Govt finance leaders face harsh criticism over misplaced $4.5 million

Pago Pago, AMERICAN SAMOA — Government Treasurer Malemo Tausaga, Deputy Treasurer Levi Reese, Director of the Office of Financial Institutions, John Marsh and LBJ Chief Financial Officer Sefanaia Kaumaitotoya faced harsh criticism and accusations of negligence in the performance of their duties from members of the Senate Appropriations Committee last Wednesday, for when government funds totaling $4.5 million were transferred from an ASG account to a Wells Fargo Bank account.

The transaction was directed by two “fake resolutions” emailed to Treasury, which had the LBJ letterhead and the signatures of the LBJ Board.

Senate President Tuaolo Manaia Fruean asked who had initiated the transaction and Malemo responded that it was LBJ. However, LBJ CFO Kaumaitotoya stated that it was not LBJ.

He explained that the money was supposed to be transferred from the American Samoa Government’s account at the Territorial Bank of American Samoa (TBAS) to LBJ’s account also with TBAS, and that the LBJ Comptroller Tulli Tone Maugaotega usually authorizes these transfers.

However he emphasized that she did not authorize this particular transfer.

 “So if it wasn’t initiated by Tulili, who initiated it?” Tuaolo asked. “If it was initiated by someone else, why didn’t you verify it? This is $4.5 million! It’s a hell of a lot of money!”

An apologetic Malemo stated that his staff had taken for granted that the resolutions were genuine because of the LBJ letterhead and the signatures of the chairman and members of the LBJ Board, and they went ahead with the transaction.

Reese explained that the resolution was sent to their senior accountant and the files were uploaded and sent.

She revealed that LBJ executive director Dr. Jean Anderson had visited their office and had asked what was causing the delay in the transfer.

 “Dr. Anderson was talking with our chief accountant and she mentioned that they (LBJ) were switching over to First Hawaiian Bank,” the deputy treasurer recounted. “It was then that our chief accountant realized that the directive that came from LBJ was to Wells Fargo.

“So what she had done [sic], was she communicated with the bank, did a reversal and we also contacted the FBI at that point.

“From then on, the accounts were frozen and the investigation started.”

Responding to Committee Chairman Senator Utu Sila Poasa’s line of questioning, Kaumaitotoya explained that LBJ had changed its off-island account from Zions Bank to First Hawaiian Bank two months earlier.

However, the fake resolutions emailed to Treasury directed that the funds be transferred from TBAS to Wells Fargo Bank.

Senator Utu was clearly frustrated as he tried to ascertain from the LBJ CFO the funds’ trail and how it ended up at Wells Fargo Bank.

The LBJ CFO clarified that the funds were supposed to be transferred from ASG’s account at TBAS to LBJ’s account also at TBAS.

 “Then how did it get off-island?” asked an exasperated Utu as Kaumaitotoya reiterated that it was because of the fake resolution that directed the funds to be transferred to Wells Fargo Bank.

“I can’t believe this. That’s a red flag right there! You should open up another level of accountability…”

The matter was put to rest by the Senate President, who intervened and offered his help in resolving the problem.

 “The solution is very simple,” Tuaolo stated. “When Treasury gets a resolution directing the transfer of funds to wherever bank, all they have to do is to pick up the phone and call LBJ and ask, ‘Is this the account where the funds are to be transferred to?’ Simple as that!’”

He admonished Reese saying that the staff was not doing their jobs and they should not depend on Malemo for every little problem that comes up.

According to Malemo, of the funds that were transferred to Wells Fargo Bank, the amount of $957,000 has been returned and the rest is expected in another 2 or 3 weeks.

In the meantime, an LBJ source told Samoa News that the medical center is reaching out to Treasury to ask for the file number of the report that’s been made to the FBI by Treasury on behalf of LBJ and TBAS — they had yet to get an update.