The Tokyo High Court has dismissed an appeal by Kazuo Okada against a decision by the Tokyo District Court earlier this year ordering him to pay damages of JPY21.3 million (US$193,000) for three alleged cases of fraudulent acts against his former company, Universal Entertainment Corp.
According to an update from Universal, the Tokyo High Court found that “the claims of Mr Okada were objectively contrary to the facts and as such inadmissible” – ordering him instead to pay the damages previously awarded by the Tokyo District Court in February of this year. He will also be required to pay interest of 5% per annum backdated to 29 December 2017 plus all litigation costs.
Universal, the Japanese pachinko manufacturer and parent company of Okada Manila operator Tiger Resort, Leisure and Entertainment Inc, first filed the suit on 27 November 2017 in response to an internal investigation that found Okada had committed three cases of fraudulent acts against the company.
Universal stated at the time it was seeking compensation from Okada “for a part of the damage suffered by the company due to his negligence of duty as a board member of the company in connection with the three misconducts by Mr Okada.”
The three acts in question include a HK$135 million loan from Universal subsidiary Tiger Resort Asia Limited (TRA) to a third party in 2015, arranged by Okada, to obtain funds for his personal use and without imposing any interest charges; the unauthorized procurement of a check for HK$16 million from TRA; and changing the business entity that was purchasing land for an integrated resort in Korea from TRA subsidiary UE Korea to his own wholly-owned company, Okada Holdings Korea Co Ltd, for his personal gain.
Okada Holdings subsequently borrowed US$80 million for purchase of the land using UE Korea’s money as collateral, then charged UE Korea a US$173,562 management consultancy fee which was equivalent to the interest fee for the loan.
Okada was removed as Universal Chairman and kicked off the board following a June 2017 shareholder vote in which his estranged wife Takako Okada and son Tomohiro Okada moved against him.
Universal said the original decision against Okada by the Tokyo District Court, “acknowledges that the Fraudulent Acts were conducted under the order of Mr Okada, as well as that Mr Okada breached both his duty of care of a good manager and his fiduciary duty of loyalty as a Director of the Company.”