THE CNMI Supreme Court yesterday removed attorney Randall T. Fennell as bank of Saipan’s temporary receiver.
The high court’s order was signed by Associate Justice Alexandro C. Castro who did not hold a hearing on the Calvo & Clark law firm’s motion to remove Fennell, much to the surprise of the lawyers and government officials involved in the case.
Castro also ordered the Superior Court to proceed with yesterday’s 10 a.m. hearing, including the appointment of a new temporary receiver.
Castro’s order, however, was filed in court at 10:10 a.m. when Superior Court Presiding Judge Edward Manibusan was already in the courtroom for the receivership hearing.
Attorney General Robert T. Torres told Variety he was surprised by Castro’s order.
Torres said while Castro ordered Fennell’s removal, Manibusan yesterday stated that Fennell would continue as temporary receiver until the disqualification matter was resolved.
“So obviously there is conflict and confusion,” Torres said, adding that the Attorney General’s Office will file a motion for reconsideration of Castro’s order.
Acting Commerce Secretary Fermin M. Atalig told Variety that with the absence of the receiver following Castro’s order, the law allows him to act as receiver.
Atalig said he would implement temporary regulations to carry out the functions of the bank in such limited activities as restriction of withdrawals and other transactions.
Gov. Juan N. Babauta and Lt. Gov. Diego T. Benavente said they were “stunned” by the Supreme Court’s order. But both officials refused to comment further.
During the trial court proceeding yesterday, Manibusan did not conduct hearings on all motions, including the issue on the appointment of a new temporary receiver, because the Calvo & Clark law firm, on behalf of Bank of Saipan, Inc., filed a motion to disqualify him.
Manibusan said he could not address all other motions before the disqualification issue had been resolved.
Manibusan said he would set a date for a hearing on the disqualification motion and allow the parties in the receivership to respond. Another judge is expected to handle the disqualification issue.
Castro in his order stated that “there shall be no further ex parte communications between the Superior Court and any party or attorney in the receivership matter.”
“All proceedings must be made on the record,” he said.
The new temporary receiver will carry out his duties that include taking all measures to generate revenue, collect sums owed to the bank, and other means to re-establish the bank’s solvency and ensure its continued operation, Castro said.
He said the new temporary receiver will manage the daily operations of the bank as a fiduciary to the depositors, including the CNMI government and its agencies.
“This court encourages the new temporary receiver to work with all concerned parties to rehabilitate the bank and return it to solvency, if possible,” Castro said.
Last May 28, Bank of Saipan, Inc. filed in the CNMI Supreme Court a petition raising “serious concerns” with respect to the receivership proceedings and seeking assignment of the case to another judge.
Calvo & Clark lawyers said their client had raised serious concerns with respect to an ex parte “private briefing” of the court by Fennell and his counsel over Bank of Saipan, Inc.’s written objections.
Calvo & Clark, contrary to its previous position, is now opposing the appointment of Oscar Camacho as Fennell’s replacement.
Attorney Rodney J. Jacob of Calvo & Clark said Camacho “is not and cannot be independent because he works for the executive branch, which over the past few weeks has worked closely with the conflicted temporary receiver (Fennell) to deceive the bank’s directors and shareholders.”
Jacob said prior to the commencement of the receivership, the government told the bank’s board of directors that Camacho would be the receiver.
In a “good faith gesture,” Jacob said the board agreed to work with Camacho.
Jacob alleged that Atalig “ambushed” the bank by selecting Fennell, saying that Camacho was ineligible in light of his position as the governor’s special assistant for banking.
Torres said he was not aware of the motion for disqualification until yesterday when he heard it in court. “But apparently we were served this morning and we’ll take a look at that. So all substantive motions are taken off the calendar until we resolve the issue of disqualification,” he said.
“The receivership continues— the bank continues to operate pursuant to the order. The bank is in operation, and the banking commissioner will continue to monitor the developments,” Torres said before learning about Castro’s order.
