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On September 7, Mr. Henry K. O. Norman posted an open letter on the facebook page, Yap’s Development, to Mr. John K. Waayan Fillmed (link). We re-post this open letter here with Mr. Norman’s consent. 

Tagaytay Highlands, September 7, 2013

Dear Waayan,

In a recent Facebook thread (transcript attached), you make a number of statements that could easily be construed as misleading… I do feel a need to comment on a few passages from that FB thread:

  • You wrote: For you to say 99 years is not leasing it’s a sale is incorrect and slanderous.” Actually, the lady saying “99 years is not leasing. It is owning” was referring to an earlier comment (posted by a Yap State Senator) that said “no land is being sold although 99 years [lease] is almost the same thing” Yes, technically this is not true, but in intent, it is correct: If an individual receives a 199-year family property rent lump sum up front, then all her/his offspring, up to ten generations,[1] s/he has effectively sold the leased property — and in the process robbed all offspring of their birthright Wa’ab land.

 

  • You wrote that 99-year leaseswould be an incentive of why to invest into Yap” How do you figure this? With the volatility of the tropical island tourism market — especially WRT sea level raising due to global warming — why would a Lessee wish to lock in leases for two centuries? This simply does not make sense. Unless, of course, the real reason for wanting to lock in 200 years is something hitherto undisclosed by ETG/PRC. See also the additional point made below.
  • You wrote: our landownershave hired land appraisers to appraise their lands. Are there really licensed real-estate appraisers in Yap State (or even in all of FSM) nowadays? I can open an office in Colonia (after purchasing my FIP and Business License), and call myself a “Real Estate Appraiser,” but that does not make me one. If I’m wrong here (it’s been seven years since I left Yap and things may have changed), please send me names, emails and phone numbers of these appraisers: I’d be interested in learning what their credentials are.

 

  • You wrote If someone don’t know what is going on it is their responsibility to get informed.” Are you really saying this to the elders out in the villages, who rarely (or barely) speak English? Most people would consider this the responsibility of the FSM and Yap State Governments — especially of the traditional Wa’ab leadership, COP/COT, who have refused to be involved when it comes to helping their subjects — to inform the People of Yap State about what is going on, especially considering it will concern every Yapese for more than ten generations.1

 

  • You wrote: “if you want to know what is going on in this project you can go to your chief for information, if he needs, he will call on the Governor to meet with you and the community if needed for more information. The Governor can call on the departments that are closely monitoring the development of this project for more information.” We all know this is not true. After all that’s transpired during the past 24 months, where is this coming from?

 

  • You wrote: “You accuse ETG of being corrupt, get the evidence and sue them in court if this is your thing.”  Criminal activity is not something that should be stopped depending on whether “it is someone’s thing.”  Breaking the law, like offering bribes (a bribe of $3,000 to a Rumung Chief by Mr. Yang Gang, and millions by ETG, as payment to legalize gambling, to Yap State Government). Bribery to make gambling legal is criminal and, by Yap State law, should be pro­secuted: however, this does not happen. Evidence is well documented, known by all, reported to the Yap State OPA for investigation, but nothing happens. This indicates that several entities in Yap State may be corrupt. What do you mean by “accus(ing) ETG of being corrupt”? Everyone knows for a fact they are.  Of course, Mr. Yang Gang (and you?) accuses the Rumung Chief of lying.  Do you support the AG in not having this resolved in Court?

 

  • You wrote China already holds a third stake in US Bonds which can be used as a bargaining chip on both sides.” What does this mean? What is “a third stake”? How can the same “bargaining chip” be used by both sides?

 

  • You wrote: “the departure fee at our airport here is $20 bring a million tourists per year you’ll get $20 million in departure fees. 1500 rooms at 50% occupancy at $100 per night (being conservative here) will give you approx. $2.7 million per year in occupancy tax.” 1,000,000 tourists per year, spread evenly over a whole year, is 2,739 tourists per day (18+ fully loaded Boeing 757 per day). And they are most likely not going back to China the next day. Let me be reasonable and say they will stay in Yap State for two days: then you will have 5,478 Chinese tourists roaming around, every day of the year (365 % occupancy)!

ETG — through FSM President Mori — has promised to “downsize the project” to 1,500 rooms, no golf courses, and no casinos.[2] Where will 5,000+ tourists be lodged, with only ~1,700 hotel rooms in Yap State? More to the point, with virtually no beaches, not much in terms of sightseeing and no local “nightlife,” why visit Yap, and what will they do while in Yap?

As you know better than most Yapese, a resort cannot make money with a 50% average occupancy — and certainly not at $100 per night.[3]

My two documents Resort Hotel Development Cost  (here: goo.gl/41rqYC) and The ETG Project (Analysis & Reality Check) (here: goo.gl/PEUZq8) are still current — for a realistic cost/benefit analysis, please read them.

