Editor’s Note: The following is the author’s statement to the Commonwealth Lottery Commission during its meeting yesterday at the Office of the Governor on Capital Hill.
It’s frankly astonishing that we are here today, entertaining IPI’s ninth requested amendment since 2015—this company that has no history or culture of compliance.
The licensee has not paid their license fee—after months of assurance to this government, even after COVID-19, up until two months ago when it was due, that they would be able to meet this statutory obligation. Now they are saying, “Give us what we want, and we will pay you half of the license fee in 10 days, and the rest next February.”
They want to cut the casino commission’s regulatory fee by half. They’re already seven days late—and now, apparently, as a result they are in illegal possession of unlicensed gaming machines.
They want to waive the Community Benefit Fund obligation for 2020, and not pay the outstanding $36 million they owe—for three years. And not pay any more into the Community Benefit Fund until after they get the Marpi land and build Phase 1.
Why should IPI be entitled to any more public land?
They want to change the law to weaken the regulatory authority of the casino commission. This, while the Legislature is contemplating a bill to increase the CCC’s regulatory power.
They want to change the law to legalize online gaming—and have exclusivity over that too, by the way. How do we get around the federal Wire Act? Who knows? IPI doesn’t seem to care. But we should.
I urge you, members of the Lottery Commission, to ask yourselves: What bargaining power does IPI have at this point? Why do they continue to have any power at all over this government? What good faith have they shown? What obligations under the license agreement have they actually met?
They owe taxes. Mr. Finance Secretary, you filed a tax lien for $9 million, for business gross revenue taxes alone, arrears going back to 2017, long before COVID-19. This doesn’t even include the millions in developer taxes they owe because they haven’t complied with Public Works’ repeated requests for an assessment.
They owe Public Lands $250,000 for their current lease. What other business is getting away with that? And IPI wants more public lands.
They owe CUC $200,000 for utilities. Even the hospital got disconnected. Families hard hit by furloughs and unemployment are getting disconnected. Somehow, IPI gets a break.
They owe so many vendors some $39 million. So many small businesses are badly hurting. IPI can’t even pay them a few thousand dollars.
They owe hundreds of workers who are waiting for back pay, termination pay, and repatriation tickets so they can go home and move on with their lives. In the meantime, nonprofit groups and good Samaritans in our community are giving these people food and water so they can live.
IPI can’t even pay for trash collection and grounds maintenance at employee housing. Living conditions are atrocious.
Their audited financial statements show they are insolvent. As of Dec. 31, 2019—before COVID-19—the auditors expressed substantial doubt about IPI’s ability to continue as a going concern.
IPI claims to have a third party willing to finance them for $150 million—if they can only get what they want from the CNMI government. But the company’s current liabilities as of December 2019—before COVID-19—exceeded current assets by $280 million. Total deficiency was over half a billion dollars.
IPI is facing so many lawsuits. Who isn’t suing or thinking about suing IPI these days? Indictments have been filed against senior IPI executives for money laundering and RICO conspiracy and illegal employment of aliens. And by the way, IPI’s own attorney recently told the federal district court that he expects the company to be indicted as well.
Then there is the ever-present specter of FinCEN, and the hammer they may soon bring down on IPI for violations of the Bank Secrecy Act.
Yet somehow IPI thinks they can dangle half of the license fee and half of the regulatory fee and none of the Community Benefit Fund—and still no gaming taxes—and we will just roll over and say, “Okay, here’s your extension. Here are more breaks. Here’s one more chance.”
They truly are playing us like fools. But we let them. Again and again and again.
The Casino Commission has multiple pending complaints against this licensee. The casino commission is finally moving to hold a financial suitability hearing to determine whether to suspend or revoke this license.
Members of the Lottery Commission: How are you protecting the public interest if you give IPI what they are demanding? All the concessions and accommodations in the world that you could possibly offer IPI will make no difference at all if they are bankrupt and financially unsuitable.
All you would do is kick the can down the road a little further, and drag out this embarrassing charade a little longer. Consider the cost to our reputation in the world. What legitimate investor would want to come here? What we need at this point is an exit strategy—one that protects the Commonwealth’s interests.
Members of the Lottery Commission, let the Casino Commission proceed with their financial suitability hearing. You are under no obligation to entertain IPI’s absurd demands. We owe them no favors.
The members of the Lottery Commission are Commerce Secretary Mark Rabauliman (chairman); Finance Secretary David Atalig; and Public Safety Commissioner Robert Guerrero. All were present at yesterday’s meeting.
Tina Sablan (Special to the Saipan Tribune)
Christina Marie Sablan is a member of the CNMI House of Representatives of the 21st Legislature.