June 27, 2017 / 11:35 PM / 24 days ago

Family help oust Japan casino mogul Okada in boardroom coup

5 Min Read

FILE PHOTO: Kazuo Okada, chairman of Tiger Resort, Leisure and Entertainment Inc. listens at the press launch of 65th annual Miss Universe competition on January 30, 2017.Erik De Castro/File Photo

NEW YORK/TOKYO (Reuters) - Relatives of Japanese tycoon Kazuo Okada helped remove him as director of a Hong Kong investment company at the centre of a sprawling gambling empire, according to corporate filings and people with knowledge of the matter.

Three sources said it was a rift with family members over money and control of the Hong Kong company that played the decisive role in Okada's May 12 resignation as director of Okada Holdings Ltd. Okada Holdings owns 69 percent of Tokyo-listed Universal Entertainment Corp (6425.T), a maker of Japanese-style slot machines and operator of a $2.4 billion (1.87 billion pounds) casino in the Philippines.

The people spoke on condition of anonymity because the rift has not been made public.

One of those people, who was briefed by senior executives on the matter, said Okada's son Tomohiro was upset with how his father was using Universal dividends allocated to Okada Holdings. That included, the son believed, purchasing pieces for Okada's art museum in Hakone, a resort town near Tokyo.

Universal said it was not in a position to comment on the changes at its top shareholder.

Attempts to reach Okada at his address in Hong Kong were unsuccessful. David Krakoff, his lawyer in an unrelated U.S. lawsuit, did not respond to emails and calls seeking comment.

The sources did not provide details of how Okada's family helped oust him as director of Okada Holdings. His resignation was confirmed in a corporate filing in Hong Kong.

Okada's son Tomohiro holds 43.5 percent of Okada Holdings and his daughter Hiromi holds just under 10 percent - together enough to have the majority of shares needed to remove him under the terms of the company's founding documents.

Reuters was unable to determine if Okada's wife Takako, who owns a stake of less than 1 percent, played any role in the changes.

Tomohiro, Hiromi and Takako did not respond to letters sent to addresses listed in public documents.

Okada is set to lose his post as chairman of Universal after the company recently announced a slate of directors that omitted him - a move Universal said had the blessing of Okada Holdings. Shareholders will vote on that list of directors, which includes the reappointment of Takako, at Universal's annual meeting on Thursday.

Okada was also recently dropped from the board of the company running Universal's casino on Manila Bay.

The boardroom shake-up was orchestrated in part by Universal President Jun Fujimoto, a company veteran whose relationship with Okada has grown increasingly strained over the years, according to people with knowledge of the recent changes and the relationship between the two men.

Fujimoto, who is in charge of Universal's profitable business of developing pachinko and pachi-slot gambling machines for the Japanese market, has at times questioned the wisdom of Okada's costly push into the Philippine casino market, the people said.

Universal denied there was such tension between Fujimoto and Okada. In response to other questions it referred to a recently launched internal investigation into Okada's alleged misuse of company funds and noted that it had added an outside director in an effort to bolster oversight.

"We are taking steps to further strengthen corporate governance," Universal said in an emailed response.

Universal announced this month it was probing an alleged misappropriation of $20 million by Okada and another director. Okada has not commented on the allegations.

While out as director of Okada Holdings, Okada still owns a 46.4 percent stake in the company and retains a grip over other parts of his empire, including a 100 percent stake in Aruze Gaming America, which manufacturers slot machines and is licensed in several U.S. states.

Separate from the recent allegations, Okada and his companies have been under investigation by the Federal Bureau of Investigation over a $40 million payment to a Manila-based consultant in 2010. The FBI's probe is focused on whether the payment was aimed at helping Universal gain tax and ownership concessions for the casino from the Philippine government, according to people with knowledge of the matter.

Universal and Okada have denied any wrongdoing and filed a defamation lawsuit against Reuters in 2012 for its reporting on the payments. The Tokyo District Court ruled in 2015 that Universal's case was without merit. Last year the Tokyo High Court upheld that ruling, dismissing Universal's appeal. Universal has appealed to the Supreme Court of Japan.

Additional reporting by Farah Master in HONG KONG; Editing by Lincoln Feast

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