internationalcasinoreview News INTERNATIONAL Kazuo Okada is
fighting the allegations of wrongdoing
Steve Wynn objects to Okada’s investment in the Philippines
badblood UNITED STATES
The board of Wynn Resorts ousted the company’s prin- ciple shareholder Kazuo Okada from among its number on February 24 and is attempting to redeem his 20 per cent stake in Wynn, which Okada holds through his company Aruze USA, a subsidiary of Universal Entertainment. In fact, Okada still officially remains a member of the board until a shareholder meeting can be convened to ratify the board’s decision. The Wynn board has issued a promissory note to the tune of $1.9bn (E1.4bn) over ten years with interest at two per cent in exchange for the shares,
which
because of some restric- tions, it has taken back at a 30 per cent discount. That move is likely to be subject to a lengthy battle. Wynn Resorts said it took
the move after its Compli- ance Committee concluded a year-long investigation into certain activities of Aruze, Universal and Okada, which, it says, are apparent viola- tions of the US Foreign Corrupt Practices
their own benefit in appar- ent violation of US anti-cor- ruption laws and gross disregard for the company’s code of conduct. These trou- bling discoveries include cash payments and gifts totalling approximately $110,000 (E82,600) to foreign gaming regulators.” According to the Freeh
Act
(FCPA). The investigation resulted in a report by former FBI director Louis Freeh. The company said:
“Freeh’s investigators uncovered and documented more than three dozen instances over a three-year period in which Mr Okada and his associates engaged in improper activities for
report: “Mr Okada and his associates and companies appear to have engaged in a longstanding practice of making payments and gifs to his two chief gaming regula- tors at the Philippines Amusement and Gaming Corporation (Pagcor), who directly oversee and resulted Mr Okada’s Provisional Licensing Agreement to operate in that country.” Universal has said it will
take all legal action neces- sary. On February 19 it issued a statement saying: “It is unfortunate that Wynn Resorts Board of Director has decided to operate as a Star Chamber and not like a board of a publicly traded company protecting the interests of stockholders. The decision…which fol- lowed a rushed investiga- tion that lacks absolute findings, to redeem Univer- sal Entertainment’s nearly 20 per cent holdings in Wynn Resorts based on its project in the Philippines is outra- geous. We have not even been provided with the opportunity to review the Freeh report.” On February 21, it added:
“We believe the allegation levelled against Universal
Crown doubles its Echo stake
doublecrown AUSTRALIA
Crown Limited, Australia’s biggest earning casino operator led by James Packer, doubled its stake in Echo Entertainment to ten per cent on February 24. Echo, the casino owner and operator formed after the demerger of Tabcorp has been seen as a likely acquisition target ever since its formation in June 2011. Crown said in a statement that it had paid A$256.6m (E204m) for the additional 5.1 per cent stake in the business and it said it would also
2 March 2012 • internationalnews
Star City is jewel in Echo’s crown
seek government approval to go beyond the ten per cent mark. Analysts say that a full takeover of Echo by Crown would cost in excess of $2.6bn (E2.1bn) and would almost certainly lead to an investigation by the competition authorities. Echo owns and operates four casinos, three in Queensland and Sydney’s Star Casino, plus two convention centres. Crown owns the Crown Casino in Melbourne and the Bur- swood in Perth - it is also a one-third partner the now highly remunerative Melco Crown operation in Macau. The news of ownership move-
ment came on the same day that both companies released half-year results. Crowns profits minus excep- tionals rose 27 per cent to A$211.6m (E168.2m), with a great deal of input from the Macau business. The company said that activity in Aus- tralia remains relatively low, however gaming revenues at both casinos were up 5.5 per cent, while rolling chip volume in the VIP rooms was up almost 28 per cent. Echo for its part reported revenue
growth of 16.5 per cent to A$908.2m (E722m) resulting in profit of A$70.2m (E55.8m)
Buffett gains Bossier City approval Singer/Songwriter Jimmy Buffett began construction of what will be his third Margaritaville branded casino venue on February 29 after getting final approval for resort in Bossier City, Louisiana. The 396-room hotel with 1,300 slot machines and 46 tables is expected to open in June next year with, of course, an It’s Five O’Clock Somewhere bar, which features in his Las Vegas Strip casino opposite Caesars Palace and will feature in the Biloxi venue due to open later this year.
Wynn and Okada in messy public divorce
Once friends, now they are enemies. Steve Wynn, chairman and CEO of the company that bears his name, and his largest shareholder Kazuo Okada, are throwing lawsuits at each other over allegations of malpractice and corruption: but competition between the Philippines and Macau is at the heart of the matter
are motivated by self-inter- est… Universal believes the entire process has been tainted by the desire to serve Steve Wynn’s predetermined goal of removing Aruze USA as the largest stockholder of the company.” The relationship between
Steve Wynn and the Japan- ese billionaire Kazuo Okada, who has been an investor in Wynn for 12 years, has been gradually deteriorating, with the latter investing in a major operation in the Philippines: Wynn believes that casino expansion in Manila will have a negative impact on Macau. In January, Okada filed a lawsuit against Wynn for apparently blocking financial information about a donation of $135m (E101m) to the University of
Macau, which Okada
strongly objected to. According to some ana-
lysts, the weapons being used by both sides in their battle are fairly flimsy: the US FCPA has in the past been a notoriously difficult piece of legislation to enforce. Cristino Naguiat, head of Pagcor, has issued a state- ment denying he accepted bribes and that he had been offered only hospitality and security during visits to Macau for meetings. Gifts are also, in Asian cultures, an acceptable part of the confi- dence building process in business relationships. Simi- larly, large corporate dona- tions to educational establishments are also par for the course in the US and many other companies.
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