ASG’s $10 million that was transferred from the ARPA Interest Account is being invested in the Pension Fund of the United Arab Emirates.
ASG signed an agreement with a partnership between McKinley Investments and Beech Tree for the investment in the UAE.
According to testimony by the Governor’s Executive Advisor for Finance, Brett Butler before the Senate Government Operations Committee Wednesday, an independent broker firm Entelles first made the contact with the ASG about an investment opportunity to raise financing for airport projects. He said ASG’s engagement with the firm of McKinley started in November last year to January this year however ASG had been in negotiation with an independent broker company Entelles which connected ASG with McKinley for the funding opportunity in May or June of last year.
According to Butler, two retired Samoans in Hawaii Don Saaga and Agnes Telles made contact with the head of the ASG Office in Hawaii, and the information was relayed to him. He first spoke to the two on the phone and after that initial contact he felt that the opportunity sounded too good to be true and a decision could not be made without a face to face meeting with the two individuals.
He met Agnes Telles in Hawaii and Don Saaga in California to try and understand their story and their intentions.
He said in his discussions with the two, they indicated that their reason for providing the financing opportunity was to help the airport here be better as one of their issues was why our airport is poor versus what we see in Samoa.
Butler said he didn’t know if the two were employees of Entelles or were contract workers.
After hearing their proposal he felt that this not something the Governor’s Office should be involved with. It was an economic development opportunity so he brought the proposal to the American Samoa Economic Development Authority (ASEDA) Board.
The ASEDA Board did not support the activity as the board didn’t feel there was enough evidence to support moving forward with the proposal.
According to Butler McKinley was one of the few companies that can provide non new course funding.
The next step was to sign a contract to meet with McKinley lawyers to try and understand what the arrangement would entail for the American Samoa Government. An agreement was signed with McKinley to take the discussions to the next level. Butler said before giving any money he felt he needed to talk to the CEO of McKinley, Halen Bach, a Korean based in South Korea. While he was at a fuel suppliers meeting in Thailand he met with Bach who was in Thailand at the time.
The $10 million was transferred first to an escrow lawyer in Leeward, Kansas and the escrow lawyer was to release the money once insurance coverage for fraud was received. Butler said the insurance policy for the $10 million is with an insurance firm South Pacific Insurance which is based in the US but has a local office.
Butler said they have confirmation that the money was transferred to McKinley. The partnership between McKinley and Beech Tree has invested the funds in the United Arab Emirates pension fund . This is how Butler explained the investment returns.
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Butler with Sen. Togiola Tulafono, Chairman of the Senate Government Operations Committee. ( KHJ News has edited out the Samoan translation by Fono translator Leleiga Raina Savali for brevity.
Togiola asked Butler what the Governor’s position was rewarding the transfer of $10 million of ASG funds for investment purposes without appropriation authority from the Fono based on the constitution.
Butler said this was a question for the Governor to answer.
Togiola also asked if the Governor knew that the money would end up being invested in a foreign country.
According to Butler when they first signed the agreement with McKinley Beech Tree, where the money would go was not defined. However this information was disclosed later, and the Governor is aware.
He also said that all of the negotiations and decisions made were approved by the governor and he did not on his own make the decisions.
When asked if the agreement was review by the Attorney General, Butler said when the proposal was brought to the ASEDA Board, the AG did review the proposal but she wasn’t very supportive as she didn’t know the people ASG was negotiating with. He said the final agreement was never given to the AG to review. Togiola asked if the reason why the agreement was not given to the AG to review is because she wasn’t supportive of it. Bret said this was a question for the Governor as the Governor had discussions with the AG and not him.
Senator Magalei Logovii said he had copies of emails from Deputy Treasurer Levi Reese to Butler last Thursday asking him when the money would be received, that Reese and the Acting Treasurer Carri-lee Magalei Tulafono were under pressure from the Fono, and Butler had said Friday. But at 5 oclock on Friday his daughter (the Acting Treasurer) told him there was still no money.
Magalei accused Butler of lying to senators. He said Butler had tried to get ASEDA to invest money with McKinley and the Board had their advisor Cody Deeter carry out an investigation and found out that Don Saaga does not work for McKinley. Butler explained that Saaga worked for an independent broker and was not an employee of McKinley. He apologized if there was confusion.
Butler stated at the hearing that he firmly believed with all his heart that this was a real good deal for American Samoa. He told senators said a certified financial planer from Puerto Rico also reviewed the agreement and verified that the contract is valid. He said if nothing materializes on September 18, ASG can always invoke the insurance of the $10 million.
