Universal Entertainment Corporation says it has received the final investigative report from a Special Investigation Committee established earlier this year to investigate potentially fraudulent acts by founder and former Chairman, Kazuo Okada.
The report, originally, scheduled for completion on 30 June 2017, had been postponed due to the discovery of two more matters of investigation in relation to Mr Okada. A final version of the report is now being prepared for disclosure with the company “adjusting parts unfit for disclosure from the standpoint of protecting the business secrets of the company and its business partners, protecting the privacy of individuals, and so forth.
“The Company intends to disclose said version of the investigative report for disclosure on 30 August as soon as it has been received,” Universal said. “Please note that the preparation of said version of the investigative report for disclosure is being conducted by the members of the Special Investigation Committee, with no involvement by officers and employees of the company.”
The Special Investigation Committee was formed in early June after it was revealed that Mr Okada and Mr Yoshinao Negishi, Director and Head of the Management Division, had illegally authorized the transfer of around HK$135 million on 20 March 2015 from Tiger Resort Asia Ltd to a third party. HK$130 million was then transferred to Okada Holdings Ltd with the alleged purpose of achieving “personal benefit for Chairman Okada.”
The Committee subsequently discovered two more cases of alleged illegal activity. The first originated from a US$80 million bank loan granted to Okada Holdings Ltd – a company entirely owned by Mr Okada and his relatives of which Mr Okada was the only director at the time – in February 2014 for the purchase of land in Korea. Mr Okada then created a security for US$80 million held by Universal Entertainment Korea Co – a wholly-owned sub-subsidiary of Universal Entertainment Corp – at the same financial institution that granted the loan. By the time that security interest was cancelled the following month, Universal Entertainment Korea had already paid US$170,000 in interest that should have been paid by Okada Holdings Limited.
The second case, in May 2015, saw Mr Okada issue a bearer check to the amount of HK$16 million from a bank account under the name of Tiger Resort Asia Limited, a Hong Kong subsidiary of Universal Entertainment Group. Three days later Mr Okada withdrew HK$16 million from a Tiger Resort Asia Limited account based on this check.
“As the series of actions leading up to the withdrawal of the funds described above have been done without necessary internal procedures of the Company, there is a suspicion that they constitute a serious violation of governance,” Universal said at the time.
“The Special Investigation Committee is determined to investigate into these new suspicions in order to clarify the whole picture and to formulate measures to prevent reoccurrence and the Company will continue to provide full cooperation for the investigation by the Special Investigation Committee.”
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