Auditor candidate cites protected class of corruption

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“Alright, you’ve been ignoring my letters, now I’m going to be issuing performance audits that say you shall stop.”

Guam – Speaker BJ Cruz is mincing no words in his new campaign for public auditor—assailing the cozy relationship and patronage that he says have led to one corruption allegation after another during the Calvo-Tenorio Administration, the failure to prosecute corruption charges, the raiding of legally protected special reserve funds, and the constant misspending of public revenues.

Recently discovered raids on Chamorro Land Trust accounts reserved for surveys and infrastructure development for affordable rural property leases and on the federally protected Emergency-911 system accounts are cases in point which emptied out strongboxes and left funds unavailable for intended purposes. This, at a time when pundits and particular politicians have wondered aloud whether the Government of Guam might be edging closer to federal financial receivership, not entirely unlike the PROMESA (Puerto Rico Oversight, Management, and Economic Stability Act).

“There is some transfer authority in the budget act, but just for the general fund,” Cruz said of Gov. Calvo’s limited transfer authority. “On special funds, if the fund specifically states ‘there shall be no transfer’, or ‘not subject to this transfer authority’, he’s not allowed to do that.” He has been doing it. We pointed it out last year that they’ve been doing it, and to stop. They’ve just not stopped.”

Cruz spelled it out quite plainly in an interview with Pacific News Center on Thursday, asking rhetorically why certain public officials who should have been investigated and even prosecuted for suspected or even blatant government corruption have not been prosecuted to this day. Examples of corruption or suspected corruption include suspect special fund transfers, illegal front-office pay raises, and dereliction of public duty.

He admitted that large and influential families on Guam tend to look out for one another and that this is one reason certain government offices such as that of the attorney general, treasurer, and judges should focus on executing the law, without having to buy people off or bow to the influence of local families and the voting blocs they control.

Elected vs. appointed

It may stand to reason why even the most partisan voters might want to elect an independent, nonpartisan auditor as a prospective watchdog on public finances and a deterrent to slush-funds and opaque expenditure. By the same token, the school of thought Cruz subscribes to would bar from the ballot box those offices considered susceptible to more volatile forms of political interference.

Supreme Court justices who serve the government of Guam are appointed for life but face retention elections every ten years. Local Superior Court judges are appointed for eight years and face confirmation by voters, if they wish to continue serving. So far, Guam judges don’t campaign for votes, per se, and Cruz wants to keep it that way.

Recently, Sen. Frank Aguon, Jr. introduced legislation calling for an elected and bonded Territorial Treasurer to oversee the Depts. of Administration and Revenue and Taxation, as well as the Bureau of Budget and Management Research and the Guam Economic Development Authority. But Cruz sees an elected treasurer as problematic, too.

PNC asked Cruz whether he supports Aguon’s legislation. “Oh, God no!” he said.

“Either you have a governor or you don’t have a governor,” he said, emphasizing a need for fewer elected chiefs and more worker bees under an administration held accountable by checks and balances, the separation of powers, and special prosecutorial authority.

Frenemies

So far, Cruz is running unopposed for the seat at the head of the Office of Public Accountability, vacated at close of business, Friday, June 8th, by outgoing auditor Doris Flores Brooks. When PNC asked presumed Acting Public Auditor Yukari Hechanova that day whether she  would run for the public auditor’s position that Brooks was leaving to run for Congress, Hechanova was not ready to declare.

Longtime friends, Cruz and Brooks haven’t always seen eye to eye. In August of 2014, while serving as Vice Speaker and Appropriations Chairman of the legislature, Cruz publicly accused then-auditor Brooks of covering up for the Calvo-Tenorio Administration and lying to the public through misrepresentation of fact.

As PNC reported at the time, Cruz alleged that the local government had suffered a $20 million fiscal year 2013 deficit, instead of the $2 million surplus shown in the government’s published FY13 financial statements, a final report he said bore “many misrepresentations and flaws.”

Brooks refuted the allegations in writing. “As Public Auditor I deny the charges you made in your letter and assure you that the Office of Public Accountability has acted ethically and in accordance with the accounting standards you cited in your letter,” she wrote.

But Cruz was adamant, stating that Brooks had told him during a July 17th, 2014 meeting that the GovGuam financial audit had been the subject of “‘political manipulation.’” And Cruz called on the OPA to publicly acknowledge what Brooks had allegedly told him in private.

“While you had made these assertions to my face,” Cruz wrote, “you have been unwilling to recognize them publicly.”

“Failure to openly address the flaws you acknowledged to me in private undermines the integrity of your office, the very concept of an independent audit, and the basic belief that our government’s financial statements should not further a lie.”

At the time, Cruz reported to PNC that, within the GovGuam financial audit, Deloitte & Touche had recognized as 2013 revenue “$22,869,385 in additional Section 30 Funds,” even though at least $15 million of that amount was still uncollected as of July 14th, 2014.

Included in the documents then released by Cruz was a letter from Deloitte Partner Dan Fitzgerald, who acknowledged in a letter to then-Director of the Dept. of Administration Benita Manglona as well as Public Auditor Brooks that “the $15 million was…inappropriately recognized as revenues.”

