessman—formerly a close friend of Mr. Wynn—for alleged corrupt practices, including lavishing favors and gifts on Philippine gaming regulators, specifically ranking officials of the Philippine Amusement and Gaming Corp.
Pagcor officials have dismissed the charges as the result of the ugly boardroom brawl between the gaming giants, adding that free accommodations they received at the pricey Wynn Macau during a 2010 visit was “standard operating procedure” for the leisure and gaming industry.
Pagcor chairman Cristino Naguiat Jr. explained that Wynn’s fight against Okada was likely motivated by the latter’s decision to invest in Pagcor’s Entertainment City project, which the former believed to be a threat to its operations in nearby Macau.
In its complaint, Universal Entertainment said that the Wynn Resorts action removing from its board Okada—the single largest shareholder in the company—constituted an “unjust and improper redemption of shares” owned by Aruze USA Inc. (Universal’s subsidiary), especially since it was allegedly redeemed at a 30 percent discount.”
Universal is seeking “damages, punitive damages and treble damages,” in addition to a “permanent injunction, declaratory relief and multiple claims for damages caused by the actions of Mr. Wynn and the Wynn Resorts board.”
The filings have been made in the United States District Court for the District of Nevada.
“Our counterclaim highlights that the Wynn Resorts board did not exercise any independent judgment or otherwise act in a manner consistent with sound corporate governance principles,” Okada said.
“Rather, the Wynn Resorts board fell in line behind Mr. Wynn and authorized the illegal redemption of Aruze USA’s shares following a hurried and incomplete investigation that lacked sufficient findings and any form of due process in accordance with appropriate governance principles and standards,” he added.
Universal Entertainment’s counterclaim contains allegations, among others, that no redemption of shares has occurred and that there is no legal basis for the redemption.
The counterclaim also contends that the report, prepared by Freeh Sporkin & Sullivan, LLP—a law firm headed by former Federal Bureau of Investigation director Louis Freeh—hired by Wynn Resorts to investigate Mr. Okada, “constitutes an effort to create a pretext to carry out the predetermined judgment of Mr. Wynn by providing a rationale for unjustly attempting to take Aruze USA’s shares in Wynn Resorts at a severe discount.”
