United States. Congress. House. Committee on Resou.

Samoan white-collar crime : hearing before the Subcommittee on Native American and Insular Affairs of the Committee on Resources, House of Representatives, One Hundred Fourth Congress, first session, on the Department of Justice report on American Samoa white-collar crime assessment which highlights online

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SAMOAN WHITE-COLLAR CRIME

Y 4. R 31/3: 104-50 ^^^^^^^^'^'^^^

Sanoan Hhite-Collar Crine/ Serial H. . . ^^^^

iNG

BEFORE THE

SUBCOMMITTEE OxN NATIVE AMERICAN
AND INSULAR AFFAIRS

OF THE

COMMITTEE ON RESOURCES
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

FIRST SESSION
ON

THE DEPARTMENT OF JUSTICE REPORT ON AMER-
ICAN SAMOA WHITE-COLLAR CRIME ASSESSMENT
WHICH HIGHLIGHTS SOME SERIOUS PROBLEMS AND
SUGGESTS POSSIBLE RESOLUTIONS



AUGUST 3, 1995— WASHINGTON, DC



Serial No. 104-50



Printed for the use of the Committee oi^vl|S^nn^^l ""tlttf*^/*




my



U.S. GOVERNMENT PRINTING 0FFWK7>*«^lS)r^ 1^^^^" V




20-369CC WASHINGTON : 1996



For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office. Washington, DC 20402

ISBN 0-16-052335-4



SAMOAN WHITtCOLLAR CRIME

Y 4. R 31/3: 104-50 ^^^^^'^^^^'^^^^

Sanoan Hhite-Collar Crine, Serial K. . . ^^^^

iNG

BEFORE THE

SUBCOMMITTEE ON NATIVE AMERICAN
AND INSULAR AFFAIRS

OF THE

COMMITTEE ON RESOURCES
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

FIRST SESSION

ON

THE DEPARTMENT OF JUSTICE REPORT ON AMER-
ICAN SAMOA WHITE-COLLAR CRIME ASSESSMENT
WHICH HIGHLIGHTS SOME SERIOUS PROBLEMS AND
SUGGESTS POSSIBLE RESOLUTIONS



AUGUST 3, 1995— WASHINGTON, DC



Serial No. 104-50




Printed for the use of the Committee otJfj^ibpae^s^i, ''Uunh^^^A^,^

^^^^9 1996




U.S. GOVERNMENT PRINTING DFFwiif'i'^^lfJsiV. '1^^^'*":

u/AC«TMnTr>M • ^aac '"'it. V. 7 t< f -) « '^ '



20-369CC WASHINGTON : 1996



For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-052335-4



COMMITTEE ON RESOURCES
DON YOUNG, Alaska, Chairman



W.J. (BILLY) TAUZIN, Louisiana

JAMES V. HANSEN, Utah

JIM SAXTON, New Jersey

ELTON GALLEGLY, California

JOHN L. DUNCAN, Jr., Tennessee

JOEL HEFLEY, Colorado

JOHN T. DOOLITTLE, California

WAYNE ALLARD, Colorado

WAYNE T. GILCHREST, Maryland

KEN CALVERT, CaUfornia

RICHARD W. POMBO, California

PETER G. TORKILDSEN, Massachusetts

J.D. HAYWORTH, Arizona

FRANK A. CREMEANS, Ohio

BARBARA CUBIN Wyoming

WES COOLEY, Oregon

HELEN CHENOWETH, Idaho

LINDA SMITH, Washington

GEORGE P. RADANOVICH, CaUfornia

WALTER B. JONES, Jr., North Carolina

WILLIAM M. (MAC) THORNBERRY, Texas

RICHARD (DOC) HASTINGS, Washington

JACK METCALF, Washington

JAMES B. LONGLEY, Jr., Maine

JOHN B. SHADEGG, Arizona

JOHN E. ENSIGN, Nevada



GEORGE MILLER, CaUfornia
EDWARD J. MARKEY, Massachusetts
NICK J. RAHALL II, West Virginia
BRUCE F. VENTO, Minnesota
DALE E. KILDEE, Michigan
PAT WILLIAMS, Montana
SAM GEJDENSON, Connecticut
BILL RICHARDSON, New Mexico
PETER A. DeFAZIO, Oregon
ENI F.H. FALEOMAVAEGA, American

