‘MPLA made duplicate requests for payment’

An official of the Marianas Public Lands Authority other than its expenditure authority, then commissioner Henry S. Hofschneider, had asked for the release of land compensation money totaling some $158,000.

A 12-page special report issued by the Office of the Public Auditor showed that MPLA asked and received two payments for requisition No. 2 in spring 2004. OPA said the first request was dated April 26, 2004 while the second request for the same payment, which was now signed by Hofschneider, was dated May 17, 2004.

On May 5, Bank of Guam, as a fund trustee, transferred the entire requested amount of over $158,000 to the MPLA compensation account “as per letter dated April 26, 2004.”

“It appears that this transfer occurred prior to receiving authorization to process payment from the Commonwealth Development Authority as its request to process payment for this requisition was transmitted on May 17, 2004,” said OPA.

Based on this request, BoG then transferred “a duplicate payment of $158,790.51” to MPLA account on May 19, 2004.

OPA said the duplicate payment was not returned by MPLA to BoG “until July 30, 2004 or 72 days after the funds were deposited.”

Under bond regulations, the money should have not stayed idle at the MPLA’s account.

The OPA report did not of who made the prior “unauthorized” April 26 payment request.

Hofschneider, who was unilaterally suspended on July 9 and subsequently terminated on Oct. 8 by MPLA board chair Ana Demapan-Castro over Requisition No. 3, among others, hinted that the prior payment request may have been made by MPLA comptroller David Demapan, a brother of the chairwoman.

The OPA, which had interviewed Hofschneider for its report, said that he had “suggested that the chairwoman focus her review on the comptroller’s handling of the funds in the MPLA account from previous drawdowns ‘because funds could not just remain in MPLA’s account for more than 10 days.’”

The report was issued in December 2004 but was not made public until Tuesday this week. Demapan-Castro declined to comment on the report, saying she has yet to read it in its entirety.

The board chair initially suspended Hofschneider after her brother, David, informed her that the commissioner had allowed CDA to reduce the payment amount for Requisition No. 3.

Hofschneider provoked the ire of the board chair when he agreed to reduce the amount for Requisition No. 3 from $216,322 to $134,695.91 without the board’s approval.

CDA executive director Mary Lou Ada offered to reduce amount due to the fact that MPLA still had an $81,626 fund balance in its account out of Requisition No. 2. Hofschneider had concurred with Ada’s proposal.

Meantime, the OPA, which said that Hofschneider’s termination appeared to have violated the terms of his employment contract, said the changes in procedures on fund disbursement “is not attributable solely to Mr. Hofschneider.”

In the termination letter, Demapan had faulted Hofschneider for the change in procedure. “This change in procedure is a direct result of your unauthorized alteration of Requisition FY04-03,” she said.

OPA said the changes in rules were made because the CNMI’s bond counsel in California discovered that MPLA, CDA, and BoG “were not following the terms of the Indenture Agreement” all along.

The new rules essentially prohibit MPLA from receiving and keeping the funds; it also requires that direct payments be made to the land claimants by the trustee, BoG.

As to Hofschneider’s termination, OPA said Demapan-Castro may have violated the CNMI Open Government Act for not doing it in a public hearing.

OPA cited that the same MPLA board also violated the Act in terminating Hofschneider’s predecessor, Bertha Deleon Guerrero, in a non-public meeting.