CUC backs out from genset deal

The Commonwealth Utilities Corp. is back to the drawing board after both the CNMI House and Senate public transportation and utilities committees urged yesterday the corporation’s board of directors to do so after both oversight hearings.

According to members of both PTUC committees, the CUC emergency procurement of single 8- to 10-megawatt engine to answer the increasing energy demands of certain business establishments on island was suspected to be “unethical and unlawful” after investigations from both committees found possible areas for conflicts of interest.

Both committees clarified first that they were not opposed to the idea of a new engine, but was rather disturbed by the procurement process.

Investigations by both committees found that CUC board chair Adelina Roberto notarized the articles of incorporation of their contractor, namely General Pacific Services Marianas Inc. or GPSM with Amelia Toelkes as GPSM president, Philip Roberto as vice president, and Kimberly Smith as treasurer-secretary.

After further investigation, Roberto admitted to both committees that Philip is Roberto’s stepson. Philip Roberto used to work for Robert Toelkes, president of now bankrupt International Bridge Corp. Toelkes owes the government of Guam a total of $4.8 million in business tax and the U.S. Internal Revenue Service $9.2 million in taxes.

Roberto later told Saipan Tribune that it seems CUC is back to the “drawing board” as far as the GPSM deal is concerned.

Another relationship that was questioned was Albert Taitano as GPSM’s registered agent. Investigations by both committees found that Taitano and his son, along with Philip Roberto, were related to GPSM; Taitano’s son and Philip Roberto currently work for Guam Sen. James Espaldon (R-Guam), who is a spokesman and representative for the GPSM contract.

Both Senate PUTC chair Sen. Sixto Igisomar (R-Saipan) and House PUTC member Rep. Edward Propst (Ind-Saipan) questioned the relationship of Adelina and Philip Roberto during their respective hearings and whether Adelina was aware of Taitano being registered as GPSM’s agent.

Roberto told both committees that she was not aware of Philip Roberto acting as vice president for GPSM and Taitano acting as registered agent when she was presented the documents for notarization.

“When I did the notary for Amelie Toelkes and Smith, the documents sent to me were their documents. I looked at their identification and it matched. That is what I notarized. Anything after what I notarized—the initial articles of incorporation and affidavit—I have no knowledge. The name of director Taitano, as [Igisomar] mentioned, was not included in the package that I notarized,” she told the Senate PUTC.

“Philip Roberto being a vice president then, [was out of my knowledge]. I [did not know], so I do not see myself [as having a conflict of interest]. All I notarized was the documents presented to me by Amelia Toelkes as an affidavit with the by-laws and articles with no indication that they were purchasing an engine for CUC,” she added.

Documentation showing Roberto signing as a notary public for Saipan was dated March 23, 2016.

Fraudulent behaviors?

House PUTC member Propst was pushing for a total cancellation of the procurement, going as far as saying there were “serious problems” with GPSM itself.

“I see no flaws here. I see a serious problem here,” Propst said to the CUC management and board.

Propst questioned GPSM’s credibility, as GPSM was incorporated in March 2016, while claiming partnership with Fairbanks Morse. Propst asked William Gilmore, CUC deputy executive and chair for the CUC selection committee, if he confirmed the partnership. The latter did confirm, but then found out that GPSM did not have a partnership with Fairbanks Morse.

According to Gilmore, GPSM represented themselves as “partners with Fairbanks Morse.”

“On one page [of documents obtained by Propst], [GPSM] claims they have a partnership. On the second day of negotiations, we find that there is in fact no partnership. Is Amelia Toelkes and GPSM a partner or an agent for Fairbanks Morse?” asked Propst.

Gilmore, who found out the second day of negotiations that there was no partnership, said, “We found out on the second day that GPSM would be the primary contractor for the project and Fairbanks Morse would be stepping back and be a sub-contractor.”

“A no-experience company—less than a year old—is willing to come in and procure a single 8- to 10-megawatt generator, correct?” asked Propst.

Gilmore confirmed Propst’s question. According to Propst, there were disturbing red flags that could be found by people that had no expertise in engines.

Propst summarized his findings, claiming that his investigations discovered additional financials included in the request for quotation. The additional finances belonged to a reported GSP, LLC.

“The financials were not of GPSM,” said Propst.

According to Propst, further investigations of the GPSM documents claim that GPSM was established since1983.

“In the front pages of the documents, [GPSM referred to themselves] as a new company but in the back, they claim that they have several projects that were completed in Micronesia since 1983. Which one is it?” asked Propst.

According to Gilmore, GPSM indicated that documents presented to CUC were brochures and nothing else.

Senate PUTC chair Igisomar told the media that the appearance of a conflict of interest should be enough for the members to voluntarily recuse themselves from discussions pertaining to the procurement.

“In order to better the processing of contracts in the CNMI, a mandatory automatic conflict of interest form should be available for every contract and agreement must fill out—whether there is a conflict or not,” he said.

Future legislation on the forms has not been confirmed.

House PUTC chair Francisco Dela Cruz (R-Saipan) told reporters that the hearing was mostly about the board and management’s lack of transparency on the issue.

“The committee asked for the cancellation of the proposed purchase with GPSM and immediately restart the process,” further reiterating the need for a new engine to address the future power needs of Saipan.

Of the four CUC board members present during the proceedings, only David Sablan Jr. chose to take an oath and swear to tell the truth. CUC executive director Gary Camacho, deputy director William Gilmore, and CFO Antonio Castro also took the oath.

Aside from Sablan and Roberto, other CUC board members in attendance were Eric San Nicolas and Ike Perez. Albert Taitano only took part in the portion of the Senate hearing. Joe Torres was absent.