CUC, Retirement Fund settlement negotiation fails

The settlement negotiation between the Commonwealth Utilities Corp. and the NMI Retirement Fund has fallen through, signaling a continuation in the court battle between the two agencies.

Fund board of trustees chair Sixto K. Igisomar disclosed this Friday, confirming that the exchanges between CUC and the Fund did not result in an amicable agreement.

“The negotiation pretty much failed because CUC is asking us to do something that is outside of our parameters, which is to follow the numbers they are using based on some legislation,” said Igisomar.

The Fund is suing the utilities corporation to collect on some $4.44 million in unpaid employer contributions ($3.1 million as of April 2011), penalties ($740,462), and damages ($527,716).

In the standing lawsuit, the Fund also wants the court to declare that CUC’s attempt to pass on its obligation to the central government is fraudulent on creditors and is void.

CUC’s settlement proposal, according to Igisomar, uses a different equation to calculate its outstanding contributions to the Fund. He said that based on CUC’s offer, it wants to pay an amount that is about 50 percent less than what the Fund says it owes. The Fund responded to CUC’s proposal with a counter-offer, which CUC also later rejected.

Igisomar insists that the Fund is using the proper method of calculating CUC’s unpaid employer contributions.

“Public Law 6-17 is what we’re following because laws that came after that never changed P.L. 6-17. Obviously, CUC is challenging it so the court needs to make the decision,” he said, adding that one big thing that caused the negotiations to fail was the different interpretation of the laws.

According to the Fund, under the law, CUC is required to pay employer contributions to the Fund based on the gross salaries or wages of its employees and the Fund’s actuarially determined contribution amount. These employer contributions must be remitted to the Fund within five working days following the end of each payroll date.

Saipan Tribune learned that CUC, in its proposal, cited some differences in legal opinion on how the Fund determined the total debt of CUC. The utilities firm cited some statutes to point out the “wrong calculation” made by the Fund in coming up with the $3.1 million unpaid contributions.