House hearing on $8 MIL loan from ASG Retirement Fund reveals conflicts with law
While supportive of the intention of an administration bill to provide financial aid for the LBJ Medical Center, the ASG Employees Retirement Fund board chairman Aleki Sene Sr. says the board has concerns, including that some provisions of the bill are in conflict with current law.
Sene made the comments when he appeared yesterday before the House Health/Retirement Committee to testify on the $8 million loan bill from the retirement fund for the hospital. Funding source for the bill comes from a certain percentage of the new hike in excise taxes and business licenses and the new $2,000 corporate tax.
When the governor submitted the loan bill to the Fono last month, he explained that he was informed by the retirement fund board and staff that ASG has paid down $8 million in the previous $20 million from the retirement fund. Therefore the amount of the new proposed loan bill is $8 million.
At yesterday’s committee hearing, chairman Rep. Pulele’iite L. Tufele said the House had requested reports from the retirement fund including an official written opinion of the board on this bill; however, none of these reports have been received.
Sene told the committee that the board fully supports the intent of the bill, which is to help the hospital, but at the same time, the board could not provide an opinion because the bill is not clear and some provisions of the legislation are in conflict with current laws pertaining to the retirement fund.
He also said that the bill is not clear as to the interest rate of the loan and the length of the loan. Additionally, it’s not clear if this is a separate loan from the $20 million loan, in which “all of the government assets” are used as collateral and therefore what other assets will be used as collateral for the $8 million loan?
He said the only provision that is clear in the bill is to loan $8 million — but this is also a problem because based on the retirement office figures, the government can only loan up to $6.7 million.
Another concern, said Sene, is that the revenue measures to repay the $8 million loan are not yet approved by the Fono and the proposed loan bill cannot be attached to the current $20 million loan.
According to the board chairman, the Retirement Fund — whose current market value stands at $205.8 million — would prefer that ASG pay off the $20 million loan first before moving on to another loan.
House Vice Speaker Talia Fa’afetai Iaulualo said Sene’s testimony is very clear to the committee and he agrees that the measures to repay the loan are not yet approved by the Fono. He suggested dismissing the witnesses, while the committee looks at a future hearing to discuss the bill with other government witnesses.
Also raised during the hearing, was the $10 million loan for the hospital enacted several years ago from the retirement fund and this loan is being repaid by the American Samoa TeleCommunications Authority, headed by Sene.
Rep. Taotasi Archie Soliai asked about the balance on the $10 million loan, to which Sene said its about $7.75 million. Taotasi points out that the Fono ends the current session next week Friday, while the hospital is in dire need of additional financial assistance.
Taotasi asked if the $10 million can be refinanced, to which Sene said it’s a very difficult question to answer because it’s ASTCA that is paying this loan. He added that ASTCA prefers to have this loan paid off first.
Sene was accompanied to the hearing by Retirement Office executive director Filisouaiga Ta’afua; ASG Treasurer Magalei Logovi’i and Tax Office manager Melvin Joseph.
In the end, the committee decided to table the bill for now while a request is again being put forth to the retirement fund for an actuarial report — which is required by law when there are any proposed changes to the retirement law — and an official written statement regarding the bill from the board of directors.