‘Pay up or lose it’

Gov. Ralph DLG. Torre notified Imperial Pacific International (CNMI) LLC yesterday of the government’s intent to suspend or revoke its exclusive casino license—seven days after IPI failed to pay the $15.5 million annual casino license fee by the Aug. 12 deadline.

In a letter that Torres said serves as a notice of the government’s intent, he told IPI chief executive officer Donald R. Browne that IPI is entitled to an “adequate and reasonable time to cure” the breach, per Section 31 of the Casino License Agreement.

Torres also emphasized with Browne that the annual license fee for the year 2020 is due and payable on the anniversary date of the signing of the CLA, which was on Aug. 12, 2020.

As of press time yesterday, Saipan Tribune was still awaiting IPI’s comments.

Earlier, in a letter dated Aug. 11, Browne informed top government officials that IPI will not be able to pay the $15.5 million in annual license fee by the deadline and asked for an “abatement” of the fee for the year 2020. Browne also proposed that payment of the $3 million to support the operations of Commonwealth Casino Commission that IPI owes by this October be delayed until 30 days before the scheduled reopening of IPI’s casino in Garapan.

Citing the COVID-19 pandemic that grips the world, Browne described what has happened as a classic “force majeure” that affects not just IPI and is beyond IPI’s control.

File photo shows the main entrance to the Imperial Palace Saipan in Garapan. (KRIZEL TUAZON)

In his response to IPI yesterday, Torres said he assumes that IPI’s request for “abatement” of the casino license fee for the year of 2020 means that IPI seeks to be absolved from paying the required fee entirely. “This request cannot be dealt with administratively as the fee has been set by law,” Torres said.

He noted that the law that provided IPI’s obligation specifically as to the casino license fee was unconditional.

Further, the governor said, the casino regulatory fee is created by Commonwealth law. He said the “force majeure” clause of the CLA cannot supersede an explicit statutory command of the Legislature. “This is also true with regards to the payment of the casino license fee,” Torres said.

The governor said IPI’s stated reason for wanting to delay payment—that “there will be no casino operations to monitor until IPI does reopen”—has already been foreclosed by the Legislature. He cited the statute that states that “The casino regulatory fee is due regardless of actual costs incurred by the [Commonwealth Casino] Commission.”

Torres also noted that IPI is in material breach of the CLA for its Community Benefit Fund deficiencies.

He said Section 31 of the CLA defines a “material breach” as, among other failures, “to pay any amount due and payable under upon the date when such payment is due” and the failure “to observe or perform any material obligation or covenant under this agreement.