CNMI Casino Applicants Don’t Include Hong Kong Investor Group

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Governor says this proves law wasn’t crafted with company in mind

By Haidee V. Eugenio

SAIPAN, CNMI (Saipan Tribune, April 24, 2014) – Gov. Eloy S. Inos, Senate President Ralph Torres (R-Saipan), Senate vice president Victor Hocog (R-Saipan), and Sen. Frank Cruz (R-Tinian) said yesterday that the investor group that invited and hosted them in separate "fact-finding" trips in Hong Kong and/or Macau months ago is not among the two investor groups that are applying to develop a casino resort on Saipan, even as more details about the two applicants emerge. Torres also disclosed for the first time the name of the company that "paid" for their trip, Esteem Capital.

That the name of the investor group that brought these officials to Hong Kong has been kept secret until now has been drawing flak from the community.

Many raised concerns that the Saipan casino bill that was passed by the Legislature—without a committee report and public hearing—was tailored for the investor they met with in Hong Kong.

The two companies that are vying for an exclusive Saipan casino license are Best Sunshine International Ltd. and Marianas Stars Entertainment Inc. Each paid the $1 million nonrefundable application fee on Monday.

Hong Kong-based Best Sunshine International Ltd. is just one of the wholly-owned subsidiaries of First Natural Foods Holdings Ltd. It has not been incorporated in the CNMI nor has it applied for a business license in the CNMI as of yesterday.

Marianas Stars Entertainment Inc., meanwhile, is partly owned by the new owner of Tinian Dynasty Hotel & Casino, the Hong Kong-based Mega Stars Overseas Ltd. It is incorporated and licensed to do business in the CNMI.

Cario Hon, chief executive officer of Mega Stars Overseas, said yesterday that Marianas Stars Entertainment will issue a statement about portions of their plans later on.

At this time, Mega Stars Overseas is still reviewing its additional plans for Tinian, including building a new 1,000-room hotel on Kastiyu, a scenic Tinian area atop Carolinas Plateau, a 36-hole golf course, and a $5 million water park on Tinian.

When it became apparent that the Saipan casino bill would become law, Mega Stars started rethinking some of its plans for Tinian. When the law was signed, Mega Stars officials held meetings in Hong Kong, apparently to redraw plans not only for Tinian but also for Saipan.

Meanwhile, Best Sunshine International’s parent company, First Natural Foods Holdings Ltd., figured in a major case in Hong Kong in 2013 and the case remains pending.

First Natural Foods’ founder and now former chairman Yeung Chung-lung remains a fugitive almost a year after the Securities and Futures Commission took him to court in April 2013 over an alleged embezzlement of HK$84 million in corporate assets, along with other First Natural Foods executives at the time.

Some lawmakers and the governor separately and jointly went to Hong Kong and/or Macau during the late part of 2013 and early 2014.

Torres said he received a letter last week from Esteem Capital, which paid for the trip he joined in, saying that "they’re not able to participate."

Esteem Capital recently partnered with the China-Australia Entrepreneurs Association Inc. and Zelong Group to invest $5 billion in a casino resort in Australia.

"I did receive a letter last week [from Esteem], informing the Senate, thanking us for giving the opportunity to see at least the integrated resort but they will not be able to participate in the bidding that just took place, the deadline on Monday. So the two companies that bid had no knowledge of, they are not the company that we met in Hong Kong," Torres said at the signing of five proclamations yesterday at the Pedro P. Tenorio Multi-Purpose Center in Susupe.

Torres said the senators that went with him were Hocog, Sen. Frank Borja (Ind-Tinian), and Sen. Frank Cruz (R-Tinian).

Separate trips also included House floor leader Ralph Demapan (Cov-Saipan), main author of the Saipan casino bill that became law.

The governor, for his part, said he also "didn’t see any of the names pop up."

Inos said he has yet to see the application packets filed by Best Sunshine International Ltd. and Marianas Stars Entertainment Inc.

"There are only two applications. One is Sunshine, I don’t know who these folks are, and Marianas Stars, I don’t know who these folks are. I haven’t seen the application. I haven’t seen the submittal," he said.

A few hours after the interview, the governor was set to meet with members of the Lottery Commission for a preparatory meeting as the panel is expected to begin reviewing the applications.

Inos also said he was hoping that Korean investors would also submit an application, "but they never showed up."

Torres reiterated that he was hoping there would be three to four Saipan casino applicants, but was happy that there are at least two, which will promote competition.

Hocog, in an interview yesterday afternoon at a GOP road waving in Precinct 1, said the names of the two Saipan casino applicants are not the names of the groups that invited them to Hong Kong.

Sen. Frank Cruz, for his part, said neither of the two applicants was the company that they met with on their trip.

The Senate president also said they turned in their travel authorization report with the Department of Finance, along with the letter of invitation from the company.

He said this was no different from the trips offered and paid for by other investors, such as when some other lawmakers flew to China months ago for "fact-finding" missions.

Torres said senators are not part of any decision-making in the casino license application process. The Lottery Commission decides the winning applicant.

First Natural Foods/Best Sunshine directors made an announcement in February—even before the Saipan casino bill passed—about discussing tourism and gaming business with "certain parties."

On April 15, just days before the deadline to turn in Saipan casino applications, First Natural Foods announced a proposal to change its name to "Imperial Pacific International Holdings Ltd." to provide a better identification for the company as it further diversifies its business.

The next step is for the deposit of $30 million in escrow by May 5, and the Lottery Commission’s approval or denial of the applications by June 19.

The CNMI government is relying on the $30 million to restore retirees’ deferred 25-percent pension, as the governor promised and as stated in the amended Saipan casino law.

This comes seven years after Saipan voters rejected for the second time a casino question on the ballot. Casino gaming used to be legal only on Tinian and Rota.

An investor granted a license to exclusively operate a casino on Saipan is required to build a hotel-resort with at least 2,000 rooms and an initial investment of $2 billion.

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