"Cannery still planned for Pohnpei"

May 27, 2009

The Kaselehlie Press

After meeting with key Pohnpei state government officials this week, including Governor John Ehsa, Oceania representatives said they now believe the company is back on track in assisting the state with the expansion of its environmental resources, infrastructure, social programs and, ultimately, the development of a cannery.

"I don't think we could have asked for them to be more welcoming and cooperative," said Bob Rosen, board director for Oceania. "We have a completely new level of understanding with each other."

Other officials meeting with the company during the week included Pohnpei State Legislature Speaker Nelson N. Pelep, FSM Assistant Attorney General Timoci Romanu, State Attorney General Scott Garvey, and Senators Dion G. Neth, Dohsis Halbert and Fredrico O. Primo. Company officials also met with U.S. Ambassador Miriam K. Hughes.

Rosen said the first order of business was to let officials know that Oceania had taken care of a major management "problem" and that they were ready to move forward. While he wouldn't elaborate on exactly what the problem was, he did say it concerned removing someone involved with Oceania from the process.

"When we arrived we thought we were coming into a buzzsaw," he said. "To be honest, we made mistakes. But after apologizing profusely and making amends, we received nothing but warmth and hospitality."

Rosen said that since a complete economic growth engine for the area would entail more than just a cannery, Oceania is especially focused on assisting the FSM in six key areas: ocean resources, agriculture and aquaculture, infrastructure (roads and transit as well as health, education and welfare), energy resources and development, tourism, and financial management.

"Everyone is focused on the cannery but right now these issues far outweigh that," he added. "We have an impressive list of both American and Global companies who will act in concert with us to build not only for-profit companies in the FSM, but social programs and infrastructure as well."

Rosen said Oceania has had serious discussions with a number of companies including the Trump Organization, Beatrice Foods, the Fluer Group, and Cerberus Capital Management, and that all are interested in the project.

Oceania has commissioned the University of Florida to look into the six key infrastructure and social issues and produce a 20-year strategic development plan. The company also commissioned the Kennedy School at Harvard to look into legal and governance issues. Both studies are expected to be completed by early fall of this year.

Rosen added they are only in the early-tomid stages of developing funding initiatives and that much of it is dependent on the studies being conducted.

"I can't overemphasize the importance of the public/private partnerships between Oceania, FSM and our partners back in the U.S.," he said.

The meetings this week bode well for Oceania, whose relationship with the government of Pohnpei has been anything but smooth sailing since the company came in on a wave of excitement two years ago.

In August of 2007 Oceania announced it would work with Pohnpei's Economic Development Authority (EDA) and invest between $80 - $100 million in a cannery that would bring approximately 3,000 jobs to Pohnpei. The company planned to build on the southeast side of Dekehtik, with land constructed at the company's cost, and include a new dock for staging on the east side of the island. The cannery was originally proposed to have four operations: cooking, canning, loining, and fish meal.

The EDA also announced the Authority had entered into a contract with Oceania, Inc. to manage and operate on behalf of EDA all of their port functions including the transshipment plant facility, Ship Agency (provisioning services), bunkering services, and transshipment privilege fee collection.

Almost one year later, however, the Pohnpei government filed a complaint against Oceania and asked the Supreme Court to declare the contract invalid claiming it had never been approved. The State additionally filed a motion for a temporary restraining order and preliminary injunction on the management agreement between Oceania and EDA.

The state provided an affidavit from Acting EDA Manager Hernet Ringlen that said that he could find no records in EDA files that the Board had ever approved the agreement. Oceania, however, provided two affidavits that listed the people that were at the meeting of the board when the agreement was first approved.

The State also said that at the time the agreement was signed, Oceania, LLC did not have a Foreign Investment Permit as they were required to do and that their violation of that law invalidated the agreement.

