Vendors, contractors plead with CCC to act against IPI

Representatives of many vendors and former contractors of Imperial Pacific International (CNMI) LLC, who are allegedly owed $35 million in all, showed up at yesterday’s Commonwealth Casino Commission meeting, to collectively appeal to the CCC to take action against IPI, whom they accused of engaging in a pattern and practice of breaching contracts and dishonoring obligations to licensed professionals in the Commonwealth.

IPI counsel Kelley Butcher, who attended the meeting refused to comment about the vendors’ complaint and some lawmakers’ statements urging CCC to take action against IPI.

Colin M. Thompson, who is the lawyer of a former IPI contractor, Pacific Rim Land Development LLC, spoke on behalf of the vendors/contractors before the commission during the public comment portion of the meeting, which was held at CCC’s conference room at the Springs Plaza in Gualo Rai.

Thompson, who read the vendors’/contractors’ joint letter that was addressed to the CCC commissioners and executive director Edward Deleon Guerrero, said that each of the service providers that signed the letter was injured by IPI’s wrongful conduct.

“Collectively, we seek action on our complaint by this commission,” the lawyer said, reading the letter.

Thompson said that, pursuant to CNMI law, the CCC is empowered to hold hearings on violations of its regulations.

Under CCC regulations, Thompson said, it is a violation for IPI to engage in unsuitable methods of operation, and breach of contract is expressly listed in the regulations is one such violation.

Thompson said that IPI breaching its contracts with all businesses listed in the letter of appeal shows that IPI engages in unsuitable methods of operation, which deserves CCC’s scrutiny and discipline.

Thompson said each of the signatory to the letter are service providers and are licensed to do business in the CNMI—many of whom have been in business for over a decade.

“Each company entered into an agreement with IPI to provide materials and/or services, and each company was damaged by IPI’s breach of its commitment,” he said.

Thompson said some have decided to file actions in courts, while others are still pleading with IPI to pay amounts that are owed.

He said in every case, and especially given their numerosity, IPI’s unsuitable method of operation reflects discredit upon the CNMI and its gaming industry.

Such activity, the lawyer said, “shall be grounds for disciplinary action by the commission.”

Rep. Christina Sablan (Ind-Saipan), who, along with Reps. Edwin K. Propst (Ind-Saipan) and Ralph Yumul (R-Saipan), spoke during the public comments portion, said the commissioners should show that they are not compromised by enforcing the laws and the casino license and make IPI comply.

If IPI is unable or unwilling to comply, CCC should revoke the casino license, Sablan added.

“Pave the way for a new bidding process with developers who are in a better position to improve and complete this project, and who would respect our laws, our contracts, our workers, our cultures, and our environment,” she said.

The lawmaker said there must be consequences when laws are violated. “We are under no obligation to continue to do business with bad actors,” she said.

Sablan pointed out that IPI vendors are collectively owed $34 million according to an audited financial statement of 2018. She said IPI is chronically delinquent in its payments.

She said many of these vendors are small businesses struggling to keep afloat—and they are basically financing what was supposed to be a billion-dollar project.

The lawmaker said CCC members have an obligation to help these businesses get paid.

Sablan said CCC members also have an obligation to look out for the workers.

“We have seen a litany of labor violations: unsafe working conditions, at least one death, over 80 documented workplace injuries, illegal employment of tourists, workers suing for forced labor, human trafficking, injuries for which they were never compensated, sexual harassment, discrimination, contracts have been abruptly terminated, and lives disrupted,” she said.

Sablan said these are human beings and IPI treat their employees like they’re disposable.

“And that’s wrong. And it’s wrong to allow them continue to do so,” Sablan said.

She also cited rumors that the reason why CCC does not exert its authority is because they are inherently compromised, that some of the commissioners may have financial interests tied to IPI. If true, that would be a violation of their code of conduct and the law, and would require automatic forfeiture of their commission membership.

“Because of the nature of this industry, because of the propensity for corruption, the commissioners must be of unimpeachable integrity. Above reproach. No conflicts or even the appearance of conflicts,” Sablan said.

