Instead of a world-class resort packed with Chinese high-rollers, Okada, 70, was sitting on a $300-million patchwork of reclaimed and undeveloped land next to the Manila airport that by the middle of 2009 was threatening to become a money pit, according to company records and people involved.

Crucial regulatory approvals were tied up in red tape. The provisional gaming license was flawed. No one could tell the architect how high he could build the gold-toned towers without endangering incoming aircraft.

To realize Okada’s goal of making the Manila casino more profitable than rival operations in Macau or Las Vegas, the project needed to win an exemption from corporate taxes in the Philippines. It also needed a presidential order giving Okada’s company, Universal Entertainment, the ability to own the resort outright as a foreign investor.

Universal executives believed Philippine officials had promised those concessions by the end of 2008 for a project expected to create more than 6,000 jobs. The Philippine gaming authority had given Okada a side letter to Universal’s provisional license in August 2008 saying it would make its “best effort” to get those approvals from then-Philippines President Gloria Arroyo.

It would mean hundreds of millions of dollars in additional profit each year if the approvals came through, according to an analysis of Universal’s presentations to regulators and investors.

By June 2009, however, the project was more than six months behind schedule and Okada’s patience was wearing thin. When Arroyo came to visit Tokyo, Okada saw her in a meeting arranged by the head of Philippine gaming regulator, Efraim Genuino.

“Get clarity on how long it will take to solve these problems on the spot and extract a promise,” a note prepared for Okada in Japanese by Universal executives said. It was not clear what was discussed in the private meeting.

BRIBERY INVESTIGATION

Reuters examined hundreds of pages of documents from Universal and Philippine regulators and interviewed nearly two dozen people involved in the project in Japan and the Philippines in reconstructing how Universal tried to push through its casino deal in the Philippines in the final months of the Arroyo administration. That deal is now the subject of investigations there and in the United States.

The record shows Universal won concessions on three critical issues that had threatened the $2-billion project in late 2009 and early 2010.

First, the Philippine Amusement and Gaming Corporation (PAGCOR), the gaming regulator under Genuino, brokered a land swap in November 2009 that Universal needed to move ahead with construction.

Then in February 2010, Arroyo signed a presidential order making it possible for foreign investors such as Okada to have 100-percent ownership of casinos. Around the same time, Arroyo’s office approved an application for corporate tax relief from Universal’s land-holding company. Both measures were expected but the delays had frustrated Universal executives, records show.

Universal pushed hard to get its final gaming license from Genuino – right up until June 29, 2010, a day before he left his post – but failed to get it.

As it raced to win final approval for its casino, Universal also funneled a total of $40 million in payments to Rodolfo Soriano, an aide to Genuino and a former consultant to PAGCOR who had become central to Universal’s operations in the Philippines by late 2009.

Of the total $40 million in transfers to Soriano, $10 million was immediately returned to the Japanese company in May 2010 to avoid writing off a bad loan extended to another company not involved in the casino project, as Universal closed the books on its fiscal year, records show.

The payments to Soriano, now under investigation as potential bribery, were first reported by Reuters.

It is unclear what happened with the $30 million paid to Soriano that remained with him. Soriano, who came to be known to Universal executives by his nickname “Boysie”, has not commented on the payments and could not be reached. There is no evidence the money was transferred to officials in the Arroyo administration or to others.

Universal booked $7 million of the payments to Soriano as a “consulting fee”, citing his help in winning the order signed by Arroyo allowing foreign casino ownership as partial justification for the payment, according to company documents seen by Reuters.

Okada broke ground on construction of the casino in January 2012, but PAGCOR under its new chairman has threatened to strip Universal of its license if evidence of bribery is found.

Universal said it conducted its business in the Philippines lawfully. Its lawyer, Yuki Arai, declined to comment further.

Genuino has been charged with misuse of public funds during his time at PAGCOR for allegations unrelated to the Universal payments to Soriano. He could not be reached for comment.

Arroyo has been under hospital arrest for charges related to alleged electoral fraud and misuse of public funds during her presidency. Her spokeswoman, Elena Bautista-Horn, did not return calls seeking comment.

Universal has sued three former employees claiming that $15 million transferred to Soriano – including the $10 million that was immediately returned – was unauthorized.

In early December, Okada and Universal announced they had filed a libel action against Reuters in Tokyo for reporting on the payments to Soriano in November.

UP FROM HARDSHIP

Okada, one of Japan’s most successful entrepreneurs, had risen through hardship and trusted his gut when it came to the biggest decisions.

His father died when he was in elementary school, a loss he said helped make him self-reliant. He made his first fortune fixing and selling American jukeboxes in the 1960s. He became a billionaire selling pachinko machines, a Japanese form of legal gambling.

By the late 1990s, the pachinko market had peaked and Universal began to look for ways to diversify.

Okada met casino impresario Steve Wynn in 2000. The two had to rely on a translator – Okada speaks little English – but both said they began a strong friendship. On a handshake, Okada became Wynn’s major investor.

“I got lucky,” Wynn, 70, told Nevada gaming regulators in 2004. “At first I could hardly believe it, but then $250 million came ‘zwinging’ in.” Wynn also said then he believed Okada to be a man of deep integrity. “Take the high road. Do the right thing,” he recalled Okada telling him.

Okada staked Wynn for a total of $380 million. That jump-started construction of the Wynn Las Vegas resort that opened on the site of the old Desert Inn in 2005, and the even more profitable Wynn Macau in 2006. By 2010, Okada’s investment had increased in value almost eight times and returned just over $600 million in dividends.

Macau in particular has produced stunning results. By 2011, the Macau market was bringing in almost $34 billion a year, making it more than five times larger than Las Vegas.

When Genuino visited Tokyo in 2007 to drum up interest in a $15-billion resort and casino complex PAGCOR wanted to develop, Okada jumped at the chance to invest, people involved said.

A year later, on the cusp of global recession, Universal paid just over $300 million for 30 hectares (74 acres) on Manila Bay. In August 2008, PAGCOR granted a provisional license to its casino operating company, Tiger Resorts, Leisure and Entertainment.

But Okada later realized the initial license fell short of what the company had sought, records show. Universal did not want to have to hire employees, including dealers, through PAGCOR and pay fees to the regulator as a placement service, according to letters sent from Universal to PAGCOR.

Universal also pressed PAGCOR to allow high-rollers coming on trips organized by junket operators to come into the casino without reporting their names to the regulator. Junket operators combine concierge and credit services for rich Chinese and have been central to the growth of gambling in Macau.

To promote Manila as an alternative to Macau, Universal wanted to make it a market where the winnings of Chinese gamblers would be “free of supervision,” according to a company presentation.

There was also some uncertainty about whether Wynn would join the Okada project. Okada said he wanted to bring Wynn in as a partner through late 2010. “At that time I trusted him. I showed him everything,” Okada told Reuters in October.

