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Chris Sieroty

Wynn Resorts criticizes fund's lawsuit

21 March 2013

LAS VEGAS -- Wynn Resorts, Limited on Wednesday criticized an amended lawsuit by a Louisiana public employee pension fund that claims the Las Vegas-based gaming company’s $135 million donation to the University of Macau Development Foundation was improper and potentially illegal.

“This is simply an attempt to recycle a complaint that was previously dismissed by a federal judge,” a Wynn Resorts statement said. “We will defend vigorously and expect it to meet the same fate as its pre­decessor: dismissal.”

The Louisiana Municipal Employees’ Retirement System, suing with other investors, made the claim in a lawsuit in 2012. U.S. District Court Judge James Mahan dismissed their lawsuit in February, saying they didn’t show that Chef Executive Officer Steve Wynn and other company directors had done anything wrong.

Mahan said they could refile a new lawsuit.

The plaintiffs filed the amended lawsuit late Monday in Las Vegas and said it corrects the “perceived defects.”

The pension fund and investors don’t allege that Wynn Resorts broke U.S. anti-bribery laws, only that the company knew or should have known the donation might violate the Foreign Corrupt Practices Act.

“The Macau foundation had board members with either oversight of Wynn Resorts’ gaming business in Macau by virtue of either their positions in Macau government or connections to Wynn Resorts through other business relationships,” the investors said in their amended lawsuit.

The Louisiana retirement fund and other investors argue the contribution “was an improper attempt by the board to influence the procurement of a casino license.” They allege that it constituted an “egregious and shocking breach” of the board’s fiduciary responsibilities.

In May 2011, Steve Wynn and a large majority of the company’s board approved the $135 million gift to the University of Macau. Last May, Macau’s government approved the gaming company’s plan to build a $4 billion resort on a 51-acre site on the Cotai Strip.

According to the amended lawsuit, Wynn Resorts directors knew or should have known they were making a potentially illegal payment to a foreign university run by a foreign government.

The plaintiffs argue the donation caused a series of events that they say damaged shareholders, including lawsuits and more than $1.9 billion spent to buy out Kazuo Okada’s stake in Wynn Resorts.

The company seized Okada’s shares last year at a 30 percent discount after an internal investigation found him unsuitable as a board member or stockholder.

The company says Okada and his Tokyo-based company violated U.S. anti-corruption laws through payments made to gambling regulators in the Philippines.

Okada, chairman of Universal Entertainment Corp. and co-founder of Wynn Resorts, resigned from the board Feb. 21, a day ahead of a shareholder vote on his removal. Shareholders in Wynn Resorts voted overwhelmingly to remove Okada.
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