Billionaire founder fights back for control of Japan’s Universal

TOKYO/NEW YORK: Nearly three months after his ouster from the board at Universal Entertainment Corp, billionaire Kazuo Okada is fighting back to try to regain control of the US$2.2 billion Japanese gaming group.

At a news conference in Tokyo on Thursday, Okada is expected to say he has reinstalled himself as director of Okada Holdings Ltd, the Hong Kong parent of Universal, according to a person close to the 74-year old tycoon.

That development, which the person said was made possible by a recent change of heart by Okada’s daughter to support her father, marks a significant step in his effort to wrest back control of Universal itself.

Winning back the gaming empire he founded five decades ago is just the latest challenge Okada faces in a chequered career. He is locked in a legal battle with former associate Steve Wynn, and has been subject to a slew of tax, gaming and law enforcement probes, including those related to a US$2.4 billion casino in the Philippines.

But his ouster from Universal in June was more personal.

His son, daughter and wife voted him out of Okada Holdings in May, replacing him with two directors friendly to Universal’s board, which then dismissed him based on allegations he misappropriated US$20 million in company funds. Okada has denied wrongdoing.

Universal did not respond to questions about the changes at Okada Holdings. It has also declined to make its president, Jun Fujimoto, available for interview.

People familiar with the matter say Fujimoto largely engineered the boardroom coup that ousted Okada.

How the battle for Universal shakes out could alter the course of a long-running dispute between Universal and Wynn Resorts, say people familiar with the litigation strategy on both sides.

Writing to a Universal shareholder in June, Fujimoto said Okada was ‘unfit’ to represent a public company, echoing Wynn’s reasoning for dismissing Okada as a director of Wynn Resorts in 2012.

Okada says he is worried Fujimoto will settle with Wynn to access more than US$2 billion held in escrow while the suit is ongoing. The money is owed to a Universal subsidiary, and not Okada, who wants a trial.

“This is what scares me most,”

Okada told Reuters in an interview on July 13.

“It’s natural for them to think that getting the money is the smart thing to do.”

Changing sides

Okada says his son Tomohiro and daughter Hiromi turned against him partly because they were not being paid the full dividends on their stakes in Okada Holdings, a problem he blamed on subordinates.

Contacted by phone, Tomohiro declined to comment. Hiromi could not be reached for comment.

Okada managed to get Hiromi back on his side over a series of meetings this summer, the person close to Okada said, but his relationship with Tomohiro remains strained. Okada owns 46.4 per cent of Okada Holdings.

With support from his daughter’s 9.8 per cent holding, Okada last month submitted a filing to Hong Kong’s corporate registry seeking to reinstate himself as director. Tomohiro, who owns 43.5 per cent, is contesting the move, and the registry has not made any documents public, citing “issues with the company”.

Even if Okada takes back control of Okada Holdings, re-establishing himself at Universal is not a given, some legal experts say, noting the Universal board could fight him in court, citing the misappropriation allegations.

Okada wrote to the Universal board last month demanding a special shareholders’ meeting to install a new board, including himself. Okada Holdings, which owns two-thirds of Universal, has the right to call such a meeting under Japanese corporate law.

High stakes

For Okada, the stakes go beyond his position at Universal.

He also owns Aruze Gaming America, a slot machine maker that competes globally with International Game Technology Plc and others.

Okada’s ability to defend himself against Universal’s allegations could impact Aruze Gaming America’s licenses to operate in the United States.

Gaming regulators in Nevada, Mississippi and Louisiana told Reuters that they were investigating Universal’s allegations against Okada.

“I‘ m concerned,” said Allen Godfrey, executive director of the Mississippi Gaming Commission, referring to Universal’s allegations that Okada committed fraud against the company.

“But there are always two sides to every story. The dust hasn’t settled on this yet.”

Okada and Universal sued Reuters for defamation in Tokyo in2012 for its reporting on a US$40 million payment made by a Universal affiliate in 2010 to a Philippine consultant. Three courts found the case had no merit, including Japan’s Supreme Court, which rejected a final appeal in July. — Reuters