Wynn, however, was always skeptical about doing business in the Philippines, a person familiar with his thinking said. When Okada asked him to visit Manila in June 2010, he agreed to a briefing from Genuino. But he turned up in a polo shirt when everyone else wore business attire, a sign he saw himself as a spectator, the person said.

By early 2012, Wynn and Okada had split and begun a legal fight over Okada’s continued investment in Wynn’s company that is playing out in courthouses in the United States, Japan and the Philippines.

A Wynn investigation found Universal had paid $110,000 to entertain gaming regulators from Korea and the Philippines. The Wynn camp alleges that showed Okada was an unfit partner. Okada has said Universal entertains officials in line with its internal policy and denies any wrongdoing. The guest list that drew the attention of Wynn included Soriano, Genuino and Mike Arroyo, the husband of then-President Gloria Arroyo.

Wynn told Okada and other directors in 2011 that he did not think it would be possible to operate in the Philippines, consistently ranked as one of the most corrupt economies in Asia, according to a legal claim filed by Universal in Nevada.

“All of us are of one mind,” Wynn told Reuters. “We cannot be related to activities in the Philippines.”

LAS VEGAS IN MANILA

When Okada and the Universal board approved the Manila project in August 2008, they projected it would be a cornerstone of a string of resorts around the rapidly growing Asian market. They expected Universal would become a $9 billion company by 2014 with a listing on the Hong Kong stock exchange, according to notes from the board meeting.

Casino gambling revenues in the Asia-Pacific region have more than tripled since 2007, according to PricewaterhouseCoopers. The region is set to overtake the U.S. market as largest in the world next year when gambling revenues reach $67 billion from $58 billion in 2012.

Universal’s first designs were based on the Wynn casinos, featuring two wings in reflective gold glass. Plans included $150 million to build one of Asia’s largest aquariums and a “Kidzania” playland, with another $70 million for the “Manila Eye,” a massive Ferris Wheel.

But Okada’s plans for a “six-star” resort were immediately tested by a litany of problems on the ground in Manila. Engineers discovered 10 hectares (24 acres) of its site was reserved for road use and held by another developer, making building impossible.

It had been overlooked in the original purchase. “We didn’t realize at the time that we had the road problem,” a memo from June 2009 said. “Our land was crisscrossed by these roads like wormholes.”

Universal’s Manila staff worried there was no easy fix. After months of delays, Universal called in Genuino to negotiate a land swap between Universal, the local city of Paranaque and developer Asiaworld Properties Philippine Corporation.

“The right answer is to ask PAGCOR Chairman (Genuino) to be our public face in this matter,” the memo said.

Over the summer, Universal pushed for more frequent contact with Genuino. It set up a video conferencing facility so the two sides could talk more regularly. Universal also sought to make Genuino the conduit for passing on key documents to Arroyo’s presidential office, company documents show.

Around that time, Universal was also looking to break with Philippine law firm SyCip Salazar Hernandez and Gatmaitan, which it felt was charging too much and moving too slowly, according to company memos. As it prepared to ditch SyCip, Universal rebuilt its strategy around Soriano in what was described in an internal memo as a “shift to Boysie”.

In a statement, SyCip partner Imelda Manguiat, who handled the Universal account, said all transactions the law firm worked on were legitimate and lawful. She declined to comment further.

Shifting to Soriano meant reworking a structure that allowed it to circumvent the requirement that the landholding company behind the casino be at least 60 percent owned by Filipinos.

Records reviewed by Reuters show Universal had bankrolled the original investment meant to satisfy that foreign ownership requirement. This was done by depositing $4.4 million in a Banco De Oro account in 2008. That money secured a loan to a firm called Lex Development Corp, a shell company established by SyCip. Lex used the money to make its investment in the project. Universal covered interest on the loan, records show.

The holding was transferred in 2009 to Platinum Gaming and Entertainment, a Soriano-affiliated firm, records show.

OKADA IN CHARGE

Okada remained in charge of key decisions involving Universal and the Manila project, current and former employees said. On some mornings, employees would wait more than an hour to speak to him. Any expense over $36,000 had to be approved by the strategy board for the Manila project, records show.

Sometimes Okada’s hands-on style grated on his people. In one December 2009 meeting, Okada and Toshihiko Nishigaki, a hotel industry veteran brought in to oversee the Manila project, got into a heated discussion about responsibility for the project, according to three people in the room. Nishigaki asked Okada to step into the corridor and a shouting match ensued.

Within weeks, Nishigaki was gone. His departure was the start of a transition that put greater focus on a quicker return from a downsized project. Plans for the Ferris Wheel and other attractions that had promised to turn the casino into a tourist magnet were dropped or scaled back, people involved said.

Nishigaki did not respond to a letter seeking comment.

In November 2009, Okada hosted a PAGCOR delegation, including Soriano, in Las Vegas to watch Philippine national hero Manny Pacquiao win a welterweight championship fight. Universal picked up the tab for Soriano and the PAGCOR delegation at Wynn Las Vegas at a cost of $14,412, records show.

Then in January 2010, Okada led a delegation of Universal executives from Tokyo to the wedding of Genuino’s son, Anthony, at the Sofitel hotel in Manila. Okada sat at the same table as former Philippines First Lady Imelda Marcos. Executives who accompanied Okada said the intent was to show his support for Genuino and his politically ambitious family.

PAGCOR filed corruption complaints against Efraim Genuino and other former PAGCOR officials in 2011 alleging they diverted funds to help favored candidates for public office, including Genuino’s children.

In part, Genuino is accused of diverting rice Okada had donated to help typhoon victims in 2008 to support the candidacy of his sons, two years later. The rice was delivered to potential voters in bags with pictures of Anthony and Erwin, according to the charges.

Anthony was elected mayor of the city of Los Banos, while Erwin ran unsuccessfully in the May 2010 elections.

The Department of Justice recently said it would not pursue charges against Anthony and Erwin due to a lack of evidence. Neither of the sons could be reached for comment.

The $40 million in payments from Universal began moving to Soriano on January 14, 2010 with an initial installment of $10 million transferred to the bank account of Subic Leisure and Management, a Soriano-controlled company registered in the British Virgin Islands. Another $15 million was transferred to Subic Leisure on March 3, 2010, internal records show.

Then in late April and early May 2010 Universal recycled another $10 million payment through the same Subic Leisure route. Records show Universal brought the money back to its own accounts in a move aimed at covering a loan to a company called AZ Games International Corp that had gone sour, according to company records and people involved in the transaction. AZ Games was registered in the British Virgin Islands and operated with little oversight as a result. It had been dissolved months before, records show.

The final $5 million was paid to a Hong Kong shell company named People’s Technology Holding Ltd, of which Soriano was the sole shareholder. It was paid four days after Soriano met Okada and other Universal executives at a Chinese restaurant in central Tokyo to press for the transfer, people with knowledge of the meeting said.

