By Gemma Q. Casas
Variety News Staff

A LAWMAKER is asking the government to investigate United Micronesia Development Association after its former senior officer pleaded guilty to making false statements to federal authorities to cover up a tax shelter scheme.
But the Fitial administration said the firm faces no “apparent risks or dangers.”
“I am not aware of any UMDA liability from the tax case,” said Press Secretary Charles P. Reyes Jr. “I understand that the matter may be confined to one of UMDA’s employees, managers, shareholders, or directors, rather than with the company as a whole. We would have to look into this issue.”
Rep. Manuel A. Tenorio, R-Saipan, said he spoke with the president of UMDA, Peter Sinclair, and was told that the government has 50,000 shares of common stock in the firm valued at $20 per share for a total of $1 million.
Tenorio said aside from the government, hundreds of local citizens and companies also own stock in UMDA and its sister company, MCV, which was recently purchased by the New York-based firm, Seaport Capital.
In a Feb. 14 letter to Gov. Benigno R. Fitial, Tenorio said the government stock should be sold to the highest bidder.
“First, as your office may be aware, there are hundreds of our local citizens and companies who own stock both in UMDA and MCV…. In addition, the CNMI government owns 50,000 shares of common stock in UMDA with a book value of $1 million. The public interest and the government both must be protected,” Tenorio said.
“Secondly, Mr. Governor, it behooves the CNMI government to look into the allegation that it may be a benefactor to millions of dollars in corporate taxes due to it as a result of the tax shelter scheme allegedly committed by a UMDA senior officer,” he added.
The lawmaker said it will be to the government’s advantage if it takes action now rather than later.
“Due to the unfortunate incident and the problems that might follow as a result, it is my strong sentiment that the CNMI government should conduct its own investigation to preserve the public funds and its interest in the company for several reasons,” Tenorio said.
He added that this is not the first time that the CNMI government has been victimized in a tax evasion scam.
“Let us not let our guard down especially as this particular problem may have far reaching fiscal implications not only to our local shareholders and the CNMI government but also to our friends and neighbors in Micronesia who have interests in the company,” he added.
Reyes said the government has no plans to sell its UMDA shares.
“The company has not suffered from (the criminal conviction of its former official). We appreciate (Tenorio’s) concerns but this issue is overshadowed by the federal takeover issue. He’s just raising the possibility (of a problem) but there’s no evidence so far,” Reyes said in a phone interview.
Variety repeatedly tried but failed to get a comment from UMDA.
According to the Associated Press, Michael Grandinetti, a former senior executive of UMDA, pleaded guilty to making false statements to federal authorities.
Grandinetti, 54, was charged in U.S. District Court for the Southern District of New York. He admitted receiving and sharing UMDA’s tax shelters with certain tax shelter promoters in the U.S.
Grandinetti will be sentenced in New York on Jan. 8, 2008.