Tang says without appropriation it’s like money laundering
U.S. District Court for the NMI designated Judge Frances Tydingco-Gatewood on Friday stated that the court will not allow inciting words from Gov. Ralph DLG. Torres pertaining to payments of 25 percent pension benefits to retirees.
At an emergency hearing, Tydingco-Gatewood read a news article quoting Torres in a statement when he urged “all retirees and settlement fund members to contact Ms. Joyce Tang and ask her to stop playing games with your pensions.”
Tydingco-Gatewood said it appears that Torres was trying to incite the Settlement Fund beneficiaries.
“It’s not acceptable. It’s not appropriate. It’s not right. It’s not fair,” the judge said during a telephonic hearing.
Tang is a Guam-based lawyer that the court appointed as trustee for the Settlement Fund.
The emergency hearing was held after Tang requested to address the issue of the Settlement Fund’s continuing assistance and accommodation to the CNMI government in disbursing the 25 percent payments.
Acting governor Victor Hocog appeared in court with assistant attorney general Teresita Sablan.
Tydingco-Gatewood ordered Hocog to meet with Settlement Fund Trustee Tang and the counsel for Betty Johnson to come up with a solution to the 25 percent issue.
The judge ordered the parties to appear at a status conference on Feb. 19 at 8:30am.
Tydingco-Gatewood noted that the late governor Eloy S. Inos had been very cooperative with the court and to the parties in Betty Johnson’s class action.
Tydingco-Gatewood said Inos worked very diligently when they crafted the Settlement Fund agreement.
Tydingco-Gatewood said the court cannot accept this lack of cooperation from Torres.
Hocog told the judge that he will uphold the settlement agreement to meet the 75 percent as agreed upon in Johnson’s class action.
Hocog said he will further discuss the matter with the Legislature.
“You can assure my words,” Hocog said.
Tydingco-Gatewood asked Hocog to continue cooperating and communicating with Settlement Fund Trustee Tang and Johnson’s counsel.
Tang said the government appropriated funds to pay the 25 percent pension payments from the casino license payments under Public Law 18-56 (Casino Law).
Tang disclosed that this source has been exhausted as there is no money available for the casino license fees paid by Best Sunshine International, Ltd. with which to pay the 25 percent pension payments for Fiscal Year 2016.
For FY 2016, Tang said, the government has to pass a law to appropriate $1,529,874.66 for Tinian, $1,081,038.12 for Rota, and $12,677,050.11 for Saipan to cover FY 2016 25 percent pension payments.
Tang said the Settlement Fund processes the 25 percent payments as an accommodation to the government.
The Settlement Fund calculates the 25 percent pension payments each pension period and releases the funds after confirming the money is funded, and that funding was properly appropriated under NMI law.
“The Settlement Fund is an extension of the District Court, and must uphold all laws,” Tang said, adding that the Settlement Fund cannot disburse money that was not properly appropriated.
Tang cited that during Inos’ tenure, they communicated regularly to work on these issues.
Unfortunately, she said, all her letters and calls to Torres on Jan 29, 2016, and Feb. 10, 2016, went unanswered.
Tang said instead the government demanded that the Settlement Fund release funds that were not appropriated for the 25 percent pension payments.
On Friday, Tang returned the 25 percent payment for Feb. 12, 2016 to the NMI Treasury.
Tang said a dispute has arisen because the government disagrees with the position of the Settlement Fund, and continues to demand that the Settlement Fund process funds that were not appropriated.
Tang has refused to process funds that were not properly appropriated for the 25 percent payment without a court order or clear authorization under NMI law.
Since March 15, 2015, the Settlement Fund has required the Department of Finance to certify the amounts remitted to the Fund to pay for the 25 percent pension amount are properly appropriated funds under the Casino Law, and the use of which in covering the 25 percent pension payments is in accordance with all applicable CNMI appropriation laws.
Tang said Finance Secretary Larissa Larson also certified that the funds from the Oct. 15, 2014, pension through the Feb. 28, 2015, pension complied with CNMI appropriation laws.
In her Jan. 29, 2016 letter to Torres, Tang expressed her deep concern that the government has not been making regular payments toward the reduction of the minimum annual payments for the first and second quarter of FY 2016.
Tang said the government is required to pay $10.5 million for the second quarter, and to date, the government has only paid $1 million.
She said the government’s payments have been unpredictable and irregular.
Tang said in the month of January 2016, the government paid more for the 25 percent pension payments ($1.26 million) than it did toward the reduction of its minimum annual payment obligations to the Settlement Fund.
Tang said the government gives the 25 percent payments higher priority than its obligations under the Settlement Agreement.
Tang said if the government continues its pattern of not making significant payments until the deadline, March 31, 2016, the Settlement Fund could be required to liquidate up to $10 million of its investments from the corpus to cover the shortfall through the end of the second quarter.
Tang said the cost to the retirees will include not only the loss of investment income from the liquidated investments and the liquidation fees incurred by the Settlement Fund, but a significantly reduced investment corpus which will directly translate into reduced investment income.
