But the Marshall Islands Shipping Corporation refused to sign, forcing the issue to a head earlier last week because funding for ships had been withheld by Finance since the new fiscal year started on October 1, virtually halting service to the outer islands.
Earlier last week, Transportation and Communications Minister Kenneth Kedi asked the Attorney General’s Office for a legal opinion on the hold up in funds that had stalled ship service to remote outer island populations, and acting Attorney General Tubosoye Brown weighed in on the side of the agencies. Brown said on Thursday that the Ministry of Finance was in error, and the problem has been corrected with money to begin flowing to agencies shortly.
But until the Attorney General’s Office stepped in, both Majuro Atoll Waste Company and the College of the Marshall Islands had signed agreements that Finance required in order to get funding to prevent bankruptcy. And the lack of funding for shipping had virtually shut down lifeline service to outer islands populations who depend on ships to buy food and sell copra (dried coconut meat used to make coconut oil).
Brown said the government’s Public Service Commission salary rules do not apply to agencies, which are established by law to be independent of government. “They are independent by statute,” Brown said. “They have their own processes, hiring procedures and pay scales.”
He called it an error by staff at the Ministry of Finance. “I informed the Secretary of Finance (Jefferson Barton) and he immediately corrected it,” Brown said. “It’s an administrative error.”
But that administrative error threatened to bankrupt Majuro Atoll Waste Company, which was forced to sign an incorrect agreement including the provision about coming into line with government pay scales after it missed a payroll while waiting for new fiscal year money in early October.
The College of the Marshall Islands also recently signed a similar agreement with Finance. College President Kenneth Woodbury Jr. said Tuesday that “we have given the Ministry of Finance a statement of compliance provided that the Public Service Commission can provide us with vital information necessary to make proper determinations of comparable positions.” As of mid-week, the Ministry of Finance had not replied nor provided operating funds due CMI.
Marshall Islands Shipping Corporation board chairman Alson Kelen said they refused to sign the agreement “because it wasn’t fair.”
The parliament already approved the budget for the Shipping Corporation for fiscal year 2011 and then after the budget was approved the government wanted the agency to change its pay structure, he said.
He said the government had established the Shipping Corporation — like other government entities — under the authority of an independent board, but was then attempting to tell the board what to do.
The net effect of the standoff between Finance and Shipping is that no money has flowed to Shipping since October 1 and Kelen said that the agency had exhausted all of its shipping-generated revenue that it has used the past few weeks to meet payroll.
Kelen said he has been told by Finance officials that because the issue has now been resolved, funding will be provided soon. He said ships are being loaded and bookings taken, but the Shipping Corporation does not have money to buy fuel, so the vessels are tied up in port until the first FY 2011 government funding is received.
Brown said these agreements are in error. Ministry of Finance staff was inadvertently using PSC contracts that do not apply to agencies, he said.
“We have corrected it. We are concerned that it doesn’t cause problems for people (agencies) who need payments,” Brown said.
