MGI: we have been defrauded by the contract

Following the termination of their exclusive master concessionaire contract for Mañagaha Island, Mariana Global Inc. has spoken up about its contract with the Department of Public Lands claiming they were defrauded and baited by the promise of “exclusivity.”

Earlier this month, the Department of Public Lands officially terminated the master concessionaire contract for Mañagaha Island awarded to Mariana Global Inc. citing failure to comply with violations to include nonpayment of rental fees.

According to information acquired from DPL, to date, MGI has not remitted its rental fee for 7/2024-6/2025 in the amount of $800,000 plus interest of $12,000 for a total of $812,000.

In a statement from MGI, it states that the root cause of the contract termination stems from “Uses and Privileges” clause in the contract that granted them the exclusive rights to Mañagaha island.

However, MGI said that in its one year as master concessionaire, they found out that DPL didn’t have the authority to grant exclusive rights of Mañagaha which MGI claims is ultimately fraud.

“In our one year of operation, we found that DPL effectively has no authorities to grant the exclusive rights. In other words, DPL has given us exclusive rights to marine sports that it does not own. This constitutes fraud. All operators who receive permits from the Division of Fish and Wildlife and/or the Division of Coastal Resources Management can conduct marine sports, and all businesses are freely selling their services on the island. Further, not only did DPL fail to uphold the exclusive rights promised to us in the contract, but they sided with the local vendors in protecting their interests instead of enforcing the contract terms,” said MGI.

MGI adds that because most tourists rent equipment from outside and/or bring food or lunch boxes and drinks onto the Island, MGI could not regulate what equipment or foods and beverages were brought onto the island from outside which essentially obstructed MGI staff from enforcing exclusive rights.

“External operators/local vendors even accompanied DPL staff to protect their customers therefore, these local vendors efforts coordinated with DPL staff effectively negated any exclusivities it promised under the agreement,” said MGI.

MGI claims that the exclusive rights described in their contract was proposed by DPL from the outset as an attractive bait to ultimately impose much greater obligations on the concessionaire.

“With this understanding, we offered to pay excessive rent and various donations to the local community by having the exclusivity granted to us in the contract. However, without the exclusivity in the actual commercial practice thus far, the annual revenue is about $500,000 whereas the rent, island maintenance and insurances, and community donations have costed us over $2 million a year. This non-exclusivity forced us to compete in a fiercely competitive market at a huge disadvantage. We had to bear the $200,000 a month for island maintenance and rent that goes into our product pricing whereas the local vendors, our competition in this case, enjoyed our island management services for completely free while competing against us. This will obviously put us into a perpetual loss situation for any products or services that we may offer in this disadvantageous condition,” said MGI.

MGI notes that it entered in the bidding process on the belief that CNMI is a U.S. commonwealth where the fair standards of the U.S. federal laws and commercial practices apply in Saipan.

“However, ultimately, we have been defrauded by the contract with the impractical exclusivities that DPL granted to the concessionaire. While we see that DPL’s ill-fated commitment to the grant of exclusivity was not intentional to be false or invalid since they recently went through the regulations amendment effort before stalling to adopt it, the order of their action was completely wrong! It would have been so much better to amend their regulation and adopt it first prior to offering bids to the potential concessionaire with the true and valid exclusivity that now merits a revenue and cost sharing model to be fair to all parties involved. As for us, please understand that MGI is not just an operator. We are an investment company operating hundreds of millions of dollars and have consigned our marketing efforts to McCann Erickson, a world-renowned advertising and marketing company, for millions of dollars for this project. Our offer was to return much of our profits to the infrastructure development of Saipan,” said MGI.

MGI further states that it wanted to install a systematic approach to manage price, quality, and orderly competition while sharing the revenue and the costs of operating the island. However, DPL didn’t seem to comprehend this approach and rejected it with a notification of the contract termination.

“Unfortunately, Mañagaha would now revert back to the past where the existing

3 to 4 local businesses would continue to provide low-quality services using cheap equipment and dangerous boats to ultimately solidify the island as another low-quality site to visit. This also include the loss of all of the benefits we have provided or promised to provide to the local community,” said MGI.

MGI, in closing expresses that it is painful to see its investment and vision for Mañagaha end in failure stating that they had big plans for Mañagaha when entering their agreement with DPL back in 2023.

“We came to Mañagaha with big hope and vision in August 2023. We had plans to turn the island into the world’s most premier marine resort and prepared our operations to reflect such top-end services by purchasing submarines, various equipment, facilities, and upscale speedboats,” said MGI.

However, MGI claims various complex administrative regulations and permit conditions and processes kept most of these investments on hold before MGI could start to implement them into usage for over more than a year.

“Additionally, we have invested $3 million over the past year to repair and replace outdated electrical and water supply facilities and restrooms, and another $3 million on over 20-year-old facility renovations that still remains yet another 1 to 2 years of work to be completed to meet the global standard. However, we’re facing a termination now,” said MGI.

MGI states that it came to the CNMI with a big picture and vision to rebrand Saipan’s entire image by initiating key infrastructure investments in Saipan.

“We wanted to rebrand the island into an upscale and luxurious setting to ultimately target the very lucrative niche market that comes with the high-end premium customers who wouldn’t mind dropping several hundred thousand dollars in their visit for the benefit of elegant and pleasure-loving style of refine services,” said MGI.

“Right from the get-go, we stated that aiming for improving the key infrastructures in Saipan is our top priority. We foresaw that the tourist market winner will be determined by whoever wins the improvement race to successfully renovate the broken and neglected infrastructures and facilities first after the pandemic. Our prediction was very accurate as we witness the current Southeast Asia, including Vietnam, now overflowing with Korean tourists while Saipan is seriously lagging behind and simply ignored by these Korean and Chinese tourists because we can only offer Saipan bound customers only with the low-end products and services with outdated infrastructure that are topped with lack of entertainment options,” MGI adds.

MGI says ultimately, Saipan needs to seriously think about rebranding itself to withstand the global tourist market competition which MGI believes they could have helped achieve.

“However, it is painful to see that our investment and our big vision in this good faith effort has ended in failure because we could not deliver this message loud and clear enough to be the pioneer to rebrand this beautiful island,” said MGI.

Managaha