Probe begins on MPLT spending

Acting Gov. Timothy P. Villagomez called on the Attorney General’s Office on Wednesday to investigate the alleged wasteful spending by Marianas Public Land Trust.

The administration’s request came on the heels of an audit report detailing the trustees’ abuses with regard to board compensation, travel and the executive director’s professional services contract for fiscal years 2002 through 2004.

The Office of the Public Auditor stated, “OPA believes that the matters discussed in this report should be investigated by the [AGO] for possible violations of CNMI laws, breach of trustee’s fiduciary responsibility, and recovery of Trust funds if it is determined that CNMI laws were violated or fiduciary responsibilities were breached.”

In a Nov. 29, 2006 memorandum, the acting governor asked Attorney General Matthew T. Gregory to advise him of the AGO’s recommendations by Jan. 15, 2007.

The OPA report, signed by Public Auditor Michael S. Sablan, covered MPLT’s expenditures from Oct. 1, 2001 through Sept. 30, 2004.

During this three-year period, MPLT expenditures for board compensation totaled $297,920 and travel amounted to over $500,000.

In October 2002, the trustees increased their fees to $300 for meetings four hours or longer and $150 for those lasting less than four hours. This increase was made retroactive from Oct. 30, 2002 to Nov. 13, 2001, Sablan reported.

He also noted that the number of board meetings held during the three years reviewed appeared to increase significantly subsequent to the increase in meeting fees. From FY2002 through FY2004, MPLT trustees met a total of 255 times. This is 219 times more than the 36 scheduled meetings required by MPLT bylaws.

In addition, trustees received generous financial benefits in the form of compensation for “extraordinary work” they performed for the Trust, and travel compensation for time spent outside of the CNMI. Examples of extraordinary work were meetings with officials such as the governor or a member of the Legislature.

OPA maintained that MPLT’s travel expenses, which totaled $509,572 over a three-year period, were excessive, given the size of the agency. MPLT consists of only five trustees, an executive director, an administrative assistant, and a board secretary. The majority of the travel expenses were incurred by the trustees and not the staff.

The huge travel expenses resulted from MPLT’s policy, which allowed trustees to fly business or first class for trips that lasted five days, take two rest days upon arriving at their destination on top of flying first class so they could recuperate while earning travel per diem, and arrange to meet with money managers after attending a conference but taking rest days in between the meeting date and the conference.

“OPA believes that not all travel expenses incurred during the review period were reasonable or necessary for the administration of MPLT. For example, meetings with money managers could be done telephonically or money managers could meet the trustees on Saipan. Any one of these alternatives would have saved money and allowed more money to be available for transfer to the CNMI General Fund,” Sablan said.

OPA also questioned MPLT’s decision to hire the services of a certified public accountant through an executive service agreement to oversee the administrative actions of MPLT. The contract, as amended on April 29, 2004, indicates that the executive director was to be paid at a rate of $90 per hour with a five-percent increase in the hourly rate each year on the contract’s anniversary date.

The executive director, Bruce Macmillan, has been functioning in this capacity since the inception of MPLT.

From FYs2002 to 2004 alone, MPLT paid him a total of $416,141.

Furthermore, the five trustees used MPLT credit cards to purchase clothes, athletic footwear, tickets to a baseball game, specialty knives, and media products. MPLT credit cards were also used at adult entertainment establishments.

Trustees reportedly made it a practice to use MPLT-issued credit cards for personal charges. Payments on these personal accounts would be offset from a trustee’s meeting fees earned. As such, these personal accounts became a form of “interest free loans” for those trustees. Such activity also runs contrary to MPLT’s adopted credit card policy, OPA noted.