Marianas Variety

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    Sunday, July 23, 2017-10:00:51A.M.

     

     

     

     

     

FEATURE: Ethics complaint regarding Guam Sen. James Espaldon

DEAR Honorable Guam Speaker Benjamin J.F. Cruz:

Hafa adai yan tirow woomi. It is unfortunate that I am compelled to file an ethics complaint regarding one of your colleagues, but as a representative of the people of the CNMI and as a CUC rate payer, 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 good senators will address the many questions that have yet to be answered.

At the core of this complaint is Senator Espaldon’s role and relationship with a Saipan-based company called General Pacific Services Marianas Inc., which submitted to the Commonwealth Utilities Corporation a Request for Quote pertaining to RFQ-PG17-001, the description of which is “Turnkey supply, installation, and commissioning of 1 x 8-10 MW of diesel generating plant system at CUC Saipan Power Plant 1, Saipan.”

Edwin Propst

This highly controversial RFQ submitted and nearly awarded to GPSM launched investigations by the following CNMI government entities:

• Committee on Public Utilities, Transportation and Communications of the Senate,

• Committee on Public Utilities and Communications of the House of Representatives,

• Office of the Attorney General, and

• Office of the Public Auditor.

After fraud and numerous conflicts of interest and possible collusion were revealed through confidential informants and our investigations, RFQ-PG17-001 was finally canceled. The findings and conclusions from these investigations led to CNMI Gov. Ralph Deleon Guerrero Torres calling for the resignation of five CUC Board members last Friday, May 12, 2017. GPSM President Amellia Toelkes claimed in her company’s RFQ submission that GPSM and Fairbanks Morse were a team and that they had “an established relationship with multiple successful projects.” As chief negotiator for the GPSM RFQ, Senator Espaldon made the same claims to CUC management and CUC legal counsel Jim Sirok.

As it turned out, no such partnership existed. In fact, Fairbanks Morse Power Generation Segment Manager David McCallum submitted a “Letter of Correction” to the Marianas Variety on April 17, 2017. Mr. Mccallum wrote, “Fairbanks Morse was not a ‘partner’ to GPSM nor were they a signatory to the agreement between GPSM and CUC.” Yet the GPSM RFQ submittal uses a joint letterhead with Fairbanks Morse and even has David McCallum’s signature at the bottom of the page, right next to the signature of GPSM President Amellia Toelkes.

The only way that GPSM should have been considered for this RFQ is if Fairbanks Morse was in fact their partner, as CUC was to accept only those solicitations from Original Equipment Manufacturers, or OEM’s. GPSM was not teaming up with Fairbanks Morse, nor were they partners. Instead, GPSM was simply a salesman, or middleman. This should have automatically disqualified GPSM from the RFQ, but the CUC Board decided to select GPSM for the RFQ, despite receiving advice from CUC Deputy Director William Gilmore and CUC legal counsel Jim Sirok that they should not go with GPSM due to several red flags and concerns.

Although Amellia Toelkes is the president of GPSM, she was not involved in any of the negotiations with CUC management and CUC legal counsel Sirok. Instead, Mrs.

Toelkes was somehow able to obtain the services of Senator Espaldon to act as the chief negotiator for the CUC RFQ. One can only wonder why a Guam senator would be the chief negotiator rather than the company’s owner, Amellia Toelkes.

Aside from the false claim that GPSM and Fairbanks Morse were a partnership, GPSM was also deceitful in other parts of their RFQ. GPSM was incorporated on March 23, 2016. Yet in their RFQ, GPSM claimed to have managed several successful projects in the CNMI. One example appears on page 4 of GPSM RFQ Attachment B, in which GPSM claims that “GPSM operated CUC Plant 2 for four years (1991-1995).”

If GPSM President Amellia Toelkes incorporated her company in March, 2016, how can she claim that GPSM operated a CUC plant from 1991 to 1995? In the GPSM RFQ, there are claims that GPSM, a one-year-old company, was responsible for numerous projects throughout Micronesia and claims it was “founded in 1983, a firm with extensive experience in design and heavy construction.”   How is this possible?

