‘Where’s our $5.62M?’

The Marianas Public Land Trust has sent a second demand letter to the Department of Public Lands to already remit $5,620,461 that is allegedly due to MPLT in fiscal year 2019 and warned of an investigation and a lawsuit if DPL fails to immediately remit the money.

MPLT, through lawyer Robert T. Torres, noted that the Deloitte & Touche financial audit of the CNMI government as to DPL in fiscal years 2018 and 2019 found that $4,451,471 was due to MPLT.

However, he said, the audit also reported the action by DPL to “improperly segregate and allocate funds in the amount of $5.62 million for itself without lawful authority.”

Torres said the funds pertain to $516,696 for homestead projects, $4,103,865 reserved for the ensuing fiscal year 2020 budget, and $1 million holding in reserve funds from DPL’s settlement agreement.

Torres addressed the demand letter to DPL acting secretary Irene Tudela-Torres. The letter dated May 20, 2021 was concurred by MPLT chair Martin B. Ada.

As of press time yesterday, Saipan Tribune was still trying to get comments from DPL.

Torres earlier sent the first demand letter to Marianne Concepcion-Teregeyo before she stepped down as DPL secretary and became head of the newly-created Infrastructure and Recovery Program office that is supposed to streamline the close to a billion dollars’ worth of recovery and infrastructure projects in the CNMI.

In his latest demand letter, Torres said if DPL fails to remit the $5.62 million, MPLT shall seek the assistance of the Office of the Attorney General to compel the remittance as well as request the Office of the Public Auditor to investigate why DPL would continue to violate its fiduciary and constitutional obligations.

Torres said the MPLT trustees do not favor suing for a declaratory judgment against DPL, not is a lawsuit necessary. He said the Commonwealth can be better served by compliance and fidelity to the Constitution for the beneficiaries. “With this mutual interest in mind, MPLT hopes that DPL would reconsider and remit the funds without delay,” he said.

However, after exhausting efforts for a good faith resolution, then the MPLT trustees are prepared to carry out their constitutional rights and duties to compel the remittance of funds for investment for the benefit of persons of Northern Marianas descent, Torres said.

In his previous demand letter to Concepcion-Teregeyo, Torres sought the remittance of at least $4,451,471 to MPLT. In response, Torres said, Concepcion-Teregeyo remitted this amount, which was reported as due to MPLT in the fiscal year 2019 audit. The lawyer said this is laudable but falls short of the remittance of the entire amount due and proper to MPLT as required by Public Law 15-2 and the CNMI Constitution.

Torres said demand is made upon the DPL secretary and DPL to remit the sum of $5.62 million within 30 days or on or before June 12, 2021. He said if DPL fails to remit the amount on or before June 12, MPLT shall undertake all measures to compel DPL’s compliance with constitutional and statutory mandates, including its responsibilities and that of its secretary as a co-trustee/fiduciary of public land lease funds.

The lawyer said DPL has continued the improper and unlawful practice of allocating funds for homestead development, which has been determined as without authority.

He said the Legislature appropriates funds (including those remitted by MPLT from interest income) for Capital Improvement Projects.

Similarly, Torres said DPL has continued its efforts to “reserve for next fiscal year” funds for which it has no authority either by the CNMI Constitution or its enabling act to do.

Torres said that, as a result of a settlement with Mariana Resort & Spa from a public land lease in the amount of $1 million, DPL has continued to withhold these funds unlawfully.

Citing previous CNMI Supreme Court’s two decisions, Torres said MPLT reiterates for DPL the authority that both confines its actions and compels DPL to remit the funds upon demand from MPLT.

Torres said in past demands from MPLT to DPL, DPL has asserted various claims or grounds to justify the withholding of public land lease funds.

He said one such approach was to await the findings or determination of DPL’s annual fiscal year audit before remitting such funds.

As to that claim, Torres said the FY 2019 audit by Deloitte & Touche was completed and presented to DPL on Dec. 10, 2020. Torres said while MPLT disagrees with DPL’s prior assertions on this point, the position is made more untenable now that the fiscal year audit has been completed.

“As such and as found by its independent auditor, due to MPLT now is the additional sum of $5,620,461,” Torres said.

Citing an opinion by the Attorney General, the lawyer said DPL has also been counseled at great length by the AG on its questionable fiscal practice of creating a “reserve fund balance” for itself.

Torres said the AG, in discussing the high court’s decision, concluded that DPL must transfer public land revenues in excess of budgeted levels to MPLT, stating that “DPL has no legal authority to retain the excess revenue.”

More emphatically, the AG informed DPL that failure to turn over the fund balance each fiscal year “is a clear violation of DPL’s fiduciary duty under [the statute] as co-trustee, with MPLT, of public lands and revenues and may subject the DPL secretary, as the expenditure authority, to personal liability.”

He said in his opinion, the AG opined that a supplemental appropriation to DPL is not allowed.

Torres said for MPLT, the fiscal practice was in violation of the CNMI Planning and Budgeting Act in that no agency, including DPL, may create or segregate funds as reserves for the next fiscal year, much less DPL as an agency that is specifically charged with remitting net pubic land lease funds to MPLT.

Torres said the MPLT trustees have made continuous demands upon DPL to heed its fiduciary obligations as a co-trustee and remit the excess funds to MPLT for investment.

“MPLT’s entreaties have been met with resistance and avoidance in various ways through the years,” he said.

DPL, Torres pointed out, only remits when there is disclosure of the reserve funds or those reserve funds are now needed for an exigent need by the central government.

Torres said in the MPLT trustees’ view, such an approach is counter-productive to agencies charged with the generation of public land revenue with DPL, and the investment and creation of revenue for the general fund with MPLT.

Torres said if DPL were to remit the sum demanded as well as the other funds previously demanded such as the questionable withholding of the $1-million settlement fees, MPLT would have been able to generate substantial interest income for the general fund.