Board Fight Erupts at Wynn Resorts

LAS VEGAS (CN) - A co-founder and board member sued Wynn Resorts, claiming he was the only board member to oppose a giant de facto bribe to China, and that Wynn Resorts issued false statements to shareholders to try to remove him before his term expires.

Kazuo Okada sued Wynn Resorts, Limited, in Federal Court, alleging securities violations.

Okada claims he was the only director to vote against Wynn Resorts' decision to donate $135 million to the University of Macau Development Fund in 2011 - one month before China granted Wynn a land concession for a giant new casino on Macau.

"This donation is now subject of media scrutiny and several investigations regarding potential bribery and Foreign Corrupt Practices Act violations," Okada says in his complaint.

Macau is one of two of China's "special administrative regions." The other is Hong Kong.

Okada claims that Wynn Resorts issued a false and misleading proxy statement on Jan. 3, claiming that "acting through an 'Executive Committee' comprised of all directors other than Mr. Okada, has called a special meeting of the company's shareholders for February 22, 2013. In the Proxy, Wynn Resorts seeks the shareholders' approval of a proposal by Wynn Resorts to remove Mr. Okada from the board prematurely, ahead of the scheduled expiration of his term at the regular 2014 Annual Meeting of shareholders (which has not yet been scheduled). In recommending that the company's shareholders vote to remove Mr. Okada from the Board, the Proxy makes numerous materially false and misleading statements, as detailed herein, as part of its effort to avoid an honest and informed shareholder vote on its dealings and to silence the only dissenting voice on its board with respect to certain actions of Steve Wynn and other company management."

Okada says in his complaint that the special meeting is part of Steve Wynn's effort to "reconsolidate power in his hands, and to deflect attention from highly suspicious and apparently improper activities in which the company has engaged under Steve Wynn's direction relating to its efforts to open a new casino resort on the Cotai Strip in Macau, China."

The tactics used to oust him include an "illegal share redemption, a one-sided 'investigative report' that was intended to offer only Steve Wynn's views disguised as a purportedly independent investigation, and a suspiciously timed 'about face' in the company's view of Mr. Okada's longstanding plan to build a casino in the Philippines," according to the lawsuit.

Okada says his own independent investigation turned up documents that "on their face, show a $50 million payment by Wynn Resorts to an obscure Macau company and individuals with connections to Macau's former top official and prominent local figures."

Okada, a citizen of Japan who lives in Hong Kong, says the Jan. 3 proxy statement omits and misrepresents facts on the "supposed 'imperative' need to remove Mr. Okada immediately, the company's authorization of the casino resort development in the Philippines by Mr. Okada's companies, [and] Mr. Okada's efforts to shed light on Steve Wynn's dealings in Macau as a representative of the company."

Okada, claims he who co-founded the company with Wynn in 2002, also challenges the proxy's claim that he failed to sign a company code of conduct form and attend compliance training.

Okada claims the proxy asks stockholders vote to remove him, falsely stating that "failure to take steps to separate the company from Mr. Okada ... poses materials risks to the company."

The proxy tells shareholders that if the proposal fails, the Executive Committee has authorized itself to "continue to seek to obtain a sufficient number of additional votes to approve the removal proposal," according to the complaint.

"In this way, Steve Wynn attempts to bypass the normal corporate governance procedure whereby Mr. Okada would have the right to seek re-nomination and a full and fair vote on Mr. Okada's re-election to the board upon the expiration of his term at the company's regularly scheduled 2014 annual meeting," the complaint states.

"If Steve Wynn is successful in removing Mr. Okada from the board, the remaining directors will be fully aligned with Steve Wynn, without anyone to offer independent views, check his power, or speak on behalf of shareholders and the best interest of the company."

Okada wants the Feb. 22 enjoined, and "other appropriate injunctive relief."

He is represented by Charles H. McCrea Jr. with Lionel Sawyer & Collins.

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