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Wynn Resorts Board Members to be Questioned in Litigation with
Japanese Billionaire Gaming Figure Kazuo Okada

Judge Rejects Okada Request to Block Wynn Resorts Deposition

By Steve Green, Las Vegas SunMcClatchy-Tribune Regional News

June 29, 2012--All of the Wynn Resorts Ltd. board members can be questioned by attorneys in the legal battle pitting Kazuo Okada against the rest of the board, a judge ruled Thursday.

With two and possibly three lawsuits progressing this summer in the litigation involving the Japanese billionaire gaming figure Okada, Clark County District Court Judge Elizabeth Gonzalez during a hearing rejected a request by Okada's attorneys that Wynn Resorts be blocked from taking his deposition this summer.

Okada filed suit against Las Vegas-based Wynn Resorts on Jan. 11 demanding to see books and records related to the company's pledge to donate $135 million to the University of Macau. His suit suggested improprieties as Wynn has a gaming license in Macau, the Chinese city that is the world's largest casino market.

In February, Wynn Resorts forcibly redeemed Okada's $2.7 billion in company stock at a discount and sued him alleging breach of fiduciary duties as a director. Wynn Resorts has also threatened to remove Okada from the board, though a shareholders' meeting for that purpose has not been scheduled.

Wynn Resorts says Okada is unsuitable to serve on the board or be a major stockholder since he provided benefits to gaming regulators in the Philippines, where he's developing a resort.

Each side has denied the other's charges of wrongdoing.

As the litigation progressed in federal and state court, Okada amended his document inspection demand to the company. He's now trying to gain information about how Wynn Resorts may have entertained and provided benefits to Macau officials while seeking its casino license there in the early 2000s.

Okada appears to be trying to show that while Wynn accused him of providing improper benefits to regulators, Wynn Resorts may have done the same thing.

The litigation is responsible for separate shareholder lawsuits against the directors and a Securities and Exchange Commission inquiry into Wynn Resorts' compliance with the Foreign Corrupt Practices Act, a U.S. law aimed at deterring companies from paying bribes to foreign officials.

Wynn attorneys have resisted this latest document inspection request, saying Okada is trying to gain information to use in the Wynn lawsuit against him.

They asked Gonzalez on Thursday to require Okada to appear in Las Vegas for a deposition so they could question him about his motives in demanding the documents.

"He sat silent for 10 years. Now all of a sudden we hear cries of urgency," James Pisanelli, an attorney for Wynn Resorts, told Gonzalez. "He now is pressed for time and there is something urgent about what he is doing on this retrospective look at these old and cold documents and issues."

But Gidon Caine, an attorney for Okada, said it's improper for Wynn Resorts to try to block Okada from seeing documents he's entitled as a director to see.

"Wynn Resorts' deposition request is an attempt to delay inspection (of records) and harass Mr. Okada," Caine and the rest of Okada's legal team told Gonzalez in a brief.

They said the inspection of books and records is "a necessary tool to permit him to carry out his fiduciary duties to the corporation."

Gonzalez ruled Wynn attorneys have a right to take Okada's deposition on the narrow issue of whether there's an improper purpose behind his document inspection demand.

The date and the location of the deposition have not been worked out -- Okada wants to do it in Hong Kong, the Wynn team wants to do it in Las Vegas. Gonzalez said she may entertain a request that it be conducted in Hong Kong, with Okada footing the bill for Wynn's team to travel there.

After Okada's deposition is taken and more legal briefing is completed, Gonzalez plans to hold a hearing on whether Okada's document inspection request is reasonable and relates to his role as a director of Wynn Resorts.

She said that in the main lawsuit filed by Wynn Resorts against Okada, Okada attorneys will have the opportunity to take the depositions of the other Wynn directors.

Gonzalez rejected a request by Okada attorneys Thursday that the directors depositions be taken on the issue of whether Okada's document demand involves an improper purpose.

Okada's position is that the directors need to be deposed on that issue soon because they've showed bias against Okada in refusing to grant his inspection requests, they've failed to investigate matters raised by Okada and they have "knowledge of the underlying subjects that might support Mr. Okada's suspicion of non-compliance with applicable laws and rules governing use of corporate assets."

Gonzalez, however, said the other directors need not be questioned about Okada's document inspection requests.

"Whether the other directors think it's (the inspection request) reasonable or not isn't the determining factor," Gonzalez said. "The determining factor is whether I think Mr. Okada is using it for a proper purpose."

The main lawsuit had been moved to federal court by Okada, but a federal judge moved it back to Gonzalez's court on June 21.

However, Okada's attorneys may try to keep a portion of the suit relating to federal securities laws in federal court.

That means three actions could continue into the fall at least: The federal securities case, the main lawsuit before Gonzalez and the Okada inspection case before Gonzalez.


(c)2012 the Las Vegas Sun (Las Vegas, Nev.)

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