SPECIAL REPORT: Oshidori claims corruption in Nagasaki RFP while NIKI suggests legal action after very troubling process

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Huis Ten Bosch in Nagasaki, the planned site for an IR.

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In the wake of Nagasaki Prefectures defense of its RFP process for an integrated resort at Huis Ten Bosch at Sasebo City, further shocking details have emerged relating to Nagasakis treatment of the two bidders not chosen by the Prefecture, Oshidori International Development and NIKI Chyau Fwu (Parkview) Group.

Both Oshidori and NIKI have publicly stated they were told by Nagasaki Prefecture there were probity issues in relation to their bids, but Nagasaki Prefecture not only refused to reveal to the bidders what those issues were, but even the identity of the outsourced company which Nagasaki Prefecture hired to conduct the probity investigations. Both bidders claim Nagasaki Prefecture suggested they withdraw their bids, otherwise the alleged probity issues would be made public.

OSHIDORI
Speaking directly to IAG, an Oshidori spokesman said, The Nagasaki Prefecture has no other option at this point than to lie to cover up its corruption. We just feel bad for the people of Nagasaki because they deserve a better IR and a better government.

The Nagasaki Prefecture threatened us, saying that if we dont want their [probity] investigation report to become public we better withdraw [from the entire RFP process] before our [final] presentation in front of the judges.

Oshidori refused to withdraw and participated in the final presentation before the judging panel, which took place on 4 August 2021.

Two days later, Oshidori issued a press release dramatically withdrawing from the process, but some have interpreted the press release as not actually a withdrawal and merely a threat to withdraw, given the press release stated that Oshidori [is withdrawing] unless there are certain changes to the developmental and operational rules imposed by the Nagasaki Prefecture, and unless the RFP process is conducted in an ethical manner.

It seems Nagasaki took this view, acting as though Oshidori had not withdrawn by awarding them a score of 682.8 points in the announcement of the winner of the RFP process. This placed Oshidori in second place behind eventual winner Casinos Austria International with 697.0 points, with third placed NIKI Parkview bringing up the rear with 667.1 points.

When asked by IAG for any evidence of their claim that they were threatened by Nagasaki, the Oshidori spokesman said, We have correspondence between our [legal] counsel and the Prefecture, but the correspondence is covered by an NDA.

Oshidori claims that Nagasaki refuses to release the alleged negative information (even to Oshidori itself) for confidentiality reasons but the Oshidori spokesman said, We would agree to waive our right to privacy so that the people of Nagasaki can see the charade being perpetrated by the Prefecture.

NIKI PARKVIEW
IAG has seen minutes of two meetings between NIKI and Nagasaki Prefecture representatives held on 12 and 27 July, just weeks before the final presentation on 4 August. When IAG approached NIKI to confirm the veracity of the minutes, NIKI confirmed that the minutes were indeed genuine.

The minutes provide for fascinating reading. They confirm that Nagasaki Prefecture asserted to NIKI they were in possession of negative probity information relating to their group and Nagasaki gave NIKI three options to deal with the issue. Firstly, NIKI could try to answer the information and dispel the claims, in which case the RFP process would continue as usual. Secondly, if the claims could not be dispelled to Nagasakis satisfaction, they would be made public. And thirdly, it was suggested to NIKI if they were to withdraw from the RFP process by 30 July then Nagasaki would simply announce the withdrawal without any reference to the probity investigation.

NIKI attempted to dispel any claims by providing Nagasaki with a host of information relating to their consortium, which Nagasaki shared with the probity investigation company, but the minutes of the 27 July meeting confirm the result of the probity check was unchanged. This left NIKI with only the final two options either withdraw from the RFP process or see the alleged negative probity information made public.

In the minutes of the 27 July meeting, a Nagasaki Prefecture official appears to validate NIKIs claim, stating, if you withdraw by 30 July, we will not announce that you were not selected due to the results of the integrity survey [another term for probity investigation] but if you do not, we will announce it in the final announcement, we will announce we could not select [NIKI] as a result of the integrity investigation.

The meetings were attended by NIKI and several professionals and officials representing NIKI, including Dr Ku Shin, CEO of NIKI. Between them, those on the NIKI side of the meeting made a slew of comments highly critical of Nagasakis RFP process, including the following, which are reproduced from the minutes verbatim:

[in relation to the negative probity information] we have been told the jurisdiction [has used an investigation] consultant that refuses to identify themselves, refuses to give their credentials, refuses to give the basis for which they reject [NIKI] you are so far below any standard of any gaming entity in the world. It is beyond belief!

This process has no transparency and is clearly sub-standard, with a threat to make a public statement to embarrass us and damage our reputation

We do not believe [the Nagasaki RFP] process has been either fair or adequate.

I do not believe Nagasaki can [apply] its responsibility by hiring someone who is either incompetent or corrupt.

legitimate [industry] investigators do not try to hide in the dark!

we had hoped to bring a world leading IR to [Nagasaki] so this is profoundly disappointing we have limited choice but to go back, and speak with our counsel to try to determine what our legal rights are going forward

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You refused to provide any information in what is [a] very troubling process I object to this process in its entirety!

We have the right to know as we paid JPY 11 million for the investigation.

Did the prefecture conduct due diligence and an integrity investigation of the [investigation] company?”

It was even hinted that perhaps there was a darker cause, with one official connected to the NIKI bid stating, is something going on there with different motivation?

And finally, in a suggestion of what may be yet to come, Dr Ku ended the 27 July meeting stating, lets have legal action

IAG understands NIKI presented a request to the Prefectural IR Promotion Council and the Governor of Nagasaki on 29 July, which included complaints about the probity investigation, questions about the integrity of the investigation company and the advisors Nagasaki Prefecture hired, and a statement that if Nagasaki does not provide sincere answers, then next steps will be taken.

There has been some suggestion that Oshidori and NIKI are seeking a redo of the process, but given the current angst, it remains to be seen whether either party, or any other party, would want to engage in an IR bid in Nagasaki. The prevailing animosity means any redo process would certainly need to be conducted by a party that was not only beyond reproach, scrupulous and completely independent, but also seen to be so.

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LEGAL NOTE: The opinions and statements in this article are as directly quoted from Oshidori International Development and from written minutes of meetings attended by NIKI Chyau Fwu (Parkview) Group and seen by IAG. They do not necessarily represent the opinions or views of IAG Japan or Inside Asian Gaming.