previous post.) Predictably, the news of the deal leaked out while the key players were off-island and could not answer questions. Sickeningly predictable.
No legitimate government official signs a $190 million contract with a company that has been in existence for only 5 days. No ethical government official signs a 25 year contract binding the government to $636,000 plus a month when the total annual budget is a mere $114 million. No law abiding official negotiates with people who have criminal records. But then again, no legitimate governor appoints felons to his cabinet, releases a federal prisoner from jail for a late night massage, defends his criminal driver-body guard who deals drugs from the governor's car or sends on-duty police officers to the airport to obstruct justice. Sickeningly predictable.
The Office of the Public Auditor has its work cut out for it. While still dealing with criminal charges against former AG Buckingham, the OPA is now called to investigate this latest scandal. Is there a federal connection that can be investigated in this case? Can these players finally be put behind bars so they can do no more harm to the people of the CNMI?
The Office of the Attorney General, which has lost credibility over the years, cannot be trusted to investigate this deal. The governor's appointment of Viola Alepuyo to be acting Attorney General has only added fuel to the fire. Alepeyo replaces former AG Buckingham who was charged this month with 7 criminal violations, including illegal activity related to Alepeyo's husband's 2010 election campaign. The OAG failed to make an appearance at the Senate hearing held on Friday to investigate the $190 million CUC deal.
Acting CUC executive director Alan Fletcher told CNMI lawmakers that he was present when the contract was signed by the governor and attorney general on August 3rd. Prior to approving the agreement Fletcher stated that CUC had been asked to provide basic economic and technical data. The Saipan Tribune reported:
When asked whether he knows the local representatives of Saipan Development LLC, Fletcher said he didn't know, but said weeks prior to July, he only met Don [Donald] Kurz of Keystone Shipping, and a certain “Kenneth.”
Saipan Development LLC's registered agent is Keystone Shipping, which is based also out of Delaware and Pennsylvania. Keystone Shipping's chief executive officer is Donald Kurz.This certain "Kenneth" is said to be Kenneth Mahmood, a partial owner of Allegiance Capitol Corp. Mahmood appears to be a sketchy guy who has criminal records in both Texas and Washington state. Another article details a questionable transaction with a casino company that involved a floating casino that offered prostitutes. Then there is this Anchorage Daily News article about "con man" Kenneth Mahmood. This is from the Seattle Times:
A "charming" man police once considered the region's top con artist is now a member of a different elite: the Seafair Commodores.
Kenneth Mahmood, sentenced to 10 years in prison for theft and fraud in a phony oil deal in 1983, surprised law-enforcement officials recently when he was interviewed on a local radio station as a representative of Seafair.
"He's the best con man I ever worked on, and I worked on a bunch of them," said King County Police Maj. Larry Mayes.Apparently Fitial was "charmed" by Mahmood. In 2009 Mahmood proposed a dry dock and facilities repair company to the Commonwealth Ports Authority. He claimed that it would bring in $100 million in revenue a year. A 25-year lease was being drafted between Allegiance and the CPA according to an April 2009 Saipan Tribune article.
This 25 year CUC contract may be connected to this 25 year land lease by Allegiance. Another April 2009 Saipan Tribune article states that Allegiance is interested in "paying for a new power plant" as part of the project. From the article:
The whole seaplane ramp area in Lower Base is currently the site of a submarine station, a restaurant, and the holding area for Tinian boats, as well as the Commonwealth Utilities Corp.'s Power Plant 1, the main power plant on Saipan.
“I told them I'd only move CUC if they paid for a new power plant. Guess what? They're looking into it,” Fitial said at a news briefing last week.
A 25-year lease agreement is being drafted between the Allegiance Capital Corp. and the CNMI government, according to a source close to the project.
Once the lease is signed, processing of the local and federal permits is expected within two years. The project is expected to infuse $100 million in revenue into the local economy, Fitial said.The CNMI Government has the duty to check out the background of individuals or companies proposing multi-million dollar deals. What has happened here?
Allegiance Capitol's Chair is Mahmood's brother, David. This video describes him:
Wasn't that Donald Kurz the CEO of Keystone Shipping singing his praises in the beginning of the video at 0.17 saying, "I don't think you can have a better friend"? He was referring to David Mahmood, Kenneth Mahmood's brother who represented Allegiance to the CNMI Government.
Keystone Shipping is the registered agent of Saipan Development LCC that was registered in New Jersey on March 22, 2012, five days before the agreement was written. Donald Kurz's name appears on the option to lease agreement with the department of public land.
|Donald Kurz CEO Keystone Shipping|
|Kurz on video 0.17|
Kenneth Mahmood is not listed as a "team member" on the Allegiance website. However, on Kenneth Mahmood's Commodore, Inc. website which advertises ships for sale, Saipan is featured.
There is something terribly wrong with the deal between Allegiance-Keystone (Saipan Development, LLC) deal. Too many of the deal makers are ethically challenged, including Fitial, Buckingham, and Mahmood.
The Senate passed Senate Resolution 17-94 formally objecting to the contract between Saipan Development, LLC and CUC. House minority leader Rep. Joseph DeLeon Guerrero described the contract as "reeking of corruption" and described Saipan Development LLC as a "middleman".
It appears that Governor Fitial declared the "state of emergency" at CUC in order to use his executive power to push this contract through behind the backs of the CNMI Legislature and the people of the CNMI.
