By Ben Blaschke
A Special Investigation Committee employed by Japanese gaming giant Universal Entertainment Corporation has found former chairman Kazuo Okada guilty of committing three acts of fraud.
Universal, which first uncovered evidence of possible fraudulent acts by Mr Okada earlier this year, released the committee’s findings overnight stating that the company’s founder “led and conducted the fraudulent acts” and that he “committed these acts for his own personal benefit … it can only be said that this is an extreme intermingling of private and public affairs and that there was a lack of a sense of ethics that one should naturally have as a director of a listed company.”
The report also alleges that Mr Okada visited the home of former Director and General Manager of Administrative Division, Yoshinao Negishi, during the course of the Special Investigation Committee’s probe to “intimidate and threaten him with respect to the subject matter of the investigation.” Mr Negishi was suspended by Universal in June amid allegations he aided Mr Okada in an illegal transfer of funds from Universal subsidiary Tiger Resort Asia Ltd (TRA) in March 2015.
The HK$135 million transfer, described at the time as a loan, was the first of the three suspicious acts that instigated the investigation.
The committee found that the loan was “for the purpose of collecting on the loan credit of Okada Holdings Limited (Okada HD)” and to “obtain funds to be allocated to the payment of art work which is a personal use.”
It found that Mr Okada’s actions cost TRA roughly HK$16 million “for the purpose of Okada HD’s gain, and consequently, for the purpose of Mr Okada’s personal gain.”
“These acts by Mr Okada can only be construed as misappropriating the deposits of TRA to facilitate his own gain and causing economic losses to TRA in the process. Moreover, these transactions were conducted by Mr Okada at his own discretion without going through designated internal procedures,” it said.
The second instance, in May 2015, saw Mr Okada instruct a TRA staff member to prepare a check in the amount of HK$16 million to a third party, who subsequently deposited the amount – resulting in the payment of HK$16 million from the account belonging to TRA.
“Prior to issuing the check, largely due to the fact that Mr Okada had made a request that his personal officer remuneration be increased to [Mr Negishi], one can conclude that the payment of HK$16 million that Mr Okada asked TRA to make from its account based on the check was intended to facilitate the gain of Mr Okada himself,” the committee’s report said.
“These acts by Mr Okada can only be construed as misappropriating the deposits of TRA to facilitate his own gain and causing economic losses to TRA in the process. Moreover, these transactions were conducted by Mr Okada at his own discretion without going through designated internal procedures.”
The third and final uncovered instance, which predated the first two, took place in late 2013 when UE Korea, a wholly-owned subsidiary of TRA, had been negotiating over the purchase of land for a casino project in South Korea.
The committee found that after suddenly changing the lead business entity of that project from UE Korea to Okada Holdings Korea Co Ltd – a wholly-owned subsidiary of Okada HD – in order to raise the deposit for the purchase of the land in South Korea by Okada Korea, Mr Okada borrowed US$80 million through Okada HD by providing deposits belonging to UE Korea as collateral.
It also found that Mr Negishi “repeatedly pointed out to Mr Okada that providing deposits belonging to UE Korea as collateral in order to borrow monies through Okada HD infringed on regulations on Aggravated Breach of Trust,” but that “Mr Okada chose to carry out the provision of collateral nonetheless.”
“The act by Mr Okada of making UE Korea carry out the provision of collateral can be evaluated as Mr Okada breaching his duty as a director of the company and UE Korea for the purpose of facilitating the gain of Okada HD and, by extension, himself, and as causing economic losses to UE Korea,” it said.
“Furthermore, Mr Okada conducted these acts at his own discretion and without going through internal procedures.”
Universal said it will now examine the measures it should take against both Mr Okada and Mr Negishi. It added that while Mr Negishi may be dismissed from his position or expelled from the company, “in reality there is room for doubt about the extent to which he could have stopped Mr Okada.
“Moreover, it has been ascertained based on objective materials that in fact, Mr Okada paid a visit to the home of the Director and General Manager of Administrative Division at the time to violently intimidate and threaten him with respect to the subject matter of the investigation by the Special Investigation Committee during the period of said investigation as well.”
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