Wanted: More vigilance over the Port Authority's actions

HOTEL WHARF: The Port Authority of Guam's Hotel Wharf is shown in 2017. Post file photo

The margin between the Port Authority of Guam losing money or turning a profit is small.

And we, consumers, pay for it, whenever the Port makes financial missteps.

Consider this. According to a recent Guam Office of Public Accountability audit report, the Port eked out $1.1 million, or 2% increase, in revenue for an entire year – in fiscal 2019. The revenue increases were for the most part due to a 1 percentage point tariff rate increase, cargo volume, wharf fees and other operating income, the audit report states.

The Port posted net income of $3.5 million in the 2019 budget year, which is a rebound from a $103,000 loss one year prior.

These numbers show the Port is hardly flush with cash.

Spending like a Fortune 500 business

But the way it's been handling rehiring and giving back pay compensation to some of its fired workers leaves you with the impression it has a bank account as deep as that of a Fortune 500 company.

The Port, in the audit of its fiscal 2019 finances, reported a $3 million contingency for the back pay and rehiring of some of the fired "Port 7" managers and employees.

This matter stems from a disputed workers' compensation claim over a fall some eight years ago that led to the firing and the rehiring of some employees. 

One of the Port 7, a controller, had been reinstated to the job from which he was fired and then awarded almost $400,000 in back pay. He had asked for more than $600,000.

In the case of another rehired Port 7 worker, the Port authorized more than $360,000 in back pay covering eight years. A third rehired Port 7 manager stood to get paid more than $600,000 in back pay, giving her credit for about $80,000 in annual pay for certain years.

The latest in the Port 7 saga was the Port board's decision last week to approve a $1.8 million settlement for the remaining four of the Port 7 members.

Outside of the fired and rehired Port 7 managers, another example of a questioned Port action was the case of Agat Mayor Kevin Susuico, whom the Port had fired because he wasn’t qualified for the accountant job he was hired to perform. Although he didn’t have an accounting degree, the two-year marketing grad eventually was awarded years of back pay. 

The Port justified – or at least attempted to justify that the $1.8 million settlement was worth it – considering that the agency had spent $7 million in prior years for legal fees. There is a slyness to that claim in that some of the Port's legal expenses over the years were for other legal matters, primarily the Guam YTK issue.

The Guam YTK issue threatened to empty out the Port's bank accounts in recent years.

The Port had been served with a series of notices of collection by a failed fisheries business, Guam YTK, which sought to get paid between $14 million and $17 million based on an arbitration panel's award of judgment against the Port Authority. Guam YTK had sought a court order to garnish the Port's bank accounts – until a Supreme Court of Guam decision saved the day.

In a surprise victory for the Port, the Supreme Court of Guam ruled that the arbitration panel's decision – which some thought irreversible – can't stand because the arbitration panel based its decision on a contract that was no longer valid. 

It took some legal maneuvering to lay the groundwork for the Port to prevail and not have to pay $14 million to $17 million to Guam YTK.

The matter of the Port's finances has bubbled up once again because the Port's board has decided to move forward on a $1.8 million settlement on the remaining cases involving the fired Port 7 workers. 

There are many issues with the Port's decision. Among them, it was made without legal expertise. Two, the Port has essentially agreed to throw in the towel on the case even when a Guam Supreme Court decision had opined there were some merits to the prior Port management's decision to fire the Port 7.

Luis Baza, a former Civil Service Commission head, who was assigned as deputy general manager at the Port Authority just months prior to this $1.8 million settlement agreement, is not an attorney. He is not equipped with the legal expertise to give the Port advice to fork out $1.8 million to fired workers – even on an installment basis.

This settlement agreement was crafted just after a former chief prosecutor had resigned from being the legal counsel at the Port. 

The Port Authority general manager, we've been told, has had an arm's-length role in the matter of the fired Port 7 because one of the fired workers once was employed by him.

A former deputy general manager, who had been assigned to a task force to look at the issue of whether the Port 7 fired workers should be rehired, has quit.

The current Port Authority chairman, who has a history including a bungled procurement process at the airport that cost the airport and other parties millions of dollars, is not the best person to make the settlement judgment call on behalf of ratepayers.

Poor decision-making

So, if anything, there is a vacuum of sound decision-makers at the Port.

The Port 7 workers' cases have not been open and shut. No less than the Guam Supreme Court has raised some issues – based on merit – that cannot be overlooked simply because the deadline for the Port to raise the alleged violations had run out of the initial 60-day clock.

One of the remaining merit-based issues was the creation of what the court called a "fraudulent memo" as part of the file in the workers' compensation issue.

A lot of things that happen in the government of Guam aren't by happenstance.

The fact that the Port has a general manager whose hands are tied on this matter - and its board's willingness to sign off on a $1.8 million settlement without legal expertise – are just a couple of the red flags.

Also raising further questions is the lack of the outcry we would usually hear from senators who would be quick to comment on even inconsequential things.

This is not just a question of financial accountability. It's also a matter of doing what's right – for the ratepayers and for the integrity of those in public service.

But why is there silence? Why are these settlements proceeding without the usual watchdogs and safeguards in place?

It can't possibly be chance. Or is it?

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