Universal has filed two lawsuits against three former employees claiming the final $5 million and the $10 million that came back to Universal were not authorized. In rebuttals to the Universal lawsuits, two former executives – Mitsuo Hida and Takafumi Nakano – said they had been following orders in making the payments. Nakano said he was considering becoming a whistleblower under Japan’s anti-bribery law.

IN COMES AQUINO

At the end of June 2010, Genuino stepped down after a controversy erupted over his “midnight” reappointment by Arroyo. The election of President Benigno Aquino the month before posed potential complications for Universal.

Okada went to Manila to meet the new PAGCOR chief, Christino Naguiat, in August 2010. A month later, he hosted Naguiat at the Wynn Macau casino and covered $50,523 of expenses during a four-day stay. Universal does not contest it covered hotel rooms and other costs for government officials but maintains no laws were broken. Naguiat has said there was nothing inappropriate about his stay.

A memo from Okada’s August 2010 visit to Manila notes he was “trying to keep a good relationship with and feel comfortable with the new government.” But it also contained harsh words for his Manila-based staff.

“I think you should have made a prediction what would happen due to change of government and should have made necessary preparations,” Okada was quoted as saying.

Okada’s ambition to build casinos around Asia hinges in part on how the investigation of the Manila payments is resolved. The payments to Soriano are the subject of a Philippine Department of Justice investigation and two separate congressional hearings in the Philippines.

The Nevada Gaming Control Board said last month its investigation was progressing. Possible sanctions include a suspension of Universal’s gaming license.

Earlier this month, Universal signed a deal giving Philippine property firm Robinsons Land Corp a minority stake in its casino operating company and a majority stake in its Manila landholding company.

The Manila project – now known as Manila Bay Resorts after initially being dubbed “Okada Resort Manila Bay” – is scheduled to open in 2014, four years behind initial projections.

(This story makes clear in paragraph 59 that Pacquiao won the welterweight title, not retained it.)

(Additional reporting by Farah Master in Hong Kong, Manuel Mogato and Rosemarie Francisco in Manila, and Sue Zeidler in Los Angeles; Editing by Bill Tarrant and Michael Williams)

Edwin Lacierda, a spokesman for Aquino, told reporters the
country’s Department of Justice had been asked to investigate
whether bribes were paid in relation to the project being
developed by Okada’s Tokyo-based company Universal Entertainment
.

“If there’s a proof that the licence was obtained through
bribery, then there may be reasons to consider cancelling the
contract,” Lacierda said. “Obviously, it is something that we
will not countenance.”

Shares in Universal sank to a nine-month low on Monday after
Reuters reported U.S. gaming regulators were investigating
payments from its affiliates to an associate of the former head
of the Philippine gaming regulator. Shares in
the Tokyo-based company closed down 11 percent on Monday and
have lost nearly 30 percent of their value this year.

Reuters reported on Friday that a Universal subsidiary made
a $5 million payment in May 2010 to Rodolfo Soriano, a close
associate of the former head of the Philippine Amusement and
Gaming Corp., the country’s gaming regulator which is known as
PAGCOR.

The payment to Soriano was made at a time when Universal was
lobbying to win concessions for its casino from the
administration of then-Philippine President Gloria Macapagal
Arroyo.

PAGCOR issued a statement on Monday saying the Reuters
report contained “serious allegations.” The agency said it was
asking investigators to “get to the bottom of this alleged
payoff” and asked Philippine authorities to work with the
Federal Bureau of Investigation in the United States.

“The group of Mr. Okada is a major investor in the
Philippines and this is the reason why PAGCOR is giving them a
chance to address all the issues,” the regulator said.

It added, if “they have violated Philippine laws and they
fail to comply with the provisions of the provisional licence
issued to them, they cannot commence their casino operations.”

Universal spokesman Nobuyuki Horiuchi said the company had
no immediate comment.

The company, which is controlled by Okada, has been
developing a casino resort in the Philippines aimed at
high-rollers from China since 2008. Okada, who serves as
Universal’s chairman, founded the company and remains an owner
of almost 70 percent of its shares through a family trust.

Monday’s decline in Universal shares was the biggest one-day
percentage drop since Feb. 20 when Las Vegas titan Steve Wynn, a
former partner, said Okada’s company had acted improperly in
paying for about $110,000 in entertainment expenses to foreign
gaming regulators, including officials from the Philippines.

Separately, a Philippine congressman who has urged the
government to suspend the Universal casino project called for a
legislative hearing on the matter. Rep. Teddy Casino had
previously submitted a resolution calling for an investigation.

“We will have to include new pieces of evidence unearthed by
Reuters news agency that can help complete the picture of
corruption in PAGCOR,” Casino said in a statement.

Philippine Sen. Miriam Santiago also called for a Senate
investigation of the reported payment to Soriano, citing the
Reuters report.

Okada has been seeking to have a U.S. court reverse an
earlier move by Wynn to redeem his shares in Wynn Resorts Ltd
at a 30 percent discount after the board determined he
was an “unsuitable” shareholder.

That finding was based in part on Universal’s record of
paying for entertainment and lodging expenses for PAGCOR
officials, including Soriano and former PAGCOR chief Efraim
Genuino, Wynn said at the time.

Both Soriano and Genuino are the targets of a corruption
case brought by the Aquino administration in 2011. PAGCOR said
on Monday that the report of payments to Soriano would
“strengthen its plunder case” against the two men.

Soriano and Genuino could not be reached for comment.

On Friday, one of the U.S. law firms representing Okada
withdrew from the lawsuit against Wynn.

Paul Spagnoletti, an attorney with the New York offices of
Davis, Polk, Wardwell LLP, said his firm had stopped
representing the Japanese businessman. Spagnoletti would not
cite a reason for the sudden withdrawal.

Shares in the Tokyo-based company closed down 11.04 percent and have lost nearly 30 percent of their value this year. Universal is required to the Nevada Gaming Control Board because it supplies slot machines for casinos in that state in addition to making and marketing “pachinko” machines for the Japanese market.

The company, which is controlled by billionaire Kazuo Okada, has been developing a casino resort in the Philippines aimed at high-rollers from China since 2008. Okada, who serves as Universal’s chairman, founded the company and remains an owner of almost 70 percent of its shares through a family trust.

Monday’s decline in Universal shares was the biggest one-day percentage drop since February 20 when Las Vegas titan Steve Wynn, a former partner and friend of Okada, said Okada’s company had acted improperly in paying for about $110,000 in entertainment expenses to foreign gaming regulators, including officials from the Philippines.

Reuters reported on Friday that a Universal subsidiary made a $5 million payment in May 2010 to Rodolfo Soriano, a close associate of the former head of the Philippine gaming regulator.

