Acting Commonwealth Casino Commission Chairman Ralph S. Demapan, left, and Commissioner Ramon Dela Cruz, right, listen to Assistant Attorney General Carl Dela Cruz during a meeting on Wednesday.
THE Commonwealth Casino Commission on Wednesday gave itself 10 more days before making a final ruling on Imperial Pacific International’s exclusive casino license.
The commission said it needs time to review a proposed stipulated agreement between its executive director, Andrew Yeom, and IPI Director Howyo Chi.
The commission will meet again at 10 a.m. on April 22 to render a decision.
The commission’s acting chairman, Ralph S. Demapan, and Commissioners Mario Taitano, Martin Mendiola and Ramon Dela Cruz said they wanted to ensure that the proposed stipulated agreement “has legal sufficiency” before it is submitted to Attorney General Edward Manibusan for his approval.
The commission was scheduled to deliberate and decide on Wednesday whether or not to revoke IPI’s exclusive casino license for its failure to pay CCC the annual $3.15 million regulatory fee and to maintain a bank account for the payroll of IPI employees.
But before the commissioners could deliberate on the casino license, they allowed Yeom to present the proposed stipulated agreement.
Rep. Marissa Flores, who attended the CCC meeting, questioned the commission’s discussion on the proposed agreement. Afterward, as she was about to leave the conference room, Commissioner Mario Taitano said, “Adios.”
Flores turned around and approached Taitano. “Excuse me?” she asked. She reiterated that the CCC meeting was not supposed to be a “settlement hearing” so “why are you discussing settlement? Your job [now] is to decide whether or not to revoke…. That is your job right now at this point.”
Legal sufficiency
After a two-hour recess, the commissioners, Yeom and Assistant Attorney General Alison Nelson continued the discussion on the legal sufficiency requirement for a stipulated agreement. It was agreed that it would take 10 days to revise it and make sure it has legal sufficiency in order for the attorney general to consider approving it.
Yeom said the legal sufficiency requirement has something to do with the manner in which IPI would pay the CNMI government.
He said they were advised that the only way IPI could make a payment is through IPI (CNMI) LLC, the casino operator’s local company, and not through its parent company in Hong Kong, IPI Holdings.
Yeom earlier told the commissioners that “whatever payment IPI can make, the CNMI government would not be the first one to receive it, so it will be moot for us to come up with a settlement.”
Stipulated agreement terms
According to the proposed stipulated agreement presented on Wednesday:
1) No later than April 22, 2024, IPI shall pay $1.5 million of the regulatory fee that was due on Oct. 1, 2020. No later than July 15, 2024, IPI shall pay the remaining balance of $1.65 million. IPI expressly acknowledges that time is of the essence in making these payments. For the avoidance of doubt, these amounts must be paid in full before the commission lifts the suspension of IPI’s exclusive license.
2) IPI asserts certain arguments as to why the regulatory fee should be reduced or waived. In consideration of the parties’ willingness to resolve the disputes between them, IPI agrees not to dispute its obligation to pay the regulatory fees due Oct. 1, 2021, Oct. 1, 2022, and Oct. 1, 2023, or its obligation to pay the $5 million penalties, and CCC agrees to accept the negotiated amount of $6.85 million and a discounted penalty of $2 million to settle IPI’s obligation to pay such fees and penalties, provided that the following payments are made by no later than the dates specified herein:
Oct. 1, 2025 – $2.85 million
Oct. 1, 2026 – $2 million
Oct. 1, 2027 – $2 million
Oct. 1, 2028 – $2 million
IPI expressly acknowledges that time is of the essence in making these payments.
For the avoidance of doubt, IPI and (sister company) Best Sunshine reserve the right to challenge by whatever means available the CNMI Supreme Court’s decision in Commonwealth Casino Commission v. Imperial Pacific International (CNMI) LLC, to the extent it relates to IPI’s payment obligations for the 2021, 2022, or 2023 annual license fees and the Community Benefit Fund; provided, however, that IPI and Best Sunshine agree to honor their obligations to pay the annual casino regulatory fees regardless of the outcome of their efforts in challenging the court decision.
3) In addition to these payments, IPI shall make the required annual regulatory fee payment on or before October 1 of each year starting on or before October 1, 2024. The parties acknowledge that the regulatory fee amount may be reduced pursuant to a change in applicable law, but may not be changed prospectively without action by the CNMI Legislature; provided, however, that if the CNMI Legislature has not taken action to change the regulatory fee amount before a given payment is due, the commission will deem IPI in compliance with its obligation to pay the casino regulatory fee for regulatory purposes so long as IPI makes payment in the amount of $1.15 million on or before October 1 and agrees to pay the remaining balance of $2 million no later than April 30, 2039. IPI expressly acknowledges that time is of the essence in making payment of each regulatory fee.
