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Wynn Resorts buys out biggest stakeholder Okada, asks him to resign after payments probe
NEW YORK (AP) ' Wynn Resorts Ltd. said Sunday that it forcibly bought back all the shares controlled by its biggest stakeholder and asked the Japanese tycoon to resign from the board after finding he made improper payments to overseas gambling regulators.
The Las Vegas casino operator said it took action against Kazuo Okada after a year-long investigation uncovered that he engaged in activities that violated U.S. anti-corruption law.
The announcement marks the latest deterioration of Okada's relationship with Stephen Wynn, founder of Wynn Resorts and a one-time ally.
Okada is the founder of casino game maker Universal Entertainment Corp., which held an almost 20 percent stake in Wynn Resorts through its privately held subsidiary Aruze USA Inc.
Aruze's 24 million shares were worth about $2.7 billion based on Friday's closing price and are being acquired for the discounted price of about $1.9 billion.
The investigation centered on payments and gifts Wynn Resorts says were made to Okada's two chief gaming regulators at the Philippines Amusement and Gaming Corporation. The regulators oversee Okada's provisional licensing agreement to operate in that country, Wynn Resorts said.
The company said its investigation also found Okada and his associates consciously took actions to conceal "the nature and amount of these payments."
The investigation, which was led by a former FBI director Louis Freeh, uncovered more than three dozen instances over a three-year period in which Okada and his associates engaged in "improper activities for their own benefit," Wynn Resorts said.
The company says discoveries include cash payments and gifts totaling about $110,000 to foreign gaming regulators
Based on the report, Wynn Resorts said its board found that Okada is "unsuitable"; the company's articles of incorporation provide for redemption at "fair value" of the shares held by unsuitable individuals.
The company issued a 10-year, $1.9 billion promissory note in redemption of the shares. The notes bear an interest rate of 2 percent.
Wynn said it will immediately recommend that Okada be removed from the board of its Hong Kong subsidiary, Wynn Macau Limited.
Last month, Okada filed a lawsuit against Wynn to seeking financial documents regarding Wynn's $135 million donation to the University of Macau; its 2010 amendment to a shareholders agreement among Okada, company founder Stephen Wynn and Wynn's ex-wife, Elaine Wynn; and the use of $30 million that Okada gave to Wynn Resorts in 2002 to help develop a Macau casino project.
An email was sent seeking comment from Okada but it generated no immediate response.
Wynn says it filed a lawsuit against Okada, Aruze and Universal Entertainment in Nevada District Court for breach of fiduciary duty and related offenses.