Islas de los Ladrones

April 21, 2012

When the Spanish christened the Marianas Islands the Islas de los Ladrones, which translates to Islands of the Thieves, I wonder if they knew that the name would stick like a curse or perhaps a prophecy of sorts.  The title may be even more appropriate centuries from the time it was given.

It certainly is an appropriate name today considering the millions of dollars that the government has allowed unscrupulous crook-employers to steal from foreign workers with absolute impunity. The practice of wage theft is accepted by officials, the agencies that have a duty to prevent it, the franchised class of the general public, and the thieving employers. It is condoned by employers in both the private and public sectors. Theft from the foreign workers has occurred in the CNMI government agencies such as the Commonwealth Health Corp. ( CHC ) and the Commonwealth Utilities Commission (CUC). Stealing has been practiced by private sector employers for decades. The crook-employers are found across all segments of the CNMI society. The thieves have included food stamp recipients who were allowed to hire foreign maids. The thieves include government workers and high ranking officials who stole from workers hired for their private businesses. The thieves are the average small business owner (local or foreign) looking to put a little extra in their pockets at the expense of disenfranchised workers. They steal blatantly, openly, and except in extremely rare cases, with absolute impunity. Thieves all.

Then there is the money stolen by corrupt elected officials who have pillaged the public coffers by taking lavish junkets (most often unessential); enjoyed the rewards of pricey expense accounts and unwarranted salaries; and reaped in excessive fringe benefits - the cars, housing, drivers and body guards, free electricity and other perks that they enjoy.

There is thievery in the hugely expensive contracts are routinely given to political allies, "yes men" and relatives. They are paid big bucks to manipulate data to create politically favorable reports; to defend the local government in frivolous lawsuits; to analyze failures and make plans that will never be put into motion; and a variety of other nonsensical deals.

Theft is also routinely practiced in the CNMI through the blatant misuse of federal grants and funds. Billions of federal tax payers' dollars have flowed into the CNMI for decades, but one would ever guess that by looking at the state of the place.

Elections are based on unscrupulous deals including the campaign events planned on government time in government offices and the exchange of a vote for a government job (often a job that the person doesn't qualify for). 

Aside from the CHC, the most recent headlining prime example of Islas de los Ladrones thievery is the NMI Retirement Fund. For decades the CNMI Government failed to pay the employer contributions to the Fund. The total amount stolen from the Fund members is over $317 million. The plundering of the Fund was carried out or approved by governors, legislators and government appointees that ran the mismanaged Fund into the ground.

The Fund was founded in 1980 by elected leaders who wanted to set up their own retirement system separate from the Social Security system. Could it be because their own system would a set up for easy access and thievery; the Social Security system would not?

The state of the Retirement Fund was inevitable.  There have been lawsuits filed and years of minimal and sporadic outrage from the retirees, future retirees and their family members. Economist William Stewart warned of the meltdown of the retirement Fund in 2001. (Read what he wrote 10 years later.) In 2009 Associate Judge Kenneth Govendo ruled that the CNMI Government must pay back the Fund, but the judgement was ignored and the obligation increased over $85 million.

In 2009 it was reported that the Fund's unfunded liability was $574.5 million "bringing the agency's funded level to less than 40 percent, which is way below the 70 percent threshold that allows any private pension fund to file for bankruptcy." In February 2011 the unfunded liability was $619.7 million and in April 2011 it reached $911 million.

The Retirement Fund saw losses, not only because of the government failure to pay its share of contributions (government theft), but because of generous and imprudent bonuses for retirees, large commissions for advisors, and allowing the Fund to be used as a government bank. The Fund provided loans for the construction of the $13.8 million Susupe judicial complex, and was even tapped for $2 million to fund pharmacy supplies for the CHC.

The Judicial Building Financing Act of 1994 allowed a loan of $13.8 from the Fund to build the judiciary complex. In 2010 it was reported that the reserve account for payments had been emptied, a violation of the loan agreement that required a 3 month reserve account.  In April 2011 it was reported that the Judiciary was 3 months behind in making its monthly payments of $118,000 to the Fund. I do not know how much behind it is now, but imagine it may be more.

