SIC continues its probe into status of $20 Million loan


The Senate Investigative Committee (SIC) returns this Thursday to continue its probe into the $20 million loan that ASG received from the ASG Employees Retirement Fund to finance several local capital improvement projects.

In preparation for the hearing, SIC subpoenas were recently issued to ASG Treasurer Magalei Logovi’i, the Governor’s Chief of Staff, Pati Faiai and the Governor’s Chief Counsel Toetasi Tuitelelepaga. However, SIC was unable to serve a subpoena on Faiai, who was off-island at the time.

Provided with the subpoenas is the required general statement of inquiry, which states in part that the “SIC advises that it intends to investigate and inquire into any and all matters relevant and pertaining to the American Samoa Government Employees’ Retirement Fund loan to the American Samoa Government” for $20 million and may include inquiry into all areas as relevant to the loan.

SIC has also subpoenaed financial records from Magalei, who is being asked to produce for SIC inspection copies of all files, records, correspondence and memoranda, including electronic data and communications with Treasury Department pertaining to the loan covering the period of Apr. 25, 2012 to July 18, 2012. Also subpoenaed are all supporting documents for each transaction, expenditure, or credit.

This new subpoena for Magalei requested updates on expenditures from the loan since the last report was submitted to the Senate for the period ending Apr. 25 which shows a balance of $1.21 million.

For Faiai and Tuiteleleapaga, the SIC is seeking identical financial records of the loan that are the possession of the Governor’s Office for the period of Jun. 1, 2006 to July 18, 2012. Other information being sought:

•            Loan proceeds, allocations or budgets for each project;

•            Authorizations or directives for expenditure of any and all Loan proceeds;

•            All correspondence, communications, directives, or notices to and/or between ASGERF and ASG officials, or any third party, pertaining to the subject Loan;

•            All ASG communications, memoranda, reports, analyses, and/or recommendations regarding the Loan between ASG staff, management, and/or officials, including any and all inter-departmental or intra-departmental (office) communications, reports, analyses, and/or directives.

SIC is also seeking all communication and directives establishing the position or office to manage disbursement and oversee the administration of $3 million in Loan proceeds appropriated for the separate Districts. (Each district - Manu’a, Western and Eastern - were allocated $1 million from the loan for their specific capital improvement projects)

A report received in March by the SIC from the ASG Budget Office shows  that 16 projects were funded with the loan money and only $1.21 million is left to be expended.

Not unexpectedly, the report shows some projects received more money than what they were allocated, resulting in other projects receiving less money.

For example, the Fono building was allocated $3 million and spent only $163,870 leaving a balance of $2.83 million — which means the Fono is stuck at this point because the balance of the $20 million stands at $1.21 million.

Six projects overspent their allocation and among the largest over-spenders was the ASG tug boat project, which included the purchase of barges. This project had been allocated $3.2 million, but was overspent by $1.45 million, according to the report.

Total expenditure for the same project, which was sole sourced to Honolulu-based Marisco Ltd., for purchase and refurbishment of two barges and one tug boat, is expected to be increased even further, following a federal arbitration decision and award which specifically states that “ASG is to pay Marisco... $811,631.87, plus interest on that amount at the rate of .43% per year — not compounded — from Sept. 1, 2009 until paid, plus costs of suit.”

This case remains pending at the federal court in Honolulu for final disposition.

According to the Budget Office report, $1.50 million was allocated to the 10th Festival of the Pacific Arts for logistics but it overspent by $1.02 million; and $1 million was allocated for the food voucher program for the Arts Festival, which was overspent by $44,453. (See Samoa News story on Apr. 23 for more over-spending of the $20 million loan


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