HONG KONG - Kazuo Okada, the Japanese billionaire embroiled in a legal dispute with Las Vegas casino mogul Steve Wynn, has been dealt a tough hand by his ex-partner and best friend. 

Okada, an engineer by training who helped bankroll his friend's Wynn  Resorts Inc empire, now worth $14 billion, stood accused on Sunday of improper payments to foreign gambling regulators and lost his nearly 20 percent slice of that company when it was forcibly redeemed by Wynn at a steep discount. 
 

Kazuo Okada, the Japanese billionaire embroiled in a legal dispute with Las Vegas casino mogul Steve Wynn. / REUTERS

The falling-out between the two self-made tycoons has longer-term implications for their multibillion-dollar businesses. Each is claiming the other made improper payments to win favor in their respective Macau and Philippines markets, two of the world's fastest-growing casino arenas. 

It comes at an inopportune time for Okada, who has mostly been careful to maintain a low profile while exploring and developing projects from the Philippines to North America. 

Okada, said by Forbes magazine to be worth $2.1 billion in 2011, made his fortune in pachinko: a uniquely Asian game that  mixes slot machine style gambling with pinball that rakes in about 20 trillion yen ($250 billion) annually. He was Wynn Resorts' largest shareholder, holding more than double the stake of its eponymous chairman. 

Okada's dispute with Wynn erupted into the open in January when Okada filed a lawsuit against his partner of 12 years for blocking access to financial documents relating to a $135 million company donation to the University of Macau. 

That lawsuit goes back to court on Thursday for a U.S. judge to decide if Okada should get access to those records. For now, Okada's suit has prompted the U.S. Securities and Exchange Commission to start an informal inquiry into Wynn. 

Things got bad fast

Universal Entertainment, Okada's holding company  said on Tuesday it would take all necessary steps to protect its investment in Wynn Resorts. Shares of Universal plummeted after the lawsuit emerged. 

The souring of the two men's lengthy partnership occurred with surprising speed, particularly after Wynn had declared in 2008: "I love Kazuo Okada as much as any man that I've ever met in my life. He's my partner and friend. And there is hardly anything I won't do for him." 

Okada even has a posh Japanese restaurant named after himself in Wynn's Macau and Vegas resorts. 

The Japanese businessman appears intent now on expanding beyond Wynn and pachinko. Aruze Gaming America, a private unit  of Universal that makes slot machines for casinos worldwide, is aggressively expanding into North America. Okada has said he wants it to be the No. 1 slot company globally by 2015, according to Macau media. 

And in Japan, he is advising the government on how best to legalize gaming. Should Japan approve casino legislation to boost tourism, Okada would be well positioned to gain given his strong relationships in the country, analysts said.    

But it is Okada's $2 billion Philippine casino, due for completion in 2014, that proved pivotal in his dispute with Wynn. The project marks the Japanese tycoon's first foray into developing a casino rather than making the pachinko and slot machines that go into them. Wynn has said he declined to get involved in the Philippine venture and that it puts the two in direct competition.  

Legal experts say their dispute, in which Wynn accuses Okada of bribing Philippine gaming regulators, may not directly affect that endeavor as it may not come under U.S. foreign bribery regulations.  

And Philippine regulators have shrugged off the claims.  

"If all the facts and circumstances involving the bribes to the Philippines officials by Okada that involved the Japanese parent but did not involve the U.S. subsidiary, then it's not sufficient to say there is an FCPA violation," said a Hong Kong-based lawyer who declined to be named. FCPA stands for Foreign Corrupt Practices Act. 

Okada, 69 years old and a resident of Hong Kong where he lives with his wife and young daughter, has typically maintained a low profile, choosing to focus on his personal business developments. He speaks limited English, preferring to communicate to press through a translator.  

Okada, who started his career fixing juke boxes, has a mixed reputation in Japan, where he is often described as the country's Steve Wynn , said a former Aruze executive, adding that many books in circulation were critical of him because of the high turnover rate at his company.  

"The executives around him were afraid to cross him or give their opinions. There was no one who went against his opinions. He was like the emperor without clothes," the ex-executive said. 

Okada, who nominated four directors to Wynn's board in January, is likely to persist with his own lawsuit over Wynn's donation to the University of Macau even if he is removed as a company director, said a source directly linked to him who was not authorized to speak to the media.