DPL issues notice of violation to Palacios’ company

Arnold I. Palacios

The Department of Public Lands has issued a notice of violation to a company owned by Lt. Gov. Arnold I. Palacios for allegedly failing to secure permission or concurrence from DPL to sublease the public lands the company had leased to a private company.

Describing DPL Secretary Sixto K. Igisomar’s actions as highly unethical and politically charged, Palacios said Tuesday that he finds it highly suspect that Igisomar chose issues to highlight right in the middle of the runoff election.

But Igisomar said yesterday that the notice of violation issued is standard and not political. “The sensitivity of this matter is understandable, but rest assured there is no subjectivity on the matter,” said the DPL secretary in a press statement.

The issue started on Sept. 29, 2022 when two taxpayers, Steven Dela Cruz and William Villagomez, asked DPL to report to the Office of the Attorney General and the Federal Bureau of Investigation Palacios’ “criminal act” of allegedly defrauding the government by assigning to a private company public lands that he had leased from DPL.

Igisomar said yesterday that in response to an inquiry by Dela Cruz and Villagomez, DPL’s Compliance Division initiated a review of the account of Palacios’ company, A&M Corp.

Igisomar said the premises of A&M Corp. was visited on Oct. 6, 2022, via an official notice that was sent to the company on Sept. 23, 2022—way ahead of the request of Dela Cruz and Villagomez.

He said as a result of the inspection, the Compliance Division issued a response letter to Dela Cruz and Villagomez on Nov. 17, 2022.

Subsequently, he said, their Compliance Division issued a notice of violation to A&M Corp. for failure to secure DPL’s permission or concurrence to sublease the public land that was leased to the company.

Igisomar said the current lease with A&M Corp. is a “new” lease, not a renewal or extension. “Whatever terms and conditions prior—during the old lease—is not automatically applicable to the new lease,” he said.

Igisomar said Palacios’ statement that DPL’s conduct is unethical and politically charged is baseless and improper. He said the amount due is nominal in the amount of $207 but was included in the notice as a standard practice, along with the insurance policy requirements.

“It is the duty of every lessee to comply with the terms and conditions of the contract with DPL, and must furnish every required documentation to DPL, not to wait for DPL to review or inspect lessee first,” Igisomar said.

However, he said, the main violation of concern relates to the “no sublease” provision. He said the lease agreement executed on March 23, 2021 expressly states that “DPL will not consider any assignment, sublease, or transfer during the initial five years of the lease terms.”

Igisomar said on Nov. 20, 2021, eight months after the lease was signed, lessee entered into a sublease agreement in the amount of $4,500 with South Pacific Lumber in violation of the March 23, 2021 lease agreement.

He said further, DPL staff reported that South Pacific Lumber has allowed Big Brother Auto Shop through a lease agreement (another violation) to enter and occupy DPL’s premises for the operation of a commercial auto repair shop.

Igisomar said these violations remain unsolved.

He said DPL has worked in good faith with Palacios in all the transactions by allowing a promissory note in the amount of $65,000 (significant reduction) to resolve a previous debt.

“We will continue to work in good faith to resolve the most recent violations,” the secretary said.

Palacios, in his press statement issued Tuesday, said the quarterly amount owed by A&M Corp. has already been paid. He was notified of the amount due two weeks ago and he paid it that morning (Tuesday).

Palacios said regarding the sublease of the warehouse to a third party, it was permitted under the original lease and DPL has been on notice since day one. However, he said, in an abundance of caution, he has forwarded this letter to his attorneys for further review and to consult with him on his options.

Oscar Babauta, who chairs the Palacios-Saipan Mayor David M. Apatang executive committee, said in the same press statement that although he appreciates Igisomar’s concern for diligently seeking payment of $207 to the agency, which has already been paid, he encouraged him to put more meaningful efforts to collect the outstanding rent and security deposit from Imperial Pacific International (CNMI) LLC, amounting to over half a million dollars.