‘Legislative initiative on MPLT unsupported by facts, history’

A Senate legislative initiative that seeks to amend the CNMI Constitution with respect to MPLT is unsupported by facts, history, and is unnecessary in its purpose, according to Marianas Public Land Trust chair Martin B. Ada.

He said the MPLT trustees have always welcomed scrutiny of their decisions and investments, but the proposed legislative initiative that he says is grounded on personal attacks of the trustees “is simply untenable.”

Ada expressed the trustees’ opposition to Senate Legislative 22-05 in his written comments dated April 30, 2021 and addressed to Senate Fiscal Affairs Committee chair Sen. Victor B. Hocog (R-Rota).

Authored by Sen. Justo S. Quitugua (R-Saipan), Senate Legislative Initiative 22-05 seeks to amend Article XI, Section 6 of the NMI Constitution. This will effectively require the MPLT and its board of trustees to exercise transparency and accountability, to provide for “reasonable” expenses of administration by law, and will require the Legislature to appropriate and approve MPLT’s annual operating budget.

Quitugua stated in the proposed initiative that the operations, functions, duties, and powers of MPLT and its board of trustees are not clearly defined or enumerated, leading to confusion, contradictory interpretations, and dissension among past administrations, MPLT trustees and members of the Legislature.

Ada said the legislative findings in the initiative are misinformed and selectively ignore the substantial return on investments MPLT has produced for the CNMI as well as its diversified local investments.

Ada said they will be happy to meet and confer with Hocog’s committee to respond with full transparency and accountability as to MPLT’s investments, administration and activities.

The chairman said the initiative’s statement that the trustees do not file financial statements other than their financial disclosure prior to confirmation is “simply incorrect.” He said every trustee has and continues to file their financial disclosure statement with the Office of the Public Auditor, pursuant to the CNMI Ethics Act.

Ada said every OPA audit or review has never made any finding that any trustee has failed to file nor refused to file any financial disclosure statement.

He said a section in the initiative concludes that the compensation, travel and per diem rates, personnel, and operations of MPLT “may be inconsistent with other government boards and commissions.” Ada said the trustees follow the CNMI government travel policy and that the trustee have implemented the travel policies of the CNMI Executive Branch.

Ada said the issue of trustee compensation has focused on the necessity of the frequency of meetings that were an issue in 2006—over 15 years ago—and has been corrected by the trustees’ own changes to the current policy.

He said the legislative findings of the initiative also purportedly “find” that MPLT does not submit a copy of its annual budget to the governor or the Legislature.

Yet Quitugua himself recognizes that neither Section 6 of Article XI of the CNMI Constitution nor the Planning and Budgeting Act compel legislative approval of MPLT’s annual operating budget, Ada said.

He said the language in the Analysis of the 1976 constitution as to MPLT makes it clear that the trustees are authorized by the constitution to “retain sufficient funds for the administration of the trust.”

Moreover, he pointed out, MPLT is designed to be “independent of either the executive or legislative branches.”

Ada said the language in the legislative findings are unsupported because the trustees’ expenditures are subject to annual audit and oversight by the OPA.

He said the trustees have always provided their annual report to the governor and Legislature.

Ada said Quitugua discusses in the Legislative findings MPLT’s particular investment with the APLE 501 pilot scholarship program, calling it “questionable conduct” and MPLT’s acquisition of private land for its administrative office.

Ada said the trustees did find it good policy to invest in a local scholarship loan program of up to $3 million—$1 million each for Saipan, Tinian, and Rota—for persons of Northern Marianas descent pursuing higher education.

He said the program was a loan program and MPLT would seek to have organized and formed non-profit organizations that would administer the funds with security pledged to protect MPLT’s investment against any loss. Ada said the initial program effort was on Rota with APLE 501 and that organization issued out loans averaging at $15,000 per loan, totaling $154,000.

Because of problems with that organization, Ada said, the trustees suspended the program, recovered a judgment against APLE 501 and assumed the portfolio to recover the funds.

Although borrowers have paid MPLT their loans, they have pursued and recovered funds from delinquent borrowers, he added.

Ada said the legislative findings take a selective approach with MPLT’s local investments to criticize an investment in local scholarship, calling it “questionable conduct.” He said the trustees disagree, although the experience with APLE 501 compelled the trustees to establish strict and elevated standards in its diversified local investments to guard against such a result.

On the other hand, Ada said, the initiative ignores MPLT’s more substantial investments with secure transactions directly benefitting the Executive Branch, which the Legislature could not fund by appropriation. The fact is this: the approximate total of these diversified local investments exceeds $30 million, Ada said.

The chairman also cited other “significant MPLT investments” that the initiative speaks nothing about.

As to the MPLT’s administration building investment with the purchase of property, Ada said the property itself has continuing value as it is located on Capital Hill. He said the record is clear that MPLT was compelled to pursue its own facilities after the NMI Retirement Fund would no longer allow MPLT as a tenant and MPLT could not secure its own building on any guaranteed lease agreement on Capital Hill.

Ada said Quitugua describes MPLT’s investment as questionable and “possibly unethical conduct” despite the fact that such a charge is unsupported by any audit finding or review by OPA.

The chairman said the trustees are required under Article XI to publish an annual report to the people of the CNMI and that every year the trustees have done so, which includes an accounting of all revenues received by the trust.

As to the proposal of the initiative which seeks to impose legislative approval and appropriation of MPLT’s annual budget, the trustees say this will run afoul of the fundamental constitutional intent of MPLT to be independent of the executive and legislative branches.

“Controlling MPLT’s annual budget would…restrict [the trustees’] ability to make investment decisions as needed and for costs of administration,” Ada said.