Okada's Manila tour a defining moment in feud with Wynn


HONG KONG -- Steve Wynn stepped off his private jet at Manila airport in June 2010 to be greeted by the Philippines gaming regulator. On the tarmac, too, in black wraparound sunglasses and trademark 1950s-style, slicked-back hair, was Japanese slot-machine billionaire Kazuo Okada.

Okada, 69, wanted the chief executive officer of Wynn Resorts Ltd. to join his $2 billion casino and hotel project on Manila Bay. Wynn, his future wife, Andrea Hissom, and Wynn Resorts Chief Operating Officer Marc Schorr toured a hotel, shopping mall and casino showcasing Manila's investment potential, and sat through a presentation on the new project, photographs show.

That visit proved pivotal for Okada's ambition to create an Asian casino empire -- only not as he had hoped, he said in an interview last week detailing how his 12-year alliance with Wynn soured. Philippines regulator Efraim Genuino was indicted in an ongoing graft case. By the fall, Wynn was focusing on Okada's Philippines activities, removing him as vice chairman last year and forcibly buying his $2.77 billion stake last month at a 30 percent discount.

During three hours at his office in Hong Kong's Tsim Sha Tsui district, Okada laid out his version of the split with Wynn, whose business he helped revive in 2000. It's a story at odds with the Wynn-commissioned report that catalogs more than $110,000 in hotel rooms, meals and gifts for gaming officials and their associates that Wynn's lawyers said may have breached U.S. law, making Okada unsuitable as an investor.

A MATTER OF TRUST

"They gave the board the report without letting me review it," said Okada, founder of Tokyo-based Universal Entertainment Corp. "Even criminals would be asked to sign off on the findings to ensure there are no mistakes."

Okada said he is gathering evidence to show the report was riddled with errors and exaggerated standard industry practice as a pretext to eliminate a man Wynn, 70, had come to regard as a threat. He said he intends to clear his name and regain his 20 percent stake in Wynn Resorts.

Wynn Resorts also alleges Okada broke its code of conduct by trying to set up a casino to rival its operation in Macau -- that Okada planned "to lure high-limit, VIP gamblers from China" to Manila "in direct competition with Wynn Macau."

A shareholder agreement bars Okada from investing in casinos in Macau and Nevada, regulatory filings show. There is nothing to stop Universal from expanding elsewhere, Okada counters. What is more, everything was done to further the partnership with Wynn and for their mutual benefit, he said.

"I believe that business by nature is about trust, contracts are a last resort," Okada said. "That may be a difference between Western and Asian countries."

Okada won one of four provisional gaming licenses in the Philippines in 2008. After Wynn's compliance committee advised the group to steer clear of the country because of corruption concerns, "Okada was unrelenting" and in February 2011 "repeated his oft-uttered request that Mr. Wynn travel to the Philippines to explore investing in Universal's Manila Bay project," according to court papers filed in Nevada.

The photographs show Wynn had already been there, with Hissom and Schorr, on June 14, 2010. Wynn was "very interested" and asked to meet with President Benigno Aquino, Okada said.

A 'FOOLISH' MOVE

In a 2008 statement, Universal said it "intends to enlist the full cooperation of Wynn Resorts Ltd.'s Steve Wynn" to develop the project. Okada said he wanted Wynn to join in any gaming business.

Okada pushed for Wynn to meet with Aquino and was "embarrassed and angry" when told to cancel, the court document said. Okada said Wynn was "foolish" to turn his back on the Philippines project, which he expects to rake in about $3.5 billion in revenue in its first year of operation.

For Okada, the growing number of governments in the region that plan to introduce casinos offers a chance to diversify away from Japan, where Universal's operating profit peaked in 2000. He said he has also bought land in Siem Reap, Cambodia, and has held talks with South Korean officials about a $3 billion casino project near Incheon Airport.

Wynn Resorts sees gaming expansion as a risk.

"If current efforts to legalize gaming in other Asian countries are successful, our Wynn Macau resort will face additional regional competition," the company said in its annual report last week.

In January, Okada turned hit back at Wynn, filing a lawsuit in Nevada to force more disclosure on a $135 million donation to the University of Macau that he said hasn't been sufficiently explained. Wei Zhao, the university's rector, in a Feb. 29 interview, declined to give a detailed breakdown of how the money would be spent.

The U.S. Securities and Exchange Commission last month requested information on the donation, Wynn Resorts said in its annual report. Okada's court action was an attempt to distract attention from his own conduct, Wynn said.

With hindsight, Okada said he now suspects Wynn may have harbored a desire to get rid of him as early as 2002, when he unilaterally approved the articles of incorporation for the company before its initial public offering.

But Wynn couldn't afford to get rid of him before expansion into Macau, Okada said.

"He saw his chance when Macau proved to be a success and started to feel like he was on top of the world around mid-2010," Okada said.

MISUNDERSTOOD CHANGE

Okada said he wasn't aware of the 2002 amendment that included a clause giving the board powers to declare a person unsuitable and forcibly redeem their shares at a price the board would determine.

"Mr. Okada has previously authorized and acknowledged these fundamental protective measures and has participated in board meetings at which the documents containing these provisions were discussed," Wynn spokesman Kranhold said.

Kranhold provided Bloomberg News with copies of documents relating to Wynn Resorts' predecessor companies that were signed by Okada, outlining the provisions.

Articles of incorporation are generally overlooked in Japan as nobody thinks they're important, Okada said.

"We should have been helping each other over the hard times, in a relationship based on trust," he said of Wynn. "But he was a cunning man."

 

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