Government grants more time to finish resort
Imperial Pacific International, the Hong Kong-based company that was supposed to revitalize the economy on the U.S. territorial island of Saipan, seems to be flaming out on its impressive promise, according to a critical assessment on Bloomberg News and other news accounts.
When it first opened in 2015, the company’s Imperial Pacific Resort made news because of the high volume of VIP bets at its casino, with per-table revenues that rivaled and even exceeded those in Macau. “What was largely unknown at the time was the amount of uncollected debt that was rapidly accruing,” said Andrew Klebanow of Global Market Advisors. For example, Wynn Macau posted first-half casino revenue of HKD16.5 billion, almost eight times more than that of Imperial Pacific, but Wynn’s uncollected debts were less than one-tenth of IPI. The latter reported a 51 percent decline in first-half revenues that drove down earnings by more than 90 percent.
According to the Macau Daily Times, at the end of June IPI had almost 8 billion Hong Kong dollars (US$1.02 billion) in uncollected debt, “more than Macau casinos that cater to the highest of high rollers.”
There’s been a mass exodus of executives from the company as well. Marco Teng, a former HR manager who was serving as chairman, resigned in August, followed by Cai Lingli, a senior executive and board director. Earlier this month, CEO Henry Cheang resigned; he held the position for less than a year, and replaced yet another CEO who departed, former Donald Trump protégé Mark Brown.
The company and its lavish, still-unfinished resort have raised concerns for other reasons, including the use of illegal foreign workers, which led to an FBI probe; the inability to make payroll on time; and failure to complete the 340-room casino hotel per the deadline. IPI claimed a shortage of qualified workers as one reason for the construction delay, then asked for and received yet another extension to complete the project, until February 2021. After the extension was approved, IPI fired 80 members of its labor force.
That sparked the ire of Saipan Rep. Edwin Propst. “Rather than getting more workers to complete the casino construction, they are now cutting back on labor. Why? With all of these local and H-2B workers being laid off, are we really supposed to believe that IPI will complete the hotel casino construction project within two-and-a-half years?
“These terminations of local and H-2B workers, the recent multiple resignations of high-ranking executives at IPI and the termination of Pacific Rim are all telltale signs that the casino is having serious problems,” Propst said.
Meanwhile, Bloomberg reported, the casino operator controlled by Chinese businesswoman Cui Lijie has become by far “the largest outside investor in Saipan’s history and a significant force in local politics,” with long-term land leases on the island and million-dollar financial dealings with relatives of the territory’s governor, Ralph Torres. Both Imperial Pacific and Torres, who is campaigning for a second term in November’s general election, deny any impropriety in their relationship.
The extension of the resort’s completion date came with a condition: IPI must donate $500,000 to the island’s hospital.
With Imperial Pacific’s turbulent history, Propst said it’s time to end the company’s monopoly on gaming in the CNMI. “We have the right to do so, because they haven’t lived up to their agreements,” he said.
In an article entitled, “Failure in Paradise,” Forbes wrote, “Imperial Pacific hasn’t demonstrated it can run a profitable casino, and three key executives have left since August without announced replacements. Despite these deficiencies, the government wants IPI to take over a hotel the authorities put out of business.” That was a reference to the Mariana Resort & Spa, However, the commission eventually only decided to allow the company to take over the operations of the Mariana Resort & Spa, which closed last summer; in September, the Commonwealth Lottery Commission approved IPI’s request to take over operations.
But Joe C. Reyes, vice chairman of the Commonwealth Casino Commission, now admits that some lawmakers are getting fed up with IPI’s track record and troubled operations. “All I want IPI to do is pretty much to get its act together and get its casino project done,” he told Marianas Variety, and added, “A commitment is a commitment.”
