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Monday, April 21, 2014

‘SDLLC pursuing multimillion shipyard, power plant’
Osborne is Fitial’s former campaign manager; more SDLLC officials arriving

Sen. Juan Ayuyu (Ind-Rota) said Saipan Development LLC, whose representatives have arrived on Saipan and more will follow this week, is still pursuing a multimillion-dollar shipyard facility on Saipan along with a $190.8-million diesel power plant, both of which are touted as potentially creating over 1,000 new jobs and boost the CNMI’s sagging economy. The sole-source, 25-year PPA is a subject of a court’s temporary restraining order and is among the issues in a soon-to-be reintroduced resolution impeaching Gov. Benigno R. Fitial for allegations of corruption, neglect of duty and negligence.

Fitial and three senators had an initial meeting with SDLLC’s Kenneth Mahmood two weeks ago, and more meetings are expected when other SDLLC officals arrive.

They include Don Kurz and David Mahmood, Ayuyu said.

Ayuyu, chairman of the Senate Committee on Public Utilities, Transportation and Communications, said it would be important for the CNMI to directly hear from SDLLC officials about the PPA, instead of just completely shunning their idea about both the PPA and the shipyard project.

The full Senate joined Rep. Janet Maratita (IR-Saipan), as well as Rep. Ray Yumul (IR-Saipan), in asking the court to stop the PPA. Senators, including Ayuyu, also adopted in August a resolution asking the administration to cancel the PPA. But Ayuyu said at the time, there were not much information about the PPA, and he said this is the best time to know more about the agreement from SDLLC officials. As PUTC chairman, he said he still has a lot of questions about the deal.

Besides Ayuyu, the two other senators who met with Kenneth Mahmood were Senate Vice President Jude Hofschneider (R-Tinian) and Sen. Ralph Torres (R-Saipan).

Ayuyu said there will be another meeting this week between lawmakers and SDLLC officials.

The Delaware-based Saipan Development LLC was founded by Allegiance Capital Corp. founder David Mahmood and Keystone Shipping owner Don Kurz.

Who is Osborne?

Besides SDLLC’s Kenneth Mahmood, also on island has been Jason Osborne, consultant for Allegiance Capital Corp.

Osborne “managed the successful re-election campaign of an incumbent Republican Governor Ben Fitial of the Commonwealth of Northern Marianas Islands” in 2009, according to his own LinkedIn profile.

In the 2009 election, Fitial was running under the Covenant Party, which he founded and later on left to rejoin the Republican Party. Fitial is now president again of the Republican Party in the CNMI.

Osborne was director of External Relations at the 2012 Republican National Convention, attended by Fitial and his party members.

“I would have thought the National Republican Party would all be moving to distance themselves from this Fitial administration, not pull closer… so the guy who is telling the CNMI people that Fitial’s signing of the PPA was a good thing is not only associated with SDLLC but also Fitial’s campaign manager?” said Glen Hunter, one of the leading advocates of a transparent and corruption-free CNMI government.

Delegate Gregorio Kilili Sablan (Ind-MP) said yesterday he doesn’t have any comment on Osborne’s involvement in the $190.8-million diesel power purchase deal but reiterates his concern about the PPA which he said is going to cost the CNMI people millions of dollars that they cannot afford.

“He has, on more than one occasion, assured me that he has nothing to do with the power plant deal. Still, Mr. Osborne is of course free to associate himself with Governor Fitial or with the people behind this power deal. That’s Mr. Osborne’s decision and he has to live with the consequences,” Sablan told Saipan Tribune when asked for comment.

Sablan said the power deal “is also a prime example of the corruption and circumvention of the law that the people of the Marianas are fed up with, which is why this is one of the articles of impeachment against Governor Fitial.”


Ayuyu said during the initial meeting with SDLLC’s Kenneth Mahmood, the latter gave an overview of their shipyard facility project, tied with the military buildup in the Marianas.

The senator said the shipyard project could be a $500-million investment and will create some 1,000 new jobs, and this project is closely related to the development of a new power plant in Lower Base. If the shipyard project pushes through, it would encompass the area currently occupied by the existing Commonwealth Utilities Corp. power plants in Lower Base. Moving the existing power plant to a new location in Lower Base and improving it resulted in the PPA, said Ayuyu.

That PPA was signed by SDLLC’s David Mahmood, Fitial and former attorney general Edward Buckingham, a day before the latter took off.

The PPA made no mention of the shipyard project but Ayuyu said the power plant project and shipyard project are intertwined.

The governor has been working on seeking congressional approval to allow the CNMI to be included in the list of areas where U.S. military ships can be repaired.

Similar to the facility in Guam, a shipyard in the CNMI would give ships operating in and around region a ship repair facility with full dry dock and overhaul capabilities in the Western Pacific.

Legislative fix

Sablan said he supports giving the CNMI the same advantages under federal law as other parts of the United States.

“So when I see a law that says U.S. military vessels cannot be repaired in the Northern Marianas, I work to fix that,” he said. “I have introduced legislation to change that law and tried to get the provision into the National Defense Authorization Act. So far, there have been interests that don’t want any competition from the Northern Marianas and that have blocked my efforts. That’s a political reality. But it won’t stop me from trying. I’m not going away. But that also does not mean that one company will have exclusive rights to build a shipyard repair facility.”

Sablan said once the law has been changed, “if a shipyard company wants to take advantage of that change and thinks it makes economic sense to locate in the Northern Marianas, then we will see that kind of economic development.”


Sen. Ralph Torres (R-Saipan), also in the meeting two weeks ago with Kenneth Mahmood, said that the senators didn’t ask a lot of questions to Kenneth Mahmood because it was his brother David Mahmood that signed the PPA, not him.

“We want to hear it from the one who signed the PPA,” Torres said.

Torres and Ayuyu said if it were up to them, they would like the next meeting with SDLLC officials to be in the Legislature so that the public would have a chance to see and listen to the discussions which they hope would include the real cost to the CNMI government and the individual utility customers, and the reason why the contract and PPA were kept secret from the very people affected by the 25-year deal.

Rep. Janet Maratita (Ind-Rota), the main plaintiff in the lawsuit on the PPA, told reporters on Thursday that she will ask the court to issue a penal summons on Kenneth Mahmood and other SDLLC officials while they are on-island “so they can answer to the people.”

“We’re going to file a motion to ask that a summons be served on Mr. Mahmood and any of the parties involved in this PPA that are here on island and then hopefully they can tell us and tell the people what is really the benefit of this PPA. I think again I must emphasize that our people need to know what they are sold for… What are we getting ourselves into… I still maintain that this contract is not in the best interest of our people,” she said.

She also asks that the governor be upfront with the people about the PPA.

“They should all explain to the public and again, if the public agrees to this PPA then hey more power to the public but again something is fishy with this PPA. I still believe that this is not in the best interest of the public since the beginning,” she said.

Maratita earlier said she believes the reason the governor didn’t attend the Micronesian Chief Executives Summit in the Marshall Islands is the visit of SDLLC officials.

Lt. Gov. Eloy S. Inos and press secretary Angel Demapan attended the MCES instead. Inos came back yesterday, in time for Fitial’s trip to the Philippines.

There remains no full economic analysis done on the PPA, some four months since its signing became public.

SDLLC’s David Mahmood said in August that the $190.8-million PPA won’t have an upfront cost to the CNMI government and would be much more cost-effective than operating the existing power plant in Lower Base in the next 25 years, but CUC officials didn’t believe so. He said SDLLC’s plan included not only a 50-megawatt diesel power plant but also a shipyard and construction of a new hotel, among “various projects.”

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