Nagasaki Prefecture defends RFP process, denies asking NIKI, Oshidori to withdraw

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Nagasaki

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By Andrew W Scott and Shintaro Kamimura

Nagasaki Prefecture has defended its integrated resort RFP process as being based on the highest international standards following accusations from two of the three candidate operators that they had been pressured to withdraw from the Nagasaki IR race before the final evaluation.

As reported by Inside Asian Gaming last week, both NIKI Chyau Fwu (Parkview) Group and Oshidori International Development claimed to have been told by Nagasaki officials that they had been subject to negative background checks and asked to withdraw before Casinos Austria was ultimately named preferred partner on 10 August.

IAG last week sent a list of nine questions to Nagasaki Prefecture in relation to concerns aired by the pair of candidates that were not selected. Nagasakis answers are reproduced in full below.

IAG: There appear to be significant advantages to the Oshidori Sails at Omura Bay concept over that of the selected candidate, as well as other significant points in favor of the offerings of the two candidates that were not selected. Why was Casinos Austria chosen over Oshidori or NIKI?

Nagasaki: As previously stated in the press conference on 10 August, Casinos Austria International Japan was selected based on the overall evaluation of five evaluation sections. Specifically, the sections are 1) concept, 2) facility implementation policies [IAG: we believe this relates to the ability of each candidate to deliver what they propose], 3) financial and operational track record, 4) measures against points of public concern [IAG: We believe this relates to gambling addiction issues, security and safety and keeping criminal elements out of integrated resorts], and 5) regional contribution.

Since the evaluation by the evaluation committee and the background check are independent, the result of [the] background check was not disclosed to the evaluation committee to ensure the evaluation was conducted in a fair and impartial manner, so we had the evaluation committee evaluate purely on the contents of the proposal of each applicant when scoring.

All applicants were evaluated for their probability of business realization and feasibility [IAG: we believe this means the probability that the operator will actually be able to implement, and the feasibility of, their proposals] based on their experience of developing businesses around the world.

As mentioned in scoring, Casino Austria International Japan was highly evaluated for efforts in matters of concern. The other two applicants (NIKI and Oshidori) also made proposals based on their respective know-how (expertise) and features.

IAG: Did Casinos Austria delete the image of their proposal and their press release about winning the IR process because Nagasaki Prefecture instructed them to?

Nagasaki: There have been no orders to delete press releases made from the prefecture to any of the applicants.

[IAG: If true, this means Casinos Austria themselves decided to remove their press release from their website showing the one rendering previously available of their proposal. That press release was widely published by various media outlets around the world.]

IAG: Why wont Nagasaki Prefecture release renderings of Casinos Austria and NIKIs concepts to the public so all the people of Nagasaki can view them and form an opinion for themselves?

Nagasaki: The public tender process for the IR operating partner is not yet completed, which means that the prefecture cannot disclose such information.

IAG: Has Nagasaki Prefecture instructed Casinos Austria and NIKI to not release their renderings? Is there any reason Casinos Austria and NIKI cannot release their renderings?

Nagasaki: Specific communication with individual applicants will not be disclosed. However, all individual applicants are required to act within the rules of the application guidelines.

Huis Ten Bosch, the proposed site for a Nagasaki IR.

IAG: Why did Nagasaki Prefecture ask both Oshidori and NIKI to withdraw before the presentation in front of the judges? Why did Nagasaki Prefecture want the judges to see only one presentation?

Nagasaki: The prefecture did not ask any of the applicants to withdraw from the RFP. To clarify the intent of the presentations, the presentations were part of an overall evaluation based on the previously received final proposal documents.

IAG: If it is true that both organizations have some negative information in their background checks, will Nagasaki release that information to give Oshidori and NIKI an opportunity to defend themselves?

Nagasaki: Regarding the background checks, we will not disclose details of the results or any of the communications regarding the results. The information is strictly private and should not be disclosed in any way.

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The application guidelines for Nagasaki prefectures IR operator tender are based on the nations intention to implement the highest international standard of casino regulations in order to achieve a clean casino operation (Prime Minister Abe, 4 April 2017). The conditions, standards and documents relating to the background checks were exactly the same for all of the applicants.

The prefecture selected the priority negotiation right holder after completing the background check in accordance with the requirements of the guidelines. We will give the necessary explanations to [the Nagasaki Prefecture] Assembly and national government regarding the probity of the first priority negotiation right holder [IAG: By first priority negotiation right holder, Nagasaki means Casinos Austria].

The prefecture outsourced to a proven and reliable investigation company that conducts global investigations on probity and conducts investigations in accordance with industry standard investigation methods. For contractual reasons it is not possible to disclose the name of the research company and the details of the selection process.

The result of background checks for any applicants will not be disclosed to the public due to those result including information related to subtleties of individuals and entities who are investigated, and also there are strict disclosure restrictions in the contract with the investigation company. However, the conditions and standards relating to the background checks were exactly the same for all of the applicants andthe evaluation criteria are also in line with the highest standards in the global market under the IR Implementation Law.

[IAG: To summarize Nagasakis answer, they are saying they outsourced the background checks to an investigation company that conducts global investigations on probity in accordance with industry standard investigation methods, but that non-disclosure provisions preclude the Prefecture from disclosing the name of that company, the processes involved and the results of the investigations.]

IAG: With all the questions and discontent currently circling around the Nagasaki process, how can Nagasaki expect the Japanese national government to believe Nagasaki Prefectures preferred operator is really the best option for the people of Nagasaki?

Nagasaki: The prefecture will continue working in a fair and compliant manner with the most suitable partner, following the strict regulatory and licensing requirements as required by the national government.

IAG: Is Nagasaki Prefecture concerned about the possibility of legal action against them by Oshidori, Niki, or both?

No answer provided.

IAG: Oshidoris press release suggested there should be changes to the developmental and operational rules imposed by the Nagasaki Prefecture, and that the RFP process should be conducted in an ethical manner. Would Nagasaki Prefecture consider re-doing the RFP process?

No answer provided.

IAG will ask Oshidori and NIKI for their reaction to Nagasaki Prefectures responses.