Welcome To Saipan
If someone were to ask you where in the world casinos held the most sway, what is the first place you’d think of? and the second? Depending on which hemisphere you inhabit your first thought might be Paradise City, Nevada the place that is home to the Las Vegas strip. Or the less Western-centric player might propose Macau, China’s offshore gambler’s Utopia. The sharper among you, expecting some sort of trick answer, might rack your brains for one of the big licensers of online casinos: Alderney, the Isle of Man, Malta or some small cay in the BVI.
But arguably the strongest candidate for the title of Most Under the Thumb of the Casino Industry is the Northern Mariana Island of Saipan.
If you’ve never heard of Saipan, don’t worry, you are not alone. As one of the United States many overseas territories, it’s the answer to an obscure trivia question. Less well known than the unincorporated territories of Guam and Samoa, or even it’s military bases like Wake Island, the Northern Mariana Islands are in that odd halfway house between being a part of the US and being an independent nation. And largely invisible even to the nation that supposedly rules over them. Invisible unless you live there under the thumb of a foreign casino conglomerate.
The fact that Saipan is part of the US led one batch of unscrupulous businessmen to take advantage in a way that led to crime, terror, and an extraordinary number of deaths. And it all revolves around the Imperial Pacific Casino, where roughly six times more money crossed each table than in any casino in Macau, and there is blood in the foundations.
Health, Safety, and the Suicide Cliffs
In an article for Bloomberg magazine Matthew Campbell did an expose of the Imperial Pacific Casino in February of 2018, blowing open this story of how a Macanese junket operator became a backdoor to the US dollar market.
The Casino started its life as a plot of land and a brass plate on a door to the temporary lodgings Imperial Pacific International Holdings Limited. Even before the casino was built the company was taking $2 billion a month in bets. Meanwhile out on the construction site hundred of Chinese ‘tourists’ were working at putting up a building, and being maimed in droves.
When one of these construction workers fell to what ended up being his death, an ambulance wasn’t called. Instead he was stripped of his work clothes with their incriminating logos, and dragged to a local doctor where he expired. The doctor in question — one Doctor Rohingar — was keeping an off the books record of these accidents which included an eye blinded by flying metal, and numerous broken bones and punctured organs. Safety standards, illegal workers and what appears to most experts as blatant money laundering all taking place on US soil and conducted largely by an international business. I should say for safety allegedly.
How exactly did the Imperial Pacific Casino get away with this? The answer is boringly straightforward — it’s graft (also allegedly).
Money is Power
The Lieutenant Governor’s family received huge payouts running into the millions, though it should be noted that Governor Torres’ office has issued a categorical denial that any law has been flouted at all. On top of this (alleged) Gubernatorial protection racket, the casino’s board of directors is a revolving door roster that includes ex-Governor’s of continental US states and ex-heads of both the CIA and the FBI.
Life here is tough enough already, so politicians seem pretty game to get their kicks where they can.
To try and boost the economy in the 70s the Mariana Islands removed the minimum wage and slackened their immigration laws. The effect was to bring in the kind of business that wanted the apparent legitimacy of being conducted in the USA, but would rather not fuss around with red tape regulation or with paying their workers a living wage.
When the hoped for economic revival remained coy, the government started looking at the casino option, which they had avoided in the past due to how poorly a den of sin like that would go over with the largely Catholic population.
So off the politicians flew on a ‘fact finding’ trip to Macau, coming back ready to sign on whoever gave them the best bid. After one meeting with the Imperial Pacific crew, they offered them the contract. For just a $15 million dollar fee the casino got a 25-year monopoly and a tax rate on their gaming revenues of exactly 0%.
Corruption and Gangsters in Paradise
In some ways this sort of horrorshow should surprise no one. Las Vegas has only just shed it’s gangster origins which had stuck to it since Bugsy Siegel’s post Murder, Inc days and Macau is renowned for the scale and blatancy of its laundering ops.
The difference is, when Siegel put his money into the Flamingo Hotel in Paradise Valley, the FBI had just been formed from the remnants of the DOI and Prohibition Office and the USA was a few years off from joining Interpol in 1938. The idea of systematically dealing with transnational crime syndicates was on the cutting edge while the syndicates had been dealing transnationally for decades if not Centuries.
China’s crime problem is in some ways more recent. While organised crime was never crushed by the Maoist government the opening up of the Chinese markets in the nineties and noughties gave a new lease of life to criminality that hadn’t existed since the British forced opium on the Chinese masses at Maxim-gun point.
For the Triads and their ilk, Macau’s offshore status was a godsend. Just a ferry ride away, no real border to cross, and not just one other currency but three since both the Macanese pataca and Hong Kong dollar are pegged to the market price of US currency. The first two are considered legal tender ant the last in an unofficial factor.
Casinos with their high cash turnover, exchange of cash for chips and back again, and the inevitable rub of chance in their favour make for great launderettes. Slam some dirty renminbi down on the counter pick up some HKD valued chips. Walk across the room cash them out in patacas and change them into clean renminbi on your way through the ferry terminus. If you own the casino too you can put the chips on red until they’re all gone and know that your dirty cash will show up as nice legal gambling profit in the next quarter.
This is why governments do what they can to keep on top of regulating the industry, far more than the risks of gambling addiction, it is taxation and AML worries that are priority number one. Unless it proves convenient to bypass them.
In Saipan, under the turned backs of government oversight the junket industry was taking over.
The First National Food Holdings Junket Tour
In modern Macau the organised criminals aren’t the main money-runners. Instead, the money-runners are the organised crime, helping regular citizens with a few too many mainland assets get their money abroad.
Concerned by threats of government seizure of assets, or simply trying to play the dollar markets, most wealthy Chinese people have reasons for wanting their currency converted. Unfortunately the foreign exchange is highly regulated and amounts of currency you can sell and buy are limited. Enter the junket tour.
The junket is essentially a high-roller package tour. The junket operator sorts your trip out, and for fees from both parties connects whales with places to gamble in luxury. They also extend credit allowing a tourist in Macau to play for more money than they brought. Cash out in the highly changeable local currency. Then pay the junket back in renminbi once back home, now with a tidy sum in foreign currency. Usually this currency is dollars.
Enter First National Food Holdings Limited, a food transport company bought up by a massive junket operator as they were shut down in Macau. A name and location change later and the company is operating ostensibly out of an office in Saipan under the new name of Imperial Pacific. The money barely stops flowing for the changeover.
And we find ourselves at the start of this story.
What Happens Next?
America seems to live in constant fear of the Chinese economy. Already China is one of the biggest single holders of the USA’s national debt in the form of government bonds. Bonds bought with the dollars American’s pay for their Made in China goods. Now Chinese business interests effectively own a piece of American soil with a puppet government and real power on the ground.
One of the exciting tourist attractions are the firing range which advertise the 2nd Amendment with all the ferocity of an NRA member, an amendment added by the founding fathers to ensure a body of well trained militia troops should a foreign invasion occur. More likely here what is needed is an attorney general with a remit to close down corruption.
But with US politics already struggling with its own astonishing breakdown under the Trump kakistocracy whether or not the law will find its way to Imperial Pacific seems highly unlikely. And for now the casinos and criminals rule, just as they did in Vegas and Macau… Allegedly, at least.