The General Auditing Commission (GAC) Compliance Audit Report on the National Lottery Authority (NLA) for the period July 1, 2018 to June 30, 2019, observed that during the conduct of the audit, the NLA management granted license to Palm Spring Resort to a sport betting company (GoBet) and a casino gaming without documentary evidence the entity met the required investment portfolio and financial capacity to cover their liabilities.
The GAC audit report, a copy of which is in the possession of this paper further observed that Palm Spring Resort Management during its initial application for license to operate a casino gaming and sports betting did not provide copies of bank statement to confirm that its minimum bank balance was equal to or greater than 25 percent of the required US$5million and US$750,000 business investment portfolio respectively.
It was also noticed during the auditing process that from analysis made by the GAC, NLA’s bank statement records and official receipts obtained, suggest that Palm Spring made payments of US$20,000 for sports betting and casino license it obtained for the entire period under audit.
In line with the NLA regulation, Palm Spring management is required to pay US$120, 900 annually for application and license fees respectively. But it was further noted in the audit report that there was no evidence of document and/or board approval for the awarding of sports betting license to the management of Palm Spring to operate sports betting.
Therefore, GAC in her report recommended that the NLA management provides a material justification for awarding license to Palm Spring without documentary evidence of financial capacity.
According to the audit report, it was risky awarding a license to a company without due diligence thus leading to companies not having financial capability to operate; hence, liabilities owed may not be paid.
Hence, GAC in her report recommended that the management of NLA ensure that Palm Spring Resort pay the required license fees per the NLA’s regulations.
Addressing the issue at bar, the GAC report noted that Palm Spring Resort in a letter to both management of NLA and Palm Spring suggested that GoBet is a subsidiary to Palm Spring Resort; it is not another parent company to operate on its own. For this reason, the licenses issued them was all during the tenure of Martin Kollie as head of the entity and Titus Charley as Board Chairman.
But GAC in her position noted that the management assertion does not address the issues raised. They also recommended that NLA should ensure that the unpaid balance of US$100,900 is paid in the entity’s account by Palm Spring Resort within 30 days after the issuance of the report to the Legislature and receipt of payment should be submitted to the office of the Auditor General for validation.
According to the NLA Regulation 6.2 (a) (b) (c) of the NLA Act of 2014 states that “An application for a license shall only be approved upon presentation of satisfactory evidence to the authority that the entity has adequate capital available to pay all liabilities and obligations and to provide adequate working capital to finance sports betting. (b) Pursuant to sub-section 126.96.36.199(a) above, an applicant for a license must provide documentary evidence that the entity has an investment portfolio of not less than US$750,000 or its Liberian dollars equivalent (c) An applicant for a renewal shall possess the financial capacity to cover all liabilities including, unpaid winnings to gaming patrons, future wages, salaries or other obligation as condition precedent to the renewal of any license.”
Furthermore, the NLA Regulation 6.2 (d) requires that “An applicant fir a license shall maintain a minimum bankroll requirement to cover liabilities pursuant to sub-section 188.8.131.52(c) above. Such evidence of minimum bankroll requirement shall be (i) the most current bank statement for the month preceding an initial application for a license showing that the applicant maintained a minimum bank balance equal to or greater than 25 percent of the business’ investment portfolio.”
Additionally, Appendix 1 of the NLA Regulation of 2016 requires the payment of US40, 000 each as license fees to operate a Sport Betting company, Slot machines and Scratch and Win games. The Act also requires a license fee of US$60,000 to operate a casino.”
However, the GAC Audit report observed that during the audit, the NLA management granted license to Palm Spring Resort to operate a sport betting company (GoBet) and casino gaming without documentary evidence that the entity met thee required investment portfolio and financial capacity to cover liabilities.
The GAC audit further observed that Palm Spring Resort management during its initial application for license to operate casino gaming and sports betting, did not provide copies of bank statements to confirm that its minimum bank balance was equal to or greater than the 25 percent of required (US$500,000,000) and (US$750,000) business investment portfolio respectively.
It was also noted in the GAC audit that analysis of bank statement, records and NLA official receipts that Palm Spring Resort made payment totaling US$20,000 for sport betting and casino licenses it obtained for the entire period under audit.
In line with NLA regulation, Palm Spring Resort management is required to pay US$120,900 annually for application and license fees respectively.
Payment required to be paid by Palm Spring Resort/GoBet as per NLA regulations are: Application fee for casino US300; however, the audit discovered that it a dime was not paid, license fee for casino, amount required is US60,000 and that not a dime of this amount also was paid by Palm Spring Resort; also, application for sport betting is US$300 while license fee for sport betting is US$40,000; application for slot machine is US$300 and license for operation is US$20,000 thus totaling the entire amount to US$120,900.00.
The auditing commission in her report also noted that there was no evidence of documented minutes and or board approval for the award of a sport license to the management of Palm Spring Resort to operate betting.
Therefore, GAC in her report further noted that the risk of awarding license to company without financial due diligence could lead to companies having technical and capability to operate. Hence, the NLA management should ensure that Palm Spring Resort pay the required license fees as per the NLA’s regulations.
In response to the GAC, the management of Palm Spring response and a letter to the NLA management with respect to the GoBet, Palm Spring Resort stated that GoBet is a subsidiary to Palm Spring Resort. It is not another parent company to operate on its own. Therefore, the licenses were all issued during the tenure of the then Managing Director of NLA, Tarnue Kollie and Chairman of the Board, Titus Charley administration.
However, the Auditor General in reaction asserted that management assertion does not address the issues raised. According to her, the management of NLA should ensure that the unpaid balance of US$100,900 is paid in the entity account by Palm Spring Resort within 30 days after the issuance of this audit report to the Legislature and that receipt of payment be submitted to her office for validation.
The audit report shows that as of December 19, 2018, with receipt number 681, Palm Spring Resort have only pay US$10,000 for sport betting license; while as of February 5, 2019, with receipt number 694, also paid US$10,000 for casino license.
Najib Kamand, born June 1971, a Lebanese national, professional poker player and business; who is known to be the owner of Palm Spring Resort and Casino, located in Congo Town, Monrovia, in recent years has been allegedly accused of bad labor practices and not paying his workers. However, detail of this report will be released in our subsequent posting.
According to a summary GAC report, Mr. Kamand’s Palm Spring Resort as of July 1, 2015 to June 30, 2016, owes an outstanding amount of US$60,300 to NLA; while as at July 1, 2016 to June 30, 2017, management also owes an outstanding amount of US$120,900 and as at July 1, 2017 to June 30, 2018 they also owed an outstanding amount of US$82,400 and as at July 1, 2017 to June 30, 2019, Palm Spring Resort owes an outstanding to NLA in the amount of US$100,900.00.
The total tabulation according to the GAC summary sheet due the Government of Liberia vis-a-vis NLA is US$364,500, penalties and interest calculated would rise to over US$50,000.00.