Samoa
TIM JOHNSON, South Dakota
NEIL ABERCROMBIE, Hawaii
GERRY E. STUDDS, Massachusetts
SOLOMON P. ORTIZ, Texas
OWEN B. PICKETT, Virginia
FRANK PALLONE, Jr., New Jersey
CALVIN M. DOOLEY, CaUfornia
CARLOS A. ROMERO-BARCELO, Puerto

Rico
MAURICE D. HENCHEY, New York
ROBERT A. UNDERWOOD, Guam
SAM FARR, CaUfornia
PATRICK J. KENNEDY, Rhode Island



Daniel Val Kish, Chief of Staff

David Dye, Chief Counsel

Christine Kennedy, Chief Clerk /Administrator

John Lawrence, Democratic Staff Director



Subcommittee on Native American and Insular Affairs



ELTON GALLEGLY,
DON YOUNG, Alaska
WAYNE T. GILCHREST, Maryland
WALTER B. JONES, Jr., North CaroUna
RICHARD (DOC) HASTINGS, Washington
JACK METCALF, Washington
JAMES B. LONGLEY, Jr., Maine



California, Chairman

ENI F.H. FALEOMAVAEGA, American

Samoa
DALE E. KILDEE, Michigan
PAT WILLIAMS, Montana
TIM JOHNSON, South Dakota
CARLOS A. ROMERO-BARCELO, American

Samoa
ROBERT A. UNDERWOOD, Guam



Tim Glidden, Staff Director I Counsel

T.E. Manase Mansur, Professional Staff

Marie Howard Fabrizio, Democratic Professional Staff



(II)



CONTENTS



Page

Hearing held August 3, 1995 1

Statements of Members:

Faleomavaega, Hon. Eni, a U.S. Delegate from American Samoa 2

Gallegly, Hon. Elton, a U.S. Representative from California, and Chair-
man, Subcommittee on Native American and Insular Affairs 1

Statements of witnesses:

Ale, Savali Talavou, Speaker of the House of Representatives, American

Samoa 27

Prepared statement 52

Coleman, Peter Tali, former Governor of American Samoa 16

Harwell, R. Wendell, Territorial Auditor 10

Prepared statement 31

Lutali, A.P., Governor of American Samoa 6

Richard, Mark, Deputy Assistant Attorney General, Criminal Division,

Department of Justice 21

Prepared statement 35

Stajrman, Allen P., Deputy Assistant Secretary for Territorial and Inter-
national Affairs, Department of the Interior 24

Prepared statement 46

Togafau, Malaetasi M., Attorney General, American Samoa 8

Additional material supplied:

American Samoa White-Collar Crime Assessment, dated December 1994 . 62
Bill for an Act entitled: "An Act To Create the Ainerican Samoa Medical
Center Authority as an agency of the Executive Branch of the Amer-
ican Samoa Government, To Repeal Title 13, Chapters 1 and 2 ASCA,
To Crreate a new Title 13, Chapter 01 and To Amend Title 13, Chapter

06, ASCA." 102

Responses to Questions:

Department of Justice, Andrew Fois 89

Office of Governor, A.P. Lutah 92, 122

President of Senate, Letuli Toloa 130

Speaker of House of Representatives, Savali Talavou Ale 132

Territorial Auditor, R. Wendell Harwell 137

Senate Bill No. 22-109, Legislature of American Samoa 95

Title 15, Public Utilities and Energy 112

Communications submitted:

Gallegly, Hon. Elton: Letter with questions of September 13, 1995, to

Hon. LetuU Toloa 128

Lutali, Gov. A.P.:

Letter of November 20, 1995, to Hon. Bruce Babbitt (Dept. of Inte-
rior) 121

Letter of November 20, 1995, to Hon. Janet Reno (Dept. of Justice) ... 119



(III)



AMERICAN SAMOA WHITE-COLLAR CRIME



THURSDAY, AUGUST 3, 1995

House of Representatives, Subcommittee on Native
American and Insular Affairs, Committee on Re-
sources

Washington, DC.
The subcommittee met, pursuant to call, at 1:25 p.m., in room
1100, Longworth House Office Building, Hon. Elton Gallegly
(Chairman of the Subcommittee) presiding.

