Trouble is brewing inside Japanese gaming conglomerate Universal Entertainment Corp. as the company launches a probe into founder and chairman Kazuo Okada and another director over JPY2 billion (US$18.15 million) illegal fund outflows from its Hong Kong-based subsidiary.
Universal announced before the Japan Association of Securities Dealers Automated Quotation (Jasdaq) that the firm has suspended the leadership of Okada and Yoshinao Negishi, director and general manager of Universal’s Administrative Division pending the ongoing investigation.
According to Universal, there is a possibility that Okada and Negishi committed fraudulent acts when a loan amounting to HKD135-million ($17.3-million) was transferred to third party from Tiger Asia Resort, ltd on March 20, 2015.
The statement says that all but HK$5 million of the loan was subsequently transferred to Okada Holdings Limited, a company controlled by Okada and his son, and that the purpose of the loan was “to achieve personal benefit for Chairman Okada.”
“Recently, it has been found out that there is a suspicion that certain directors of the Company illegally outflowed approximately 2 billion yen from one of the subsidiaries of the Company without going through proper internal decision-making process,” Universal said in a statement. “In response to this, the Company suspended all the rights and authorities previously held by Chairman Okada and Director Negishi with regard to the business execution and commanding in the Company, its subsidiaries and affiliated companies… As a result of this investigation, a serious violation of governance was discovered.”
Following the discovery, Universal has created a three-member Special Investigation Committee, led by former Tokyo prosecutor Michio Masaki. The two other members are Sotaro Matsuo and Miya Fukayama.
The committee, according to Universal, will conduct a thorough investigation from a professional and objective viewpoint on the case and will submit an interim investigative report to the company on or before June 30.
Universal assured shareholders that the illegal loans have no impact on the company’s finances even if it wasn’t able to collect the funds.
This is not the first time that Okada had been accused of irregularities in relation to his business dealings.
The Japanese casino mogul was ousted as director of US casino operator Wynn Resorts in 2012 on allegations that he violated US anti-bribery laws when he treated Philippine gaming officials to fancy meals and drinks while in Las Vegas and Macau. Okada then denied the allegations.
Separate from the issue was the alleged $40 million payment to a Manila-based consultant in 2010. The Federal Bureau of Investigation then launched an investigation on whether the money was used to bribe Philippine officials in order to get tax and ownership concessions for the new Okada Manila integrated resort.