IPI ordered to pay $18.6M in fees, $6.6M in penalty
The Commonwealth Casino Commission board ordered yesterday the indefinite suspension of Imperial Pacific International (CNMI) LLC’s gaming license.
The same order directed IPI to pay $6.6 million in total penalty within six months, and pay immediately $15.5 million and $3.1 million in annual casino exclusive license fee and annual casino regulatory fee, respectively.
IPI counsel Tiberius Mocanu said they’ve just been issued the order and that they are still going to review it. “You need to talk to IPI guys about what they [are going] to do next. I’m just defending them legally,” said Mocanu in an interview after the CCC meeting.
The lawyer said in these five consolidated cases, he as counsel for IPI and assistant attorney general Michael Ernest as counsel for complainant CCC executive director Andrew Yeom, each submitted their own order to the board that acted as the tribunal.
Mocanu said IPI’s proposed order has a different payment scheme and a longer suspension period until paid.
At a regular monthly meeting at the CCC conference room at the Springs Plaza in Gualo Rai, all five commissioners adopted a consolidated final order pertaining to CCC executive director Andrew Yeom’s five consolidated complaints against IPI.
With the adoption of the final order, CCC board chair Edward C. DeLeon Guerrero said CCC is ordering IPI to pay immediately the $15.5 million annual exclusive license fee and $3.1 million casino regulatory fee for the license for the machines and gaming tables.
As to penalties, Deleon Guerrero said IPI must pay $100,000 in the first case, $1.5 million in the second case, $1.5 million in the third case, $2 million in the fourth case, and $1.5 million in the fifth case—for a total of $6.6 million that must be paid within six months.
In an interview after the meeting, DeLeon Guerrero said there’s a big difference between a COVID-19 suspension closure versus a regulatory body suspending a gaming license.
“We are suspending the license indefinitely until IPI complies with those orders,” he said.
The chairman said the order will take effect 10 days after it’s is published in the Commonwealth Register. “So it will presumably be May 10,” he said.
DeLeon Guerrero said they went over violation by violation and the penalties for each violation in the original complaints, all adding up to $800 million in total penalty.
“So CCC is penalizing IPI $6.6 million for all the violations noted in the five enforcement actions, and they must pay this not to exceed six months,” the chairman said.
If IPI does not make payments in six months, he expects the CCC to file another complaint and it, most likely, will be seeking revocation of the license.
He noted that IPI did not contest the complaints, as they acknowledged it and they stipulated on it.
His concerns, he said, are that this gaming industry—as outlined in Public Law 18-56—provides for specific deliverables. “And those deliverables are: One, you must build 2,000 new hotel rooms of five-star quality. And two, you must invest a minimum of $2 billion,” he said.
DeLeon Guerrero said the Lottery Commission then executed the license agreement.
“And in those agreements have specific deliverables too and they went from initial gaming facility, which is supposed to be like a training facility, and Phase 1 and Phase 2 of the operation to complete the 2,000 rooms and the $2 billion investment,” he said.
The chairman said they’re concerned because IPI cannot seem to complete the initial gaming facility He said there doesn’t seem to be any discussion as to what’s going to happen in Phase 1 and Phase 2 since it is his understanding that IPI never submitted a proposal for the Kan Pacific property in Marpi.
“Which now leads me to believe that if anyone were to amend the casino license agreement, you would have to consider the Phase 1 and Phase 2, which was worded into the casino licensing agreement, there are dates there,” DeLeon Guerrero pointed out.
The chairman said he understands that Gov. Ralph DLG Torres has the responsibility to enforce the terms and conditions of the casino license agreement.
He said CCC has the mandates when it involves gaming, but a significant part of that agreement is non-gaming such as construction of hotel, water parks, entertainment facilities, a convention center, and so forth.
At the hearing last March 2, Ernest asked the board to suspend IPI’s gaming license and be fined a total of $5 million.
Ernest said pumping up the fine is basically a de facto revocation anyway, because IPI is “financially unsuitable.”
The five complaints against IPI are its failure to pay the $3.1 million annual regulatory fee last Oct. 1; failure to comply with a CCC order directing IPI to settle amounts owed its vendors; failing to comply with the minimum capital requirements of CCC’s order, among other issues; failing to pay the $15.5 million in annual casino license fee by last Aug. 12; and failing to contribute $40 million community benefit fund money in 2018 and 2019 as required by the casino license agreement.