May 4, 2015 Pohnpei, FSM -On the morning of Tuesday, April 28, a group of Sokehs Traditional Leaders headed by His Majesty Herculano Kohler, Nahnmwarki of Sokehs arrived at the Sokehs Municipal building. When asked what his intentions were before the group headed upstairs to Chief Magistrate Michael Liemen's office, Mr. Kohler said that he was going to shut the Sokehs government down until the next election in November.
He said that an audit released by Pohnpei's Office of the Public Auditor on January 12 revealed that Sokehs had been allowing cash advances to employees and to non-employees and that it had been going on for a long time. He said that his intention was for the traditional leaders to assume control of the government until a new one could be put into place. He said that he had been told that prosecutors at Pohnpei State government would be pursuing charges of embezzlement against all of the people who took cash advances from the government.
The audit of Sokehs Municipality covered Fiscal Years 2010-2012. The last audit prior to that was conducted in 2005. "Unfortunately, most of the internal control weaknesses identified during this audit (2010-2012) are similar to those reported in our last audit report."
The audit found that the Sokehs Government had total operating revenues during the period audited of $1,316,829 and total expenses of $1,254,323. It revealed that there were missing cash receipts resulting in undeposited collections totaling $2,707 during the three year period.
It said that disbursements were not all properly recorded, supported and disbursed in accordance with applicable laws, policies and procedures. It said that Sokehs Government employees continued to receive cash advances despite the restrictions on such by Financial Management Regulations. Specifically it reported that employees owed a total of $25,775.92 in uncollected cash advances.
The audit did not include the auditors' detailed working papers on the advances that Mr. Kohler had in his hands on the morning of his meeting with Lieman. Those papers listed the details of the balances of cash advances for 36 employees and council members. Those details spanned 16 pages.
When the group of traditional leaders entered Lieman's office, the Nahnmwarki demanded that the Chief Magistrate resign voluntarily and that he hand over the Municipality's checkbook. He said that if he did not do so then he would shut down the office by force.
Lieman explained that checks were now printed by computer through a new computerized accounting package specifically designed for small government operations. He said that he had taken steps to rectify the situation and respectfully declined to resign, and asked the Nahnmwarki to allow the legal system to work.
With no agreement reached, the traditional leaders left and the Nahnmwarki began making phone calls after which he left to file a complaint at the Pohnpei Attorney General's office. During a conversation later in the day he said that he had filed a complaint and now the matter was in the hands of the legal system.
He did not close down the municipality "by force".
During a later interview Michael Lieman said that his office has already taken steps to deal with the results of the audit. He has issued a directive to everyone who has outstanding payroll or other advances. All advances must be paid by the end of this fiscal year even if it means seeking a bank loan in order to do it. The person with the highest balance owes over $9000. The next two highest, which includes the Magistrate himself, each owe in excess of $2000. Most of the other advances are for relatively minor amounts.
Lieman said that the auditors were incorrect when they said that cash advances are "strictly prohibited in Part 4 Section 4.3 of the Sokehs, FMR." He turned to Part 14 section 14.16 of the Sokehs Policy manual that says that cash advances can be made in event of emergencies.
A press release that came out shortly after the audit was released in January but never published said that the Sokehs Municipal Government was upgrading its financial accounting system to one that is specifically designed for municipal governments to track spending against their annual budget. The Chief Magistrate of Sokehs, Hon. Michael Lieman, hired Advantage Business Solutions Inc. of Fertile City in Iowa State to build and install the new system, ClerkBooks Municipal Accounting, so that it is specifically tailored to the needs of his municipal government. "In the past, we've had challenges in our Finance Office for tracking spending against the annual budget with our existing software. This new system is built to help us better manage our budget and our funds", said Chief Lieman. In light of the recent audit that was done on the municipal government, Chief Lieman believes that many of the recommendations of the State Auditor will be addressed using this new system. "If this works out as well as we hope for, we will encourage other municipal governments to utilize ClerkBooks to help them better manage their finances", noted the Chief.
He said that the treasury is still loading information into the computerized system, a process that is nearly complete. When that process is completed, the company will verify that everything is correct and all of the applications that Sokehs needs are in place. Then they will train employees about the reports that the system will be able to do. Once payment is made for the system, the company will transfer the system permanently to the Municipality. The system also has Internet connectivity so the company will be able to provide online support in the future as it is needed.
Lieman said that the council's committee on Justice and Governmental Operations has met and instructed him to have a plan in place and report on that plan by Friday, May 8. He said that his office is working to compile current cash advance balances but that regardless of the amounts, his directive that all employees and others with cash advances must be paid in full by the end of the fiscal year.
The Sokehs Constitution provides only two means of unseating an elected magistrate. One is an impeachment process that begins in the council. The other is by petition of 40% of the voters in Sokehs followed by a ballot issue in which 51% of voters must vote to unseat the magistrate for it to become effective.
Lieman asserted that "the Mwoalen Wahu (the traditional leaders) are aware that they don't have any authority by or above Sokehs Law." He speculated that there may have been another, more political reason for their attempting to shut the government down until elections.
"I will do whatever it takes to resolve the issue and to make sure that it won't happen again," said Lieman, and implored the traditional leaders to let the legal process work.