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AG testifies $6.8 MIL tobacco is to go to repay loan debt

Based on testimony last week by Attorney General Fepuleai A. Ripley Jr., the Fono’s Joint Budget committees are now looking into the actual status of the $6.8 million ASG windfall money from the tobacco settlement.

The windfall is supposed to be the unplugged interest of the tobacco settlement share for American Samoa and was cited in a letter late last year from the Senate President to Gov. Togiola Tulafono, who, when submitting the FY 2013 budget to the Fono said this is new, additional revenue for the government and is part of the local revenue funding.

When Fepuleai appeared last week for the Department of Legal Affair’s proposed budget, Rep. Taotasi Archie Soliai wanted to know when the attorney general found out that the government was to receive the $6.8 million in the tobacco settlement.

Fepuleai said he couldn’t recall, but it was sometime this year, which was around the time the Senate had scheduled a hearing on LBJ Medical Center funding. He said the $6.8 million remains with the U.S. Department of Interior.

In exchange for its share of the Master Tobacco Settlement Agreement, which was worked out by attorneys general of states and territories and the major U.S. tobacco companies, American Samoa opted for an $18.6 million loan from the federal government, and the DOI oversees the loan, including repayment of the loan using proceeds from the tobacco settlement.

Responding to a committee question, Fepuleai explained that of the total loan money, $14.3 million was allocated to pay off ASG debts (debt reduction) at the time and $4.3 million went to fiscal reforms. He said the $4.3 million has since been paid off and he believes that the debt reduction should be paid off soon.

Fepuleai also stated that $6.8 million goes to repay the debit service for the loan and Sen. Alo Dr. Paul Stevenson requested a full report on the loan and details of the payments. Alo said the Fono was supposed to get updated reports on this loan but has yet to see one.

Rep. Taotasi Archie Soliai said he was surprised to hear that the $6.8 million is earmarked to pay the loan and wanted further clarification.  “Are you saying that the $6.8 million goes into the payment of the debt service?” asked Taotasi, and Fepuleai replied “o lea lava” in Samoan, which means yes.

“So it not necessarily... should be treated as revenue for ASG?” Taotasi asked again.

And Fepuleai replied, “generally, this would be considered an income stream revenue that should be appropriated. But of course there may be some other issues that make it a different type of revenue — because its going towards the loan [repayment].” He said these proceeds are being paid directly into the account for payment of the loan.

“So it's already obligated?” Taotasi asked and Fepuleai replied, “Well... generally — yes.”

Fepuleai also explained that the loan payments are made in the middle of April of each year and that about $15 million has been paid as of 2011. He said the annual payment is around $942,000.

Some lawmakers backed up an earlier request from Alo, and requested that the AG’s Office provide additional information about the $6.8 million and how much has been paid so far for the loan.

How the Fono will deal with this money included in FY 2013 is expected to be discussed later this week during the joint budget hearing debate on a final budget for the government.


One issue of interest that came up during the hearing, dealt with the $102,000 budget proposal for the Independent Prosecutor, that is included in the budget for the Department of Legal Affairs.  The budget book shows $100,000 for contractual services and $2,000 for All Other budget items, and no personnel costs — since there is no total number of employees listed.

According to the budget explanation, the $100,000 under 'contractor services' is for expenditures of services render by the Independent Prosecutor “for current pending case load including any additional matters assigned by the Attorney General and/or the court.”

Taotasi asked who is the Independent Prosecutor, and Fepuleai explained that since the court’s ruling on this IP matter, this is now a temporary post, and when a matter arises and requires an IP, a request is then submitted to the court.

Currently there is no permanent IP office, but two attorneys have been appointed by the court for current pending cases, said Fepuleai.

Taotasi also sought additional information on another issue — the $67,500 allocated under the Special Program budget category for the Immigration Computer System upgrade.

The budget book explains that since implementation of this system, it is relevant that the computer system be upgraded to a capacity level that will enable immigration agents to access, retrieve and screen passenger information from the traveling population in and out of American Samoa.

Fepuleai told the committee that there is a big problem with the computer system, which at many times is down, affecting immigration work at the airport and the main office at the Executive Office Building in Utulei.

He said the current system was installed in 2003 and is therefore considered old, and is always in need of repair. He said the government is now looking at a vendor or an individual with experience in this type of computer system in order to maintain it, and have it upgraded.

He said the requested money is needed to upgrade the system, which is important in the tracking of incoming passengers as well as the immigrants who enter the territory and reside here.