Friday, August 15, 2008

Federal Charges & Solutions

Food For Thought 8-15-08

Hi friends, this is Harry Blalock; General Manager for radio stations KZMI & KCNM. It’s that time once again to take a look at the issues of the week, and to offer some Food For Thought.

It finally happened this week; something that many of us had heard was coming for at least a month. That was the arrest and arraignment in federal court of Lt. Governor Timothy P. Villagomez, his sister Joaquina V. Santos and her husband, Commerce Secretary James Santos. Former Commonwealth Utilities Executive Director Anthony Guerrero was also arrested but accepted a plea agreement to plead guilty to one count of conspiracy in exchange for his testimony against the others. They each face 3 counts: conspiracy to defraud the federal government, wire fraud and theft of federal funds.

For those of you not familiar with what led to this, let me give you the Reader’s Digest version of the story. Back in 1998, when Tim Villagomez was the Executive Director of Commonwealth Utilities Corporation, he used some federal funds to purchase thousands of gallons of Rydlyme. The problem was that he ignored CNMI procurement regulations and sole sourced the contract out to a company owned by his brother in law, James Santos. Santos had formed the company shortly before the purchase of the Rydlyme. There are also laws against doing business with family members when acting as an agent of the government. They very quickly found that using the chemical caused more problems with the equipment than it solved, so they stopped using it, and CUC still has 8,175 gallons of Rydlyme that remain unused. But according to the indictments, this was a very lucrative transaction for the James Santos as he marked up the cost of the chemical by 400%. If this was a legitimate purchase and the chemical was really needed, why didn’t CUC test the product first to make sure that it worked and didn’t have any adverse effects before buying such a huge quantity of it, the purchase price was $280,000? The fact that procurement policies were ignored, and the fact that it was a sole sourced contract through a family member makes this a very questionable, if not outright illegal transaction.

Now if it weren’t for the fact that procurement policies were ignored and that it was sole sourced to a family member, I could almost swallow the explanation that they erroneously bought a chemical that just didn’t work out. We all know that sometimes you just make mistakes when buying things, although one would hope that if they were spending that kind of money they would make sure they knew what they were doing and buying.

But the thing that really makes this whole thing stink even worse is that they didn’t stop at that one transaction back in 1998. Evidently they all made so much money out of this little scheme that they decided to bring it back for another round in 2006-2007. This time Tim Villagomez was no longer the Executive Director of CUC, but was the Lt. Governor. Since Governor Fitial has gotten rid of the Board of Directors for CUC shortly after coming into office, he had appointed the Lt. Governor in charge of the troubled power company, since he was after all a former Executive Director of CUC. So even though CUC was in the middle of the worst financial mess they’ve ever had to face, the Lt. Governor decided to launch their little plan one more time, only this time his sister set up the company that would sell the Rydlyme to CUC. So even though they already knew the Rydlyme wouldn’t work, and would just cause more problems if it was actually used, they went ahead and bought another $120,000 worth of it through the company set up by his sister. Since there was another Executive Director of CUC now, he had to be instructed to go ahead and approve the purchase of the Rydlyme, even though we already still had a bunch sitting around. According to the indictments, the Lt. Governor in his capacity as the boss of CUC Executive Director Anthony Guerrero, included him in this scheme and had him sign off on the purchase, again without going through proper procurement procedures. They didn’t even have the creativity to use a different chemical this time, they didn’t figure they would ever get caught, and even if they did, they didn’t figure anybody would do anything about it anyway. After all, that’s just the way things work here in the islands. So at a time when we were already experiencing rolling blackouts as a result of not being able to pay for fuel, and we didn’t have the money needed to do the proper maintenance and repair of the engines, the Lt. Governor went ahead with this little plan to buy more of the useless chemical to the tune of $120,000 and route it through his sisters newly formed company.

There are so many things that bother me about this whole thing that I almost don’t know where to start. First of all, how dare they enrich themselves at a time when the rest of the Commonwealth is suffering through constant rolling blackouts? Did they not care that the money was needed for things that might help alleviate our rolling blackouts? Did they not care about the effect this would have on you as they sat in their generator powered air conditioned homes? I know that this kind of thing happens all the time here, and has been done numerous times in the past, but that doesn’t mean we have to like it or tolerate it.

