Inside Asian Gaming

INSIDE ASIAN GAMING | December 2012 12 the Philippines prior to the change of presidential administration in the summer of 2010 were undertaken on behalf of and for the benefit of Steve Wynn and Wynn Resorts”. The company vehemently denies this. The FCPA does not prohibit a“reasonable andbona fide expenditure, such as travel and lodging expenses, incurred by or on behalf of a foreign official … directly related to the promotion, demonstration or explanation of products or services; or the execution or performance of a contract with a foreign government or agency thereof.” What it does prohibit is conduct like that of a California telecommunications company that was slapped with an enforcement action for spending several millions of dollars over a period of years for hundreds of customer trips arranged for the purpose of obtaining systems contracts in China. These included visits by employees of state-owned companies to popular US tourist destinations. The trips were purported to be for “training,” and approximately $670,000 of the expenses was falsely recorded as such. A New Jersey- based telecom ran into similar trouble over hundreds of trips by Chinese government officials ostensibly for training and facility inspections that masked holidays in New York City, Las Vegas, Hawaii, Disney World, the Grand Canyon and Niagara Falls. The expenses were either not recorded or falsely listed on the books as “consulting fees,” the Justice Department says. This included cash that was handed to some of the officials for spending money. According to the Freeh report, everyone in Mr Naguiat’s party received US$5,000 in credit for “shopping and gaming”. This was granted at the request of Mr Okada’s representatives and charged to the Universal/Aruze USA account. Another 80,000 Macau patacas (approximately $10,000) was advanced from the cage and charged to the Universal/Aruze account for a Chanel bag Mr Naguiat wanted for his wife. If it is true, as Wynn’s suit alleges, that Mr Okada’s representatives also wanted the stay to be kept secret and instructed the hotel that Mr Naguiat would not register as a guest (he would be listed by VIP Services as “Incognito” followed by his name) that could prove especially damning from the standpoint of the FCPA. The same goes for the accusation that they wanted to conceal some of the costs by laying themoff onWynn Macau. This included accommodations at the “most expensive” suite at the property, the 7,000-square-foot Villa. This was refused, according to the Freeh report. Mr Okada denies any knowledge of or involvement in wrongdoing at the company. Wynn likewise maintains that it has followed the law both in letter and spirit. In August 2011, the month the Compliance Committee commissioned its second investigation into the Philippines, a notice was issued to all the members of the board to report in October for training on the Foreign Corrupt Practices Act. They also were instructed to review the company’s “Code of Business Ethics” and “Policy Regarding the Payment to Government Officials” and to confirm in writing that they had read and understood them. Wynn says every director signed this “Code of Business Conduct and Ethics Acknowledgement” save one, Kazuo Okada. He notified the board that he would attend the FCPA training, the company says, but the week before it was to start he asked for the training materials to be translated into Japanese. He also wanted the date of the training moved. He never attended. The lawyers at Latham & Watkins, a US- based practice specializing in international law and regulation, say an effective compliance program should be able to satisfy at least three basic questions: • Is the program well-designed? • Is it applied in good faith? • Does it work? Currently, the FCPA does not provide for an affirmative compliance defense. The US Chamber of Commerce, among others, believes it should. So does Mr Koehler.“What you’re dealing with is not the law,” he says, “but the Justice Department’s and the SEC’s view of the law and in some cases that view has been rejected by the courts.” The chamber also wants the Act amended so that “willfulness” has to be proved for a company to be criminally liable. (Currently, this applies only to individuals.) They also want limitations on a company’s liability for the acts of its subsidiaries. For now, though, good intentions will carry only as much weight as federal prosecutors choose to accord them. “It’s the enforcement agencies’ view that’s important,” Mr Koehler says. “They hold the big stick.” Meet the new boss—Cristino L.Naguiat COVER STORY