The buck regarding La Fiesta stops with Juan N. Babauta

Pete Callaghan, press secretary for Gov. Juan N. Babauta, recently told the media that the administration, as well as the Northern Marianas College, failed to look at the “real issue” surrounding the purchase of the facility. He also stated that “no debt would have been incurred had NMC’s plan bore fruition to have the facility revenue-generating through the Pacific Gateway project and that there was no intent of giving money out that was meant to incur debt. In addition, he asserted that the NMC Board of Regents “miscalculated by not having an accountant look at the lease… the whole package deal.” And his final remarks to the media were, “It is foolish to point fingers this time with plenty of blame to be shared by all parties of the miscalculation; and the only way to go is move forward.”

The “real issue” involving the La Fiesta Mall transaction is that the legal counsel and/or policy advisers for the governor either advised the governor to not move ahead with forwarding the federal funding totaling approximately $3.5 million, but the governor did anyway; they did not advise the governor at all on what to do with the federal funding and the governor approved the transfer of funds albeit not being advised; or they advised the governor to go through with signing the Memorandum of Understanding in July 2003 and forward the $2 million to the parties concerned in August 2003 and the remaining $1.5 million several months later in October 2003.

Whatever the advisers of the governor advised him to do, they apparently did not deter the governor from approving the transfer of $3.5 million of public funds and violating the stipulation in the CNMI Constitution regarding the approval of public debt by both houses of the CNMI Legislature.

Had the governor’s closest advisers effectively deterred the official inking of the transfer of the first $2 million installment in August 2003 and then the $1.5 million balance forwarded in October 2003 to the BOR, then there would not be any Senate investigation regarding the legality and legitimacy of the La Fiesta deal.

If the governor’s closest advisers advised him that the establishment of the balance left on the $7.5 million transaction was in direct violation of the CNMI Constitution and the governor went ahead and issued the directive to transfer the public funds anyway, then the total responsibility and accountability of the violation should fall squarely on the shoulders of the governor.

The other real issue is that the governor was clearly cognizant about all of the particulars surrounding the La Fiesta deal from the official signing of the MOU in June 2003. This can be substantiated by the language in the Memorandum of Understanding that was drawn up between the college and the Governor’s Office on June 19, 2003 and prior to the initial installment of $2 million of federal funds being officially transferred from the governor’s office to the BOR on Aug. 19, 2003.

Since the MOU stipulated the requirement for the BOR to spend the whole $3.5 million within the period or lose it to other government priority programs, then the press secretary’s comment that “there was no intent of giving money out that was meant to incur debt” is clearly contradicts the governor’s signing the MOU and approving the transaction and the debt that was established by the BOR.

The NMC BOR evaluated the La Fiesta Mall deal and made the decision in June 2003 to approve and follow through with it. At that time, all of the particulars involving the transaction and the $4 million debt to be established were made public. And with Galvin Guerrero wearing the hat of an NMC BOR member and chair of the fiscal and finance committee for the college, as well as the governor’s special assistant for special projects, how could the governor not know about the upside and downside of the transaction? Hence, the remark Governor Babauta’s press secretary made to the media, “We did not find out about it until after the lease was signed” appears to be in conflict with what was actually known about the transaction.

The La Fiesta Mall deal should have never been approved by the NMC BOR because it was a project based on no credible research and without a formal business and marketing plan delineating how the program would be successfully implemented and how long that would take. But even with the decision and approval for La Fiesta put forth by the BOR, the problem would have never escalated into a fiasco had the governor refused to forward the funds to the BOR and, instead, allow both houses of the Legislature to deliberate and make a decision on a public debt being established.

Furthermore, the rationale conveyed by the governor’s press secretary that “no debt would have been incurred had NMC’s plan bore fruition to have the facility revenue-generating through the Pacific Gateway project” is not substantive for the simple reason that the revenues collected and used to pay for the $4 million debt in annual increments and established at the signing of the lease by the BOR could not have been generated until subsequent to the “400 plus” foreign students were admitted and paid in full the $7,500 required for tuition covering one year of full-time equivalent status.

Moreover, since the governor officially inked his name for the approval of the transaction that included the stipulated payment of $200,000 plus interest for 20 years substantiates that there “was intent of giving money out that was meant to incur debt.”

The island community should not have to bear the financial brunt and pay for a “miscalculation” by the governor and the individuals he appointed to the BOR. The governor’s press secretary’s suggestion that we move forward is appropriate. The CNMI 14th Legislature should move forward toward legally nullifying the La Fiesta Mall transaction because it was in violation of the supreme law of the CNMI. Moreover, to prevent anything like this from occurring in the future, there should always be public hearings and a legal opinion issued by the Attorney General explaining whether or not any future transactions are in fact infractions of the CNMI Constitution.

Had the governor taken the $4.6 million expended for the La Fiesta Mall—described by some media professionals as “a white elephant in the CNMI”—and split the federal funds equally for NMC and the Public School System, i.e., $2.3 million for each, then there would have been a tremendous amount of progress made in terms of education in the Commonwealth. More school buses and books for the classrooms and libraries, educational equipment needed to enhance the learning process, e.g., computers, laser pointers, PowerPoint machines, could have been purchased; as well as providing much needed maintenance on all school campuses.

The bottom line is that the students in the CNMI schools would be in a better position of realizing their full potential if the educational resources needed for their academic success were readily made available. As it stands now, the $4.6 million has been expended and not one positive thing for education has transpired for NMC, PSS, and any of the students who will be tomorrow’s leaders in the CNMI.

Divvying up the federal funding equally and taking care of the business of enhancing education in the realms of higher education, as well as the K-12 system, would have made Juan Babauta a genuine education governor. But since this obviously did not take place, the governor cannot claim justifiably the dubious distinction of being considered a true and ardent proponent of education in the CNMI.

Dr. Jesus D. Camacho
Delano, CA 93215