Vendors to IPI: Pay your bills

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A GROUP of vendors, including construction companies, on Thursday asked the Commonwealth Casino Commission on Thursday to take “disciplinary action” against Imperial Pacific International for not paying its bills.

Representatives of 13 different vendors attended the monthly meeting of the commission in Gualo Rai to “collectively seek action on our complaint” against the “unsuitable method of operation” of IPI.

The vendors are Pacific Rim Land Development LLC, Canaan Realty, Mr. Ripon Ahmed dba GT Bldg. System, DA Bao Corp., Red Coral Corp., Pingshun Corp., Plumeria Corp., AYD Services, Inc., Artman, Winzy Corp., DKK, and Kim Corp.

Steven Zuo, owner of Sardini Group Inc., also attended the meeting and reminded IPI that it still owes Sardini over $1 million.

Representatives from USA Fanter asked the casino commissioners, “Why are you tolerating this?” referring to the failure of IPI to pay its vendors.

Also attending the meeting were House Gaming Committee Chairman Ralph Yumul, House Minority Leader Edwin Propst, and Rep. Tina Sablan.

The lawmakers reminded the casino commissioners that IPI still owes the Commonwealth “tens of millions of dollars in BGRT, corporate income taxes, and developer’s taxes,” and has yet to contribute $37 million in community benefit fund as required by the casino license agreement.

The casino commissioners, for their part, noted that no one who is supposedly in charge of the casino was present in the meeting.

Mark Brown has recently resigned as CEO of IPI, which is facing several lawsuits from vendors and former employees, and is also under federal investigation.

In a statement to Variety on Thursday night, IPI said it “strives to be a responsible citizen of CNMI. Over the years, we have hired thousands of employees, hundreds of third-party vendors, and we honor our business commitments and financial obligations.”

IPI said in “cases of disputes, we conduct our reconciliation diligently and defend our interest in court vigorously, if necessary. We have been working with a number of vendors to develop mutually agreeable settlements of claimed obligations. We continue to do our best to contribute to the development of CNMI economy.”

During the public comment portion of the casino commission meeting on Thursday, attorney Colin Thompson, a representative of Pacific Rim, read the vendors’ joint letter addressed to Casino Commission Executive Director Edward C. Deleon Guerrero.

In their letter, the vendors accused IPI of engaging “in the pattern and practice of breaching contracts and dishonoring obligations to licensed professionals in the Commonwealth.”

The letter added, “Each of the service providers that signed this report and notice was injured by IPI’s wrongful conduct. Collectively, we seek action on our complaint by this commission.”

The vendors said under the casino regulations, it is a violation for IPI to engage in activity deemed to be an unsuitable method of operation. Breach of contract is expressly listed in the regulations as unsuitable method of operation, the vendors told the commissioners.

“That IPI breached agreements with all businesses listed here, demonstrates that IPI engages in unsuitable methods of operation, which deserves the commission’s scrutiny and discipline according to the applicable law and regulations,” the vendors added.

The vendors said each of them entered into an agreement with IPI to provide materials and/or services, and IPI damaged each company by breach of its commitment. Some of the vendors have decided to file actions in a court of law while others are still pleading with IPI to pay the amounts rightfully owed, the vendors said.

“In every case, and especially given their numerosity, IPI’s unsuitable method of operation reflects discredit upon the CNMI and its gaming industry. Such activity shall be grounds for disciplinary action by the commission in accordance with the Act and regulations,” the vendors added.

Revoke the exclusive license

Rep. Tina Sablan reminded the casino commission that it has the power to revoke the license of IPI.

“Mr. Chairman and members of the commission, you are called to exercise the authority you already have to impose penalties and take other disciplinary action to compel IPI to follow our laws and honor their obligations. If they continually fail, you have the power to suspend or revoke the casino license, upon a finding of clear and convincing evidence, during a public hearing, and by unanimous vote,” Sablan said.

