Senator introduces bill to write off LBJ’s old $5 million loan
In an effort to reduce outstanding LBJ Medical Center debts, Sen. Laolagi F.S. Vaeao has moved to repeal a current law pertaining to the hospital’s $5 million loan made more than 10 years ago to pay off long-outstanding debts at the time.
During a Senate committee hearing late last month, ASG deputy treasurer Tina Va’a told senators that LBJ owes ASG a total of $6.78 million — which includes a $5 million loan that the government made in 2003 on behalf of LBJ. However, the loan is still carried on Treasury Department books until there is a new law enacted to repeal it.
Even before the hearing, Laolagi was already working on drafting legislation to repeal the $5 million loan law. “I keep getting reports from the government about this $5 million loan owed by the LBJ and it’s still not written off until a law is passed to repeal it,” he told Samoa News after the bill was introduced yesterday in the Senate.
“And this has become a problem where ASG keep claiming that there is this outstanding $5 million debt and it’s probably the reason the ASG Treasury Department is not giving LBJ all of the revenue collected from the 2% wage tax as well as the delay in giving the hospital the quarterly payments of ASG subsidy for the hospital,” he said.
The loan was funded by proceeds that ASG received from a legal settlement with FM Affiliate insurance, which failed to pay government claims following Hurricane Val in 1991.
Laolagi recalled when he was in the House and chairman of the House Budget and Appropriations Committee back in 2003 when the measure to authorize the loan was approved by the Fono, “It was approved by the Fono at the time because the hospital was facing serious financial problems and debts at the time needed to be paid and ASG had the insurance proceeds money,” he said.
And then more than a year after the $5 million loan was approved another measure was submitted to the Fono for another loan for LBJ, this time the amount was $10 million from the ASG Employees Retirement Fund to be repaid by the American Samoa TeleCommunications Authority.
“It was my understanding at the time when the $10 million loan was approved, that the $5 million loan was to be forgiven or written off especially for the fact that it was funded by ASG money — the insurances proceeds,” Laolagi explained, adding that this was also the understanding of other lawmakers as they wanted to help the hospital.
“And all this time, I thought this was written off and I have been adamant that the $5 million was never a loan because — again — it was from ASG monies,” he said. “However, it still remains on the books at both ASG Treasury and the hospital. So it was best that this bill is moved through to repeal the previous law on the $5 million.”
Additionally, enacting this measure into law will further help reduce LBJ’s debt to the government, he said.
LBJ chief executive officer Taufete’e John Faumuina told senators last month that auditors have stated that this loan will remain on the books until and unless the Fono approves new legislation to have it written off.
Preamble of the bill to repeal the $5 million loan states that the government has long desired to “forgive and write off” the loan. So that both ASG and LBJ can provide a more accurate account and reporting of their finances, this bill becomes law upon passage by the Fono and approval of the governor.
The bill is assigned to the Senate Budget and Appropriations Committee, whose chairman Laolagi has scheduled a committee meeting next week Monday. Laolagi said no witnesses would be called because this is a clear-cut issue that was discussed previously by the Senate. He hopes to report the bill to the Senate floor during Monday’s session following the committee meeting.