CCC to IPI: Pay up; maintain working capital for payroll

The Commonwealth Casino Commission board unanimously adopted yesterday an order requiring Imperial Pacific International (CNMI) LLC to maintain sufficient working capital to pay three months’ payroll in a bank in the CNMI or the United States.

At a monthly meeting held at the Springs Plaza in Gualo Rai, the commissioners also approved an order requiring IPI to settle its payable accounts and to appoint a chief executive officer.

This developed as IPI Treasury director Frances Mafnas and IPI human resources director Redie Dela Cruz disclosed to CCC at the meeting that IPI has just hired a new payroll service provider in Guam to address the payroll problem with IPI employees.

Mafnas said IPI’s payroll account at the Bank of Saipan in the amount of $800,000 was not just being frozen but is actually being closed.

On hiring a CEO, CCC chair Edward Deleon Guerrero said IPI must do it within 15 days. Since the departure of Mark Brown as CEO, the CCC has been urging the IPI board of directors to find a replacement, Deleon Guerrero said. “We continuously impressed upon them that this is of utmost urgency…to hire one even [on] an interim basis, even an acting one, so CCC would know who to direct all the questions to,” he said.

He said IPI has been remiss in making the appointment and that the commission is not interested in seeing a messenger.

IPI senior vice president Tao Xing said IPI can appoint a CEO right away, but given the COVID-19 pandemic situation, it’s difficult to have that person on board.

On settling its payable accounts, commissioner Diego M. Songao pointed out that since he became commissioner two years ago, the discussion has always been about IPI’s money problem to pay its debts and payables, to continue the construction.

“I really feel that IPI has been playing with the casino commission for the past two years,” Songao said, and he feels that IPI is biding time in order to get financing. “This order perhaps will make IPI wake up that we are serious and that they have to do something,” he said.

Deleon Guerrero said what they are looking at in this order is what IPI owes in public land taxes and community fund contributions. “It’s now public and private. On the government, there is no such thing as contested,” he said.

On maintaining a reserve account, Deleon Guerrero said IPI is ordered to reserve $1.4 million for the first three months from the effective date of this order, that this restrictive account can only be used for payroll.

For the next three months, the amount in reserve would be doubled to $2.8 million, which will be on standby.

Starting in January 2021, $4.2 million must be placed in reserve for payroll. “We [are going to] be auditing this thing. You will be sanctioned for not maintaining the order,” he added.

Deleon Guerrero said they don’t want to hear any more delayed payrolls for any of the employees, whether in construction or non-construction.

IPI’s Mafnas said one of their main concerns is the employees’ payroll so they opened this special account with Bank of Saipan that is strictly for employees’ payroll checks. “We do not deposit any funding into this account. Only when we have checks reaching to the employees,” she said.

Mafnas said there was $800,000 in that account but it was frozen and then the account was closed after it was taken away by Pacific Rim Land Development LLC through a writ of execution order from the federal court. That meant the payroll checks that IPI employees had cashed in convenience stores or other bank accounts rather than Bank of Saipan were returned to IPI, she said.

Mafnas said they understand IPI’s other bank accounts are being frozen, but this payroll account that belongs to employees should not be touched or closed. “Those are the employees’ money. We do not deposit any funding in there until the employees’ payroll checks have been released,” she said.

As for the new payroll service provider, Mafnas said they just hired this company in Guam last Wednesday and that they just finished sending the service provider the information for IPI’s payroll number 13 that was never released. “We have all the checks due to the account being closed,” she said.

Mafnas said payroll number 13 supposed to be given today, Friday, but that their parent company in Hong Kong has not able to wire the funding because it was a holiday in Hong Kong last Wednesday and yesterday.

Mafnas said this payroll provider in Guam will be handling IPI’s payroll starting with payroll number 13 and onward.

She said the IPI management has assured that they will not be having any funding issue.

When asked how much IPI pays for payroll, Mafnas said they are looking at around $600,000 to $700,000 in gross amount for every pay period and that IPI pay about $1.4 million monthly. She said they are still working to reserve at least three payrolls. Mafnas said the $800,000 in the Bank of Saipan was not just specifically for one payroll as there are some people who hold on to their checks instead of cashing them.

Mafnas said they ran this idea of hiring a Guam payroll service provider with to their legal team so she believes it’s legal as she noted that many other Saipan companies engaged this same payroll service provider.

IPI’s Dela Cruz, the human resources director, said that they are making arrangement for that Guam payroll service provider to send direct deposit and will take care not only the construction workers but everybody else. Dela Cruz said this will resolve the employees’ two pay periods and the upcoming third one by next week. She said they are looking at resolving the payroll issue by next week.

As for the construction employees, no one has been furloughed because the project remains ongoing, she said. Dela Cruz said the employees will get paid as there is funding and the problem is just the mechanism in distributing or disbursing those funds.