Sword, Fund sued for defective software pension system

Two members of the NMI Retirement Fund are suing Gerhard “Gary” Sword and his company over their alleged defective and non-functioning software pension system project in 2008 that cost the Fund over $400,000.

Joaquin Q. Atalig and Jesus I. Taisague also named as co-defendants in the suit former Fund board chair Juan T. Guerrero, the Fund board itself, and 10 unnamed individuals.

Saipan Tribune tried but failed to obtain comments from the defendants.

Atalig and Taisague, through counsel Robert H. Myers Jr., sued all the defendants for breach of trust. They also sued Sword and his Express Electronics Ltd. for breach of contract, and unfair business practices. Guerrero, the Fund board, and the 10 unnamed individuals are being sued for alleged negligence.

The plaintiffs are demanding unspecified damages, attorney’s fees, and court costs.

In the complaint filed on Tuesday, Myers said the lawsuit intends to recover damage caused by the defendants and to put in place protections so that Fund beneficiaries will not be subjected “to such irresponsible expenditure” of funds.

Citing a recent article in the Marianas Business Journal, Myers said that Sword didn’t fulfill a contract obligation in the Marshall Islands involving a management software system.

Myers said that, according to the article, the Marshall Islands Attorney General’s Office accused Sword of “flagrantly breaching the trust reposed on them by the people of Marshall Islands.”

Myers said the Fund board knew since 2008 that Express Electronics had breached the pension software contract by providing a defective software yet collecting over $400,000 from the Fund.

Myers said it took the Fund board until December 2010 to finally express disappointment about the non-implementation of the pension software system.

In March 2011, the Fund board gave the Fund management until April 2011 to make a recommendation on the fate of the long-delayed pension software project.

In July 2011, at the request of Sword, the Fund board gave Express Electronics a new 10-day ultimatum to come up with a plan on how to implement the project.

Yet despite several follow-ups from the Fund, Sword still failed to respond, Myers said.

In August 2011, the Fund board decided to file a lawsuit against Express Electronics but then decided to “temporarily hold off” on the suit in November 2011 due to the caseload of its attorneys.

Myers said that Fund board chair Sixto Igisomar publicly made an excuse that the decision to file a lawsuit against Sword will be executed soon after the Fund lawyers’ have more time to do it.

“One of the best-kept secrets at the Retirement Fund is that, in order to run Sword’s pension software program, the Fund needs a computer server,” he said.

Myers said that Guerrero caused to be procured from his brother-in-law’s company a huge computer server that was supposed to run the pension software program.

Express Electronics was awarded the $449,800 contract in 2008 to deliver a “pension software program” by 2009. Sword and then Fund board chair Guerrero signed the contract in April 2008.

Myers said the contract was awarded to Express Electronics despite the fact that other bidders submitted a lower bid and are more qualified/responsive.

“Inexcusably, however, the Retirement Fund has already paid Sword and/or Express Electronics over $402,000 for a defective pension software program that, to date, is still inoperable,” the lawyer said.

To add more insult to injury, Myers said, the board spent over $9,000 to hire R&R Associates to evaluate the entire project and seek recommendation whether there is a need to keep the project or scrap it entirely. Myers said one of the principal owners of R&R Associates happens to be the brother-in-law of the current Fund administrator.

He said R&R Associates identified two serious deficiencies in the defective software.

“Despite the fact that the board had to withdraw principal to pay retirement benefits between Sept. 19, 2008, and December 2011, the Retirement Fund is not serious about going after the other defendants who have clearly injured the Retirement Fund,” Myers said.