The payment was made at a time when Universal was lobbying to win concessions for its $2 billion Manila casino from the administration of then-Philippine President Gloria Macapagal Arroyo.

Universal shares closed Friday at 1,685 yen and traded on Monday as lows as 1,488 yen.

Universal spokesman Nobuyuki Horiuchi said the company had no immediate comment.

Jay Santiago, a lawyer for the Philippine Amusement and Gaming Corporation (PAGCOR), which regulates gambling in the Philippines, said the issue of the payments detailed by Reuters would be discussed at an upcoming meeting of the regulator’s board.

“Because of the issues that have come out, this will be discussed by the members of the board, and there will be a resolution in the coming days on what should be done with the project of Mr. Okada,” Santiago told a Manila radio station.

Separately, a Philippine congressman who has urged the government to suspend the Universal casino project, called for a legislative hearing on the matter. Rep. Teddy Casino had previously submitted a resolution calling for an investigation.

“We will have to include new pieces of evidence unearthed by Reuters news agency that can help complete the picture of corruption in PAGCOR,” Casino said in a statement.

Okada has been seeking to have a U.S. court reverse a move by Wynn to redeem his shares in Wynn Resorts Ltd at a 30 percent discount after it determined he was an “unsuitable” shareholder.

In addition to being Wynn’s largest outside investor, Okada and Steve Wynn had been friends and partners for almost a decade before their bitter dispute began in 2011.

On Friday, one of the U.S. law firms representing Okada withdrew from the lawsuit against Wynn.

Paul Spagnoletti, an attorney with the New York offices of Davis, Polk, Wardwell LLP, said his firm had stopped representing the Japanese businessman. Spagnoletti would not cite a reason for the sudden withdrawal.

(Editing by Matt Driskill)

A Universal subsidiary made a $5 million payment in May 2010 to Rodolfo Soriano, a close associate of the former head of the Philippine gaming regulator, according to a Reuters examination of bank records, corporate filings, court documents and records prepared by Universal staff. The payment was made via a shell company in Hong Kong and was part of $40 million in transfers made by Universal’s U.S. affiliate Aruze USA that are now a focus for investigators.

The document trail connecting Soriano to the $5 million payment has not been previously reported.

It’s not clear whether Okada, 70 and ranked 18th among Japan’s wealthiest by Forbes, personally approved the payments. Universal, more than two-thirds controlled by Okada and his son through Okada Holdings LLC, has filed suit against three ex-employees saying they acted without proper authorization in channeling $15 million of the total through Hong Kong-registered Future Fortune Ltd.

BITTER SPLIT

The revelation of the contested payments is the latest twist in a bitter falling out between Okada, who made his fortune making and marketing pachinko machines – a mix of slot and pinball machines – and Las Vegas casino magnate Steve Wynn. Okada was Wynn’s partner and largest investor until Wynn charged this year that Okada had broken compliance rules – and possibly U.S. law – by paying some $110,000 in entertainment and other expenses for gaming regulators from the Philippines and Korea.

The investigation of the much larger payments by Okada’s company threatens to complicate Universal’s attempt to get a U.S. federal court to reverse Wynn’s decision to redeem Okada’s Wynn Resorts shares at a discount. It could also complicate Universal’s push to complete the casino on Manila Bay that it began building in January and has promoted as a VIP-destination resort for China’s newly rich, some critics say.

“I don’t have any illusions that it is going to be stopped, but there has to be accountability,” said Teodoro Casino, a Philippine congressman who has urged the government to suspend the Universal project.

Universal referred questions to Yuki Arai, the lawyer who is representing the company in lawsuits against former employees. His office had no comment as of Friday.

Soriano could not be reached for comment. A woman at his home in Manila said he no longer lived at that address. She declined to say how he could be reached. An attempt to reach him at a Manila business operated by the family of his wife was also unsuccessful.

DISCUSSED WITH FBI

The Nevada Gaming Control Board has been looking into payments by Okada-controlled companies to Soriano, a consultant to the Philippine Amusement and Gaming Corporation (PAGCOR), which regulates gambling in the Philippines, said a person with knowledge of the matter. The Control Board has sent agents to Japan and elsewhere to investigate claims that potentially improper payments were made to Soriano, said the person, who asked not to be named as the process is ongoing, adding the payments were also part of an audit by Nevada authorities of Universal in Japan that began in August.

If Nevada authorities determine there is evidence of wrongdoing, state gaming regulators can limit or restrict gaming licenses or impose other sanctions. Universal, which also makes slot machines, is one of two public Japanese companies, along with Konami Corp, that are registered with and report to the Nevada Gaming Commission.

At least two former Universal employees have discussed the payments to Soriano with the FBI, said people with knowledge of those talks. Any FBI investigation would be for a potential criminal case, separate from the regulatory probe. A spokesman for the FBI office in Las Vegas, which handled the interviews, declined to comment.

The disclosures deepen questions about compliance and controls at Universal at a time when those issues are already under scrutiny because of revelations it paid to entertain Philippine and Korean gaming officials at the Wynn casino resort in Macau and the Wynn resort in Las Vegas. Those revelations were first made public by Wynn after he commissioned an investigation by former FBI director Louis Freeh.

MONEY TRAIL

Records reviewed by Reuters show the $5 million transferred from Nevada-incorporated Aruze USA was sent first to Future Fortune, which was set up in Hong Kong in 2008 and run by a succession of Universal employees. From that firm’s HSBC bank account, the money was sent to People’s Technology Holding Ltd, a firm established in 2009 and wholly-owned by Soriano.

The payment was part of $40 million that moved from Aruze USA’s accounts through Future Fortune in the first half of 2010, just as Universal sought tax and ownership-related concessions in the final months of the administration of former Philippines President Gloria Macapagal Arroyo. It also sought to resolve road use issues that risked complicating its casino development, people involved in the project say.

The remaining $35 million was paid in January-May 2010 to a firm called Subic Leisure and Management, records show. Subic Leisure was registered in the British Virgin Islands in September 2008, weeks after Universal acquired reclaimed land on Manila Bay and announced plans to build Asia’s largest aquarium, a Ferris wheel and a 2,050-room hotel and casino.

Under corporate laws in the British Virgin Islands, Subic Leisure does not have to disclose its directors or investors. HSBC said it had no comment.

Universal has looked to Asia for growth to offset a decline in its home market for pachinko. It won a provisional license to operate a casino in the Philippines when it paid about $300 million for land as part of the Manila Bay project.

But Universal continued to lobby for its casino to be exempt from corporate tax and for an exception to rules requiring Philippine investors own 60 percent of the venture, three former employees involved in the project said. Universal, which has a market value of around $1.7 billion, announced it won those concessions in April 2010. Arroyo left office in June 2010.

“The incumbent PAGCOR management has no knowledge about the said transfer of funds,” the regulator said in an emailed response to questions from Reuters for this article.