Payroll reserve
No later than April 22, 2024, IPI also agreed to provide CCC documentation that it maintains a payroll reserve in an amount no less than $4.2 million in a restricted account in the CNMI or U.S. The cash or cash equivalents in the restricted account will be maintained for the exclusive purpose of protecting IPI’s employees against defaults of debts owed by IPI as they become due, and there are no intended third-party beneficiaries for such payroll reserve. As soon as practical, IPI may petition CCC to lower the amount to a reasonable level matching its actual payroll expenses and CCC shall not unreasonably withhold its approval.
Annual license fee
• No later than April 22, 2024, IPI shall pay $1.65 million in annual license fee that was due Aug. 12, 2020. No later than July 15, 2024, IPI shall pay the remaining balance of $13.8 million.
IPI expressly acknowledges that time is of the essence in making these payments. For the avoidance of doubt, these amounts must be paid in full before the commission lifts the suspension of IPI’s exclusive casino license. For the avoidance of doubt, the payments made by IPI shall not be construed as an admission of IPI’s obligations to pay the 2021, 2022, or 2023 annual license fee or as a waiver of any available legal defenses that may be raised by IPI in an action challenging such obligations; provided, however, that IPI shall not challenge or seek recovery of the payments made by IPI.
• IPI asserts certain arguments as to why the annual license fee payments should be reduced or waived. To provide IPI time to negotiate a settlement and/or adjudicate its liability to pay the annual license fees due Aug. 12, 2021, Aug. 12, 2022, and Aug. 12, 2023, the commission agrees not to pursue suspension or revocation of IPI’s exclusive casino license for non-payment of such fees until Dec. 31, 2027. For the avoidance of doubt, CCC’s agreement not to pursue suspension or revocation on this basis does not extend to any other major violation of applicable law or other material breach of the casino license agreement.
• In addition to these payments, IPI shall make the required annual license fee payment on or before August 12 of each year starting on or before Aug. 12, 2024. The parties acknowledge that the annual license fee amount may be reduced pursuant to a change in applicable law, but may not be changed prospectively without action by the CNMI Legislature; provided, however, that if the CNMI Legislature has not taken action to change the annual license fee amount before a given payment is due, the commission will deem IPI in compliance with its obligation to pay the annual license fee for regulatory purposes so long as IPI makes payment in the amount of $5.5 million on or before August 12 and agrees to pay the remaining balance of $10 million no later than April 30, 2039. IPI expressly acknowledges that time is of the essence in paying the annual license fee.
• IPI expressly acknowledges and agrees that the commitment by the commission not to pursue suspension or revocation on the basis of non-payment of the annual license fees, provided that the payments required herein are timely made in full, do not compromise, limit, or in any way affect the right of the Office of the Governor, the Lottery Commission, or any other Commonwealth government agency to bring an action against IPI seeking payment of any such annual license fee amount.
Revocation for non-compliance
• If IPI fails to make payments, IPI and Best Sunshine agree that the exclusive casino license shall automatically be revoked by the commission along with any right, claim, title, or benefit thereunder, without any further action of the commission.
• If IPI fails to fulfill any of the other obligations with respect to payment of the regulatory fees, payroll reserve and annual license fee, IPI and Best Sunshine agree that the exclusive casino license may be revoked by the commission.
• Any revocation of the license shall be initiated by the filing with the commission of a notice of revocation by the executive director, and shall be effective upon entry of an order of revocation by the commission at an open meeting. IPI expressly does not waive its right to contest any claim that it failed to fulfill the obligations by presenting testimony and supporting documentation to refute any findings of fact contained in the notice of revocation. However, any dispute by IPI as to its obligation to pay any regulatory fee or annual license fee shall not excuse IPI’s failure to make timely payments, and IPI expressly acknowledges and agrees that all payments must be timely made under protest. In addition, the revocation of the exclusive license by enforcement of this stipulated agreement shall not be considered a proceeding against a licensee, and the formal procedures therein (including but not limited to opportunity for an evidentiary hearing) shall not apply.
• In the event of the revocation of exclusive casino license by the Commonwealth, IPI shall implement the steps for permanent shutdown of casino gaming operations as set forth in the casino closure plan/standard operating procedure submitted. In the event that such revocation occurs prior to submission and/or approval of the casino closure plan/standard operating procedure, the shutdown shall meet all minimum criteria, and any additional requirements imposed by commission in its reasonable discretion.
