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Demands for kickbacks prompt bankruptcy move to Florida

By Fili Sagapolutele PAGO PAGO, American Samoa, (Samoa News, Jan. 27, 2011) – In American Samoa, not wanting to "succumb to the corruption surrounding the Governor" of the country, MYD Samoa Inc. opted to fight the "corrupt regime" in the federal bankruptcy court in Florida, according to MYD's "Disclosure Statement" filed Tuesday with the bankruptcy court, which also outlines a new allegation against American Samoa Government (ASG) added to previous ones made.

The statement, pursuant to federal bankruptcy code, accompanied the company's reorganization plan, which is required in federal bankruptcy law.

The statement reiterated the company's previous allegations of kickbacks sought by people, purported to be representatives of the governor, but a new twist in the disclosure outlines another allegation.

[PIR editor’s note: MYD Samoa Inc. is a Fort Lauderdale, Florida-based company that provides ship repair services in American Samoa. The company has disputed a $2 million tax bill levied by the American Samoa government. ]

It says that within weeks after taking over the shipyard, MYD officials were "approached by ASG officials who blatantly sought kickbacks and/or bribes in the form of cash in a brown paper bag which was to be paid weekly in exchange for the Debtor being able to operate its business without government obstacles" and MYD officials "rebuffed these demands."

Also recalled in the statement were two MYD officials wired under the direction o the Federal Bureau of Investigation (FBI) during meetings with the governor's representatives.

MYD says it "approached the FBI, [which] opened a file on the kickback/bribery schemes of the Governor and his underlings" and MYD officials Bob Weihe and Dan Del Monico "were ‘wired' by the FBI on numerous occasions. Apparently public corruption is rampant in American Samoa."

Allegations of kickbacks and bribes were dismissed last year by the governor, who has demanded that MYD make public these recordings. MYD later told Samoa News the recordings are in the hands of the FBI.

Also recalled in the disclosure statement were the two meetings between Gov. Togiola Tulafono and Southwest Marines Samoa Inc. (SWMS) official Todd Roberts, who was told by the governor that the sublease between Southwest Marines and MYD would never be approved.

"Roberts left the meeting believing that breaching its sublease agreement with the Debtor was more advantageous than dealing with the threats that the Governor would bring down the full force of his government against SWMS, said MYD in its disclosure statement. Based upon the real and perceived threats by the Governor and his henchmen, the board of SWMS apparently determined that being in litigation with American Samoa Government for the remainder of the master lease with ASG was far too costly; in early 2010, Southwest Marines Samoa exercised another five year option on the master lease taking the expiration date into 2015, the statement alleges. The board of SWMS apparently decided that it might as well try to ‘find' an excuse to avoid the terms of the sublease with the Debtor than to fight with the corrupt regime in American Samoa, it says. Although Roberts thought MYD was a ‘model tenant' the SWMS board apparently decided that the Debtor would be the proverbial ‘sacrificial lamb' in this matter, the company further alleges. The principal of the Debtor, believing that they had done everything right and not wanting to succumb to the corruption surrounding the Governor, made the decision to fight this corrupt regime in the United States Bankruptcy Court," it says.

The government moved to appoint a Chapter 11 trustee, and the federal bankruptcy court appointed a Trustee to oversee all operations of MYD as well as all financial matters - with ASG's concern about the US$1 million the company received from the Small Business Administration as a loan following the September 2009 tsunami.

According to MYD, the effect of a Trustee "has not been favorable to ASG" because MYD and the Trustee have kept the business operating in American Samoa "and may well keep the business operating for the balance of the Master Lease" which was between American Samoa Government and Southwest Marines Samoa.

"ASG continues to throw money toward litigation in the Bankruptcy Court, but it appears that it may be a long time before the litigation is resolved," said MYD, adding that even failing to pay nearly US$200,000 to MYD has not given ASG the desired result of closing the Debtor's operation.

"Despite the litigation, the Trustee has profitably operated the business and has withdrawn at least US$80,000 from the business to hold toward the administrative expenses. The Trustee has the rent money for the sublease in escrow," said MYD.

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