SIC hears total value of barges, tugboat not worth the money spent on them

Sanchez calls task force “disorganized and questionable”
Port Administration deputy director Chris King (left) and the governor’s representative for fishery and marine matters Carlos Sanchez (right) as the pair were sworn in yesterday before testimony was heard by the Senate Investigative Committee, probing the use of the $20 million loan. [photo: FS]

Local businessman Carlos Sanchez, who is the Governor’s representative on fishery and marine matters, testified yesterday before the Senate Investigative Committee that an independent marine surveyor found that the value of the tugboat Sailele and the two barges was much lower than the total money spent on the purchase and refurbishment of these ASG vessels.

Sanchez — who is also the chairman and acting chief executive officer of the Shipyard Service Authority, the ASG entity that manages and operates the Ronald Reagan Marine Railways — also testified that the cost of refurbishment to the Sailele was actually $1.6 million.

He and Port Administration deputy director Chris King were the next witnesses to be subpoenaed by the SIC, which is probing spending of ASG’s $20 million loan from the ASG Employees Retirement Fund.

The tugboat and barges project was funded with an initial allocation of $3 million in loan money, but a report from the ASG Budget Office states that this project has an overage of $1.45 million.

Still pending in this project is more than $800,000 in unpaid ASG invoices to Marisco Ltd., which later sued ASG, and won when the the case went to arbitration. The case remains pending in federal court, as resolution of legal issues about the payment is sought.

When questioned by SIC chairman Sen. Lualemaga Faoa about the subpoenaed documents, Sanchez said the documents he brought are the only ones that are in his possession at this point, while the majority were given to ASG’s Honolulu lawyers for the Marisco lawsuit.

King said all documents at Port Administration on this project were transferred to the Attorney General’s Office for the Marisco suit and therefore he is unable to provide any of the subpoenaed documents.

“I’m here to tell you the story truthfully of what I know and what I saw,” Sanchez told the committee, adding he was prepared to go through every single document to provide a detailed explanation.

Sen. Mauga T. Asuega started off with questions dealing with Sanchez’ involvement in this project, to which the witness referred to a letter from the governor appointing him on Dec. 4, 2009 to negotiate with Marisco to reduce the final amount owed to the Hawai’i company.

He also noted that two other documents, provided to the SIC, provided other information including the last payment to Marisco, that was made Nov. 23, 2009.

He said he was appointed “after the fact” and “after everything happened” referring to the scouting of the vessels and purchase of the tugboats and barges, which were done by a task force.

Original members of the task force were Port Administration director Matagi Ray McMoore; Capt. Wally Thompson; special advisor to the Port director Fanene So’oto; and Terry Conden, a port marine engineer. Conden was also the ASG representative when Marisco was handling the refurbishment of the ASG vessels.

Sanchez went on to explain that the tugboat was purchased for $500,000 but refurbishment came to $1.6 million; however, an independent surveyor, who later came to inspect the vessel at his request, valued the tugboat at only $850,000.

(Information initially received by the SIC has repairs and refurbishment at $800,000 -—and this was also the amount that was used in previous Samoa News stories on this project.)

For the barges, which were originally owned by the U.S. Navy, Sanchez said that each had been purchased for $50,000 —  but $500,000 was spent on each barge for repairs.

Sanchez said the surveyor valued each barge at $75,000.

“The problem is, the barges were not made to be in the ocean,” said Sanchez, who added that these vessels were meant to be used on rivers and lakes. (Samoa News reported last year — based on project documents — that these were ‘spud barges’ for use only on rivers and lakes.)

He also claimed the task force didn’t ask a surveyor to come up with the actual value of each vessel after the repairs; instead the task force “kept giving money” to pay for this project.

Another problem with the task force, said Sanchez, was they didn’t go to the mainland to look for better vessels and lower costs, but instead went to Honolulu, purchased the vessels and then started negotiations with Marisco for the repairs. 

(Thompson testified last week that the task force looked in Honolulu because of its close proximity to American Samoa, making it easier to sail the vessels here once the refurbishment was complete. Additionally, Marisco was known to ASG, and had done work on other ASG vessels including the MV Sili.)

Sanchez said his main goal, when appointed by the governor, was to get the vessels released from Honolulu and negotiate to bring down the costs of the invoices for ASG. He said the Coast Guard didn’t approve sailing the vessels to the territory due to some issues, and one of those issues, according to Sanchez, was that no insurance company in the world would insure the barges.

He also said ASG was paying around $300 a day for these vessels to be anchored in Honolulu while both sides were trying to resolve the dispute involving unpaid invoices. He said the Coast Guard finally allowed the vessels to sail to the territory, wherein the tugboat towed the barges.

Sanchez then disputed Thompson’s claim made during last week’s hearing that the person who captained the tugboat on its sail to the territory was not certified to sail more than 200 miles out of Hawai’i.

Sanchez claims the Coast Guard approved the captain of the tugboat and this same captain had sailed barges from Honolulu to Seattle, Wash.

When questioned by the committee, Sanchez said the “task force is very, very disorganized” and “is very questionable.” He did acknowledge that both Thompson and Conden were considered experienced and qualified individuals.

Sanchez also told the committee that Thompson was fully involved in this project as several Marisco invoices totaling $2.1 million had Conden and Thompson’s names on them. He pointed to invoices for $710,000, $284,000 and $500,000.

Prior to the hearing, Sanchez showed Samoa News a handful of those invoices from Marisco, made out to ASG with Conden and Thompson’s names on the invoices.

One interesting issue raised by Sanchez during the hearing, was that the excavator purchased under the tugboat/barges project was sent to American Samoa via Los Angeles at a cost of $75,000 to ASG.

The excavator, currently at the ASG shipyard, was to be placed on one of the two barges for dredging the Manu’a harbors, but the barges, he said, are now docked in the main harbor and cannot be used.

More in next week’s Samoa News from the testimonies of Sanchez and King at yesterday’s SIC hearing.


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