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Report to SIC on $20 Million loan reveals overspending

The government’s $20 million loan from the ASG Employees Retirement Fund is the latest target of the Senate Investigative Committee, whose chairman Sen. Lualemaga Faoa is calling today another hearing after a brief one last month where ASG Office of Program Planning and Budget director Malemo L. Tausaga was subpoenaed to testify.

Malemo also provided for the committee a report on the status of this loan. The report — marked received by SIC on Mar. 23, 2012 — shows that 16 projects were funded with the loan money and only $1.21 million is left to be expended.

Not unexpected, the report shows some projects received more money than what they were allocated, resulting in other projects receiving less money.

For example, the Fono building was allocated $3 million and spent only $163,870 leaving a balance of $2.83 million — which means the Fono is stuck at this point because the balance of the $20 million stands at $1.21 million.

Six projects overspent their allocation and among the largest over-spenders was the ASG tug boat project, which included the purchase of barges. This project had been allocated $3.2 million, but was overspent by $1.45 million, according to the report.

But total expenditure for the same project, which was sole sourced to Honolulu-based Marisco Ltd., for purchase and refurbishment of the barges and tug boat, is expected to be more than $5 million, following a federal arbitration decision and award which specifically states that “ASG is to pay Marisco... $811,631.87, plus interest on that amount at the rate of .43% per year — not compounded — from Sept. 1, 2009 until paid, plus costs of suit.”

Marisco had sued ASG in 2010 at the federal court in Honolulu for failure to pay outstanding invoices of around $800,000 for work done on the tub boat and barges and other services. ASG has rejected the claim. The federal court is expected to issue a firm ruling soon on the arbitration decision and award.


According to the report, $1.50 million was allocated to the 10th Festival of the Pacific Arts for logistics but it overspent by $1.02 million; and $1 million was allocated for the food voucher program for the Arts Festival but was overspent by $44,453.

Another over-spender is the “OPAD/TEO Building” project which was allocated $1 million but overspent by $50,256. The Lee Auditorium renovation project was allocated $500,000 but it overspent by $17,575.

The under sea fiber optic cable project overspent by $24,761 after it was allocated $3.22 million, according to the report. Samoa News should point out that the Fono is of the understanding that only $3 million was allocated for this project.


Information from the Fono last week shows the SIC will convene this morning to hear testimonies from ASG Treasurer Magalei Logovi’i; Retirement Fund executive director Filisouaiga Taafua and Toloa Letuli, who heads the office that oversees the $3 million allocated to the three districts (Western, Eastern and Manu’a) for capital improvement projects, where each district was to receive $1million.

Ten percent of the $1 million for each district went to fund the office overseeing the district’s projects — which means each district in the end receives $900,000.

The report shows that Western district has a balance of $539,752 left to be spent; Eastern district with $271,351 to be expended and Manu’a with only $52,100 left.

The report further shows that the $300,000 allocated to Letuli’s office to oversee these projects is already overspent by $20,529.

The $20 million loan, which was first enacted into law in January 2007 and followed by three amendments, has a 10-year repayment term, at 7.5% fix interest rate with monthly payments of $237,810, according to the report.

The loan is repaid through a percent of excise taxes on beer, alcohol and tobacco, along with customs entry declaration fees, and is guaranteed by ASG assets and general fund. Retirement Fund officials testified in the Fono this year that the government is up to date on its loan payments.


2008 Pacific Arts Festival

The final financial report of the 2008 Pacific Arts Festival has yet to be presented to the Fono, which has been asking for it. In 2010, the Festival committee co-chair, Fagafaga Daniel Langkile said the report was completed early 2009 and forwarded to the Governor’s Office. At the time, the governor said there were problems with the report, which included questions about donations that went directly to the committee.

District Allocation of $1 Million Each

Little has been reported about the $1 million allocated to each of the three districts, with the exception of the Manu’a District — which spent more than $250,000 of their allocation building the high-tech Manu’a fautasi, Matasaua II.

In 2010, during the March 27 dedication ceremony for the christening of the new fautasi, Kovana Itumalo a le Manu’a Tele, Misa’alafua Hudson thanked Gov. Togiola Tulafono for his help in securing funds that enabled Manu’a to possess the most expensive fautasi ever constructed.

One leader from the Motu Sa absent during the ceremony was Sen. Velega Savali from Ofu and Olosega. He has gone on record with his opposition to the use of the capital improvement project money to build  a fautasi.