In his letter, Fund Administrator Richard Villagomez said Senate Bill 17-43, which passed the House last week after a contentious discussion, is “substantially as offensive as the previous version and will have the same damaging effects to the Fund.”
The latest version of S.B. 17-43 was recommended for passage by the bicameral conference committee tasked to finalize a draft acceptable to both the Senate and House. But when the committee report was discussed during the House session on Wednesday, some members of the House leadership opposed it.
Villagomez said the measure “will make it very difficult for the Fund to find any party that would be willing to enter into a contract because the party would be responsible, not only for satisfying the board of trustees, but all the 20,000 potential intended beneficiaries of the Fund in all aspects of performance of its contract.”
In other words, he said the high risk of potential litigation would discourage investment consultants and money managers from dealing with the Fund.
“What other reason could be there for this legislation to proceed?” Villagomez asked.
If the lawmakers were not immune from liability for acts performed in their official capacity, Villagomez said the enactment of S.B. 17-43 “would no doubt subject those voting in favor and responsible for its enactment to mind-numbing liability for the harm this bill will cause the fund.”
He added, “For the CNMI to re-write hundreds of years of contracts and trusts laws and civil procedure in order to affect the outcome of…one particular case, and to unjustly enrich a few individuals who have lobbied incessantly, is an abomination.”
Some retirees who have sued Merrill Lynch, the Fund’s former financial consultant, for negligence and breach of fiduciary duties have lobbied for the bill’s passage.
After saying that there was no evidence against Merrill Lynch, the Fund later announced that it was joining the lawsuit against the company.
