A Louisiana police fund said it had “established” that a $135 million donation to the University of Macau made by casino billionaire Steve Wynn and other Wynn Resorts Ltd. (WYNN:US) directors was improper and potentially illegal.
The police retirement fund, suing with other Wynn Resorts investors, made the claim in a filing to U.S. District Judge James Mahan in Las Vegas, who dismissed their suit in February saying they didn’t convincingly show that Wynn and his directors had done anything wrong. He said they could try again.
The shareholder suit is based on accusations by former Wynn Resorts director Kazuo Okada, who sued the casino operator over the gift in January 2012. Their proposed amended suit, attached to the filing, cures “the perceived defects” found by the judge, they said yesterday.
The investors don’t allege that Wynn Resorts directors broke U.S. anti-bribery law, only that they knew or should have known the donation might violate the law. They try to show that the board knew when arranging the gift to the Macau university foundation that its members could be influential in pushing for a “fast track” approval of the land concession, enabling the company to proceed with its casino project.
“The Macau foundation had board members with either oversight of Wynn Resorts’ gaming business in Macau by virtue of either their positions in Macau government or connections to Wynn Resorts through other business relationships,” said the investors. “The contribution to the Macau foundation was an improper attempt by the board to influence the procurement of a casino license and constituted an egregious and shocking breach of the board’s fiduciary duties.”
According to the amended suit, Wynn Resorts directors knew or should have known they were making a potentially illegal payment to a foreign university run by a foreign government, seeking favorable treatment. If they didn’t know the law, called the Foreign Corrupt Practices Act, they were “utterly uninformed and detached from the critical fiduciary duties that they are required to fulfill,” said the investors.
The amended suit also tries to link the donation directly to a chain of events that they say damaged shareholders, including a U.S. Securities and Exchange Commission inquiry, lawsuits and $1.9 billion of extra borrowing to buy and cancel Okada’s stake in Wynn Resorts after he faulted the gift.
Alexandra LaManna, a spokeswoman for Steve Wynn, didn’t immediately respond to an e-mail seeking comment on the revised suit.
In May 2011, Steve Wynn and almost all of Wynn Resorts’ board approved the gift to the University of Macau’s Development Foundation. Last May, Macau’s government approved the Las Vegas- based company’s plan to build a $4 billion resort on a 51-acre site on the Cotai Strip.
Okada resigned from the board of Wynn Resorts in February ahead of a shareholder vote on whether to remove him. The vote favored his removal.
The case is Louisiana Municipal Police Employees’ Retirement System v. Wynn, 2:12-cv-00509, U.S. District Court, District of Nevada (Las Vegas).
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