Quarry operators owe DPL $4.7-M • Public auditor presses public lands office to step up collection efforts

The CNMI government could have been about $5 million richer had the Division of Public Lands made good in its collection of rentals and land leases from quarry operators from 1990 to 1995, the Office of the Public Auditor said.

According to a report released by OPA Wednesday, overall outstanding receivable from quarry operators during the six lease years under review, including rentals and interests, amounted to $4.69 million.

A public audit revealed five quarry operators incurred back rentals amounting to $2.89 million; four quarry operators underpaid lease rentals by $261,311 due to misrepresentation of lease agreement provisions and incorrect rental computations.

The OPA report also mentioned that eight quarry operators owed about $1.1 million in interest as of lease year ending 1995 due to delinquency in the payment of rentals.

Public Auditor Leo LaMotte said Public Lands likewise failed to collect rental underpayments of about $570,000 that were disclosed in previous audit reports. As of end-December 1998, additional interest of $1.28 million from the delinquent accounts in the years under review remain uncollected.

In order to resolve the problem and immediately collect the amounts receivable, which remain outstanding since 1995, OPA submitted a 10-pronged recommendation to the Department of Finance, the DPL, and the Board of Public Lands.

Mr. LaMotte is asking the Board to require the DPL Director to record the adjustments to effect the under and overpayments of rentals and interests, including those identified by previous public audit reports.

“DPL should prepare documents to make the offset arrangements binding on all of the affected parties so they will have a basis for updating financial records,” said Mr. LaMotte in a letter to BPL Chair Manuel P. Villagomez.

OPA is also recommending that those who continue to lag behind in their payment of the overdue accounts should be referred to the Attorney General’s Office, while urging DPL to intensify efforts to collect the $4.69 million.

Mr. LaMotte also saw the need to develop and implement written policies and procedures to ensure that all rental amounts payable are pursued, and that timely and appropriate actions against erring lessees are promptly taken.

OPA called for a stop in the awarding of contracts that are for offset purposes without using the competitive selection procedures required by the procurement regulations.

“[DPL should] develop and implement written policies and procedures to ensure that all quarry operators who remain in possession of the leased area are holding valid quarry permits,” the OPA report added.

The Public Auditor is also calling for an amendment to the conditions for quarry lease agreements to include a provision that any government agency will be exempt from paying any cost for material extracted from a government-owned quarry site.

“Additionally, we recommend that BPL, the Governor, and the Secretary of Finance review the average yearly government cost for coral purchased by agencies such as SMO and DPW,” the report said.