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Independence Bank: It’s OAG that pulled plug on CUC loan
Rhode Island-based Independence Bank business development director Michael C. Sammartino said yesterday it was the CNMI Office of the Attorney General-and not the U.S. Department of Agriculture-that pulled the plug on the $10 million loan for the Commonwealth Utilities Corp.
“The USDA has not pulled the plug on the loan; in fact, Independence Bank and USDA have been waiting to close the loan for the past 60 days. It was the CNMI Attorney General that has delayed the loan closing, making the statement that the CUC does not have repayment ability [untrue],” Sammartino told Saipan Tribune.
Sammartino also informed lawmakers, including Senate President Paul Manglona (Ind-Rota), Sen. Juan Ayuyu (Ind-Rota) and Rep. Frank Cruz (R-Saipan), about this.
“The Attorney General is not correct, repayment ability exists; we do not make loans without repayment ability, nor does the USDA. Further, the CUC has been building a payment reserve for the loan [as mentioned by Rep. Frank Dela Cruz]. The reserve is now over $1 million,” he said.
Manglona, in a separate interview, echoed Sammartino’s statement that CUC has the capability to set aside money to repay the loan, also citing the estimated $1 million that has been collected from CUC customers since last year.
Sammartino said the reserve is a requirement of the loan, and clearly assists in repayment ability.
“Should the reserve be reprogrammed, we will not make the loan. Independence Bank and the USDA remain ready, willing and able to make the loan. We await the CUC and the CNMI government. We are pleased that our loan will assist the CUC in meeting its mandated requirements with the EPA,” he said.
CUC is back under the Executive Branch wing after Gov. Benigno R. Fitial declared a state of emergency for CUC because of financial, procurement and hiring crises, among other things.
Lt. Gov. Eloy S. Inos said in his understanding, USDA as the loan guarantor “has decided not to move forward” with the loan.
A USDA-guaranteed loan would have a much lower interest rate than a regular loan.
The Saipan and Northern Islands Legislative Delegation’s Committee on Public Utilities and Infrastructure, chaired by Rep. Frank Dela Cruz (R-Saipan), called for a meeting with CUC on Thursday afternoon to shed light on the cancelled $10-million loan.
Dela Cruz said because the loan has been cancelled, CUC should give back to its customers an estimated $1 million that he believes the corporation started collecting from utilities customers in July 2011 to help repay the planned $10 million loan that didn’t materialize.
CUC was supposed to use the $10 million loan to meet federal requirements under the U.S. District Court and U.S. Environmental Protection Agency stipulated orders.
By Haidee V. Eugenio
Reporter
