Battle lines drawn on Fund law repeal

House Speaker Eli Cabrera (R-Saipan) referred yesterday to the Committee on Judiciary and Government Operations a bill repealing the Beneficiaries Derivative Law, which is again drawing the same battle line between those who support and oppose the original measure.

Cabrera said the bill needs further review, and this comes at a time when six of the NMI Retirement Fund’s money managers and consultants have quit within days of the signing of Public Law 17-51.

The Fund said these “solid, reputable firms” are terminating their contracts with the pension system because of the added liabilities and uncertainties brought by the new law signed on Sept. 5.

But after retirees and NMI Retirement Fund officials personally appealed to House members on Wednesday to pass House Bill 17-220, it was the turn of some retirees and their counsel to air their opposition to the same bill yesterday.

HB 17-220 seeks to repeal in its entirety PL 17-51, which allows Fund beneficiaries to sue on behalf of the pension program if the board refuses to bring such legal action.

House floor leader George Camacho (Ind-Saipan) formally introduced his HB 17-220 during yesterday morning’s session, but the bill was referred to the JGO Committee instead of being placed on the bill calendar for immediate action.

“I just hope that the (JGO) committee sees the need to repeal PL 17-51 and act swiftly,” Camacho told Saipan Tribune.

He said the original derivative bill went through intense scrutiny by the House and Senate and their committees, so there shouldn’t be a reason to further prolong action on the bill repealing the law.

“I respect the committee and I want it to do its due diligence on the bill. However, we all know time is of the essence regarding the derivative bill,” he added.

Patricia Guerrero, a retiree and a plaintiff in a lawsuit against the Retirement Fund’s former investment consultant Merrill Lynch, said lawmakers should not repeal P.L. 17-51 by not passing HB 17-220.

The plaintiffs in the case claim that Merrill Lynch overcharged the Fund and provided bad advice to the trustees, resulting in millions of investment losses.

Atty. Michael Dotts, who also opposes HB 17-220 and is counsel for retirees suing Merrill Lynch, reiterated yesterday that the NMI Retirement Fund does not need a dozen money managers and consultants when its assets have dramatically dropped from over $500 million to some $217 million.

Of this remaining asset, the Superior Court said $100 million of this should be put in bank accounts to protect retirees’ benefits. A money manager is not needed to manage a bank account.

With the Fund having assets of $175 million, it does not need over a dozen money managers and consultants especially when the Fund’s lifespan is projected to be three to five years, the lawyer said.

“As this thing shrinks, you have less and less need for money managers and you certainly don’t need 12,” he added, in connection with the termination of contracts of the six money managers and consultants.

Dotts said there are organizations on Saipan “that are very good at managing money,” including the Marianas Public Lands Trust.

“You don’t need the same massive amount of complication, money managers that you had when there’s $500 million in assets,” he added.

The lawyer said PL 17-51 has allowed retirees to proceed with the case against Merrill Lynch.

Because this is a contingency fee case, nobody pays anything unless there’s a victory.

“And if there’s a victory, the majority of the money goes to the Fund for all the retirees…not only for those who (joined the suit)… They’re suing for the benefit of the whole Fund. There’s no harm in trying and there really does seem to have a good case but if it wasn’t for P.L. 17-51, we wouldn’t even be able to try,” he said in an interview during the House session yesterday.