Wynn casino sues Japanese partner

The owner of the Wynn Macau casino accused Japanese gambling tycoon Kazuo Okada of paying off Philippine regulators in his bid to build a rival gaming resort in Manila. Las Vegas-based Wynn Resorts said in a lawsuit that Okada, Japan's pachinko king and a director of Wynn, went behind the company's back to build a stake in Asian gaming for his own Universal Entertainment group. Wynn also accused Okada of spending more than $110,000 to curry favor with Philippines officials in apparent violation of the US Foreign Corrupt Practices Act, jeopardizing Wynn's own reputation in the process. The suit, filed Tuesday in Las Vegas district court, said that Okada had sought a gaming license in the Philippines and made the payments despite Wynn's telling him not to do so. "Mr. Okada, his associates and companies appear to have engaged in a longstanding practice of making payments and gifts to his two chief gaming regulators at the Philippines Amusement and Gaming Corporation (Pagcor)," the lawsuit said. It named former Pagcor chairman Efraim Genuino and current Chairman Cristino Naguiat, and their families, as the main recipients of the payoffs and gifts. Okada paid for Genuino's trip to the 2008 Beijing Olympics, Wynn said. "Okada's conduct poses a direct assault upon, and a threat to, Wynn Resorts' reputation for probity, which is central to maintaining its stature in the gaming industry as well as its current and future licensing." The suit was a strong blast against a potentially powerful competitor to Wynn in the high-stakes battle for the lucrative Asian gambling market. Okada, who owns a 19.7 percent stake in Wynn Resorts, is already known as king of Japan's pachinko industry -- a hugely popular gambling business built around a pinball-like arcade game. His Universal Entertainment broke ground last month on its multi-billion dollar Manila Bay resort, saying it was aiming to attract the same VIP Chinese gamblers Wynn has targeted at its five-year-old Macau casino. The suit also accused Okada of paying for trips by South Korean officials to Wynn properties to boost his effort to build a gambling resort at the Incheon Free Economic Zone. The suit came after the Wynn board voted Sunday to expel Okada and to redeem his 24 million shares in Wynn, held through Aruze USA Inc, a Universal subsidiary. The board said it would redeem the shares at a 30 percent discount to the market price, issuing a 10-year, $1.9 billion promissory note for them. Wynn filed the lawsuit after conducting a lengthy internal investigation led by former US Federal Bureau of Investigation chief Robert Freeh, hired to conduct the probe. Wynn said the probe found that Okada had used Wynn's name to advance his own interests in the Philippines. It also said Okada insisted that it was "customary" to give gifts to officials in Asia via intermediaries. Wynn cited 36 separate instances "where Okada or his associates/affiliates made payments exceeding US$110,000 that directly benefited senior Pagcor officials." The investigation report attached to the suit cited mostly free stays and dinners at Wynn resorts in Las Vegas and Macau for the officials, their families, and the husband of former Philippines president Gloria Macapagal-Arroyo. In a February 15 interview with Freeh's investigation, however, Okada denied knowledge of much of the money spent on the officials, and said that Naguiat's 2010 stay in the Wynn Macau resort was to allow the him "to better understand the casino business." In a statement Sunday Universal branded the board's action "outrageous," saying the investigation had been "rushed." "We have not even been provided with the opportunity to review the Freeh Report," it said. "Universal Entertainment will take all legal actions necessary to protect its investment and prevent a forced redemption of its shares." Universal, through Aruze USA, was one of four winners of provisional gaming licenses awarded by Arroyo's government in 2008. It broke ground for its Manila Bay Resorts casino on January 26, promising ultimately more than 2,000 guest rooms in three hotels, with the planned opening in the first half of 2014.