Attorneys for Wynn Resorts Ltd. board member Kazuo Okada signaled Monday that he would cite ambiguities in a federal anti-bribery law in defending against a Wynn Resorts lawsuit.
As part of the dispute in which Las Vegas-based casino resort giant Wynn Resorts removed Okada as a shareholder because of concerns he had provided cash and gifts to Filipino gaming regulators, Wynn Resorts sued Okada on Feb. 19 in Nevada state court.
The suit alleges breach of fiduciary duty related to potential violations of the anti-bribery law, called the U.S. Foreign Corrupt Practices Act, which is aimed at blocking U.S. companies and officials associated with them — like Okada — from winning foreign business by paying off foreign officials.
The suit also alleges misappropriation of Wynn Resorts trade secrets related to Okada's alleged use of Wynn assets to develop a Filipino casino resort.
Besides redeeming his $2.7 billion in Wynn Resorts shares at a discount, Wynn Resorts is moving to remove Okada as a board member. He’s already been removed from the board of Wynn Macau Ltd. in the Chinese gambling region.
In Okada’s first formal response to the lawsuit, his attorneys on Monday transferred it to federal court in Las Vegas.
In a court filing, they said the federal court is the proper forum for resolution of the dispute because ''the issues raised on the face of the complaint involve a resolution of a substantial federal question'' — the scope and interpretation of the FCPA.
Okada’s attorneys noted the Japanese businessman was removed as a Wynn Resorts shareholder because the Wynn board found him to be ''unsuitable'' under gaming regulations and other interpretations.
In describing the Wynn Resorts lawsuit against Okada and his companies Aruze USA Inc. and Universal Entertainment Corp., his attorneys wrote in the brief Monday: ''In essence, plaintiff (Wynn Resorts) purports to (improperly) seek a judicial declaration confirming its conclusion that defendants are 'unsuitable' because they violated the FCPA.''
''Because plaintiff’s claims are predicated upon findings of violations of federal law, and thus arise under federal law, this action is properly removed (to federal court),'' Okada’s attorneys wrote in their filing. ''There is an important federal interest in the uniform interpretation of the FCPA. The U.S. Department of Justice has exclusive jurisdiction to prosecute criminal violations of the FCPA. Both the DOJ and the U.S. Securities and Exchange Commission have authority to seek injunctive relief to prevent bribery and recordkeeping violations of the FCPA.''
''Courts recognize that the statutory language of the FCPA is imprecise,'' Okada’s attorneys wrote in their filing.
They cited case law and writings by a legal scholar highlighting the ambiguities in the FCPA making it difficult to prove ''the business nexus element.''
That was described in the court filing as the connection ''between the anticipated results of the foreign official’s bargained-for action or inaction and the assistance provided by or expected from those results in helping the briber to obtain or retain business.''
''Given the exclusive jurisdiction over criminal and injunctive relief for FCPA violations, and the potential for conflicting interpretations of the ambiguous statutory language, this court should retain jurisdiction to ensure that federal law relating to the FCPA is interpreted in a uniform manner,'' Okada’s filing of Monday said.
Okada is represented in the filing by attorneys at the law firms Lionel Sawyer & Collins in Las Vegas and Paul Hastings LLP in Los Angeles.
The filing came one day after the New York Times reported the American Gaming Association had joined the U.S. Chamber of Commerce and other business groups in asking the Justice Department and the SEC for new guidelines on FCPA enforcement that would help businesses comply with the law.
For the U.S. gaming industry, the FCPA is a hot issue not just because of the Wynn/Okada dispute but because Las Vegas Sands Corp.’s compliance with the law has been under review by federal regulators because of a lawsuit involving its business dealings in Macau.
Attorneys for Wynn Resorts will have a chance to challenge the transfer of their suit to federal court — they haven’t yet indicated if they’ll do so.
Monday’s legal action follows last week’s setback for Okada in which a state judge in Las Vegas, in another lawsuit filed by Okada against Wynn Resorts, rejected most of his request that Wynn Resorts be required to turn over confidential financial information to him. That lawsuit focuses on efforts by Okada to gain information about a $135 million Wynn Macau donation pledge to the University of Macau.
While Wynn Resorts has accused Okada of providing improper benefits to Filipino gaming regulators, Okada wants to see documents related to records on Wynn Resorts entertaining Macau government officials from 2000 to 2002 while the company was seeking a gaming license in Macau; documents on Wynn Resorts’ discussions with Macau officials on the license; and documents on meals, entertainment, lodging and gifts provided to directors, agents or employees of the University of Macau.