‘Rydlyme purchases were divided artificially’

The U.S. government called yesterday its first witness in the trial of Lt. Gov. Timothy P. Villagomez—a former internal auditor of the Commonwealth Utilities Corp. who testified that he wrote a report about finding some deviations in the purchase of thousands of gallons of chemical called Rydlyme.

Former CUC internal auditor Socnilo Villanueva testified that in his report—which he submitted to the Office of the Public Auditor—he had determined that contracts to purchase Rydlyme were divided artificially.

Villanueva said there was also a conflict of interest between then CUC executive director Villagomez and the Rydlyme vendor, James Santos, who is Villagomez’s brother-in-law. Santos and his wife, Joaquina V. Santos, are co-defendants in the case.

Villanueva said that CUC bought thousands of gallons of the chemical but they were not used.

He reiterated this point during questioning by Victorino Torres, lawyer for James Santos, saying he stated in his report that the purchase of Rydlyme “is a waste” considering that thousands of gallons were in the storage room and were not being used for almost a year.

He said he interviewed the Rota power plant manager in August 2000, during which the manager stated they never asked for Rydlyme.

Villanueva said CUC procurement regulations require two to three quotations from vendors when a purchase is worth more than $50,000. If the purchase is beyond $50,000, there should be a competitive bidding process.

In an interview with two OPA investigators, he told them that the purchases of Rydlyme were subdivided to skirt the bidding requirement, Villanueva said, responding to a question by Ramon Quichocho, Joaquina Santos’ lawyer.

David Lujan, counsel for Villagomez, asked if James Fejeran, who was doing the processing of all the purchases, did not say that the subdivision was done to avoid the bidding as it involved a purchase beyond the $50,000 limit.

“Yes,” Villanueva answered.

He noted that since 1998 CUC had purchased a total of $286,000 worth of Rydlyme under a sole-source basis, yet CUC still paid for the off-island training of some CUC technical staff for the Rydlyme product.

He suggested in his report that Rydlyme should shoulder the cost of such training, considering the big business CUC is giving the company.

When asked if he interpreted the CUC procurement regulations on his own, Villanueva replied: “Based on my professional judgment.”

Villanueva said he was not among the three staff sent off-island for Rydlyme training in 2000 but that the essence of his report is that CUC has already spent so much for Rydlyme, yet the training came after.

“After spending $208,000 why only now the training?” the witness said.

Quichocho asked if it is not a violation of the Ethics Act to let a company pay for CUC staff’s off-island training. Villanueva answered that it is standard business practice. He said it was his suggestion for Rydlyme to pay for the training, considering that CUC spent so much already to buy their product. “I’m just being practical,” he added.

When asked why he is testifying, Villanueva said he believes it is his duty to shed light on the issue after the U.S. government asked him to do so.

Torres asked Villanueva whether in his report he mentioned a single violation of procurement regulations committed by James Santos. Villanueva replied, “I did not imply here.”

The former CUC internal auditor also agreed with Torres that James Santos never approached him (Villanueva) to not include him in the report.

When Saipan Tribune left the courtroom, Lujan was still conducting his cross-examination of Villanueva.

Meanwhile, Munson placed under advisement Villagomez’s motion to dismiss the indictment.

Villagomez’s counsel asserted that the conversation between the prosecutor and the grand jury were not recorded.

The Santos couple joined in the motion.

The prosecution opposed the motion. O’Malley said the colloquys were recorded, but neither transcribed nor produced.

O’Malley also stated that he ordered that transcripts be made and available for inspection should the defendants demonstrate a need for them.