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MAJURO, Marshall Islands (Oct. 21, 1999 – Marshall Islands Journal)---The RMI Auditor General questioned the Kwajalein Atoll Development Authority’s use of nearly $1 million in U.S. Compact of Free Association funding during fiscal year 1998, according to the most recent audit submitted to the Nitijela.

The 1998 findings increase KADA’s overall "unresolved" questioned costs involving Compact funds to $7,976,463, the audit said.

The Auditor questioned KADA’s use of Compact funding that it said was used to pay for:

· operations and maintenance work and a transfer of funds to the RMI government rather than for the construction of capital projects, and

· higher than allowed administration costs.

KADA officials responded that the majority of questioned costs related to important development or social service-related projects and that there was "a fine line that separates these projects between expenses for operation, repairs and maintenance, and actual project cost."

Specifically, the Auditor said that during 1998:

· KADA transferred $80,000 which was designated for construction projects to the RMI government for "assistance not considered related to capital projects." KADA replied to the audit that "we will request reimbursement from RepMar" and that all future RMI requests would have to comply with Compact provisions before a disbursement is made.

· KADA spent $353,383 on project administration and finance in FY1998 when the Compact allowed only $63,900 (1.5 percent) to be used for these expenses. Thus, the Auditor questioned the use of $289,483. KADA replied that "it is still our desire to request an increase in allowable project administration costs to a more reasonable level. Previous requests should be pursued vigorously to get a definite response (from the U.S. government) to this issue."

· KADA spent $627,092 on operations or repair and maintenance work for a dive resort project ($92,875), KAJUR power plant ($87,247), causeway project ($275,604) and workboats ($171,366). This use of funds may be inconsistent with the Compact, which required the funds to be spent on construction of capital projects.

KADA replied that the dive resort was in its development stage and a major portion of the questioned expenses were used to cover the salary of the dive master – a position without which the dive resort couldn’t operate. "However, the project will be suspended shortly," KADA added.

On the KAJUR expenses, KADA noted that the money spent was to pay legal fees in the ongoing case against Pacific Machinery over one of the Ebeye power plant’s engines.

KADA said that the causeway was only 30 percent complete and when it is hit by high tides, portions are washed out. KADA estimated it will take another $7 million to finish the causeway and in the meantime the agency was using the funds to prevent the causeway from washing out.

KADA asked the Auditor to delete the question concerning the workboat expense, saying the only link between Ebeye and nearby outer atolls is being provided by KADA through its boats that supplement the RMI service, a project that KADA said is "considered humanitarian in nature."

The Marshall Islands Journal, Box 14, Majuro, Marshall Islands 96960 E-mail:  Subscriptions (weekly): 1 year US $87.00; international $213.00 (air mail).

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