CHUUK'S DIRECTOR OF FINANCE & ADMINISTRATION SAYS "NO"

June 25, 2008

By BILL JAYNES
The Kaselehlie Press

Weno, Chuuk -- Despite FSM President Mori's publicly stated request that parties in Chuuk drop any pending lawsuits that might complicate matters regarding Chuuk State's financial reforms; two lawsuits filed by attorney Sabino Asor on behalf of his client Gillian Doone were, at press time, still pending at the Chuuk State Supreme Court.

Gillian Doone is the Chuuk State Director of Administrative Services (DAS). Director Doone speaks English extremely well but it seems that the word he has used most often since taking office is only two letters long, "no".

The first lawsuit he filed was a result of saying "no" to the Chuuk State Legislature and to his boss, the Governor of Chuuk State, Wesley Simina. He later filed a motion to intervene in a case filed by Fuminori Shirai against Governor Simina and the Chuuk State government regarding a final payment for land currently being used as the Chuuk State International Airport.

Doone has steadfastly refused to release allowance payments for the Chuuk State Legislature members. The Civil Action that he filed at the Chuuk State Supreme Court (38- 2008) says that the reason he withheld those payments was that the bill (9-07-02) passed by the Legislature and signed into law by Governor Simina was contrary to the Chuuk State Constitution. The law appropriated $1.4 million in personnel funding to the Chuuk State Legislature.

Members of the Chuuk Legislature disagree with Doone's position and continue to demand disbursement of their allowance. The lawsuit includes as an appendix a copy of a joint letter dated April 28 signed by Isiro Choram, the Vice-President, and Alanso Cholymay the Floor Leader of the House of the Senate of the 9th Chuuk State Legislature. The letter, as Governor Simina pointed out in his letter to Doone dated two days later was "in a much stronger tone" than the ones the Legislature had previously sent on the same topic-"something" Simina said, "I can no longer ignore at this time."

The letter was indeed strong. It said, among other things that "your Director has chosen not to comply with the budget law, as he wrongly believes that the budget act is only a planning document and that it is up to him as to which portions of the enacted budget he would make payments on. This cannot go on. This must not be repeated. We will no longer tolerate any clear violations of our laws and constitution."

Both Simina's letter and the letter from the House of the Senate said essentially that their act was constitutional. Citing the State Constitution the letter continued, "Inherent in that granted power, and as presented elsewhere in other laws, the Governor may remove anyone most especially those members of his cabinets who serve at his pleasure." Simina gave Doone five days to make at least a $1000 payment to each member of both Houses of the Legislature within five working days from his April 30 letter. That payment still has not been made.

According to Director Doone, he told the Governor that he would make the payments but then would resign from his position as DAS. Not long after, he decided to 'stick to his guns' and instead filed a lawsuit and continued in his position as the DAS. The lawsuit lists four causes for the action the first of which is a violation of Chuuk State Constitution's limit on members' salary and allowances. The filing says that the aggregate sum of a legislative member's salary and allowance is not to exceed three fourths of the Governor's salary. It says that that a member's expense allowance shall not exceed one fifth of his or her annual salary.

The Chuuk State Constitution requires an affirmative majority by voter referendum before salaries for the Governor, Lt. Governor, and members of the Legislature can be increased. Even then the increase could not exceed $2000 for each member.

The first cause of action says that there has never been any voter's referendum on the issue since the Budget Law for Fiscal Year 1991. The action says that the Budget Law for 2008 was not approved by a majority of voters as required and therefore the law violates the Constitution's limits on Salary and Expense and is "null and void to that extent."

The second cause of action for the lawsuit was for violation of Oaths of Office(s). The lawsuit says that the Legislature and the Governor knew that the appropriation under 9-07-02 "had exceeded the amount of salary and expense allowance permitted by the Constitution through interpretation by the Chuuk State Supreme Court, and they knew that no such appropriations consequent to the Chuuk State Supreme Court decision in 1995 (Sauder vs Chuuk State Legislature) has ever been approved by the voters, and yet they demanded disbursement of the appropriation."

The third cause of action was for violation of the Chuuk State Financial Management Act. According to the filing by Doone's lawyer, "the Chuuk State Code prohibits any officer or employee of the State from ordering anyone to obligate funds of the General Fund unless at the same time there are funds…available for obligations." The law "also prohibits any officer or employee of the State from making or authorizing any expenditure of funds, or in excess of the amount appropriated."

The lawsuit said that the Legislature and the Governor "knew or should have known" that the funds they appropriated were beyond those allowed by the Constitution and that the act of instructing to disburse those funds was a violation of the Chuuk Financial Management Act.

The fourth cause of action says "based on information and belief and subject to proof at trial, the defendants, including some of their predecessors to Office; may have been receiving official salaries and allowances in amount incorrectly calculated…that are violative of the Chuuk State Constitution's limits on official Legislative salaries and allowances and the Constitution's proscribed procedures for salary increases for elective officials of the State."

As to relief the lawsuit requests:

1) Declaratory Judgment declaring that all appropriations for salary and allowances for Chuuk State Legislature beyond the limits established under the 1995 Sauder vs Chuuk State Legislature that did not receive approval by a voter's referendum are in violation of the Constitution.