FEELING DECEIVED

Soriano, a confidante of former PAGCOR chairman Efraim Genuino, frequently visited Universal offices in Tokyo and hosted Okada on his visits to Manila, former associates say. Widely known by his nickname “Boysee,” Soriano operated at the nexus of business and politics in Manila and often networked over rounds of golf at the Wack Wack Country Club, one of the country’s oldest golf courses, people who worked with him say.

Manuel Camacho, 79, a Manila-based lawyer who formerly represented Universal in the Philippines, said it was understood that Soriano was an agent for Okada on the Manila casino project even as he worked for PAGCOR as a consultant. “This guy Soriano – that is Okada himself. He is acting for Okada,” he said.

Camacho, who also spoke to Freeh investigators, claims money he was paid by Universal was diverted by his former law partner, Genuino’s son, Erwin, and sent as a pay-off to local officials to win clearance for road building. Erwin, his father Efraim and their lawyers could not be reached for comment.

Okada has defended himself against accusations of misconduct in the Wynn case in part by saying he was not directly involved in running Universal. He also argues he was pushed out as a Wynn shareholder for raising concerns as a director about a $135 million donation approved to a foundation aligned with the University of Macau. Okada told Reuters in an interview in Hong Kong last month he would also file lawsuits against former Universal employees he accused of negligence that contributed to the crisis for his company in its relations with Wynn.

“Once we started looking back at things in 2011, I realized I had been deceived all along,” Okada said. “To be honest, I feel like an idiot for trusting people.”

At the time of that interview, the payments to Soriano had not come to light.

CHAIN OF COMMAND

In a lawsuit filed by Universal on August 20 in Tokyo District Court, Universal claims Mitsuo Hida, 65, then president of Aruze USA’s Japan branch, made an unauthorized debit of $5 million from the company’s Bank of Tokyo-Mitsubishi UFJ account in May 2010. Records show the money was transferred via Future Fortune, where Hida was a director, to Soriano’s People’s Technology.

In his rebuttal to the lawsuit, Hida, who led the effort to win concessions for Universal’s Manila casino from the Arroyo administration, says he was operating under Okada. “Kazuo Okada is the president of Aruze USA in its entirety,” he wrote in his statement filed with the court. “I was operating under his chain of command in conducting business.”

Hida declined to comment further when contacted by Reuters. His lawyer also declined comment, citing the pending legal case.

A second lawsuit accuses three former Universal employees, including Hida, of acting without authorization in sending $10 million to Subic Leisure and Management. That lawsuit has been filed with a Tokyo court, but remains partly sealed.

Internal Universal documents reviewed by Reuters describe the series of payments to Future Fortune as both “consulting fees” and, in one case, an “increase in capital.” The $5 million payment to Soriano’s People’s Technology was described as an “advance payment” in one internal document.

It was not immediately clear how the payments were treated in quarterly financial reports or in mandatory disclosures to Nevada gaming regulators. An email from a member of Universal’s compliance unit shows staff sought guidance on how to account for the $40 million paid to Future Fortune in mid-2010.

SPONSORED GUESTS

Both Soriano and Genuino, who left his post in June 2010, face separate charges of bribery and corruption lodged by Philippine officials over payments from the gaming authority to candidates in May 2010 elections in the Philippines. Both were also guests at Wynn resorts with their expenses paid for by Universal when Okada was a major Wynn shareholder and Genuino was the chief gaming regulator for the Philippines. The Freeh report first disclosed those payments.

Universal has acknowledged both men, and other officials from the Philippines and Korea, were guests it sponsored. It maintains the free lodging and expense payments did not violate the Foreign Corrupt Practices Act, a U.S. law against paying bribes. Okada said the arrangements were made by employees no longer with the company, and he was not aware of the payments.

Wynn said the payments uncovered by Freeh were evidence that Okada was “unsuitable” to serve as a director of the Las Vegas-based company, and forced the redemption of Okada’s 20 percent stake in Wynn Resorts for $1.9 billion, a 30 percent discount to the market value. Wynn Resorts had no comment about the $5 million payment to Soriano when asked by Reuters.

Soriano and his wife stayed free at Wynn resorts five times between 2008 and 2010, records show. On a June 2010 trip, Soriano travelled with Efraim Genuino to Wynn Macau where Universal covered their expenses of $2,974.70, including $25 for Soriano to watch a movie.

Genuino checked out on June 10. Soriano left a day later. Within the week, Genuino announced his resignation as PAGCOR chief, a move that incoming Philippine President Benigno Aquino said meant “one less problem for me.”

(Reporting by Nathan Layne, Taro Fuse, Kevin Krolicki, Teppei Kasai, Fumika Inoue and Mayumi Negishi in Tokyo; Farah Master in Hong Kong; Sue Zeidler in Los Angeles; Joseph Menn in San Francisco and Rosemarie Francisco and Manuel Mogato in Manila; Writing by Kevin Krolicki; Editing by Ian Geoghegan)

A Universal subsidiary made a $5 million payment in May 2010
to Rodolfo Soriano, a close associate of the former head of the
Philippine gaming regulator, according to a Reuters examination
of bank records, corporate filings, court documents and records
prepared by Universal staff. The payment was made via a shell
company in Hong Kong and was part of $40 million in transfers
made by Universal’s U.S. affiliate Aruze USA that are now a
focus for investigators.

The document trail connecting Soriano to the $5 million
payment has not been previously reported.

It’s not clear whether Okada, 70 and ranked 18th among
Japan’s wealthiest by Forbes, personally approved the payments.
Universal, more than two-thirds controlled by Okada and his son
through Okada Holdings LLC, has filed suit against three
ex-employees saying they acted without proper authorization in
channeling $15 million of the total through Hong Kong-registered
Future Fortune Ltd.

BITTER SPLIT

The revelation of the contested payments is the latest twist
in a bitter falling out between Okada, who made his fortune
making and marketing pachinko machines – a mix of slot and
pinball machines – and Las Vegas casino magnate Steve Wynn.
Okada was Wynn’s partner and largest investor until Wynn charged
this year that Okada had broken compliance rules – and possibly
U.S. law – by paying some $110,000 in entertainment and other
expenses for gaming regulators from the Philippines and Korea.

The investigation of the much larger payments by Okada’s
company threatens to complicate Universal’s attempt to get a
U.S. federal court to reverse Wynn’s decision to redeem Okada’s
Wynn Resorts shares at a discount. It could also
complicate Universal’s push to complete the casino on Manila Bay
that it began building in January and has promoted as a
VIP-destination resort for China’s newly rich, some critics say.

“I don’t have any illusions that it is going to be stopped,
but there has to be accountability,” said Teodoro Casino, a
Philippine congressman who has urged the government to suspend
the Universal project.

