CUC under fire

A joint session of the Legislature will be called in to expedite decision-making on the ongoing inquiry on Commonwealth Utilities Corporation’s $150 million delinquent loan from the Commonwealth Development Authority.

House Committee on Public Utilities, Transportation and Communication chair Rosiky Camacho yesterday disclosed plans to invite members of the Senate to deliberate on the CUC-CDA case.

He explained that this way, the problem will be properly and immediately addressed since it would not require tossing the issue back to the Senate soon after the House acts on it.

However, he assured that the committee is reviewing the details and facts gathered by the Legislature including comments from the Department of Finance, Attorney General’s Office, NMI Retirement Fund among others.

CUC is yet to submit its complete report on the scheduled hearing following request of additional days, allowing them more time to present comprehensive report on the corporation’s liabilities, assets, loans and expenses.

The utility corporation took the brunt after the Legislature discovered it has amassed funds to afford across-the-board salary increase, anniversary increases and travel tabs accorded to CUC board members.

During the initial phase of the inquiry, CDA officials warned that it will carry out measures to takeover the utility agency if it continues to snob demands for payment of its $150-million debt.

CDA Board Chair Juan S. Tenorio underscored CUC’s obligation’s to repay principal and interest of the said loan or face takeover by the government-controlled lending arm.

CDA Legal Counsel Vicente Salas argued that under the Special Representatives Agreement, the government-controlled lending agency has the right to go in and investigate CUC’s financial management.

In fact, Mr. Salas said, CDA has the right to remove officials who cannot properly operate the utilities corporation and relegate the responsibility to CDA’s appointees.

He added this will ensure smoother relationship and guaranteed repayment of CUC’s obligation which has amounted to $51,568,750.

CUC and CDA entered into a loan agreement, stipulating CUC’s obligation to repay the loans plus interest. Such obligation was agreed upon by CUC and bargained for by CDA but HB 12-320 will impair these contractual rights and obligations.

CDA Executive Director Marylou S. Ada said the government’s lending arm has fiduciary responsibilities that cannot be ignored, especially the need to safeguard the assets and preserve its financial vitality.

The finance department and the NMIRF likewise rallied behind CDA’s demands of repayment. Fund Administrator Juan S. Torres said the bill is fiscally irresponsible and economic recession could not be considered a logical reason to tamper with CUC-CDA’s agreement.

Under House Bill 12-320, the indebtedness of the CUC from the CDA will be transferred to the Department of Finance to relieve the utility company of all obligation to pay accrued interest.

The bill also seeks to provide CUC with credit against such indebtedness for all capital expenditures made from its revenues subsequent to the date of such borrowing from the CDA.

Based on the Department of Interior’s report in 1993, CUC was created with zero capital and the concept for loaning the money through CDA was flawed originally.

The report assessed that it is essential to the CNMI that CUC be structured like a private sector utility corporation and that it conducts its affairs in a business-like manner.

House Speaker Benigno R. Fitial asked Mr. Camacho to immediately convene the committee to discuss the matter explicitly. He said, the Legislature should revisit the house bill before the scheduled April 23 meeting.

According to Mr. Camacho the meeting with CDA and CUC will give the Legislature a better picture of the financial status of the utility company and shed light on the alleged violation of fiduciary responsibilities of CUC officials. (EGA)