Scientific Game

Okada’s Philippine Woes Continue

Although Universal Entertainment claims it has been cleared of allegations of wrongdoingby the Philippine Economic Zone Authority, the company is pressing on withits internal bribery investigation, as are the Philippine Department of Justice and the US FBI

Monday, 16 September 2013 11:48
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Kazuo Okada’s embattled gaming machine manufacturer Universal Entertainment claimed in a disclosure to the Tokyo Stock Exchange that it has been cleared of bribery and corruption allegations by the Philippine Economic Zone Authority.

PEZA, set up in 1995, is an office of the country’s Department of Trade and Industry. It aims to promote “export-oriented manufacturing and service facilities” inside special economic zones declared by the authority. Mr Okada’s Aruze Philippines Manufacturing, Inc. operates facilities within a PEZA-authorized zone.

According to the statement from Universal, PEZA issued a letter dated 23rd August stating that the group’s local unit, Eagle 1 Landholdings Inc., had “complied with all the necessary documents required by the Presidential Proclamation of the Okada Resorts as Tourism Economic Zone … without any special favours or accommodations extended …”

Universal contends the letter proves “the allegations about illegal expenditure are totally unfounded.” Still, the company has said it will continue looking into the allegations.

Last month, an internal investigation at Universal alleged former President Hajime Tokuda altered the minutes of a company meeting to include a 2009 payment of US$25 million connected to the company’s pursuit of its casino license in the Philippines.

The panel that conducted the probe, composed of a former high-ranking police official in Japan and two lawyers from the country, found “illegal payments” were made by “some managers who had ignored the company’s existing rules and regulations,” but it concluded there wasn’t enough evidence to prove bribery.

That hasn’t stopped Universal from subsequently recommending criminal charges against unnamed executives for “fraud, breach of trust and misappropriation of funds” in connection with the “illegal flow” of $40 million into the Philippines, where Universal wants to be one of four developers of integrated resorts at the government’s new Entertainment City complex in Manila.

A lawsuit filed by Universal in Tokyo last year also claims a former president of Aruze USA’s Japan office made an “unauthorized” withdrawal of $5 million from a corporate bank account in 2010.

The $40 million, described by Universal in part as “a payment linked to the Philippine business,” was first reported in a series of Reuters articles last year and is under investigation by the Philippine Department of Justice and the Federal Bureau of Investigation in the United States, where Aruze USA is licensed as a slot machine manufacturer.

Reuters tied the money to a politically connected businessman named Rudolfo Soriano.

Universal has had difficulty securing Philippine partners for the Entertainment City project after the country’s Department of Justice named Chairman Kazuo Okada and 25 others in an alleged scheme to set up dummy companies to acquire land for the resort. The department has said its investigation into the bribery allegations has been hampered by a lack of witnesses willing to testify.

Mr Okada was removed last year from the board of directors of Las Vegas-based Wynn Resorts and its Hong Kong-listed Wynn Macau subsidiary after an internal investigation found him “unsuitable” as a result of his business dealings in the Philippines. His shares in Wynn Resorts were forcibly redeemed at a discount. He had been the company’s largest individual shareholder.

Mr Okada denies the charges and is suing the company to contest his removal and the seizure of the shares.

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