SIC hearing on $20 MIL loan cut short by lack of quorum
Forty five minutes into yesterday’s Senate Investigative Committee hearing on the government’s $20 million loan from the ASG Retirement Fund, two committee members left the Senate chamber for health reasons, prompting committee chairman Sen. Lualemaga Faoa to continue the hearing at a later time, due to the lack of a quorum.
At the start of the 9 a.m. hearing, Lualemaga announced that SIC had a quorum (five senators including the chairman) to proceed. Witnesses were then sworn in.
Around 9:45 a.m., Lualemaga called a halt to SIC questioning saying the committee could not continue further without a quorum as required, because two members left the chamber saying they were not feeling well.
Lualemaga said the witnesses — ASG Treasurer Magalei Logovi’i; Retirement Fund office executive director Filisouaiga Ta’afua; and Tagaloa Toloa Letuli, who oversees the office managing the $3 million for district capital improvement projects — will be informed of the next hearing. (Tagaloa’s office comes under the purview of the Governor’s Office.)
Sen. Velega pointed out at the start of the hearing that some 16 projects funded with the loan money have already overspent their allocation and asked Magalei if the government had set policies regarding allocation spending.
For example, Velega said, the 10th Festival of the Pacific Arts and the tug boat projects have big overruns. He also noted that the Fono has a balance of $2.8 million in its allocation, but the problem here is that the entire loan balance is just $1.2 million. He said the Arts Festival ended in 2008, while the tug boat project is yet to be completed.
Magalei said the only information that he is aware of, is what is outlined in the loan agreement, but any specific written policies at the time the loan was approved is information he does not have at this time. (Magalei was not Treasurer at the time the loan was first approved in 2007)
He also said that he was unable to provide other specific reports sought by the committee due to issues with the ASG computer system and invited the SIC staff to come down to the Treasury Department this week to review all documents and obtain any additional information.
Lualemaga set Thursday this week for the SIC staff and legal counsel Henry Kappel to visit Treasury Department.
Velega asked if any new expenditures have been submitted for payment under the tug boat project, including those from the Honolulu-based attorneys handling the ASG case with Marisco. The senator said he expects to see this project total cost increasing, with the pending $800,000 plus to be paid by ASG according to the case filed at the federal court in Honolulu.
Magalei replied that he has not received any new invoices for the project and he has not seen any new invoices from attorneys representing the government. He could not recall right away the total amount paid to the attorneys so far, but said he could provide that information later.
As to the overrun of the Arts Festival, Magalei said that when he took over Treasury duties for the Festival, he found that many local vendors were not paid for their services and invoices were still arriving. He said he received directions from the governor’s office to pay these vendors.
Magalei said this is the same thing with other projects, where as soon as he receives approval of invoices from the governor’s office, the Treasury Department issues checks.
Ta’afua informed the committee that the Fund transmitted to ASG the entire $20 million on Nov. 23, 2007. He said the only dealings between the Fund and ASG since that time is to make sure that monthly payments of $237,800 for the 10-year term loan are received and all payments are current.
The loan is repaid through a percent of excise tax on beer, alcohol and tobacco, as well as customs entry declaration fees.
When asked if the government is having problems repaying the loan thru this funding source, Magalei told the committee the government had to tap into the general fund in FY 2011 to meet payment for at least four months.
Magalei — who is also a member of the Retirement Fund board — said his office continues to make sure that the government does not default in its payment because the loan is guaranteed by all ASG assets and the general fund.
Sen. Mauga T. Asuega asked about a “reasonable” amount of the $20 million that could be refinanced to help provide financial assistance to the LBJ Medical Center. (The Senate has a $2 million refinance bill under the $20 million loan pending in the House).
Ta’afua said he and board chairman Aleki Sene Sr. had previously testified in the Fono that the amount that can be refinanced is $6.7 million and this amount remains the same to date.
Responding to Mauga’s questions, Tagaloa explained that all requests for district projects are reviewed followed by a site visit before any funds are approved. However, he pointed out that all requests must come through village councils.
He said there have been individuals requests such as those from village mayors for purchase of items such as tools, but those requests are returned with the explanation that the district funds are for capital improvement projects.
He recalled that the latest approved application of $27,000 was for a bridge and road in Tula.
Lualemaga said the committee has more questions about the district money as well as other issues pertaining to the loan, but without a quorum the committee could not continue the hearing.
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