THE Commonwealth Development Authority, which acted as guarantor for loans from Bank of Saipan amounting $7 million, may be sued by the receiver or the bank if the loans continue to be in default, according to a lawyer of a major shareholder.
David J. Lujan, who represents JLH Pacific Trust on the bank’s board of directors, said it is also likely that the Marianas Public Lands Authority “will be hard-pressed to collect on any of its money against the bank” totaling over $8 million if the bank “is not saved on time.”
“In addition to the losses on government deposits either the temporary receiver or the bank will sue CDA for its 90 percent guarantee as to certain loans which have defaulted. It is my understanding that this amount is approximately $6 million to $7 million,” Lujan said in a letter to Adam Turner, a special assistant of Gov. Juan N. Babauta.
Lujan added, “It is also my understanding that CDA lacks these funds and will require further appropriation to meet this obligation which will be a great burden on scarce governmental resources.”
But CDA Chairman Juan S. Tenorio said they should not be blamed for what is happening with Bank of Saipan.
“If there are delinquent borrowers then the bank has adequate measures to go after them. It’s not CDA’s problems,” Tenorio said.
He said CDA has only about eight clients with Bank of Saipan loan accounts.
CDA will try to help the bank get loan payments from clients guaranteed by CDA, he said.
According to Tenorio, CDA wants to sit down with bank officials to discuss the issue at length.
In his letter, Lujan said: “If we all believe the bank can be saved then that should be our priority. We can all sue each other later after we accomplish this goal, i.e., protecting the small shareholders’ investments, private and government depositors, 50 employees and the bank’s customers.”
He added, “Time is quickly running out and the parties must be serious and honest if they are to work cooperatively to save the bank…. If we don’t begin this process now, I fear there will come a time and point when, even with all our best intentions and efforts, it will be too late.”
