Wynn Resorts won a lawsuit filed by former majority shareholder Kazuo Okada after his removal from the board of directors in 2010. The Nevada Supreme Court ruled in favor of Wynn Resorts, which means the Las Vegas casino company will not have to produce legal documents to show its firing process.
Seven years ago, the Wynn Resorts board of directors removed Kazuo Okada, a Japanese casinoe executive. Okada’s removal came after allegations arose that the Japanese billionaire had paid bribes to Philippine gaming regulators.
Kazuo Okada, was the chairman of the Japanese pachinko corporation, Universal Entertainment at the time. Mr. Okada, who is estimated to be worth about $2 billion, had been a personal friend of Steve Wynn’s before the scandal.
Okada Removed from Wynn Board in 2010
Wynn Resorts decided to end the business relationship, because the Federal Bureau of Investigation had an active investigation into Okada’s $40 million payment to a Manila-based consultant. The FBI believed, given the large fee paid, that the consultant’s payment was a part of a kickback scheme to bribe Philippine officials.
At the time, Kazuo Okada was negotiating licensing to build a $2.4 billion casino resort in Manila. Kazuo Okada had a shareholders agreement which stated he could not cash in his shares without approval from Wynn Resorts. Ultimately, the Wynn board decided to redeem all $1.9 billion in Okada’s shares.
2012 Kazuo Okada Lawsuit
Kazuo Okada filed a lawsuit in 2012, claiming he wanted to know the process Wynn’s board of directors took to remove him. Signs of trouble for Okada’s case were present for a time. In mid-July 2017, David Krakoff, a lawyer representing Okada and Universal Entertainment Corp, left the case. Krakoff, who works for the prestigious Buckley Sandler Law Firm, asked to drop Okada as a client, while continuing to work for Universal and its subsidiary in the case.
David Krakoff cited accusations made by Universal Entertainment that Okada misused $20 million in the company’s funds while he was still its chairman. Judge Elizabeth Gonzales agreed to have Krakoff removed as Okada’s lawyer.
That decision presaged the more important decision by the Nevada Supreme Court this week. Nevada’s high court ruled that attorney-client privilege protected Wynn’s deliberations in the case.
The Okada Case and Japanese Casino Development
Steve Wynn won the right to privacy in the case, but the Kazuo Okada case has caused several complications for the 75-year old Las Vegas billionaire. Many believe the Okada case is going to be an obstacle for Wynn Resorts if it applies for a Japanese casino license.
The Japanese government approved legalized brick-and-mortar casinos in the Integrated Resort Bill of December 2016. Analysts believe the Japanese casino industry could be worth as much as $25 billion, making it the third most-lucrative casino economy in the world, behind the United States and China.
Kazuo Okada is a wealthy and powerful figure in Japan, while his corruption case is famous there. Any connections to Okada likely would be investigated closely and could sour Japanese officials’ enthusiasm for a Wynn casino for a variety of reasons.
Elaine Wynn Lawsuit
Throughout 2016 and 2017, the Kazuo Okada case cast a shadow over another Wynn shareholder lawsuit. Elaine Wynn, Steve Wynn’s ex-wife and Wynn Resorts co-founder, sued the company in order to release her $1 billion in shares.
Elaine Wynn’s filed a separate claim in Wynn’s lawsuit against Okada. She wanted to escape a shareholders agreement that kept her from divesting herself without board approval in 2016. After she was removed from the board, her lawsuit claimed she was a whistleblower who was fired from the board for trying to expose “serious misconduct”. Elaine Wynn’s suit received a setback in February 2017, when her chief lawyer, Quinn Emanuel, was thrown off the case by a Nevada judge.
Removal of Quinn Emanual
In January 2017, District Judge Elizabeth Gonzales ruled that Quinn Emanuel and other Elaine Wynn lawyers could not reveal Wynn Resorts secrets in “any way, shape, or form” in the case. They could contest Elaine Wynn’s disqualification from the board, but nothing else.
Judge Gonzales wrote in her opinion, “I’ve had multiple stories every time I’ve dealt with this information. The fact that the story changes whenever some new information come up gives me a high level of concern, which is why I am trying to preclude Quinn Emanuel from affirmatively reaching out to anyone.”
