Japan's Universal Entertainment files counter suit vs Wynn Resorts

MANILA, Philippines - Japan-based pachinko games maker Universal Entertainment Corp. filed yesterday a counterclaim against Wynn Resorts to prevent the unjust and improper redemption of shares owned by subsidiary Aruze USA Inc. at a deep discount.

Wynn Resorts chairman Stephen Wynn and the company’s board last month redeemed Aruze’s 24 million shares with Wynn Resorts at 30 percent discount by issuing a 10-year $1.9-billion promissory note. This followed an investigation which found that Universal Entertainment owner Kazuo Okada appeared to have paid $110,000 to gaming regulators in the Philippines in violation of US anti-corruption laws.

Universal Entertainment sought a permanent injunction, declaratory relief and multiple claims for damages caused by the actions of Wynn and the Wynn Resorts board.

“By means of the purported redemption, Wynn and the other members of the board seek to profit from their illegal acts in a process that was corrupt and unfair, causing Universal Entertainment and Aruze USA irreparable damages based on an unproven pretext,” the countersuit said.

Okada alleged that the actions taken by Wynn was aimed at maintaining his absolute control over Wynn Resorts and enriching himself.

“Our lawsuit contends that after having lost control of his previous ventures in Las Vegas, Wynn has undertaken this campaign to suppress dissenting views on the Wynn Resorts board, particularly with regard to Wynn Resorts’ unprecedented, inadequately explained and wasteful $135 million donation to the University of Macau, so that this venture would not end with the same result,” Okada said.

Okada said the Wynn Resorts board did not exercise any independent judgment or otherwise act in a manner consistent with sound corporate governance principles.

Okada, who helped bankroll Wynn Resorts beginning 2000, argued that Aruze USA’s shares were never subject to the redemption provision of the Wynn Resorts articles of incorporation as Aruze USA acquired its interest before the redemption provisions became effective.

Okada also refuted the finding by the Wynn board that he is “unsuitable”, saying Universal Entertainment is a public company in Japan with its own compliance committee, which adheres to rules relating to business entertainment so that such entertainment is within industry practices and applicable laws.

Universal Entertainment also noted that its subsidiary in the Philippines has a provisional gaming license and that the final license will be granted on the condition that the construction of the casino.