Look for regulators to get involved in the battle royal between Steve Wynn and Kazuo Okada, the two founders of Wynn Resorts Ltd., now that allegations of political bribery have surfaced.
The history of Nevada gaming regulators is they don’t look kindly on licensees who
bring gaming into disrepute. And Macau gaming regulators have already indicated their concern with operators in their jurisdiction by questioning practices of both Wynn Macau and the Las Vegas Sands Corp. The latter company has already been cleared of any wrongdoing.
On Sunday, the directors of Wynn Resorts Ltd. (WYNN) dumped Okada from the board and ordered the forcible purchase of Okada’s interest and that of his companies, Universal Entertainment Corp. and Aruze USA Inc., thus freeing the company of all ties to the Japanese investor.
Although the Okada shares had a market value of $2.7 billion, WYNN directors said it would seize the shares at a 30 percent discount and would pay Okada $1.9 billion for the next 10 years, plus 2 percent interest.
Okada responded by saying he planned to take every possible action to prevent the forced buyout, calling the move "outrageous."
The dispute, which resulted in lawsuits from both sides, resulted from Okada’s efforts to get a casino license in the Philippines. According to a year-long investigation by Wynn Resorts, which had hired former FBI director Louis Freeh as its chief investigator, Okada violated the Foreign Corrupt Practices Act (FCPC) by making payments to some Filipino officials in order to gain a casino license.
Based on the report, WYNN directors found that Okada was "unsuitable" for further participation as a company director and major stakeholder. It was expected an effort would be made to remove Okada from his position as a director of Wynn Macau, as well.
Okada’s company has begun construction of a casino in Manila, according to press reports.
In 2000, Okada and Wynn joined forces in forming Wynn Resorts Ltd., with Okada anteing up some $350 million for a 50 percent interest in the new company. Steve Wynn held the other half-interest but was forced to split his holdings with his ex-wife, Elaine, as part of the divorce settlement some three years ago.
Investors appeared to favor the company’s weekend action. In early trading in Hong Kong, Wynn Macau shares rose by 3 percent, while in Tokyo shares of Universal Entertainment fell some 20 percent.
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