CNMI Court Issues Injunction For $190 Million Power Deal

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Agreement allegedly allows different copies to be combined

By Andrew O. De Guzman

SAIPAN, CNMI (Marianas Variety, Aug. 31, 2012) – The 45-page $190 million power purchase agreement was duly signed by the Commonwealth of the Northern Mariana Islands’ Fitial administration and Saipan Development LLC on Aug. 3, 2012, according to documents submitted in Superior Court which yesterday said it will issue a preliminary injunction that stops the implementation of the no-bid contract.

Also yesterday, attorney Ramon K. Quichocho, who represents Rep. Janet U. Maratita, submitted their first amended complaint that included Rep. Ray Anthony N. Yumul and the CNMI Senate as additional plaintiffs.

The plaintiffs want the court to stop the illegal expenditure of public funds. They are alleging breach of fiduciary duty and breach of trust, and are seeking declaratory relief as well as an injunction and damages.

Among the documents submitted by the plaintiffs yesterday was the 45-page copy of the power purchase agreement that bore the signatures of Gov. Benigno R. Fital for the Commonwealth Utilities Corp. "pursuant to his authority under executive order" that placed CUC under state of emergency; then-Attorney General Edward T. Buckingham; and PWJ Fisher who signed on behalf of Donald R. Kurz. The contract date was Aug. 3, 2012.

Saipan Development LLC was formed by Allegiance Capital Corp. and Keystone Shipping Co.

Allegiance Capital founder and chairman David J. Mahmood earlier told Variety: "Quite frankly, we are surprised at all the controversy this has generated. While an agreement was signed by Governor Fitial, Saipan Development, represented by Mr. Kurz, has not signed the agreement and hence there is no agreement in place."

[PIR editor’s note: Meanwhile, Saipan Tribune reports Saipan Development LLC co-founder Mahmood claims the agreement will not have an 'upfront cost' to the territory and is more beneficial than operating the existing Lower Base power plant over the next 25 years. However, lawmakers are still pushing for greater transparency over the agreement and the financial ramifications of its approval.]

But Quichocho said the contract was signed by Saipan Development.

He said PWJ Fisher is an executive of Keystone Shipping Co.

According to Quichocho, "The power purchase agreement has a counterparts clause, which means that they can simultaneously sign different copies and when taken together, shall constitute one and the same agreement."

Judge David A. Wiseman yesterday said the preliminary injunction to be issued "shall follow the restraints imposed by the temporary restraining order" he earlier imposed on the controversial deal.

Wiseman directed Quichocho to file another motion for a temporary restraining order on or before 2 p.m. today, "only with respect to the items requested to be added for injunctive relief."

The court set the preliminary injunction hearing for Sept. 4, 2012 at 1:30 p.m.

If there is any objection to the preliminary injunction hearing, Wiseman said the matter will be continued until Sept. 14, 2012 at 9:30 a.m.

If defendants Gov. Benigno R. Fitial, former Attorney General Edward T. Buckingham, the Commonwealth Utilities Corp., and Saipan Development LLC object to the preliminary injunction on the additional items submitted by Quichocho, "then the subpoeana duces tecum presently returnable on Sept. 5, 2012 shall be modified to be due and deliverable to the plaintiffs’ attorney on or before Sept. 11, 2012 close of business," Wiseman said.

Maratita through her lawyer earlier subpoenaed acting Gov. Eloy S. Inos to produce documents "related to an alleged power purchase agreement between defendants Saipan Development LLC and the Commonwealth Utilities Corp."

The court said if there is no objection to the preliminary injunction motion scheduled for Sept. 14, 2012 then the case will be taken off calendar and will proceed pursuant to the Civil Rules of Procedure for litigating a civil matter and the subpoena duces tecum will also be quashed.

For his part, Assistant Attorney General David Lochabay submitted a manifestation that acting Attorney General Viola Alepuyo has substituted Buckingham. Lochabay further told the court that "they do not oppose, and do hereby consent, to the issuance of a preliminary injunction in this case enjoining them under the same terms and conditions as they are currently restrained by the temporary restraining order previously issued by the court."

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