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Bank of Hawaii finds itself in the middle of ASG/Marisco battle

The trial division of the High Court has taken under advisement a preliminary injunction by the government against the Bank of Hawai’i, over the case of Honolulu-based shipyard operator Marisco Ltd, which has been awarded over $812,000 for a bill of repairs made to the tugboat Sailele and two government barges.

The Bank of Hawai’i is at the center of the case, after Marisco sought to garnish ASG funds held by the Bank of Hawaii branch in American Samoa. Following a request from Marisco, the Federal court issued a writ of execution against ASG.

The hearing in this matter was yesterday, presided over by Chief Justice Michael Kruse.

The American Samoa Government is seeking a preliminary injunction to prevent the Bank of Hawaii from releasing the funds from the government’s general account.

Assistant Attorney General Michael Iosua said the injunction is appropriate because the Governor and the Fono have not approved this withdrawal, and additionally the government will suffer irreparable damage, given that the judgment is more than $800,000 

Attorney Jennifer Joneson, representing the Bank of Hawai’i, told the court the bank is literally in the middle, and wishes to stay neutral. She added that the Bank of Hawai’i has moved the funds from the ASG general fund to a different bank account pending the outcome. Joneson noted that BOH did what they did in response to the writ of execution issued by the federal court in Hawaii, and they acted appropriately.

The government called to the stand, ASG’s Comptroller Matthew Grady, who told the court the government is not financially stable.

Ass’t AG Iosua asked the comptroller if expenditures are made that are not within the budget, how will it affect the government?

Grady told the court that without the funds (more than $800,000) in the government’s general fund, “the government will be forced to prioritize its expenditures, given that the state of the economy of the government… is not good.”

He told the court he started working as ASG comptroller in March 2011 during the time the government had moved to furlough some government employees.

“In Fiscal Year 2011, the government could not pay the subsidies for the LBJ hospital, the Community College or the public library” he stated, adding that the government was having difficulties making its subsidies.

“The immediate need is meeting (ASG’s) payroll, the legislature’s salaries and other subsidies” said Grady. He added the government also needs to pay the vendors and local businesses what is owed to them by the government.

Bank of Hawai’i American Samoa District Manager Vice President, James “Hobbs” Lowson also took the stand on behalf of the bank.

He explained that Bank of Hawai’i in the territory is a branch of the main office, which is based in Hawai’i, and there is another branch in Guam.

He added that anyone who holds a Bank of Hawaii account can make a transaction from any BOH account, whether in Guam, here or in Hawai’i.

He said once the writ was received on June 20, 2012 at 4 p.m., the bank moved more than $800,000 from the ASG general account to a “bank controlled account” and the funds are now on hold. Ass’t AG Iosua asked Lowson if he’s aware how funds are deposited into ASG’s general account.

The local BOH Vice president responded that some deposits are made locally, while there are other funds which come from federal agencies as wire transfers to ASG’s general account; however the wire transfers are routed to the main BOH office in Hawai’i.

The Ass’t AG noted that the Writ of Execution issued by the federal court in Honolulu to the Bank of Hawaii’s main office in Honolulu is ineffective, given the fact that the site of the ASG account is the branch in American Samoa.

He said it’s apparent that right now there’s a withdrawal without proper authorization, which must be done according to the laws of the territory. Additionally, he said, the government is on a tight budget and also must pay out subsidies to LBJ hospital, ASCC, ASPA and the public library, as mandated by law.

Ass’t AG Iosua told the court the government needs to have the money re-deposited into ASG’s general account.

He explained that local law dealing with the garnishment of ASG funds requires the approval of the Governor and the Fono before the funds are released. “These are our laws, our jurisdiction and our laws need to be followed.”

In it’s reply motion, filed on Tuesday, at the federal court in Honolulu, Marisco pointed to a waiver signed by the governor and the attorney general of American Samoa allowing the company to file claim to fulfill the judgment, as well as the “pertinent terms” of the “Agreement to Arbitrate” signed by both parties. (See story for further details in yesterday’s Samoa News issue, Thursday, July 05)