Steve Wynn and Kazuo Okada No Longer BFFs

Steve Wynn and Kazuo Okada No Longer BFFs

Posted on 19/02/12 - by Theodor Mavrodis News

A simmering feud that began in January has now exploded into a very public war of words, with Steve Wynn accusing former friend and business partner Kazuo Okada of fraud and forcibly buying back the 20% stake he owned in Wynn Resorts at a steep discount.

Rumors began to circulate in January that Wynn Resorts could be in hot water over improper payments that it made to pave the way for its lucrative Macau operations -- including a $125 million donation to the University of Macau -- with Wynn and Okada publicly pointing the finger at one another as far as who was responsible for authorizing the payments.

The war of words between the two longtime friends and business partners erupted over the weekend into a full-on battle, with Wynn Resorts taking the unusual move of forcibly buying back the 20% stake Okada owned in the company at a sizable discount.

Okada's shares were worth $2.7 billion based on the last closing price of Wynn Resorts' stock but the company decided it was only going to pay Okada $1.9 billion for the shares (and pay him back over ten years via a promissory note yielding just a 2% annual interest rate).

Wynn Resorts (of which Steve Wynn is CEO and chairman of the board) justified the move by unveiling the results of a year-long investigation of Okada's business activities by independent investigators the company hired, which unearthed more than three dozen instances where Okada engaged in "improper activities for their own benefit in apparent violation of U.S. anti-corruption laws."

Okada has vowed to block the attempts to seize his ownership stake and is askign for independent oversight of Wynn Resorts' board of directors, of which he is still a member after having his vice-chairman title previously stripped.

Okada is credited by many in the industry with saving Steve Wynn's career and personal fortune, bailing him out when Wynn was desperate to unload his Mirage casino to MGM Grand in 2000.

Wynn had gone so far in the past to say: "I love Kazuo Okada as much as any man that I've ever met in my life. He's my partner and my friend. And there is hardly anything that I won't do for him," but that ardor seems to have cooled in the face of cut-throat business practices in the world of gambling.

Okada made his fortune in pachinko games and had announced plans on his own to open a casino in the Philippines, a move that some feel is really behind the feud with Wynn concerned that the rival casino would cut into Wynn Resorts' profits in Macau -- an increasingly important source of revenues as business in Las Vegas and the US continues to lag.