Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698747492058.pdf (Micronesia, Federated States of)
FOURTEENTH CONGRESS OF THE FEDERATED STATES OF MICRONESIA SECOND REGULAR SESSION, 2005 CONGRESSIONAL RESOLUTION NO.

14-36 A RESOLUTION Requesting the President of the Federated States of Micronesia to direct the Departments of Economic Affairs and Justice to investigate and report on the ownership, management and operations of Micronesia Longline Fishing Corporation ("MLFC") and requesting the National Public Auditor’s Office to perform an audit of the financial affairs of MLFC.
1 WHEREAS, under a series of agreements concluded in December, 2 1993, the National Government of the Federated States of 3 Micronesia borrowed $5 million from the Asian Development Bank 4 ("ADB"), of which $4.5 million were, in turn, loaned by the 5 National Government to Micronesia Longline Fishing Corporation 6 ("MLFC"); and 7 WHEREAS, under the pertinent loan agreements, MLFC was to 8 service the ADB loan, but the National Government was to make the 9 loan payments in the event that MLFC defaulted on its obligations; 10 and 11 WHEREAS, in addition to assuming said obligations with 12 respect to the ADB loan, the National Government contributed $1 13 million to MLFC in return for a 50% interest in MLFC, in the form 14 of non-voting shares; and 15 WHEREAS, it was intended that an additional $1 million in 16 capital for MLFC would be raised by the sale to private 17 individuals of voting shares, representing, in the aggregate, 50% 18 of the ownership of the corporation; and 19 WHEREAS, only approximately $39,000 in private capital was 20 raised by the sale of such voting shares and some portion of that CRL 14-40 CONGRESSIONAL RESOLUTION NO.
14-36 1 amount may have been loaned by the National Government to the 2 purchasers; and 3 WHEREAS, the National Government assumed virtually all of the 4 financial risk associated with the operations of MLFC, but, 5 because it held only non-voting shares, had little or no control 6 over said operations; and 7 WHEREAS, MLFC has suffered significant operating losses, has 8 defaulted on its obligation to repay the ADB loan and has filed in 9 bankruptcy; and 10 WHEREAS, due to the defaults and failures of MLFC, the 11 National Government is now obligated to make all payments on the 12 ADB loan; and 13 WHEREAS, the management and board of directors of MLFC, at 14 some point in time, ceased to perform their respective duties and 15 may have thereby breached their fiduciary obligations to the 16 shareholders and creditors of MLFC; now, therefore, 17 BE IT RESOLVED by the Fourteenth Congress of the Federated 18 States of Micronesia, Second Regular Session, 2005, that the 19 Congress hereby requests the President of the Federated States 20 of Micronesia to direct the Secretary of Economic Affairs and 21 the Secretary of Justice to investigate and report to Congress 22 with respect to the circumstances and events surrounding the 23 formation, financing, capital structure, management, operations 24 and failure of MLFC; and 25 BE IT FURTHER RESOLVED that the Congress hereby requests 2 of 3 CONGRESSIONAL RESOLUTION NO.
14-36 1 the Office of the National Public Auditor to perform an audit 2 of the financial affairs of MLFC from its inception to the date 3 of its filing in bankruptcy, including but not limited to any 4 related party transactions, the sources and uses of MLFC's 5 cash, all compensation received by MLFC's officers and 6 directors, and the use and disposition of any assets of the 7 corporation; and 8 BE IT FURTHER RESOLVED that certified copies of this 9 resolution be transmitted to the President of the Federated 10 States of Micronesia, the National Public Auditor and the 11 Governor of each state.
ADOPTED: September 30, 2005 _____________________________ Peter M. Christian Speaker FSM Congress ATTEST: _____________________________ Liwiana K. Ramon Chief Clerk FSM Congress 3 of 3 25