Amidst differences in opinion about the public hospital's operations, Commonwealth Healthcare Corp. board members agreed, at least, on one major issue when they unanimously concurred with the employment contract of CEO Juan N. Babauta.
Corporation board chair Joaquin Torres and vice chair Pete Dela Cruz confirmed with Saipan Tribune that all board members affirmed the validity and legality of Babauta's contract during an executive session yesterday.
Babauta's contract became the subject of controversy when it was learned that the contract took effect without discussion and endorsement by the board. The issue became more interesting when the administration's press secretary claimed that the governor did not execute a contract for the CEO.
Babauta's two-page contract provides him a $96,000 annual salary as CEO of the organization. It was signed last July 9 by Gov. Benigno R. Fitial, Babauta, and then attorney general Edward T. Buckingham. Copies of the contract were provided to board members during the executive meeting.
Torres said that Babauta's contract is a “standard contract” given to a government employee and has no allowances, discretionary funds, or special benefits such as travel perks. The CEO is also given a standard number of hours in annual leaves like other government employees. The contract is not retroactive.
Torres and Dela Cruz expressed relief yesterday because the issue about the legality of Babauta's contract is now closed. Those who voted to concur with the contract were Torres, Dela Cruz, Anthony Aguon, and Anthony Raho. Babauta recused himself. Member Roy Rios was excused during the continuation of the special board meeting Wednesday noon. Also present in the voting was legal counsel Allen Hazlip, who reportedly recommended the board action.
Babauta, prior to becoming CEO, was receiving an annual retirement pension of $96,000. It was learned that this was used as the basis to determine his compensation for the job.
Torres and Dela Cruz confirmed that Babauta, since assuming the CEO position in October last year up until June, was not paid a salary because he chose to continue receiving his pension.
Around February this year, the Retirement Fund stopped his pension checks in relation to the double-dipping law. Babauta, according to board members, did not receive his pension four months prior to the execution of his contract in July this year.
Sources told Saipan Tribune that Babauta appealed the Fund's decision when it stopped his pension. Babauta reportedly lost in the administrative hearing. The Fund, as of press time, has yet to provide any information about Babauta's transaction with the agency after its management asked for an extension on the Open Government Act request filed by Saipan Tribune.
For Torres and Dela Cruz, the $96,000 salary for Babauta is “fair and reasonable” considering the tasks and responsibilities of the position. In comparing the CEO's salary to other heads and directors of autonomous agencies and departments, they said the amount is still “within range.”
It was in October 2011 when the corporation formally took over the management of the then Department of Public Health, pursuant to Public Law 16-51. During the corporation's first board meeting, members endorsed Babauta's appointment as CEO of the organization and recommended a $120,000 annual compensation. This contract did not take effect following Babauta's decision not to give up his retirement pension.