STATEMENT OF HON. ELTON GALLEGLY, A U.S. REPRESENTA-
TIVE FROM CALIFORNLV; AND CHAIRMAN, SUBCOMMITTEE
ON NATIVE AMERICAN AND INSULAR AFFAIRS

Mr. Gallegly. I want to welcome our witnesses today. We know
that they have traveled a great distance to share their views on the
subject of today's hearing, the American Samoa White-Collar Crime
Assessment was issued by the United States Department of Jus-
tice. At the conclusion of my statement, I will defer to the delegate
to American Samoa to add his welcoming remarks to the current
leaders of American Samoa.

I also want to acknowledge and thank former Governor Peter
Tali Coleman for volunteering to share his testimony via telephone
conference from the Queens Medical Center in Honolulu, Hawaii,
where he is recovering from surgery. This, I think, will be the first
time a subcommittee or a full committee will receive live testimony
telephonically, which is certainly warranted due to the importance
of the subject of the hearing, and given Governor Coleman's exten-
sive years as leader in American Samoa.

The Administration is represented today by Mark M. Richard,
Deputy Assistant Attorney General, Criminal Division of the De-
partment of Justice, and Deputy Assistant Secretary for Territorial
and International Affairs Allen Stajrman of the Department of Inte-
rior. The Federal Bureau of Investigation and other components of
the Department of Justice have devoted significant resources in as-
sessing criminal activity in American Samoa.

The American Samoa White-Collar Crime Assessment, which
was only recently released, and is the basis for this hearing, high-
lights a number of serious problems and suggests possible solu-
tions.

This subcommittee and the full Committee on Resources has al-
ready taken steps to address certain problems raised by the Assess-
ment through the enactment of H.R. 1332, which contains the
American Samoa Economic Development Act. The legislation ap-
proved by the committee provides additional funding to American

(1)



Samoa, which is automatically withheld if stringent Federal audit
standards are not met. In addition, in order to use the funding for
capital improvement projects, American Samoa is required to es-
tablish independently audited, semi-autonomous agencies for var-
ious areas of public utilities and infrastructure. We have worked
closely with the Interior Department's Office of Inspector General
to develop the legislative language to apply Federal audit stand-
ards and enforcement mechanisms.

In addition to the solutions provided in H.R. 1332, additional leg-
islation will be necessary to provide for the prosecution of Federal
crimes in American Samoa. We have an obligation to the people of
American Samoa, and to every U.S. taxpayer to ensure that the
misuse of Federal funds is both prevented and when necessary,
prosecuted. At the same time, I intend to look for the alternatives
which will be compatible with our commitment to the people of
American Samoa as provided for in the Deeds of Cession.

I am confident that an appropriate legislative solution can be de-
veloped with the cooperation and input from the leaders of Amer-
ican Samoa. The Administration, and of course, the delegate, my
good friend, Eni Faleomavaega, from American Samoa.

The chair would now recognize my friend, the ranking member,
minority member from American Samoa, Mr. Faleomavaega.

STATEMENT OF HON. ENI FALEOMAVAEGA, A U.S. DELEGATE
FROM AMERICAN SAMOA

Mr. Faleomavaega. Mr. Chairman, thank you for holding this
hearing on white-collar crime in American Samoa. I know you re-
main busy, and this week is an especially busy one for all of us.

I want to welcome Governor Lutali; Speaker Savali Ale; Presi-
dent Pro Temp Lutu Tenari Fulmaono; our Attorney General,
Malaetasi Togafau; our Territorial Auditor, Mr. Harwell, all from
American Samoa at today's hearings. We appreciate, Mr. Chair-
man, your willingness — I am sorry. Governor, your willingness to
travel 8,000 miles to testify before the subcommittee. It is not an
easy trip, and your efforts on behalf of the people of American
Samoa are sincerely appreciated.

