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Pacific Islands Development Program, East-West Center

With Support From Center for Pacific Islands Studies, University of Hawai‘i


Palau Government Seeks Dismissal Of Pension Plan Lawsuit
Government disputes unremitted payment allegations

By Aurea Gerundio-Dizon

KOROR, Palau (Island Times, Nov. 12, 2012) – The national government, through the Attorney General’s Office, Thursday answered the complaint filed by Civil Service Pension Plan regarding unremitted pension contributions of the employees.

The national government and its officials, including President Toribiong, Vice President and Finance Min. Kerai Mariur, National Treasury Dir. Marino Rechesengel and Budget and Planning Dir. Dennis Oilouch, were ordered by the court to file its answer no later than November 8 following a motion to extend deadline in filing its answer.

But before the November 8 deadline, on November 7, the defendants again filed motion for another extension. The defendants asked that the deadline of filing its answer be extended to November 17.

The second motion disclosed that on November 5, the counsel for plaintiff provided counsel for defendants a copy of a proposed settlement agreement. The parties reportedly need additional time to review and negotiate the terms of agreement. However, as of this writing, the trial court has not decided on the motion yet.

In its response filed November 8, the defendants stated its first defense that the court does not have jurisdiction of this matter pursuant to the Doctrine of Sovereign Immunity. The defendants further stated that the plaintiff, CSPP Board of Trustees, failed to state a cause of action upon which relief can be granted.

With regards to the complaint over unremitted contributions, the defendants stated that as of the filing of the answer, all principal amounts have been paid to the plan.

The defendants admitted that the interests were not paid yet. They stated that it is unclear as to what interest is being referenced.

The defendants claimed that the interest was never requested until relatively recently when the new computerized system went into effect.

On the plaintiff’s claim that it is has been forced to consistently withdraw money from the invested accounts in the United States to pay out monthly benefits to retired members and beneficiaries, the defendants stated that it has insufficient knowledge as to what funds were withdrawn and why and whether or not these funds took a gain or loss.

The defendants said that the government has indeed withdrawn money from employees’ pay checks for Pension contribution, but all the money deducted from employees were already paid to Pension.

The defendants’ answer to the complaint showed that it has neither admitted nor denied that plaintiff sent the government demand letters on eight separate occasions.

The defendants disagreed that the plaintiff is entitled to the relief requested in the complaint. The defendants also asserted that the damages asked by the plaintiff are too speculative.

The defendants reserved the right to assert that the complaint and all claims asserted against them are barred by doctrine of absolute immunity, qualified immunity, respondent superior, mootness, latches and by the applicable statute of limitations.

The defendants asked the complaint to be dismissed with costs against the plaintiff.

In the complaint filed by Pension, the latter asked for judgment against the defendants for $8,094,501.74. This amount includes $3,101,713.62 for contributions, $1,252,636.22 for interest and $3,740,151.90 for the lost earnings. In addition, the plaintiff prays for cost of suit incurred and for any and further relief that the court deems just and proper.

As of October 25, the government has paid Pension in the total amount of $3,101,713.62.

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