Kazuo Okada Resigns from Wynn Board Amid Disagreement, Sends Letter
Kazuo Okada issued the following statement today on his resignation from the Wynn Resorts (NASDAQ: WYNN) Board of Directors:
“Since the year 2000, Steve Wynn has orchestrated a deliberate campaign to deceive me. His actions have betrayed our friendship, the management agreement executed between us, the Shareholders Agreement executed in 2002, and, ultimately, Universal Entertainment, Inc. (“UEC”).
In 2000, it was originally agreed that Mr. Wynn and I would be equal partners. However, Mr. Wynn, at his discretion, has schemed to make change after change which not only ignored my intentions as his equal partner, but also were to the detriment of me, his partner. Furthermore, not only did Mr. Wynn set up a private enterprise in Macau unbeknownst to me, his partner, and misappropriate funds from Aruze to Macau under the guise of an investment in kind, Mr. Wynn has also acquired personal gain and committed acts of betrayal.
The Shareholders Agreement originally executed in 2000 was entered into under the spirit of equality in our relationship. But now, regardless of the fact that the number of directors seconded to Wynn Resorts, Limited (“Wynn Resorts” or the “Company”), should be the same under this Agreement, Wynn Resorts has plotted to hold a general meeting of shareholders to try to have me removed as a director. The sheer fact of scheduling this general meeting of shareholders alone clearly violates the Shareholders Agreement.
Additionally, while it appears that Mr. Wynn is asserting that UEC's Philippines Project violates the obligation of “No Competition” under the Shareholders' Agreement, to start with, the applicability of the No Competition provisions are limited to Las Vegas and Macau only. Thus, there are no grounds whatsoever for asserting that the Philippines Project is in competition with Las Vegas or Macau. Furthermore, the Philippines Project was disclosed to Mr. Wynn and Wynn Resorts over three years ago upon which Mr. Wynn himself visited the Philippines and said that he would provide his cooperation. Therefore, there are no legal grounds for accusations at this stage that the Philippines Project constitutes competition.
As set forth in documents in the lawsuits between me and Mr. Wynn and Wynn Resorts, Mr. Wynn has pursued this campaign to eliminate me as a rival to his power within the Company and in retaliation for my having asked questions about the propriety of actions the Company has undertaken at Mr. Wynn's direction in Macau. His actions have betrayed me, our friendship, the partnership we held and agreements between us, and the Company itself. More specifically, Mr. Wynn used my legitimate questioning of and eventual opposition to the $135 million donation to the University of Macau Development Fund — a donation which was decided without consulting me, an equal partner, at all and was without any clear objective or reason — as the perfect opportunity to brand me as “unsuitable” by using the Freeh Report which deceptively claims to be “independent”.
At Mr. Wynn's direction, the Wynn Resorts Board of Directors has not only stripped UEC – a publicly traded company – of its shareholdings in Wynn Resorts and sought to have me removed as a Director, but also disregarded my repeated requests as a Director that the Board investigate the Company's dealings on the Cotai strip in Macau. Despite a specific request by me, the Company has refused to tell me when or even whether it (or a Company committee) will investigate my concerns about the Cotai land concessions obtained by Wynn Resorts. The Board has also taken the position that I may not participate in their discussions of these subjects. Instead, on January 29, 2013, the Company threatened to sue me and my attorneys for not helping them conceal a set of five-year-old documents related to the Company's Macau dealings from the Company's shareholders.
The documents are simply contracts, none of which are marked confidential or even have confidentiality provisions, between the Company and a mysterious Chinese company whose principal – a man known only as “Ho Ho” – evidently holds a senior position in an organization affiliated with the Chinese government according to media reports in China and the title stated on the business card which is believed to be his.
If so, Mr. Wynn's aforementioned series of conduct in relation to the Cotai land concessions could be in violation of the Foreign Corrupt Practices Act which ironically Mr. Wynn himself, in his attempts to try to remove me from Wynn Resorts, has asserted to be sufficient grounds to regard as a threat to Wynn Resorts in its maintaining and obtaining of gaming licenses in various locations. Thus, as I have been asserting, his aforementioned acts require further investigation. To my knowledge, the Nevada Gaming Control Board has not concluded any investigation on Mr. Wynn and Wynn Resorts regarding the Cotai matter. Additionally, the aforementioned acts regarding the Cotai land and enormous donation by Mr. Wynn and Wynn Resorts presents sufficient ground for questions as to whether they harm the interests of me and the shareholders and if they violate securities laws.
