A United States-based law firm says it has filed a class action there on behalf of public investors in New York-listed, China-based gaming operator 500.com Ltd, alleging securities fraud.
The complaint, filed by Block & Leviton LLP in the U.S. District Court in New Jersey, claims that 500.com “concealed from investors that its executives were bribing Japanese lawmakers in order to secure development rights for a casino resort project in Japan”. People linked to 500.com have been accused of involvement in a bribery scandal tied to lobbying for one of a possible three casino licences to be awarded in the first round of liberalisation in that country.
The law firm noted in a Thursday press release that the 500.com stock price fell more than 12 percent in a single day of trading. That, according to the law firm, happened after 500.com announced on December 31 that it would investigate the bribery claims; and reported the resignation of its chairman and the temporary departure of its chief executive pending the results of the internal probe.
“These allegations of corruption are very serious and our investigation will focus on whether illegal activity occurred which resulted in investor losses,” said Mark Delaney, the attorney leading the investigation, as quoted in a press release from the law firm.
Block & Leviton’s investigation relates to anyone that either purchased or acquired 500.com securities between April 27, 2018 and December 31, 2019.
Also on Thursday, 500.com said in a press notice that what it termed a special investigation committee comprised of its board members had retained Hong Kong-based law firm King & Wood Mallesons LLP as legal advisor.
The 500.com release said the law firm would “assist with the internal investigation into the role played by the company’s former external consultants in the alleged illegal money transfers following their arrest by the Tokyo District Public Prosecutors Office”.
Masahiko Konno and Katsunori Nakazato, two people described by Japanese media as having been advisors in Japan to 500.com, are among those said to have been cooperating with prosecutors there regarding the bribery allegations.
The Chinese firm was reportedly seeking a chance to develop a casino resort on Japan’s northernmost main island, Hokkaido.
The governor of Hokkaido prefecture announced however in November that his community would pass up during the current first round of market liberalisation the right to have a casino resort. Communities wishing to host one will first have to find a private-sector partner, and then apply to the national government for consideration.
Alleged bribery attempts in relation to a possible Hokkaido project came to light at the end of last year. Tsukasa Akimoto, a politician from Japan’s House of Representatives and a leading advocate of the country’s policy to legalise integrated resorts or “IRs” – as large-scale gaming venues with other tourism facilities are known in that country – was arrested in late December for allegedly taking bribes from 500.com.
Five members of Japan’s House of Representatives have also been questioned – on a voluntary basis – by Japanese authorities for their alleged receipt of cash from people said to be linked to 500.com.
Japan’s Asahi Shimbun news outlet reported on Thursday – citing “investigative sources” it did not identify – that as well as millions of Japanese yen in cash allegedly channelled to Mr Akimoto, prosecutors were also looking at whether gifts allegedly given to the lawmaker – including luxury brand shoes and a bag worth hundreds of thousands of yen – might also constitute a bribe.
