CCC complaint filed vs IPI

Commonwealth Casino Commission executive director Charlie Atalig has filed a complaint before the CCC against Imperial Pacific International (CNMI) LLC for allegedly failing to contribute $40 million in community benefit fund money in 2018 and 2019 as required by the Casino License Agreement.

Atalig, through assistant attorney general Mike L. Ernest, asked CCC to declare that IPI committed the violations and failed to self-report to CCC all the facts that gave rise to the violations.

In his complaint, Atalig asked the CCC to declare each violation as a major offense and order IPI to pay a fine of $50,000 per violation, for a total of $100,000. He also asked the CCC to suspend IPI’s license to conduct gaming operations on Saipan until such time that all community benefit fund payments are full paid.

According to Ernest in the complaint, IPI is required by the Casino License Agreement to contribute $20 million in community benefit fund money toward community benefit programs on or before June 1,2018, and Oct. 1, 2019. Ernest said Atalig alleges that IPI did not self-report the violations and has not accepted responsibility for the conduct underlying the offenses.

Ernest said that Atalig did consider mitigating factors, such as IPI’s business being harmed by a recent super typhoon and the coronavirus pandemic, but notes that the failure to fully contribute to the CBF happened even before the pandemic.

Ernest said the executive director believes, though, that the violations do not warrant revoking the casino license agreement.

When asked for comments Sunday, IPI, through counsel Michael W. Dotts, said the company finds itself unable to infuse money to the community benefit fund at this time and hopes that the Lottery Commission will agree to amend the license to push back the time to pay into the fund.

Dotts said IPI has paid over $300 million in taxes since starting its business, has helped create jobs for many residents, and has helped the growth of the tourism industry to the CNMI.

“Now IPI needs the help of the CNMI,” he said, adding that if the Lottery Commission agrees to amend the license to push back the community benefit fund payments, that should resolve Atalig’s complaint.

Dotts said IPI has been having significant and mounting financial problems dating back to when its contractor, MCC International, abandoned the construction project and fled the island. Since that date, IPI has had unexpected and enormous construction costs, he said. Two super typhoons—Soudelor and Yutu—have also hit Saipan, disrupting operations and construction. He said federal laws also changed regarding CW workers and H-2B workers, making it harder to bring in the workers needed and further driving up the costs. Dotts said the Chinese economy has also retracted, meaning tourism has dropped, and then the COVID-19 pandemic hit and shut down the casino.

As a result of all these problems—that were all outside IPI’s control and that no one saw coming—IPI has ended up spending over $900 million on a project that was projected to cost $500 million, he added.

Since mid-March, the casino has been closed, producing no income.