In a test case for New Jersey's tough gambling laws, the state's Casino Control Commission today refused to revoke the Atlantic City license of a major casino operator despite allegations that the company had bribed the prime minister of the Bahamas.
The decision provoked an outcry from top law enforcement officials who had recommended that Resorts International Inc. be ousted from the state.
"We are extremely disappointed," Attorney General Irwin I. Kimmelman said. "It sends the wrong message to the casino industry and to the public as to what standards we are trying to maintain for the image of this state."
Kimmelman said that he probably will appeal the independent commission's 3-to-1 vote to the New Jersey Supreme Court. The Resorts case is the first in which the state's gaming enforcement officials have recommended not renewing a casino's license.
In 1978, New Jersey became the second state to allow casino gambling. However, wary of the corruption historically associated with the industry elsewhere, New Jersey adopted what have been advertised as the world's strictest gaming control laws and regulations.
More than 100 federal agents, 125 state police officers and 750 state lawyers, accountants and inspectors monitor gambling in Atlantic City. In eight years, the seaside resort has become one of the nation's largest tourist attractions, with 29 million visitors a year.
Resorts International, which operates the oldest and one of the most profitable of the city's 10 luxurious casino-hotels, acknowledged during 12 days of hearings this month that $425,000 in payments it had made to Bahamian lawyers had been channeled to Prime Minister Lynden O. Pindling.
The company operates a Paradise Island casino regulated by the Bahamian government.
The payments, made in 1980 and 1981, came to light last year during a Bahamian investigation into political corruption in connection with drug trafficking.
According to testimony before the New Jersey commission, Resorts paid $105,000 to Bahamian attorney John A.H. Duffus in February 1981 for what it later called an advance legal fee, and Duffus gave $105,000 to Everette Bannister, a close associate of the prime minister.
Bannister, who also worked for Resorts as a $50,000-a-year consultant, gave $91,000 of the money to a contractor building a house for the prime minister.
Duffus later told an investigator that he had been directed by Resorts Chairman James M. Crosby or by another Resorts executive, Robert D. Peloquin, to pass the money on to Bannister. Confronted by Resorts officials, he retracted the statement. Testifying before the commission this month, however, he repeatedly contradicted himself and was forced again to retract key portions of his testimony.
In another transaction, Resorts paid another Bahamian attorney, Julian Maynard, $700,000 as a "finder's fee" to locate a buyer for a bridge owned by Crosby. Maynard passed $580,000 on to Bannister, who gave $340,000 to the prime minister, according to testimony.
Resorts officials testified that they were "floored" and "shocked" to discover that the money was channeled to the prime minister.
"There have been mistakes," said Resorts attorney Joel Sterns. "They're stupid, but they're not criminal. They don't add up to passing a bribe."
But Kimmelman charged that "Resorts has failed to satisfactoraily explain these instances of bribery of government officials."
Under New Jersey law, the burden of proof rests on the casinos to show that they are of good character, Kimmelman said.