Universal referred questions to Yuki Arai, the lawyer who is
representing the company in lawsuits against former employees.
His office had no comment as of Friday.

Soriano could not be reached for comment. A woman at his
home in Manila said he no longer lived at that address. She
declined to say how he could be reached. An attempt to reach him
at a Manila business operated by the family of his wife was also
unsuccessful.

DISCUSSED WITH FBI

The Nevada Gaming Control Board has been looking into
payments by Okada-controlled companies to Soriano, a consultant
to the Philippine Amusement and Gaming Corporation (PAGCOR),
which regulates gambling in the Philippines, said a person with
knowledge of the matter. The Control Board has sent agents to
Japan and elsewhere to investigate claims that potentially
improper payments were made to Soriano, said the person, who
asked not to be named as the process is ongoing, adding the
payments were also part of an audit by Nevada authorities of
Universal in Japan that began in August.

If Nevada authorities determine there is evidence of
wrongdoing, state gaming regulators can limit or restrict gaming
licenses or impose other sanctions. Universal, which also makes
slot machines, is one of two public Japanese companies, along
with Konami Corp, that are registered with and report
to the Nevada Gaming Commission.

At least two former Universal employees have discussed the
payments to Soriano with the FBI, said people with knowledge of
those talks. Any FBI investigation would be for a potential
criminal case, separate from the regulatory probe. A spokesman
for the FBI office in Las Vegas, which handled the interviews,
declined to comment.

The disclosures deepen questions about compliance and
controls at Universal at a time when those issues are already
under scrutiny because of revelations it paid to entertain
Philippine and Korean gaming officials at the Wynn casino resort
in Macau and the Wynn resort in Las Vegas. Those
revelations were first made public by Wynn after he commissioned
an investigation by former FBI director Louis Freeh.

MONEY TRAIL

Records reviewed by Reuters show the $5 million transferred
from Nevada-incorporated Aruze USA was sent first to Future
Fortune, which was set up in Hong Kong in 2008 and run by a
succession of Universal employees. From that firm’s HSBC
bank account, the money was sent to People’s Technology
Holding Ltd, a firm established in 2009 and wholly-owned by
Soriano.

The payment was part of $40 million that moved from Aruze
USA’s accounts through Future Fortune in the first half of 2010,
just as Universal sought tax and ownership-related concessions
in the final months of the administration of former Philippines
President Gloria Macapagal Arroyo. It also sought to resolve
road use issues that risked complicating its casino development,
people involved in the project say.

The remaining $35 million was paid in January-May 2010 to a
firm called Subic Leisure and Management, records show. Subic
Leisure was registered in the British Virgin Islands in
September 2008, weeks after Universal acquired reclaimed land on
Manila Bay and announced plans to build Asia’s largest aquarium,
a Ferris wheel and a 2,050-room hotel and casino.

Under corporate laws in the British Virgin Islands, Subic
Leisure does not have to disclose its directors or investors.
HSBC said it had no comment.

Universal has looked to Asia for growth to offset a decline
in its home market for pachinko. It won a provisional license to
operate a casino in the Philippines when it paid about $300
million for land as part of the Manila Bay project.

But Universal continued to lobby for its casino to be exempt
from corporate tax and for an exception to rules requiring
Philippine investors own 60 percent of the venture, three former
employees involved in the project said. Universal, which has a
market value of around $1.7 billion, announced it won those
concessions in April 2010. Arroyo left office in June 2010.

“The incumbent PAGCOR management has no knowledge about the
said transfer of funds,” the regulator said in an emailed
response to questions from Reuters for this article.

FEELING DECEIVED

Soriano, a confidante of former PAGCOR chairman Efraim
Genuino, frequently visited Universal offices in Tokyo and
hosted Okada on his visits to Manila, former associates say.
Widely known by his nickname “Boysee,” Soriano operated at the
nexus of business and politics in Manila and often networked
over rounds of golf at the Wack Wack Country Club, one of the
country’s oldest golf courses, people who worked with him say.

Manuel Camacho, 79, a Manila-based lawyer who formerly
represented Universal in the Philippines, said it was understood
that Soriano was an agent for Okada on the Manila casino project
even as he worked for PAGCOR as a consultant. “This guy Soriano
- that is Okada himself. He is acting for Okada,” he said.

Camacho, who also spoke to Freeh investigators, claims money
he was paid by Universal was diverted by his former law partner,
Genuino’s son, Erwin, and sent as a pay-off to local officials
to win clearance for road building. Erwin, his father Efraim and
their lawyers could not be reached for comment.

Okada has defended himself against accusations of misconduct
in the Wynn case in part by saying he was not directly involved
in running Universal. He also argues he was pushed out as a Wynn
shareholder for raising concerns as a director about a $135
million donation approved to a foundation aligned with the
University of Macau. Okada told Reuters in an interview in Hong
Kong last month he would also file lawsuits against former
Universal employees he accused of negligence that contributed to
the crisis for his company in its relations with Wynn.

“Once we started looking back at things in 2011, I realized
I had been deceived all along,” Okada said. “To be honest, I
feel like an idiot for trusting people.”

At the time of that interview, the payments to Soriano had
not come to light.

CHAIN OF COMMAND

In a lawsuit filed by Universal on Aug. 20 in Tokyo District
Court, Universal claims Mitsuo Hida, 65, then president of Aruze
USA’s Japan branch, made an unauthorised debit of $5 million
from the company’s Bank of Tokyo-Mitsubishi UFJ account in May
2010. Records show the money was transferred via Future Fortune,
where Hida was a director, to Soriano’s People’s Technology.

In his rebuttal to the lawsuit, Hida, who led the effort to
win concessions for Universal’s Manila casino from the Arroyo
administration, says he was operating under Okada. “Kazuo Okada
is the president of Aruze USA in its entirety,” he wrote in his
statement filed with the court. “I was operating under his chain
of command in conducting business.”

Hida declined to comment further when contacted by Reuters.
His lawyer also declined comment, citing the pending legal case.

A second lawsuit accuses three former Universal employees,
including Hida, of acting without authorization in sending $10
million to Subic Leisure and Management. That lawsuit has been
filed with a Tokyo court, but remains partly sealed.

Internal Universal documents reviewed by Reuters describe
the series of payments to Future Fortune as both “consulting
fees” and, in one case, an “increase in capital.” The $5 million
payment to Soriano’s People’s Technology was described as an
“advance payment” in one internal document.

It was not immediately clear how the payments were treated
in quarterly financial reports or in mandatory disclosures to
Nevada gaming regulators. An email from a member of Universal’s
compliance unit shows staff sought guidance on how to account
for the $40 million paid to Future Fortune in mid-2010.

