Kazuo Okada, the Japanese billionaire Wynn Resorts Ltd. (WYNN:US) wants to remove from its board, asked the directors to investigate company Chairman Steve Wynn’s actions to obtain a concession for a new casino in Macau.
Okada said in a Jan. 24 letter to the board, filed in federal court in Las Vegas, that documents he reviewed about the underlying agreements for the Cotai project raise “serious questions about the propriety of the actions taken by Mr. Wynn, the company, and its affiliates in pursuing” it.
Wynn Resorts, based in Las Vegas, is asking shareholders to vote Okada off its board of directors at a special Feb. 22 meeting. The casino operator last year forcibly redeemed Okada’s 20 percent stake in the company for a $1.9 billion promissory note payable in 10 years, saying improper payments to Philippine gaming regulators made him unsuitable.
Okada, who is fighting the redemption of his shares in court, filed a lawsuit Jan. 24 to block the shareholder meeting.
Wynn Resorts in May received approval from the Macau government to build a $4 billion resort on a 51-acre site on the region’s Cotai Strip. Wynn said the resort, which will highlight pieces from the company’s Chinese art collection, will “surely be the fanciest we’ve ever done.”
University of Macau
Okada claims Steve Wynn wants to remove him from the board because in 2011 he objected to a $135 million donation to the University of Macau Development Fund. The chancellor of the university has “ultimate oversight over gaming matters in Macau,” Okada said in the letter to the board. Okada has noted in previous filings that Macau’s chief executive also serves as university chancellor.
“One month later, the company’s Cotai project in Macau received the land concession it had been seeking for five years,” according to Okada’s letter.
Okada said he couldn’t verify the authenticity of the Cotai documents that he said “detail a series of highly suspicious transactions.”
Among the documents is a 2006 joint-venture agreement providing that a Wynn Resorts affiliate will pay a $35 million “finders fee” and a 12.5 percent interest in the company that would own the Cotai resort to a business called Tien Chiao upon the award of the Cotai concession, according to Okada’s letter.
Tien Chiao appears to be owned by Ho Ho, an unidentified individual, and Cliff Cheong, a person connected to former Macau Chief Executive Edmund Ho, according to the letter. Tien Chiao wasn’t required to make a capital contribution to the joint venture and wasn’t obligated to do anything else, Okada said.
In a 2008 agreement, Tien Chiao relinquished its rights in return for a $50 million payment when the Cotai concession would be officially publicized by the Macau government, Okada said.
Wynn Resorts’ public disclosures about the Cotai transaction only name an “unrelated third party” that agreed to relinquish its rights to part of the land in Cotai in exchange for $50 million, according to Okada.
“This and subsequent disclosures by Wynn Resorts appear to give the impression that the unnamed and ‘unrelated third party’ had rights in the Cotai parcel, which I understand is owned by the government of Macau, when in fact the Cotai documents, if authentic, appear to show that the only rights the ‘unrelated third party’ had were rights created by its joint-venture agreement with the company’s affiliates,” Okada said.
Wynn Resorts said in a statement that Okada’s letter to the board is “the latest ploy in Mr. Okada’s increasingly desperate campaign to divert attention from the real issue —- his misconduct as a director of Wynn Resorts.”
The case is Okada v. Wynn Resorts, 13-00136, U.S. District Court, District of Nevada (Las Vegas).
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