GGRAsia – DICJ meets Wynn Macau on claims against firm’s boss

DICJ meets Wynn Macau on claims against firm’s boss

Jan 30, 2018 Newsdesk Latest News, Macau, Top of the deck

The Macau regulator met on Monday with representatives from local casino operator Wynn Macau Ltd following allegations of sexual misconduct made in the United States against the firm’s chairman and chief executive Steve Wynn (pictured in a file photo).

The meeting was confirmed to GGRAsia by a spokesperson from the local regulator, the Gaming Inspection and Coordination Bureau, a body also known by its Portuguese acronym DICJ.

“In response to recent media reports regarding alleged improper conduct in the United States by the chairman and CEO of Wynn Macau Ltd, Steve Wynn, DICJ is paying attention to the matter and met on January 29 with the Wynn Macau Ltd management better to understand the situation,” the spokesperson told GGRAsia in an emailed reply.

The person added: “DICJ reiterates that the Macau government pays attention to the suitability of major shareholders, directors and key employees in high-level positions in the casino industry, and to the strict implementation of the relevant provisions in this field.”

GGRAsia directly enquired of the DICJ spokesperson whether the body planned to launch a review of the recent sexual misconduct claims against Mr Wynn. No reply on the matter was provided.

The DICJ reply did not identify the Wynn Macau Ltd representatives that took part in the meeting with the local regulator.

The meeting between DICJ and representatives from Wynn Macau Ltd followed an article by the Wall Street Journal on January 26 detailing allegations of sexual misconduct made against Mr Wynn by former Wynn Resorts Ltd employees. Mr Wynn has denied the allegations featured in the article.

In a filing to the Hong Kong Stock Exchange on Tuesday, Wynn Macau Ltd said it would “cooperate fully with any requests” made to the company by DICJ.

U.S.-based Wynn Resorts is the parent company of Macau-based casino operator Wynn Macau Ltd. Mr Wynn is also chairman and chief executive of Wynn Resorts.

The Massachusetts Gaming Commission announced on Friday it would independently investigate the allegations raised in the Wall Street Journal article. Wynn Resorts is developing a casino property in Boston, in the U.S. state of Massachusetts.

The head of the Nevada Gaming Control Board – where Wynn Resorts has gaming operations, namely in Las Vegas – said it a statement the body was “aware of the situation and we are reviewing the information”, according to media reports.

Wynn Resorts announced on Friday it would form a special committee consisting solely of independent directors to investigate the claims against Mr Wynn. It will be chaired by Patricia Mulroy, a member of the board’s corporate governance and compliance committees and a former member of the Nevada Gaming Commission.

Impact ‘hard to access’

Commenting on the allegations involving Mr Wynn and the near-term potential impact on the stock price of Wynn Resorts, Deutsche Bank Securities Inc analysts Carlo Santarelli and Danny Valoy said it was “hard to access”.

They added, in a note published on Monday: “We believe the next several months are likely to be choppy; just how choppy likely depends on the following: whether further allegations, along the lines of Friday’s Wall Street Journal article, emerge; whether other negative headlines surface, as members of the media gravitate to the story; and whether the Universal Entertainment case (April start) becomes a more considerable than expected distraction or whether a settlement amount, should one surface, extend well beyond the current balance sheet promissory note value of US$1.9 billion.”

The latter was a reference to a court case involving Japanese gaming conglomerate Universal Entertainment Corp and Wynn Resorts. Universal Entertainment is seeking return of 24.55 million shares in Wynn Resorts that Universal Entertainment says are owed to its own unit Aruze USA Inc.

In 2012, Wynn Resorts’ board voted to cancel a 20 percent stake in the firm held by Universal Entertainment. Wynn Resorts issued the Japanese firm with a promissory note for US$1.9 billion. The note was in effect a 30-percent discount on the then US$2.77-billion valuation of the stake.

The decision followed a Wynn Resorts-commissioned report that concluded then-Universal Entertainment chairman Kazuo Okada was “unsuitable” to be a Wynn Resorts director and a threat to the firm’s gaming licences. This was on the basis of Mr Okada allegedly providing gifts to what were then senior officials of the Philippine casino regulator, the Philippine Amusement and Gaming Corp.

The Deutsche Bank analysts said in their Monday note that in the case of Wynn Resorts specifically, Mr Wynn’s “influence on operations, the brand, and the investment community, is more pronounced than that of the majority of his peers.”

They added: “Thus, hypothetically, if Mr Wynn were to step down, something we aren’t about to speculate on, we do believe there would be an impact, over time, on the operations of the company and we believe the design and development of future company projects would lack the meticulous attention to detail the current portfolio is renowned for.”

Brokerage Union Gaming Securities LLC advised investors to remain on the sidelines regarding trading on Wynn Resorts shares.

Analyst John DeCree wrote in a note published on Monday: “We do believe the company has a deep bench of strong executives and we remain constructive on the company’s fundamentals overall as well as business trends in Macau and Las Vegas. We would look for the equity to eventually bounce back but suggest investors remain patiently on the sidelines at this point.”