IAG December 2015

Blast
from the Past
“By invoking the specter of overseas bribery, Wynn has
effectively opened itself up to a wide-ranging federal
investigation of its dealings in Macau and elsewhere.”
former director of the FBI is terming the conduct ‘prima facie’ FCPA
violations. An analogy would be like calling the fire department to
inform that your house is on the fire, but the fire department fails to
show up.”
The UMAC endowment, which has generated at least four
shareholder lawsuits, is characterized as “suspicious” by Mr Okada,
who cites “its enormous size, the fact that the 10-year term of the
pledge matches precisely the length of the casino license Wynn
Resorts was seeking, and the fact that the lead trustee of the University
of Macau Development Foundation also has a position in the Macau
government which enables him to influence the issuance of gaming
licenses.” Presumably this refers to a prominent local businessman
named Peter Lam Kam Seng, a charter member of the foundation
and a member of the committee that elects Macau’s chief executive.
“I am at a complete loss as to the business justification for the
donation,” Mr Okada said in September in an open letter to Wynn’s
shareholders, “other than that it was an attempt to curry favor with
those that have ultimate authority for issuing gaming licenses.”
He was the only one of the 16 directors to oppose the endowment.
Wynn says that’s not true, that he objected only to its length.
Charitable contributions as such are not prohibited by the Act
as long as they are not used as a “pretense” to cover bribes to
government officials. This distinction was reiterated in fresh guidance
on the Act issued last month by the Justice Department and the SEC.
The guidance gives the example of a Eurasian-based subsidiary
of a US NGO that acceded to a request from an agency of a foreign
government to make a grant to a local financial institution as a
condition for attaining bank status. The company emerged in the
clear, however, in part because it informed the DOJ of the request up
front and because it did its homework by ensuring the money was
transferred to a valid bank account and requiring the institution to
provide audited financial statements along with a written agreement
restricting the use of the funds and a confirmation that none of its
officers were affiliated with the government.
Then there’s the example of pharmaceutical giant Schering-
Plough, which had a subsidiary in Poland that donated money to a
foundation that restores historical landmarks. The foundation was
genuine. Its founder and president, however, was the director of a
government health fund that purchases pharmaceuticals. Worse,
“Internal documents established that the payments were not viewed
as charitable contributions but rather as ‘dues’ the subsidiary was
required to pay for assistance from the government official,” the
November FCPA guidance notes, adding that the payments also
violated Schering’s own policies, which require that charitable giving
“generally should be made to health care institutions and relate to
the practice of medicine”.
Wynn maintains that the UMAC donation “was made following
an extensive analysis which concluded that the gift was made in
accordance with all applicable laws.” No doubt, corporate counsel
has since made note of these “Five Questions to Consider When
Making Charitable Payments in a Foreign Country” from the FCPA
guidance:
What is the purpose of the payment?
Is the payment consistent with the company’s internal
guidelines on charitable giving?
Is the payment at the request of a foreign official?
Is a foreign official associated with the charity and, if so, can
the foreign official make decisions regarding your business
in that country?
Is the payment conditioned upon receiving business or other
benefits?
As for Mr Soriano’s visits to Wynn’s casinos, they were part of
more than $110,000 in room and food and beverage complimentaries
and other courtesies that were extended to current and former
members and associates of PAGCOR and their families at the behest
of Mr Okada and/or his representatives. These sums were all charged
to a courtesy account maintained by the company for Universal and
Aruze USA and funded by deposits from Mr Okada or his affiliates.
In November 2009, the husband of then-Philippines President Gloria
Macapagal Arroyo was comped a week at Wynn Las Vegas at a cost of
more than $4,600. In June 2010, his last month in office, Mr Genuino
was comped $1,870 at Wynn Macau. (The Freeh report claims
Universal also paid expenses related to a trip by the former PAGCOR
chairman to Beijing during the 2008 Olympics.) More than $5,900
was comped in 2010 and 2011 for stays at Wynn Las Vegas and Wynn
Macau by four South Koreans, one of whom was identified at the
time as commissioner of the Incheon Free Economic Zone Authority,
where Mr Okada is also looking to develop a casino. In September
Mr Okada contends in
the Freeh report that
“all his efforts in the
Philippines prior to the
change of presidential
administration in the
summer of 2010 were
undertaken on behalf of
and for the benefit of Steve Wynn and Wynn
Resorts”. The company vehemently denies this.
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inside asian gaming December 2015