2) That the amount of allowances received above the amount determined by the Chuuk State Supreme Court in the Sauder vs Chuuk Legislature be paid back to the Chuuk State Treasury based on payment schedules established with the Chuuk State Director of Administrative Service.

3) That permanent injunctions against the member of the Chuuk State Legislature and the Chuuk State Governor be issued that would prevent them from interfering with the DAS' execution of his duty to protect the State Treasury against "their appropriating and demanding disbursements of salaries and allowances beyond the limit set forth by the Chuuk State Constitution."

4) …any other relief that the Court deems just and proper.

Another "no"…

Fuminori Shirai, et al., filed Chuuk State Civil Action Number 27-2007 in order to collect approximately $2.75 million that they said was owed to them under an agreement with the Chuuk State Government for a "Deed of Conveyance" for the land that is being used as the Chuuk State International Airport.

According to a court document, a motion to allow intervention was filed by Doone's attorney. They argued that because Doone as the Director of Finance and Administration has a duty to protect the state treasury under the State's Financial Management Act he therefore has a right to intervene in the case.

Doone's attorney points to two factors that would allow him to intervene. The first is an "apparent collusion" between Fuminori Shirai, et al., the plaintiffs, and the defendant, Chuuk State Government, in their execution of the Deed of Conveyance. The second is "the established record of the Chuuk State Government's Office of the Attorney General in neglecting to defend the State' (sic) interests in lawsuits involving land and monetary claims against the state." Attorney Asor in his filing quoted the findings of several previous cases over many years in which the Attorney General for Chuuk State was found by the Court to have defended Chuuk State's interests less diligently than they should have.

The intervention that Doone asked for on case number 27-2007 says that the plaintiffs represent themselves to be the owners of four parcels of land that Chuuk State Land Commission maps show to cover an area of approximately 150,000 square meters. The plaintiffs gave Chuuk State a fifteen year lease that covered the years 1984 through 1999. The lease was extended from 1999 to 2004 for an agreed rent of over $1.5 million plus a 40% revenue-sharing right with the State from all improvements and fees generated on the leased premises.

According to court documents, on November 23, 2001, three years before the fiveyear extended lease was set to expire the plaintiffs and then Chuuk Governor Ansito Walter "decided to change the lease agreement into a land purchase agreement which they called a 'Deed of Conveyance.'" The agreed upon price of $4.6 million was to have been paid in full by November 21, 2003 before Governor Walter was to leave office. There was no legal review or certification by the State Attorney General's Office nor was there a fund availability certification issued by Chuuk State Department of Finance.

The total purchase price was to be supplemented by a 50% revenue-sharing agreement that would be in effect during the "pendency of the purchase."

By way of background Doone's filing says that during the entire fifteen year lease period as well as the five year extension the plaintiffs were also leasing part of the same properties they were leasing to Chuuk State also to Mr. Hersin Ruben and Ms Moria Ruben (Moria Store) and collecting rent on that lease. The document says that "the lease rate with the Rubens is significantly lower than what the plaintiffs charged the state for those same properties."

"Also while the plaintiffs were collecting the purchase price from the state, they sold part of the same properties at a different price rate to another private business entity owned by a Mr. BJ Mori and his immediate family."

The court document says that "as far as the Chuuk State Department of Finance could document, the state has paid about $2 million dollars to the plaintiffs during the purchase agreement."

The intervention motion said that there are several factual issues that must warrant the denial of the plaintiffs' Motion for Summary Judgment in the case. The filing included an affidavit showing that the Rubens had just paid their rent on their lease for part of the land in question for the month of May, 2008.

The owners of the "Lei Side" business entity, also located on the land supposedly sold to the Chuuk State Government said that "they have already received their land certificate on that portion of land they purchased from the plaintiffs."

The plaintiffs' titled has been contested throughout the term of the lease agreement (Enengeitaw Clan vs. Shirai) in a case "now on appeal before the Chuuk State Supreme Court Appellate Division. That matter is still pending before the court.

The intervention says that summary judgment should also not be granted based on the Chuuk State Court's standard land value. The court ruled in the case -Shinobu Poll v Chuuk State, that the Shinobu Poll lease for 15 years at a total rent of $75,000 for the state to use the land for a water tank was "unconscionable". Doone's intervention says that the court needs to determine whether the plaintiffs' cost of approximately $30 per square meter along with a 40% to 50% revenue-sharing is "per se unconscionable" especially when the plaintiffs are also "selling parts of those same properties to other persons for a different rate and no revenue- sharing rights."

"The plaintiff's are also not entitled to judgment as a matter of law because their Deed of Conveyance or purchase agreement with the state is illegal…" Attorney Asor went on to say that former Governor Walter and the attorney for the plaintiff were relatives and "close political supporters of each other." The filing said that the two "hurriedly changed a five-year lease agreement into a purchase agreement before expiration of the lease and for a significantly higher purchase price and revenue-sharing rate with no additional economic or legal justification." Doone through his lawyer suggests collusion, oppression and even fraud in the original agreement.

Chuuk State Supreme court has yet to enter a ruling on either case.