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Senators say Treasurer Malemo lied about FY 2023 budget overspending

Budget Director Catherine Saelua and Treasurer Malemo Tausaga

Pago Pago, AMERICAN SAMOA — Senators were not happy with government overspending of the 2023 Fiscal Year budget, which exceeded $40 million with blatant disregard for established rules and regulations to control government funds, according to a report submitted by government Treasurer Malemo Tausaga.

This was the focus of the Senate Budget and Appropriations Committee hearing on Tuesday where Treasurer Malemo Tausaga and Budget Director Catherine Saelua testified.

The hearing began with Committee Chairman Senator Utu Sala Poasa asking Budget Director Saelua to explain in detail, the whole process of executing payments to government departments and private companies for services rendered, by approving the withdrawal of funds from the various government accounts.

Saelua clarified that all documents (hard copies or electronic) must go through her office before referral to Treasury for payment.

“So if an invoice for payment of services rendered with a corresponding amount is submitted to your office and you find out that there are not enough funds to accommodate that payment, what do you do?” Utu asked.

“The invoice or request for payment will be stamped and returned,” she replied. “Also, the system has a feature which blocks payments if there are insufficient funds.”

“So why is the approved budget overrun?” Utu wanted to know. “Who is overriding the budget? Is it you or is it Treasury who is doing (making payments) without prior approval from your office?”

Senator Magalei Logovi'i, a former Treasurer, intervened to help shed light on the matter and reminded the Budget Director that the financial system used by government has safeguards to block any spending once funds run out, and that she has the authorization to override the system with the governor's approval.

He stated that Chairman Utu wants to know why the governor's Contingency Fund which normally sets aside funds in the vicinity of about $300,000 to handle unexpected debts that are outside the range of the budget approved by the Fono, has been overrun by up to $2 Million.

"How did this happen?" he asked. 

Senator Magalei again repeated Utu’s query if it was the Budget Office or Treasury where the discrepancy originated.

Saelua answered that Treasury also has access to the feature to unblock the system and some of the payments were done by Treasury before she was informed.

Magalei stated that the committee wants to ascertain who exactly is overriding the system because a Senate resolution is currently with the Attorney General, asking him to request the Chief Justice to appoint an Independent Prosecutor to investigate the government's unlawful spending of funds.

“That is what this committee wants to know,” Magalei said. “We want to know who is overriding the system so that we can forward his or her name to the AG and request an investigation of that individual.”

He then asked if there were any records of requests for payments that did not go through her office but have already been paid out.

Saelua answered that her office has the records of all payments made including those made by Treasury without their knowledge.

Senator Utu commented on the exorbitant overrun of the budget which was done with full knowledge — that the the amount was too large to be reasonable.

He expressed his concern of the blatant disregard for government rules and regulations by the two government officials who were supposed to control and monitor government funds.

Utu stated that many payments using funds from an account earmarked for emergencies titled “Non-Departmental Miscellaneous” were not emergency-related at all and he pointed out that as a result, there will be no reimbursement from the federal government because of that.

Senator Magalei questioned various payments made out of this account which included $1.5 million to reimburse federal funds used by government to purchase the vessel MV Pago Pago and another $1.5 million payed to Howard’s Construction which the Treasurer said was for the construction of the road in Fogagogo.

Magalei also questioned a payment of $1 million to Paramount Builders which according to the Treasurer was for the construction of the road in Poloa.

“I don’t believe you because according to the breakdown of funds by DOE, they paid $5 million to Paramount Builders for the access road to Poloa village and another $5 million for the construction of the road from Poloa to Fagamalo,” Magalei said.

Malemo countered saying that it was not his job to know the details of these matters, all he is required to do is to pay the invoices he is given which have been approved.

“So who should be subpoenaed to explain these transactions?” Magalei asked. “The director of Public Works and the CPO?”

The Treasurer agreed.

Senate President Tuaolo Manaia Fruean stated that a lot of review was needed and that the hearing should be continued.

“The public depends on you Malemo,” Tuaolo said. “You are a to’oto’o (orator), you are also a senior deacon. “This all depends on honesty. “Do you own a landscaping business?”

Malemo replied that his children run a landscaping business.

“Does this not conflict with your position as Treasurer? Tuaolo asked.

“In a way it does, sometimes,” the Treasurer replied.

The Senate president also commented on protocol costs of $30,000 in the name of Chief of Staff’, Loa Tuimavave Tauapai Laupola, mentioned in the report.

Treasurer Malemo explained that while the payments are made in the Chief of Staff’s name, it is done at the request of the governor.

Tuaolo asked the witnesses if they had read the anti deficiency law, to which both replied yes.

“And what’s the penalty for a violation,” he asked.

Malemo answered someone can go to jail.

Tuaolo expressed his displeasure at some of the payments being made to a particular security service, namely Alapati Fano Security Service, which the Treasurer identified as belonging to the governor’s security officer.

Tuaolo said this security service was being paid close to $19,000 a month compared to $4,000 to $5,000 a month being paid to his wife Nana’s Security Service.

Senator Togiola advised the witnesses to include the attorney general when they appear again before the committee.

He asked how the overrun feature in the financial system is bypassed in cases where payments are done even though there are insufficient funds in an account.

Saelua explained that most of the requests for payment are rejected and sent back but in some cases when a request is signed off by the governor, her office tries to meet the payment.

“Even if it means breaking the law?” Togiola persisted.

Saelua did not answer the question directly but explained that many requests from government departments were returned if there were no funds, but when they receive an invoice signed off by the governor, they try to find funds in other accounts to meet it.

Senator Satele Lili’o did not mince words when he was given the floor.

“I am very disappointed with your testimony today Treasurer Malemo,” he said. “You have lied to the Senate.

“I asked you when you appeared before, if you had any affiliation with contractor doing business with the government and you said no.

“But now you have admitted that your children own a landscaping business contracted by government.

“There are also rumors that you are affiliated with another contractor dealing with construction.”

In his final remarks Malemo denied any involvement with Howard Construction company.

In the Senate regular session that followed, Senator Muagututi’a declared that it was time for the Senate to act and take this matter to court.

He stated that the government Treasurer has lied to the Senate and if they continue the hearings he would not hesitate to lie again.

(Samoa News should point out that the report on the FY 2023 budget overrun is not the result of an “audit” of the government’s finances. It came out of the Treasury.)