Legal saga continues

Yes there is honor, even in the casino industry.

Japan’s Universal Entertainment Corp. (UEC) has announced that as part of its plan to expand its casino-related businesses in the United States, it is creating Limited Liability Co. ABC based in Tokyo, Japan, that will become the direct parent of the different companies operating these businesses, namely Tiger Resort Asia Ltd., Aruze USA Inc., and UE Technologies Inc.

The new company, it said, would employ a mechanism through which unsuitable individuals, as well as persons acting on behalf of said individuals, may not have any involvement in the execution of the business. UEC explained that since the arrangement will create a structure for executing business without being affected by unsuitable individuals, even the appointment as director at the company or parent level, will not affect the operation of casino-related businesses even by applicable laws and ordinances in countries around the world.

In its statement to the JASDAQ Securities Exchange, UEC noted that casino-related businesses are prone to hosting ties with anti-social forces, such as involvement in money laundering. It is for this reason that casino operators are strictly regulated, including in the US.

The company explained that in acquiring and maintaining licenses for casino-related businesses in the US, members of management and shareholders must undergo strict screenings of suitability conducted by the gaming commission. It stressed that in cases where unsuitable individuals are present among management or shareholders, there is a risk of being unable to acquire a license or having its license invalidated.

As part of its preparations to secure the structure to execute its casino-related businesses in the US without being affected by a shareholder of the company’s parent who has been cited as violating governance and compliance, adding that this shareholder is already the subject of an investigation by the Nevada Gaming Commission, the group is undertaking an intra-group organizational realignment for its casino-related businesses.

Among the companies that will be placed under LLC ABC is Tiger Resort Asia Ltd. based in Hong Kong, which is 100 percent owned by UEC. Listed as its representative is director Takako Okada.

Takako is the wife of casino mogul Kazuo Okada. Last year, it was reported that Kazuo was suing his son, daughter, and wife to wrestle back control of Hong Kong-based Okada Holdings, the corporate parent of UEC which is the pachinko, slots, and casino equipment manufacturing company which Kazuo founded in 1969.

Kazuo owns 46.4 percent of Okada Holdings, while his children now own a combined 53 percent controlling stake. Meanwhile, Okada Holdings has a 67.9 percent stake in UEC which booted Kazuo out as board member last year.

The planned Limited Liability Co. ABC is currently a subsidiary of WonderGraph Corp. which, in turn, is a subsidiary of UEC. In the future, UEC will acquire all of WonderGraph’s interest in ABC, thereby making the latter a subsidiary of UEC.

It has been reported that following Takako’s reappointment to the UEC board and for that, Kazuo said he could not forgive her. Tomohiro and Hiromi are his children from a previous marriage.

UEC owns the $2.3-billion Okada Manila casino resort.

This latest reorganization move by UEC is seen as an excellent move to prevent Kazuo from having any further involvement in UEC’s casino-related businesses.

Earlier, Okada was thrown out of the boards of both UEC and TRA following accusations that he had committed fraud involving TRA funds. TRA later sued Okada before the Tokyo District Court and the High Court of the Hong Kong SAR.

Last month, UEC revealed that it had also filed criminal and civil charges against Aruze Gaming America Inc. (AGA) and Okada, seeking damages for violation of patent and other rights. The cases were filed in the US, Macau, Philippines, and Hong Kong, with UEC accusing AGA of illegally using patents on gaming machines belonging to the company to sell gaming machines in each jurisdiction.

Tiger Resort Leisure and Entertainment Inc. (TRLEI), which manages Okada Manila, has also filed two criminal complaints in Makati and Parañaque against Kazuo for perjury and estafa respectively. TRLEI accused Kazuo of illegal disbursing $3 million in company funds for his salaries and consultancy fees which were unauthorized by the TRLEI board, as well as for a supply contract (LED fixtures for Okada Manila) given to Kazuo’s personal company Aruze Philippines Manufacturing Inc.

In June of last year, Kazuo was removed as director, chairman and CEO of TRLEI together with president and COO Takahiro Usui and chief technology officer Kengo Takeda.

Okada is also facing cases in South Korea, Hong Kong, and Japan.

Meanwhile, the National Bureau of Investigation here is investigating why the official recommendations of a Parañaque prosecutor on the two criminal cases filed against Kazuo were posted on social media even before the recommendation were have been officially released.

As for the perjury charges, TRLEI claims that Kazuo and Usui made false statements under oath. In questioning their ouster from Okada Manila, the two said that TRLEI did not submit an updated general information sheet for 2017 before the Securities and Exchange Commission and that the company implemented a mass layoff.

TRLEI said the documents have been submitted and there was no mass layoff, adding that it is hiring more workers and not forcing shops at Okada Manila to close.

But Kazuo will not stop until he regains control of his empire. There were media reports that after talking to her father, Hiromi has filed a suit asking the Hong Kong High Court to order that the transfer of her nine percent stake in Okada Holdings to her brother Tomohiro was invalid and that she was misled. She has also reportedly filed a criminal complaint with the Hong Kong police accusing her brother of a financial crime.

Since the combined share of Kazuo and Hiromi is over 50 percent, experts say that Kazuo would be able to hold an extraordinary meeting of Okada Holdings shareholders and come back as chairman.

Can UEC’s reorganization move prevent Kazuo and Hiromi from getting back control of the casino businesses? The plot thickens.

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