The $500,000 repair failure of Angaur State boat Regina IV’s is due to the “lack of capacity and expertise” of Angaur State to manage “a project of this complexity and cost” cites the Office of Public Auditor in the newly released audit report.

Auditor further states that the “funding, oversight and monitoring of the project should have been retained at the National Government until project competition.”

The audit report cites 11 findings in the audit of the Regina IV Rehabilitation Project of Angaur State Government.

Findings include expending $68,436 for travel and travel-related expenses not authorized by law.  The auditor recommends the Office of Attorney General or Special Prosecutor to look into the misappropriation of State funds.

Former Governor Marvin Ngirutang who served at the time, in response to Auditor’s finding says that he was advised that the difference between the bid amount and the appropriated amount can be used to pay for work-related expenses of Regina IV repair and that the funds were used to pay for the Transportation Commission, the consultant, boat captain and boat crew members trips from Palau to Cebu and back to conduct oversight over the project.

The auditor stated that there’s a lack of proper records and documents to support such activities of the project.

Auditor adds that poor oversight and lack of accountability resulted in confusion, miscommunication, and delays.  According to the report, Governor had created a Transportation Commission to be responsible for all oversight, operations, and procurement.  The appointed members of the Commission were Vance Basilius, Benito Thomas, Levan Akitaya, Benhart Thomas and Jay Alfred.  Governor also hired a Consultant/Advisor without a contract and with no “defining scope of work, duties, and responsibilities resulting in confusion and miscommunication with the contractor.

Former Governor Ngirutang countered the report saying that the Transportation Commission had agreed to use the Consultant Steven Sword “pro-bono” services to “review monthly milestone”.  Adding, the reason they did not formally hire him was that he already had prior obligations and agreed to provide his services pro-bono.  The State was the only to pay for his travel expenses.

OPA said there should have been a contract defining the scope of work with specific deliverables that the consultant was accountable for and for which he would be reimbursed for his expenses.

“Considering that the Regina IV experienced mechanical and structural failures on its return voyage to Palau and was grounded shortly upon arrival, the Office of Public Auditor questions all payments.”

Another finding mentioned throughout the audit report was the lack of plan or guideline for overseeing and monitoring the repair of Regina IV.  “Transportation Commission approached the repair of Regina IV without a plan on how to carry out the oversight and monitoring responsibilities.”

Report further states, “funded by a $500,000 appropriation by OEK, a plan or guideline should have been the logical and critical starting point for overseeing and monitoring the repair work….The fact that the Regina IV experienced engine and other mechanical problems on its return voyage to Palau and was soon grounded again after its arrival is a testament that the oversight and inspections by the Transport Commission and the consultant failed resulting in the wasteful use of over $400,000 of public funds.”

Other findings include change orders of $46,740 directed by a consultant approved by the governor without the Commission and without legal review and certification.

In response, the former governor said that the changed order derived from the Transportation Commission’s reliance on the consultant’s expertise and verification of funds from State Treasurer Ken Uehara.

Another finding said that Governor Ngirutang signed certifying the work completion from contractor, preempting the Transportation Commission, “not knowing the outstanding problems and issues surrounding boat repair.

Former governor contends that he did consult with Transportation Commission, Consultant Steven Sword and Treasurer Uyehara and was advised to sign off on the Acceptance of Regina IV based on information given to him which assured him that they had one year warranty, they can hold 10% of the payment if anything is wrong, the weather was going to get worse and failure to depart would cost more money and that Ngeaur Legislature was pressuring for the return of the boat.  Former Governor Ngirutang added that he did not personally agree with recommendations but signed the acceptance based on the recommendations before final inspection.

Auditor said that Governor Ken Uehara who took office after Governor Marvin Ngirutang “failed to enforce the warranty provisions of the contract by compelling the contractor to correct the work defects or take action to collect on the performance bond insurance.”

Office of Public Auditor concluded that the failure to successfully implement the $500,000 appropriated funds to repair and rehabilitate Angaur State boat Regina IV is due to lack of capacity and expertise to manage a project of this size and scope.

Palau national government had appropriated $500,000 in two separate budget laws, RPPL 9-34 and 9-46 to rehabilitate the aging Angaur State boat Regina IV which has been grounded after years of poor maintenance.  The rehabilitation work went out to bid in April of 2016 and after 2 bids were submitted, Angaur State accepted the proposal from Colorado Shipyard Corporation out of Cebu, Philippines for $402,015.14.

In December of 2016, Regina IV on its return voyage to Palau experienced mechanical failures and was grounded shortly after that.  Additionally, over $62,000 of Angaur State funds were spent to try and fix the problem but boat remain grounded.

The 76 feet aluminum metal boat power by twin Caterpillar 3406 diesel engines of 300 BHP is a sole mode of public transportation by sea for the people of Angaur. (L.N. Reklai)