Fallen pachinko king looks to retake his throne
Japanese billionaire Kazuo Okada's children and business colleagues took away the money-spinning casino company he created – and now he plans to take it back
Kazuo Okada’s dreams all seem to be coming true. There’s a casino with his name on top in the Philippines, a popular tropical retreat for Japanese holiday-makers, and over the past five years Asia’s fastest growing major casino market.
In July, after decades of dithering, Japan legalized casino gambling: Okada’s life’s work creating gambling devices for Japan and beyond, his stint as vice chairman of Wynn Resorts and then developing his own casino from scratch, makes him a compelling candidate for one of Japan’s three coveted integrated resort (IR) licenses.
Except that Okada has been written out of his dream, ousted in June last year as chairman of Universal Entertainment, the pachinko machine company he founded 50 years ago that made him a billionaire, by an alliance of his children and Universal executives led by President Jun Fujimoto wielding what Okada contends are bogus accusations of financial wrongdoing.
Now, he can’t even enter Okada Manila, the casino with the world’s largest dancing fountain, outdoing his former partner Steve Wynn, who forcibly cashed out Okada’s 20% of Wynn Resorts at a US$900 million discount in 2012, and now also finds himself, for completely different reasons, on the outside looking in at casinos with his own name on top.
“I was rudely disrupted and sent away from my dreams,” Okada says through a translator during a three-and-a-half hour interview in Hong Kong, where he took up residence to ease the transfer of his wealth to the children that turned against him. “But my intention is to make my way back and to fulfill my dreams.”
He’s intimately familiar with one model for coming back from losing your company. When MGM bought Mirage Resorts in 2000 and crowded out founder Steve Wynn, Okada put up half the capital – about US$455 million – for the enterprise that became Wynn Resorts.
That cashed-up company developed its eponymous resort on the Las Vegas Strip and won a Macau casino concession, returning Steve Wynn to the top tier of the casino industry.
But Okada doesn’t see a similar road to a happy ending following his separation from Universal. “I have no choice,” Okada says. “I have to get my company back to get my reputation back.” And his dreams.
Okada’s daughter, Hiromi, has recanted her actions that enabled his ouster from family vehicle Okada Holdings Ltd, which holds 67.9% ownership of Tokyo- listed Universal.
Okada created Okada Holdings in Hong Kong to benefit his children by avoiding Japanese estate taxes. The patriarch owns 46% of the holding company, his son Tomohiro has 43% and Hiromi holds a decisive 10% stake.
Hiromi and her brother Tomohiro were exceptionally close, and she says Universal exploited that bond to victimize her and her father.
“I only recently learned that the documents I signed were not what I intended,” Hiromi, seated beside her father, says through a translator. “I had no idea they could be used to drive my father out.”
Wittingly or otherwise, Hiromi and Tomohiro combined to control a majority of the shares in Okada Holdings and remove their father as the company’s sole director, appointing two new directors that Okada contends work in concert with Universal management.
The changes were made via papers Hiromi signed under pressure, allegedly being told there was no time to consult her father or get the English documents translated into Japanese.
“What did I do that was so mean to make my family do this to me?” Okada, who didn’t learn of the May 12, 2017 mutiny against him until several days after the fact, asks in regret tinged with anger.
Hiromi has filed two of four Hong Kong legal actions – Okada himself filed the others – aiming to reassert his control over Okada Holdings and therefore Universal.
Tomohiro has been out of contact with the family since his father’s ouster. The family believes he is in Japan under Universal’s stewardship. Attempts to reach him through Universal proved unsuccessful.
A Universal spokesperson says that in view of ongoing legal proceedings, “it’s not proper” for the company to comment on Okada’s assertions, but then asks, “Did Mr Okada show you any evidence for his claim[s]? We do have many for our complaints.”
Ahead of the revolt against him, Okada was devoting all but two or three days a month to the long-delayed Manila casino that soft opened at the end of 2016 to meet a deadline imposed by Philippine regulator Pagcor, but remained largely incomplete.