Acting Assistant Secretary Allen Stayman from the Department
is also here with us. I certainly want to welcome him here. Finally,
it is my understanding that the Department of Justice chose to
send Deputy Assistant Attorney General Mark Richard to today's
hearing, and I look forward to hearing his testimony.

As we proceed into this hearing, Mr. Chairman, it is important
to keep in mind that Governor Lutali recognized in 1993 that
white-collar crime may have been a problem in American Samoa.
He requested assistance from the Secretary of the Interior and the
Department of Justice, and it was at his direction that the assess-
ment team was formed with the cooperative efforts of the Governor
and appropriate agencies of the local government.

The report we are considering today is not what the Governor
had in mind over two years ago when he wrote to the Secretary of
the Interior, but here we are, and we are considering recommenda-
tions to the Justice Department assessment team, presumably with
departmental recommendations to follow.



Mr. Chairman, I feel it is important to note that many of the
findings of the assessment team report are not new. Audit report
after audit report has pointed out the shortcomings in the internal
controls of the local government's financial operations. As noted in
the most recent report, allegations of white-collar crime have been
reported by the local and national media.

Issues such as the jurisdiction of Federal courts in Samoa have
been debated for over 30 years now. For these 30 years, it has been
the understanding of the leaders of the local government that ASG
would work with the Department of the Interior in preparing rec-
ommendations on how and when it would be best to proceed. Now,
all of a sudden, everyone is jumping as if these are new issues dis-
covered by some miraculous investigative process.

I remember years ago, Mr. Chairman, the Department of the In-
terior was considering a proposed bill introduced by one of our col-
leagues to authorize an appeals process from Samoa to the Federal
District Court in Hawaii, and even to the Ninth Circuit Court of
Appeals. I found out that the strongest supporters of this idea were
our tuna canneries. I don't blame them because they have hun-
dreds of millions of dollars of investment at stake in Samoa, and
they want to make sure the interests of their corporate stockiiold-
ers are protected. I certainly did not support the proposal for the
simple reason that our leaders of the people were not ready to ex-
amine such a fundamental change. Except for the well-to-do, how
can the average Samoan wage earner, who makes about $6,500 per
year, possibly afford to defend himself in Federal court, let alone
bring his grievance to court, when incomes are so low in Samoa.

Another classic example of Federal intrusion without local sup-
port was an instance in which an American citizen years ago filed
suit in the Federal district court here in Washington, D.C., by
suing the person of the Secretary of the Interior, since the Sec-
retary was the authorized overall administrative authority over
Samoa. This citizen claimed he was being denied his constitutional
right to due process, since Samoa's judicial system did not provide
for criminal trials by jury.

This is a classic example, Mr. Chairman, whereby our Samoan
leaders testified before the Federal district court, we even had the
celebrated Dr. Margaret Mead testifying. All told the judge the Sa-
moan culture ties to families and friendships would make jury
trials a very difficult situation. Well, guess what? By a stroke of
the pen, Mr. Chairman, the Federal district court ruled Samoa will
now have jury trials.

This is not the sole source of the pain I feel, Mr. Chairman. The
real source of the hurt is that the Interior and Justice Department
attorneys who represented Samoa's interests in court never both-
ered to appeal the case to the Supreme Court. To this day, Mr.
Chairman, Samoa has jury trials, and I suspect Samoa would have
had a better chance in court if it had hired a private law firm rath-
er than depended on the Interior Department for assistance.

I cannot help, Mr. Chairman, but note the irony that 20 years
later, it is an assessment team of the same Department of Justice
that complains how hard it is, even today, to pick an impartial jury
in Samoa.



I want to make it clear, Mr. Chairman, that we are aware of the
issues raised by the assessment team, and again, it was Governor
Lutali who stepped forward and asked for assistance, and I com-
mend the Governor for doing so. He asked for a prosecutor and in-
vestigators to prosecute violations of local law, not for a prosecutor
and Federal investigators to write a report to be followed by a con-
gressional hearing.

