Inside Asian Gaming

inside asian gaming December 2015 38 former director of the FBI is terming the conduct ‘prima facie’ FCPA violations. An analogy would be like calling the fire department to inform that your house is on the fire, but the fire department fails to show up.” The UMAC endowment, which has generated at least four shareholder lawsuits, is characterized as “suspicious” by Mr Okada, who cites “its enormous size, the fact that the 10-year term of the pledge matches precisely the length of the casino license Wynn Resorts was seeking, and the fact that the lead trustee of the University of Macau Development Foundation also has a position in the Macau government which enables him to influence the issuance of gaming licenses.” Presumably this refers to a prominent local businessman named Peter Lam Kam Seng, a charter member of the foundation and a member of the committee that elects Macau’s chief executive. “I am at a complete loss as to the business justification for the donation,” Mr Okada said in September in an open letter to Wynn’s shareholders, “other than that it was an attempt to curry favor with those that have ultimate authority for issuing gaming licenses.” He was the only one of the 16 directors to oppose the endowment. Wynn says that’s not true, that he objected only to its length. Charitable contributions as such are not prohibited by the Act as long as they are not used as a “pretense” to cover bribes to government officials. This distinction was reiterated in fresh guidance on the Act issued last month by the Justice Department and the SEC. The guidance gives the example of a Eurasian-based subsidiary of a US NGO that acceded to a request from an agency of a foreign government to make a grant to a local financial institution as a condition for attaining bank status. The company emerged in the clear, however, in part because it informed the DOJ of the request up front and because it did its homework by ensuring the money was transferred to a valid bank account and requiring the institution to provide audited financial statements along with a written agreement restricting the use of the funds and a confirmation that none of its officers were affiliated with the government. Then there’s the example of pharmaceutical giant Schering- Plough, which had a subsidiary in Poland that donated money to a foundation that restores historical landmarks. The foundation was genuine. Its founder and president, however, was the director of a government health fund that purchases pharmaceuticals. Worse, “Internal documents established that the payments were not viewed as charitable contributions but rather as ‘dues’ the subsidiary was required to pay for assistance from the government official,” the November FCPA guidance notes, adding that the payments also violated Schering’s own policies, which require that charitable giving “generally should be made to health care institutions and relate to the practice of medicine”. Wynn maintains that the UMAC donation “was made following an extensive analysis which concluded that the gift was made in accordance with all applicable laws.” No doubt, corporate counsel has since made note of these “Five Questions to Consider When Making Charitable Payments in a Foreign Country” from the FCPA guidance: What is the purpose of the payment? Is the payment consistent with the company’s internal guidelines on charitable giving? Is the payment at the request of a foreign official? Is a foreign official associated with the charity and, if so, can the foreign official make decisions regarding your business in that country? Is the payment conditioned upon receiving business or other benefits? As for Mr Soriano’s visits to Wynn’s casinos, they were part of more than $110,000 in room and food and beverage complimentaries and other courtesies that were extended to current and former members and associates of PAGCOR and their families at the behest of Mr Okada and/or his representatives. These sums were all charged to a courtesy account maintained by the company for Universal and Aruze USA and funded by deposits from Mr Okada or his affiliates. In November 2009, the husband of then-Philippines President Gloria Macapagal Arroyo was comped a week at Wynn Las Vegas at a cost of more than $4,600. In June 2010, his last month in office, Mr Genuino was comped $1,870 at Wynn Macau. (The Freeh report claims Universal also paid expenses related to a trip by the former PAGCOR chairman to Beijing during the 2008 Olympics.) More than $5,900 was comped in 2010 and 2011 for stays at Wynn Las Vegas and Wynn Macau by four South Koreans, one of whom was identified at the time as commissioner of the Incheon Free Economic Zone Authority, where Mr Okada is also looking to develop a casino. In September Blast from the Past “By invoking the specter of overseas bribery, Wynn has effectively opened itself up to a wide-ranging federal investigation of its dealings in Macau and elsewhere.” Mr Okada contends in the Freeh report that “all his efforts in 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.