Dissident Wynn Resorts Ltd. board member and shareholder Kazuo Okada is stepping up the pressure on Wynn as he and the Las Vegas company head toward a court showdown.
Attorneys for Okada, who has a nearly 20 percent stake in Wynn stock, on Friday filed with a Las Vegas court a brief asserting that by failing to open certain books and records to him for inspection, Wynn Resorts was making it impossible for Okada to fulfill his duties to fellow stockholders as a director.
Okada filed suit in Clark County District Court on Jan. 11 in hopes of gaining an order requiring Wynn to open some of its confidential business records to him. Specifically, he's seeking records related to his investments in the company and the company’s decision to have subsidiary Wynn Macau pledge a donation of $135 million to the University of Macau.
In Wynn’s view, the legal dispute between Okada, a Tokyo gambling industry billionaire who owns $2.74 billion in Wynn stock, and Wynn erupted after the Wynn board found Okada’s investment in a Philippines gambling resort was inappropriate, as it would put Okada in competition with Wynn. Wynn also has accused Okada of making misrepresentations linking Wynn to the project in Manila Bay.
Attorneys for Wynn have suggested the University of Macau donation issue was a red herring. In responding to the Okada lawsuit, they said that while Okada may have opposed the donation during an April board meeting, he later attended a ceremony at the University of Macau in which Wynn Macau was thanked for the donation.
"Okada even placed himself in a photograph, along with Mr. (Steve) Wynn and others, accepting the accolades and gratitude of the (university) rector on behalf of the people of Macau for the donation," Wynn’s response filed in court says. "It is safe to say that any reservations Okada had with respect to the donation were quickly cast aside."
The Wynn attorneys — led by Robert Shapiro of O.J. Simpson trial fame — also in their Jan. 27 response disputed assertions by Okada he needed to inspect the books "to properly exercise his fiduciary obligations" as a director of Wynn.
If that had been the case, Wynn attorneys said, Okada would have first raised his "alleged 'concerns' about how certain Wynn funds have been used and his need for further information and documentation with the Wynn Board and/or the Wynn Compliance Committee."
They suggested Okada was trying to convince Clark County District Court Judge Elizabeth Gonzalez and, "more importantly to Okada, the court of public opinion," that Wynn was concealing evidence of wrongdoing.
"One thing should be made perfectly clear: Wynn has nothing to hide and Okada knows it," the Wynn filing said.
Attorneys for Okada, however, fired back Friday with a court brief saying Okada had requested the records at issue, had been denied access to them and that Wynn was impeding his ability to act as a director.
"Mr. Okada has a fiduciary duty to act in the best interests of the corporation and its stockholders and to act in an informed manner," the Okada filing said. "Without the right to inspect the company’s books and records, he cannot fulfill that duty. Inspection is the director’s primary tool to ensure that the company’s management is acting in the best interests of the corporation and its stockholders."
Saying Okada had "lost trust in management," his attorneys said he wanted to look into the University of Macau donation as well as how a predecessor of Wynn Resorts spent $120 million developing and licensing its Macau casinos — $90 million more than the $30 million investment required by Macau, a Chinese gambling district.
Gonzalez has scheduled a hearing for Thursday on the legal dispute, though it’s unknown if she’ll rule at that time.
The legal filings by both sides indicate a key issue she’ll have to decide is whether directors — as opposed to stockholders — of Nevada companies have the right to inspect records on top of what management provides them. Another issue is whether Okada is suing as a shareholder, a director, or both.
Wynn asserts stockholders have no right to inspect its books since it’s current on Securities and Exchange Commission filings. Okada attorneys claim Wynn is trying to mislead the court by portraying his director request as a stockholder request.