Opposition to $15-million line of credit


Editor’s Note: The following is the text of a letter the Matua Council for Chamorro Advancement sent last July 10, 2019, to the 21st CNMI Legislature, the Marianas Public Land Trust, and Gov. Ralph DLG Torres. The letter was signed by Liana M.S. Hofschneider, president/founding member.

This letter is submitted on behalf of Matua Council for Chamorro Advancement to express our opposition to the intention of House Bill 21-044 titled, “To pledge as security the interest income distributions from the Marianas Public Land Trust pursuant to Article XI, Section 6(d) of the Northern Mariana Islands Constitution and to authorize the Marianas Public Land Trust to withhold and to retain Net Annual Distributable Interest Income starting Fiscal Year 2020 and beyond as necessary, to create a credit facility to address bond obligations and retirement settlement fund payments.”

The goal of this legislation intends to instantly create a $15-million-and-more credit facility at Marianas Public Land Trust to ensure that there are adequate funds at the disposal of the CNMI Department of Finance for the purpose of paying “bond obligations and retirement fund settlement payments.”

It further stated that the “amount at issue are not intended to be used for operations, whatsoever.” But both bond obligations and retirement fund payments are in fact “operation expenses” of the CNMI government; and both are government obligations. This is purely semantics between what is government obligation payments and what is government operation expenses. They are, in fact, one and the same at this juncture.

Additionally, the Legislature, in collaboration with the administration and the Marianas Public Land Trust, are working in tandem to ensure that this legislation accomplishes two goals: First, to pledge all future MPLT “interest income” that would be distributed to the CNMI General Fund pursuant to Article XI, Section 6 of the Constitution as security of the $15 million “line of credit” to the Department of Finance. And to create a “credit facility” at MPLT for the CNMI government for bond obligation payments and retirement fund settlement payments.

Second, this legislation intends to ensure to provide protection clause to the MPLT trustees of their fiduciary prudence, strict scrutiny and due diligence to make careful and prudent investment and protection of the trust proceeds from the lease of public lands and interests earned from its investments. And to indemnify MPLT trustees from any lawsuits arising from their decision to extend to the CNMI government this $15 million “line of credit” and “credit facility” to assure the government’s obligation to the NMI Settlement Fund and bond obligation payments, and for “whatsoever,” which are not only operational expenses but are also government debt.

Both of these intentions dictated in this legislation purports to infringe and/or violate the CNMI Constitution Article XI, Section 6 on MPLT; and “public debt limitation” by the CNMI government for operation purposes under Article X, Section 4, “Public indebtedness may not be authorized for operating expenses of the Commonwealth government or its political subdivision.”

It is important to note that some of the MPLT trustees and some members of the Legislature, including their immediate parents and siblings are, in fact, retirees. This causes a potential conflict of interest on their part—MPLT trustees and legislators—in participating to deliberate and to approve this act where their due diligence and voting privileges are in conflict as retirees, immediate families of retirees and legislators; and are also beneficiaries of the NMI Retirement Fund Settlement Fund.

It is unconscionable how the members of this Legislature, administration and the MPLT trustees would acquiesce to an intentional violation of the CNMI Constitution where this legislation purports to provide for a language that would entitle MPLT “to withhold interest income as necessary for fiscal year 2020 and beyond toward debt service of principal and interest in the event that the Commonwealth Department of Finance does not fully repay the loan.”

Further, H.B. 21-044 would authorize MPLT to withhold all interest income distribution exclusive for the “debt service of principle and interest from the Commonwealth Department of Finance each fiscal year until the debt to MPLT is fully retired and satisfied.” The legislation states that this shall be a “line of credit for bridge capital and other needs.”

Furthermore, this enabling act also provide vague language as to the details of the MPLT’s “credit facility” for the CNMI government. Nevertheless, the “Legislature expresses its intent that the interest, security, and repayment terms of the credit facility will be worked out in the agreement between MPLT and the Department of Finance through an arm’s length negotiation that takes into consideration their respective abilities relative to the credit facility, their respective fiduciary duties, and their respective long-term goals.”

The language in this act that includes “through an arm’s length negotiation” is ambiguous and abusive public policy making language.

“In simplest terms, the Legislature hereby agrees and consents that MPLT shall withhold from its annual remittance to the central government an amount equal to any unpaid principal and interest that the Department of Finance might be delinquent at the end of any fiscal year (e.g. Sept. 30 of any year) during the term of the agreement.”

