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US – Calls for Wynn’s President to step down amid ‘secrecy’ claim

By - 4 April 2019

The Boston Globe has demanded that Wynn President and CEO Matthew Maddox should step down from his position as one of the conditions for the Massachusetts Gaming Commission allowing Wynn Resorts to retain the licence for its almost completed $2.6bn Encore Boston Harbour casino, due to open in June.

The Boston Globe’s Deputy Managing Editor Larry Edelman believes that the Commission should fine Wynn Resorts $100m and take a further five per cent of Encore Boston Harbour’s GGR for a period of five to seven years.

He wrote however: “I’ve come to the conclusion that regulators should add one more condition for Wynn Resorts to keep its license: Maddox must step down. Before he succeeded Wynn, Maddox had been the company’s president since 2013 and Wynn’s right-hand man. He says he was unaware of the allegations against his boss until shortly before they were aired by The Wall Street Journal, and neither Nevada nor Massachusetts regulators have shown otherwise. I find it hard to believe that Maddox, given his role as corporate consigliere, was completely in the dark. If he didn’t know anything, he should have, and his resignation would cement the company’s claim that it has cleaned house.”

As it considers whether or not Wynn Resorts should retain its licence, the Massachusetts Gaming Commission has fired some hard hitting questions at the current Wynn Board.

Commissioner Gayle Cameron asked Mr. Maddox: “Why weren’t you angry at Steve Wynn? Did you ever feel betrayed by your staff that all knew about this and yet didn’t tell you as the President of the company? What does that say about your leadership that they think it is OK that all these things can be happening but yet you’re never notified?”

Mr. Maddox was keen to highlight the shift in corporate culture culture since Wynn left.

“We launched a campaign to remind people this company is never going to be about a person again,” he said. “I’m hopeful our actions going forward will allow you to begin to rebuild trust in us. Because the events that happened in the past certainly shook all of us to our core, and I apologise that we’re here today talking about it and I take responsibility for it.”

When asked if he felt betrayed by his staff, Mr. Maddox replied: “They were trying to protect him. Mr. Wynn was the boss. I wasn’t.”

They also focused on a $10m payout to former general counsel Kim Sinatra for not revealing details about the settlement of one of the sexual harassment lawsuits.

Commission Chairwoman Cathy Judd-Stein asked: “Did Ms. Sinatra know that her severance payment was being signed on August 3? Did she ask you to make sure to sign on August 3? Did she know before our deposition that she was going to be paid nearly $10m?”

Wynn board member Betsy Atkins said: “At the time we believe this was the right business decision. We were concerned about stabilising the company and not inviting another big, ugly, public, protracted lawsuit.”

The Commission is holding a three-day hearing to decide whether Wynn Resorts is still a suitable license holder following a report that ruled Wynn Resorts executives ‘were part of affirmative efforts to conceal’ allegations of rape against former CEO Steve Wynn.

Wynn Board Chairman Phil Satre said: “The product was not Steve Wynn, though he had an important role in creating the product going back many years. The product its what’s delivered by 25,000 employees.”

The commission is tabling its questions following the completion of a 199 page report when making its decision.

The report stated: “Over the course of years, a limited group of executives and employees in positions of authority at the company, including in the legal division, were aware of certain allegations of sexual misconduct against Mr. Wynn involving employees, but they disregarded company policies when it came to handling those allegations.”

“The investigation also shows that in some instances, particular company executives, with the assistance of outside counsel, were part of affirmative efforts to conceal allegations against Mr. Wynn that came to their attention. Their efforts at secrecy made it exceedingly difficult, if not impossible, for gaming regulators to detect potentially derogatory information through typical regulatory means.”

The report did not make a recommendation regarding the award of the Boston license and said Wynn had made “significant changes in leadership, policies, structure, and internal controls” but said the action did “not erase the fact that the corporate failures revealed in this investigation are significant, repetitive, and reflective of the company’s historical governance practices.”

However, it added that these ‘inaction and failures’ “appear to have contributed to a culture where employees were reluctant to report allegations against Mr. Wynn to management. The Commission should evaluate the Company’s remedial measures in light of the evidence revealed in this investigation and detailed in this report.”

In response Wynn Resorts said: “We are grateful for the opportunity we had today to provide more details about the extensive changes we have made in the company in the last 14 months. We also hope we were able to provide the context around the situations in which we acknowledge we fell short. The findings are consistent with the investigation conducted by our own Special Committee of Independent Directors as well as that of the Nevada Gaming Control Board. The company does not contest the facts contained in the report. Any employee who was aware of allegations of sexual assault against the company’s former chairman and did not investigate or report it is no longer with the company.”

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