Government officials in the Northern Mariana Islands violated ethics rules when they handed an almost $400,000 contract to the former Commerce secretary's new company, according to the Department of Interior's inspector general.
During the two years he was secretary of Commerce, Michael Ada managed the commonwealth's grants and projects under the American Recovery and Reinvestment Act. But last August, he told Gov. Benigno Fitial (R) that he intended to leave government, kick-starting discussions that led to the two developing a private contract for Ada's not-yet-formed company to manage the ARRA projects of the Commonwealth of the Northern Mariana Islands (CNMI).
Five days after Ada resigned as Commerce secretary, the government awarded the contract to his new company, Integrated Professional Services. Ada and his business partner did not obtain a business license until the next day; the day after that, the new company received a $78,418 check.
"Ada used information not generally available to the public for his own economic benefit. Only Fitial and Ada knew of the possibility of privatizing CNMI ARRA management until after they agreed to the framework of the deal," according to the report. "The ARRA management contract was never advertised, and the public did not know of the privatization of ARRA management until after IPS was awarded the contract."
The Interior IG partnered with CNMI's Office of Public Auditor in November to investigate the contract after media reports brought up ethical concerns. Despite the report's findings, the commonwealth's U.S. Attorney's Office has declined prosecution -- a fact that does not sit well with Delegate Gregorio Kilili Camacho Sablan (D).
In a statement, Sablan questioned whether Attorney General Edward Buckingham's part in the contract's approval presented a conflict of interest.
According to the IG report, Buckingham "acknowledged that ethics concerns existed" but felt that the need for a contract outweighed those concerns. Officials were worried that if Ada did not get the contract, they would be unable to timely comply with the ARRA's reporting requirements and would potentially lose some of the more $90 million in Recovery Act funding.
But Sablan said officials' behavior is a setback in the commonwealth's effort "to regain acceptance as part of the American political family."
"This is especially unfortunate at a time when the Commonwealth and its people continue to struggle economically and need the support of the federal government to protect those who are suffering," he said. "How can we expect more help to rebuild, when the generous assistance of the American people that is coming to us through the Recovery Act is siphoned off for the personal gain of a few individuals -- as the Inspector General reports?"
This is not the first time Fitial's name has come up in an ethics case. He was an ally of disgraced lobbyist Jack Abramoff, pushing for years to extend Abramoff's contract to represent the commonwealth. In his lobbying efforts, Abramoff fought congressional efforts to reform the islands' labor laws.
According to the recent IG report, Fitial admitted to developing the IRS contract while Ada was in office. He also provided justifications for making it sole source, writing in an Oct. 6, 2010, memo to the director of procurement and supply that Ada "has extensive historical and current knowledge, as well as nonpublic information of all ARRA funds."
Fitial and other officials potentially violated multiple ethics rules with the contract, according to IG investigators. Ada's participation in drawing up the contract -- and the fact that it was awarded to his company five days after his resignation -- violated the one-year cooling-off period for government officials. Ada also violated rules that prohibit the use of a public position to obtain private benefit, negotiate for personal financial gain or use public office resources for seeking contracts, among others.
At publication time, the CNMI government offices were closed and unavailable for comment.
Click here to read the Interior IG report.