Santos: Transparency is one of IPI’s big weakness

If Macau, the mecca of casino gambling in Asia, doesn’t allow tax write-offs, the CNMI should do the same, according to Commonwealth Casino Commission commissioner Alvaro Santos.

“That was the position of the whole commission from the beginning, that to allow write-off is not in the best interest of the Commonwealth. It should not be allowed because the CNMI government will be losing money every year big time,” he said during Monday’s Senate Cannabis and Gaming Committee meeting on Capital Hill.

Santos argued that allowing casino write-offs is a huge leak for the CNMI government. Imperial Pacific International (CNMI) LLC is the CNMI’s lone casino licensee.

“It is like a safety net for IPI, and a huge leak for the CNMI government, when you allow write-offs in a casino industry. How it works, when I say safety net for IPI, is because, either way, IPI benefits. Whether they collect or not collect, they benefit. That’s why I call it a safety net,” he said.

Santos also disclosed that IPI is currently having difficulties collecting debts from its patrons.

“Nowadays, many of you may be aware, IPI is having an extremely hard time collecting debts from its patrons. The other sticky part about this also is that it is the Hong Kong office that collects the receivables [or] debts owed by patrons,” he added.

He pointed out that the CNMI has no involvement, and that they just receive information from the Hong Kong office, “whatever the Hong Kong office decides what information to give the CNMI office.”

Santos is concerned that, under such condition, only Hong Kong knows how much the actual collection is, and implied, through an example, that the chief financial officer on the island has no way to verify the authenticity of collection reports coming from Hong Kong.

“IPI CNMI is at the mercy of Hong Kong IPI for information, and the casino commission is in the dark all the time,” he said. “Transparency is one of their very big weakness, and that is one of the most contentious area for the commission that we have in the past six years, not getting the right information. And if they give us [the information], oftentimes they give us what they want to give us.”

The commissioner also said that in the casino industry, casino operators use all kinds of financial strategies to avoid paying taxes or to minimize the paying of taxes.

During the meeting, the Senate Committee endorsed the passage of House Bill 21-11, HS1, the bill that gives the casino commission more authority to regulate the casino industry, with amendments.

The Senate struck off the tax write-off proponent of the bill following the introduction and passage of H.B. 21-62 in the House of Representatives, which intends to take care of the tax write-off clause in H.B. 21-11.