A judge ordered Wynn Resorts Ltd. (WYNN) was to produce two more pages of documents for Kazuo Okada, the casino operator’s director whose 20 percent stake in the company Wynn forcibly redeemed alleging he was “unsuitable.”
Nevada state court Judge Elizabeth Gonzalez at a hearing yesterday in Las Vegas said Okada should get the additional pages regarding a University of Macau donation. The judge rejected a request to order Wynn to produce additional papers from before the company went public or documents regarding an amended stockholder agreement that resulted from Chief Executive Officer Steve Wynn’s divorce.
Okada sought a court order that, as a director, he is entitled to inspect Wynn’s books and records regarding its HK$1 billion ($129 million) pledge last year to the University of Macau. At a Feb. 9 hearing, Gonzalez said she would order Wynn to produce the documents if she found that Okada’s request was “reasonable” and that Wynn had refused to provide them.
Okada, a billionaire, held the largest single stake in Wynn through his Tokyo-based Universal Entertainment Corp. (6425) He brought the case in January, claiming the company hadn’t provided information he requested about the University of Macau pledge, or about the use of $120 million he invested in 2002 and the amended stockholders agreement.
“To ask Wynn officials to go through warehouses for every record from 2000 to 2002 was unreasonable,” Kirk Lenhard, a lawyer for Wynn, said at yesterday’s hearing. Wynn said in a court filing March 7 that it has already provided Okada with more than 900 pages of the requested documents.
Charles Sipkins, a spokesman for Wynn, declined to comment on the judge’s decision after the hearing.
“The court admits that Okada has the right to see documents as a director,” said Nobuyuki Horiuchi, spokesman for Universal Entertainment, when reached by phone today. “Universal Entertainment continues its own investigation and asks Wynn to disclose more detailed documents.”
The stock redemption and Wynn’s announcement March 7 that it will seek to remove Okada as a director escalated a clash between Steve Wynn, the company’s founder, and Okada, who helped bankroll Wynn Resorts starting 12 years ago.
Wynn’s lawyers said in a court filing March 7 that the company has produced all non-privileged documents that could “reasonably relate” to Okada’s responsibilities as a director. Were the judge to issue an order for Wynn to produce more documents, the lawyers asked that she delay the order for 60 days because Okada may no longer be a director then.
Wynn called March 7 for a special shareholders meeting to vote on ejecting Okada as a director following a Feb. 18 decision by the board that Okada and certain affiliates are “unsuitable persons,” according to a company statement.
The shareholder vote is set to take place in late April or early May, Wynn said in a court filing.
Gidon Caine, a lawyer for Okada, said at yesterday’s hearing that “important” documents from Wynn’s donation to the University of Macau were still missing from the ones Wynn had turned over, including ledgers of money spent on meals and lodging for university officials.
Caine said he wanted those documents to make sure Wynn hadn’t violated corruption laws.
The company last month redeemed Okada’s 24 million shares for $1.9 billion. An investigation found that Okada appeared to have paid $110,000 to gaming regulators in the Philippines in violation of U.S. anti-corruption laws, Wynn said.
Macau’s gambling regulator said March 7 that it has started probing Wynn’s allegations about Okada. The Chinese city’s Gaming Inspection and Coordination Bureau didn’t disclose details of the investigation.
In a separate lawsuit filed Feb. 19, Wynn alleged that Okada is developing two casinos and three hotels in Manila and that he seeks to lure “high-limit, VIP gamblers” from China in direct competition with Wynn’s casino in Macau. Construction on the Manila Bay casino resort started Jan. 26, Wynn said in its complaint.
Okada’s interest in seeking access to Wynn’s books and records was an attempt to divert attention away from his own misconduct in the Philippines, Wynn said in the complaint.
Universal Entertainment said in a statement March 7, in response to the planned shareholder vote to remove Okada, that Steve Wynn and Wynn’s board of directors were subverting the corporate governance process “to carry out the predetermined judgment of Mr. Wynn.”
“In attempting to unjustly remove Mr. Okada, Mr. Wynn is exerting his control over the board to silence any dissent and to divert attention from the questions surrounding the company’s use of stockholder money,” Universal Entertainment said. “Mr. Okada is committed to protecting his interests and intends to take the appropriate actions to do so.”
Okada said in his Jan. 11 court petition for a ruling to inspect Wynn’s books and records that he had objected to the May 2011 pledge to the University of Macau Development Foundation. The pledge appeared to be unprecedented in the university’s history and there had been no discussion about whether the gift was an appropriate use of corporate funds, according to the petition.
Wynn said Feb. 13 that the U.S. Securities and Exchange Commission, following Okada’s lawsuit, asked the company to preserve information related to the University of Macau donation “in connection with an informal inquiry.”
The case is Okada v. Wynn Resorts, A-12-654522, Clark County, Nevada, District Court (Las Vegas).
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