What happened to the CBF?

With both the Commonwealth Casino Commission and the Lottery Commission washing their hands off on the community benefit fund issue, all eyes are now on Gov. Ralph DLG Torres to answer one big question—what happened to the CBF money?

The fund is the subject of controversy after House of Representatives Gaming Committee chair Rep. Ralph Yumul (R-Saipan) asked both commissions to report to the committee on the status of the Imperial Pacific International (CNMI) LLC’s compliance with the casino license agreement.

CBF is a contractual obligation of the IPI, spelled out in the casino license agreement, as part of its contract with the CNMI government and the public.

Based on the audited financial statements for 2017 and 2018, IPI owed $17 million in distributions from the CBF. With the required $20 million payment every year, beginning Oct. 1, 2019, IPI should owe about $37 million in CBF distributions.

In an interview with Saipan Tribune, Rep. Tina Sablan (Ind-Saipan) said that IPI’s obligation to pay out these funds is non-negotiable, as it is in their contract.

“They have missed these deadlines. That much we know, and as far as we have been able to tell from communications, from media report, there have been no consequences at all for this failure to honor a promise,” Sablan lamented.

CBF for recovery

In a separate interview, press secretary Kevin Bautista explained that CBF is an escrow account managed by IPI, and that it is up to IPI to choose which community projects to fund, but from the standpoint of an endorsement by the governor.

“The one thing about the community benefit fund is that that money does not belong to the Commonwealth government. It belongs to the casino license holder, IPI,” Bautista said.

“IPI then chooses to put the money out to fund projects that benefit the community. The governor endorses the project, the casino license holder then looks at it, and if they want to fund that particular project, they can,” he added.

The press secretary went on to share that one particular project of high importance that was able to get done through the community benefit fund by IPI was the amount of about $400,000 to the Commonwealth Advocates for Recovery Efforts.

“They are a nonprofit long-term recovery group that was formed by government and private sector partners before super typhoon Yutu, and that $400,000 was used to rebuild homes of folks that were still on the unmet needs table of CARE and the American Red Cross,” Bautista said.

“We were able to use that $400,000 to fund the construction and the rebuild of about 46 homes that were still left at the unmet needs table. Those are families and individuals that were still suffering after Typhoon Soudelor back in 2015,” he added.

No control over the money

CBF is a supplemental resource to fund community projects. According to Bautista, it is not a source of revenue to the CNMI government’s general fund for ordinary government expenses such as wages and salaries.

Bautista reiterates that the Office of the Governor has no control over the CBF, but the office provides input on community projects that IPI chooses to fund.

“The most important thing for the Commonwealth is for them to finish that project, and then ensure the payment of the CBF, but we continue to be in close dialogue with IPI on ensuring that the CBF requirement under the license agreement remains fulfilled.”

What’s next?

According to the Casino License Agreement, the CBF is supposed to be held with IPI until the point of distribution, with IPI to consult with the governor about how the funds could be distributed.

The House minority bloc is seeking answers as to why the IPI is not being required to honor its contractual obligation, for about $37 million owed by the IPI that could have been used to benefit health care, public education, retirement benefits, and infrastructure.

“If we only enforce the laws that we already have, and collect the taxes and the fees that already should be collected, we’d be in much better shape,” Sablan said.