What really bothers me, Mr. Chairman, not only how leaks of
this report came about obviously by someone within the agency re-
sponsible for its publication, but to suggest and imply that the Sa-
moan culture condones stealing and lying, and that to further sug-
gest that corruption in government is an acceptable activity within
the context of tlie Samoan culture is an insult to every Samoan
who is present at this hearing, and I resent that very much.

I also want to note that for years I have been raising the issues
addressed in the report publicly and suggesting that a comprehen-
sive Federal study commission, similar to those established for Na-
tive Americans and Native Hawaiians be established for Samoa as
well. I never advocated a political status commission, but a study
commission to thoroughly study the governing documents and what
little history is available and report its findings to both the Samoan
people and the Congress.

Until the political relationship between Samoa and the United
States is clearly defined, Mr. Chairman, a vacuum will exist, and
it is more likely than not that it will be the Federal Government
that will step in to fill that vacuum. I do believe this will not help
plan for Samoa's future.

I submit, Mr. Chairman, that neither the U.S. nor American
Samoa needs a relationship based upon misunderstandings and
misinterpretations, and I do not want to see a Federal intrusion in
the process unless and until the Samoan people and its leadership
determine the manner in which they wish to proceed now and in
the future. But where does this leave the future of the Samoan peo-
ple? What are their rights under the current relationship? In my
view, Mr. Chairman, there clearly was a misunderstanding in the
early part of this century in that there was no meeting of the
minds between U.S. negotiators and the Samoan traditional lead-
ers who signed these two basic documents. It remains my opinion
that to proceed in an orderly manner, we need a comprehensive
and independent study in which both the Federal and local govern-
ments participate.

One of the recommendations the Justice Department made is
that limited court jurisdiction be extended to Samoa. My fear is
that the more the Federal Grovernment gets involved with Samoa,
the greater the danger that Samoan culture and traditions will be
lost or severely compromised.

I will not now, nor will I ever, support fundamental changes to
this basic relationship taken on a piecemeal fashion. While some of
the recommendations made by the assessment team may resolve an
immediate need, an unintended consequence of these actions may
be that in the long run, they destroy the very essence of Samoan
culture and Samoa's unique land tenure system.

The Congress is actually addressing another facet of this problem
through legislation which will create, for the first time, to my



knowledge, a formal authorization for appropriations for future
congressional funding for Samoa. H.R. 1332 and Senate Bill 638
are the vehicles for this discussion. Part of the discussion is the
need for the Department of the Interior to maintain an office which
directly monitors Federal interests in American Samoa on a daily
basis.

As you know, Mr. Chairman, I support legislation that would ter-
minate the Office of Territorial and International Affairs, and give
the American Samoan government greater autonomy, while at the
same time, make the local government accountable for the use of
the Federal funds it receives from the Congress.

Mr. Chairman, after 29 years of uncertainty — it was not until
1929 the Congress officially then ratified the two documents joining
the United States and the island groups of Tutuila and Manu'a into
some form of a political union. The statute also vested in the Presi-
dent "all civil, judicial, and military powers necessary to govern
American Samoa, until such time as Congress provided for a gov-
ernment of the islands."

In 1984, out of concern that the Secretary of the Interior was
about to personally intervene for political purposes into the local
election process in a partisan manner, Samoa's delegate to the
House of Representatives spearheaded a legislative effort to fore-
close that option. This 1984 law prohibits any change in the Re-
vised Constitution of American Samoa unless Congress itself makes
the change.

But here is the problem, Mr. Chairman. This has only added
more fuel to the fire in that if Congress were ever to examine the
provisions of the territorial constitution approved by the Secretary
of the Interior as it now is. Congress, in my opinion, would have
simply to declare Samoa's constitution not in conformance with the
Federal constitution, like all other territories' or states' constitu-
tions.

Mr. Chairman, these two Federal statutes are in conflict with
one another, and one unintended consequence of the 1984 law is
that the Secretary of the Interior now relies on the 1929 law when
he wanted to take certain actions, and then relies on the 1984 law
when he wishes to avoid responsibility to the Congress as well as
to the Samoan government.

