Hong Kong court refuses to freeze local assets of Kazuo Okada

In Hong Kong and a High Court judge has reportedly refused to grant an injunction that would have prevented former Japanese casino magnate Kazuo Okada (pictured) from being able to offload any of his local financial assets.

According to a report from Inside Asian Gaming, the check was being sought by international gaming conglomerate Universal Entertainment Corporation as part of its effort to collect approximately $620 million from Okada over claims that he had earlier mismanaged the development of the firm’s giant Okada Manila integrated casino resort.

Budget overrun:

Okada had previously served as Chairman for Universal Entertainment Corporation but was unceremoniously sacked in June of 2017 following the emergence of allegations that he may have been involved in the illicit transfer of almost $100 million in company funds. The source reported that the Tokyo-headquartered company subsequently initiated its Hong Kong action after claiming that the final cost of realizing the 993-room Okada Manila had been some $3.05 billion, which was just over 25% beyond the project’s approved $2.43 billion budget.

Financial freeze:

Universal Entertainment Corporation had reportedly asked the Hong Kong court to issue a ‘Mareva injunction’ against Okada so as to prevent the 77-year-old from divesting interests that could be used to pay damages should it prevail in its attempt to secure any of the $620 million difference between the approved and final budgets for the Philippines project.

Critical charge:

Universal Entertainment Corporation is alleging in its larger legal action that Okada, who holds shares in Hong Kong-registered enterprises Okada Holdings Limited and Okada Fine Art Limited, had ‘undermined all control measures put in place to minimize risk, prevent the diversion of funds and prevent cost overruns’ during the development of the 110-acre Okada Manila. The company moreover purportedly included a ‘fallback figure’ of $112.6 million in its lawsuit, which apparently represents the budget overrun at the time of its former boss’ ousting.

Impracticable penalty:

However, Judge Russell Coleman reportedly issued a ruling on July 17 that Universal Entertainment Corporation had failed to satisfy the ‘necessary good arguable claim test’ that is needed in order for a ‘Mareva injunction’ to be issued owing to the damages figure being unrealistic. The magistrate purportedly asserted that the plaintiff had also exhibited ‘obvious difficulty’ in equating the extra development costs in Manila to a loss as ‘monies paid out ordinarily receive some value in return.’

Reportedly read Coleman’s ruling…

“Until the submissions at the hearing, the plaintiffs do not seem to have countenanced that the damages claim is realistically not simply the dollar figure of overspend. Once it is acknowledged that $620 million is unlikely to be the right answer and the alternative figure offered by reference to a different date suffers the same intrinsic difficulties, I am afraid that I do not think there is really any evidence demonstrating a good arguable claim to any particular figure. Even doing the best on the available evidence, I think that if I were to alight on any damages figure, I would be doing no more than choosing that figure in effect arbitrarily.”