UPDATE 1-Manila probes Okada payment, Universal shares drop

Mon Nov 19, 2012 3:18am EST

* U.S. regulators also investigating Philippine payments

* Philippine regulator reviewing Okada casino plan

* Universal shares drop 11 pct to nine-month low

By Kevin Krolicki and Rosemarie Francisco

TOKYO/MANILA, Nov 19 (Reuters) - Prosecutors in Manila will investigate whether bribes were paid in relation to the $2 billion Manila Bay casino being developed by Japanese billionaire Kazuo Okada, a spokesman for Philippine President Benigno Aquino said on Monday.

Edwin Lacierda, a spokesman for Aquino, told reporters the country's Department of Justice had been asked to investigate whether bribes were paid in relation to the project being developed by Okada's Tokyo-based company Universal Entertainment .

"If there's a proof that the licence was obtained through bribery, then there may be reasons to consider cancelling the contract," Lacierda said. "Obviously, it is something that we will not countenance."

Shares in Universal sank to a nine-month low on Monday after Reuters reported U.S. gaming regulators were investigating payments from its affiliates to an associate of the former head of the Philippine gaming regulator. Shares in the Tokyo-based company closed down 11 percent on Monday and have lost nearly 30 percent of their value this year.

Reuters reported on Friday that a Universal subsidiary made a $5 million payment in May 2010 to Rodolfo Soriano, a close associate of the former head of the Philippine Amusement and Gaming Corp., the country's gaming regulator which is known as PAGCOR.

The payment to Soriano was made at a time when Universal was lobbying to win concessions for its casino from the administration of then-Philippine President Gloria Macapagal Arroyo.

PAGCOR issued a statement on Monday saying the Reuters report contained "serious allegations." The agency said it was asking investigators to "get to the bottom of this alleged payoff" and asked Philippine authorities to work with the Federal Bureau of Investigation in the United States.

"The group of Mr. Okada is a major investor in the Philippines and this is the reason why PAGCOR is giving them a chance to address all the issues," the regulator said.

It added, if "they have violated Philippine laws and they fail to comply with the provisions of the provisional licence issued to them, they cannot commence their casino operations."

Universal spokesman Nobuyuki Horiuchi said the company had no immediate comment.

The company, which is controlled by Okada, has been developing a casino resort in the Philippines aimed at high-rollers from China since 2008. Okada, who serves as Universal's chairman, founded the company and remains an owner of almost 70 percent of its shares through a family trust.

Monday's decline in Universal shares was the biggest one-day percentage drop since Feb. 20 when Las Vegas titan Steve Wynn, a former partner, said Okada's company had acted improperly in paying for about $110,000 in entertainment expenses to foreign gaming regulators, including officials from the Philippines.

Separately, a Philippine congressman who has urged the government to suspend the Universal casino project called for a legislative hearing on the matter. Rep. Teddy Casino had previously submitted a resolution calling for an investigation.

"We will have to include new pieces of evidence unearthed by Reuters news agency that can help complete the picture of corruption in PAGCOR," Casino said in a statement.

Philippine Sen. Miriam Santiago also called for a Senate investigation of the reported payment to Soriano, citing the Reuters report.

Okada has been seeking to have a U.S. court reverse an earlier move by Wynn to redeem his shares in Wynn Resorts Ltd at a 30 percent discount after the board determined he was an "unsuitable" shareholder.

That finding was based in part on Universal's record of paying for entertainment and lodging expenses for PAGCOR officials, including Soriano and former PAGCOR chief Efraim Genuino, Wynn said at the time.

Both Soriano and Genuino are the targets of a corruption case brought by the Aquino administration in 2011. PAGCOR said on Monday that the report of payments to Soriano would "strengthen its plunder case" against the two men.

Soriano and Genuino could not be reached for comment.

On Friday, one of the U.S. law firms representing Okada withdrew from the lawsuit against Wynn.

Paul Spagnoletti, an attorney with the New York offices of Davis, Polk, Wardwell LLP, said his firm had stopped representing the Japanese businessman. Spagnoletti would not cite a reason for the sudden withdrawal.

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