American Samoa’s $1.3 million in the so called unpledged interest from the Tobacco Settlement Agreement is expected to be received by next month and this money is one of the four separate funding sources of ASG’s $5 million in supplemental appropriations for fiscal year 2013.

This information surfaced at yesterday’s House Budget and Appropriations Committee hearing on the supplemental appropriation.

American Samoa’s share of the tobacco settlement money was a hotly contested issue during last September's Fono budget hearing on the FY 2013 budget, mainly due to conflicting information from ASG witnesses.

At the time, ASG projected a $6.8 million windfall from the tobacco settlement and this is the amount that was not pledged in Provision Two of the settlement agreement. The Budget Office officials testified at the time that this money is due to American Samoa as unpledged interest, while the Attorney General at the time testified that it was allocated to pay the ASG loan, which was made several years ago.

In exchange for its share of the Master Tobacco Settlement Agreement, which was worked out by attorneys general of states and territories and the major U.S. tobacco companies, American Samoa opted for an $18.6 million loan from the federal government, and the DOI oversees the loan, including repayment using proceeds from the tobacco settlement.

When there were conflicting testimonies during the FY 2013 budget review, lawmakers deleted the $6.8 million in tobacco proceeds from the final budget document.

During yesterday’s House committee hearing, ASG Treasurer Dr. Falema’o ‘Phil’ M. Pili was asked by lawmakers about this $1.3 million in tobacco money, because this was an issue of contention at last year’s budget hearing. 

Pili explained that this issue was discussed with federal officials during Gov. Lolo M. Moliga’s visit to Washington D.C early this year. He said the $1.3 million will be received into a separate ASG account already set up specifically to receive any unused funds from the tobacco settlement.

He also says that $6.8 million, which was sitting in an escrow account — in accordance with conditions of the national tobacco settlement — was also used by DOI to pay the loan and “it will take an act of Congress” to return this money to American Samoa.

Therefore the governor asked Congressman Faleomavaega Eni for his assistance in returning this money to American Samoa, now that a separate ASG account is in place to deposit these proceeds, said Pili.

Responding to lawmaker's questions, Pili said ASG was slow in opening up a separate account for the $6.8 million, and the $1.3 million as a funding source for the supplemental is “windfall” money for ASG.

JUST ASKING…

For clarity’s sake, Samoa News asked ASG Treasurer Dr. Falema’o ‘Phil’ M. Pili several questions, yesterday afternoon, about the the $6.8 million in ‘unpledged’ interest that was in an escrow account and used by DOI to pay the $18.6 million loan from the federal government.

Questions & Answers

SN: What exactly is the $6.8 million?

TREASURER: It is “unassigned proceeds” — that is money, which is left after the yearly loan payment is done. In this case, Pili said, it is from 2005- 08 and is money not assigned to pay the federal loan. It was placed in an escrow account, and the DOI, which oversees the loan, including repayment using proceeds from the tobacco settlement, apparently used it to pay the loan — even though it was ‘unassigned’.

According to Pili, it’s not known if DOI notified ASG there were “unassigned proceeds” and ASG only found out there was such money available about 2 years ago — hence it appeared in the FY 2013 budget.

Pili said currently Attorney General Afoa S. Lutu has assigned attorneys to work on the Tobacco Settlement — its proceeds and legal issues; and, right now they are trying to find out if there are any “unassigned proceeds” for the years 2009- 11”.

He credits much of the success of the government getting the $1.3 million windfall, which is “unassigned proceeds” — to the AG’s work, especially with off-island people and entities that handle the hugh Tobacco Settlement.

The Treasurer also noted that due to the AG’s work a new distribution plan is now in place for American Samoa’s share of the Tobacco Settlement.

Essentially, with the separate bank account now opened locally, all of American Samoa’s share will go into this account — that is Section One monies (for repayment of federal loan) and Section Two monies (unassigned proceeds). American Samoa is then obligated to repay the federal loan out of this account.

SN: Because the $6.8 million was “unassigned proceeds” — why did the DOI use it to pay the federal loan?

TREASURER: According to the Treasurer, that is something to be worked out by the attorneys, including the question of whether or not DOI had the authority to use it to repay the loan — it was “unassigned proceeds”. However, to get it back, Pili said, it will take an act of Congress and they are working with our congressman on this.

SN: When was the new account opened?

TREASURER: Pili told Samoa News the account was opened the first week of this month (March), and the $1.3 million is expected to clear the account on April 15th (next month).

Samoa News notes the “unassigned proceeds” or “unpledged interest” of $6.8 million first came to light when Senate President Gaoteote Palaie Tofau wrote a letter to then Gov. Togiola Tulafono in December 2011 identifying the money as a possible source of funds for the LBJ Medical Center.

See separate story on the supplemental budget hearing.