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Unidentified client hopes to resurrect Pacific Savings Bank

By Bernadette H. Carreon KOROR (Palau Horizon, April 16, 2010) -- A Guam-based law firm has contacted the Palau government regarding the defunct Pacific Savings Bank.

Eduardo Calvo of Calvo & Clark is inquiring about the bank’s latest year-end and current financial statements, audit report, loan status, deposits and other outstanding obligations.

"I hope we are able to work together and develop a feasible plan to save the bank," Calvo said in an e-mail to President Johnson Toribiong.

According to the law firm’s Web site, Calvo & Clark LLP was founded in 1992 and has represented some of the Pacific region’s most successful companies.

The firm’s general commercial practice "embraces complex civil litigation, international law, finance, real estate, land use and development, communications, business licensing, bank regulation and licensing, and government regulations."

It is not clear, however, what entity the law firm is representing when it inquired about the Pacific Savings Bank.

Toribiong said the law firm represents the company that "revived" the collapsed Bank of Saipan.

PSB was the first locally owned bank in Palau and had more than 7,000 customers and more than US$20 million in deposits when it was declared insolvent and placed under receivership in Nov. 2006.

In 2006, then-President Tommy Remengesau hired an independent counsel to look into the bank’s failure.

Toribiong has appointed a new independent counsel amid the public’s call for "action" on the matter.

Previous criminal cases were filed in connection with the bank’s collapse only to be dismissed.

There are still 641 depositors who have not recovered their money amounting to US$18 million.

When the bank was placed under receivership, it had 7,335 deposit accounts worth about US$20,638,334.

The PSB receiver then borrowed US$2.4 million from the Palau government at zero interest rate to make the first payout of up to US$2,000 to each depositor.

The payout was made in March 2007, and about US$1 million was distributed to the depositors.

The receivership’s priority is to pay another US$2.4 million.

Once funds are enough, another payout will be scheduled.

Loan collections and sales assets were used to pay the government loan.

Earlier, civil charges were filed against individuals and corporations involved in the bank’s failure.

Independent counsel Nelson Werner filed the third amended complaint, with 19 different causes of action, including negligence, breach of duty, gross negligence, breach of fiduciary duties, breach of duty of loyalty, embezzlement, conversion, fraud, intentional misrepresentation, intentional concealment, conspiracy to commit fraud, violation of the Financial Institution Act and breach of promissory note.

The complaint said the banks officers and directors converted to their personal use and possession the sum of at least US$16 million.

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