Credit relief bill sparks OPA probe

Public Auditor Michael Sablan said yesterday that his office would investigate possible ethical violations that might have been committed by lawmakers in passing the credit relief bill and the impact that the measure could cause on the government’s financial performance if passed into law.

Sablan said the OPA has already discussed possible conflicts of interest when the lawmakers participated in passing Senate Bill 14-48—a bill that seeks to provide credit relief and condonation of interests of certain delinquent borrowers from the Commonwealth Development Authority.

The bill is now before the desk of acting Gov. Diego T. Benavente, who said he would take action on the measure within two days.

“This is a matter that deserves priority attention,” the public auditor said, disclosing that he would meet with OPA’s investigators, staff and legal counsel regarding the issue.

“[Conflict of interest is] one of the concerns [that is] going to be addressed in the investigation,” he said. “[The OPA is] also concerned about the potential impact [the measure]…might have on the financial performance of the government.”

The latter concern would be consulted with the U.S. Department of the Interior’s Office of Insular Affairs, Sablan said.

The CDA disclosed Wednesday that all nine senators and 15 out of 18 members of the House of Representatives have close relatives facing foreclosure proceedings due to delinquent loans. At least five lawmakers have acquired loans from the CDA, most of which are in default.

At the lower house, only one lawmaker, Rep. Arnold Palacios, abstained from voting on S.B. 14-48. House Reps. Janet Maratita and Ray Yumul were absent when the rest of the House members unanimously voted in favor of the bill. According to the CDA, Palacios and Maratita have defaulted on their respective loans with the agency.

Seven senators voted in favor of the bill, with only Joseph M. Mendiola abstaining from the voting. Thomas Villagomez was absent. The CDA said Mendiola has defaulted on his loan. It added that Paul A. Manglona and Diego M. Songao and some relatives also have loans with the CDA, with most of them in default.

The CDA said most lawmakers have suspicious motives in passing the bill, which would benefit their own relatives if it becomes law.

‘No conflict of interest’

Senate President Joaquin Adriano, the bill’s proponent, said there was no conflict of interest on the lawmakers’ part when they supported the passage of the credit relief bill.

“There is no conflict of interest here. Conflict of interest has to fall directly on you [lawmaker],” Adriano said. “When I sponsored [introduced] that bill, I didn’t know that my brother has a loan and in default.”

“Even is they refer that to heaven, the Legislature has the sole authority to provide legislation,” Adriano said, reacting to the CDA’s statement that it has referred the matter to the OPA, as well as to the Department of the Interior and the U.S. Inspector General.

Adriano said he had thought of crafting the credit relief bill some three years ago “to show the people how I can help.”

He said that, if the CDA could help big businesses through the issuance of qualifying certificates that provide for tax rebates and abatements, the agency should also help delinquent borrowers in meeting their obligations.

The Senate president said the CDA is not a banking institution, but an agency that should provide public assistance.

OPA probe on CDA sought

House leadership spokesman Charles Reyes Jr. said the lower chamber would welcome any inquiries that the OPA might have on the passage of the bill and related circumstances.

He said, however, that the House would also ask the OPA to investigate the CDA’s loan policy and its handling of its loan portfolio.

House Speaker Benigno Fitial blamed previous board members of the CDA for the agency’s high loan delinquency rate, saying that they were remiss in their fiduciary responsibility.

“You don’t find this [delinquency] rate in any part of the world,” Fitial said. The Speaker said that, had the previous CDA board members managed the loan portfolio properly, the credit relief bill would not be needed.

He lauded the present board of the CDA in running after delinquent loans. He added, however, that the economic conditions warrant that delinquent borrowers get credit relief, noting the recent passage of the tax amnesty bill into law, which provides delinquent taxpayers 120 days to settle unpaid taxes free from penalties and interests.

Fitial said he didn’t know of any relative that has loans with the CDA.

Rep. Oscar Babauta—the acting chairman of the House Committee on Commerce and Tourism, which recommended the adoption of the credit relief bill—also echoed this statement.

“The overall intention of that bill is to work out an amortization process for its clients,” Babauta said.

He recognized the CDA’s prerogative in referring the matter to the OPA, DOI and the Inspector General but said that he personally has no loans with CDA.

“None of my brothers and sisters have made any loan [from the] CDA,” he added.

The CDA said it referred the matter to the OPA and federal agencies due to ethical concerns and the possible damage it might cause the CNMI’s financial integrity. It foresees the eventual collapse of the agency if the bill is approved.

“CDA acts as the depository of all federal CIP money; once CDA is gone, the flow of federal funds into the CNMI will dramatically be impacted, if not ceased,” the CDA said.