“This is a waste of the Settlement Fund’s diminishing resources and will hasten the depletion date of the Settlement Fund’s investments,” she said.
Tang said there is no order or legal obligation on the part of the government to pay the 25 percent, and the priority given to the 25 percent payments is a matter of grave concern, especially when the government is clearly unable to pay the minimum annual payment on a regular basis.
Tang said in the event of a default, the Settlement Fund will has no alternative but to execute on the $779 million consent judgment.
“This will be disastrous for the retirees and the entire Commonwealth,” Tang told Torres in the letter.
The $30 million casino fees paid by Best Sunshine were the source of 25 percent payments in FY 2014 and 2015.
That source of funding was exhausted in December 2014.
The $15 million license fee paid by Best Sunshine for Year 2 to cover FY 2016 25 percent payments was exhausted for Saipan in June 2015, and Rota after the Aug. 15, 2015, pension pay period, according to Tang.
Tang asked Torres that they must improve communication and coordination between the government and the Settlement Fund on the matter of payments of the minimum annual payment.
In her Feb. 10, 2016, letter to Torres, Tang said she contacted his office twice regarding scheduling a meeting with him, but that he has not received a response for a meeting, or for the government to identify a source of income with which to pay the 25 percent pension payments that complies with NMI Appropriation laws.
Tang said the Settlement Fund received $632,052.71 that day, Feb. 10, 2016, from the government to pay the 25 percent pension payment due Feb. 12, 2016.
Tang said the Settlement Fund cannot continue to accommodate the government in distributing the 25 percent pension payments unless the government identifies a source income that can be used for this purpose or obtains a court order.
In that Feb. 10 letter, Tang said the Settlement Fund will hold all monies transferred by the government to the Settlement Fund for the 25 percent pension payments until a funding source complying with NMI law is identified, or the government obtains a court order requiring the Settlement Fund to disburse these funds.
In a letter hand delivered to Finance Secretary Larissa Larson on Friday, Tang said she is returning the $632,052.71 which was transferred to the Settlement Fund for the Feb. 12, 2016, 25 percent pension payment because it comes from an unauthorized source.
At the hearing, Tang stated that since June 19, 2015, she had communication with Inos about the exhaustion of casino funds for the 25 percent pension payments.
Tang said Inos was very cooperative and that she was hoping that such cooperation would continue with the Torres administration.
Assistant attorney general Sablan said the government has other source of funding for the 25 percent, and these are the hotel rooms and beverage taxes.
Sablan also pointed out that the governor has reprogramming authority for public purposes.
Sablan said the payment for 25 percent is clearly for public purpose.
Tang disagreed. She said the hotel rooms and beverage taxes cannot be used for this purpose and that they addressed this very issue in their previous letter.
In her letter to Torres on Jan. 29, 2016, Tang informed the governor that they do not believe that the 25 percent pension payments come within the definition of “public purposes” under the statute, therefore Public Law 19-08 (CNMI Appropriation law) would not allow Torres to reprogram Executive Branch funds to pay the 25 percent pension.
Attorney Margery Bronster, counsel for Johnson, agreed with Tang by discussing the reasons why the 25 percent pension payments do not fall under the definition of “public purposes.”
Bronster said her concern is that she does not know if the government has appropriately appropriated the additional payment for 25 percent.
She said they have not heard that the Legislature actually appropriated funds for the payment of 25 percent.
Bronster also emphasized that the payment for 25 percent is not really the trustee’s job.
Bronster said their concern is if the 75 percent payment of the settlement agreement is met.
The lawyer said if the government or the legislature appropriate additional funds that would be fabulous.
Bronster said without clear idea about the source of funds for the 25 percent, the trustee should not go forward without appropriation.
Hocog said the government will cooperate to meet the payments under the settlement agreement.
Hocog said he extends his apology to Tang to her comments that Torres is not responding to her request for a meeting.
Hocog said he will communicate with Torres to work with Tang to reach an understanding.
“I am willing to sit down with Tang to work out the concerns,” the acting governor said.
Tydingco-Gatewood said she expects the Torres administration to work closely and expeditiously with Tang to ensure the retirees get their benefits.
Hocog assured that it will be a priority in every budget year to satisfy the 75 percent payment,
The judge said she will take Hocog’s words that the communication with Tang will continue.
“You can take my words,” Hocog replied.
Tang said they struggled with this issue of accommodation and that it has to stop.
“It’s like laundering money!” Tang said. “There is no different. We cannot continue as we are.”
Sablan stressed that the government has so far met its obligations to date as the government has managed to pay the 75 percent.
Tydingco-Gatewood said the government should make sure that in paying the 25 percent it does not compromise the 75 percent.
Bronster said the failure to pay the 25 percent is not the failure of Tang as she is simply accommodating the request.
Bronster said it’s not Tang’s responsibility to pay the 25 percent.
Hocog said they can make a “workable solution” in one week.
Hocog asked the court to consider proceeding with the payment of 25 percent for the meantime, while the government is making a critical decision.
But Tang said they have not received authorization from the legislature for the funds.
The judge said she cannot rule on the issue without making proper diligence or having received briefings on the matter.