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Administration moves to repeal law pertaining to LBJ's $5M loan — Again

American Samoa Executive Office Building

Pago Pago, AMERICAN SAMOA — In an effort to “provide accurate financial reports” for LBJ Medical Center, the Lolo Administration has again 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.

The loan was funded by proceeds the American Samoa Government received from a legal settlement with FM Affiliate Insurance, which failed to pay government claims following Hurricane Val in 1991.

Over the years, there have been efforts to repeal this law but all have failed. The measure never makes it out of committee prior to the official close of past Legislative sessions. The Lolo Administration made the most recent effort last year, but the 35th Legislature ended last October without any final action taken by the Fono.

But there have always been discussions amongst lawmakers, of this $5 million loan, and the need for the law to be repealed.

In a Mar. 26th letter to Fono leaders, Lt. Gov. Lemanu Palepoi Sialega Mauga explained current law, which provides the “loan obligation agreement” between ASG and LBJ.

“However, the funds were never remitted to the Medical Center, but were instead administered by [ASG] Treasury Department,” Lemanu wrote. “Unfortunately, the $5 million authorized remains on LBJ’s financial records as an outstanding obligation, which clouds its audit and financial records.

“It is time to help LBJ provide accurate financial reports by repealing” this law, he said and asked the Fono for support and passage of this important legislation.

LBJ audit financial statements for fiscal years 2016 and 2017 show the $5 million as an “Advance from American Samoa Government”.

During a House committee hearing in March last year, faipule learned that Treasury was using the loan as an excuse to withhold 2% wage tax revenues earmarked for LBJ, as well as delay sending the hospital its monthly ASG subsidy.

Deputy treasurer Tina Va’a told the committee that this loan has been on the government’s books for many years and in order for it to be written off, appropriate legislation needs to be enacted into law.

She explained that ASG is still holding over $4 million in revenues from the 2% wage tax from Fiscal Year 2016 that was supposed to be paid to LBJ. She said it was the Treasurer’s plan to use this $4 million from the 2% wage tax to offset the $5 million loan LBJ owed to ASG.

With the current legislative session officially ending at the close of business tomorrow, Friday, the bill to repeal the $5 million loan is not expected to be taken up until lawmakers return in July for the Second Regular Session of the 36th Legislature.