CUC board nearly breaks hiring law

Taitano tells Riegel who to hire

The Commonwealth Utilities Corp. board directed utility executives to hire Velma Palacios to the position of deputy director of electric systems—but changed their minds after hearing challenges from management over this person’s qualifications, and the legality of the board’s directive to tell the utility whom to hire.

Instead, the board voted to direct management to hire the “most qualified person” as recommended by their Human Resources.

CUC management has concerns, though, that there is no need for such a position. They also assert there was never a recommendation from human resources communicated to them in person or in writing.

Management says the two candidates considered for the job failed to meet job qualifications.

Saipan Tribune learned of “significant differences” among the four-member panel set up to rate candidates interviewed for this position. However, the exact scores and who did the rating is kept confidential.

It was also not made immediately clear by the board last Friday if this Velma Palacios is also IT&E’s manager of engineering, and the same person who sat on the CUC board over 10 years ago with current board member Joe Torres. That board was dissolved.

The directive to hire Palacios was made by board member Albert A. Taitano. He chairs the personnel subcommittee.

On Friday, Taitano restated a motion from their July 31 personnel committee meeting to “recommend to management and the full board to hire a Velma Palacios to position of deputy director of power.”

“I would like to motion and rescind the word ‘recommend’ to replace it with the word ‘direct’ and I would like to motion to direct management to hire Velma for the position of director of deputy director of power.”

This was later clarified to state to deputy director of “electric systems.” Taitano’s motion was seconded.

Board counsel James Sirok, however, repeatedly suggested that they go into executive, or closed-door session, as they were dealing with a specific individual to hire.

“If there is going to be some discussion about whether or not management feels that she’s qualified for this position, we should probably do that in executive session,” he said.

To this point, Torres asked Sirok point blank if he was “sitting on our side or the management’s side?”

Sirok said neither. He said he was trying to protect the interest of Velma Palacios.

Board members chose to continue discussion in open meeting, citing that the matter was already discussed in their committee meetings.

Management objects
During the ensuing discussion, acting CUC executive director John Riegel and other management officials objected to the need for the position, and whether this person meets minimum qualification levels.
At one point, the management’s “challenges” to the board prompted Torres to say there was “discriminatory” practice in CUC against hiring locals.
Riegel assured the board that his recommendation has nothing to do with that.
“I’d like to move on [and vote],” Torres said at one point. “We haven’t seen any of our products here. We have a lot of our local products that would be able to help in this corporation.”
Riegel told board members he looked at the need for the position at all and its history and based on that, CUC did not need that position under the current structure they have.
The electrical systems position was created in the late 2000s to repair Power Plant 1.
He also said the decision who to hire lies with him and that’s where the selection should rest.
Riegel said that from his conversations with power managers, it didn’t seem like the “need was there.”
“We are creating like another level [of management], in a time we are trying to save our money,” Riegel told the board.
Torres and Taitano, though, said managers need more support, giving the example of an “apprenticeship program” that has not moved since the board voted for one.
Chief financial officer Matthew Yaquinto, who has lived in six countries and worked in 10, said utilities their size usually do not have the position for electrical systems.
He said for a small utility, there would be a power manager for generation and a power manager for transmission and distribution.
“…So I don’t think there is a need for that position here and I am with John there. I agree with John also that we have policies in place for hiring, and if there is a directive given to John just to hire” then they are violating some of their HR policies.
According to Riegel, the Human Resources file he was given said “no recommendation.”
“It was, ‘action needs to be taken on this,” he said.
“We had two [ratings] that are strongly in favor, and two that are strongly opposed. My recommendation is to reconvene that [selecting] body,” Riegel said.
Yaqunito explained that under the rating sheets, the two candidates had to meet a “certain level,” noting that it was Human Resources who determined this level.
“And neither candidate was above that level,” Yaquinto told the board.
Breaking mandates?
Before speaking again, Sirok said he wanted to be absolutely clear that he was not taking side.
“My concern is not directed to the individual that is going to be put in the position, but a precedent that we may be setting—and that’s the board directing management to hire a certain named individual.
“This particular position is a director position. The law—our enabling statute, not the bylaws—says that the executive director may hire assistant directors to be in charge of one or more divisions in the corporation.”
He said for the executive director’s authority, the relevant statute states that the executive director can hire such employees as the board may delegate the power to do so.
He said he understood that to say that the board can tell the director to hire a deputy in charge of power.
“But you don’t say hire a Mr. A, Mr. B, Ms. C, Ms. D or E—because then you are involved in the hiring process, which is supposed to be a management position.”
“That’s just the note I want to make, that’s just how I interpret this particular provision in the law,” Sirok said.
Taitano amended his motion to remove Velma Palacios and insert the “most qualified person” as recommended by their Human Resources.

Dennis B. Chan | Reporter
Dennis Chan covers education, environment, utilities, and air and seaport issues in the CNMI. He graduated with a degree in English Literature from the University of Guam. Contact him at

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