Editor’s Note: The editorial team’s selection of stories was taken from an extensive list of 2004 exclusives and breaking news stories.
“Tan Holdings quits SGMA”
Manufacturing giant Tan Holdings Corp. resigned from the Saipan Garment Manufacturers Association because complicated labor regulations led to a free-for-all for contract workers.
The story told of an unwritten code in the industry that factories would not steal each others’ workers. However the factory-quota system was suspended in October 2003 under emergency regulations adopted by the CNMI attorney general and the Department of Labor to deal with a growing pool of disgruntled factory workers. A chart listed all 34 active garment factories in the CNMI with the amount of quotas they were entitled to under Public Law 11-76 enacted in 1999. Industry insiders accused the administration of Gov. Juan N. Babauta of attempting to increase taxes on garment manufacturing and said he enacted the regulations in order to limit the industry’s growth and break up the 15-year-old quota system.
“BOS battle begins”
In the first of several Journal stories it was reported that the huge Navy base operating services contract has multinationals converging on Guam and gearing up to present favorable pictures of readiness to the U.S. Navy.
Pairing with other prime contractors visits to Guam strategic partnerships with local companies securing offices on-island — all these calculated moves were taking place as the date for issuance of the RFP draws closer.The story went on to report that the contract was previously awarded to Raytheon Technical services Guam Ltd. which took over base operations support on April 9 2000. Raytheon won the contract with a bid of $348.4 million against the Navy’s $582 million. There were concerns surrounding the BOS contract. Whether the contract would be offered for re-bid as a whole or whether some services would be offered under separate requests for proposals.
“National chains won’t hide Guam tax anymore”
National stores began passing on increased gross receipts tax to consumers on Feb. 1. This was in response to the 2% raise in gross receipt taxes to 6%. When gross receipts tax rose from 4% to 6% on April 1 2003 many businesses repriced goods and services to adjust to the new tax but many retailers that were part of a U.S.-wide chain absorbed the increase.
Public Law 27-41 formerly Bill 63 legislated that displaying gross receipts tax was optional clarifying for many businesses the legality of doing so and allowing them to develop plans to charge clients the increase. Many mall managers and storeowners were interviewed and Ryan Torres general manager of Macy’s on Guam said “Macy’s cannot absorb the increased tax and continue to offer merchandise at Hawaii and U.S. mainland prices. Before we were able to show this tax on receipts we either had to charge higher prices in Guam — which we did not want to do — or absorb the tax as an expense. Now that we’ll be able to show the tax we are able to continue to provide the people of Guam quality merchandise at Hawaii and U.S. mainland prices.”
“Aon inks deal of the Century”
Aon and Century Insurance Co. of Saipan were on the brink of signing a contract that would turn Century into a major player in the region.
March 1 was the effective date that the largest property/casualty insurer on Saipan launched a partnership with the world’s second-largest insurance broker.
Rodney Rankin regional director for Aon said of the arrangement “Both organizations will benefit from this partnership. We’re quite excited locally and internationally. We were the first international broker to be granted a license in China and Luen Thai [International Group Ltd. parent company of Tan Holdings headquartered in Hong Kong] is big in China.” The combination of Century and Aon portfolios would elevate Century to the third largest property/casualty insurance company in the Marianas in terms of premiums. Rankin said that by 2005 Century with the combined portfolios would report gross written premiums well in excess of $20 million. Chicago-based Aon is the No. 1 reinsurance broker in the world and the No. 2 insurance broker in the world.
“Red carpet: CNMI eagerly opens four China tourism offices”
The Marianas Visitors Authority was to open marketing offices in Shanghai Beijing Guangzhou and Hong Kong. The presence was in anticipation of the Northern Mariana Islands government application with the Chinese government for approved destination status.
The Journal reported that because of U.S. Immigration and Homeland Security issues Guam officials would proceed more slowly despite anticipation of approved destination status at the same time as the Northern Mariana Islands. Gov. Juan N. Babauta said that his office was “working closely” with Attorney General Pamela Brown to ensure that approved destination status was not delayed by a local immigration regulation ensuring safety of island borders from terrorists.
“ To Russia with love”
Hundreds of Lexus and Toyota vehicles from Atkins Kroll Inc. on Guam were being sold in Russia in an invasion of another Toyota dealer’s territory.
The story exposed an extraordinary business scenario covering 6 931 miles between Guam and Moscow through an importer in Finland who was buying hundreds of new Lexus and Toyota vehicles on Guam and selling them in Russia.
The Journal traced clues to the transactions through Guam Customs documents from shipments in April which said Aleksander Odrischinsky was the exporter and his company listed on bills of sale was Catamount Oy with an address in Helsinki Finland. What he was up to baffled Customs agents who sources said intended to follow the trail of cars and money and figure out the scheme.
Government officials on Guam in mid-April began investigating the trail of millions of dollars worth of luxury SUVs and sedans. The trail of cars led from Atkins Kroll on Marine Corps Drive into shipping containers at the Port of Guam on to Helsinki via Korea and across the Finnish border into Russia.
The Journal spoke with Vesa Tikka general manager of Toyota Motor Finland Oy which has 60 dealer outlets and a national office in Helsinki that sold 27 000 Toyotas and 50 Lexus vehicles in 2003. Tikka described Catamount as “a company that is selling cars to Russia — a small company that is very active in this boats as well.”
In a phone interview Robert Hernandez president of Atkins Kroll Inc. distributor in the Mariana Islands of Lexus and Toyota vehicles said AK was “selling to local markets and local businesses. What they do with it is their business. This is a free trade business.”
|This prime beachfront property one of Tumon’s four remaining undeveloped hotel sites may well be the deal of the century. CBA Development LLC on May 20 purchased the 41 659 square meters for $4.8 million.|
“L.A. referral office hangs on for dear life”
The Los Angeles office of the Guam medical referral office with mounting patient numbers a trickle of inadequate finance and deteriorating equipment said it was not receiving the support needed to adequately take care of Guamanians needing off-island health care.
