TOKYO/SAN FRANCISCO, Nov 30 (Reuters) - Japanese billionaire
Kazuo Okada's Universal Entertainment funnelled at
least $30 million to an ex-consultant for the Philippines gaming
authority who is now at the center of a bribery investigation,
according to sources and company records.
The sum is six times the amount initially confirmed by
Reuters and could, if found to be bribery, result in Okada being
stripped of his firm's casino license in the Philippines and
also jeopardise his gaming license in Las Vegas.
A Hong Kong firm established by Okada's Universal sent the
money to Manila-based consultant Rodolfo Soriano in a series of
payments in the first half of 2010, according to a review of
company records and interviews with more than a dozen current
and former employees and people familiar with the investigation.
Soriano, who has close ties to key members of the
administration of former Philippine President Gloria
Macapagal-Arroyo, received the payments as Universal was
lobbying for tax and other government concessions to boost the
profitability of a $2 billion casino it was developing on Manila
Soriano is now under investigation by the Philippine
Department of Justice which has created an inquiry panel on the
payments with a target to submit findings within the next month.
Universal, a Tokyo-based maker of gaming machines majority
owned by an Okada family trust, had no comment through its
lawyer, Yuki Arai. Soriano could not be reached for comment.
In addition to the investigation in the Philippines, the
Universal payments are being probed by U.S. gaming regulators,
with the Nevada Gaming Control Board likely to call the
70-year-old billionaire to give evidence at a closed-door
investigative hearing, people familiar with the matter said.
Soriano's powerful connections included Arroyo's husband,
Jose Miguel, with whom he had travelled to Las Vegas in 2009.
Soriano was an early partner in Okada's Philippine project,
and Universal documents describe him as the "personal secretary"
to Efraim Genuino, former head of gambling regulator the
Philippine Amusement and Gaming Corporation (PAGCOR).
Jose Miguel Arroyo, a lawyer by training, could not be
reached for comment. His spokesman, lawyer Ferdinand Topacio,
said he was unaware of any business dealings between Jose Miguel
Arroyo and Soriano. "We are denying reports linking Attorney
Arroyo to that bribery case," Topacio said.
Genuino's lawyers did not respond to calls seeking comment.
PAGCOR has said it has no knowledge of the Soriano payments but
is cooperating with the Philippine bribery investigation.
The Universal payments to Soriano in 2010 were described at
a company meeting as a "completion bonus" for his help in
clearing remaining hurdles for the casino, including an
exemption from corporate tax and foreign ownership restrictions,
people involved in the project said.
Philippine authorities have already threatened to strip
Okada's operating company of its casino license if investigators
find evidence of bribery. Nevada regulators could also impose
sanctions, including a suspension of Okada's Las Vegas license.
Either outcome would represent a major setback for Okada,
who has vowed to bounce back from a costly legal fight with
American casino magnate Steve Wynn to turn Universal into Asia's
leading operator of high-end casino resorts.
In the United States, the FBI has also taken statements from
those involved in the Soriano payments, according to people
familiar with that inquiry. The bureau declined to comment on
the state of its inquiry.
The Nevada Gaming Control Board's investigation has been
underway since at least August and is gathering momentum.
"We are continuing our work," board chairman A.G. Burnett
said, declining to comment on the agency's next moves or the
likely conclusion of its investigation. "We're about in the
middle stage of our investigation."
Hearings could help the board's three-member investigative
panel decide whether to bring a formal complaint against Okada
or his company, the people familiar with the investigation said.
Investigators were particularly concerned about fund
transfers to Soriano-controlled Subic Leisure and Management,
registered in the British Virgin Islands, because that
jurisdiction allows firms to conceal the identity of directors
"He's going to have some interesting explaining to do," one
of those with knowledge of the investigation said of Okada.
Universal has maintained that at least some of the payments
to Soriano were not approved. It has sued three of its own
former executives in Tokyo District Court, claiming they made
$15 million in payments to entities controlled by Soriano
without authorization by Okada or the Universal board.
A review of company records and interviews with sources
shows that a total of $40 million was sent by Universal to
Soriano-controlled firms. The money was sent to Hong Kong firm
Future Fortune, set up as an investment vehicle for the
Philippines project. Of the total, $10 million was routed back
immediately to Universal for internal accounting reasons,
leaving Soriano with a net $30 million.
It is not clear how that money was invested or disbursed.
Gloria Macapagal-Arroyo's government gave Universal a
corporate tax exemption in March 2010, leaving the casino liable
only for a 23.5 percent gaming tax. That exemption was key to
the projected profitability of the casino, which had been given
a provisional license in 2008.
As a result of the tax concessions and low labor costs in
the Philippines, Okada told investors and analysts last year
that the Manila casino would be more profitable than gaming in
Macau or Las Vegas, markets where Wynn has built his resorts.
The investigation of the payments to Soriano threatens to
complicate Okada's efforts to recover from a costly falling-out
with U.S. casino tycoon Wynn.
Okada was Wynn's largest investor until the American accused
him this year of improperly paying $110,000 in entertainment and
other expenses for gaming regulators from the Philippines and
Korea, where Okada is also looking to build a casino.
As a result of the disclosures, Wynn forced Okada to redeem
his 20 percent stake in Wynn Resorts for $1.9 billion,
a 30 percent discount to the market value.
Okada has sued to reverse the redemption, saying Wynn forced
him out for questioning Wynn Resorts' dealings in Macau.
The Nevada Gaming Control Board has been separately
investigating Wynn Resorts on allegations made by Okada that
Wynn's company sought to influence Macau officials through a
donation to the University of Macau, the people close to the
However, this probe was likely to be resolved without an
investigative hearing, they said, signalling that Wynn Resorts
was less likely to be subject to a major disciplinary action.
(Additional reporting by Taro Fuse, Kevin Krolicki and Takeaki
Ueno in Tokyo, Manuel Mogato in Manila, Sue Zeidler in Los
Angeles and Farah Master in Hong Kong; Editing by Mark Bendeich)