The Fund was also tapped for a $2 million loan to Commonwealth Employee Government Credit Union in 2005. There is a $1.6 million balance on the loan and like the Judiciary loan is is suspected that it may go into default.

The Public School System (PSS) rented two floors of the Fund building for a monthly fee of  $20,000 for rent and about $10,000 for utilities. In April 2011 PSS was 6 month behind on rent and utility payments.

Like everything CNMI,  the secretive formation of a Pension Holdings Corp. that preceded the announcement of the April 17th bankruptcy filing suggests an underhanded scheme. The secret back door deals that have outraged Fund members.  At a Fund Board Meeting, retiree Donna Cruz questioned the formation of the Pension Holdings Corp. and noted it was not on the agenda of the previous board meeting.

While the retirees, present and future, will most likely be forced to sacrifice by accepting reduced benefits, it appears that Fund staff and attorneys will continue to collect their generous salaries. The Fund's attorneys are Brad Huesman from the Law Office of Braddock J. Huesman LLC;  legal counsel Viola Alepuyo, wife of Fitial pal Joseph Camacho;  and fund counsel Carolyn Kern. The Fund also hired Boston bankruptcy attorney Jeremy B. Coffey from the firm Brown Rudnichk as their bankruptcy counsel. He is reportedly Huesman's college friend. He has practiced bankruptcy and corporate restructuring law in Massachusetts and Texas. Attorney Stephen Pohl from Brown Rudnichk is also representing the Fund.

The Marianas Variety reported:
The Fund has been in negotiations with Brown Rudnichk from Boston, with the Fund able to bring down their fee from $1,000 an hour to $475.
It is interesting that an institution in such financial crisis and declaring bankruptcy can afford all of these attorneys. It has been reported that Alepuyo raked in millions of dollars as the Fund's legal counsel.

Retirement funds belong to the members and a Fund should not be used a government piggy bank. The members' trust and future security have been violated primary by the CNMI Government, but angry members also seem to have lost their trust in the Fund's Trustees.

The CNMI Government is a thief and the bankruptcy judge should make it pay all, or most of the $317 million in stolen contributions before allowing the Fund to file Chapter 11 bankruptcy to be pushed through. A hearing was held April 20, 2012 in Bankruptcy Court with Hawaiian Judge Robert J. Faris presiding. (read minutes) The next hearing will be June 1, 2012. That should give members a chance to organize and hire their own attorney.

Perhaps worse than the theft of money is the routine theft of dignity, justice and quality of life. This is witnessed in existing and proposed laws, regulations and decisions of elected officials. as well as in and the failure to prosecute criminals. The legal, longterm foreign workers, the elderly, the sick, the poor and the young are the ones most adversely impacted. There is a culture of thievery in the CNMI that needs to be broken before things will change for the better. 

3 comments:

Anonymous said...

This may be the last straw to wake up the sleeping apathetic populous. Until we stand up and take control nothing will ever change. The CNMI is the Ladrones and it's also:

Citizens
Never
Moving for
Improvement

Anonymous said...

Take a look around the Marianas. How many Chamorros do you see? Very few left. They are Spaniards now. One third Spaniard, one third Chamorro and one third Filipino. Don't forget that the Spaniards also brought rampant disease with them which killed off thousands of Chamorros. They also brought the barbaric Catholic church which tortured islanders. Before you start passing judgement Wendy Doromal please do some research. Yeah they were called thieves and what's your point? The Spanish were called murderers by many.

Wendy Doromal said...

5:25 I am unsure of your point. Is it because natives were abused centuries ago in what is now the CNMI, the present day population living in the CNMI should be allowed to continually abuse and steal? I don't condone ill-treatment of anyone. The theft in the CNMI is blatant and unchecked. It needs to stop now.