Fund Administrator Richard Villagomez said auditor J. Scott Magliari, whose firm was the sole respondent to the recently closed Request for Proposals for audit services, informed the agency that “even if indemnification from P.L. 17-51 were an option, he could not accept an indemnification from the Fund because it would violate his requirement to maintain independence as an auditor. The standard of independence applies to all audit firms.”
Magliari told the Fund that they explored the possibility of obtaining insurance to cover liabilities created by the derivative lawsuit measure, or P.L. 17-51; however, he was not able to find an insurance policy to cover the unforeseen liabilities of the law even after an extensive search.
He told the Fund that his firm was withdrawing the proposal.
Villagomez said they will be issuing an emergency RFP as approved by the board during its emergency meeting last Tuesday.
“It is an emergency because the Fund has deadlines to meet to comply with the auditor’s requirements as well as the CNMI Government’s Single Audit,” the Fund administrator said.
He added, “If the Fund is not able to have its books audited, or if the auditor’s opinion is qualified due to the delay in getting the audit done, it will cause the entire CNMI Single Audit to be a qualified report. If this happens, it will be very bad for the CNMI.”
Last Tuesday, as it sought to contain the damage of P.L. 17-51 to the assets, the Fund board authorized the investing in mutual funds and immediate issuance of emergency RFP’s for investment consultant, actuary and auditor. It also sought to fill two potential vacancies in its legal team by addressing budget issues.
Villagomez said, “The contracts between the Fund and investment consultant, actuary, and money managers, respectively, were broken by P.L.17-51.”
Villagomez said P.L. 17-51 is chasing all the service providers away.
P.L. 17-51 is bad
Oscar Camacho, expressing his own opinion and not of the Commonwealth Retirees Association of which he’s the treasurer, told Variety in an interview, “Constitutional or not P.L. 17-51 is BAD.”
He said experts and those most affected by the law had expressed their concerns and opposition but the Legislature and the lt. governor did not heed to the experts’ pleas to have that not become law.
“Now they have havoc and how they deal with it they care less and care not. What was troubling was that the attorney general who works directly under the governor argued for the constitutionality of the law in court despite the Fund’s plea arguing that it be unconstitutional or that at the least a TRO be enforced until a remedy is found on how to placate the money managers’ and the fund consultant’s fears,” Camacho said.
On Friday, the Retirement Fund’s motion for temporary restraining order or preliminary injunction was denied by Superior Court Judge Kenneth L. Govendo who found P.L. 17-51 constitutional.