SPONSORED GUESTS

Both Soriano and Genuino, who left his post in June 2010,
face separate charges of bribery and corruption lodged by
Philippine officials over payments from the gaming authority to
candidates in May 2010 elections in the Philippines. Both were
also guests at Wynn resorts with their expenses paid for by
Universal when Okada was a major Wynn shareholder and Genuino
was the chief gaming regulator for the Philippines. The Freeh
report first disclosed those payments.

Universal has acknowledged both men, and other officials
from the Philippines and Korea, were guests it sponsored. It
maintains the free lodging and expense payments did not violate
the Foreign Corrupt Practices Act, a U.S. law against paying
bribes. Okada said the arrangements were made by employees no
longer with the company, and he was not aware of the payments.

Wynn said the payments uncovered by Freeh were evidence that
Okada was “unsuitable” to serve as a director of the Las
Vegas-based company, and forced the redemption of Okada’s 20
percent stake in Wynn Resorts for $1.9 billion, a 30 percent
discount to the market value. Wynn Resorts had no comment about
the $5 million payment to Soriano when asked by Reuters.

Soriano and his wife stayed free at Wynn resorts five times
between 2008 and 2010, records show. On a June 2010 trip,
Soriano travelled with Efraim Genuino to Wynn Macau where
Universal covered their expenses of $2,974.70, including $25 for
Soriano to watch a movie.

Genuino checked out on June 10. Soriano left a day later.
Within the week, Genuino announced his resignation as PAGCOR
chief, a move that incoming Philippine President Benigno Aquino
said meant “one less problem for me.”

(Reporting by Nathan Layne, Taro Fuse, Kevin Krolicki, Teppei
Kasai, Fumika Inoue and Mayumi Negishi in Tokyo; Farah Master in
Hong Kong; Sue Zeidler in Los Angeles; Joseph Menn in San
Francisco and Rosemarie Francisco and Manuel Mogato in Manila;
Writing by Kevin Krolicki; Editing by Ian Geoghegan)

Apple launched its own mapping service earlier this month when it began providing the highly anticipated update to its mobile software platform iOS 6 and started selling the iPhone 5.

But users have complained that Apple’s new map service, based on Dutch navigation equipment and digital map maker TomTom NV’s data, contains glaring geographical errors and lacks features that made Google Maps so popular.

“We think it would have been better if they had kept ours. But what do I know?” Schmidt told a small group of reporters in Tokyo. “What were we going to do, force them not to change their mind? It’s their call.”

Schmidt said Google and Apple were in constant communication “at all kinds of levels.” But he said any decision on whether Google Maps would be accepted as an application in the Apple App Store would have to be made by Apple.

“We have not done anything yet,” he said.

Google and Apple were close partners with the original iPhone in 2007 and its inclusion of YouTube and Google Maps. But the ties between the two have been strained by the rise of Google’s Android mobile operating system, now the world’s leading platform for smartphones.

Schmidt said he hoped Google would remain Apple’s search partner on the iPhone but said that question was up to Apple.

“I’m not doing any predictions. We want them to be our partner. We welcome that. I’m not going to speculate at all what they’re going to do. They can answer that question as they see fit,” he said.

Google provides Android free of charge and allows developers to add applications on an open basis, betting that by cultivating a bigger pool of users – now at over 500 million globally – it can make more money by providing search functions and selling advertising.

“Apple is the exception, and the Android system is the common model, which is why our market share is so much higher,” Schmidt said, adding that success was often ignored by the media, which he said was “obsessed with Apple’s marketing events and Apple’s branding.”

“That’s great for Apple but the numbers are on our side,” he said.

At one point, Schmidt, who was in Japan to announce the launch of Google’s Nexus tablet here, used the device to show off a new function of Google Maps.

The feature allows users to shift their view of an area by moving the device in the air without touching the screen, similar to the effect of looking around.

“Take that Apple,” he said, adding quickly, “That was a joke by the way.”

(Writing by James Topham; Editing by Ryan Woo)

Watanabe’s home town of Futaba sits next to the Fukushima Daiichi nuclear plant, which was hit by the March 2011 earthquake and massive tsunami that followed, sparking explosions that scattered radioactive debris and forced the town to be evacuated.

Today, the coastal town remains a no-man’s land, and Japan’s government estimated that an exclusion order barring families from returning could remain in place for almost half of the town for another decade.

The 28-year-old, who slipped out of the town with dreams of making his fortune in Japanese professional cycling, now finds himself an unlikely spokesman for an effort to ensure that evacuees from Japan’s nuclear disaster are not forgotten.

“The consequences from the devastation will continue for many more years, and it will be my life work to keep attention on the issue,” said Watanabe, who missed the medal platform at the Beijing Olympics but still managed sixth in the team sprint and was feted by his home town all the same.

“I want to be power for the people in Futaba and Fukushima at this Olympics and will aim for the gold medal.

“I want to help them and bring them some light as an athlete.”

When Watanabe was growing up in Futaba, most people either worked at the nuclear power plant or made a living selling things to those who did, like his father, who wove traditional tatami mats.

Watanabe was a gifted runner but he switched to cycling at high school because of the impact of Yuichiro Kamiyama, who won over $30 million on Japan’s professional cycling circuit.

Kamiyama dominated the keirin in the 1990s, a race that features a pace bike and a line of riders that build up speed in a tightly choreographed line until an all-out sprint at the end that can reach speeds of 70 kilometres (43 miles) per hour.

Keirin, after lobbying from Japan, became an Olympic sport at the Sydney games in 2000.

But unlike judo, the other Olympic sport with an origin in Japan, competitors from outside Japan have dominated and the country’s only medal so far was the bronze won by Kiyofumi Nagai in 2008.

NERVOUS WAIT

Watanabe, who made his professional debut in keirin at 19, was training in Tokyo for the world championships last March when the 9.0 magnitude earthquake struck off the coast of northern Japan.

He remembers nervous hours watching scenes of the devastation on television before he could reach his sister on the phone and learned that her family and his parents had escaped alive and unharmed.

In the weeks that followed, he struggled to focus on his training. He raced poorly. He no longer enjoyed the sport.

But his family and his friends who had evacuated Futaba urged him to get back in the saddle.

“They were much cheerful than me and helped me to refocus back on what I can do, which is cycling,” he said.

Although he is bitter about the loss of his town, he is also equally worried about the risks of people returning too quickly to the contaminated zone around the Fukushima plant.

“They shouldn’t send residents back until it is completely safe. It will affect the children who are our hope to the next generation,” he said.

In London, Watanabe will compete in the team sprint competition with three riders. Japan has not selected members yet for the sprint or the keirin.

(Editing by Greg Stutchbury)

Watanabe’s home town of Futaba sits next to the Fukushima
Daiichi nuclear plant, which was hit by the March 2011
earthquake and massive tsunami that followed, sparking
explosions that scattered radioactive debris and forced the town
to be evacuated.

Today, the coastal town remains a no-man’s land, and Japan’s
government estimated that an exclusion order barring families
from returning could remain in place for almost half of the town
for another decade.

