Wynn, Okada fallout continues with shareholder lawsuit

Wynn Resorts Ltd. board members, including Steve Wynn and Kazuo Okada, were sued Tuesday by a shareholder who says their conduct has harmed the company.

Wynn and Okada have been battling in multiple courts since January over charges and countercharges of wrongdoing related to Las Vegas-based Wynn Resorts’ growing Chinese casino resort empire and a dispute over Okada’s gaming development plans in the Philippines.

Tuesday's suit, filed by shareholder the Louisiana Municipal Police Employees Retirement System, claims Wynn Resorts directors breached their fiduciary duties ''by causing and/or allowing Wynn Resorts to engage in ultra vires acts (acts beyond its powers), waste of corporate assets and to allow potential violations of the Foreign Corrupt Practices Act (FCPA) from at least 2009 to the present.''

''Regardless of who ultimately prevails in the Wynn Resorts boardroom battle, it is the company that has, and will, lose the most,'' the suit says. ''Allegations of corruption are particularly damaging in the highly-regulated casino industry, and the company may be particularly vulnerable since the accusations are being made at a time when U.S. regulators are pursuing a record-breaking number of corruption investigations.''

A Wynn Resorts spokeswoman said the company had no comment on the lawsuit. Judging by the number of press releases issued in recent weeks by law firms saying they are investigating Wynn Resorts, Tuesday’s suit may be just the first of several shareholder actions against the company.

The Louisiana agency filed a ''derivative'' lawsuit Tuesday in U.S. District Court in Las Vegas against each of the 12 Wynn board members.

In a derivative complaint, a shareholder tries to sue a company’s directors or officers on behalf of the company so the company can collect damages from them.

The Louisiana police retirees’ system is no stranger to the Las Vegas federal courthouse. Last year it sued Las Vegas Sands Corp. after that company revealed its compliance with the FCPA, the U.S. law banning bribes to foreign officials, was being reviewed.

In Tuesday’s lawsuit against the Wynn directors, the shareholder sued all the directors but targeted Wynn and Okada over charges and countercharges those two have been making against each other since January.

The lawsuit complained that Wynn subsidiary Wynn Macau Ltd.’s pledge to donate $135 million to the University of Macau in China was ''extremely generous'' and appears to be unprecedented for both the university and Wynn Resorts.

''The fact that the chancellor of the University of Macau is also the head of Macau’s government, with ultimate oversight of gaming matters, coupled with the size of the 'donation,' has aroused suspicion that this was not a charitable gift,'' Tuesday’s lawsuit said. ''Rather, it was an indirect attempt by the board to improperly influence the procurement of a casino license.''

Wynn Resorts has already denied such assertions, saying the pledge agreement had been reviewed by attorneys to ensure it complied with the U.S. anti-bribery law, the FCPA.

''It should be noted that the company’s donation to the University of Macau was not the first such gift lavished on the Macau government,'' the lawsuit said, noting that in December 2006, Wynn Macau donated an early Ming dynasty vase valued at $10.1 million to the Macau Museum.

The Louisiana shareholder also complained in its lawsuit that Okada has, ''for the past several years, used accounts at Wynn Resorts to attempt to allegedly improperly influence gaming regulators in the Philippines for a casino project.''

''Okada could not, however, have used these accounts without the knowledge and approval of the board of Wynn Resorts,'' the lawsuit charges.

Okada has denied assertions he's been involved in wrongdoing.

The suit further alleges that Wynn Resorts’ decision to buy out Okada’s $2.77 billion stake in the company at a discount is ''financially advantageous'' to Steve Wynn because, ''by getting rid of Okada, it allows him to maintain virtually absolute control over the company he founded.''

The suit says Wynn Resorts likely faces steep costs in its litigation with Okada and in dealing with a Securities and Exchange Commission inquiry into its University of Macau donation pledge, along with ''reputational damage and the possible loss of licensing opportunities.''

The suit asks that:

• The Wynn Resorts board members be required to pay unspecified damages to the company;

• Wynn Resorts be barred from funding its pledge to the University of Macau; and

• Wynn Resorts be directed ''to take all necessary actions to reform and improve its corporate governance and internal procedures, to comply with the company’s existing governance obligations and all applicable laws, and to protect the company and its shareholders from a recurrence of the damaging events described herein.''

The Louisiana agency is represented in the lawsuit by Aldrich Law Firm Ltd. in Las Vegas and the firm Scott+Scott LLP in New York.