  • You wrote: no one is above the law, not even in China as some of the posts suggested,” and Senator Raglmar-Subolmar wrote: ETG or anybody for that matter are not above the law” As an outsider looking in, the Governor, COP and other powerful individuals certainly appear to be above the law. The OPA cannot prosecute and the Attorney General will not. Investigations sensitive to the “leadership” tend to get lost, or fade out. Also — correct me if I’m wrong — aren’t Yap State tax laws in effect? It is well known that some Yap State businesses (one hotel in particular) have not paid any taxes for years, but are still operating. Above the law? Well, it certainly appears that way. Not only does this harm Yap State, but also the future of employees who must, one day, live on social security. Additionally, it is unfair competition — the fact that in Yap State, all businesses do not have to follow the same rules.

This text was adapted from a recent article written by Ben O’Neill (online here)

A principle of good governance is that authority of law must prevail over the brute power of people — society should operate under the rule of law, not the rule of men. Aristotle wrote that “the law ought to be supreme over all” and argued that “where the laws are not supreme, there demagogues spring up.Governments and their agents/agencies, as well as their subjects, must follow the same law: governments ignoring this principle operate “above the law,” without effective legal constraints. A good example of a government agency seeing itself “above the law” is the National Security Agency (NSA) in the U.S., claiming that they only have a slight “rule compliance problem”

The NSA has “compliance problems” in its surveillance programs in the same way that a serial killer has “compliance problems” with the law against murder — neither of them are willing to follow the rules. In a society which respects the rule of law this matters. And as the demagogues spring up to defend the actions of the agency, it is useful to bear in mind what these “compliance problems” really mean for the rule of law.

  • You wrote: if you were here you would see what Yap needs today and how much investments is needed to stabilize our economy.”  What do you mean? Are you saying only those resident in Yap State know these things and Yapese outsiders should be quiet?

 

  • You wrote: “… if you want you could run your own analysis of the costs and benefits of such project.”  See the document Resort Hotel Development Cost (also referenced above). But do not take my words for granted: I welcome (and encourage) any critique or improvement of my analysis.

 

  • You wrote: “the world has changed and the world has been helping us in this change in hopes that one day we will be able to stand and be a partner in the international arena. To be able to do good things for ourselves without the aid of others.” This is true, but how will you realize ideas of “doing good things for yourselves, without the aid of others,” by simply giving up all control of Yap State to a PRC “developer,” who stubbornly refuses to reveal what their real purpose is for pushing so hard for two-century leases, or what they really intend to do with/on the leased land?

 

  • You wrote: there is really nothing we can discuss until ETG’s master plan is submitted to the government.” This is defeatism. The very important issues to be discussed are far from exhausted. Here are a couple of additional questions that could be very worthwhile to discuss:

 

    • Who is best suited to write a Master Plan for Yap’s Development? A foreign investor — with next to zero knowledge about Yap culture, traditions and custom — or the three branches of Yap State Government, in harmonic and democratic cooperation with their constituents, the People of Yap State?

    • What is best: To have investors conform to a plan made by Yap State, or painfully try to shoehorn Yap State’s needs/desires into a foreign investor’s plan?

A Master Plan made by Yap State would by definition be proactive and inclusive of all stakeholders. An outsider investor’s plan would by definition be passive, contentious, exclusive and biased in favor of the investor.

  • You wrote: If it’s a family matter you go to your parents, if it’s a village matter you go to your chief, and for municipality matters you go to the municipality chief, for the island you go to the next level of chiefs.” This could be construed as “negationism.” Who signed the infamous Memorandum of Understanding? (Answer: COP) Who sent a letter to the YSL, “washing their hands” of any responsibility as far as regulating ground lease issues? (Answer: COP).[4] Who said the voices of Yap opposition was “rumblings and grumblings”?  (Answer: COP).[5]

 

  • You wrote: “I don’t want to see us making millions yet paying billions for the mistake we made along the way. That is why regulations and laws are crucial in creating a conducive environment for business growth.” From where do you get the idea that Yap would be “paying billions”? Yes, regulations and laws are crucial, and what’s even more crucial is that existing regulations and laws be followed, and that violators of said laws are prosecuted and made to pay for their crimes. Yap State Code states that bribery is a crime: we have several examples of ETG violating this law, but to date nothing has been done. The OPA has received the facts, and the OPA has passed this on the AG office for investigation. What happened to that investigation?

 

  • You wrote: “what does PRC really wants?” and “I asked because […] you mentioned that you did not think our leaders know what PRC really wants.” As this is a question of utmost interest to all, I saved this for last: What could it possibly be, that in spite of a massive opposition to their “pro­posed tourism investment proposal,”[6] makes ETG keep pushing forward as if nothing has happened?

Other issues discussed in the Facebook thread, of considerable general interest:

  • YSL Senator Jesse Raglmar-Subolmar wrote: “The question in my mind right now is this: How is it that our government is sluggish in making a decision on the offer by the World Bank to fund the fiber optic connectivity of Yap State … yet they were quick in their decision to support the ETG, which has so many unanswered questions and outstanding allegations…” The good Senator asks a valid and interesting question here, and it might serve the People of Yap State well to make an effort in finding what the answer is, from the Executive Branch.