What is deeply troubling is that Senator Espaldon was the chief negotiator for this fraudulent RFQ submission to CUC. Through our investigations, we learned the following:

• Senator Espaldon’s chief of staff, Phillip Roberto, was GPSM’s Vice President,

• Phillip Roberto was the stepson of CUC Chairwoman Adelina Roberto,

• CUC Chairwoman Adelina Roberto notarized the articles of incorporation for GPSM,

•   GPSM’s registered agent was CUC Board member Albert Taitano,

• Albert Taitano’s son was employed by GPSM, and

• Senator Espaldon has claimed to be the attorney for GPSM.

After our PUC House committee meeting with CUC on April 11 was completed, Senator Espaldon spoke with me as Iwas leaving that meeting with my chief of staff, Vince Camacho. Senator Espaldon and Ispoke briefly, and he told me that he had no idea that his own staff member, Phillip Roberto, was the Vice President of GPSM. I told Senator Espaldon that Ifound that hard to believe, especially since Espaldon was the chief negotiator for this $11.7 million contract that was almost given to GPSM.

Incidentally, I recall that Senator Espaldon, earlier in the day, sat through the PUC House committee meeting with Robert Toelkes, the husband of Amellia Toelkes. Robert Toelkes was also the local representative for CapFa or Capital Projects Finance Authority and was in the RFQ negotiations along with Senator Espaldon and CUC management and CUC legal counsel Sirak. As it turned out, Robert Toelkes was trying to convince CUC to finance the 8-10 megawatt engine over a period of 20 to 30 years, even telling CUC legal counsel Sirak that CUC would not have to get legislative approval for the loan. Sirak disagreed with Toelkes. CapFa was the same company that Robert Toelkes represented when he and his wife Amellia Toelkes tried to convince the CUC Board and management to purchase, through an unsolicited bid, a $160 million reverse osmosis system, and the same company Toelkes used to finance the rebuilding and repair of JFK High School.

Senator Espaldon claims that when he comes to Saipan and does business, he is wearing the hat of a “private citizen.” Can Senator Espaldon reasonably expect anyone in Guam or the CNMI to believe he can so easily become a private citizen and that his title as a Guam senator will not give him greater access to elected and appointed officials?

In an article that appeared on April 15, 2017 in the Guam Daily Post by Gaynor D. Delano, Espaldon told the Post that he was “an attorney who negotiated on behalf of a company called General Pacific Services Marianas Inc., or GPSM.” If this is the case, does Senator Espaldon have a license to practice law in the CNMI? How many “hats” does Senator Espaldon wear?

We do know that Senator Espaldon has flown to Saipan on various occasions to conduct business, but who is paying for his trips? Mr. Speaker, I urge you and your colleagues to look into all trips to Saipan taken by Senator Espaldon while he has been in office. Were all trips to Saipan financed by Senator Espaldon as a private citizen?

According to a Marianas Variety article on February 1, 2015 entitled, “CUC board urged to reduce power rates,” Senator Espaldon was in Saipan once again as a private citizen, and this was more than two years ago. In the article, Senator Espaldon said “he knew a company interested in the request for proposals announced by CUC in November 2014 for new power supply resources to service Saipan.” Is Senator Espaldon truly concerned about the CNMl’s power issues, or is he lobbying for companies trying to do business with CUC?

In his trips to Saipan, Senator Espaldon has visited members of the House and Senate and the Administration, and has had meetings with CUC Board members and management. Was Senator Espaldon paid to be the chief negotiator for GPSM? Was he promised future payments or benefits if this deal succeeded? Were any of his trips to Saipan paid for by GPSM, or Amellia or Robert Toelkes? Did he receive any gratuities or gifts or former campaign contributions from Amellia or Robert Toelkes?

This information is crucial for ongoing investigations into the GPSM RFQ, as we would like to know if there was collusion between GPSM and the CUC Board and any elected officials. Senator Espaldon needs to explain why he would fly to Saipan on multiple occasions to help GPSM secure a lucrative contract. What is the nature of their relationship? Does Senator Espaldon have any business ties with Amellia or Robert Toelkes? We do know that his chief of staff, Phillip Roberto, used to be employed by Robert Toelkes through IBC. The people of the CNMI deserve to know if there are any other possible conflicts of interest we are not aware of, and we hope you can help us with this.

Mr. Speaker, I hope the ethics complaints and questions I have submitted to you will be investigated. We have only scratched the surface so far and hope to discover the truth behind this GPSM RFQ deal that was stacked high with fraud, conflicts of interest, and what appears to be collusion. Please feel free to contact me through email or by phone should you have any questions. Undangkulu na si Yu’us ma’ase yan Ghilissow.