By: Toh Han Shih

FBI raids on the island of Saipan of the offices of Ralph Torres (above), governor of the Northern Mariana Islands, and Imperial Pacific International Holdings appear to be linked to possible bribery, money laundering and improper political donations, according to a search warrant seen by Asia Sentinel. 

The Hong Kong-listed Imperial Pacific has the sole license to operate the only full-fledged casino in Saipan, which is part of the Northern Mariana Islands. The FBI investigation raises a question mark over the future of the island as a gambling paradise for Chinese high rollers who account for most of the gaming revenue in the US territory. 

Imperial Pacific’s advisory committee has been chock-full of prominent US figures, including former FBI director Louis Freeh, former New York governor David Paterson, and Edward Rendell, a former governor of Pennsylvania and former chairman of the US Democratic National Committee. The trio were appointed on April 20, 2016.

Former US Central Intelligence Agency Director Robert James Woolsey serves as a non-executive member of the board of directors. A former US judge, Eugene Sullivan, was also a non-executive director, leaving in June 2017.

The warrant authorized the search and seizure of all documents, records and property related to any transfer of funds or items worth more than US$1,000 each to governor Torres, his brothers, Torres Brothers (a law firm co-owned by governor Torres) and other companies and individuals, on or after September 1, 2013.

Suspicion of bribery is indicated in the warrant’s authorization of search and seizure of luxury items as well as records of travel and entertainment purchased by Imperial Pacific for the benefit of governor Torres and his relatives. Lending a political dimension, the warrant also targets donations to political campaigns of governor Torres and other politicians in the US territory on or after September 1, 2013.

The warrant was signed on November 6 by Ramona Manglona, chief judge of the Northern Mariana Islands. The next day, the FBI raided a Saipan office of Imperial Pacific, the governor’s office, Torres Brothers and other facilities, as Asia Sentinel reported on November 13. 

On November 14, the Saipan Tribune reported that Imperial Pacific’s local subsidiary, Imperial Pacific International (CNMI), was summoned to testify before a grand jury and ordered to bring along communications between itself and governor Torres on matters including cash discussions.

The investigation widened on November 12, when the FBI and Office of the Public Auditor (OPA) of the Northern Mariana Islands visited the Commonwealth Casino Commission, which regulates Imperial Pacific’s casino, according to local media reports. The commission’s executive director, Edward Deleon Guerrero, an uncle of governor Torres, confirmed to the Saipan Tribune that the FBI and OPA had approached the commission, but declined to give more details. 

In August 2014, Imperial Pacific gained a 25-year license to build and operate a casino in Saipan, for which it pays US$15 million per year but no gambling tax. Such unusually generous terms have raised eyebrows. 

Imperial Pacific’s casino saw HK$196.28 billion (US$25 billion) roll through its VIP tables in the first half of 2017 and HK$100.28 billion in the first half of 2018. The money rolling through Imperial Pacific’s VIP tables in the first half of 2017 would be several multiples of that bet at the average Macau casino’s VIP tables. That amount plunged to HK$8.34 billion in the first six months this year, partly due to Typhoon Yuto which hit Saipan in October last year and is rated the most severe such storm ever to hit the island. Most of the VIP players in the Saipan casino hail from mainland China, although some come from Hong Kong and Macau.

“There is an almost insatiable appetite for mainland Chinese business people to both gamble, which is illegal in China excluding Macau, and also offshore their money,” said Dane Chamorro, a Singapore-based senior partner of Control Risks, an international consultancy.

When Saipan’s garment manufacturing industry collapsed almost a decade ago, the local government was desperate for income, Chamorro said. Around the same time, China was tightening up on financial flows from mainland China to Macau, due to Beijing’s fears of money laundering and flows into the former Portuguese enclave from corrupt government officials. 

For both Chinese gamblers and the US territory’s government, Imperial Pacific’s investment in the gaming sector in Saipan “seemed a match made in heaven,” Chamorro added.

The Chinese spending in Saipan is largely on credit and expensed back in China, said Eric Coskun, director of casino projects at IGamiX, a Macau gaming consultancy. “These players are of zero benefit to Saipan’s economy.”

Imperial Pacific should rely more on local customers, who would use less credit and spend more money on local shops and restaurants, Coskun urged. “A better business strategy could have benefitted all involved.” 

The Advisory Committee peopled by the American politicians functions “to provide the management of the Company with sound strategic and tactical advice on issues that the Group may face from time to time, including…government relations,” said Imperial Pacific on April 20, 2016. 

Imperial Pacific and the Commonwealth Casino Commission did not respond to questions at press time.

Toh Han Shih is a Singaporean writer in Hong Kong.