The 28-year-old, who slipped out of the town with dreams of
making his fortune in Japanese professional cycling, now finds
himself an unlikely spokesman for an effort to ensure that
evacuees from Japan’s nuclear disaster are not forgotten.

“The consequences from the devastation will continue for many
more years, and it will be my life work to keep attention on the
issue,” said Watanabe, who missed the medal platform at the
Beijing Olympics but still managed sixth in the team sprint and
was feted by his home town all the same.

“I want to be power for the people in Futaba and Fukushima
at this Olympics and will aim for the gold medal.

“I want to help them and bring them some light as an
athlete.”

When Watanabe was growing up in Futaba, most people either
worked at the nuclear power plant or made a living selling
things to those who did, like his father, who wove traditional
tatami mats.

Watanabe was a gifted runner but he switched to cycling at
high school because of the impact of Yuichiro Kamiyama, who won
over $30 million on Japan’s professional cycling circuit.

Kamiyama dominated the keirin in the 1990s, a race that
features a pace bike and a line of riders that build up speed in
a tightly choreographed line until an all-out sprint at the end
that can reach speeds of 70 kilometres (43 miles) per hour.

Keirin, after lobbying from Japan, became an Olympic sport
at the Sydney games in 2000.

But unlike judo, the other Olympic sport with an origin in
Japan, competitors from outside Japan have dominated and the
country’s only medal so far was the bronze won by Kiyofumi Nagai
in 2008.

NERVOUS WAIT

Watanabe, who made his professional debut in keirin at 19,
was training in Tokyo for the world championships last March
when the 9.0 magnitude earthquake struck off the coast of
northern Japan.

He remembers nervous hours watching scenes of the
devastation on television before he could reach his sister on
the phone and learned that her family and his parents had
escaped alive and unharmed.

In the weeks that followed, he struggled to focus on his
training. He raced poorly. He no longer enjoyed the sport.

But his family and his friends who had evacuated Futaba
urged him to get back in the saddle.

“They were much cheerful than me and helped me to refocus
back on what I can do, which is cycling,” he said.

Although he is bitter about the loss of his town, he is also
equally worried about the risks of people returning too quickly
to the contaminated zone around the Fukushima plant.

“They shouldn’t send residents back until it is completely
safe. It will affect the children who are our hope to the next
generation,” he said.

In London, Watanabe will compete in the team sprint
competition with three riders. Japan has not selected members
yet for the sprint or the keirin.

(Editing by Greg Stutchbury)

“I don’t think the situation is unstable,” said Goshi Hosono, Japan’s minister in charge of the response to the nuclear crisis. He was speaking to reporters after his first tour of the twisted and partly destroyed building that houses Fukushima’s No. 4 reactor.

The visit marked an effort by Japanese officials to show they are addressing international concerns about the risk of a second accident at Fukushima, and a group of reporters were allowed to accompany Hosono on his tour of the plant while clean-up operations were suspended for the day.

Hosono said he expected workers to begin removing fuel from the No.4 reactor’s storage pool next year. Work began last month to raise what amounts to a giant tent over the building to keep radioactive dust from scattering during the transport of the fuel rods.

“We want to move as quickly as possible,” Hosono said.

Tokyo Electric Power, the utility that operates the Fukushima Daiichi plant, says its analysis shows the No.4 reactor building would hold up in a strong earthquake even after being badly damaged by a hydrogen explosion last March when three nearby reactors suffered meltdowns.

Japanese safety regulators on Friday ordered Tepco to recheck its findings after measurements showed the west wall of the reactor building was buckling out by about 3 centimeters (1.2 inches).

Hosono said the government accepted Tepco’s estimate that the No.4 reactor could withstand an earthquake measuring a “strong 6″ on the Japanese scale.

The magnitude 9 quake last March that triggered a tsunami and overran Fukushima’s back-up power systems was measured at 7 on the Japanese scale north of the plant in Miyagi prefecture.

Some environmental critics charge the No.4 reactor presents a particular risk of a knock-on disaster if a subsequent earthquake were to topple it or puncture its fuel storage pool and allow the 20 meters (65 feet) of water now covering and cooling 1,535 uranium fuel assemblies to drain away.

DECADES

Such an accident, they say, could release far more radiation than the leaks of radioactive water Tepco has battled since improvising a system for cooling reactor cores last year.

Hosono, who was accompanied by aides and bodyguards on his tour of the plant, climbed a narrow and dark staircase built with scaffolding to take workers to the top of the No.4 building where the fuel pool has been covered with a tarp.

Tepco has taken steps to shore up support for the pool, which measures 10 meters by 20 meters across, by adding a cement column underneath.

Officials from the utility demonstrated how they were using water in the pool as a kind of level to confirm the building was not tipping. They also showed a grid of floats holding up the tarp they said could support a person if a worker fell in.

Hosono said his biggest concern was ensuring Japan could secure the labour and talent to finish the decommissioning of the Fukushima reactors over the coming decades.

“This may take 30 or even 40 years to complete and extremely difficult work is still ahead of us,” he told Tepco workers.

(Editing by Sophie Hares)

Tokyo Electric Power said its own analysis conducted over the past year put the amount of radiation released in the first three weeks of the accident at about one-sixth the radiation released during the 1986 Chernobyl disaster.

“If this information had been available at the time, we could have used it in planning evacuations,” Tepco spokesman Junichi Matsumoto told a news conference.

Because radiation sensors closest to the plant were knocked out by the March 11, 2011 quake and the tsunami, the utility based its estimate on other monitoring posts and data collected by Japanese government agencies.

Tepco, set to be nationalized in July in exchange for a Japanese government bailout, estimated meltdowns at three Fukushima reactors released about 900,000 terabecquerels of radioactive substances into the air during March.

That was 2-1/2 times the amount of the first estimate by Japan’s Nuclear and Industrial Safety Agency in April last year and about 17 percent more than the highest estimate provided by the government safety agency.

The estimate was based on measurements suggesting the amount of Iodine-131 released by the nuclear accident was three times higher than previous estimates, the utility said in the report.

Iodine-131 is a fast-decaying radioactive substance produced by fission that takes place inside a nuclear reactor. It has a half-life of eight days.

More than 99 percent of the radiation released by the accident came in the first three weeks, it added.

The Fukushima Daiichi plant, which had six reactors, was hit by a series of hydrogen explosions and meltdowns after power and cooling systems were cut off by the tsunami.

The World Health Organization released its own study this week concluding that residents around the Fukushima plant had been exposed to up to 20 times normal background radiation in the first year after the accident. That was still within the WHO’s recommended emergency limit.

Officials expect it will take up to 30 years to decommission the Fukushima reactors. The accident has prompted a debate over the future of nuclear power in the resource-poor nation.

(Editing by Jeremy Laurence)