Bank of Saipan President John Z. Arroyo, center, appears before a joint House committee hearing on the BOOST program on Tuesday in the House chamber on Capital Hill.
BANK of Saipan President John Z. Arroyo told the House Committees on Judiciary and Governmental Operations, and Ways and Means that in addition to the 2% administrative fee that the bank received for administering the Building Optimism, Opportunities, and Stability Together or BOOST program, the bank also has obtained $500,000 in BOOST grant which is federally funded.
Arroyo appeared before the joint committee on Monday and Tuesday to answer questions pertaining to the BOOST program.
Arroyo told the joint committee that a total of $17 million in American Rescue Plan Act funds were transferred to the Bank of Saipan for the BOOST program which was provided by the Office of the Governor, the Department of Finance, and the Department of Commerce.
Arroyo said the Bank of Saipan was paid an administrative fee equivalent to 2% of $17 million or $340,000,
He said the bank also applied for and was awarded a total of $500,000 in BOOST grants.
The bank received $250,000 after the bank initially requested $1.5 million on Aug. 18, he added.
The bank received another $250,000 about two weeks ago after it was served a subpoena to appear before the joint committee, he said.
Asked by Rep. Joel Camacho what was the bank’s plan for the BOOST funds, Arroyo said they get a lot of requests from non-profit organizations and social and civic groups looking for donations and sponsorships. “We’d like to do as much as we can to support the community, but we are limited to our budget,” he said.
Their intention, Arroyo said, was to use the BOOST grants to assist non-profit organizations and social civic groups.
He said the bank also produces videos that teach children how to save and spend their money wisely.
“So, some of that [BOOST] money is going to help us produce more and more of those videos. Some of that money was also earmarked to be used as low-cost loans to individuals who might have difficulties in getting loans in a traditional way. But we were starting to pull back on that because we were not sure if we could use that money [for loans]. So, if not, more of that money would be used toward community investment,” Arroyo said.
It was Bank of Saipan Accounting Manager Arnold Pascua who signed the letter making an initial BOOST grant request of $1.5 million.
In a letter to then-Finance Secretary David DLG Atalig, Pascua said: “Nearly every business in the CNMI was negatively affected by the Covid economy. The bank was no exception. At the start of the government’s mandates to curb the spread of the virus, the bank voluntarily provided loan payment relief assistance to all loan customers. The option provided by the bank included 90-day deferrals of monthly payments or payments of only the principal portion of their monthly payments.”
Pascua added, “Overwhelmingly, the vast majority of our customers elected to defer their full payment. As a result, the major revenue source was significantly reduced during the greater part of fiscal year 2019 and throughout FY 2020.”
Rep. Tina Sablan reminded Arroyo that the Finance secretary told Arroyo in a letter that the Bank of Saipan “will be permitted to utilize these funds to attain its goals [while] ensuring compliance with U.S. Treasury rules and guidelines found in the [ARPA] Act and Final rule.”
Sablan said these include the rule regarding conflict of interest. She asked him if BOS took any steps to ensure compliance with ARPA.
Arroyo said, “We did to a degree but there were, I guess, some aspects of the law that we probably were remiss.”
Sablan responded, “Thank you for your candor. In hindsight, what do you think now?”
Arroyo replied, “I…kind of believe that the [review] panel would be the stop gap, but I suppose maybe in hindsight, we probably never should have submitted the application.”
Asked by Sablan if there were applicants who withdrew their BOOST applications when the joint House committee hearings commenced, Arroyo said “Yes, there was one — Pacific Horizon Education Services.”
But Arroyo said he’s not aware of any applicant who returned the money when the House joint committee began its investigation of the BOOST program.
Sablan asked if he would accept the job of BOOST administrator again, Arroyo said, “Absolutely not, and thank you for that question.”
If he could change anything in the administration of the BOOST program, Arroyo said he would “definitely tighten it up a lot.”
“I guess one of the things we were supposed to do, in hindsight, we should not have relied on the expertise of others — we should not have relied on the direction of others.”
The members of the review panel for BOOST program applications are the governor’s Chief of Staff Wil Castro, then-Finance Secretary David DLG Atalig, and Commerce Secretary Edward “Tofila” Deleon Guerrero. The panel makes a recommendation to the governor “for his ultimate approval.”
Also present in the joint committee hearing were Ways and Means Chairman Donald Manglona, JGO Chairwoman Celina Babauta, Vice Speaker Blas Jonathan Attao, Reps. Leila Staffler, Edwin Propst, Richard Lizama, and Corina Magofna.
On Monday morning, the Federal Bureau of Investigation executed a search warrant at the Bank of Saipan. “The FBI is inquiring about the BOOST program,” a bank staffer who requested anonymity told Variety.
