(Updates with analyst comment in fourth paragraph.)
Feb. 24 (Bloomberg) -- Wynn Resorts Ltd.’s Macau unit ejected Japanese billionaire Kazuo Okada from its board and Philippine President Benigno Aquino ordered a probe into payments allegedly made to the nation’s top gaming regulator.
Wynn Macau Ltd. cited “unacceptable conduct” by Okada for the board’s decision to remove him as a non-executive director, in a statement to the Hong Kong stock exchange today. A cabinet committee will investigate Philippine gambling regulator Cristino Naguiat, Aquino told reporters in Manila.
Okada, 69, improperly gave more than $110,000 in payments and gifts to regulators in the Philippines and their families, Wynn Resorts said in a Feb. 19 statement, when it forcibly sold the stake held by Okada’s Universal Entertainment Corp. His removal and the redemption escalated a clash between founder and Chief Executive Officer Stephen Wynn and the man who helped bankroll his company starting 12 years ago.
“We believe we are at the beginning, not the end, of this dispute,” Aaron Fischer, head of consumer and gaming at CLSA Ltd., said by e-mail from Hong Kong. “I think the ouster was a formality after his shares were redeemed. If Wynn can maintain the current outcome, then this would be extremely positive for Steve Wynn and his other shareholders.”
“The board determined that it was obligated to remove Mr. Okada as a non-executive director given the unacceptable conduct by Mr. Okada, his employees and associates,” Wynn Macau said in a Hong Kong stock exchange statement today.
As chairman of Universal, which owned 20 percent of Wynn Resorts, Okada vowed to fight Wynn in court. On Feb. 19, Wynn said its investigation had determined Okada was “unsuitable” as a board member of Wynn Resorts. The casino operator then gave Universal a $1.9 billion 10-year promissory note, forcibly redeeming its 19.65 percent stake worth about $2.77 billion yen at the market price.
In a letter addressed to Wynn Macau’s directors yesterday, Okada said he wouldn’t attend today’s meeting to discuss his removal.
“I disagree with the decision to remove me as a director because it is based on false and misleading assertions,” Okada wrote in the letter dated yesterday. The meeting’s result is predetermined so attendance “would therefore be futile,” he said.
Aquino said today at a cabinet committee that the investigation of Naguiat, who allegedly received free hotel accommodations including a $6,000-a-day suite through Okada, will give the regulator a chance to tell his side of the story.
Naguiat “will be asked to explain himself,” Aquino told reporters in Manila.
“The least that Chairman Naguiat should be able to expect is he gets a fair hearing,” Aquino said. “Let’s have the allegations, let him answer it, then we will weigh the allegations versus his defense of actions or lack of actions.”
Accepting free accommodations is “industry practice,” Edwin Lacierda, Aquino’s spokesman, said in a briefing on Feb. 21. “There is no conflict of interest in that sense.” Lacierda also said at the time that Aquino was satisfied with Naguiat’s explanation.
Naguiat earlier this week said he had done “nothing inappropriate.”
Okada and his associates and companies made three dozen improper payments between May 2008 and June 2011, including one for a four-day stay for Naguiat in the most expensive room at Wynn Resorts Macau, according to a 47-page report commissioned by Wynn. The room, known as Villa 81, covers 7,000 square feet, the report said.
One payment, for $4,642, benefited Jose Miguel “Mike” Arroyo, the husband of former Philippines President Gloria Arroyo, according to the report.
Universal Entertainment shares fell 1 percent to 1,781 yen at the 3 p.m. close of trade in Tokyo, while Wynn Macau rose 1 percent to HK$19.90 as of 3:27 p.m. in Hong Kong.
“We’ll look at it from all perspectives and take legal action,” Nobuyuki Horiuchi, a Universal Entertainment spokesman, said today by telephone, after the Wynn Macau announcement it had ousted Okada from its board.
--Stephanie Wong and Joel Guinto, with assistance from Cheng Herng Shinn and Shunichi Ozasa in Tokyo and Anjali Cordeiro in Hong Kong. Editors: Stephanie Wong, Dave McCombs
To contact the reporters on this story: Stephanie Wong in Shanghai at firstname.lastname@example.org; Joel Guinto in Manila at email@example.com
To contact the editor responsible for this story: Stephanie Wong at firstname.lastname@example.org