People are asking why is the governor signing an agreement that locks the CNMI into deisel fuel use for 25 years when the current discussions are revolved around alternative, cleaner energy. In fact federal money was given to the CNMI to explore geothermal energy.
Breaking Negotiations with a Respected Geothermal Energy Company
Also sickeningly predictable is the way that the governor and CUC promised a contract to KUTh Energy and then stopped negotiations, apparently without even informing the company. It has yet to be determined if KUTh Energy can or will sue the CNMI or if federal monies were misused once again.
“I'm trying to bring in as many renewable [energy companies] as we can because the only way to reduce diesel [reliance] is replace it with renewable,” he said.
Fitial said he expects to have solar and biomass energy producers in the CNMI within the year, while geothermal energy-which he is strongly pushing for-will take 18 to 19 months.
Interior Assistant Secretary for Insular Affairs Tony Babauta and acting governor Eloy S. Inos signed yesterday two documents: the first one giving the islands $1.26 million to explore the potential of geothermal energy. . .
“This grant will allow us to do a more detailed assessment and possibly some initial exploration to go ahead and prove that [geothermal] resource is available and hopefully we can calculate in what quantities so we can invite interested private firms and come in do production,” said Inos.
|Governor Fitial meets with Senator Lisa Murkowski in March 2011|
“She's helping me with that $100 million interest-free loan from Department of Energy. Like I said, drilling must be done first.The contract is contingent on the result of the drilling,” Fitial said.
Lt. Gov. Eloy S. Inos, now heading the CNMI's renewable energy matters, said the contract for geothermal drilling could be awarded in January or February. He said there were a few bidders that responded to the RFP. The CNMI got a $1.2 million grant from Interior for geothermal investigation.
He said after contract award, it could take several more months for the CNMI to have a good idea whether there's really a viable geothermal energy source.
The Commonwealth Utilities Corp., which issued a request for proposal for companies to conduct geothermal investigation, believes that Saipan’s proximity to the active Mariana volcanic arc, extensional faulting, and the occurrence of shallow water wells with anomalous temperature suggest that sufficient geothermal resources may exist beneath Saipan to support generation of electricity using binary plant technology.The Fitial-Murkowski relationship was also advertised in the publication, Geothermal Energy Weekly, December 23, 2011. (She may want to check out the governor's background, secret deals and corrupt acts before further publicizing their bond. Yikes!)
A January 2012 a KUTh press release announced:
KUTh Energy (ASX: KEN) has been awarded an exclusive concession by the Commonwealth Utilities Corporation of Saipan to develop geothermal power and sell electricity to the transmission grid.
The company has also received a US$1.1 million grant from the Commonwealth of the Northern Marianas Government to support the drilling of a 600 metre deep geothermal gradient well. KUTh will initially confirm the geothermal gradient and heat flow below Saipan by drilling one or two diamond core holes to about 600 metres deep.Another flashier press release outlines details of the deal and highlights photos of CNMI leaders with KUTh personnel.
|From the KUTh announcement packet|
The announcement states:
Current base load diesel generation 30 MW and Peak load 45 MW. Compelling economics to replace diesel with geothermal base load power.
The success of Saipan tender builds on the company strategy to become a significant player in the development of geothermal energy to displace high cost diesel generation in remote grid locations.The announcement contains a timeline that outlines the commitment of the company dates of meetings and milestones with CNMI and CUC officials. It concludes: "KUTh has subsequently been advised in writing that it is the successful tenderer and that the CUC will proceed to contract preparation."
In February 2012 KUTh released this statement:
KUTh Energy Ltd, an Australian geothermal energy company, has announced that Saipan, a United States territory of the Northern Marianas, has issued the company a Notice of Intent to Award a contract for the development of geothermal electricity for the Saipan grid.
The contract involves:
The fact that a contract was forthcoming with KUTh makes the secret deal with the shady company Saipan Development, LLC all the more suspect. It also makes the players all the more unethical and deceitful. Why string along KUTh, if other deals were in the making? Why pretend to support economic and ecological friendly alternative energy sources like geothermal energy if a deal for expensive and ecologically damaging diesel fuel is in the making? Were there kickbacks or other promises in this deal? Where is the entire contract? Who owns Saipan Development LLC?
- A concession issued to KUTh to develop geothermal power and sell electricity to the transmission grid with agreed milestones and timelines
- A grant to KUTh from the Commonwealth of the Northern Marianas (CNMI) Government for the amount of $ US 1,100,000 to support the drilling of a 600 metre deep geothermal gradient well
- Additional grant funding available from CNMI for the amount of $ US 500,000 to support follow-on assessment work if warranted and approved, following the determination of the gradient well.
As was pointed out, the agreement with Saipan Development LLC may have violated the CNMI Constitution:
"Section 3: Public Debt Authorization. Public debt may not be authorized or incurred without the affirmative vote of two-thirds of the members in each house of the legislature.
Source: Original provision, unaltered (ratified 1977, effective 1978).
Section 4: Public Debt Limitation. Public indebtedness other than bonds or other obligations of the government payable solely from the revenues derived from a public improvement or undertaking may not be authorized in excess of ten percent of the aggregate assessed valuation of the real property within the Commonwealth. Public indebtedness may not be authorized for operating expenses of the Commonwealth government or its political subdivisions.
Source: Original provision, unaltered (ratified 1977, effective 1978)."Hopefully, this latest scandal will not overshadow the fact that the former CNMI Attorney General has an outstanding arrest warrant and is hiding somewhere in California.