Fredrick Ramp, an attorney for Oceania, called that argument a "red herring" and added that "Oceania, LLC does not do business in the FSM." He said that after the agreement was signed, Oceania, LLC formed a new corporation in the FSM named Oceania, Inc. that has a Foreign Investment Permit (FIP). Despite the state's claims to the contrary, he said the types of businesses that they can operate according to that permit are broad enough in scope to cover their management agreement with EDA and that the agreement itself allows for the assignment of the contract to Oceania, Inc.

The state alleged in its complaint that the agreement is "Usurpation of Government Power; Illegal Exercise by Private Persons of Governmental Regulatory Powers." It says that the agreement assigns governmental functions to Oceania, Inc to manage. "This wholesale relinquishment of governmental authority to Oceania is irreconcilably at war with State laws…"

After hearing both arguments, FSM Supreme Court Justice Andon Amaraich issued an order and memorandum in July of 2008 denying Pohnpei's request for a Temporary Restraining Order (TRO) and preliminary injunction that would have set aside the agreement between the EDA and Oceania, Inc. until after a full hearing takes place on the matter.

The Chief Justice added the court would address the issue of Pohnpei's standing in due time but for purposes of the order on the request for the TRO the court would proceed on the basis that Pohnpei State does have standing to bring the lawsuit.

Oceania then issued a counterclaim contending "tortious interference" with the contract and that the actions of Pohnpei State "falsely cast aspersions on the honesty, integrity, credit, financial, and technical capability, efficiency and business character of Oceania." The company also claimed the actions of Pohnpei State, including "the seizing of EDA assets, repeated wrongful attempts to force EDA to rescind the Management Agreement and attempts to destroy the business endeavors of Oceania in the FSM and other similar acts constitute fraud and intentional negligent misrepresentation."

The counterclaim by Oceania seeks compensatory damages and reimbursement for attorney's fees.

However, Rosen said Kembo Mida, Jr., a local attorney with Ramp's office, recently had several productive meetings with State Attorney General Garvey and that the legal issues should come to a close soon. "I believe there are no remaining issues," said Rosen. "Right now it's just paperwork and rewriting clauses in the agreement to achieve greater clarity."

In another development, during an earlier press conference held in May of 2008, Governor Ehsa announced that one of the results of his recent trip to China was that they had agreed to provide a grant to build a fish processing facility (a cannery) in Pohnpei. He said the cannery might employ as many as 700 people. When asked about the status of Oceania's plans to open a cannery in Pohnpei he said that he thought that Oceania's interests had waned.

A bill introduced later that month then offered the Pohnpei Fisheries Corporation (PFC) a 30-year no-cost lease agreement for land in Dekehtik for fisheries development. The designated site is the land currently leased to the Misko family for use as the Pwohmaria Beach Resort.

The bill passed in the legislature establishes the China-Pohnpei fisheries project to be built on the site and specifically waives the requirement for a foreign investment permit. The Government of the People's Republic of China, under the agreement will provide a grant of up to $15 million for construction of a "fish processing plant." Pohnpei State Government would then sell the plant to PFC with the requirement that PFC leases the plant or outsources management of the facility to a company that will be designated in the grant from China.

Making matters even more complicated, in November of 2008 the Pohnpei legislature then passed a bill terminating the existence of the EDA and PFC, bringing their functions under the direct control of the Governor through the creation of a new executive Office of Fisheries and Aquaculture. The bill transferred all contracts and obligations, including those of Oceania, to the new executive office.

The earlier May 2008 bill, however, made allowances for the fact that PFC might not be an entity when the law is passed, if it is passed. The bill often referred to PFC as, "Pohnpei Fisheries Corporation or its successor in state law."

According to Rosen, the possibility of a China-Pohnpei fisheries project is of no concern to Oceania. "We'll compete with anyone as long as there is a level playing field," he said and added that Oceania has already begun screening and interviewing local FSM applicants for port facility management positions.

Nothing in the bill would preclude Oceania Inc. from carrying out its previous plans to build and operate the cannery project. The bill does not say that the China-Pohnpei partnership would operate as a monopoly.

At press time the case between Pohnpei and Oceania is still pending before the Supreme Court.