IMPERIAL Pacific International Holdings Ltd., the parent company of IPI (CNMI) LLC, said it fully cooperated with the Federal Bureau Investigation, which conducted a search of IPI offices on Nov. 7. 2019.
On the same day, the FBI also raided the office of Gov. Ralph DLG Torres, among other premises on island.
According to IPI Holdings’ 2021 annual report, the FBI requested “certain documents and information” from IPI.
“Subsequently, a federal grand jury issued two grand jury subpoenas on IPI to provide additional documents and information in December 2020. IPI has fully cooperated with the Federal Government Authorities in providing documents and information,” IPI Holdings’ 2021 annual report stated.
Last week, IPI Senior Vice President for Public and Media Affairs Tao Xing provided the Commonwealth Casino Commission copies of IPI’s annual reports for 2020 and 2021 after Commission Chairman Edward C. Deleon Guerrero reiterated his concern about IPI’s “continuous violations of the regulations.”
Deleon Guerrero said the annual audit report for 2020 that was due on April 30, 2021, was 570 days behind while the annual audit report for 2021 that was due April 30, 2022, had been 200 days behind as of Wednesday.
Tao Xing forwarded the electronic copies of the annual audit reports to the commission on Wednesday. He said the reports were submitted to IPI International Holdings chair Cui Lijie and board member Xu Zhongxiang by Executive Director Cheng Feng on June 23, 2022.
The Hong Kong Stock Exchange was also provided copies of the report, Tao Xing added.
Independent investigation
According to the 2021 report, IPI Holdings’ subsidiaries “engaged external legal counsels” to conduct an independent investigation on the financial transactions undertaken by the subsidiaries “with the named parties in the two subpoenas for the period from 2013 to 2020.”
Based on the findings from the independent investigation reports, the members of IPI Holdings board of directors “have not identified any transactions which were assessed to be either of a high or moderate risk to a criminal liability exposure.”
The external legal counsels of IPI “have also opined that the criminal liability exposures which were assessed to be of a low to moderate risk in the investigation reports do not amount to a material breach of any provisions” of the casino license agreement or the casino commission’s regulations.
IPI “had not undertaken any unlawful activities, and IPI has sound defenses that it had acted in good faith and conduct.”
IPI said it “continues to cooperate” with the FBI. “As of the date of this [2021] report, the investigation is still ongoing, and it is premature to predict the eventual outcome. Accordingly, the potential for any fines, penalties or other consequences cannot currently be assessed. It is also not yet possible to identify the timescale in which these issues might be resolved.”
In an interview on Saturday, Cui Lijie, the major shareholder of IPI Holdings, said through an interpreter: “IPI has been willing to provide whatever information the federal authorities will request from them.”
She also said that all she wishes is to move forward with their plan to reopen the casino-hotel and contribute to the revival of CNMI tourism and the local economy.
Anti-money laundering
The 2021 report noted that IPI is also under the jurisdiction of the U.S. Treasury Department’s Financial Crimes Enforcement Network or FinCEN in terms of compliance with the anti-money laundering provisions of the Bank Secrecy Act.
“Should IPI violate the requirements of the Regulatory Authorities, it could be subject to various sanctions and disciplinary actions including monetary fines and penalties, restrictions and conditions in the scope of operations, and the potential suspension or revocation of its gaming license,” the 2021 IPI report said.
According to the report, in March 2019, the Internal Revenue Service issued a report with findings on IPI’s compliance with the Bank Secrecy Act.
FinCEN indicated that there were apparent violations of the anti-money laundering law and Bank Secrecy Act’s implementing regulations, and that it was considering whether to impose civil money penalties or take additional enforcement action against IPI.
“As of the date of this [2021] report, IPI is still in the process of preparing for the information to be submitted to FinCEN,” the IPI report stated. “Accordingly, it is not practicable for the company to accurately predict the resolution of this matter, including timing and amount of any possible impact [on IPI]. Notwithstanding the aforesaid, as of 31 December 2021, the Directors, based on external advice, have made a provision for the estimated civil money penalty in respect of the identified and potential violations.”
Zero revenue
According to the IPI 2021 report, “for the year ended 31 December 2021, no revenue was generated from the operations of Imperial Palace Saipan.”
The 2020 annual report, for its part stated, that for “the year ended 31 December 2020, the Group’s revenue was approximately HK$26,507,000 (about U.S. $3.39 million). In 2019, it was approximately HK$539,266,000 (about U.S. $69 million).”
To cope with the measures imposed by the CNMI government to prevent the spread of Covid-19, IPI said its casino has suspended operations since March 17, 2020. “As a result, no revenue was generated from VIP gaming operations during the period,” IPI’s 2021 report said.
