Protest brews over casino process

The Lottery Commission said Friday it is standing by its Thursday decision to reject the application of Marianas Stars Entertainment Inc. for failing to timely deposit $30 million in escrow, even as Marianas Stars considers protesting or filing a lawsuit over its application’s disqualification after claiming it met the deposit deadline set by law. Any protest or lawsuit could stall the review and grant of an exclusive license to develop a minimum $2 billion casino resort on Saipan.

Meanwhile, two consultants paid out of the $2 million nonrefundable application fees are now on board to investigate Best Sunshine International Ltd.’s background and review its business plan.

There is no guarantee, however, that Best Sunshine will get an exclusive casino license once the consultants out of California and Florida are done with their investigation and review.

On Friday, Bank of Guam vice president for wealth and trust services Amoretta LP Carlson wrote to Gov. Eloy S. Inos, confirming that Best Sunshine deposited $30 million into the casino license escrow account with Bank of Guam Trust Services “on May 3, 2014.”

That was two days before the May 5 deadline set by Public Laws 18-38 and 18-43.

“The disposition of the $30 million will be in accordance to the executed Escrow Instructions Agreement dated April 30, 2014,” Carlson said in a one-page May 9 letter to the governor, a copy of which was provided by the Lottery Commission on Friday to the media, which asked for proof of the deposit by the two investors.

Lottery Commission chair Sixto Igisomar and fellow commission member Larrisa Larson, in a news briefing on Friday, said if another party is claiming that they were able to meet the deadline to deposit $30 million in escrow, that party has to come forward with the “right proof.”

“What they need to show you is proof that it’s physically in the bank account on May 5th. That’s the thing you need to look for,” Larson told reporters.

Igisomar said the application rule and the law were “very clear” as to the May 5 deadline.

“What we’re saying is that the commission already made a decision. This is where we’re moving forward based on what the commission received. Now if there are questions with respect to whether it was the right decision or not, there are processes for those things. But we’re moving forward,” Igisomar, the Commerce secretary, told reporters.

Larson added that the commission made a decision “based on facts”—that there was no deposit in the bank from the rejected applicant on May 5.

“We wouldn’t make a decision like that unless we have the confirmations that are necessary. So we did receive confirmation of receipt of one deposit by the deadline,” she said.

Marianas Stars has yet to share proof of it meeting the deposit deadline.

But Igisomar said Marianas Stars was able to submit its business plan by the May 5 deadline.

In a May 8 public notice on the Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong, Chinese Strategic Holdings Ltd. announced that Marianas Stars and escrow agent Bank of Guam entered into an escrow agreement on April 30, 2014.

“The deposit has been delivered to the Escrow Agent and the parties to the Escrow Agreement agree that the deposit in the escrow account is to be held exclusively for the purpose of the Escrow Agreement and are controlled by terms as stated in the Escrow Agreement,” Chinese Strategic Holdings said.

There is no mention in the notice as to when the deposit was delivered.

The May 8 notice mentioned that trading in the shares has been halted with effect from 9am on May 8, 2014, pending the publication of the announcement. Application has been made by the company for the resumption of trading in the shares with effect from 9am on May 9, 2014.

Marianas Stars is an indirect subsidiary of Chinese Strategic Holdings Ltd. Marianas Stars is 25 percent owned by Mega Stars Overseas, the new owner of Tinian Dynasty Hotel & Casino, the only operating casino in the CNMI.

In its business plan, Marianas Stars plans to develop a “world-class integrated casino resort, Legend of the Ocean,” which includes four themed-hotels totaling 2,000 rooms, a 20,000-square meter casino facility with up to 300 gaming tables and 700 electronic gaming machines, a multi-purpose venue capable of accommodating 5,000 people, a 158,800-square meter theme park with 26 attractions and a waterfront village offering 224,000 square meters of retail shopping and dining.”

Marianas Stars targets the high growth and/or high-volume outbound tourist markets within a five-hour flight time radius from Saipan, including Beijing, Shanghai, Guangzhou, South Korea, Japan, Taiwan, and Russia.

It also intends to form a joint venture with existing carrier airline operator, Star Marianas Airways, to operate low-cost interisland flight service to Saipan, Tinian, Rota, and Guam. Marianas Stars also plans to buy aircraft to provide additional service.

“MSE’s strategy is to pursue synergy rather than competition between the casinos [on] Saipan and [on] Tinian,” it added.

Transparency

Igisomar and Larson said they made the decision to reject Marianas Stars’ application in a public, transparent manner during their meeting on Thursday.

After the commission went into an executive session, they invited back any member of the public waiting outside the governor’s main conference room on Capital Hill. At the time, only members of the media were waiting outside.

That was when commissioner James Deleon Guerrero made a motion to reject Marianas Stars’ application for failing to comply with Section 106 of Public Law 18-38, as amended, or the casino law. Deputy Attorney General Gil Birnbrich, also a commissioner, seconded the motion. The four approved the motion.

The Lottery Commission sent a formal notification to Marianas Stars’ Cario Hon of their application’s rejection on May 9—a day after the decision was made in an open meeting.

“After careful consideration, the Commonwealth Lottery Commission has determined that your application for the casino license did not meet requirements of timely deposit of the required $30 million in funds as required under Public Laws 18-38 and 18-43 and therefore must be rejected,” Igisomar said in a one-page letter to Hon of Marianas Stars.

Best Sunshine

Best Sunshine has yet to incorporate or apply for a business license in the CNMI as of last week.

Best Sunshine is a direct wholly-owned subsidiary of First Natural Foods Holdings Ltd., which is proposing to change its name to Imperial Pacific International Holdings Ltd.

In a May 7 notice in the Hong Kong Stock Exchange, it said it paid the $30 million deposit. It said it also submitted the business plan on May 5 in support of the application.

Trading in the shares was halted at First Natural Foods’ request with effect from 9am on May 5 pending the release of the announcement. Trading resumed 9am on Wednesday, May 7.

In its business plan, Best Sunshine intends to build and operate on Saipan four luxury hotels and villas in four stages. It also plans to establish two phases of gaming facilities in these hotels, offering both private gaming rooms and public facilities.

Meanwhile, the Lottery Commission was expected to finalize its contracts with casino investigator B2G Global Strategies out of California, and gaming development consultant The Innovation Group out of Florida, prior to the consultants’ presentation at 10am today, which is open to the public.

Tomorrow afternoon, the Lottery Commission will be meeting with Best Sunshine but that meeting is not open to the public. Some community members are still skeptical whether any of Best Sunshine’s investors or individuals associated with it were among those that invited and paid for the trips of some CNMI lawmakers to Macau, Hong Kong, and Singapore months ago.