Philippine regulator says Okada's project under review
TOKYO/MANILA - Shares in Universal Entertainment Corp sank to a nine-month low on Monday after Reuters reported U.S. gaming regulators were investigating payments from its affiliates to an associate of the former head of the Philippine gaming regulator.
Shares in the Tokyo-based company closed down 11.04 percent and have lost nearly 30 percent of their value this year. Universal is required to the Nevada Gaming Control Board because it supplies slot machines for casinos in that state in addition to making and marketing "pachinko" machines for the Japanese market.
The company, which is controlled by billionaire Kazuo Okada, has been developing a casino resort in the Philippines aimed at high-rollers from China since 2008. Okada, who serves as Universal's chairman, founded the company and remains an owner of almost 70 percent of its shares through a family trust.
Monday's decline in Universal shares was the biggest one-day percentage drop since Feb. 20 when Las Vegas titan Steve Wynn, a former partner and friend of Okada, said Okada's company had acted improperly in paying for about $110,000 in entertainment expenses to foreign gaming regulators, including officials from the Philippines.
Reuters reported on Friday that a Universal subsidiary made a $5 million payment in May 2010 to Rodolfo Soriano, a close associate of the former head of the Philippine gaming regulator.
The payment was made at a time when Universal was lobbying to win concessions for its $2 billion Manila casino from the administration of then-Philippine President Gloria Macapagal Arroyo.
Universal shares closed Friday at 1,685 yen and traded on Monday as lows as 1,488 yen.
Universal spokesman Nobuyuki Horiuchi said the company had no immediate comment.
Jay Santiago, a lawyer for the Philippine Amusement and Gaming Corporation (PAGCOR), which regulates gambling in the Philippines, said the issue of the payments detailed by Reuters would be discussed at an upcoming meeting of the regulator's board.
"Because of the issues that have come out, this will be discussed by the members of the board, and there will be a resolution in the coming days on what should be done with the project of Mr. Okada," Santiago told a Manila radio station.
Separately, a Philippine congressman who has urged the government to suspend the Universal casino project, called for a legislative hearing on the matter. Rep. Teddy Casino had previously submitted a resolution calling for an investigation.
"We will have to include new pieces of evidence unearthed by Reuters news agency that can help complete the picture of corruption in PAGCOR," Casino said in a statement.
Okada has been seeking to have a U.S. court reverse a move by Wynn to redeem his shares in Wynn Resorts Ltd at a 30 percent discount after it determined he was an "unsuitable" shareholder.
In addition to being Wynn's largest outside investor, Okada and Steve Wynn had been friends and partners for almost a decade before their bitter dispute began in 2011.
On Friday, one of the U.S. law firms representing Okada withdrew from the lawsuit against Wynn.
Paul Spagnoletti, an attorney with the New York offices of Davis, Polk, Wardwell LLP, said his firm had stopped representing the Japanese businessman. Spagnoletti would not cite a reason for the sudden withdrawal.