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PALIKIR, Pohnpei (Federated States of Micronesia, April 18) – The U.S. Department of the Interior has suspended all Compact payments to the state of Kosrae because of inadequate internal controls and poor accountability governing the use of Compact funds by the state.

[PIR editor’s note: Kosrae is the easternmost of four states in the Federated States of Micronesia(See map). According to PIR news files, in December 2003, the Compact of Free Association increased the Federated States of Micronesia’s accountability and expanded Washington’s oversight of federal funds with the possibility of grant suspension if Federated States of Micronesia fails to comply with the new requirements under the treaty.]

Payments were suspended when the state’s financial records showed that Kosrae had improperly used approximately US$1.5 million in Compact funds.

Compact payments to the College of Micronesia, the Federated States of Micronesia national government and the states of Chuuk, Pohnpei and Yap are not affected by the suspension.

Interior has been working with the new administration in Kosrae and the Federated States of Micronesia national government to correct past problems and to put new administrative controls in place so that funding to Kosrae could be resumed.

Nikolao Pula, director of Interior’s Office of Insular Affairs, said, "We understand the importance of these funds to the people of Kosrae. We appreciate the close cooperation of the Federated States of Micronesia national government in developing improved financial management systems for Kosrae that are allowing us to resume Compact payments."

Marianas Variety

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