But the report also said — without elaborating — that the U.S. Attorney’s Office for the District of Guam and the NMI declined prosecution of this investigation.
The CNMI Attorney General’s Office can prosecute but the AG is an appointee of Gov. Benigno R. Fitial who awarded the contract to Ada.
According to the report, Attorney General Edward Buckingham acknowledged that ethics concerns existed and that Ada had a conflict of interest.
“He thought, however, that the need for the contract outweighed ethics concerns,” the report said. “Division of Procurement and Supply Director Herman Sablan said he felt that the sole source award was justified because the justification indicated that the attorney general reviewed the document. He relied on the [AG’s] opinion rather than his own review of the document.”
The report said the inspector general initiated its investigation in Nov. 2011 “based upon media reports highlighting ethical concerns in the award of the contract to [Ada’s] Integrated Professional Services,” or IPS.
Ada resigned from his position as secretary of the Department Commerce on Oct. 8, 2010. Four days later, a $392,406 service contract was approved for the not-yet-formed IPS to manage the CNMI’s American Recovery and Reinvestment Act, or ARRA, projects and grants, which was one of his tasks as head of Commerce.
The inspector general’s report noted that IPS was awarded the contract just five days after Ada resigned from the government. “1 CMC § 8543(b), Postemployment Restrictions state that ‘No former public official or public employee shall, for a period of one year after the termination of [his] term of public office or public employment, assist or represent any person in any business transaction involving the commonwealth if the official or employee participated personally and substantially in the subject matter of the transaction during his term of public legal authority. With respect to a contract, this prohibition shall be permanent as to that contract.’ ”
Moreover, “Ada gained a distinct advantage in obtaining the ARRA management contract.”
He “used information not generally available to the public for his own economic benefit. Only Fitial and Ada knew of the possibility of privatizing CNMI ARRA management until after they agreed to the framework of the deal,” the report stated.
It noted that the sole-source justification memorandum from Fitial to Procurement and Supply on Oct. 6., 2010 acknowledged Ada’s advantage: “Ada has extensive historical and current knowledge, as well as non-public information of all ARRA funds. His clear advantage with the intricacies of the ARRA funds creates a distinct advantage should the CNMI government bid out the services….”
Ada, the report stated, is permanently disqualified from any contract involving his former governmental duties.
Evidence “suggest[s] that the contract…violated multiple CNMI ethics rules, including 1 Commonwealth Code (CMC) § 8543: Post-Employment Restrictions; 1 CMC § 8531: Use of Office, Staff or Employees of Public Office; and 1 CMC § 8532: Restraint on Use of Public Position to Obtain Private Benefit; and 1 CMC § 8544: Negotiating for Nongovernment Employment. In addition, we found that the contract may have violated CNMI Procurement and Supply Regulations, Part 700, ‘Ethics in Public Contracting.’ Under the terms and conditions, the contract is null and void if the procurement processes or execution fails to comply with CNMI Procurement and Supply Regulations.”
The report said Fitial “was afraid CNMI would have lost all of its $97 million in ARRA funding if he had not awarded the contract to IPS. He acknowledged, however, that he had not discussed this concern with any of the awarding agencies.”
The inspector general’s office contacted the awarding officials from several agencies that provided ARRA awards to CNMI: “While all of the officials emphasized that ARRA awards involve enhanced reporting requirements and increased scrutiny, all officials reported that they would not have withdrawn funding for a single late report.”
Senate President Paul A. Manglona, in an interview Friday, said based on the report, the Fitial administration did not break any federal law but “possibly some local laws were violated,” he added quoting the report.
Public Auditor Mike Pai in a separate interview said “actions have to be taken by the local officials first if they want [the Office of the Public Auditor] to do something further with the report and they will instruct us on that.”
The inspector general’s office said it “conducted this investigation jointly with the CNMI Office of Public Auditor. OPA will provide its opinion separately to the CNMI government.”
Like the AG, the public auditor is a Fitial appointee.
“I know…that whenever a sole source [contract] takes place in a procurement process, there are reasons for the public to raise concerns and I believe that is the reason for OPA to initiate the review,” said Manglona, Ind.-Rota.
In a statement Sunday, Congressman Gregorio Kilili Camacho Sablan said:
“The inspector general’s report speaks for itself in detailing the violations of numerous commonwealth laws and regulations in the award of a sole-source contract to Integrated Professional Services to manage some $100 million in federal Recovery Act funds for the Northern Mariana Islands. It does appear that the public trust has been violated.
“I am sure that I speak for many people in the commonwealth, when I say how deeply disappointed I am that the United States Department of Justice has declined to use the inspector general’s findings as the basis for prosecution of the public officials named in the report. Because the CNMI attorney general was himself a party to the award of the contract, we can have little confidence that his office will press charges or seek recovery of funds.
“The commonwealth and its people have worked very hard over the last years to re-establish respect for our islands and to regain acceptance as part of the American political family. A report of this nature — and the illegal activities of highly placed government officials it points to — represents a setback in our effort and an embarrassment to us all.
“This is especially unfortunate at a time when the commonwealth and its people continue to struggle economically and need the support of the federal government to protect those who are suffering. How can we expect more help to rebuild, when the generous assistance of the American people that is coming to us through the Recovery Act is siphoned off for the personal gain of a few individuals — as the inspector general reports?”
The investigative report can be accessed at http://www.doioig.gov/images/stories/reports/pdf/CNMIARRAManagement%20-%20Public.pdf
