‘Fund’s first contract with Wilshire also had no AG review’

Senate Committee on Executive Appointments and Governmental Investigations chair Frank Cruz (R-Tinian) said yesterday that the NMI Retirement Fund’s first contract with its investment consultant, Wilshire Consulting Associates, costing $195,000 didn’t undergo review by the Office of the Attorney General, unlike the second contract worth $165,000.

Cruz said the Senate EAGI Committee reviewed copies of the Fund’s contracts with Wilshire during its consideration of Gov. Benigno R. Fitial’s appointees to the Fund board, including former chair Sixto Igisomar.

The committee, which reviews and recommends actions on the governor’s appointments and re-appointments to boards and commissions, questioned the Fund’s exorbitant professional service fees of over $9 million from fiscal year 2008 to the first five months of fiscal year 2012, including legal fees.

The Fund has since filed for Chapter 11 bankruptcy, the first public pension agency on U.S. soil to ever seek bankruptcy protection.

“Now the attorney general is saying the hospital contract with ICS [International Consulting Services LLC] didn’t follow procurement rules because it wasn’t reviewed by the attorney general. This first Wilshire contract also was not reviewed by the AG, only by the Fund’s counsel Kern,” Cruz told Saipan Tribune.

The Fund’s first contract with Wilshire in October 2010 was signed only by Wilshire Consulting president Julia Bonafede and Fund’s Igisomar, along with Fund counsel Carolyn Kern as to form and legal sufficiency, and certified as complying with procurement regulations by Fund administrator Richard Villagomez.

The second Fund-Wilshire contract in February 2012 was signed by Bonafede, Igisomar and Villagomez, and reviewed for legal sufficiency by Attorney General Edward Buckingham.

The Fund hired Wilshire as its investment consultant to replace embattled Merrill Lynch.

Wilshire terminated its services with the Fund in October 2011 following the enactment in September of the Beneficiaries Derivative Act, which was seen as increasing the company’s exposure to litigation. But Wilshire agreed to return to the Fund following the repeal of that law.

The board also put on hold the hiring of money managers until Wilshire was officially on board. The Fund’s money managers also left because of the impact of the then derivative law.