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Thursday, February 7, 2013

"Someone will be going to jail"

When the US Government passed its American Recovery and Reinvestment Act, at about the same time there was a massive uptick in local spending as the US pivoted its attention to the Central Pacific, a friend of mine noted there will be a tsunami of money coming in. The honey will attract flies. And it will have to be spent in a hurry and by people not well accustomed to monitoring the acquisition and administration of contracts in the best of times. "Someone will be going to jail", he told me. Well, his prediction may become reality if charges revealed today stick.

GWA contractor accused of filching $118K fed funding
A CONTRACTOR for the Guam Waterworks Authority is being sued in federal court for allegedly submitting false claims in order to obtain a reimbursement worth nearly $118,000 in American Recovery and Reinvestment Act funds from the U.S. Environmental Protection Agency.

A civil suit filed by the U.S. Attorney’s Office on behalf of the USEPA was filed Wednesday in District Court of Guam against GRH Technologies Construction Co. Ltd. and its first director, treasurer and company stockholder, Chen Pei Su.

According to the complaint, GRH entered into a contract with GWA in January 2009 to provide services including leak detection, pipeline, location, mapping, leak control analysis, and related training.

GRH was to complete work in three phases under the contract, and was required to “provide all leak detection equipment, and that the equipment ‘be new ... and based on the most updated state of the art technology,’ and for the equipment to be transferred to GWA at the end of the contract,” court documents state.

USEPA awarded GWA more than $2 million in ARRA funds for Phase II and part of Phase II of the GRH contract.

In June 2011, court documents state, Su submitted a reimbursement request to GRH for $117,912 related to the purchase of leak detection equipment from Great Harvest Ltd., a Taiwan-based company.
But this contract was not being administered locally. Federal funds have federal requirements and accountability that is enforced.
As part of the process, GWA reviews the reimbursement request for approval and once approved, forwards a request to USEPA for final review and approval. If approved, USEPA uses ARRA funds to complete the reimbursement to GRH.

GWA had approved and forwarded the GRH reimbursement request to USEPA which subsequently approved the request and reimbursed the $117,912 to GRH, court documents state.

However, when GWA requested Su and GRH President David Lei to provide a copy of the GRH check to Great Harvest Ltd., as well as itemized receipts, neither was able to provide such documentation.

Because GRH was unable to provide evidence of its payment to Great Harvest in the amount of $117,912 to USEPA, the government believes they submitted a false claim in order to pocket the $117,912.

The government is seeking a court judgment against GRH for “triple the damages” plus penalties per violation, or as an alternative, recovery of all payments mistakenly paid and other such costs.
It is interesting that a recent Guam Office of Public Accountancy report found that the local procurement staff proved quite effective in spending and monitoring federal funds, but woeful when it came to spending and monitoring its own funds. There's nothing like having a cop that won't look the other way standing over your shoulder.

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