Universal Entertainment Corp, which has its headquarters in Tokyo, has recently been the object of a FBI bribery investigation.
Japan’s tax authorities have started to investigate the circumstances under which a $40 million payment, made in 2010, by slot machine maker and casino developer Universal Entertainment ,to a business partner of Philippines’ top gambling regulator, along with the FBI. Universal Entertainment Corporation is a Japan-based company which oversees development, manufacture and sale of gaming machines operations.
The company has 34 subsidiaries and 2 business divisions. The Pachislot and Pachinko section deals with the manufacture, production and sale of pachislot and pachinko machines. The Others segment operates the media business, the broadcasting business, the operation and management of online chess games, and the restaurant business. Universal, which is under scrutiny by US law enforcement said it doesn’t think the company will be prosecuted in the United States “as long as a fair and proper investigation is conducted.”
Hong Kong is also involved in the bribery probe and Universal has conceded that a subpoena was given to its US subsidiary by a grand jury
Incidentally, according to US gambling news, apart from the ongoing bribery investigations, the payments are also being investigated by Hong Kong’s Independent Commission Against Corruption (ICAC). Unusual bank accounts activities that are based in Hong Kong, attracted the attention of the ICAC. A spokesman for ICAC, Lewis Tam, said that ICAC “would not comment on individual cases.” Universal did however reveal that Aruze USA, a Universal subsidiary, was given a subpoena from a grand jury in the United States, in order for the company to explain what appears to be bribery transactions, related to the $40 million payments.
The investigations seek to determine if Universal has breached US bribery laws. Universal failed to give further information related to the date of the subpoena or address of the federal grand jury. What is known though is that the FBI is investigating the 2010 payments that were made to one Rodolfo Soriano, an associate of the Philippine gaming regulator, at the time. The $40 million payment came from Aruze USA’s bank account. Soriano was unavailable for comments.
Universal star witness seemed to have been bribed during bribery probe
The alleged bribery may have been payment made to Soriano, to have Universal exempted from tax and other concessions, related to a casino that Universal was constructing on Manila Bay, Philippines. The National Bureau of Investigation in the Philippines had suspended its previous investigations as it could not get direct access to witnesses in the Japan-based Universal headquarters. Both the FBI and Japan’s National Tax Agency have declined to make public any information on the ongoing probe.
What the FBI has been doing though since 2012 is gathering evidence, interviewing witnesses and trying to figure out if a former Universal employee in Japan is obstructing justice since he has been deemed to stop cooperating with the FBI. Speculations have it that in July 2013 a lawyer for Universal paid a former Universal employee to retract claims and to stop cooperating with investigators. In the meantime, Japanese tax authorities began examining Universal’s accounting in 2014 at the company’s headquarters near Tokyo Bay.
Universal admits payments but refuses to take the blame
The Japanese tax agency which was carrying out a mere audit has transformed it into a formal investigation as it has the proper authority to bring criminal cases to light. Universal wants to wash its hands clean of this one by putting the bribery charges directly on the shoulders of the perpetrators, who happen to be former employees, saying they acted freely without the company’s consent. Universal gathered up a panel of outside experts which they said have found no evidence of bribery.
Universal did admit that the payments made inadvertently were related to ‘governance problems’. Universal restated its accounting for the payments twice in 2013. According to its accounting books, $10 million of the $40 should have been written off as payment for a bad loan. However they are still unable to justify where the remaining $30 million from Aruze USA went and why.
Universal’s licenses renewed in Mississippi despite bribery allegations
In the meantime there seems to be no dire consequences to the allegations of misappropriations of funds by Universal. Just recently Mississippi’s gaming regulator was asked to renew the license held by Universal’s founder and controlling investor, billionaire Kazuo Okada, under US gambling laws, so he could sell slot machines in the state. The Mississippi Gaming Commission approved the Okada’s license and that of Aruze Gaming America. Aruze Gaming America is a global entertainment company that designs, develops and manufactures slot machines and gaming devices for global casino markets worldwide.
The commission did however add a new clause to Okada’s gaming license that if there was an impeachment on the outcome of the investigation, the Gaming Commission had the right to revoke the licenses. Allen Godfrey, executive director of the Commission said “The allegation is very concerning to me, but until there is something I can hang my hat on, I can’t act,” he said. Okada said in his defense that “These are all misunderstandings. They portray me as if I’m a bad person but that’s not the case.”