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Largest shareholder of Wynn Resorts sues company
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K.M. Cannon/Las Vegas Review-Journal
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LAS VEGAS REVIEW-JOURNAL
Updated: Jan. 12, 2012 | 11:04 p.m.
The largest shareholder and vice chairman of the Wynn Resorts Ltd. board of directors has sued the company, claiming he has been denied access to the casino operator's books and records.
Kazuo Okada, 68, a Japanese businessman who controls slot machine maker Aruze USA through his Japan-based Universal Entertainment, said in documents filed Wednesday in Clark County District Court and with the U.S. Securities and Exchange Commission that "despite several written demands, Wynn Resorts insists on keeping its books and records hidden" from him.
Okada indirectly owns 19.66 percent of Wynn Resorts and is one of the company's founders, investing $260 million in the predecessor of Wynn Resorts in 2000 and another $120 million in 2002 to be used for casino development in Macau. The Japanese restaurant at Wynn Las Vegas has carried his name since the resort's opening in 2005.
Okada, through his attorneys, said he "has the right and obligation to be informed concerning the company's business so that he may ensure that it is being managed properly for the benefit of all of its shareholders."
A spokeswoman for Wynn Resorts declined comment.
According to the lawsuit, a $135 million donation by Wynn Resorts to the University of Macau Development Foundation last year led Okada to seek access to the company's books and records. Okada reportedly objected to the donation, which consisted of a $25 million contribution in May and a commitment for $10 million per year for 11 years.
The donation "appears to be unprecedented in the annals of that University," the filing said.
Okada, who lives in Hong Kong, said the university is on land owned by the Macau government.
"There was no discussion regarding whether such a large gift, over such a long period, is an appropriate use of corporate funds," the lawsuit said.
In court papers, Okada said he was rebuffed in November when he sought information regarding the donation, the use of $30 million that Aruze USA invested in Wynn Resorts in April 2002 and a 2010 amendment to the stockholders agreement among Okada, Steve Wynn and his former wife, Elaine Wynn.
The Wynns filed for divorce in March 2009. A January 2010 SEC filing reported that more than 11 million shares of Wynn Resorts previously held as community property were transferred to Elaine Wynn, leaving Steve Wynn an equal number of shares.
Okada's Aruze USA holds more than 24.5 million shares of Wynn Resorts, more than double Steve Wynn's roughly 9 percent stake.
According to the lawsuit, Steve Wynn procured an amendment to the stockholders agreement that "purports to impose restrictions on the shares of Wynn Resorts owned by Aruze USA and Ms. Wynn and confirm the ability to Mr. Wynn to exercise certain rights in respect of such shares."
In rejecting Okada's request to view the books and records, Wynn Resorts asked for evidence that the $30 million investment had even occurred, according to court papers.
Aruze USA provided evidence, and Wynn Resorts acknowledged receipt of the $30 million and the additional $90 million invested by Aruze USA.
"Nevertheless, the company still denied access to any records showing how the funds were used," the lawsuit said.
Two more requests in late November and in early December also were denied.
Okada is also a director of Wynn Macau Ltd. He founded Universal Lease Co. Ltd. in 1969, which became Aruze Corp., in 1998.
In 2009, the Aruze Corp. name was changed to Universal Entertainment Corp., which is a Japanese manufacturer of pachislot and pachinko machines, amusement machines and video games.
Nevada gaming regulators have approved Universal's suitability as the 100 percent shareholder of a subsidiary, Aruze USA, Inc.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.
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"If you don't like the way the business is being run, sell your shares. Your investment has appreciated about 10x. Take your money off the table."
Curious... what if by checking Wynn's books, Mr. Okada were to discover that his investment had appreciated 20x? Would you walk away? I most certainly wouldn't. I think that being not only a majority investor, but a co-founder and the Vice Chairman entitles Mr. Okada to see the books. What has Mr. Wynn to hide from his biggest investor? It isn't like Mr. Okada is going to rat him out IF THE BOOKS ARE LEGIT...
Mr. Okada, welcome to Steve Wynn's world-King of all Scammers. Believe me, if you trust this guy, he will take you to the cleaners. If you don't believe it, you can ask about 800 dealers whose pockets he stole from.
If you don't like the way the business is being run, sell your shares. Your investment has appreciated about 10x. Take your money off the table.
this guy has 2.6 billion in wynn stock alone!
I wouldn't give a Wynn property 1 penny.
Giving to a university in China makes sense to a blind man in that Macau has surpassed Vegas in gaming revenues and Wynn needs quality workers for his casinos in Macau. Wasn't it Hilter who said- "Give my your youth"? UNLV has the respected Harrah College for Hotel and Gaming Administration that struggles along today. Vegas loses revenue and it's edge, Nevada loses tax dollars for education... only the "Global" Corporations win.
stevie, is use to paying off bribes etc. so,of course the chinese aren't stupid. they want their skim off the top. and some side bribes to operate in their country. but, like a few other posters stated: stevie always have something negative to say about obama being a socialist. but, he's in bed with known communist and a proud lover of communist artist like pablo picasso. remember he was going to initially name his resort Le Reve. and he would love for all of his workers to share their wealth, just so long as it's not his wealth.
transplanted: Did you read the article? Wynn only owns 9 percent of the company. When he divorced he became a very minority shareholder. In addition, you may need some instruction in economics and global business if you think that ANY American corporation of any substantial size can survive without WORLD operations and profit centers. Wynn is a very, very good businessman and a true American inventor. He is everything that makes American innovation REAL- he takes advantage of each and every opportunity. Lastly, Ford has plants on every continent except the north and south poles and I can only assume you would not suggest every Ford stockholder selling their shares - are you? Ford, like Wynn, is very American - and today that means being very global.
it's dog eats dog.all these casino operators are ruthless the make billions and hire part timers only with minimum wage and no benifits just like the republicans giving tax breaks to the rich.
Wynn Resorts ought to "man up" and give Mr. Okada what he is requesting. If I am the SEC or Gaming Commission this ought to raise and eyebrow. If I am a potential investor, I'm walking away.