Senate to hold own inquiry on CUC debt

The Senate will hold separate independent inquiry on the Commonwealth Utilities Corporation’s outstanding loan from the Commonwealth Development Authority to shed light on the issue of breach of fiduciary responsibilities.

Senate Vice President Thomas P. Villagomez said regardless of the invitation extended by House Committee on Public Utilities, Transportation and Communication Chair Rosiky Camacho to attend the CUC-CDA inquiry today, the Senate will still conduct its own investigation to determine the culpability of the utility corporation.

However, Mr. Villagomez said the Senate PUTC will attend the inquiry today. Last week, CUC officials submitted its reports on revenue, losses, and other loan agreements entered with CDA to disprove CDA’s position to take control of the utility corporation.

CUC legal counsel Brien Sers Nicholas earlier assessed that the utility company has no financial obligation to the financing institution, noting that a management takeover in operations is unlikely to happen.

He said all loan agreements entered into by the two agencies have no legal effect and are not binding.

Mr. Sers Nicholas said CDA has no legal authority to claim ownership of the bond proceeds and subsequently loan portions of the same to CUC. These bonds were considered as public funds and subject to appropriations by law, the counsel added.

Citing statutes under the Special Representatives Agreement, Mr. Sers Nicholas said the funds floated by CDA were nothing but annual direct grant assistance to the Northern Marianas without any liability to pay back the United States.

The government-controlled lending agency served only as a conduit to float the $140 million bond, a public debt, repayments of which were fully secured by the CNMI with the Capital Development Funds from the Special Representative Agreement, the submitted report reads.

The counsel further stressed that House Bill 12-320 should be re-drafted to reflect the foregoing and once and for all resolve the problem by canceling the debt obligations from CUC to CDA.

However, the government-controlled lending firm maintained that there is a big possibility that CDA can still collect the $150 million loan from CUC as legal actions against the power corporation are being looked into.

In fact, Mr. Salas has already established a strong court case against the power corporation regardless of its claims that the existing loan agreement is not binding.

CDA Executive Director MaryLou S. Ada said there is a loophole in the Special Representatives Agreement which CDA can use in order to collect from CUC. She added that the court battle will force CUC to pay its outstanding loan amounting to $150 million.

CDA is awaiting for the second part of the oversight committee meeting to be slated next week before it initiates formal moves to file the case in court.

The PUTC committee is scheduled to convene today to discuss the issue. Mr. Camacho said that with the documents submitted by CUC, the committee can easily decide on whether or not to retire the agency’s obligations as proposed under the house bill. (EGA)