Some Thoughts on the Economic Report

November 14, 2008


McPhee and Associates and Richard Conway, the Washington state economists hand-picked by Richard Pierce, the governor's special assistant for trade relations, and the Fitial Administration to conduct an economic study for the CNMI government, have a long history with the CNMI.  

In January 1999, 5 consultants and partners were contracted to create a forecast model for the CNMI.  Among those named to conduct the study was the David J. Burger and James S. Coleman.  The Saipan Tribune reported:
The accounting firm of David Burger and Coleman, who have made previous studies for the Hotel Association of Northern Mariana Islands as well as the garments industry, is tasked to develop tax incentives for new and existing industries.
...Coming from Seattle, Washington, Dr. Dick Conway will lend his expertise on projection and simulation models. He developed the forecasting model for Hawaii years back and is reportedly being used up to these days.

Peters said project manager Malcolm McPhee will gather inputs from various areas of specialization into a comprehensive study to be presented at the CNMI Economic Summit in March.
In June 2002,  Malcolm McPhee and Associates offered their services to the Babauta Administration to locate federal grants for the CNMI.

A June 2007 Saipan Tribune article reveals that Richard Pierce, speaking as  the governor's special assistant for trade relations and economic affairs, lauded the selection of some CNMI-friendly economists for the report which was finally released last month:
Richard Pierce, the governor's special assistant for trade relations, said that Burger & Comer has assembled a technical resource team including an economist from Guam, and two of the primary economists involved in the 1999 CNMI economic study, Dick Conway and Malcolm McPhee.

“We are fortunate to have received a project proposal from someone as versed in this type of work, and as experienced in regional economics as they are,” Pierce said.

“Particularly in Dick Conway and Associates, many CNMI government officials, the Northern Marianas College, the [OIA], and many business entities and organizations will be impressed with the fact that the CNMI has affiliated itself again for this work with these professionals,” he added.

The economic analysis and report will provide projections of CNMI economic conditions based on current economic data and material on business activity, labor statistics, income by industry, population, personal and per capita income, and government revenue expenditures.

Once updated statistical data are accumulated, from both public and private sectors, forecasts will be determined in the tourism and apparel industries, other economic growth and diversification and federal expenditures.

The recently enacted minimum wage increases, possible changes to the CNMI's immigration authority, and trade and currency developments will also be considered in making the forecasts, which the CNMI will use in addressing its federal legislative efforts.
An article in yesterday's Saipan Tribune quoted Pierce making a point to emphasize the objectivity of the report.  He claimed it wasn't prepared to bolster the controversial lawsuit against the federal government. Yet, Pierce, himself, said that the report would be used by the CNMI in addressing its federal legislative efforts. 

Who are the economists associated with the report? David J. Burger is the chairman of the CNMI Board of Accountancy and an active member of the Saipan Chamber of Commerce where he serves on the Economic Development Committee and Government Relations Committee. The same Chamber of Commerce that sent its former president, Jim Arenovski to Washington, DC with Willie Tan's Lynn Knight to lobby against federalization

A November 2007, Saipan Tribune article suggests that Burger was not objective, and was indeed hired to defeat federalization:
Besides the election, Chamber members will hear the results of the 2007 Economic Study Survey conducted by Burger and Comer under contract to the Governor's Office. That survey was intended to supplement the Fitial administration's opposition to the proposed federal takeover of the CNMI's immigration system.
In May 2008, Governor Fitial announced that he was appointing Burger to the Public Utilities Commission. Burger declined the appointment. Still, this act demonstrates the bond between the administration and Burger.  David Burger also was featured in a pro-status quo, anti-federalization documentary that Richard Pierce produced and distributed in the mainland in 1999 on behalf of the Saipan Garment Manufacturing Association. 

Burger received funding and contracts not just from the CNMI government, but also from the garment industry. In 2003 Burger and Comer were commissioned to complete a report on the garment industry.

In September 2006 Governor Fitial private sector think tank met for the first time. Who were the members? From the Saipan Tribune:
The think tank members are Cepeda [Saipan Chamber of Commerce president Charles V. Cepeda]; David Burger, certified public accountant; Robert Jones, importer; Pete Dela Cruz, Rota business representative; and Kyung Soo Lee, representative of the Korean business community on Saipan.

