Palau Correspondent


KOROR, Palau — The Government of Palau pulled out at least $30 million from the Bank of Guam on March 8, following the actions the bank took to freeze the accounts of Palauans who received Economic Impact Payments from the U.S. Internal Revenue Service into their accounts. 

Although BankPacific did not freeze any accounts held by Palauans, it did not release any EIP funds sent to their accounts either. 

“Palau has a choice,” President Surangel Whipps Jr. said of the banks managements, “They own the banks, and they can do what they want, but we also have a choice. Palau has money in these banks. Many states have money in these banks. Let’s move them to banks that favor us,” a visibly angry Whipps told reporters. 

Finance Minister Kaleb Udui confirmed March 10 that the government’s accounts have been moved from Bank of Guam to Bank of Hawaii.

He said the government is also closing non-performing accounts at Bank of Guam. However, Udui said, there are accounts that will remain with Bank of Guam. He said, the main reason for moving any accounts was the stance and decision of the president — that Palau can also take actions after the actions of the two banks.

In 2020, the IRS announced that non-filers with U.S. social security numbers were eligible to apply for Economic Impact Payments.  Those with U.S. Social Security numbers living in Palau duly filed with the IRS to claim payments.

Many of them were approved for payment and were told to provide a bank account number where payment could be directly deposited.

But because IRS found that there were many who claimed and then turned out to be ineligible, it told the banks to return the payments. 

Joaquin P.L.G. Cook, president and CEO of Bank of Guam; declined to comment for the Journal’s story.

Philip J. Flores, president of BankPacific; told the Journal, “The approach the Palau government is taking speaks as though they want us to leave, which would be terribly hard for us. We’ve been serving the republic since the 1990s and have many friends in Palau. We love Palau and want to stay,’ he said. 

Flores said the bank is following IRS rules. 

A lawsuit filed against Bank of Guam in December is pending, according to local media reports, which also said that former president Johnson Toribiong is representing the people in Palau whose accounts were affected.

Bank of Guam said previously it was their fiduciary duty to report fraudulent transactions through their banks to the IRS under the IRS Leads Program. mbj