Guam Governor Accused Of Diverting Tax Refund Money

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Administration says senator’s claims ‘truly slanderous’

By Louella Losinio

HAGÅTÑA, Guam (Marianas Variety Guam, Jan. 24, 2014) – The chairman of the Guam Legislature’s appropriations committee has accused the governor’s office of continuing to siphon cash from the income tax refund trust fund.

Sen. Ben Pangelinan said approximately $5.6 million is the amount the governor took in December 2013 to pay for other operational costs.

Pangelinan has written yet another letter to Attorney General Leonardo Rapadas, updating him on what the senator says are "more unlawful" withdrawals of $5.6 million from the income tax refund trust fund that occurred in December 2013.

Pangelinan previously sent letters to Rapadas on Jan. 22, 2013 and Jan. 15, 2014, urging him to take action against what the senator described as a "subversion" of Guam tax refund laws.

In his letters, Pangelinan cited unlawful withdrawals and transfers from the refund trust fund totaling almost $45 million.

"Diverting the funds that should be reserved for tax refund payments is what led this government to have to borrow hundreds of millions of dollars in the first place," Pangelinan said.

"Now we see the governor, through his appointed Department of Administration (DOA) director, siphoning funds from the refund trust fund for what I can only imagine is to pay for politically motivated expenditures."

In his most recent letter, Pangelinan once again cited the public auditor’s findings of $25.7 million diverted from the refund trust fund for operations in fiscal 2011.

In fiscal years 2012, 2013, and the first quarter of 2014, Pangelinan claims more than $23 million was diverted from the tax refund trust fund for activities not related to income tax refunds. He said this totals almost $50 million withdrawn, transferred, or diverted from the refund trust fund just in the last three and a half fiscal years.

"Based on the law – had the governor followed it – the taxpayers of Guam should have at least $50 million reserved as cash in the bank for tax refunds that are due in April 2014. The governor says we only have $5 million," Pangelinan said. "Do not be fooled by the press releases. Although tax refunds have been paid in a timely manner as a result of the tax refund permanent injunction, these actions by the governor and DOA will place GovGuam in a similar situation we have seen in the past where borrowing is our only option."

$9M from GDOE

The senator added that Adelup has only been able to comply with the tax refund permanent injunction timeline this past year as a result of an unexpected windfall of $15 million in Section 30 funds and withholding more than $9 million from the Guam Department of Education.

"What happened to education as a priority? What happens in the next years when GovGuam doesn’t get these unexpected funds and all these new increases have to be paid? As the governor continues to increase government operations and payroll costs, we want to ensure that tax refunds and education are prioritized above election politics," Pangelinan said.

The senator is looking to the attorney general to pursue a legal remedy to recoup these funds and to further prevent these alleged withdrawals, transfers and diversions of tax refund money by the governor and DOA.

Adelup responds

Responding to Pangelinan, DOA Director Benita Manglona said the senator’s charges are "wholly untrue and truly slanderous."

She added that the administration, with the help of GovGuam employees, has made policy decisions to ensure tax refunds are paid timely, vendors are paid within a reasonable time, and that delivery of GovGuam services are not compromised.

Because of these policy decisions, Manglona said "empty promises of the past" like merit bonuses, promised compensation, law enforcement pay, and tax refunds have been paid out.

"This is why I find Sen. Pangelinan’s statement – ‘Now we see the governor, through his appointed Department of Administration director, siphoning funds from the refund trust fund for what I can only imagine is to pay politically motivated expenditures’ – insulting. We manage our cash on a daily, weekly, monthly, and annual basis to ensure we meet our obligations. That is what we have done – since day one of this administration – and will continue to do," Manglona said.

She assured that the Calvo administration will not allow the tax refund payments to relapse.

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