Showdown between Wynn, Okada could leave both wounded

If the desert dust-up between billionaire gambling men Steve Wynn and Kazuo Okada were one of those old black-and-white Westerns, this would be the time to clear the street and put the women and children in the cellar.

The metaphorical gunfight between these former back-slapping partners in Wynn Resorts is headed for an unprecedented showdown Friday at a scheduled stockholders meeting designed to oust Okada as a director. Although one might bite the dust, there’s a good chance both could be badly wounded.

A year ago, Wynn forced the redemption at a 30 percent discount of Okada’s 20 percent stake in the company. The stock was controlled by Okada’s Aruze USA, a division of Universal Entertainment gaming device giant. Although Okada still stands to profit from his initial $120 million investment, he has more than resented getting the shove from a company that these days makes a fortune with its Macau casino.

Back in September, Okada appeared to be ramping up his attack on Wynn. He filed an open letter to stockholders with the SEC blistering Wynn and blaming him for the decline in the company’s stock price. Was it a sign of a bloody corporate firefight?

In November Okada told the Financial Times, “There are governance issues here. Even if I turned out to be an unsuitable shareholder — and I don’t believe that to be true — I don’t believe the redemption of shares at a 30 percent discount has a legal basis.”

But the ensuing months haven’t been kind to Okada in court or the press. While Okada has stoked suspicions surrounding Wynn’s
$135 million gift to the University of Macau, he failed to develop the theme with regulatory authorities or reporters. (Nevada gaming regulators looked into the Macau gift and found no evidence of wrongdoing, according to published reports.)

Back when he was more openly defending himself, Okada told the Financial Times, “I was the only one on the board to raise concerns about that donation. Macau is a rich country, thanks to its casinos, and the University of Macau is relatively wealthy. I asked the board to explain why it made such a generous donation.”

Although the donation looks questionable coming, as it does, during a time federal authorities have been looking into possible violations of the Foreign Corrupt Practices Act by American casino men in Macau, it doesn’t seem to be going anywhere.

Meanwhile, Okada’s reputation has been battered by the findings of a report generated on Wynn’s behalf by former FBI Director Louis Freeh, which has questioned the propriety of Okada’s attempt to win a casino license in the Philippines. Late last year, Reuters reported that Okada’s emissaries were suspected of making suspicious payments through channels to a casino license regulator in that country.

In mid-January there was more bad news for the Japanese billionaire who made a fortune in the pachinko racket. He dialed in his attempt to dismiss a lawsuit filed in District Court before Judge Elizabeth Gonzalez by Wynn Resorts alleging he breached his duty as a corporate director by knowingly breaking the law during an independent casino foray in the Philippines.

Just last Friday, even more bad news: In U.S. District Court, Okada lost an attempt to stop this Friday’s scheduled shareholders meeting. Whatever fairness issues Okada faces weren’t enough to persuade U.S. District Judge James Mahan to postpone the showdown.

Although it’s reasonable to think Okada might feel he’s at a disadvantage on Wynn’s home turf, he also has been outmaneuvered at every turn by his former friend. He’s losing the legal war and is getting drubbed in the publicity battle.

If Okada loses his seat on the Wynn Resorts board, it raises even greater suitability issues.

When the dust finally clears, some of the wounds made in this gunfight just might be self-inflicted.

John L. Smith’s column appears Sunday, Tuesday, Wednesday and Friday. E-mail him at Smith@reviewjournal.com or call 702-383-0295. He blogs at lvrj.com/blogs/Smith