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Last updateWed, 18 Sep 2019 12am







    Tuesday, September 17, 2019-7:04:15P.M.






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MPLT board member explains opposition to loan agreement

THE lack of an “indemnification clause” in Public Law 21-3, which allows the government to borrow $15 million from the Marianas Public Land Trust “bothered” MPLT board member Pedro R. Guerrero.

In an interview on Monday, Guerrero, one of the two trustees who voted against the loan agreement between MPLT and the central government, said he wants to help the government but he also wants to make sure that the loan was in accordance with the CNMI Constitution.

Pedro R. Deleon Guerrero

Section 4, Article 10 of the CNMI states in part: “Public indebtedness may not be authorized for operating expenses of the Commonwealth government or its political subdivisions.”

The loan agreement which Gov. Ralph DLG Torres and MPLT Chairman Martin B. Ada signed on Friday included the following provision:

“Borrower herein, being the Commonwealth, agrees that it shall, at its own cost and expense, defend this Agreement as to any legal challenges including but not limited to suits or actions including any taxpayer challenges to the ability of the Commonwealth to borrow. Borrower hereby agrees to defend, indemnify and hold each trustee harmless for claims or suits arising out of or relating to this Agreement including all attorneys’ fees and cost necessary to defend such suits or actions except for claims and suits arising from breach of fiduciary duty, negligence, bad faith, willful misconduct or fraudulent action.”

But Guerrero said the agreement’s indemnification clause does not appear in the law itself.

“Having served for a long time in the Legislature, I am trained to look at the [law’s] intent very clearly,” the former House speaker said.

The CNMI Constitution is clear, he added.

He acknowledged that the attorney general believes that the loan can be allowed for “extraordinary expenses” as a result of Super Typhoon Yutu, but Guerrero said the CNMI Constitution does not provide an exception.

He said MPLT’s legal counsel, Robert T. Torres, stated in a memo that the “plain meaning of our constitutional debt limitation provision prevents our government from spending debt expenditures on the costs of obtaining and delivering government services. These are the costs that have an immediate connection to the conduct of the ongoing or day-to-day activities of the government. There is no exception for ‘extraordinary expenses.’ Therefore, when considering the proposed [loan] it is imperative that those funds not to be used on costs of obtaining and delivering government services.”

Attorney Torres recommended the inclusion of a provision stating that the Commonwealth, through the Office of the Attorney General, would defend, indemnify and hold harmless MPLT including the trustees and its agents.

“This should be authorized by legislation as well as by contract in the…transactional documents. Alternatively, in the absence of such protection I would counsel in favor of a certified question to our Supreme Court to determine whether the proposed expenditures are operating expenses within the meaning of and as may be permitted by the Constitution.”

Guerrero said that as a trustee, “I have to exercise my fiduciary duty very carefully.”

He added, “In looking at both legal opinions, I went ahead based on our own legal counsel’s recommendation that we ensure the protection of individual trustees.”

Besides Guerrero, trustee Pete Cruz voted against the loan agreement. Trustees Ada, Maria Frica T. Pangelinan, and Vianney Hocog voted yes.