As we reported yesterday the American Samoa Government Employees Retirement fund has served notice to the American Samoa Telecommunications Authority that it has defaulted on a $4.5 million payment.
The payment is for the $17 million that the Retirement Fund loaned to ASTCA in the form of an investment in the Hawaiki Cable. An agreement between teh Retirement Fund and ASTCA provides that the Retirement Fund would own components of the Hawaiki Cable and the Fund would lease back the cable to ASTCA<
The first lease payment of $4.5 million was due December 8 and this past Monday the chairman of the Retirement Fund Board Vaanatiu Toafala Iafeta unformed the ASTCA Board Chairman Faiivae Alex Iuli that if the default remains uncured the Retirement Fund shall proceed to manage, monetize, operate or dispose of the Retirement Fund’s rights and interest granted under the Decemebr 2017 agreement between the Retirement Fund and ASTCA.
Listeners would recall that KHJ News had raised questions about the basis for the Retirement Fund Board’s decision to make this investment in ASTCA and Hawaiki considering the financial standing of ASTCA.
During Fono hearings on the bill to increase the cap on the amount that the Retirement Fund could invest in the territory, it was pointed out that the investment in ASTCA was safe.
ASTCA’s failure to pay the Retirement Fund would likely jeopardize retiree benefit payment since there already is not enough investment income to pay benefits causing the Retirement Fund to cash in assets to meet the monthly retiree payouts.
Retirees have complained that its been several years since there was a cost of living adjustment for them.
Before the ASTCA and Hawaiki investments by the Retirement Fund, no other local investment had defaulted.
ASTCA officials had testified during Fono hearings that they would need a two year break from paying the Retirement Fund loan to set their finances together and carry out upgrades to fully make use of the benefits of the Hawaiki Cable.
If ASGERF grants ASTCA an extension to pay the lease payment, it can be expected that this would have an impact on retirees’ pensions.
There’s also a possibility of the bond rating being downgraded .
