IAG December 2015

Blast
from the Past
In January 2011, Wynn’s independent
directors led by former Nevada Gov. Bob Miller
undertook the first of two risk assessments
of the Philippines. Their conclusion was
that corruption is “deeply ingrained” in the
gaming industry there and that newly elected
President Benigno Aquino [pictured here]
wasn’t likely to do much about it.
“It looks like Sheldon is shooting himself in the foot when
it comes to the FCPA,” says a source with ties to the regulatory
authorities in Macau.
For what it’s worth, Mr Wynn is also a major Republican donor.
Similarly outspoken in his dislike for the Obama presidency, he
acknowledged “urging” his 12,000 Las Vegas employees to vote for
Mitt Romney.
Love Gone Sour
In January 2011, Wynn’s independent directors led by former Nevada
Gov. Bob Miller, who chairs the board’s Compliance Committee,
undertook the first of two risk assessments of the Philippines.
Their conclusion was that corruption is “deeply ingrained” in the
gaming industry there and that newly elected President Benigno
Aquino wasn’t likely to do much about it. The
committee also claimed to have evidence leading
to “reasonable suspicion that persons acting on
Okada’s behalf had engaged in improprieties,”
possibly a reference to the allegations currently
swirling around Boysee Soriano.
According to the company’s 2012 lawsuit,
these findings were presented at a board meeting
the following month with Mr Okada present.
Steve Wynn announced at the meeting that
he’d been invited by Mr Okada to meet with Mr
Aquino. The independent directors responded
that “involvement in the Philippines was
inadvisable” and recommended against it. The
meeting with Mr Aquino was canceled. Mr Okada
was “embarrassed and angry”.
The committee’s second investigation,
commissioned that August, went further,
declaring that it had “identified anomalies and
improprieties in Universal/Okada’s dealings in
the Philippines”. The findings included concerns that Mr Okada was
“engaging in acts that would render him unsuitable under Nevada
gaming regulations, and breaching the fiduciary trust duties he owed
Wynn Resorts”.
Sometime around the end of October, Washington, D.C.-based
Freeh, Sporkin & Sullivan was brought in “to examine Mr Okada’s
efforts in connection with the creation of a gaming establishment
… but not quite kingmaker
in the Republic of the Philippines”. Specifically, the board wanted
something definitive on whether Mr Okada “may have breached his
fiduciary duties to Wynn Resorts; engaged in conduct that potentially
could jeopardize the gaming licenses of Wynn Resorts; and/or
violated the Wynn Resorts compliance policy”.
It’s difficult to imagine that Mr Okada couldn’t have known
at this point that his days at the company were numbered, for his
first written request for corporate records relating to the University
of Macau donation was submitted on 2nd November. Three more
requests would follow, on the 17th, the 29th and 12th December.
On 11th January of this year, he went into state court in Nevada to
demand the information. He also wanted to see records relating to
the status of his substantial equity holding as a result of the 2009
divorce settlement between Steve and Elaine Wynn, who is also a
director, and records explaining how the company
had spent some $30 million he says he provided
back in 2002 to get the Macau business off the
ground.
It was almost exactly one month later, on
13th February, that the Securities and Exchange
Commission, which jointly enforces the FCPA,
came calling, requesting through its Salt Lake
Regional Office that the company “preserve
information relating to the donation to the
University of Macau, any donations by the
Company to any other educational charitable
institutions … and the Company’s casino or
concession gaming licenses or renewals in
Macau”.
The irony is somewhat striking since, to hear
Wynn tell it, the company’s standing with regard
to the FCPA has been of paramount concern going
back to 2008. That was the year a Philippines
subsidiary of Aruze USA won one of four no-bid
licenses from PAGCOR to develop a resort casino on land reclaimed
from Manila Bay and christened Entertainment City.
Louis Freeh’s background is indicative of just how much this
had come to worry the board. His law partners include two retired
federal judges, one of whom used to head the SEC’s Enforcement
Division. Mr Freeh had been a US attorney and US District judge
prior to joining the Clinton administration in September 1993, where
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inside asian gaming December 2015