“My attention was fully on the Manila project,” Okada says. “While I was away, other people were taking advantage.”
But even after learning of the family coup, Okada professes he wasn’t worried. He arrived at Universal’s May 23 board meeting with a strategy to regain control of Okada Holdings.
Okada Manila had premiered its signature dancing fountain at the end of March, but had completed only a small fraction of the 1,000 guest rooms planned for the resort. Therefore, under terms of its license from Pagcor, Okada Manila could operate only a similarly small fraction of the 500 gaming tables and 3,000 slot machines.
Okada Manila needed money to add rooms and other amenities to maximize its revenue potential and compete in the Philippine capital’s burgeoning integrated resort sector dominated by billionaires Enrique Razon at Solaire, Lawrence Ho and Henry Sy at City of Dreams Manila and Genting’s Lim Kok Thay and Alliance Global’s Andrew Tan at Resorts World Manila.
At the May 23 board meeting, Okada asked Universal directors to consider endorsing a new share issue to help fund completion of Okada Manila. Okada planned to purchase all of the new shares, and, after injecting them in Okada Holdings under his name, reestablish majority ownership independent of his children.
But when he raised the proposal, Okada says directors declared the topic out of order, which he found “annoying and aggravating,” considering his status as chairman and founder.
Okada wasn’t the only one with a surprise at the meeting. A company auditor gave the board a preliminary report alleging that Okada had manipulated funds for his personal gain.
“Unknown to me beforehand, he started laying out allegations of wrongdoing, accusations I had no knowledge of and no involvement in,” Okada says.
The auditor confirmed that there had not yet been a full investigation into the allegations, and Okada admits he “scolded” the group in a raised voice. “What right does the board have to judge me over unsubstantiated accusations?”
According to Okada, “At that time, Fujimoto banged the table and said, ‛I’m suspending your powers now.’”
Okada was “utterly flabbergasted… bewildered to think that one can claim to have the power to suspend me based on unsubstantiated claims. I said, ‘I can’t work with people like this, there’s no way I can stay in a place with people like you, I’m going to have to fire all of you.’”
Okada left the room and was subsequently barred from returning to Universal’s Tokyo headquarters and Okada Manila.
Universal’s special investigation committee reported three instances of Okada allegedly manipulating corporate funds for personal gain that it claims cost the company an estimated US$20 million.
Okada denies it all, declaring the findings “an absolute sham,” repeatedly asserting during the interview that his corporate enemies conducted those questionable transactions to frame him, backing his claim with a nearly 3,000 word document detailing the alleged plot.
Meanwhile Universal is suing Okada in the Philippines and Japan, as well as taking action in the US against Aruze Gaming America, a casino gaming machine manufacturer that was once part of Universal, but since 2009 has been 100% owned by Okada.
In late July, Hong Kong’s Independent Commission Against Corruption summoned Okada for questioning based on a complaint from Okada Holdings’ new directors.
The ICAC’s involvement became known because Universal issued a press release announcing the commission had “arrested” Okada, who has not been charged with any crime.
“What they’re doing, including using government channels like the ICAC, is unfathomable to me,” Okada says of Universal’s management. “They are doing everything they can to ruin my reputation, to make it look like I’m a criminal.”
If Okada’s Hong Kong suits to regain control of Okada Holdings succeed, he expects to win back control of Universal and with it Okada Manila.
Then he aims to overturn Universal’s US$2.6 billion settlement in March with Wynn Resorts for the shares seized in 2012, restoring his position as the biggest stockholder in the company.
“I didn’t want to settle, I wanted the shares back,” Okada says, adding, “I’ve been vindicated,” since, following the Universal settlement, Wynn Resorts dropped its lawsuit claiming misconduct by Okada as a director.
“If this coup d’etat had not taken place, I foresaw being in three locations – Macau, Japan and Manila,” along with Las Vegas, Okada says – and that’s still his vision.
“Successful, self-made entrepreneurs are hard to keep down,” Okada’s Nevada-based attorney Bryce Kunimoto says. “They die hard, if at all, just like dreams.”