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Senators told their approval not needed to spend bond proceeds

 Iulogologo Joseph Pereira; board chairman, ASG Treasurer, Uelinitone Tonumaipe’a; and board vice chair, Attorney General Talauega Eleasalo Ale
AG and Fono attorney have two different interpretations of the law

Pago Pago, AMERICAN SAMOA — The Senate Budget and Appropriations Committee has agreed to request the Lolo Administration to provide proposed legislation to appropriate and approve spending of the more than $50 million in proceeds the government received from the sale of the 2018 bond series, issued by the American Samoa Economic Development Authority (ASEDA).

The committee’s decision on Wednesday, followed a hearing where senators heard from the ASEDA board and separate testimony from Senate legal counsel, Mitzie Jessop-Ta’ase.

The hearing, which lasted about an hour, indicated a difference of interpretation of the ASEDA law between the committee and the ASEDA board, when it comes to whether Fono approval is required before spending 2018 bond proceeds.

Committee chairman, Sen. Magalei Logovi’i, called the hearing so ASEDA can explain, among other things, how the $50.32 million in bond proceeds are being distributed and whether the 2018 bond series sale requires Fono approval.

The biggest question had to do with the authority of the government, through ASEDA, to appropriate and spend bond proceeds without Fono authorization, as required by the Constitution and law.

Already introduced in both the Senate and House, is an Administration bill, re-allocating a certain percentage of current ASG revenues to pay the 2018 bond series.

Based on a request by the committee, ASEDA presented a summary report on the spending of the $52.32 million in proceeds: over $15.36 million to the Fono building (none of it has been expended yet); $28 million to American Samoa TeleCommunications Authority projects; and the balance to the Debt Service Reserve Fund as well as cost of insurance and consulting.

The report provided a breakdown on ASCTA projects: $15 million for “ASTCA Hawaiki” with the full amount already paid out — the final payment to Hawaiki; $10.33 million for “ASTCA Hawaiki Reimbursement" (Samoa News believes this goes to the Retirement Fund and the entire amount is expended); and $3 million for “ASTCA Capital Projects” with $602,756 already spent.

The committee didn’t get into questioning the spending of the bond proceeds during the hearing, in which ASEDA was represented by board chairman, ASG Treasurer Uelinitone Tonumaipe’a; board vice chair Attorney General Talauega Eleasalo Ale; and board member Iulogologo Joseph Pereira, who is also the governor's executive assistant.


Sen. Tuaolo Manaia Fruean questioned why spending of the bonds was not presented in bill format to the Fono for approval, as required by the Constitution and law. He said he questions the procedure involved, because allocation of proceeds requires Fono approval.

Talauega explained that sale of the 2018 bond series — and its allocation by ASEDA — is allowed under the law, which was amended before the sale of the 2015 bond series. This was echoed by other board members, who noted that the 2018 bond series didn’t require Fono approval.

The board was referring to ASEDA law amendments made and enacted into law for the 2015 bond series — under “Authorization to issue bonds” — which states in part that, “The Authority (ASEDA) may issue its bonds hereunder from time to time without further authorization from the Legislature subject to the procedures and restrictions in this chapter.”

Additionally, “Refunding bonds shall be issued by the Authority in the same manner it issues bonds under the provisions of this chapter.”

Tuaolo argued that the authority given to ASEDA, as a result of the 2015 bond series, is to find new revenues subject to Fono approval before it's allocated and spent. Other senators echoed the same argument, noting that the Constitution clearly states that Fono approval is required before spending of any government money.

Additionally, the senators believe the Constitution trumps the law, and at least two senators suggested amending provisions of current ASEDA law, to allow the Fono to be involved in the process of selling of new bonds as well as making clear that Fono approval is needed for spending of proceeds from bond sales.

Another provision of the ASEDA law, states in part that: “Nothing in this shall be construed to violate any provision of the Constitution of American Samoa, and all acts taken under this chapter shall conform to the Constitution, whether expressly provided or not.”

“Where any procedure of this chapter is held by any court to violate the Constitution or any other law of the Territory, the members of [ASEDA] shall have the power to provide by resolution an alternative procedure conforming to the Constitution or law of the Territory,” it says.


Once the witnesses were dismissed, Magalei called Jessop-Ta’ase to explain the ASEDA law.

According to her, under the law, the Administration finds new revenues but cannot appropriate those revenues, as this authority rests with the Fono.

It was noted by some senators that there appears to be a difference in interpretation of the law between the Fono and ASEDA.

Jessop-Ta’ase responded that the law allows the government to look for new revenues but before such money is expended, it needs Legislative approval.

Following the explanation, Magalei submitted a verbal motion — and the committee agreed — to inform the executive branch to submit a proposed money bill for Fono approval for the spending of the $50 million from the 2018 bond proceeds.


Of interest, when searching for new revenues, an explanation is necessary to those who would provide the money, either through bonds, a loan, etc. In the case of the 2018 bonds, a rating presentation of what the revenue was going to be used for and how it was going to be paid back was given last year November in Honolulu, Hawai’i, before Moody’s.

While the media reported on the rating presentation (after the fact), Samoa News notes the Fono was out of session, and its unknown if any lawmakers were informed by the administration, including ASEDA of the meeting.