“The supreme art of war is to subdue the enemy without fighting.”
— Sun Tzu
Sun Tzu was a Chinese general and philosopher whose wisdom, distilled in “The Art of War,” has echoed through the ages. It has informed Japanese warrior culture and American military leaders alike.
It’s also popular reading among some members of the business community.
Sun Tzu was noted for observing, “The quality of decision is like the well-timed swoop of a falcon which enables it to strike and destroy its victim.” Interestingly, he also said, “If your opponent is of choleric temper, irritate him.”
It’s just a guess, but I suspect Kazuo Okada is familiar with those aphorisms.
After enduring six years of insults and accusations, this past week the proud Japanese billionaire emerged victorious in a battle that, casino history may one day note, never should have been fought in the first place. After preparing for an epic courtroom battle, he prevailed against his former business partner, Steve Wynn, without going to trial.
Marred by the sleazy graffiti of sexual harassment allegations and mounting litigation, Wynn and his handpicked corporate board of directors of Wynn Resorts announced on Thursday it had agreed to pay $2.4 billion to settle its litigation with Okada’s Tokyo-based Universal Entertainment Corp and its American subsidiary, Aruze USA Inc. In 2012, Wynn’s board forced the sale of Universal’s 20 percent stake in Wynn Resorts, a company Okada had co-founded with Wynn a decade earlier when they were the best of friends. The forced sale came after determining what the board claimed were illicit payments by Okada to Philippines gaming regulators to curry support for a separate casino resort project in Manila.
The confidence of Wynn’s board was bolstered by a report from former FBI Director Louis Freeh, whose one-year investigation found Okada had spent approximately $110,000 in cash and gifts over a three-year period on Philippines gaming regulators and their family members. Okada and his associates were accused of conducting “improper activities for their own benefit” and he was later knocked off the Universal board he once ruled. Okada has denied wrongdoing or unethical behavior.
These days the 2012 Freeh report looks like a lounge comic’s punchline compared to the news that in 2005 Wynn paid $7.5 million to a casino salon manicurist. That matter was folded into the confidentiality of a limited liability company prepared by Wynn’s longtime attorneys. It was prepared at the behest of a board of directors now being buried by accusations of failing to maintain a scintilla of independence from the chairman. The company has agreed to pay Okada-Universal by the end of the month.
Wynn has vehemently denied the accusations first raised by The Wall Street Journal even as he’s retreated from the battlefield, and that’s his right. He’s consistently maintained that his ex-wife, Elaine Wynn, is responsible for the campaign to discredit him. She’s denied that.
In recent weeks, Okada watched the powerful former Wynn Resorts chairman and casino industry legend experience something very much like lingchi, more commonly known as “the death from a thousand cuts.” Wynn’s rapid collapse from Wynn Resorts chairman has been an ugly spectacle, and from the look of things it’s not over yet.
Institutional investors are litigating the company over the alleged reckless behavior of the former chairman and lack of independence of the board of directors. Add to that the lawsuits filed by former massage therapists who claim Wynn coerced them into performing sex acts, and the man Time magazine once called “the Great Casino Salesman” has more headaches in store.
Gaming stock analysts are having a field day speculating the next move inside Wynn Resorts as the company’s stock has rocketed on the news of the Okada settlement. A roundup by Fantini’s Gaming calls reaction to the Okada settlement “extremely positive,” in part because it also opens the door for a resolution of the stock wrestling match between the former chairman and his ex-wife.
Wynn resigned on Feb. 6. Two board members announced their departures last week in what could be described as a good start. The settlement will make a merger or sale possible, John DeCrea of North American Research observed, but it doesn’t resolve the regulatory issues.
Gaming regulators in Nevada and Massachusetts continue to investigate Wynn and his mortifying mess. Authorities in both states on Friday began to issue limited waivers of confidentiality for officials associated with Wynn’s properties and myriad business identities. The investigators want answers, and no one associated with the company – including all its experienced former local and federal law enforcement officials – is in any position to play coy.
Meanwhile, that proud old business samurai Kazuo Okada has emerged from the debacle at Wynn Resorts with his reputation unblemished by comparison.
Disclosure: Wynn Resorts and the Elaine P. Wynn and Family Foundation have donated to The Nevada Independent. You can see a full list of donors here.
John L. Smith is a longtime Las Vegas journalist and author. Contact him at email@example.com. On Twitter: @jlnevadasmith