Then I am also dismayed that the Lt. Governor has not voluntarily stepped down pending the outcome of his trial. Does he not realize that having him continue in his capacity as Lt. Governor as he faces these charges in federal court once again makes us a laughingstock to any and all potential investors and business people? Does he not care about the image of the CNMI and our already badly bruised reputation? I am also disappointed that the judge didn’t issue a prohibition against him having anything to do with CUC pending the outcome of the trial. Do you realize that the Lt. Governor is still in charge of CUC since there is still no board to oversee the corporation? And now that the Governor has declared another state of emergency for CUC, will that just open the door to numerous other sweetheart deals and scams that we’ll all wind up paying for? How much access does Tim Villagomez have to CUC documents and records right now? Can he go through and destroy other documents that that could possibly be used against him in other deals he was involved with? I think you can see how this is not only a very unhealthy situation, but a disaster just waiting to happen.

I was extremely disappointed by statements made by the Senate President in the newspaper about the situation regarding the Lt. Governor on Thursday. He went out of his way to say that he was confident that the Lt. Governor would be found not guilty and that he was very, very close family. Shouldn’t he be waiting to see what a jury has to say before declaring his belief that the Lt. Governor is not guilty? And was it really appropriate for him to point out his close family ties at the same time? Does this mean we can’t count on him to be unbiased and to look out for the best interests of the citizens of the Commonwealth? Does this mean that he won’t take his responsibility to consider impeachment proceedings against the Lt. Governor seriously?

And what about the responsibility of the Governor, he is after all the one who put the Lt. Governor in charge of CUC and let him oversee its operations. The Governor also just lost a cabinet member as James Santos was the Secretary of the Department of Commerce. Does this show that the Governor hasn’t used the best judgment in choosing not only his running mate, but also in the top people he surrounds himself with? Is the Governor the final authority? Does the buck stop with him? Since he is the one who abolished the CUC Board of Directors, does that make him ultimately responsible for what happens at the utility company since it is now under the control of the Executive branch?

I believe there is more than enough reason for both the House and Senate to look into impeachment proceedings against both the Governor and the Lt. Governor, but of course we all know that won’t happen, because as the Senate President so succinctly pointed out, they are dealing with very, very close family. So will our House and Senate put family ties ahead of their sworn duty to protect and safeguard the people of the CNMI? The Lt. Governor has also reportedly rejoined the Republican Party, who happens to be in control in the House of Representatives right now, and was reportedly getting ready to run with a very prominent member of the Republican Party and the House of Representatives in the next gubernatorial election. So because of all these connections and the close family ties that seem to permeate nearly everywhere, I’m fairly certain that we can’t count on the House or the Senate to do their jobs.

So will the Governor and Lt. Governor do the honorable thing and voluntarily step down as a result of all of this? I don’t believe they will, even though they should, because as this whole thing has shown us, they are far more concerned with their own well being and enrichment than they are of the feelings of the people and the needs of the Commonwealth. We have seen and even heard from various politicians’ mouths in the past that when they get in office, it’s their turn to enrich themselves in any way they can. It’s considered an inalienable right.

I don’t think this upcoming trial in federal court will be as much about guilt or innocence as much as it will be about getting family members on the jury and on trying to get an acquittal through technicalities. I think it is very important to remember that even though you may be found not guilty in a court of law, it doesn’t mean that you didn’t do what you were accused of; it just means that your lawyer figured out a way to get you off. So should the removal of the Lt. Governor be dependent on the outcome of the trial or should it be decided based on what has happened? The facts of the case seem pretty clear and straightforward, but sadly as the Senate President pointed out, they aren’t nearly as concerned with facts as they are with family ties.

I know that I have expressed my frustration with CUC many times and in many different ways over the past couple of years. It should be pointed out though that much of what has happened at CUC is not the fault of the line crews, or the mechanics or the rank and file CUC employees. They do their jobs and follow orders given to them by the administration of CUC, which has been taking their orders from the Governors during the previous two administrations. The frustrations should be directed at those responsible for the messes we are currently experiencing. They deserve your rath and your frustration, but remember that the CUC linemen, mechanics and rank and file employees can only do what they are allowed to, they don’t make the decisions, they simply follow orders. So during these days and nights of extended power outages, if you want to know who to blame for the current mess we’re in, you could start by thanking former Governor Juan Babauta, the CUC Executive Director under his watch, Lorraine Babauta, Lt. Governor and former CUC Executive Director Tim Villagomez, former CUC Executive Director Ramon Guerrero, numerous former CUC board members, and yes our current Governor, Ben Fitial also has to accept his role for what has happened not only when he was Speaker of the House but also now while he is Governor. There is plenty of blame to go around, but it belongs to these people, not the rank and file CUC employees. Keep that in mind the next time you see a CUC line crew out looking to isolate the problem at 3 am on a rainy morning.

Food For Thought is now available online at and if you want it by e-mail distribution please send me an e-mail at

I’m Harry Blalock, thanking you once again for giving me a generous slice of your valuable time, and allowing me to share my Food For Thought.

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