In an effort to have Aruze USA reinstated as the largest shareholder in Wynn Resorts, Kazuo Okada has accused Steve Wynn of betraying his trust and friendship in order to maintain control of his casino business.
Okada, who made his fortune in Japan through pachinko and helped bankroll Steve Wynn’s resort projects, lost his stake in the company when Wynn published a report claiming his actions made him “unsuitable” under the company’s articles of incorporation. Wynn called for Okada to resign from his role as director following the findings of a year-long investigation that claimed he had violated the US Foreign Corrupt Practices Act. The report alleged that Okada and his associates had made payments to gaming regulators in the Philippines who directly oversee a licensing agreement to operate there. Aruze USA’s 24 million shares in Wynn Resorts were redeemed for a discounted price.
Now, his company Universal Entertainment has asked a judge to immediately restore Aruze USA's rights as the largest shareholder of Wynn Resorts, to bring an end to what it described as a “punitive and unlawful bid by CEO Stephen Wynn to consolidate his power and remove a dissenting voice on his board, Kazuo Okada.”
The motion for preliminary injunction filed in the US District Court in Nevada seeks to preserve Aruze USA's voting rights, which the company said were “unlawfully stripped” in February by Wynn and the board of directors to “punish and silence” Aruze USA after Okada raised questions concerning the company's $135m donation last year to a university foundation with ties to Macau gaming regulators.
An amended counterclaim was also filed against Mr Wynn, Kim Sinatra, general counsel of Wynn Resorts, and individual members of the board, asserting that Steve Wynn has “indulged in fraud, deception, theft and betrayal to maintain control of his gaming enterprises.”
"Steve Wynn's betrayal of my trust and friendship, and the unconscionable course of conduct he engineered to suppress dissenting views and defame critics, all to maintain absolute control, must be challenged to protect the interests of all shareholders,” said Okada. “Sadly, this is not the first time Mr Wynn has shown his true colours; nor do I believe it will be the last time based on a disturbing pattern that clearly places one person first - Steve Wynn himself - above all others.''
This motion for preliminary injunction seeks to prohibit Wynn Resorts from depriving Aruze USA of any of its rights as a stockholder of Wynn Resorts until the federal lawsuit between the Wynn Resorts parties and the Universal Entertainment parties is adjudicated.
"Aruze USA and Universal categorically deny any wrongdoing, but more to the point, nothing that they have been accused of doing could pose a legitimate and imminent danger to Wynn Resorts' gaming licences. These allegations are mere pretext for actions taken to entrench and enrich Steve Wynn, the board and the management of Wynn Resorts,'' the filing in support of the motion said.
In March, Wynn Resorts informed the US Securities and Exchange Commission of its plans to hold a special meeting of stockholders to vote on whether Okada should be removed as a director. A two-thirds majority of the voting power will see Okada removed from his position, although no date has been set for the meeting.
This latest counterclaim from Okada could be an effort to guard against losing his position as a director.