The lawmaker noted the departure of Phillip Tydingco as IPI’s general counsel and Chuck McDonald as one of IPI’s counsel, and other many key managers, and the resignation of Mark Brown as interim chief executive officer, and other board members.

She said it is also her understanding that most, if not all, the staff in IPI’s compliance section have also resigned.

“So, who’s left? Who’s calling the shots? Who’s making sure that suspicious activities are being reported?” asked Sablan, adding that this should be an urgent priority, especially in the wake of recent Federal Bureau of Investigation raids on the casino, and allegations of money laundering, fraud, and public corruption.

“Members of the commission, at what point do we say, enough is enough?” she said.

Sablan said in the midst of a fragile economy and a cash-strapped government, there is a casino that owes the Commonwealth tens of millions of dollar in Business Gross Revenue Tax, corporate income taxes, and developer’s taxes and is seeking ways to avoid paying any taxes for years to come.

Former CNMI Zoning Board chair Diego Blanco asked CCC why they are tolerating IPI in not paying vendors millions of dollars.

“This is Saipan. They cannot just come in here and treat us like dogs!” Blanco said.

Blanco said he does not know who is running IPI now as everybody has resigned.

Blanco said CCC should not keep tolerating IPI and instead revoke its license.

As Steve Zuo, a principal of the Sardini Group Inc. USA, was telling the commission about his unpaid work as a designer of the casino, Blanco stood up and told the commissioners that IPI owes Zuo over a million dollars.

Before members of the public were allowed to speak, CCC chair Juan M. Sablan noted that he received a letter from a vendor complaining about IPI not paying for services.

Sablan said CCC has to start addressing some of the issues in detail next month.

He said that if IPI does not comply, then they will penalize or sanction them.

“I think we should do that because we are about five years [into this] and we’re still hearing noncompliance,” the chairman said, noting that federal laws and some local laws or regulations may have been violated.

Sablan asked CCC executive director Edward Deleon Guerrero to make a record of the potential imposition of sanctions

“Every month we have been hearing this. …I’m getting tired. I don’t know about the other commissioners, but it’s about time that we take our teeth together and work hard,” CCC chair Sablan said.

Deleon Guerrero said he wants to put it on the record that it’s not like that they don’t sanction IPI. He said the CCC has been sanctioning IPI but that some of the issues that were raised in the letter are currently being negotiated with the appropriate entity.

Deleon Guerrero disclosed there are actually ongoing investigation that they have been doing on alleged violations, but that they have to keep the commissioners out because they will be functioning in the appeals and that they should not lose their authority to conduct an impartial review.

When asked later about the vendors’ complaint, Deleon Guerrero said every vendor must understand that there’s different performance contracts between the different vendors and IPI.

“Several vendors have claimed that they were not paid as they agreed upon,” he said, adding that he is also aware that IPI has brought several of these vendors to court for various reasons.

He said the commission should not preempt the judicial process as IPI and the vendors are going into litigation.

At this point, though, he said the CCC is happy that the vendors brought this thing to its attention. Deleon Guerrero said there is a process for the vendors to collect what is owed and that’s the judiciary process.

“We let the courts resolve the issue before we make any final decision,” he said.

Aside from Pacific Rim, the other complaining vendors/contractors are Canaan Realty (Tang’s Corp.), Ms. Chong of Unicorn Corp., Ripon Ahmed of GT Building System, Da Bao Corp., Red Coral Corp., Pingshun Corp., Plumeria Corp., AYD Services Inc., Artman, Winzy Corp., Mr. Kim of DKK, Kim Corp., USA Fanther, Addison Global Interiors or AGI Stone Design, Yantze Corp. Ronghua Corp. Fritz Pacific, Kehong Engineering, Fujitech Elevator Corp., JN Saipan Security, Ronghua Corp., Fritz Pacific, Kehong Engineering, Fujitech Elevator Corp., JN Saipan Security, GPPC, Tropical Landscaping, Dong Fang Trading Corp., Hong He Hardware, and Sardini Group Inc.