The group also includes Choi Ki Dong from the Korean Garment Association; Pete Igitol from Hafa Adai Beach Hotel; Michael Kwan from the Tinian Dynasty Hotel and Casino; James Lin from the Saipan Garment Manufacturers Association; Marian Aldan-Pierce from DFS Galleria; Jerry Tan from Tan Holdings Corp.; and Norman Tenorio from Joeten Enterprises.
These are Fitial's private sector supporters, most with deep pockets representing the garment and hotel industries, and other wealthy businesses. This is the group of people who dictate the policies and support the local labor system. Are these some of the members of the "private sector" who Fitial claimed initially funded the federal lawsuit?  The private sector members that Fitial refuses to disclose?  It is preposterous to believe that Burger, the loyal Fitial ally, was objective in selecting McPhee and Conway to write (or co-write or or ghost-write) the report.  I am sure that the first qualification was to get a team that would back up the anti-federalization agenda and support the case for the lawsuit.

Apparently the federalization fighters had hoped that this report would be completed before the GAO report. A 2007  Saipan Tribune article states:
He [Pierce] also said the CNMI economic impact analysis is expected to take 90 days to complete. This will come in ahead of minimum wage impact study, which the U.S. Department of Labor-Bureau of Statistics is required by law to submit to the U.S. Congress in January 2008. The U.S. Government and Accountability Office has also been requested by the U.S. Senate Energy and Resources Committee to conduce a study measuring the impact of any changes to CNMI wage and immigration policy.
A June 2007 Saipan Tribune article reveals that:
Burger & Comer was hired by the local government to conduct a similar economic study on the Commonwealth. The U.S. Interior Department funded the study. A preliminary report is due in early November.
The governor was not happy when the GAO findings were released.  He made this statement that suggests he wanted to control the economic findings with a "more detailed and professional assessment" of his own:
“We urged GAO to subject its analysis to a meaningful peer review by professional economists before publishing it. They refused to subject their assessment to independent economists not employed by the agency, which is the essence of peer review. We do not believe that such a serious assessment of economic injury with respect to any city, county, or State in the United States would have been published by GAO or any federal agency without this kind of peer review.

“The Commonwealth has currently engaged a team of economists to conduct a more detailed and professional assessment of the economic impact of recent federal legislation on the CNMI economy.
The governor's statement suggest that if a report such as the GAO Report, doesn't reflect what the governor wants, then he can always pay another team to write a report to mirror his position.  

In a letter to Governor Fitial and Secretary of Interior Dirk Kempthorne, the economic duo of McPhee and Conway said that the contract was "first executed on August 8, 2007, and then revised on May 1, 2008 with a scope of work reflecting recent legislative developments and a six-month extension until October 31, 2008."  It appears that their contract was extended to get the governor's anti-PL 110-229 statements in the report.

The report's recommendations read like a Fitial Administration Christmas wish list:

1. Repeal the Statute Extending the U.S. Immigration Laws to the CNMI
2. Provide Emergency Financial Assistance to Respond to the Economic Crisis in the CNMI
3. Data Requirements (get a system to document populations, employment, wages and salaries, etc.)
4. Amend the Statute Extending US Minimum Wage to the CNMI
5. Positive effective representation in the U.S. Executive Branch
6. Create a Stronger Partnership Between the Private and Public Sectors
7. Seek Federal Assistance to Small Investors
8. Consider Amending the Covenant

Funding for the economic study came from taxpayer's dollars via the Department of Interior's Insular Affairs Office that originally  approved $75,000 for the study then threw in an additional $50,000 in 2008.

W. L. Doromal ©2008

1 comments:

Anonymous said...

Gee Wendy, this list below is a whose who list of teh notorious chamber.

Crooks to the last man.

"Burger received funding and contracts not just from the CNMI government, but also from the garment industry. In 2003 Burger and Comer were commissioned to complete a report on the garment industry.

In September 2006 Governor Fitial private sector think tank met for the first time. Who were the members? From the Saipan Tribune:
The think tank members are Cepeda [Saipan Chamber of Commerce president Charles V. Cepeda]; David Burger, certified public accountant; Robert Jones, importer; Pete Dela Cruz, Rota business representative; and Kyung Soo Lee, representative of the Korean business community on Saipan.

The group also includes Choi Ki Dong from the Korean Garment Association; Pete Igitol from Hafa Adai Beach Hotel; Michael Kwan from the Tinian Dynasty Hotel and Casino; James Lin from the Saipan Garment Manufacturers Association; Marian Aldan-Pierce from DFS Galleria; Jerry Tan from Tan Holdings Corp.; and Norman Tenorio from Joeten Enterprises.
These are Fitial's private sector supporters, most with deep pockets representing the garment and hotel industries, and other wealthy businesses. This is the group of people who dictate the policies and support the local labor system." W. Doromal