CUC offers settlement for unpaid employer contribution with Fund

The Commonwealth Utilities Corp. has offered to settle its unpaid employer contributions with the NMI Retirement Fund, but only if the Fund agrees to the formula it used to calculate the amount owed-a sticking point for the Fund, which says that CUC owes it a bigger amount.

Fund legal counsel Carolyn Kern disclosed CUC’s settlement proposal during Friday’s board meeting. Details of the proposal were discussed in the executive session.

CUC chief financial officer Charles Warren confirmed the settlement offer yesterday but declined to comment further pending the Fund’s decision.

“Since CUC and NMIRF are in the middle of negotiations, I think it is premature to discuss [the matter],” Warren said.

He assured, however, that once an agreement is reached, CUC will issue a statement. He also refused to disclose CUC’s proposed payment plan.

The Fund sued the utilities corporation in May this year for unpaid employer contributions. It is demanding payment of $4.44 million, including penalties and damages. It earlier disclosed that CUC is delinquent in its contributions by $3.1 million as of April this year. The Fund seeks penalty award amounting to $740,462 through the end of fiscal year 2010 and economic damages amounting to $527,716. The Fund also wants the court to declare that CUC’s attempt to pass on its obligation to the central government is fraudulent on creditors and is void.

The Fund’s complaint said that CUC attempted on March 14, 2011, to assign its Fund obligations to the CNMI government in exchange for a release of certain obligations the government owes CUC.

Fund chair Sixto Igisomar disclosed yesterday that the board has decided to counter CUC’s proposal but he refused to disclose the specifics of both proposals.

He said they expect a response from CUC next week.

Igisomar said the board has three options to deal with any proposal: accept it, decline it, or counter it. “We made the decision to counter their proposal.”

Igisomar said that CUC used a different calculation on what the agency owes the pension program, a figure he described as “a big variance” to the original amount determined by the Fund. He declined to elaborate.

Saipan Tribune learned that CUC, in its proposal, cited some differences in how the Fund determined the total debt of CUC. The utilities firm cited some statutes as justification for the “wrong calculation” made by the Fund in coming up with the $3.1 million unpaid contribution. CUC’s number, it was disclosed, only amounts to more than $1 million. It was learned that if the Fund will agree to the amount determined by CUC, the agency will commit to paying the obligation.