Wynn Resorts Buys Out 'Unsuitable' Board Member

(Reuters) -- Wynn Resorts Ltd upped the ante in the fight between its billionaire founder Steve Wynn and his former business partner Kazuo Okada, accusing the Japanese gaming mogul of improper payments and forcibly buying back his 20 percent stake in Wynn's casino company at a discount.

The gaming tycoon was found to be unsuitable and was asked to resign as a director of Wynn Resorts, the company said.

Wynn will also recommend that Okada be removed as a director from the board of its Hong Kong subsidiary, Wynn Macau Ltd.

A spokesman for Okada was not immediately available to comment.

Wynn bought back Okada's 24 million shares, worth $2.7 billion based on Friday's closing price of $112.69. Okada was the company's largest shareholder.

It promised to pay him $1.9 billion in 10 years via a promissory note paying annual interest of 2 percent.

Wynn said the move came after a year-long investigation that uncovered more than three dozen instances over a three-year period in which Okada and his associates engaged in improper activities for their own benefit in apparent violation of U.S. anti-corruption laws, including cash payments and gifts totaling about $110,000 to foreign gaming regulators.

The probe was based on increasing concerns the Wynn board had relating to Okada's activities in the Philippines and statements he had made to Wynn directors that gifts to regulators are permissible in Asia.

Wynn's compliance committee engaged several investigators, including a former director of the U.S. Federal Bureau of Investigation.

Wynn also filed a lawsuit for breach of fiduciary duty and related offenses against Okada and his company, slot machine manufacturer Universal Entertainment Corp, which just broke ground on a Philippines resort that may siphon customers from Wynn's lucrative Macau casinos.

Last week, U.S. securities regulators launched an informal inquiry into a $135 million donation by Wynn Resorts to the University of Macau.

Last month, Okada sued Wynn Resorts for denying him financial information related to the donation, which he had termed inappropriate, highlighting that the last installment of the donation is due in 2022 -- the same year that Wynn Macau's gaming concession expires.

Wynn says Okada should be denied access to that information because his new venture in the Philippines makes him a competitor.

The next hearing in the case is scheduled for February 23.

Wynn and Okada had been business partners for 12 years. Okada had been vice chairman of Wynn Resorts until Wynn stripped him of the title last October.

(Reporting By Martinne Geller in New York; Editing by Maureen Bavdek)