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MAJURO, Marshall Islands (February 9, 2001 – Marshall Islands Journal)---Two investigators from the Interior Department Inspector General’s office arrived on island earlier this week, prompting a leading government official to say the Marshall Islands needs to send a very clear anti-corruption message to Washington, D.C.

"It’s incumbent on the government to say that it totally disagrees with the actions of the previous government," in allowing former President Imata Kabua to use direct Compact money as collateral for a personal loan, said Education Minister Wilfred Kendall.

He called the Journal Wednesday and said that he wasn’t speaking on behalf of the Cabinet, but he believed it was essential for someone in government to make a clear statement distancing the present government from financial transactions of the previous administration.

The government needed to make a statement, otherwise "Washington will say it’s business as usual," Kendal said.

But, he added, it’s not because the current government doesn’t endorse this financial transaction. "We campaigned on an anti-corruption, clean government platform," he said.

The U.S. Embassy in Majuro confirmed that two officials from the Inspector General’s (IG) office -- which audits U.S. spending nationwide, and has previously audited the Marshall Islands Development Bank -- arrived on Majuro and will be here for up to 10 days. "They are here to investigate accountability issues, but I can’t comment beyond that "because the investigation involves "issues of sensitivity and privacy," said deputy chief of mission Mike Spangler.

Kendall indicated that the IG auditors are investigating a private loan obtained from Bank of Guam by Kabua while he was President and for which Compact funds handled by the Bank of New York were paid directly to Bank of Guam for the loan.

The Journal reported late last year that Bank of New York had been making quarterly loan payments to Bank of Guam for the $450,000 loan but had not been deducting this amount each quarter from Kabua, so in effect, until the problem was discovered by the Ministry of Finance late last year, Kabua was receiving a "free" loan.

Late last month, Kabua told the Journal that in response to the problem, he had already begun paying back the RMI for the loan. His attorney, David Lowe, pointed out that the money in question wasn’t improperly used; Kabua is entitled to more than a million dollars annually from Compact Kwajalein rental payments, and was merely using his share of Compact money as collateral for a personal loan at Bank of Guam.

But Kendal said, "We need to let Washington know that we strongly disagree with the actions of the previous government" regarding use of Compact funds for Kabua’s personal loan.

Kendall said he was concerned that Washington might interpret a lack of comment from the government as meaning the current administration condones the previous government’s action. "It is really damaging to the Marshall Islands," he said. "It affects us all as we go back to the negotiating table with the U.S."

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

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