I supported Mr. Wynn during some of his darkest days and provided the Company's predecessor entity with $260 million in critical funding to get off the ground—at a time when no one else wanted to invest in Mr. Wynn. We helped Las Vegas reinvent itself. Two years later, I contributed another $120 million to the Company as it pursued its initial foray into Macau. Nevertheless, neither I nor any other Director or shareholder have received any accounting relating to those funds to date. And I contributed yet another $75 million when the Company went public, bringing my overall contributions to $455 million. With my investments, we created the company known as Wynn Resorts and grew it over the last decade into a $12.5 billion gaming and casino powerhouse.
When Mr. Wynn needed my money, I was more than good enough for him and the Company. He called me his “partner” and “friend.” In 2004, he testified under oath that he “never dreamed that there would be a man as supportive, as long-term thinking, as selfless in his investment as Mr. Okada.” In 2008, he told the investment community, “I love Kazuo Okada as much as any man that I've ever met in my life.” And in April 2011—months after the Wynn Resorts' Board allegedly developed “concerns” about my suitability (concerns that were never sincerely held by the Board)—the Board re-nominated me to the Board of Directors and advised shareholders to support my candidacy as adding “significant value to [the Company's] operations” and as “essential to the Company's strategic vision.”
But, by having involuntarily redeemed my nearly 20 percent stake in the Company, a stake bound by the terms of the Shareholders Agreement, at a staggering 30 percent discount by ignoring said Shareholders Agreement, Mr. Wynn is now attempting to have me effectively excluded from all supervision of or participation in Wynn Resorts – a company I co-founded, love dearly and have a deep commitment to its continued success.
However, Mr. Wynn's scheming, including his attempts to exclude me, have been marked by serious fraying around the edges from the start. To start with, the Freeh Report which is the grounds for Wynn Resorts' removal of me due to being “unsuitable”, was not only prepared carelessly and improperly, but also contains a number of clear errors. Furthermore, the Asahi Shimbun newspaper on December 30, 2012 reported that Philippine regulatory officials have confirmed that neither I nor UEC to which I belong sought favorable treatment from them. Thus, Mr. Wynn's attempts to paint me as an “unsuitable” individual have already failed.
Nevertheless, Mr. Wynn continues to engineer a scenario where there is no longer any reason for me to continue to serve on a Board of Directors that, at his direction and insistence, undermines me at every turn, seems to act on Mr. Wynn's every whim, and impedes my ability to serve as an independent voice for Wynn Resorts shareholders. I have also heard that there have been incredible cover ups by Mr. Wynn where he, in conspiracy with former employees, manipulated the media and made requests for cooperation in the Philippines.
I no longer believe it is appropriate for me to serve on the Board of Directors of a company that is behaving in a manner that I deeply believe to be unethical, and that has refused my reasonable requests to promptly investigate what appears to me to be misconduct by Steve Wynn, and thus is under the dictatorship of Mr. Wynn and fails to fulfill its original function. Therefore, due to the above reasons, I hereby resign from my position as Director of Wynn Resorts effective immediately.
Mr. Wynn must answer to the shareholders as he has now lost a loyal investor due directly to his deliberate campaign to discredit me. I continue to wish the best for the Company's dedicated and hard-working employees who have made Wynn Resorts so successful, and to the Company's public shareholders who have supported the enterprise. But I can no longer in good conscience sit by, intentionally sidelined, while Steve Wynn and his enablers on the Board push forward a vote based on a proxy statement that makes numerous materially false and misleading statements to the Company's shareholders. I maintain that the proxy falls far short of being a fair and honest presentation of the facts, and as such is a disservice to every Wynn Resorts shareholder.
Going forward, I will continue to focus my efforts on managing UEC and ensuring its continued growth. We recently revised our earnings forecast, based on strong sales of new pachislot titles and machines, and are confident about the future prospects of our global entertainment company. At the same time, our investments in the Philippines promise to build Manila Bay Resorts into a world-class casino resort and a remarkable success. We have solid plans under way to develop an unparalleled resort featuring two luxury casino hotels, retail shops and commercial space on more than 1 million square meters of land that will rival the grandest casinos in the world.
I remain determined to fight Steve Wynn's involuntary redemption of my nearly 20 percent stake in Wynn Resorts at a 30 percent discount and my resignation from the Wynn Resorts Board will not impede me from protecting my good name and reputation as UEC and Aruze USA forcefully prosecute the claims made against Wynn Resorts in Nevada State Court.”
Mr. Okada is a co-founder of Wynn Resorts, Ltd, and founder and Chairman of Universal Entertainment Corporation.
Mr. Okada is represented in this litigation by the law firm of Morgan, Lewis & Bockius, LLP.
© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.