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Lolo not satisfied with federal court decision to fine Starkist $100M

StarKist employees entering the canning plant in American Samoa.
This court decision adds financial burden on Starkist, which could very well derail its development plans for American Samoa or worse yet, closure of the plant,” Lolo said in a statement.

Pago Pago, AMERICAN SAMOA — Gov. Lolo Matalasi Moliga says the decision by a federal court judge in San Francisco to sentence StarKist Co., to a fine of $100 million “is unsettling for me, given the potential adverse impact on its proposed production capacity expansion” for its StarKist Samoa plant.

With the uncertain status of the federal 30(A) Tax Credit incentive scheme, rise in the minimum wage, the “insensitive enforcement practices” by the U.S. Coast Guard, the rising dominance over the fishing industry by China, the additional environmental cost to compel compliance with US Environmental Protection Agency standards, the rising cost of fish, and the constant worker force challenges, “this court decision adds financial burden on Starkist, which could very well derail its development plans for American Samoa or worse yet, closure of the plant,” Lolo said in a statement.

The governor was responding yesterday to media inquiries after U.S. District Judge Edward M. Chen handed down the sentence on Wednesday for the company’s role in a conspiracy to fix prices of canned tuna sold in the United States. The US-based company was also sentenced to 13-months probation.

According to Lolo, American Samoa has struggled endlessly to diversify its economy to avert threatening financial and economic catastrophe attributed to “our continued dependence on one industry,” adding that tourism development option is continuously restrained by the existence federal cabotage law.

Attracting manufacturing and processing investments is stymied by the “methodical elimination of federal [tax] incentives”, and costly environmental compliance requirements; and China’s pervasive and aggressive investment schemes in the Pacific “have effectively limited our options for economic diversification,” he said.

“Starkist is the only economic development option, which has sustained our economy since 1954. It is for this very reason why I am very concerned with the recent court decision fining Starkist $100 million,” Lolo continued.

“This money could have been invested in American Samoa. Instead it will go to the federal government, and I hope some of this money will come here to help bolster American Samoa’s frail and ailing economy,” he said.

As previously reported by Samoa News, based on court filings, StarKist had sought a fine of $50 million or less, arguing that it couldn’t afford $100 million, which could put them in bankruptcy.

However, the US Justice Department (USDOJ) strongly opposed reducing the fine, arguing that StarKist had sufficient financial resources to pay $100 million.

StarKist’s general counsel, Scott Meece, addressed the court before sentencing Wednesday, asking Judge Chen to consider the company’s 2,600 U.S. employees, according to The Associated Press. (Samoa News notes that StarKist Samoa employs around 2,000 workers.)

Meece said the company will probably have to make some cuts and could consider layoffs or relocating its American Samoa plant to Thailand. Chen said the company did not demonstrate by “preponderance of the evidence” that it is unable to pay the $100 million fine.

In a statement following the court’s decision, StarKist president and CEO, Andrew Choe said the company cooperated with the USDOJ during the course of its investigation and accepted responsibility. “We will continue to conduct our business with the utmost transparency and integrity,” he said in a national USDOJ news release.

USDOJ’s Antitrust Division Assistant Attorney General Makan Delrahim said Wednesday that hard-working Americans deserve the benefits of open competition when they spend their hard-earned money on items that stock kitchen shelves.