January 09, 2008

By Bill Jaynes
The Kaselehlie Press

Palikir, Pohnpei - In the December 22, 2007 issue of The Kaselehlie Press we reported on a meeting of the Chuuk Chamber of Commerce with special guest Gillian Doone with particular emphasis on the State debt of $47 million. In that article we also reported on the comments of Helen Aten of Aten and Associates, the DHL Agent for Chuuk and former FSM Vice President Redley Killion.

On January 4, 2008, we met with Assistant Secretary for the Division of Customs and Tax Administration, John F. Uwas in the conference room of CTA to discuss the accuracy of the comments we reported on. Aten said in the Chamber of Commerce meeting that two shipments, one of 16 boxes and another of 14 boxes of computers had arrived in Chuuk for a total of 30 computers.

Uwas showed us paperwork for two shipments, one for 8 computers that arrived in Chuuk on the 28th of October and another for 7 computers that arrived on the 14th of November for a total of 15 computers. Pohnpei Computer Consulting, owned by longtime Pohnpei resident and businessman, Noel Boylan facilitated the supply of the computers for the two separate and externally funded projects. He paid the full Customs Tax owed for the two shipments in Palikir, Pohnpei once the computers arrived in Chuuk. Uwas also showed us the paperwork for those payments.

Aten said that since Boylan paid the Customs Tax in Palikir the 50% share that would normally go to the State of Chuuk went instead to the State of Pohnpei.

Uwas not only said that wasn't true but showed us documentation that on both Customs payments, Chuuk State received credit for their 50% share, a total of over $327 for the two payments that Boylan made that totaled well over $600 for the two shipments. While it is true that despite Boylan's request to write "Chuuk State" on his November 22, 2007 payment of Customs Tax the receiving clerk put the wrong account number on the receipt and Pohnpei did initially receive credit for the payment. On the 26th of November a correcting journal entry was made on the books that credited Chuuk State with $152.55. The October payment of $349.57 was initially handled correctly and Chuuk State received $174.79 from that transaction.

Boylan, according to Uwas handled the transaction properly and legally. There are questions about the way that DHL is handling Customs transactions in Chuuk. Uwas said that in Pohnpei and Yap, the only two States he mentioned, DHL agents pick up freight based on a Master Airway Bill for the entire shipment no matter how many customers are involved. They then make In-house Airway Bills for each customer. The customer takes the In-house Airway Bill to Customs and pays their own Customs Tax individually.

Once the tax has been paid and the paper work has been stamped DHL releases the customer's packages. Uwas said that the CTA office in Chuuk has been trying to get the DHL agent to handle things in the same way but that Aten tells them it can't be done. According to Uwas, currently, Aten and Associates uses the Master Airway Bill to pay Customs on all packages that arrive on a given flight. They then take the packages to their storage area and prepare separate bills for each of the customers that had packages on the flight. They tack on a service charge and the customer pays that amount before they can take their packages away.

On the November 14 shipment of computer, Aten andAssociates added $52.07 service charge and billed Computer Consulting over $341. Boylan received the invoice on the the 16th of November. Rather than pay that invoice he opted to pay the Tax directly in Palikir. The fee was $305.10 instead of $289.28 he had been billed by and Associates.

Uwas said that essentially Aten and is running their business like a Customs broker would do. He said that in his opinion the customer has no choice but to pay the service that the company adds on because they are not offered the opportunity to clear their packages themselves without the company as a go between.

It is unclear whether or not Aten and Associates paid the Customs Tax before Boylan did but according to Uwas description of how the company normally does business they likely did and will need to seek a refund from CTA for the doubly paid tax.

Uwas said that he was disappointed that Helen Aten wrote a strongly worded letter to FSM's President Mori instead of to his department. Uwas said he heard nothing about the situation until President Mori personally asked Secretary of the Department of Finance and Administration, Finley Perman, Uwas' boss, to look into it.

Uwas said that the concerns that Aten referred to in the letter and the comments she made at the Chuuk Chamber of Commerce meeting both regard a problem that exists only because Boylan chose to pay his own Customs Tax which he is perfectly within his legal right to do. The only entity that didn't receive a cut in the transaction was Aten and Associates though they did receive payment for shipment of the items in the first place.

In the Chamber of Commerce meeting reported on in the December 22, 2007 issue of The Kaselehlie Press former FSM Vice President Redley Killion said that another tax related problem was the handling of payroll taxes for National Government employees stationed in Chuuk. Killion said that since the tax was paid in Palikir, Pohnpei gets the credit for the payment instead of Chuuk.

Uwas showed us several tax returns filed for National Government employees stationed in Chuuk. All of them showed that the tax credits went to Chuuk.

Uwas said that they always do.