“In the midst of a fragile economy and a cash-strapped government, we have a casino that owes the Commonwealth tens of millions of dollars in BGRT, corporate income taxes, and developer’s taxes and is actively seeking ways to avoid paying any taxes for years to come.

“I note on your agenda that you are reviewing IPI’s request to extend their VIP Cash and Complimentary Rebate Program, and that you are considering implications for taxes. The impact is huge. In 2017 and 2018, IPI recorded $65 million in chip incentives as deductions from gross revenue and paid no taxes on that. The reports of auditors suggest that the program is a source of abuse and massive revenue loss for the Commonwealth. It should not be extended.

“Then there’s the estimated $37 million that IPI owes to the Community Benefit Fund, as of October 1 this year. You have declined to answer the House Gaming Committee’s inquiry about the status of this fund, citing an ongoing investigation. But who’s investigating? And why does that preclude you from cooperating with a [legislative] request?

“Today you have heard from some of the dozens of vendors who are collectively owed millions of dollars — $35 million according to the audited financial statement of 2018. IPI is chronically delinquent in its payments. Many of these vendors are small businesses struggling to keep afloat, and they are basically financing what was supposed to be a billion-dollar project. You have an obligation, members of the commission, to help these businesses get paid.

“You also have an obligation to look out for the workers and their rights under the law. Over the years we have seen a litany of labor violations: unsafe working conditions, at least one death, over 80 documented workplace injuries, illegal employment of tourists, workers suing for forced labor, human trafficking, injuries for which they were never compensated, sexual harassment, discrimination, contracts have been abruptly terminated and lives disrupted. These are human beings. IPI treats their employees like they’re disposable, and that’s wrong. And it’s wrong to allow them [to] continue to do so.

“Finally, Mark Brown has resigned. There is no CEO. Other board members have resigned. Phil Tydingco and Chuck McDonald have departed, as have many key managers. And it’s my understanding that most, if not all, of the staff in IPI’s compliance section have also resigned. So who’s left? Who’s calling the shots? Who’s making sure that suspicious activities are being reported? This should be an urgent priority, especially in the wake of recent federal raids on the casino, and allegations of money laundering, fraud, and public corruption.

“Members of the commission, at what point do we say, enough is enough? In the final calculation, this particular business may be more of a drain on our community, than a positive contributor. How many black eyes must we endure before we decide — before you decide — that it is time to walk out on this toxic relationship? Outside observers, including experts in the gaming industry, have remarked many times on the unusual leniency of the regulators over Saipan’s only casino. Anywhere else in the world, IPI’s license would have been revoked long ago.

“It has been said that the reason you do not exert your authority is because you are inherently compromised: the commission is funded entirely by IPI. There are also allegations that some of you may have direct or indirect financial interests tied to IPI which, if true, would be violations of your code of conduct and the law, and would require automatic forfeiture of your commission membership. Because of the nature of this industry, because of the propensity for corruption, the commissioners must be of unimpeachable integrity. Above reproach. No conflicts or even the appearance of conflicts.

“It is simple enough to show that you are not compromised. Enforce the laws and the license. Make IPI comply. And if they are unable or unwilling to do so — revoke the license. Pave the way for a new bidding process with developers who are better positioned to improve and complete this project, and who would respect our laws, our contracts, our workers, our cultures, and our environment. When our laws and reasonable expectations are consistently violated, there must be consequences. We are under no obligation to continue to do business with bad actors,” Sablan said.


For his part, House Minority Leader Edwin Propst said he came to the meeting because he cares. He added that he is also frustrated with the lack of response from the casino commission and the CNMI Lottery Commission to the inquiry about the $37 million community chest fund that he said IPI owes the government.

“We don’t want to have to use subpoena powers or anything like that to get this information. But $37 million is unaccounted for…while our people are suffering. It’s frustrating. And as representatives, we hear it all the time, we meet with our constituents on a daily basis,” Propst said.

He also noted that IPI is paying its consultants regularly, but not the contractors. “If these contractors are not paid, their company suffers and some have to lay off their people, which means there will be families without a paycheck and are unable to put food on the table,” he said.

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