 

  • WRT “Lion’s Share of Taxes”: IF resort owners/operators in Yap State are making a profit on which they pay taxes, and IF these taxes are to be split 50/50 between Yap State and Palikir50% to Palikir for doing nothing, while Yap State’s 50% has to contend with all costs, all hassles, all problems, all social upheaval and all violence — all of which will come, as much as I dislike being the harbinger of news nobody wants to hear — then surely: Palikir will have taken the proverbial “Lion’s Share.”

 

  • WRT Lessee’s rights to use leased land, regardless of ground lease agreement clauses: Nowhere in the U.S. (or Sweden, or most of the world) can you simply do what you want to with your land. There are zoning laws. You can petition to change a zoning designation, and as a rule, people opposed to the change will show up to contest it. Rules are not easy to change, and proposed changes always go through a legal process. Are there no zoning laws in YapState regulating what can & cannot be done on Wa’ab land? ETG demands complete freedom to do whatever they want with leased land, to be part of their lease contract.  ETG appears to have full confidence that EPA and Historical Preservation laws can be overcome, with an Executive and AG contemptuous of rule of law.

 

  • WRT Bribery and other potentially “Improper Compensation”: The ETG Chairman, Mr. Deng Hong (as well as another ETG top executive) have been detained in the PRC since March 2013, under investigation for corruption and fraud. With this in mind, isn’t it possible that Rumung Chief Lukan is not the only Wa’ab Chief or public official that ETG has been handing “fat little brown envelopes”? How many trips have been made to Chengdu — some in the luxury of Mr. Deng Hong’s private jet — with how many members of the Yap State Executive Branch and how many COP/COT Chiefs invited, all “sponsored” by ETG (and including wives!)? Recall that the Yap State Ethics Act is rather strict, frowning upon even the very appearance of official’s wrongdoing!

 

  • WRT long term leases:  Saipan was “developed” under 40-year leases. Except for Palau, I don’t know of 99-year leases being allowed anywhere in Oceania. I have yet to find leases exceeding 50-year terms anywhere (including the Maldives, where ETG wanted to get 99-year leases, but had to settle for 50 years in the end). The Palau exception is as follows:

Some years ago, Palau legalized 99-year leases by constitutional amendment. The argument at the time was, “A 50-year lease is a huge obstacle to development, 99-year leases will change everything.” It hasn’t changed a thing yet..

The problem in Palau is not lease length, but the integrity and security of land ownership whether lease or fee simple. The Court can and has vacated title on more than one claim. Clans owned land in the past, not individuals. Clan members were granted use rights to clan lands, but never ownership. Now, families are tearing each other apart, because land can be individually owned.

The Court is bombarded and years behind. Even recently, Koror State has lost huge tracts of “public” land that the Court has returned to the original (pre-Japanese occupation) owners. It’s a big concern. You have a current landlord who has what appears to be a long term lease on public land, from the State. He in turn has sub-leased to tenants. Now the Court have returned the land to the original owners, so nobody knows where they stand. For big (real) investors, it’s a scary proposition to put lots of cash into any kind of deal (hotel, golf course, what have you) when you cannot be 100% sure of the land title.

That’s part of the reason why no resort similar to Palau Pacific Resort (PPR) has been developed in Palau: It hasn’t been possible to pull together a parcel of land of the size needed, with a high degree of assurance as to its security of title.

The average Palauan is much wiser now than 30 years ago, when PPR came about. They are much less trusting and forgiving of their traditional leadership, who historically have used their powers and influence to railroad thru whatever they wanted to happen, for their own personal benefit.

PPR could not happen today.                          (“Green Frame” Source: Authority Palau Resident)

Waayan, you and many others bring up some valid arguments in the Yap’s Development Facebook group, about Yap and her development prospects. These are all-important issues, and the consequences of making the wrong choices could be far-reaching, both in time and in Yapese suffering. I only wish to set the “fact record” straight, and as a spokes­person for the pro-ETG segment of the population (Y.A.P. et al), you will, I trust, appreciate this.

Tagaytay Highlands (Philippines), 2013-09-07

Henry Norman
Independent Researcher


[1] I figure that, in the FSM, one “generation” spans about 20 years.

[2] Source: Two FSM Public Information Office documents, posted at www.fsmpio.fm (1) and www.fsmpio.fm (2)

[3] Pathways Hotel (for example) charges $115 for a “Native Deluxe Cottage” (Source: www.pathwayshotel.com)

[4] With these actions, the COP rejected the only governing authority granted them in the Yap State Constitution — to safeguard and protect Yap traditions and customs. If land usage does not involve traditions and customs, what does?

[6] A favorite tautological phrase of FSM President Mori, which is interesting in itself, as to date not a hint of what the “proposal” might entail, other than what ETG themselves refer to as “only ideas and possibilities” — has been revealed to those most in need to know: the People of Yap State! I have requested more information from the FSM PIO: no reply.

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