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Senate president urged to look at constitutionality of ASEDA statute

Faipule-elect, Larry Sanitoa
Sanitoa says ASTCA's financial crisis needs to be fully investigated and dealt with

Pago Pago, AMERICAN SAMOA — Recently elected faipule for Tualauta District, Larry Sanitoa has expressed his concerns with the proposed ASEDA Bonds- 2018, through a December 3, 2018 letter to Senate President Gaoteote Palaie Tofau.

According to Sanitoa, his letter is on behalf of the many residents and constituents who have contacted him to express their "serious concerns" with the new proposed bonds of approximately $52 million by the American Samoa Economic Development Authority (ASEDA), of which $35.5 million is to pay off the American Samoa Telecommunications Authority’s (ASTCA) debts and loans.

Sanitoa referred to the recent Notice of Bonds To Be Issued — published in Samoa News — which noted that ASEDA prepared documents shows a closing date of December 18, 2018. "This is extremely worrisome and troubling as there has been no mention of ASEDA’s intention to seek inputs and approval from the Fono, before this awfully troublesome deal closes," Sanitoa wrote.

He said that "per the amendments on Title 11, Chapter 19 which was approved by the Legislature in 2014, specifically the provision on Section 4, 11.1904 (a) basically gives ASEDA the authority to issue bonds without further debt authorization from the Legislature."

To Gaoteote, Sanitoa wrote, "As you may recall, a few of us, including the Fono’s legal team at the time, objected to this provision for various reasons. First, according to Article II, Section 1 (d) of the American Samoa Constitution, any money spending laws passed must have a source of revenue. Basically, the government needs to submit a supplemental budget to the Fono for appropriation. The supplemental budget should identify how the monies will be spent — projects, borrowing fees and interests. The supplemental budget submission must identify how the monies will be transferred to ASTCA — whether by contribution, grant or loan. In turn, ASTCA must submit a supplemental budget that the Fono will appropriate which breaks out how the money will be spent."

Sanitoa referred to Article II, Section 24, which talks about special or exclusive privileges not to be granted; local or special laws.

"The power of the Government to act for the general welfare of the people of American Samoa, shall never be impaired by the making of any irrevocable grant of special or exclusive privileges or immunities... All general laws or special acts passed pursuant to this section may be amended or repealed."

Sanitoa says the Fono giving ASEDA the authority to issue bonds violates the American Samoa Constitution under this section.

He added, "The new debt payment for the new bond will now increase the debt service to over $13 million a year for the government. Having 13% of our local funds go towards paying these loans will mean dangerously less amount of monies available to provide government services in local funds for supplies and materials to our schools, very little subsidies for the college, less funding for our hospital, and the list goes on."

Moreover, "The financial crisis at ASTCA needs to be fully investigated and dealt with."

Sanitoa said that while we appreciate the hardworking men and women at ASTCA who kept the authority financially sound for many decades, ASTCA's new management "needs to be transparent and truthful on exactly what happened to the $30 million they loaned from retirement fund within the last two years in the name of Hawaiki cable."

"Recent reports show ASTCA only gave Hawaiki Cable an amount of $14.7 million. Where is the rest of the money?" Sanitoa asks. He then went on to say that "arguably, there is potential for a court challenge on the constitutionality of the ASEDA’s statute, if the Authority insists on moving forward with closing this deal without the Fono's review and approval of revenue measures to pay for these new bonds."

Sanitoa concluded, "The future of the territory and the next generation is at stake."

He said he is seeking Gaoteote's help in "re-emphasizing the importance of having the Fono do its due diligence work prior to ASEDA issuing these bonds."

(Editor's note: Samoa News has learned that ASTCA has proposed to pay the $17 million — that the American Samoa Government Employees' Retirement Fund (ASGERF) provided to the semi autonomous agency in form of an investment — with monies from the new bond series set to be sold this month.

Samoa News understands that there has been a proposition from ASTCA, that they not pay any interest, something that will not fly with the ASGERF director and board members. According to a Samoa News source, the first payment from ASTCA to the Fund — in the amount of $4.2 million — is expected to be made later this week, on Saturday, Dec. 8, 2018. This is despite pleas from ASTCA officials to the Fono in past hearings, that they need a couple of years to get the Authority back on track, financially, and this "break from making payments" is much needed in order for them to take full advantage of the Hawaiki cable.

A Samoa News source close to the matter said the Fund’s board members are in agreement, that if ASTCA defaults on the terms of agreement, the Fund — because of its investment — is in position to sell their share of the cable to any eligible buyer.

Samoa News understands that part of the reason why the Fund agreed to loan the money to ASTCA, was to avoid this from happening. That is, getting a lender to loan ASTCA the money, having ASTCA default on the terms, therefore putting the lender in a position to sell the cable.)