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DBAS resolution exempted staff from conflict of interest

Lolo: U.S. Treasury left administration of 1602 programs up to states & territories
fili@samoanews.com

“Conflict of interest” — and who approves applications for the federally funded Section 1602 program for the construction of low income units — were only a handful of questions that were able to be raised at last Friday’s Senate hearing, where former Development Bank of American Samoa (DBAS) president Lolo Letalu Matalasi Moliga described Samoa News reporting of the program’s draft report as “trash” that belongs in a trash bin.

Senate Government Operations Committee chairman Velega Savali Jr. said at the outset of the one-hour hearing, that the goal was to get a better understanding of the program as well as the federal rules and regulations covering the program, administered locally by DBAS.

After Lolo’s first public response to the Samoa News stories in which the candidate for governor called the reporting on the draft report "trash," Velega said the hearing is to remove that “trash” and the goal is for a better understanding of the program that provided $30 million for American Samoa.

Velega sought an explanation from the witnesses as to who qualifies for the program,  to which Lolo says he and the DBAS board had assigned bank vice president Jason Betham as project manager for the program.

Betham explained that Section 1602 was to create low income housing units for low income families. He says anyone who qualifies to be an owner of a housing unit is eligible for the program to construct these units; but the owner, or recipient of the program, does not need to be low income themselves.

The draft report cited 14 incidents of conflict of interest and quotes Betham saying that DBAS had a resolution that exempts all of them from any conflict of interest violation. And during the hearing Velega asked the witnesses to explain the “conflict of interest” issue that has come up over and over again dealing with this program.

Lolo responded that this particular matter was raised by DBAS with the U.S. Treasury, asking the feds if there is a conflict of interest if bank employees or board members apply for the program.

U.S. Treasury’s reply is that it's up to each state and territory in the administration of the program, Lolo claimed.

Lolo explained that he then recommended to the DBAS board for a resolution that would qualify anyone in DBAS and it was done with the resolution in bank records. He said there “is no conflict of interest” in the policies set up for the program.  He said the resolution is clear, and made it possible for many DBAS staff and others to quality. 

DBAS board chairman Malemo Tausaga told senators that one of the board’s  responsibilities is to oversee policies that operate the bank. And when this program first came up, the first thing done by Lolo was to request a recommendation from the board,  he said.

Malemo explained that Lolo informed the board that the feds had given the bank only six months “to disburse” the money for this program. He said it was the board’s recommendation to Lolo to follow regulations and policies of the bank as well as the federal government and move ahead with the program.

He also said Lolo and the board communicates on a “monthly basis” regarding the program’s status and where it stands.

However, he said the newspaper’s reporting has affected the board chairman, DBAS and others, adding that no one stole any money from the program. He said DBAS, the board and staff conducted the program honestly and truthfully with the main goal to benefit the people of the territory.

Velega followed up with a question — so if there are problems with the administration of the program, would that be the fault of the board? Malemo replied, "yes".

Senate President Gaoteote Tofau Palaie, a former DBAS board member, said he was asked last week during the Senate session about this draft report as published by the newspaper, and his reply to the Senate membership  was that the Fono does not use “lapisi” (trash) as a basis for its probe or review on matters of importance.

He said the Senate committee is trying to clear away this ‘lapisi’ but the Fono’s wisdom should not focus on things that are incomplete. Additionally, the negative reporting in the newspaper about the draft report is not important to the the Senate leadership.

Why? he asked, and answered, because there are rules and regulations to follow in which after a final report is done it is submitted to the governor as well as the Fono. He said the main question for the program, is who qualifies, and the answer is clear: anyone can apply to be a recipient and some of the recipients, including himself — who are all tax payers — applied.

He asked the senate membership not to spend their wisdom as traditional leaders on wasteful and unimportant matters but to focus on issues for the betterment of American Samoa. He thanked Lolo and the board for their bravery in overcoming obstacles in order to meet the deadline for the program despite complaints.

He reiterated that the program is good and has benefitted the community while others — who may have not benefitted from the program just want to make things look worse. Additionally, he said that no one wants to get rich out of the program and a final report on the program should be the important issue to discuss.

Sen. Galeai M. Tu’ufuli said this program is still on going and not yet completed, but there are already concerns and complaints, without anyone knowing the actual facts, and all these issues stem from the newspaper’s report on the draft report.

He said the office responsible for preparing the draft report should be the first to question as to how this draft report, which is a government report, was leaked out, when it was incomplete. He said the bank should be set aside for now until the program is completed, and then the Fono can shift attention there.

If this program is complete and there are problems identified by the federal government, people from the feds would already be on island about it, he said.

He suggested the committee focus attention on the office that prepared the report, which should have gone only to the executive director of the office, and therefore the executive of the office should be questioned.

Additionally the Senate could also look into whether an ASG employee who leaks out government reports, should be punished, and a law dealing with this can be explored. He said leaking ASG financial documents should not happen, and the Fono should take action.

The draft report was prepared by the American Samoa Economic Stimulus and Recovery Office (ASESRO) Section 1602 Compliance staff for ASESRO executive director Pat Galea’i, who has responded to Samoa News saying that this is only a draft report without any proof.

During the Senate hearing, and responding to Galeai’s comments to call in the ASESRO staff, Velega said this was the main reason for first calling in DBAS officials — for the Senate to fully understand the rules and regulations — and the reason they were asked to bring copies of the regulations. He said the witnesses were also to explain the program for senators’ understanding before ASESRO is called in. 

He said the witnesses have answered some of the questions so far, and have also provided copies of federal regulations governing this program.

Sen. Mauga T. Asuega says this hearing was based on his earlier request on the Senate floor, adding that not only ASESRO be called in by the committee, but those in charge at the newspaper should be called to testify.

He said the newspaper is stirring up peace and harmony in the territory and this not the the first time, as it happened before — but didn’t elaborate further.

He agreed with Lolo’s statement earlier in the hearing, that an individual’s rights should be protected, and said that something should be done with the newspaper on this issue — but again, didn’t elaborate further. He reminded everyone that evil is always around and never rests. He thanked Lolo and DBAS for their hard work on this federal program.

Sen. Lemanu Peleti Mauga, who is Lolo’s running mate as lieutenant governor, asked the witnesses to explain the process for a loan application. Malemo said that when an application is submitted, it goes to the bank president and the project manager for their review, who then make a recommendation to the board. He says there are criteria for applicants to meet.

Lemanu, who is also a DBAS board member, asked two follow up questions: is it true that Lolo does not approve the applications? and it is true that Lolo only makes recommendations to the board? Malemo answered yes.

At the end of the hearing, Lolo said all data and information pertaining to the program is with DBAS according to regulations that govern the bank operations. He says anyone — including the newspaper, wanting information and questions about the program should visit the bank.

During Friday’s Senate session, Velega announced a committee hearing tomorrow (Tuesday) and witnesses requested to appear are the ASESRO boss and those in that office who prepared the draft report.

Samoa News will be publishing the DBAS list of developers (recipients of the 1602 Low Income Housing Project Grant), in Tuesday’s paper, as a Just Asking response to our readers who say they do not have internet access and are unable to go online to the bank’s website and see the list.



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