EXCLUSIVE-Philippines fixer paid $30 mln by Okada's Universal-sources

Nathan Layne and Joseph Menn
Reuters Middle East

TOKYO/SAN FRANCISCO, Nov 30 (Reuters) - Japanese billionaire

Kazuo Okada's Universal Entertainment funnelled at

least $30 million to an ex-consultant for the Philippines gaming

authority who is now at the center of a bribery investigation,

according to sources and company records.

The sum is six times the amount initially confirmed by

Reuters and could, if found to be bribery, result in Okada being

stripped of his firm's casino license in the Philippines and

also jeopardise his gaming license in Las Vegas.

A Hong Kong firm established by Okada's Universal sent the

money to Manila-based consultant Rodolfo Soriano in a series of

payments in the first half of 2010, according to a review of

company records and interviews with more than a dozen current

and former employees and people familiar with the investigation.

Soriano, who has close ties to key members of the

administration of former Philippine President Gloria

Macapagal-Arroyo, received the payments as Universal was

lobbying for tax and other government concessions to boost the

profitability of a $2 billion casino it was developing on Manila


Soriano is now under investigation by the Philippine

Department of Justice which has created an inquiry panel on the

payments with a target to submit findings within the next month.

Universal, a Tokyo-based maker of gaming machines majority

owned by an Okada family trust, had no comment through its

lawyer, Yuki Arai. Soriano could not be reached for comment.

In addition to the investigation in the Philippines, the

Universal payments are being probed by U.S. gaming regulators,

with the Nevada Gaming Control Board likely to call the

70-year-old billionaire to give evidence at a closed-door

investigative hearing, people familiar with the matter said.

Soriano's powerful connections included Arroyo's husband,

Jose Miguel, with whom he had travelled to Las Vegas in 2009.

Soriano was an early partner in Okada's Philippine project,

and Universal documents describe him as the "personal secretary"

to Efraim Genuino, former head of gambling regulator the

Philippine Amusement and Gaming Corporation (PAGCOR).

Jose Miguel Arroyo, a lawyer by training, could not be

reached for comment. His spokesman, lawyer Ferdinand Topacio,

said he was unaware of any business dealings between Jose Miguel

Arroyo and Soriano. "We are denying reports linking Attorney

Arroyo to that bribery case," Topacio said.

Genuino's lawyers did not respond to calls seeking comment.

PAGCOR has said it has no knowledge of the Soriano payments but

is cooperating with the Philippine bribery investigation.

The Universal payments to Soriano in 2010 were described at

a company meeting as a "completion bonus" for his help in

clearing remaining hurdles for the casino, including an

exemption from corporate tax and foreign ownership restrictions,

people involved in the project said.

Philippine authorities have already threatened to strip

Okada's operating company of its casino license if investigators

find evidence of bribery. Nevada regulators could also impose

sanctions, including a suspension of Okada's Las Vegas license.

Either outcome would represent a major setback for Okada,

who has vowed to bounce back from a costly legal fight with

American casino magnate Steve Wynn to turn Universal into Asia's

leading operator of high-end casino resorts.

In the United States, the FBI has also taken statements from

those involved in the Soriano payments, according to people

familiar with that inquiry. The bureau declined to comment on

the state of its inquiry.


The Nevada Gaming Control Board's investigation has been

underway since at least August and is gathering momentum.

"We are continuing our work," board chairman A.G. Burnett

said, declining to comment on the agency's next moves or the

likely conclusion of its investigation. "We're about in the

middle stage of our investigation."

Hearings could help the board's three-member investigative

panel decide whether to bring a formal complaint against Okada

or his company, the people familiar with the investigation said.

Investigators were particularly concerned about fund

transfers to Soriano-controlled Subic Leisure and Management,

registered in the British Virgin Islands, because that

jurisdiction allows firms to conceal the identity of directors

and investors.

"He's going to have some interesting explaining to do," one

of those with knowledge of the investigation said of Okada.

Universal has maintained that at least some of the payments

to Soriano were not approved. It has sued three of its own

former executives in Tokyo District Court, claiming they made

$15 million in payments to entities controlled by Soriano

without authorization by Okada or the Universal board.

A review of company records and interviews with sources

shows that a total of $40 million was sent by Universal to

Soriano-controlled firms. The money was sent to Hong Kong firm

Future Fortune, set up as an investment vehicle for the

Philippines project. Of the total, $10 million was routed back

immediately to Universal for internal accounting reasons,

leaving Soriano with a net $30 million.

It is not clear how that money was invested or disbursed.

Gloria Macapagal-Arroyo's government gave Universal a

corporate tax exemption in March 2010, leaving the casino liable

only for a 23.5 percent gaming tax. That exemption was key to

the projected profitability of the casino, which had been given

a provisional license in 2008.

As a result of the tax concessions and low labor costs in

the Philippines, Okada told investors and analysts last year

that the Manila casino would be more profitable than gaming in

Macau or Las Vegas, markets where Wynn has built his resorts.

The investigation of the payments to Soriano threatens to

complicate Okada's efforts to recover from a costly falling-out

with U.S. casino tycoon Wynn.

Okada was Wynn's largest investor until the American accused

him this year of improperly paying $110,000 in entertainment and

other expenses for gaming regulators from the Philippines and

Korea, where Okada is also looking to build a casino.

As a result of the disclosures, Wynn forced Okada to redeem

his 20 percent stake in Wynn Resorts for $1.9 billion,

a 30 percent discount to the market value.

Okada has sued to reverse the redemption, saying Wynn forced

him out for questioning Wynn Resorts' dealings in Macau.

The Nevada Gaming Control Board has been separately

investigating Wynn Resorts on allegations made by Okada that

Wynn's company sought to influence Macau officials through a

donation to the University of Macau, the people close to the

matter said.

However, this probe was likely to be resolved without an

investigative hearing, they said, signalling that Wynn Resorts

was less likely to be subject to a major disciplinary action.

(Additional reporting by Taro Fuse, Kevin Krolicki and Takeaki

Ueno in Tokyo, Manuel Mogato in Manila, Sue Zeidler in Los

Angeles and Farah Master in Hong Kong; Editing by Mark Bendeich)

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