UPDATE: Wynn Macau has officially voted Kazuo Okada off its board of directors.
Japanese tycoon Kazuo Okada doesn’t plan to attend Friday’s special meeting of the Wynn Macau board of directors at which Okada’s removal from the board was to be considered. In a letter to the board obtained by Reuters, Okada said there was little point in his attending as he felt the outcome was a foregone conclusion. However, Okada restated his assertion that the charges made against him by Wynn Resorts chairman Steve Wynn were “false and misleading.” Okada, the head of Japanese pachinko giant Universal Entertainment and Wynn’s single largest shareholder (before being forcibly bought out on Sunday), has been accused by Wynn of bribing Asian gaming regulators with $110k of hospitality and gifts.
CHANEL #110k
One of the Asian regulators named in the investigative report prepared for Wynn by former FBI director Louis Freeh was Cristino L. Naguiat Jr. (pictured below right), chairman of the Philippine Amusement and Gaming Corp. (PAGCOR). Universal is currently constructing a $2b resort casino in Pagcor’s ambitious Entertainment City Manila project. Naguiat has rejected claims that his Okada-funded stay at a $6k/day suite at the Wynn Macau in September 2010 was anything more than standard industry courtesy, telling the Philippine Daily Inquirer that he was “caught in the middle” of “a battle between two tycoons and I’m the collateral damage here.”
Naguiat confirmed that a pricey Chanel bag was delivered to the suite by someone connected to Okada, but Naguiat claims this was a misunderstanding. Upon arriving at the Wynn Macau, Naguiat had offhandedly remarked to an Okada liaison that he hoped to pick up a Chanel bag for his wife during his stay, and Naguiat figures “the staffer was jus trying to impress his guests. In any case, I had the bag returned immediately.” Naguiat noted with some annoyance that this last fact “was not mentioned in the news report.”
PHILIPPINE GOVERNMENT BACKS ITS REGULATOR
Naguiat’s version of events has received the backing of his country’s government. Palace spokesman Edwin Lacierda said the government was approaching this “from a perspective of cutting costs. If, for instance, our Pagcor officials go to the United States for a gaming convention, for any country for that matter, which is primarily more expensive than our standard of living, if they offer accommodation, in effect we are cutting costs. In the same manner, if they are here in the Philippines for a gaming convention, we also reciprocate.” Lacierda added that Naguiat had “never profited from it personally, anyway.”
The other Pagcor regulator named in the Wynn report was former chairman Efraim Genuino, who was at Pagcor’s helm when Okada was awarded the Entertainment City contract. Genuino’s attorney Ramon Esguerra told the Philippine Star that it was impossible for Genuino to have stayed at any Wynn facilities because he hasn’t left the country since 2008, a claim supported by Bureau of Immigration records. As for gifts from Okada, Esguerra says Genuino “did not receive anything.”
There is some controversy surrounding 300 tonnes of rice that Okada donated to the Philippines via his subsidiary Aruze Corp. after Typhoon Frank ravaged the country in 2008. The Inquirer reported that Genuino has been accused of repackaging 3,500 sacks of this rice into bags bearing the campaign slogans and faces of Genuino’s sons, who were running in separate mayoral elections in Laguna province. But this would hardly seem to be Okada’s fault. Regardless, the aptly named Philippine Congressman Teddy Casiño told Bloomberg he would file a resolution to open an inquiry into the Pagcor allegations.
WHEN IN ROME (OR MACAU)
Reuters took a stab at analyzing the likelihood of any of Wynn’s or Okada’s competing lawsuits paying off – at least, in terms of proving violations of the US Foreign Corrupt Practices Act (FCPA) – and returned a verdict of ‘not likely’. Okada’s dealings with Pagcor officials don’t have a clear connection to the US, and Okada’s lawyers are likely to cite the FCPA’s explicit carveout for expenses relating to a company promoting its products or services (under which a weekend at the Wynn would seem right at home). On the flip side, Wynn’s “inappropriate” $135m donation to the University of Macau (which prompted Okada to sue Wynn and the Securities Exchange Commission to open an inquiry) does not technically involve “foreign officials,” which could therefore place it outside the FCPA’s scope.
There are also clear cultural distinctions to be made between the mandates of US law and the intricacies of local customs. Westerners may feel pangs of unease at the practice, but gift-giving in Asia is a routine aspect of business etiquette. Timothy McNally, head of Cambodian gaming outfit NagaCorp, says that when he sees “an envelope passed and I can see cash inside and it makes me a little nervous because it is a different culture, different tradition. Does that mean there is anything sinister attached? There may or may not be.”
THIS IS CHESS, NOT CHECKERS
In his discussion with reporters, Naguiat appeared to suggest Okada’s interest in developing his own casino project in Manila without Wynn as a partner was, in part, to bolster his potential chances of winning a casino contract in Japan (once that country approves the relevant legislation). “If Japan opens casinos, [Okada] can say that he has the experience.” As Wynn also covets a Japanese casino presence, Naguiat suggested Wynn’s motivation in going after Okada was “to hit the credibility of the Pagcor project of Okada.” Returning to the theme of collateral damage, Naguiat lamented that “by destroying the credibility of Pagcor, you’re destroying the credibility of the entire Entertainment City.” Naguiat rejected suggestions that the brouhaha had jeopardized Okada’s Manila project “as of now,” stating that Okada’s bigger concern was “to look for a Filipino partner.” Just to be on the safe side, Okada may also want to keep a sharp lookout in the rearview mirror for Steve Wynn sneaking up behind him.