Ernesto P. Cruz manager of the Los Angeles referral office said needed funds were only trickling in and that many times employees were asked to personally fill tanks on aging transport vehicles. The referral office also had to deal with disconnected telephones and Internet accounts. The Los Angeles office received $90 000 a year for operations of which Cruz received $26 000 and four part-time staff received just under $500 each bi-weekly GovGuam payday via checks delivered through FedEx mail.
“ Grocery sale may mean liquidation for Ada’s Inc. “
The Journal ran several stories on the bankruptcy problems facing one of Guam’s oldest business firms. One of the most lucrative properties in the Ada’s Inc. inventory was the Dededo Pay-Less property.
The acceptance of a purchase agreement for the Dededo Pay-Less Supermarket was front-page news when the Journal learned that the Chapter 11 trustee concluded that Ada’s Inc. could not be saved from bankruptcy. Court documents filed on June 17 by George M. Butler partner in Butler Telford Butler and the Chapter 11 trustee said the only hope for a reorganization of Ada’s Inc. would depend upon income generated from the lease of Dededo Pay-Less but even that money would be insufficient.
While the purchase agreement between Ada’s Inc. and Payless Markets Inc. was signed by Butler and Edward J.B. Calvo vice president of Payless Markets on May 27 it was not the final say. In fairness to creditors the $1.6 million offer was subject to a bid-up procedure where by other purchasers submitted sealed bids prior to the hearing confirming the sale and oral bids at that hearing.
“What to do with GMH”
The Guam Memorial Hospital management team was planning either building a new hospital on 10 acres opposite Micronesia Mall or extending the facility into the hospital’s present parking lot. The decision depended on a survey by a structural engineer.
William I. McMillan chief executive officer and administrator of the hospital said he was seeking a second opinion to determine whether treatment was possible for the aging medical plant given its site in an earthquake zone or whether the building is beyond saving. A U.S. Department of the Interior grant of about $60 000 was to fund the request for proposal for the engineer’s survey. “We are investing in an architectural engineering study ” McMillan said. “There are a couple of things we need to find out.” Referring to the mapped fault line in the geological survey the hospital straddles (See “Hospital straddles dangerous ground ” in the Sept. 8 2003 edition of the Journal.) Chamorro Land Trust land between Marine Corps Drive and Two Lovers Point was a potential site for the new hospital.
“Air Force to double housing; survey looks at how and where”
The Air Force commissioned a feasibility study to expand housing at Andersen Air Force Base by 900 new houses and to renovate 600 houses.
Tech Sgt. Allison Day of the public affairs office of the 36th Expeditionary Wing at Andersen said “It is yet to be determined if new housing units will be constructed or renovated. As the study is still in the determination phase there is no date of when the houses are needed.” The Andersen study had two concerns: The construction of about 900 units and the renovation of 600 units measuring about 1 400 square feet each and privatizing military housing inventory.
A local businessman was under investigation by the attorney general’s office for allegedly duping the Guam Telephone Authority. Millions of dollars for goods and services were billed and in many cases marked up as much as 1 337%.
Through the use of the Freedom of Information Act the Journal viewed procurement documents that revealed the vendor who acted as the “middle man” was Danny Leon Guerrero chief executive officer of Genesis Consortium Group. His signature appeared on hundreds of documents as a GTA vendor. Officials raided Leon Guerrero’s Toto home “in the latter part of last year ” Journal sources said. Guam Telephone Authority paid over $7.4 million to Leon Guerrero.
The retail giant of the Philippines that started the “Megamall” phenomenon chose the Agana Shipping Center for upcoming expansion for a Shoemart store.
An official from SM Prime Holdings Inc. the company that oversees SM Supermalls confirmed that it was planning a SM store for Guam. High-level boardroom talks were to continue in Manila at the SM board of directors meeting held Oct. 19. Issues on the Guam expansion were in discussion with the board of directors. Henry Sy is chairman of the board for SM Prime Holdings Inc. part of the SM Group of Companies which owns develops and operates the group’s shopping mall business.
Sy and SM Prime are also the owners of the Agana Shopping Center which has been undergoing extensive remodeling the past two years. The area set aside for SM Shoemart Guam is relatively small with about 52 000 square feet allocated in the Phase III development of the Agana Shipping Center.
|Paving began on Palau’s 53-mile Compact Road on Nov. 24. The road — on which work started on Nov. 1 1999 — has already spurred development in Babeldaob. Paul Bowen acting chief of quality assurance for the Army Corps of Engineers (left); and Alex Morrison chief engineer for the Corps discuss the initial paving.|
An ongoing argument was brought to light between some members of the real estate community and the Navy’s housing officer David Matthews who had become the target for criticism by property owners realtors and appraisers for actions he took.
Matthews was accused of using dubious methods in setting monthly rents for off-base Navy housing. Gina P. Campos property owner and associate broker with RE/MAX Diamond Realty said Matthews was overstepping his authority by dictating what rental prices should be and the methods used to justify those. “Nowhere other than Guam are mandates being implemented as far as to tell a private property owner what their home is worth.” Local appraisers told the Journal they were frustrated because the Navy housing officer was telling them how to do their job. Matthews was allegedly telling appraisers to group certain unlike rentals together calling them comparable rentals in order to lower market prices.
The Navy’s position is that the real estate market on Guam is artificially high based on Navy allowances meanwhile appraisers say they have been accused of collusion with Realtors and property owners in setting market values. MBJ