Recharging CUC

May 31, 2017

 

Saipan — CNMI Gov. Ralph DLG Torres begins to recharge the troubled Commonwealth Utilities Corp. by appointing engineer Weston Thomas A. Deleon Guerrero and lawyer Matthew Holley to the board, which is part of the chief executive’s move to restructure the troubled power and water provider.

 

     Deleon Guerrero and Holley’s appointment papers came out on May 26 or two weeks after Torres put the lights out for six CUC board members, all gubernatorial appointees, asking them to step down. Torres’ decision finally pulled the plug on the controversial deal involving the purchase of a generator set.

     Torres needs to appoint four more before the CUC could have a fully functioning board. Former board members CUC Chair Adelina Roberto, Vice Chair Eric San Nicolas, Secretary Albert Taitano, Treasurer Joe Torres, and Non-resident member Dave Sablan were all appointed by the late Gov. Eloy S. Inos. Ike Perez, chair of the Commonwealth Development Authority, remains on the board as he occupies the slot designated for CDA, which holds a share in CUC.

 

   Deleon Guerrero is currently working as a Structural Engineer with Hofschneider Engineering Corp. on Saipan. He earned his engineering degree at the University of California, San Diego. The 29-year-old Deleon Guerrero previously worked as the steel bridge project manager with the Society of Civil & Structural Engineers in San Diego for a year then returned to Saipan where he became the acting building safety official and structural engineering staff at the CNMI Department of Public Works.

 

    Holley was an in-house counsel of the Northern Marianas Protection and Advocacy Systems Inc. before becoming a litigation attorney at Torres Brothers LLC, the law firm of Gov. Torres’ siblings. He also became an adjunct professor for three years at the Northern Marianas College and became an assistant public defender at the CNMI Office of the Public Defender when he arrived on Saipan. He first worked at the Office of the District Attorney in Bronx, New York as an assistant DA for the Investigations Division after earning his juris doctor at New York Law School in 2002 where he graduated cum laude at the top 14 percent of the class.

 

Torres’ move of asking the board’s resignation was prompted by public outcry the board’s questionable transaction with the General Pacific Services Marianas Inc. or GPSM for the now aborted procurement of a multi-million-dollar power plant generator set.

 

Questionable practices were raised during separate hearings held by the Senate and House committees on public utilities, transportation and communications in April. Minority Leader Edmund S. Villagomez and Rep. Edwin K. Propst blew the whistle on the deal, which they said did not go through proper procurement process. Subsequent inquiries later revealed the existence of conflicts of interests with some board members.

 

GPSM’s articles of incorporation — notarized by Adelina Roberto —names board member Taitano as a registered agent for the service of legal process. Amelia R. Toelkes is listed as president, Philip Roberto as vice president and Kimberly Smith, treasurer-secretary.

 

Phillip Roberto is the Adelina Roberto’s stepson and former chief of staff of Guam Sen. James V. Espaldon, who negotiated on behalf of GPSM. While an attorney by trade, Espaldon said he did not act in such capacity and that he has not received any compensation for his representation.

On May 16, Propst filed an ethics complaint with 34th Guam Legislature against Espaldon. “It is unfortunate that I am compelled to file an ethics complaint regarding one of your colleagues,” Propst said in a letter to Guam Legislature Speaker Benjamin J.F. Cruz. “But as a representative of the people of the CNMI and as a CUC ratepayer, Senator  Espaldon’s actions leave me with no other choice. Aside from submitting a formal ethics complaint, it is my hope that you and your senators will ask the many questions that have yet to be answered.”

 

According to Propst, Amelia Toelkes is the wife of Robert Toelkes whose company, International Bridge Corp., the contractor for Guam’s John F. Kennedy High School, a project that the company failed to complete. IBC, which filed for bankruptcy last year, reportedly owes the Internal Revenue Service $9.2 million in federal taxes and the Guam government $4.8 million in business taxes. Robert Toelkes was also implicated in the M/V Luta controversy, and named one of the defendants in a lawsuit filed by Japanese investor Takahisa Yamamoto.

 

The aborted deal involved the purchase of an 8 to 10 megawatt diesel generator at an estimated cost of between $10 million and $11 million. CUC Executive Director Gary Camacho wrote to GPSM president Toelkes expressing interest in buying the equipment from her company and its partner Fairbanks Morse. Camacho said CUC and GPSM panels met a number of times to discuss the terms of the contract and financing. He informed Toelkes that the board decided to push through with the project.

 

Fairbanks Morse was not connected in any way to GPSM, according to FM Power Generation segment manager David McCallum, who clarified that the company was not involved in the agreement between GPSM and CUC.

 

The highly controversial request for quotation submitted — and the purchase contract nearly awarded to GPSM — launched several investigations by the Senate Committee on Public Utilities, Transportation, and Communications; House Committee on Public Utilities and Communications; Office of the Attorney General and the Office of the Public Auditor. CUC later canceled the project.

 

In a report released last month, the CNMI Office of the Public Auditor suggested CUC would function better and would still be in good standing even without a governing board. OPA said CUC was incapable in functioning as an independent public agency. “History has clearly shown that a politically appointed board is unable or unwilling to exercise the necessary fiduciary responsibility for CUC to succeed,” said the report, which also recommended that CUC restructure its current set up. “For the new entity to be successful, it must have the political and financial freedom to chart an independent course in conjunction with oversight from the consumer/electorate.”

 

The report was based on documents since CUC was established in 1985. OPA has also recommended that CUC move from the corporate form to a cooperative, municipal corporation or private entity similar to its counterparts in Guam and Hawaii.

 

Rep. Francisco S. Dela Cruz, chairman of the House Committee on Public Utilities and Communications, expressed hope the new members of the CUC board would be more transparent with its functions so the public won’t be left in the dark. He also said he is looking forward to seeing the appointment of new members who are knowledgeable in the business and technical sides of running a utility agency.

 

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