IPI fails to meet deadline to pay $15.5M license fee

Contrary to earlier assurances, Imperial Pacific International (CNMI) LLC failed to meet yesterday’s deadline to pay the $15.5 million annual casino license fee.

IPI chief executive officer Donald R. Browne informed Gov. Ralph DLG Torres, Senate President Victor B. Hocog (R-Rota), House Speaker Blas Jonathan T. Attao (R-Saipan) in a letter Tuesday that IPI will not be able to pay the annual license fee that was due yesterday.

Browne also proposes a delay in IPI’s payment of $3 million to support the operations of the Commonwealth Casino Commission that IPI must pay by this October. He proposes that the payment be delayed until 30 days before the scheduled reopening of IPI’s casino in Garapan.

Browne’s letter was also addressed to Attorney General Edward Manibusan, CNMI Lottery Commission chair Mark O. Rabauliman, and Commonwealth Casino Commission acting executive director Andrew Yeom.

Citing the COVID-19 pandemic that continues to grip the world, Browne described what is happening as a classic example of “force majeure” that affects not just IPI and is beyond its control.

The CEO noted that relief is provided for in the Casino License Agreement in cases of “force majeure.”

Citing Section 25 of the Casino License Agreement, and because of the worldwide pandemic, Browne said that IPI is asking for an abatement of the casino license fee for the year 2020.

Section 25 of the Casino License Agreement states that the “licensee shall not be in default for any failure or delay in the performance due under this License Agreement if such failure or delay is due to causes beyond reasonable control, including, but not limited to: Act(s) of God, war(s), strike(s) or labor dispute(s), embargo(es), act(s) of terrorism, fire(s), flood(s), or accident(s) without the fault or negligence of the Licensee (“Fore Majeure Event”).

The section also states that “invocation of force majeure by the Licensee shall not excuse any payment obligations to the Commonwealth where the grounds and or purpose for such payments have already accrued.”

Browne said what IPI is requesting is not unheard of in the U.S. which is almost completely shut down by the pandemic.

“Not only has the federal government provided the airlines relief from certain taxes and fees but has also given the airlines tens of millions of dollars in direct aid so that they would not permanently close,” he said.

The CEO pointed out that IPI is only asking for relief from certain fees. Browne said IPI understands that the Legislature may be required to approve the relief that IPI seeks.

“IPI requests your support in providing it relief from the fees,” Brown told Torres and other government officials.

Construction on the IPI casino building remains ongoing. (KRIZEL TUAZON)

With this relief, he said, IPI will be able to stay in business and reopen stronger. “In the long term, providing this relief to IPI now will benefit both IPI and the CNMI,” he said.

Browne pointed out flights from China to the CNMI were stopped in February 2020. In March 2020, he said, IPI had to close its casino to protect its employees and the public from the virus. He said IPI has had no income for the last five months. In all likelihood, Browne said, IPI will remain closed, and have no income, for the next eight months.

The CEO cited the many expenses that IPI is required to pay its workers and significant operating costs each month.

At the Commonwealth Casino Commission’s monthly board meeting last July 30, CCC board chair Edward Deleon Guerrero reminded Browne that Aug. 12—or 13 days from that day—is the deadline for IPI to pay the $15.5 million casino license fee.

“I’m advising you, you have 13 days to notify the [corporation] that the $15.5 million is due on or before Aug. 12. Please don’t come to us on Aug. 11, saying that it’s been wired on Aug 11,” Deleon Guerrero said.

Deleon Guerrero said IPI had been sanctioned before for $25,000 a day by CCC for late payment. “Please do whatever you can. This is non-negotiable. This is the law,” Deleon Guerrero told Browne.

Browne said at that time that the license fee has been one of the top issues they’ve discussed every day and assured that they are in constant communication with corporate officials.