Board Finds Okada-Controlled Entity “Unsuitable”
Board Redeems Okada’s 20% Stake Pursuant to Company’s Articles of
LAS VEGAS--(BUSINESS WIRE)--Feb. 19, 2012--
Wynn Resorts, Limited (NASDAQ: WYNN) today announced that its Compliance
Committee has concluded a year-long investigation after receiving an
independent report detailing numerous apparent violations of the U.S.
Foreign Corrupt Practices Act (FCPA) by Aruze USA, Inc., its parent
company Universal Entertainment Corporation (JASDAQ Code: 6425) and its
principal shareholder, Kazuo Okada. Mr. Okada is a Director of Wynn
Resorts, Limited, and of Wynn Macau, Limited, a majority-owned
subsidiary of the Company.
The Compliance Committee, chaired by former Nevada Governor Robert
Miller, engaged several investigators, including Freeh, Sporkin and
Sullivan, LLP, led by Louis J. Freeh, the former Director of the U.S.
Federal Bureau of Investigation, which conducted a thorough independent
investigation. Freeh’s investigators uncovered and documented more than
three dozen instances over a three-year period in which Mr. Okada and
his associates engaged in improper activities for their own benefit in
apparent violation of U.S. anti-corruption laws and gross disregard for
the Company’s Code of Conduct. These troubling discoveries include cash
payments and gifts totaling approximately $110,000 to foreign gaming
“Mr. Okada and his associates and companies appear to have engaged in a
longstanding practice of making payments and gifts to his two chief
gaming regulators at the Philippines Amusement and Gaming Corporation
(PAGCOR), who directly oversee and regulated Mr. Okada’s Provisional
Licensing Agreement to operate in that country,” according to the Freeh
Report. The report further stated that Mr. Okada and his associates have
“consciously taken active measures to conceal both the nature and amount
of these payments.”
Based on the Freeh Report, presented to the Wynn Resorts Board of
Directors on February 18, 2012, the Board determined that Aruze USA,
Inc., Universal Entertainment Corporation and Mr. Okada are “unsuitable”
under the provisions of the Company’s Articles of Incorporation. The
Board was unanimous (other than Mr. Okada) in its determination. The
Board has requested that Mr. Okada resign as a Director of Wynn Resorts.
The Company will immediately inform the Board of Directors of its Hong
Kong listed subsidiary, Wynn Macau, Limited, of its actions and will
recommend that Mr. Okada be removed from the Wynn Macau Board.
Pursuant to the finding of “unsuitability,” the Board has redeemed Aruze
USA, Inc.’s 24 million Wynn Resorts’ shares. The terms of redemption are
outlined in Wynn Resorts’ Articles of Incorporation, which have been in
place since the Company’s inception. Following a finding of
“unsuitability,” the Articles provide for redemption at “fair value” of
the shares held by unsuitable persons to protect the Company’s gaming
licenses. The Company engaged an independent financial advisor to assist
in the fair value calculation and concluded that a discount to the
current trading price was appropriate because of restrictions on most of
the shares which are subject to the terms of an existing stockholder
agreement. Pursuant to the Articles, the Company has issued a 10-year
$1.9 billion promissory note in redemption of the shares. The note
matures on February 18, 2022 and bears interest at the rate of 2% per
“The Compliance Committee and the entire Board are deeply disturbed by
the behavior of Mr. Okada, and we have fulfilled our obligations to our
stockholders, the State of Nevada and the Wynn community,” said former
Governor Miller. “As Directors of a gaming company privileged to hold
licenses, we have a duty to uphold the highest ethical standards and
comply with the laws and the terms of the licenses upon which our
business depends. Unfortunately, it is very clear from the Freeh Report
that Mr. Okada repeatedly flouted these requirements.”
The Freeh Report is the culmination of a year-long investigation by the
Compliance Committee based on increasing concerns the Board had relating
to the activities of Mr. Okada and Aruze USA, Inc. in the Philippines
and statements made by Mr. Okada to Wynn Resorts’ Directors that gifts
to regulators are permissible in Asia. Mr. Okada is the only Director of
Wynn Resorts who has continued to refuse to sign the Company’s Code of
Conduct or participate in mandatory Foreign Corrupt Practices Act
training for Directors.
Wynn Resorts today filed a lawsuit against Mr. Okada, Aruze USA, Inc.
and Universal Entertainment Corporation in Nevada District Court, Clark
County for breach of fiduciary duty and related offenses.
The Company intends to communicate with the appropriate regulatory
agencies and government authorities on these matters.
The Company will hold a conference call to discuss this announcement on
February 21, 2012 at 6:00 a.m. Pacific Time (10:00 p.m. Hong Kong time).
Interested parties are invited to join the call by dialing (800)
794-8478, or if outside North America, by dialing (706) 643-0974. The
conference call ID is 54978500. A live audio webcast of the event will
be available by visiting http://www.wynnresorts.com.
Source: Wynn Resorts
Samanta Stewart, 702-770-7555
Verbinnen & Co.
George Sard / Paul Kranhold / Charles
212-687-8080 / 415-618-8750 / 310-201-2040