Gaming | Okada suspended from board over alleged HKD135m illegal payment

Kazuo Okada

Daniel Beitler*

In a note posted yesterday to the JASDAQ Securities Exchange, Tokyo-based Universal Entertainment Corporation revealed their “suspicion” that the company’s chairman and director illegally outflowed HKD135 million from a subsidiary of the company to an external third party in March 2015.

The revelation has led to the immediate suspension of all rights and authorities commanded by the company’s chairman, Japanese billionaire Kazuo Okada, who is currently locking horns with U.S. casino magnate Steve Wynn over alleged illegal payments made to Asian gaming regulators.

No information released yesterday suggested that the suspected illegal outflow is in any way connected to the court battle between Okada and Wynn. The initial lawsuit in the Wynn-Okada dispute was filed in early 2013.

According to the note, reviewed by MDT,  a report surfaced during a May 23 extraordinary board meeting of the company, highlighting the “possibility that fraudulent acts were carried out.”

It said that a loan, which had circumvented “a proper internal approval process,” had been extended from Tiger Resort Asia Ltd., a Hong Kong subsidiary of the company, to a third party and was processed by Okada and the organization’s director and general manager of administration, Yoshinao Negishi.

The loan amounted to HKD135 million, according to the company, HKD130 million of which “was subsequently transferred by a person affiliated with the third party to Okada Holdings Ltd., a company where Chairman Okada held a position of director at that time.”

The report suggested that “the purpose of the loan was to achieve personal benefit” for Okada. As a result, both Okada and Negishi have had their rights and authorities suspended.

Universal Entertainment Corporation also announced that it is establishing a special investigation committee to “conduct a thorough investigation from a professional and objective viewpoint […] and to formulate measures to prevent reoccurrence.”

The company clarified that the investigation committee will comprise three investigators, headed by Michio Masaki, a former public prosecutor in the Tokyo district.

As for the HKD135 million that was allegedly outflowed from the subsidiary in violation of established procedures, Universal Entertainment Corporation said that it already has a strategy for recouping the funds. However, should this prove not to be possible, “there will be no impact on the company’s business performance,” it said. 

Okada, who once owned a 20 percent stake in Wynn Resorts, was expelled from the Nevada-based company after he was accused of making improper payments to Asian gaming regulators.

The Japanese billionaire denied that any payments or gifts were illegal, but that did not prevent Wynn from forcibly redeeming Okada’s 20 percent stake for about USD1.9 billion (MOP15.26 billion), considered a 30 percent discount on its actual market value.

A court battle between Wynn and Okada is ongoing over the matter. The former has asked the district court of Clark County, Nevada to validate the sale of Okada’s stake at a discount, while the Japanese billionaire is fighting to restore his stake. Okada is also claiming that his ouster from the company was unjustified. 

*with Paulo Coutinho