U.S. Trust Territory: Issues Associated With Palau's Transition to Self-Government
NSIAD-89-182
Published: Jul 19, 1989. Publicly Released: Aug 21, 1989.
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Highlights
Pursuant to a congressional request, GAO reviewed issues concerning the Republic of Palau's transition to self-government, focusing on: (1) the Department of the Interior's oversight of Palau; (2) Palau's financial condition and practices; (3) Palau's law enforcement system and U.S. law enforcement assistance; and (4) problems with Palau's 1987 referenda to approve a Compact of Free Association with the United States.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Interior | The Secretary of the Interior should require the Assistant Secretary for Territorial and International Affairs (TIA) to assign the field representative in Palau responsibility for: (1) monitoring Palau's financial situation and obtaining information on progress in competing and negotiating major contracts and agreements; and (2) identifying situations in which Interior may need to advise Palau or take other actions concerning projects or agreements that appear questionable. |
The Office of Territorial and International Affairs (OTIA) has increased the monitoring of the financial situation in Palau and has requested additional funds to establish the necessary infrastructure to support a credible oversight capability.
|
| Department of the Interior | The Secretary of the Interior should require the Assistant Secretary for TIA to establish procedures for ensuring that technical assistance grants are routinely monitored and periodically evaluated. |
OTIA has established new procedures which provide for timely financial and program status reports for each ongoing project.
|
| Department of the Interior | The Secretary of the Interior should require the Assistant Secretary for TIA to request the President of Palau to establish a central point of contact responsible for implementing technical assistance grants on a timely basis and ensuring that project managers comply with grant requirements. |
The President of Palau has designated the Vice President, Minister of Administration, to serve as the central contact point for all technical assistance projects. OTIA has also clarified the responsibility of the Director, Trust Territory Office of Transition, and the Field Representative to monitor progress and implementation of all grants.
|
| Department of State | To better ensure that U.S. economic assistance funds under the compact will be used as intended, the Secretary of State should negotiate with the Republic of Palau to preclude Palau from using the compact investment fund as collateral for loans. |
State believes that the terms of the existing agreement governing the investment fund are sufficient to preclude unauthorized use of the funds. GAO disagrees, however, since the question of whether the controls are adequate is a matter of opinion. GAO is closing this recommendation.
|
| Department of the Interior | The Secretary of the Interior should instruct the Assistant Secretary for TIA to: (1) request Interior's Inspector General (IG) to review Palau's draft procurement manual to ensure that it includes requirements and procedures for conducting feasibility studies to assess needs, competitive bidding for major projects, recordkeeping by contractors and subcontractors, and other sound procurement principles; (2) ensure that all Inspector General comments are addressed adequately prior to the manual's completion; and (3) recommend that Palauan officials revise their procurement law to require competitive bidding for service contracts. |
OTIA said that it would request IG to review the revised procurement manual and urge the Palau government to address all IG comments prior to the government's approval of the manual, and urge the establishment of competitive bidding requirements for service contracts.
|
| Department of the Interior | The Secretary of the Interior should instruct the Assistant Secretary for TIA to advise Palau to: (1) develop housing regulations that include more specific criteria defining the extent to which government funds may be used to pay for renovations to private housing rented for government officials; and (2) request Palau's Acting Public Auditor to review the propriety of funds expended to lease and renovate a residence for President Salii. |
OTIA will advise and offer technical assistance to develop housing regulations to resolve the shortcomings noted.
|
| Department of the Interior | The Secretary of the Interior should instruct the Assistant Secretary for TIA to advise Palau's President to: (1) appoint a special prosecutor within a reasonable amount of time; (2) request the Attorney General or Special Prosecutor, if appointed in a timely manner, to investigate payments made by a firm to Palauan officials and determine whether sanctions under Palau's criminal or civil laws are warranted; and (3) develop more comprehensive conflict-of-interest legislation that includes criminal provisions, and reduces exclusions for certain categories of public officials with respect to civil provisions. |
OTIA will: (1) work with the President of Palau to help recruit and hire a competent Special Prosecutor; (2) request the Special Prosecutor to investigate payments made by IPSECO to Palauan officials; and (3) work with the President to provide technical assistance to develop conflict-of-interest legislation.
|
| Department of Justice | To resolve the current uncertainty about U.S. law enforcement agencies' authority in Palau until the compact is implemented, the Attorney General should finalize and formally distribute the Department of Justice's opinion on federal criminal jurisdiction in Palau to all relevant U.S. agencies. |
According to June 1991 correspondence from Justice to Chairman John Conyers, Justice believes that federal law enforcement agencies and Interior are all aware of Justice's position on federal criminal jurisdiction in Palau. Justice does not intend to take any further action.
|
| Department of Justice | The Attorney General should: (1) determine whether U.S. law enforcement agencies have authority to conduct investigations and make arrests in Palau for violations of U.S. criminal laws that specifically apply to Palau or the trust territory, such as the anti-drug laws; and (2) consider the view that U.S. law enforcement agencies other than the U.S. Attorney for Guam do have this authority. |
According to June 1991 correspondence from Justice to Chairman John Conyers, Justice differs with GAO opinion on this matter and does not intend to take any further action.
|
| Department of Justice | The Attorney General should authorize the Federal Bureau of Investigation (FBI) to provide investigative assistance to Palau upon request from Interior, including providing the assistance requested regarding the 1987 murder. |
According to June 1991 correspondence from Justice to Chairman John Conyers, Justice believes that the FBI does not have authority to investigate Palauan crimes.
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