THE government says the proposed rehabilitation plan offered by Bank of Saipan’s board of directors is a scheme designed to clip the receiver’s power over the banking institution.
“In short, your ‘plan’…is not supportable,” Commerce Secretary and Banking Commissioner Fermin M. Atalig said in a letter to Robert J. O’Connor, legal counsel for the bank’s directors.
“Alternatively, our office will propose recommendations to the receiver and the court as to the criteria for rehabilitation,” Atalig added.
He said meaningful negotiations cannot take place without resolving the ownership of the bank and without the board “accepting its responsibility.”
O’Connor was off-island yesterday, but Michael W. Dotts, who is also one of the bank’s lawyers, said the question on the ownership of the bank has already been “repeatedly answered.”
“Over and over we have repeatedly answered that questions,” Dotts told Variety yesterday.
He said Atalig’s letter “reveals its hidden agenda.”
According to Dotts, “they are pretending not to know what the truth is.”
Atalig said the government will urge the Attorney General’s Office to investigate the case for criminal prosecution.
Dotts said the intention of the board is to reorganize and reopen the bank.
He said they may offer higher interest rates to persuade depositors to maintain their accounts with the bank.
Dotts said the bank is not “insolvent.” The bank has a “liquidity problem” as most of its assets are in the form of treasury bills, he said.
“If the government will work with us, we can save the bank. The shareholders still have faith in them despite the tone of (Atalig’s) letter,” Dotts said.
Atalig said the rehabilitation plan of the bank’s board of directors failed to determine the status of the banking institution and the continued need for receivership.
He said the board was unable to “recognize and accept” its responsibility in this “banking debacle.”
The Commerce Department also disagrees with the board’s version of the bank’s financial condition prior to the appointment of Randall Fennell as receiver.
Atalig said the bank was not in sound financial condition and that the depositors were in danger of being defrauded when the government took over the bank through receivership.
Moreover, Atalig said the court should make a determination regarding the 52 percent of the bank’s shares claimed by Pacific Nakon International.
He also rejected the board’s contention that the receiver caused a lack of confidence in the bank.
Atalig said what caused the lack of public confidence was the bank’s inability to repay depositors and the activities of the board in delivering the control of the bank to individuals who defrauded the bank.
Atalig said the board’s rehabilitation plan also calls for the replacement of a “fully competent and honest receiver subject to the board’s approval on a quarterly or semi-annual basis.” These proposed restrictions are inconsistent with the court’s power to control the receiver, he said.
Further, the government will not take any position on the board’s composition until civil and criminal investigations are completed, Atalig said.
