‘Block Fund from appealing,

The Fitial administration, lawmakers, and retirees strongly oppose “spending hundreds of thousands of dollars more” on legal fees just to appeal the U.S. District Court’s ruling yesterday dismissing the NMI Retirement Fund’s Chapter 11 bankruptcy filing, even as the administration prepares a state of emergency declaration for the Fund.

Some lawmakers believe that without such an immediate emergency declaration, the Fund will pursue an appeal and spend more on attorneys’ fees rather than work with the Executive Branch and the Legislature to prolong the pension agency’s lifespan.

“We’re going to be wasting more money than what we’re already wasting, paying all these costly attorneys, only for a district court judge to say that the Fund is a government entity,” said Rep. Frank Dela Cruz (R-Saipan).

Press secretary Angel Demapan said the Fitial administration “would rather move forward with its plans for the Fund than to see much of the Fund’s assets be drastically reduced because of exorbitant attorneys’ fees.”

He said the administration is “absolutely not” supporting the Fund’s filing of an appeal, if any.

House Speaker Eli Cabrera (R-Saipan) said the Fund “should be immediately placed under emergency.”

“The Fund should not be allowed to appeal. It’s costly, and it’s the retirees and active members’ money that are being used to pay the legal costs. It will deplete faster the Fund’s money. The only people making money here are the attorneys,” Cabrera said.

He said if and when the Fund is transferred under the Department of Finance or another government entity, the administrative costs and legal fees will be lower.

While there’s no telling what the governor’s emergency declaration will contain, Dela Cruz hopes it will block the Fund from filing an appeal, and would explain clearly the administration’s plan related to a five-year buyback into the U.S. Social Security system for existing active Fund members and future members, as well as plans for the current retirees, among other things.

“I hope that EO also contains the latest developments in the ongoing discussions between the administration and the U.S. Social Security, so that everyone would understand and decide whether to fully support the plan or not,” he said.

Lt. Gov. Eloy S. Inos reiterated that the administration plans to declare a state of emergency for the Fund when a final court decision on bankruptcy filing has been rendered.

Among the administration’s plans beside a buyback into the Social Security is to place the Fund under the Department of Finance, which will continue to disburse retirement pension to retirees, reducing administrative costs. He said the Fund could then also do away with lots of attorneys.

As of early last night, the administration has yet to issue an emergency declaration for the Fund.

Senate President Paul Manglona (Ind-Rota) said it’s “very unfortunate that we’re sidetracked by the filing of the bankruptcy.”

“Now the governor has to take a hand-on approach to the Retirement Fund issue. More than a month later, $475 an hour in attorney’s fees later and hundreds of thousands of dollars in all other legal fees later, we’re still in the same place we were before the filing of the bankruptcy filing,” he said.

The Senate president reiterated that one of the priorities now should be to meet Judge Kenneth Govendo’s June 15 deadline for all parties involved to come up with a solution and legislative initiatives to prolong the Fund’s lifespan.

Manglona said the administration’s plan to buyback into the Social Security should be continuously explored.

“That’s something we support,” he said.

But Manglona said this is just one of the many aspects that need to be addressed, mainly to take care of many active employees and future employees.

He said another aspect is to prolong the Fund’s lifespan for the retirees. He reiterated his request for the House to pass Senate initiatives and bills that seek to help the Fund, including one that gives 25 percent of government revenues to the Fund, tax rebate cuts, and transferring government assets to the Fund.

“I’m not aware of what the governor intends to do with his Fund emergency declaration. I hope that will help reduce the $50 million or so that the Fund withdraws from its investments just to pay pensions,” he said.

Commonwealth Retirees Association director Diego Benavente, a former lieutenant governor, and speaker, said he’s “mad” and “disappointed that we wasted hundreds of thousands of dollars” for that bankruptcy filing.

“It makes you question the fiduciary responsibility of the Fund board of trustees. I truly believe we wasted a lot of very important funds. I am hoping that the administration—and I believe Lt. Gov. Eloy Inos is in charge of Fund issues—will be able to convince Fund administrator Richard Villagomez and the board members not to appeal the judge ruling,” he said.

He said the Fund should instead continue working with the administration and the Legislature.

Sen. Frank Cruz (R-Tinian), who has been critical of the Fund’s spending on professional service fees, said he does not agree with placing the Fund under a state of emergency but if it is the only way to stop the Fund from appealing the federal court’s ruling, then he will not object.

“No more appeal. We should all work together instead of letting lawyers do it for us,” he added.