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Blast<br />
from the Past<br />
“I love Kazuo Okada as much as any man that<br />
I’ve ever met in my life,” Steve Wynn once<br />
proclaimed. “And there is hardly anything that<br />
I won’t do for him.”<br />
he would direct the FBI for almost seven years, continuing in the<br />
post for five months more after George W. Bush took office. After<br />
leaving the government he represented Prince Bandar bin Sultan, the<br />
former Saudi ambassador to the US, in the al-Yamameh arms-foroil<br />
scandal involving Europe’s largest defense contractor, UK-based<br />
BAE Systems. In 2010, BAE would forfeit US$400 million in one of<br />
the largest criminal prosecutions in FCPA history. That same year,<br />
as part of the fourth-largest FCPA settlement up to that time, Mr<br />
Freeh was appointed to monitor Daimler AG’s compliance with the<br />
Act after the giant automaker and three subsidiaries agreed to pay<br />
The Foreign Corrupt Practices Act is being<br />
applied more vigorously now than at any time<br />
in its history. Almost half of all enforcement<br />
actions initiated under it have occurred since<br />
Barack Obama took office in 2009, more than<br />
under any president going back to Jimmy<br />
Carter, who signed the FCPA into law, more<br />
than under the 16 years of the Bush and<br />
Clinton administrations combined.<br />
$93.6 million in fines and hand over $91.4 million in profits to settle<br />
alleged violations. In 2011, he served as an independent investigator<br />
for FIFA in the Mohamed bin Hammam bribery scandal.<br />
While the SEC was poring over Mr Okada’s January petition, Mr<br />
Freeh was briefing Wynn’s Compliance Committee on what he’d<br />
learned about the Philippines. His final interview, with Mr Okada and<br />
Mr Okada’s US counsel, took place in Tokyo on 15th February. On the<br />
18th, he gave what Wynn describes as a “detailed presentation” to the<br />
board and provided copies of his final report, which concluded that<br />
Mr Okada’s conduct “constituted prima facie evidence of violations<br />
of the Foreign Corrupt Practices Act”. It was on that day, apparently,<br />
that Wynn issued a 10-year IOU to buy back Aruze USA’s shares,<br />
amounting to a 19.66% stake in the company, at a 30% discount to<br />
their market value at the time. The next day, the company filed its<br />
suit in Nevada District Court in Las Vegas charging the man who had<br />
helped bankroll Wynn’s empire with “breach of fiduciary trust”. Mr<br />
Okada was later booted off the board of Wynn Macau. He is still on<br />
the board of Wynn Resorts, his seat protected by Nevada law unless<br />
the shareholders vote to remove him.<br />
“I love Kazuo Okada as much as any man that I’ve ever met in my<br />
life,” Steve Wynn once proclaimed. “And there is hardly anything that<br />
I won’t do for him.”<br />
Obviously, that stopped at Luzon’s steamy shores.<br />
The “Big Stick”<br />
On 24th February, the Financial Times reported that a lawyer for Wynn<br />
Resorts who had served with the US Attorney’s Office in Los Angeles<br />
had flown to Washington to meet with criminal prosecutors at the<br />
Department of Justice. It was not known at the time if the department<br />
has joined the SEC in looking into the company’s affairs. It is still not<br />
known.<br />
Writing that month in his “White Collar Watch” column in The<br />
New York Times, former Justice Department prosecutor and law<br />
professor Peter J. Henning suggested that Wynn’s suit against<br />
Mr Okada “means the Justice Department and the Securities and<br />
Exchange Commission will be scouring the company’s books for<br />
possible violations, a front that neither side can control.”<br />
“By invoking the specter of overseas bribery, Wynn has effectively<br />
opened itself up to a wide-ranging federal investigation of its dealings<br />
in Macau and elsewhere. Combined with the lawsuit it filed against<br />
Mr Okada, the company most likely will face soaring legal costs over<br />
the next year or two as it deals with the fallout from the dispute.”<br />
Mike Koehler, a law professor with Southern Illinois University<br />
and a blogger on all things FCPA, calls this battle of the billionaires<br />
“one of the strangest instances of FCPA scrutiny one can imagine”.<br />
“The Freeh report puts the DOJ (and perhaps even the SEC given<br />
Okada’s membership on the Wynn Board) in a difficult position.<br />
How can the agencies not investigate the conduct at issue when the<br />
<strong>December</strong> <strong>2015</strong> inside asian gaming 37