Macau court sides with Wynn group in appeal by Okada
Macau’s Court of Second Instance has reaffirmed a lower court decision in a case brought by Japanese entrepreneur Kazuo Okada against – among other parties – a subsidiary of casino Wynn Macau Ltd, company vice-chairman Linda Chen and former chairman Steve Wynn.
In addition, the court maintained a fine by the Court of First Instance against Mr Okada as vexatious litigant.
The Court of Second Instance’s ruling – to which GGRAsia had access – was disclosed last week.
The original lawsuit included as plaintiffs Mr Okada, Japanese conglomerate Universal Entertainment Corp and Aruze USA Inc. However, the latter two firms eventually dropped the appeal, following a compensation settlement reached with U.S.-based casino operator Wynn Resorts Ltd, the parent of Wynn Macau, in March last year. Under the deal, Wynn Resorts agreed to pay a total of US$2.4 billion to settle a stock redemption dispute with Universal Entertainment and Aruze USA.
The stock redemption dispute dated back to 2012, when Mr Okada was ejected from Wynn Resorts’ board after the casino firm claimed he was “unsuitable” and a risk to its licences. Mr Okada was at that time Wynn Resorts’ biggest single shareholder, holding the stake via Aruze USA, a subsidiary of Universal Entertainment.
The Wynn Resorts’ board eventually voted to cancel Mr Okada’s 20 percent stake in the group amounting to 24.5 million shares and issue him with a promissory note for circa US$1.9 billion. The note was in effect a 30 percent discount on the then US$2.77 billion valuation of his stake. Mr Okada has always denied any wrongdoing.
Later on, Mr Okada was removed from the board of Universal Entertainment in June 2017. That was in connection with a separate investigation report commissioned by the current management of Universal Entertainment, a group Mr Okada founded but from which he is now estranged amid claims he defrauded the business of millions in U.S. dollars. He has also always denied any wrongdoing in this case.
Mr Okada has been engaged in legal moves in Hong Kong centring on efforts to assert control over Okada Holdings Ltd, a private Hong Kong-registered entity owning 68 percent of Universal Entertainment. The latter in turn controls Tiger Resort, Leisure and Entertainment Inc, the promoter of the Okada Manila casino resort in the Philippines.
Principal allegations
The principal allegations in the Macau lawsuit brought by Mr Okada’s side included that the redemption of the Universal Entertainment’s shares in Wynn Resorts was improper and undervalued. It added that a previously disclosed US$50-million payment made by a Wynn Macau Ltd subsidiary in 2008 to an unrelated third party – named Tien Chiao Entertainment and Investment Co Ltd – in consideration of the latter’s relinquishment of any rights with respect to future development on the land in Cotai where casino resort Wynn Palace eventually was built, was unlawful. Wynn Palace opened to business in August 2016.
In addition, Mr Okada’s side alleged in the lawsuit that a previously disclosed US$135 million donation – to be disbursed over 10 years – by Wynn Resorts to the University of Macau Development Foundation was unlawful.
The Okada side was seeking dissolution of the Wynn Macau subsidiary that actually holds the group’s Macau casino licence, and compensatory damages.
The Macau Court of First Instance had dismissed in July 2017 all claims by Mr Okada’s side as unfounded, fining at the time the Okada side as vexatious litigants.
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