I say this somewhat irreverently. The truth of the matter, Mr.
Chairman, is that the 1984 law ties the Secretary's hands to a cer-
tain extent, although it is my opinion that his hands are not as tied
as his solicitor's office claims.

Lest my comments in opposition to Federal intrusion in Samoa's
local affairs be misinterpreted, Mr. Chairman, let me state specifi-
cally that I am not supporting the status quo. The commission of
white-collar crime in American Samoa is no more acceptable in
Samoa than it is anywhere else in the United States. If some resi-
dents of Samoa are misusing Federal funds, they should be con-
victed and punished. If some of the residents in Samoa are not pay-
ing back loans made to them by Federal agencies, they should be
compelled to do so. I am in agreement with the assessment team
that these issues need attention, but I express my concern over the
team's recommendations on how best to address these issues.



Mr. Chairman, I am not going to read the remaining part of my
statement, but want to thank you for this opportunity to express
my views on the matter, and I look forward and welcome the state-
ments from our Governor, our Attorney General, and our Terri-
torial Auditor. Thank you.

Mr. Gallegly. At this time, we will introduce our first panel of
witnesses, the Honorable A. P. Lutali, Governor of American
Samoa; Mr. Malaetasi Togafau, the Attorney General for American
Samoa; and Mr. Wendell Harwell, the Territorial Auditor for Amer-
ican Samoa.

Let me remind the witnesses that under our committee rules,
they must limit their oral statements to five minutes, but their en-
tire statement will appear in the record. We will also allow the en-
tire panel to testify before questioning the witnesses.

The Chairman now recognizes the Honorable A.P. Lutali, Gov-
ernor of American Samoa. Welcome, Governor.

STATEMENT OF A. P. LUTALI, GOVERNOR OF AMERICAN

SAMOA

Mr. Lutali. Thank you, Mr. Chairman and honorable members
of the committee.

On behalf of the leaders and the people of American Samoa, I
want to express our appreciation for the opportunity to appear
today in this hearing on white-collar crime in Ainerican Samoa.

With the subcommittee's permission, I will make a brief state-
ment, and will then jdeld the floor to our Attorney General and our
Territorial Auditor, who have day-to-day responsibility for enforc-
ing accountability and preventing abuse of public funds.

First, I want to emphasize that the White-Collar Crime Assess-
ment by the Department of Justice was performed in response to
my request for assistance from Justice and the FBI. I want this
subcommittee to know that I welcome advice and support from
Federal law enforcement authorities; however, I also recognize that
primary responsibility for public integrity and accountability rests
with our own local government.

Second, you should know that our Attorney General, Malaetasi
M. Togafau, has been actively and successfully prosecuting cases of
public corruption over the more than two years which our adminis-
tration has been in office. We are submitting documentation for the
record which makes this clear. The statistics speak for themselves.
Our government has, even with limited resources, actively inves-
tigated and prosecuted cases involving embezzlement, bad checks,
fraud, bribery, corruption, and perjury. Many of the initiatives and
reforms recommended by the Department of Justice have already
been implemented. Our Attorney General is here today to provide
further details and to respond to any questions you may have.

Third, we realize that the first line of defense against public cor-
ruption lies in sound financial controls and a strong internal audit
function. For this reason, one of my highest priorities when I took
ofHce in 1993 was to fill the position of Territorial Auditor with a
person of demonstrable experience and objectivity. The auditor and
his staff identified deficiencies and areas in which the government
could save money. They recommended ways in which we could im-
prove, and we acted on those recommendations. They recommended



that their audit findings be referred for prosecution, and we acted
on those recommendations as well.

These and other efforts demonstrate the seriousness of our com-
mitment to improve accountability and discipline within govern-


1 3 4 5 6 7 8 9 10 11 12 13

Online LibraryUnited States. Congress. House. Committee on ResouSamoan white-collar crime : hearing before the Subcommittee on Native American and Insular Affairs of the Committee on Resources, House of Representatives, One Hundred Fourth Congress, first session, on the Department of Justice report on American Samoa white-collar crime assessment which highlights → online text (page 1 of 13)