Witnesses stonewall SIC in missing bank funds probe

The Senate Select Investigative Committee didn’t get any worthwhile information or testimony out of the witnesses subpoenaed yesterday about the $1.2 million in American Samoa Government grant funds frozen at the Vietnam International Bank after a Treasury Department computer was allegedly hacked into in late August of last year.

SIC is now hoping that ASG Treasurer Magalei Logovi’i will shed some light, solid testimony and all necessary documents on this case, which is now in the hands of the Federal Bureau of Investigation, working with its counterpart in Vietnam.

Magalei is scheduled to testify this afternoon and is to provide documents subpoenaed by the SIC.

Yesterday’s two subpoenaed witnesses were Bank of Hawai’i district manager American Samoa, Hobbs Lowson, accompanied by the bank’s attorney Barry Rose and Treasury Department’s chief accountant Levi Reese.

After the witnesses were sworn in, SIC chairman Sen. Lualemaga Faoa asked Lowson if he had brought the subpoenaed bank documents as required by the committee, to which the 45-year old bank executive replied, in regards to item one listed on the subpoena, “all of the requested information was gathered under the direction of the bank’s attorneys and is therefore subject to attorney-client privilege... and therefore I am unable to comment.”

As to items two and three on the subpoena, Lowson said, “all the requested materials are proprietary in nature and therefore I’m unable to testify” regarding these matters. (Specific documents sought by the SIC were not publicly revealed during the hearing.)

With that, Lualemaga moved to dismiss the witnesses but Sen. Fuata Dr. Iatala Tagiilima pointed out that SIC would like to know how the funds were transferred out of the bank, but not activities of the bank.

Lualemaga replied that this matter is with the FBI and the bank cannot provide the requested information due to federal regulations. Thereafter Lowson was dismissed from the hearing, along with the bank’s_______ attorney.

Lualemaga then asked Reese if the documents subpoenaed are being provided — to which the witness said the matter is now with the FBI, who has ordered that this case not be discussed with anyone else. Additionally, any information or documents will come from Magalei, said Reese.

However, the SIC proceeded with questions and Reese provided the same reply — the case is still open and with the FBI, he said, adding that Magalei can provide what the SIC is seeking.

Reese was able to say that when this issue surfaced around this same time last year, that Treasury Department policies on electronic transfers were in place. However, he could not provide any other details — again citing that the matter is with the FBI, who had told the department’s staff not to release documents or discuss this case.

Fuata said his “hands are tied” and he is “very disappointed” that he cannot ask questions about this matter. There were more questions from SIC members pertaining to the transaction and Reese maintained that he “cannot comment” on the case and would not offer any hint of how this matter began.

Towards the end of the hearing, SIC legal counsel Henry Kappel, who had points to make to the witness, stated that this transaction resulted in a loss of $1.2 million for the government, but the witness is refusing to answer questions.

Kappel suggested to Reese to seek legal counsel, because “you’re on the verge of being held in contempt” of SIC for refusing to answer questions and provide subpoenaed documents. Kappel wanted to know the name of the FBI person who told Levi not to discuss the case or release documents, and asked if there was any written federal code provided by the FBI.

Reese said the FBI agent is Matthew McDonald (who was based in the territory last year) and there was no specific written information from the FBI regarding any specific federal code to follow, as reasons for not discussing this matter.

Kappel, who appeared very impatient with the witness, said $1.2 million lost in this transaction is a lot of money and asked how this loss was absorbed by ASG. Reese said the  matter was not officially recorded as a loss because the case is still open.

Additionally, “we’ve been fortunate that 2012 was a good year” in collections and ASG was able to absorb the loss at this point, said Reese.

In closing, Lualemaga said the witness is aware of the requested documents and if they can be provided at a later time, SIC would really appreciate it. “If there is time in the future that we need to re subpoena you, then we will do that,” said Lualemaga.

A new document requested by SIC is the Treasury Department’s new policies to ensure that this type of situation does not occur again.

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