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IPI reiterates commitment to NMI

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IN the face of a looming economic crisis due to the novel coronavirus outbreak, Imperial Pacific International CNMI LLC said it wants to reassure the public that it remains committed to the Commonwealth.

In a statement to Variety on Tuesday, IPI also said that it has implemented a 30 percent work-hour reduction for its employees.

Noting that IPI and the people of the CNMI have gone through two devastating natural disasters —Super Typhoon Soudelor in 2015 and Super Typhoon Yutu in 2018 —the casino investor said it is confident “that this great Commonwealth will endure and rebound once again.”

“IPI assures the public that it is fully committed to the CNMI as always,” the investor added.

Just seven days after its casino opened in 2015, Saipan was struck by Super Typhoon Soudelor, IPI said, adding that it shut down its business and assisted “in the efforts to return to a life of normalcy.”

In the years after Soudelor, IPI said it has to overcome numerous major challenges such as a severe shortage of skilled labor, an economic slowdown in China, discontinued flights from Japan, unrest in Hong Kong, unfavorable immigration policy changes, and emerging competing destinations in Asia.

In October 2018, Super Typhoon Yutu directly hit Saipan and Tinian, and IPI, along with other businesses on island, had to stop operations temporarily.

In 2019, the CNMI felt a loss of roughly 14 percent of tourist arrivals from China, IPI said. This was exacerbated by the unrest in Hong Kong and trade tensions between U.S. and China, IPI added.

“Today, the new coronavirus outbreak is impacting the world, the CNMI tourism industry, and our community at a speed which has already outpaced the SARS epidemic of 2003. Impact on travel demands throughout all of Asia began weeks ago and although our company is faced with the difficult decision to mitigate these challenges, IPI still holds true to the CNMI and its people,” IPI said.

Although IPI has been with the CNMI for a little less than six years, “the company has shared the same adversities that all other businesses have faced in this period of time.”

“Our company has struggled, our employees have struggled, and our ability to create a steady stream of income has suffered. Throughout all of these unexpected adversities, IPI did its best to honor the commitments that it made to the CNMI back in 2015,” IPI said.

“Since the award of the casino license, IPI created thousands of jobs and generated countless business opportunities for hundreds of local businesses. To date, IPI has invested around $1 billion in the CNMI and paid over $300 million in taxes and fees to the government,” IPI added.

IPI, for its part, “has lost over $500 million accumulatively.”

“IPI would like to address the losses it has incurred and the tax refunds associated with our agreement with the CNMI. Because of an overall loss, IPI’s understanding is that it overpaid taxes by over $40 million which will result [in] a refund,” IPI said.

Nonetheless, IPI said the company proceeded with the settlement on business gross revenue tax payments following the announcement of the government’s budget shortfall.

IPI said it has paid $12.5 million of the $18 million stipulated by the government, and will pay the rest by the end of March.

Obligations to vendors

IPI said it currently has only around $2.8 million in outstanding obligations to vendors that the casino investor will pay by mid-March.

“IPI calls on all its local vendors to collaborate on verification and audit of relevant products and services, and help the company to achieve its goal of payment clearances. With the relative size of IPI’s business, it is exceptional to have no outstanding payment requests over 90 days and the company will work to accomplish this. Furthermore, IPI does have payment disputes with two vendors, Pacific Rim and USA Fanter. IPI will resolve these differences through the appropriate legal proceedings,” IPI said.

Community benefit funds

“One area that IPI has been very proud of is its community work and the projects it has accomplished for the benefit of the CNMI,” the casino investor said.

The casino license agreement originally required IPI to contribute $20 million in community benefit funds “within 60 days of commencing the construction of the first hotel of the Integrated Resort” — the first phase of the integrated resort project.

But this was amended by the Lottery Commission on July 31, 2017 to require IPI to contribute $20 million a year in community benefit funds “beginning on or before Oct. 1, 2019.”

However, the amended agreement stated, “all funds contributed by the licensee…shall remain under the possession and control of the licensee until distributed to selected programs or recipients.”

Since 2018, IPI said it has already contributed about $10 million in community benefit funds.

“IPI had a large corporate social responsibility team that was dedicated to community improvements and recovery efforts. IPI established the community benefit fund in 2018 ahead of the original timeline with the expectation that it will be granted the public land needed to start the next phase of our project plan.”

Super Typhoon Yutu and the novel coronavirus outbreak have drastically changed IPI’s business conditions and outlook, but it said it is still fully committed to finishing the development project.

“However, it requires that IPI obtain the land that can take up a large amount of investment,” IPI said.

“As an investor in the island’s future, IPI has undertaken unprecedented endeavors and has made tremendous contributions to the CNMI given the repeated adversities we all have faced. IPI will continue this hard work and fulfill its commitments. IPI would like to thank everybody for their understanding and support and IPI appreciates the sacrifices made by its employees and their families. IPI asks for your patience and continued support during this time of hardship. Together we will prevail,” IPI said.

Asked for comment, Sen. Paul A. Manglona said, “Either the administration or IPI is lying because the administration earlier said that IPI has contributed $3 million in 2018 so, where is the rest of the $10 million?”

He said the only way to find out the truth is for the Office of the Public Auditor to audit the community chest fund.

Manglona also said he doesn’t agree with IPI’s interpretation of the casino license agreement.

He said there is nothing in the agreement that sets the granting of public land lease as a condition for contributing community chest funds.

Manglona said he just met with Department of Public Lands Secretary Marianne Concepcion-Teregeyo who told him that DPL selected IPI when it submitted a proposal in response to the department’s request for proposals four years ago.

But Manglona said he was told that IPI could not meet the two conditions in the RFP pertaining to the time frame of construction of the integrated resort and the security bond requirements.

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