Whatever their differences in the past, Cruz and Brooks were seen in a warm embrace in the public hearing room at the conclusion of Brooks’ final budget hearing as Public Auditor on the afternoon of her last day in office. Fighting back tears during her testimony, Brooks acknowledged that both of them are “passionate” people who take their jobs seriously. Cruz had just finished presiding over the meeting as Chairman of Appropriations and Adjudication.

A process of discovery

In serving as Appropriations Chair of the legislature for three and a half years, Cruz has found himself appropriating special reserve funds for GovGuam departments and agencies one fiscal year, only to discover those funds misspent or misdirected by the approach of the following fiscal year—the annual season managers and directors return for yet more funding.

Round and round the process goes, where the money moves, nobody knows.

The combination of bloated budgets, compounding debt, Gov. Eddie Calvo’s 15% transfer authority, and an atmosphere of fiscal licentiousness that has arguably led to the raid on special funds are driving Cruz to make accountability priority number one in his bid for auditor.

“And so that’s one of the reasons why I’m running for public auditor, is I’m saying, ‘alright, you’ve been ignoring my letters, now I’m going to be issuing performance audits that say you shall stop,’” Cruz said.

“And, if I need to, as public auditor, be the party plaintiff to go to court and say to the governor ‘the law is very clear; you’re not to transfer. Don’t force me to do GASB [Governmental Accounting Standards Board]-34 transfers. Stop transferring, because the law says you’re not supposed to do it.’”

PNC asked Candidate Cruz how he would persuade lawmakers to close loopholes in any laws giving the governor leeway in interpreting his own transfer authority, and how Cruz might persuade the next attorney general to enforce current laws and even more stringent ones.

But Cruz said the problem is that the Office of the Attorney General should not be an elective position, but an appointed one, beholden to the governor, and that a special prosecutor should be hired to investigate the Office of the Governor and his or her government in special circumstances. The AG used to be appointed on Guam.

If he has his druthers, Cruz might either hope the 34th Legislature introduces legislation to change the Attorney General’s Office back to an appointed position before sine die, or to introduce the legislation himself before he is forced to resign his senatorial seat, should he win the auditor’s race.

On her final day in office, Brooks told PNC that, inasmuch as she was vacating the auditor’s office before the end of her term in order to run for Congress, a special election to fill the vacancy will coincide with Guam’s August 25th primary election. Pacific News Center has asked Speaker Cruz whether he will introduce an ‘appointed AG’ bill before he leaves the legislature. PNC is still awaiting his response.

A tale of two judges

As an example in furthering his point, Cruz reminds the public that elected Attorney General Elizabeth Barrett Anderson arguably failed to prosecute and failed to hire a special prosecutor on the issue of illegal pay raises granted by Gov. Calvo to his staff.

“The problem with having an [elected] attorney general—it’s a conflict if they’re advising [the governor],” Cruz said.

“Like [when] I tried to [call public attention to] the $850,000 transfer early in this [gubernatorial] term to get her to do something about it. She found a conflict; they couldn’t get a special prosecutor; they never prosecuted.”

What Cruz may be referring to is the approximate million dollars in retroactive raises issued to unclassified Adelup staffers, paid out in December of 2014 and discovered as an anomaly or spike in governor’s office expenditures almost a year after.

As for Cruz’s criticism that she hadn’t hired a special prosecutor in time to handle the illegal Adelup bonuses, Attorney General Anderson told PNC in July of last year that had she recused herself from that issue and left it to the chief prosecutor to handle. She said that it was then her understanding that there had been a procurement issue that prevented the hiring of the special prosecutor.

In his capacity as Speaker of the Guam Legislature and viewed through the lens of a fellow former judge (Anderson is also a former judge), Cruz had accused Anderson of being too much of a politician. But Anderson disagreed at the time.

“I am a politician. I mean, I was elected,” the attorney general said. “I am a politician but I am an attorney general and my job as attorney general is—I think the voters of Guam put me in this office to do my best job and not to constantly fight and fight and fight. I’m not quite sure that being political is such a bad word. If you’re political and you use it not in the interest of the public, then that’s bad.”

Cruz: ‘It’s just wrong’

Fast forward nearly a year later and Cruz—now a declared candidate for public auditor—is still reflecting on the thrust of his argument that an elected attorney general may be too political to be fiscally prudent.

“And, as we see now…there was that issue of ‘who represents…who’ in giving advice on whether or not you can or cannot give retroactive pay,” Cruz said.

“And so, we’ve been stalemated. If we knew that we just had an elected attorney general, and if there was anything that involved the administration, then, like you have with [the] model in the states, you have a special prosecutor you use to deal with whatever the executive is doing.”

So, for the same reason he’s against an elected AG, Cruz also opposes Aguon’s proposal for an elected treasurer of Guam or any proposal to force judges to campaign for votes. Cruz says electing these offices only adds to an atmosphere of pandering to voting blocs while avoiding the just and proper execution of the law.

Cruz said he rejected out of hand the idea of running for attorney general himself, because he didn’t want to be gun shy about prosecuting people whose families he might depend on for significant numbers of votes.

“There’s too much of a need to go out and get votes,” he said. “You should have people just be in those positions to enforce the law, period, and not have to figure that ‘I have to go out, and I have to go to this family, but I just prosecuted their son. I’ll not get that whole clan.’ It’s just wrong. I didn’t believe [in] it. That’s why I couldn’t run for [attorney general].”