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Why purchase of MV Pago Pago “was not COVID-19 related”

Interim Audit report

Pago Pago, AMERICAN SAMOA — The American Samoa COVID-19 Compliance Review Committee (CRC) has questioned the use of federal Coronavirus Relief Fund (CRF) proceeds by ASG to purchase the MV Pago Pago and concluded that — among other things — this transaction “was not COVID-19 related.”

This is according to a Sept. 12 memo from Deborah L. Harker, the Assistant Inspector General for Audit of the US Treasury Office of Inspector General (OIG) to Jessica Milano, the US Treasury’s Acting Chief Recovery Officer.

The 12-page memo on the “Interim Audit Update ─ Audit of American Samoa’s Uses of Coronavirus Relief Fund Payment”, which was publicly released earlier this week, revealed that ASG’s use of $1.5 million CRF proceeds to purchase the MV Pago Pago and related barge, was in “violation” of federal laws and regulations of the U.S Treasury. (See Samoa News edition Sept. 19 for details).

According to background information on the OIG audit, the COVID-19 Compliance Review Committee (CRC) — created under the previous Lolo Administration — was charged with ensuring that every COVID-19 expenditure was justified and complied with the grant’s terms and conditions.

The audit report says that the COVID-19 CRC reviewed the MV Pago Pago and related barge purchase on December 24, 2020, and “identified the purchase as a questioned cost in its documentation.”

“Specifically, the COVID-19 CRC concluded that there was no justification for the purchase, no assessment of the MV Pago Pago’s current value, and the purchase was not COVID-19 related,” says the OIG.

Additionally, “the COVID-19 CRC recommended that other options be considered, such as leasing the vessel to transport needed medical supplies.”

On background information, the auditors explained that between April and May 2020 —  prior to the first payment for the MV Pago Pago on September 17, 2020 — ASG leased the MV Pago Pago from the seller using non-CRF proceeds while the MV Manu’atele vessel — used for passenger, supplies, and goods transport — was being repaired.

At the time of the MV Pago Pago purchase, the MV Manu’atele vessel was still being repaired. However, OIG pointed out that ASG also owned other marine vessels, to include the MV Sili, Segaula, and the Uila Ole Sami utility vessel, that were used as alternative vessels for travel and as public transportation. A footnote in the report says that the MV Sili was later determined to be unsafe.

The MV Pago Pago was not certified for passenger transport, according to the OIG audit. Furthermore, the seller’s proposal to the American Samoa Department of Public Safety for Maritime Patrol — dated June 25, 2020 — cited uses of the MV Pago Pago that were non-COVID-19 related activities to include:

• maritime search and rescue;

• marine patrol and marine sanctuary; illegal, unreported, and unregulated fishing monitoring; and

• drug surveillance.

OIG explained provisions of federal law pertaining to the use of CRF proceeds, which must be used to cover costs and expenditures, as well as U.S Treasury guidelines.

“When we inquired as to how the purchase was necessary in response to the COVID-19 public health emergency, current ASG officials could not explain,” the audit report says. “They were also unsure whether the former COVID-19 Task Force members considered cost effective alternatives such as using and/or improving vessels already owned or leased prior to the MV Pago Pago purchase.”

Furthermore, the former COVID-19 Task Force members moved off island and could not be located to answer inquiries.

Therefore, US Treasury-OIG “concluded that ASG used CRF proceeds for unallowable expenditures” in violation federal law and US Treasury guidelines.

“As such, we question ASG’s use of $1.5 million of CRF proceeds for the MV Pago Pago purchase,” said OIG, which also provided a summary explanation of a cost that is questioned.

And OIG therefore declared that: “ASG used CRF proceeds for the purchase of the MV Pago Pago that was not a necessary expenditure due to the COVID-19 pandemic health emergency.”

Samoa News notes that the OIG audit doesn’t mention by name the owner of the MV Pago Pago, but Samoa News reported in October 2020 that the vessel had been owned by Paramount Builders, which made an offer to sell it for $1.2 million to ASG during the Lolo Administration. (See Samoa News online Oct. 11, 2020 for details.)


As reported by OIG, the first payment for the MV Pago Pago was on September 17, 2020, which was prior to the COVID-19 Task Force Chairman’s COVID-19 ERF signed approval on September 18, 2020.

ASG subsequently made the second and third payments on October 7, 2020, and October 28, 2020, respectively, according to the OIG audit.

The report does not name the COVID-19 Task Force Chairman that signed the approval; and Samoa News points out that in March 2020, the COVID- 19 Task Force was led by chair, the governor’s executive assistant Iulologologo Joseph Perieira and two co-chairs, LBJ chief executive officer, Faumuina John Faumuina and Heath director Motusa Tuileama Nua.

Samoa News should also point out that while the report says that only $500,000 remains of the $1.5 million of the MV Pago Pago vessel purchase to be paid back, it does not mention the funding source of the money used for the re-payment. In addition, there has been no mention by the government of a Fono appropriations bill for the pay back that has occurred, nor for the balance still owed — which is required under law.

Samoa News understands that the MV Pago Pago vessel continues to be owned by ASG.