Can NMI judges support retirees any further? A question for consideration

I quote portions of a letter from a NMI retiree that is very descriptive of the disappointment many have regarding the NMI’s executive and legislative branch’s inaction and indifference in paying the government’s financial obligation to the Retirement Fund. This has resulted in the almost total diminishment of the Fund as a lifeline for many retirees in their old age.

One retiree, who shall remain anonymous, wrote: ”I have a lot of medical expenses and other bills. I can’t afford a pay cut. I have already cut out everything I possibly can, and I’m living paycheck to paycheck. To take a pay cut will mean I can’t pay some of my bills any longer. Which bill do I not pay…my health insurance, home loan, doctor’s bills, or maybe my car loan? Maybe cut out my medication? The retirees did not create this mess, and we should not have to suffer for the irresponsibility and indifference of the CNMI government who have put the Fund in jeopardy.”

The above retiree continued: “I see no reason why the retirees, who WON the lawsuit in Superior Court, have to concede to the guilty party (the CNMI govt) by having their pensions and other benefits cut. I’ve never seen a lawsuit where the winners were forced to submit to the losers in this way. Why don’t we simply go after the government and enforce payment of the judgment?  The retirees’ pensions are protected under the CNMI Constitution. The retirees lived up to their part of the bargain, but the government did not live up to theirs.”

As I read the above I considered the third branch of government, which is supposed to be equal to the other two branches. Under our system of government the judicial branch is charged with the administration of justice, fair and impartial, resulting in our society being governed by the rule of law.

I submit that what has occurred in the NMI regarding the many issues surrounding the callous disregard by the executive and legislative branches for the future welfare and financial security of retirees (retired members of the Judiciary included) by ignoring both the Constitution and the law makes a mockery of the canons the judiciary branch strives to uphold.

As NMI sitting judges are potential beneficiaries of the Fund and retired judges are current recipients, I have a question I would like to pose for consideration by members in both groups.

The administration and Legislature have not respected the ruling of the Superior Court for the payment of a legal, constitutionally protected, adjudicated debt to the Fund. Therefore, is it not reasonable to ask that members of the local judiciary, particularly those already retired, to consider lending their prestige-as private citizens-to support the transfer of the lawsuit from the local to federal court?

The potential conflict of interest aside as a result of the Judiciary’s association with the Fund, with presumably $100 million of all retirees’ money held in reserve and in consideration of the disposition of judges to remain impartial and unbiased, they do have a right-as we all do-to protect their property rights as well as those of all retirees. That’s all any of us are trying to do. It is common knowledge that we all are at five minutes until midnight before the death of the Fund as we know it.

As a result of the questionable action by both the executive and legislative branches to opt out of the U.S. Social Security, presumably without any input from the Judiciary, the imminent collapse of the Fund will leave many retirees in poverty. In the retirees’ court of public opinion, this is an injustice.

If it were to occur, the endorsement of local judges in support of the action to remove the lawsuit from the local jurisdiction to the federal court would render a great service and would be to the long-term benefit of the community. It would also renew faith in the NMI administration of self-government, which seems to be waning of late.

The above retiree continued with this observation, “The government seems intent on breaking up the Fund as soon as possible so they can be rid of their debt, and get the retirees off their backs for good. They have stalled and delayed the court proceedings for over two years now, and have not bothered to repay any of the money they legally owe the Fund. Now, thank God, finally the case is moved to federal court. I hope all retirees support the federal court move. It makes sense, and it’s the only place where enforcement of the judgment can occur without political interference. Even now, some in the Legislature are getting creative once again these past two weeks to come up with another law that will negatively impact the Fund.”

Indeed, still yet another retiree points out that the Governor, “By ordering or causing the government to stop paying employer’s contribution into the Retirement Fund, violated the provision of the Covenant (CNMI Constitution, Art III section 20). That provision prohibits any act that diminishes retirees’ pensions.”

All of the local government officials and appointees involved, together with those concerned retirees, are aware that NMI judges are appointed rather than elected. As such this does raise the specter of an appearance of a conflict in issues where the government is clearly guilty of being negligent in adhering to the law as also is the Legislature as an associated party with the reliance of 1 CMC Section 7207 to avoid payment of the Superior Court’s judgment-which disgracefully has gone nowhere.

Clearly, both the administration and the Legislature, by ignoring the implementation of a Superior Court judgment rendered more than two years ago, brings into question among many retirees the relevance of the judicial process in this particular issue. Several hundred millions of dollars of retirees’ money is now at risk as well as the very future financial security of several thousand citizens and their dependents, many of whom may face poverty in a few years because the executive and legislative branch have not cooperated in appropriating funds to comply with the Superior Court order.

It all seems so intentionally planned long ago as a legal mechanism for a convenient excuse to avoid payment of certain “selected” government debts.  Section 7207 seems to be an ideal prescription to use to wear down any award to an amount where the prevailing party will accept a much smaller settlement under the guise: “it’s better to have something-than nothing.”

Considering the compounding interest charges continuing to mount up and added to the debt owed by the central government, the longer the outstanding obligation remains due and unpaid, the greater the debt becomes for both the government and by extension the taxpayers of the NMI.

For the Judiciary to permit this delay is an injustice and an added burden placed upon the taxpayers as are the fees paid to private attorneys during this prolonged issue, which has resulted in nothing.

Wrong signal to investors

As long as the central government delays payment to the Fund it sends a signal to potential investors that the NMI Constitution can be ignored when it is convenient for the government to do so. It illustrates that the supposedly three equal branches of government are not equal as far as the Judiciary is ranked and provides clear evidence for all to see that the government does not honor its contractual agreements.

Realization of the above by potential investors can have far reaching and serious adverse consequences by discouraging future foreign investment in the NMI. Such investment is vital to stimulate economic growth, which in turn will provide additional employment opportunities and contribute to an increase in tax revenues.

Should they choose to do so, the support of members of the NMI Judiciary of the lawsuit now in federal court filed on June 25, 2009, might finally assist in preserving the Fund and protecting the CNMI’s reputation as an honest government rather than one which appears to not always adhere to its own laws.

The actions of a prominent and dedicated jurist must be commended for the issuance of an “Order of Self-Recusal” stating: the entire Judiciary is implicated in failing to pay Plaintiff’s contributions and parties have not agreed to waive the conflict of interest.” This same jurist as the district federal judge also implemented self-recusal from the issues involving the Retirement Fund’s lawsuit against the NMI government.

Fund’s contribution to the government

Also, while no one expects a quid pro quo, perhaps it’s appropriate for this article to recall that the Fund did finance the Judiciary Building. Had it not done so, the Fund might still have those loan proceeds plus any invested interest earnings available for pension payments.

The financing for the judicial building was possible from the proceeds of the once healthy defined benefit plan (DBP), which the government has now abandoned for its own convenience. In the opinion of this retiree, such abandonment will prove to be not in the long-term best interest of current government employees. The DBP was the same plan and source of funds for a home loan program, which is now also dead.

The new defined contribution plan (DCP), is an inadequate replacement for the DBP and will never be a source for such home ownership financing assistance.

William Stewart, long time resident of Saipan and former CNMI senior economist, is also the author of the Business Reference & Investment Guide to the CNMI and Tourism Investment Opportunities in the Commonwealth (both now out of print but available for review at the Joeten Kiyu Library). He has served as an economic adviser and investment consultant to development banks in Tunisia; Bahamas, Ivory Coast, African Development Bank and the Inter American Development Bank. He is a former foreign service officer with the U.S. Department of State.