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‘Write-off bill sets bad precedent’
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Posted on Apr 01 2006
Commonwealth Development Authority board chair Tom Glenn A. Quitugua has criticized the House of Representatives for passing the bill canceling the Commonwealth Utilities Corp.’ $45.5 million debt with CDA “without consultation”, setting “a bad example” among other government borrowers.
Quitugua said the House hastily passed the measure, House Bill 15-64, without giving courtesy to CDA, the creditor.
“We were not invited. CDA should have been there when they tackled the issue,” said Quitugua.
The bill was passed on a vote of 14-4, with only House minority bloc members Ramon Tebuteb, Benjamin Seman, Manuel Tenorio, and Joseph Deleon Guerrero, opposing it.
“Decency dictates that you have to pay your loans. That bill sets a bad precedent—that it’s okay to incur huge debts with government agencies since it would be written off anyway,” he said.
Further, Quitugua said that, by passing the measure, the House essentially quashed a previous legislative action on the CUC-CDA debt settlement.
Over a couple of years ago, the Legislature passed two bills addressing the matter. These bills, which became laws, resulted in the signing of a memorandum of agreement between the two agencies.
The MOA, among others, instructs CDA to waive a portion of the debt, and allows CUC to issue shares of preferred stock valued at $45 million to CDA.
Quitugua said the new bill gets rid of the equity conversion altogether as provided in the MOA.
“Basically, the House is canceling everything with no conditions. No payback terms. This is irresponsible,” said Quitugua.
The loan money was used by CUC for infrastructure development such as engine purchase and repairs.
The new bill argues that since the funding was spent for development projects that benefit the entire community, CUC should no longer be required to pay it off.
Based on an earlier computation, the CUC’s unpaid loan with CDA had reached over $100 million, including interests.
