A lawyer for pachinko machine maker Universal Entertainment Corp. offered to pay a former employee if he retracted a claim that the Japanese company had given bribes to advance a Philippine casino project and stopped cooperating with investigators, according to a copy of the proposal seen by Reuters.

Universal’s lawyer, Yuki Arai, presented the proposal to a lawyer for the former employee in July 2013, a time when the FBI, the Nevada gaming regulator and the Philippine government had started probing $40 million in payments made by affiliates of the company in 2010 to a Philippine consultant.

In the two-page proposal sent by fax, Arai wrote that the former employee, Takafumi Nakano, would receive a “certain level of compensation” if he abided by a series of terms. No monetary figure was specified.

Tamaki Katsube, who is representing Nakano in a lawsuit brought by Universal, told Reuters he rejected the proposal from Arai on behalf of his client. He declined further comment, as did Nakano.

According to the document, the proposed conditions included Nakano handing over any materials he had provided to the FBI and the Nevada Gaming Control Board and not providing further information to investigative agencies.

The attempt by Universal to buy the cooperation of a former employee highlights an issue of concern raised by U.S. prosecutors examining the company’s conduct in the Philippines.

Last year, the U.S. Department of Justice intervened in a civil lawsuit in Nevada between Universal’s billionaire founder, Kazuo Okada, and his former business partner, Steve Wynn. Federal prosecutors won court orders that suspended that lawsuit for 12 months out of concern that it could reveal and compromise witnesses in its criminal investigation of potential bribery.

Last week, Clark County District Judge Elizabeth Gonzales rejected a request by the prosecutors to extend the suspension of that lawsuit for another six months. She said the government had already been given enough time, although she allowed provisions to protect the identities of witnesses cooperating with the U.S. government.

Universal, which has filed a defamation lawsuit against Reuters for its reporting on the Philippine payments, had no immediate comment on the proposal made to Nakano. Arai did not respond to a request for comment.

A.G. Burnett, chairman of the Nevada Gaming Control Board, said he had been unaware of the proposal made to Nakano until contacted by Reuters. “Our investigators will obtain that document and analyze it as part of their overall investigation into this matter,” Burnett said.

The U.S. Department of Justice had no immediate comment.

In the proposal, Arai wrote that he was making the July 2013 offer at the request of Nakano’s lawyer who was interested in a speedy resolution of their legal dispute. Arai said the proposal was his own, although made in his capacity as Universal’s lawyer.

Universal sued Nakano and two other former employees in November 2012, alleging they transmitted $10 million of the payments without proper authorization. All three men, including one who was sued for another $5 million payment related to the Philippine project, are contesting those claims in court, saying they were carrying out orders from Okada.

Last March, Nakano filed a countersuit against Universal, Okada and Arai for defamation. In a court filing, Nakano alleged that most of the $40 million was paid to gain key concessions for the $2 billion casino resort Universal is developing on Manila Bay.

In the settlement proposal, Arai said Nakano would need to hand over all email and other correspondence with the FBI, the Nevada Gaming Control Board and associates of Wynn Resorts as requested by the company.

Another condition was Nakano’s silence.

“Once negotiations over this settlement have commenced, Mr. Nakano shall not provide any information to any individual or organization, including the media and investigative agencies,” Arai said in the offer, which was written in Japanese.

Nakano, 54, who left Universal in 2011, said in his lawsuit against the company that he had been questioned about the payments by agents from the FBI and the Tokyo District Public Prosecutor’s Office. Universal has denied Nakano’s claims.

The $40 million was paid to two companies controlled by Rodolfo Soriano, a consultant with close ties to the then head of the Philippine Amusement and Gaming Corporation, the local casino regulator, records reviewed by Reuters show.

Of the total, Universal has said that $10 million was improperly accounted for as payment for a bad loan. The company has yet to determine how the remaining $30 million was used.

Universal convened a panel of outside experts to look into the payments. In June 2013, the panel completed a report that determined there was no evidence of bribery, although it said the company had governance problems and noted that a senior executive still with the company had altered a key document related to the bulk of the payments after the fact in 2012.

In the proposal, Arai said Nakano would be required to put his name to a statement saying there had been no bribery or any special treatment from the Philippine gaming regulator or others in relation to the $40 million and its casino resort.

“While there is no need for Mr. Nakano to state falsehoods, he will not be allowed to mention matters that the company does not desire to be mentioned,” said the proposal, which was stamped with Arai’s personal seal.

Nakano was also asked to cooperate in filing a lawsuit against Soriano and to assist with ongoing lawsuits against the two other former employees, which would effectively mean turning on his co-defendants in the civil case.

Universal’s business in the Philippines came under scrutiny in early 2012 when Wynn Resorts Ltd. commissioned an investigation that found Universal had paid $110,000 for lodging, entertainment and gifts for Philippine and Korean gaming officials.

Following that investigation, Wynn filed a lawsuit against Okada charging him with breach of fiduciary duties and other infractions related to the entertainment and gifts. Wynn also ousted Okada as a director and forcibly redeemed his 20 percent stake in the company.

Okada is contesting those claims and the forcible redemption of his shares. Universal has acknowledged it covered the expenses of some gaming officials, but maintains that such payments did not constitute violations of U.S. anti-bribery laws.

Last month, Universal and Okada filed a criminal complaint against Wynn in Japan, saying the U.S. casino operator had defamed Okada and that the publication of Wynn’s investigation “harmed the public trust.”

The investigation into Universal’s conduct in the Philippines and the legal fight between Wynn and Okada is playing out a time when Japan is moving toward legalizing casino gambling.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.