So, in a nutshell, through this act, the Legislature, the administration and the MPLT trustees intend to ensure that any and all land lease payments transferred from DPL to MPLT; and all interest earned by MPLT from its investments, which are also trust monies belonging to the beneficiaries, shall be earmarked exclusively for the repayments of the CNMI obligations for its bond payments and for its retirement settlement fund payments, and other operating expenses as the CNMI government deems fit to expend the beneficiaries trust funds.

Additionally, this act continues to provide the Legislature, the administration and the MPLT trustees to transfer beneficiaries funds received by MPLT to the CNMI government for the benefit of all citizens and not for the exclusive benefit of the intended beneficiaries, which are, according to the CNMI Constitution, persons of “Northern Marianas descent.”

In fact, this issue of NMI descent is a questionable classification that directly infringes upon the Taotao Tano, the Chamorros who are, in fact, the native inhabitants of the Mariana Islands for over 4,000 years that has not been resolved by the CNMI government.

Lastly, we have to be reminded that the CNMI casino law was passed and implemented to satisfy the federally mandated case of the retirement fiasco of past financial mismanagement by elected and appointed officials, taking note that some of these officials are also retirees themselves and some are currently serving the CNMI government in different capacity.

The 40,000 square meters of land that included public lands were leased out to the casino investors to construct their casino, which is a sacred ancient Chamorro burial ground where close to 1,000 of our Chamorro ancestors were buried more than 1,000 years ago. All to ensure that the government’s obligation to the close to 3,000 retirees were satisfied.

The results of these fiscal mismanagement decisions created and continues to create anxiety among retires and their beneficiaries of whether or not they will continue to have pension checks to receive as promised.

More importantly, the implementation of the CNMI casino law also causes a major moral and ethical irresponsibility by the CNMI government, the foreign investors from China (Imperial Pacific International), Scientific Consultants Services, Inc., and others who participated in the approval to make a sacred ancient Chamorro village and burial ground the site of the Best Sunshine Grand Mariana Casino and Imperial Pacific Resort where over 400 (plus 200-plus) ancient Chamorro remains were disinterred from their grave site; and continue to be displaced since 2015.

This ancient village and burial ground of Anaguan was established dated A.D. 1100 or 990 years ago. The destruction and desecration of our cultural and historical heritage as Taotao Tano at this site is lost forever. Our children and the future generations of Chamorro children will never have the opportunity to walk on this pristine landscape or to pay tribute and homage to their ancestors’ heritage.

It is our intention that when opposing a position of the government, that we also provide for an alternative solution. That said, we propose that the CNMI Legislature provide for a legislation to authorize the Commonwealth Development Authority and the Pacific Islands Development Bank to provide for a credit facility and/or a loan guaranty for the payments of the bond obligation and the retirement fund settlement fund payments, or any other government operation expenses a deemed necessary today and in the future.

CDA is a government financial institution that has provided numerous loans to the CNMI government (e.g. CUC); and the Pacific Islands Development Bank or PIDB where the CNMI is a current member and shareholder of the bank. Shareholders and members also include the governments of the Republic of Marshall Islands, Republic of Palau, Island of Guahan, and the Federated States of Micronesia (Chuuk, Kosrae, Pohnpei, and Yap).

There are millions of dollars that have been invested into PIDB where some of the members of the Legislature, past and present, including retirees, and those in the administration have benefitted through PIDB’s loan programs. There are several alternative ways to solve the CNMI’s current financial debacle. The government must focus to find other ways to meet its financial needs as they are elected and appointed to do so.

Most importantly, the DPL and MPLT trust funds are not intended to pay for government operating expenses as the Legislature sees fit or wishes because there are potential constitutional violation of the applicable laws governing the trust fund public policy rationale; and as also stated in this proposed legislation.

To this end, in the last 40 years or since the establishment of the CNMI constitutional government, there has not been any resolution to address and protect the Chamorros, i Taotao Tano, who are the true and rightful owners of these lands for 40 centuries or over 3,500 years.

Again, the Matua Council opposes the passage of H.B. 20-044 in its entirety because it intends to further displace and mismanage fund proceeds intended for the benefit of both DPL and MPLT’s intended beneficiaries.

To contact the council: P.O. Box 505906, Saipan, MP 96950. Email: chamorrocouncil@gmail.com.

Contributing Author

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