Lottery commission gives IPI more time to pay community benefit fund

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DESPITE an assistant attorney general’s warning that the extension may be challenged in court, the CNMI Lottery Commission on Friday approved Imperial Pacific International’s request to extend for three years the deadline to pay its $20 million community benefit fund or CBF contribution, and to defer for five years the payment of the $36 million in CBF that IPI failed to remit in previous years.

The lottery commission in its meeting last month gave IPI six months to pay the CBF that was due on Oct. 1, 2020. The new deadline was March 1, 2021.

But IPI has asked the commission to again extend the deadline, this time for three years.

On Friday, the lottery commission chairman, Commerce Secretary Mark Rabauliman, and the two other commissioners, Finance Secretary David DLG Atalig and Department of Public Safety Commissioner Robert Guerrero, met to hear the  request of IPI for a ninth amendment to the casino license agreement.

Assistant Attorney General John Lowrey, right, explains his concerns to CNMI Lottery Commission members, Finance Secretary David DLG Atalig, Commerce Secretary Mark Rabauliman and Department of Public Safety Commissioner Robert Guerrero, as Imperial Pacific International Chief Executive Officer Donald Browne, left, listens during a meeting in the Commonwealth Casino Commission conference room on Friday. Photo by Emmanuel T. Erediano 

IPI requested the following:

1) Defer the $20 million CBF due March 1 for three years or upon completion of the initial gaming facility in Garapan, whichever comes first; and,

2)  Defer the $36 million CBF past due for five years. This is the CBF that IPI failed to pay for the previous years.

The lottery commissioners then discussed the IPI request with Assistant Attorney General John Lowrey and Commonwealth Casino Commission Executive Director Andrew Yeom.

Guerrero raised the issue on the authority of the lottery commission over the CBF. He reminded his colleagues of the ongoing enforcement action by the casino commission on IPI obligations to the government, including the CBF.

Yeom, for his part, said he has filed with the casino commission five notices of violations against IPI, which, in turn, requested a hearing.

These alleged violations include  the failure of IPI to pay the $15.5 million license fee and the $3 million regulatory fee; its noncompliance with the order to maintain a three-month payroll, and the order to pay private vendors and meet its other obligations to the Commonwealth.

These are serious violations, Yeom told the lottery commissioners, adding that IPI employees were also not paid on their latest payday, Friday.

AAG Lowrey told the lottery commissioners that any action to change the date for IPI to pay the CBF “would be an interference in an ongoing action” of the casino commission.

He finds it inappropriate to change the date of the deadline while the case is ongoing, adding that the lottery commission would be “overstepping” its authority and its action may end up being challenged in court.

Atalig then asked Lowrey, “What’s the difference between the enforcers collecting money and those who created the rules to collect?”

To resolve the issue, Lowrey proposed to include a language in Amendment No. 9 stating that such action by the lottery commission is not overstepping the casino commission’s actions.

He said this means that the new deadline set by the lottery commission for IPI to pay the CBF would become the deadline in the notices of violations filed with the casino commission.

The lottery commission then approved the proposed amendments to the license fee agreement.

“Our agreement was whatever actions the casino commission takes should be in sync with our decision. If the casino commission wants to challenge it, fine. Let’s do it then,” Atalig said in an interview after the meeting.

He said the new deadline for IPI to pay the CBF will allow the casino investor the use of funds — with which it was supposed to pay the government — to finish instead the hotel-casino facility in Garapan.

“Keep in mind that should IPI leave or the casino commission revoke the casino license, realistically, how long before we have a new casino investor here to build a new casino to regenerate revenue? It could be three years,” Atalig said.

Instead of waiting for three years or more for a new casino investor, he added, the Commonwealth should allow IPI to finish its hotel-casino project so it can generate revenue for the CNMI and pay its obligations to the government.

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