A Senate confirmation hearing for a new member of the American Samoa Economic Development Authority (ASEDA) board revealed that senators remain concerned with all government revenues being obligated— if the bonds, which are to be issued under ASEDA, default.

Sen. Magalei Logovi’i, a former ASG Treasurer, was the first to voice such concerns during Tuesday’s confirmation hearing for Attorney General Talauega Eleasalo Ale as an ASEDA board member. (Talauega was later confirmed by the Senate in a 16-1 vote.)

While there were no questions pertaining to Talauega’s qualifications to sit on the board, Magalei asked the nominee — as the attorney general— which has more power or authority— the Constitution or the law, to which the nominee replied, it’s the Constitution.

With that answer, Magalei pointed out that under the Revised Constitution of American Samoa, only the ASG Treasurer has the authority to expend all government funds, however, with the bonds issued under the ASEDA board — which will be handling these monies— this is in conflict with the Constitution.

“Do you believe there is a conflict here?” Magalei asked, adding that he was not on island last year when the Senate debated the administration bill amending provisions of current law, giving the ASEDA board authority to issue the bond. (The bill has since became law.)

Talauega responded that he does not believe that a conflict exists, because the work of the ASEDA board is separate from the full authority and responsibilities of the ASG Treasurer. And while the ASEDA board’s duties and responsibilities are clearly identified in the law, it does not interfere with the ASG Treasurer’s authority to spend government revenues approved by the Legislature.

Magalei asked, “Isn’t the money received by ASEDA considered ASG funds?” to which Talauega responded that the only funds handled by the ASEDA board — in accordance with the law — are the funds for the bonds, and spending of such funds are clearly outlined in the law.

Therefore, he said, the ASEDA board cannot change how revenues received from the bonds are to be used. For example, he said revenues from the bonds are to refinance outstanding ASG debts and fund new government infrastructure projects, such as the new Manu’a passenger ferry.

However, Magalei said his biggest concern is the fact that all ASG revenues are being used as collateral or are obligated in the event the bonds go into default— and that is a serious problem for the government, which depends on revenues for its operations.

“And if a bond is not rated ‘Triple A, then it’s useless,” he said, and reminded Talauega that several ASG revenue sources are also being used as collateral for the government’s $20 million loan from the ASG Employees Retirement Fund.

“My concern here is that if ASEDA defaults on the bonds, then all ASG revenues will be affected,” Magalei stated.

While he fully agrees with the government’s need to get these bonds issued to help pay some of the major infrastructure projects as well as refinance other debts, Magalei said, “the risk is very high for the government and its revenues if the bonds default.”

Sen. Laolagi F.S. Vaeao, chairman of the Senate Budget and Appropriations Committee, recalled that the ASEDA bill was hotly debated in the Senate, which held at least three hearings before endorsing the measure.

He said the big concern during committee hearings and debate was the fact that all ASG revenues were obligated and used as collateral for the bond, and there are still concerns among senators on the negative impact on ASG revenues if the bonds were to default.

Laolagi said these concerns remain and he urged Talauega to do all possible to ensure that decisions made by the ASEDA board do not negatively impact the government and American Samoa as a whole.

The senator recommended that Talauega, as the Attorney General, provide the appropriate legal advice and recommendations to the ASEDA board, to ensure that ASG assets and revenues are well protected.

“You’re going to be the eyes and the ears of our people [on the ASEDA board],” Laolagi told the witness, and noted that if there are plans or decisions by the board that will have a negative impact on ASG “you need to step up and tell the board.”

“At the end of the day, [the bond] is a good thing [but] there is a risk,” he said, and with “everything in life, there is a risk [but] we’ve got to do something, and pray it will benefit American Samoa.”

At the end of the hearing, the committee called on Talauega to make the right decisions as a board member, to ensure that ASG revenues are not negatively impacted.