SAIPAN HARBOR PROJECT CPA justifies need for federal audit

The Commonwealth Ports Authority yesterday underscored the need for a federal audit of the funds earmarked for the Saipan Harbor Improvement Project to determine whether a portion of the budget had been re-channeled to other undertakings.

CPA Board Chair Roman S. Palacios said an audit by the Department of the Interior’s Inspector General would help unearth controversies hounding Change Order No. 7, which involved $741,000 in total funds.

Change Order No. 7 was allegedly made to accommodate the need for additional funds in the then existing contract for dredging work in Rota.

Previous audit requests for audit have been made to determine whether the change order were justified and legal.

Mr. Palacios added that his request for an audit was merely a follow up to the recommendations by Gov. Pedro P. Tenorio’s Transition Committee which asked the interior department and the U.S. Congress to hold a thorough audit of the Saipan seaport project.

He pointed out that the U.S. Inspector General had been asked to do the audit of the multi-million dollar project since SHIP involved at least $10 million in federal grants from the U.S. Congress.

“We just would like to bring light on some concerns involving how some federal money that were originally earmarked for the project were spent,” Mr. Palacios told in an interview.

He emphasized that the ports authority is obligated to determine whether some funds for the Saipan seaport project were indeed re-channeled to other CPA-related undertakings.

At the same time, CPA is requesting the IG to audit the Saipan harbor improvement project due to the increase in scope and cost, as well as identify the factors that caused the delay in its completion.

Inspector General Earl E. Devaney said the audit of the Saipan seaport project will be included in the agency’s Fiscal Year 2001 workplan for its field office on Guam. The investigation will be handled by Senior Auditor Peter Scharwark, Jr.

Mr. Palacios said previous reports claimed that Change Order No. 7 with over $741,000 of additive cost is a result of work initially intended to be covered by liquidated damage of $1 million against the contractor by performing certain dredging work in Rota harbor.

CPA records disclosed that none of the six supplemental budget requests for the Saipan Harbor Improvement Project, amounting to more than $6.5 million, were approved with the certification of the CPA comptroller in Fiscal Year 1995.

The following year, some $22.9 million in total supplemental budget were approved without the certification of the chief accountant, while close to $245,000 in total additional budget were okayed without the accountant’s knowledge.

Initial funding for the project came from US Congress, $10 million; $13 million from the Retirement Fund; and the Commonwealth Development Authority loaned out $13.5 million. Two separate bond issues followed in 1995 and 1998.