The beginning of what could become a lengthy legal struggle was launched last month when Wynn Resorts former Vice Chairman Kazuo Okada filed suit in Clark County, Nevada court, charging that some key financial records of the company have been kept from him. Okada charged specifically that data concerning a 5 million contribution from Wynn Resorts to the University of Macau has not been produced.
Okada indirectly owns almost 20 percent of the company and is the largest shareholder, owning twice as many shares as Chairman Steve Wynn. He invested $260 million when the company was formed in 2000 and another $120 million in 2002 when the company’s Macau venture was launched. Following his 2009 divorce, Wynn owns less than 10 percent of the company.
According to the lawsuit, Okada objects to the University of Macau donation, which will be paid $25 million upfront and $10 million for the next 10 years. He claims documents related to the donation have not been shown to him, despite numerous requests.
Okada, meanwhile, has been busy in the gaming industry on his own. He is the owner of Universal Entertainment, which controls the U.S.-based Aruze Gaming and is developing an integrated resort in Manila at PAGCOR’s Entertainment City. Okada’s removal from the board was directly related to this project, which Wynn considers competitive, although Okada claims that he and Wynn visited Manila in 2010 to consider a project together. When Wynn declined to participate, Okada went ahead alone.
Okada was removed as vice chairman of the board at the October board meeting (although the company has yet to report that fact to the Securities and Exchange Commission), citing irregularities in the acquisition of the Manila gaming license and the need to insulate Wynn Resorts from any alleged wrongdoing. Okada denied any issues in Manila, or in Japan, where Universal is one of the largest manufacturers of pachinko machines in the country.
Okada’s lawsuit, Global Gaming Business sources say, is in retaliation for that action. In addition, the lawsuit claims that following the Wynn divorce, a shareholder amendment was put it place that “purports to impose restrictions on the shares of Wynn Resorts owned by Aruze USA (a subsidiary of Universal) and Ms. Wynn and confirm the ability of Mr. Wynn to exercise certain rights in respect of such shares.”
In a press release, the company says it will vigorously defend itself.
“This action is an attempt by Mr. Okada, who was removed as vice chairman of the company in October of 2011, to deflect attention from a dispute between Mr. Okada and the board of directors of Wynn Resorts related to Mr. Okada’s decision to directly compete with the company by pursuing a project in the Philippines despite repeated admonishments from the board,” the release said. “The dispute also involves Mr. Okada’s misuse of his director position to imply the company’s participation in projects that the company had made firm decisions to avoid.”
Universal responded in kind.
“Steve Wynn and the Wynn Resorts board of directors continue to prefer secrecy over transparency,” the company said in its release. “Despite the court petition and repeated requests by Mr. Okada to inspect the company’s books and records, the Steve Wynn-controlled board still refuses to comply,” Okada’s company said in a statement.
