$67 million, no-bid Tyco contract killed

Senate committee drops fiber-optic job from treaty extension measure

November 08, 2003|By Walter F. Roche Jr. | Walter F. Roche Jr.,SUN STAFF

At the last minute, the Senate has dropped an amendment to a treaty extension that would have given Tyco International Ltd. a $67.4 million, no-bid contract to connect two Pacific island nations and a major U.S. military installation to an undersea fiber-optic cable.

Aides to the Senate Energy and Natural Resources Committee said the provision was stripped late Thursday because of objections raised by the House Judiciary Committee. It had been in an extension of the Compact of Free Association, a 17-year-old treaty that governs relations between the United States and two former trust territories, the Federated States of Micronesia and the Republic of the Marshall Islands.

The extended compact, which includes $3.5 billion in aid for the two countries during the next 20 years, was then brought to the Senate floor and approved without opposition. It returns to the House for a final vote next week before going to President Bush for signing.

The Tyco language had been added to the bill by the Senate at the request of the Office of Compact Negotiations in the State Department. It was inserted while two former Tyco executives are on trial in New York on charges that they bilked the firm of $600 million. Tyco has also faced criticism for reincorporating in Bermuda, thus avoiding up to $400 million a year in U.S. tax obligations.

The bill passed by the Senate includes first-time protections for Micronesians and Marshallese who are recruited to work in low-paying jobs in nursing homes and amusement parks in the United States. The recruiters will now be required to register with the island governments and fully disclose to any recruits their future wages and other work arrangements.

The agreement specifically bars the recruiters from forcing the recruits to sign promissory notes or other agreements that effectively bind them to the low-paying jobs for up to two years.

The Sun and the Orlando Sentinel reported last year that recruiting firms routinely force workers to sign the contracts, leaving them liable for court judgments of up to $6,250 if they leave the jobs before their contracts expire. The disclosure prompted officials in two federal agencies to insist that worker protections be added to the compact.

Marshall Islands President Kessai Note issued a statement yesterday expressing his "heartfelt gratitude" that the compact extension had passed.

A key provision of the agreement is the establishment of separate trust funds designed to ensure that both countries will be self-sufficient in 20 years. Critics contend that the trust funds will be inadequate and will allow the United States to renege on its long-term commitment to the former territories.

The measure extends until 2066 the U.S. lease agreement for the use of the Kwajalein Atoll in the Marshall Islands, the site of the Ronald Reagan Missile Test Range. The lease could be extended again until 2086.

The agreement contains $30 million a year in impact assistance to Guam, Hawaii, American Samoa and the Northern Marianas. Supporters say those areas have been heavily affected by an influx of Micronesians and Marshallese, who can enter the United States and its territories without visas.

House and Senate leaders also restored eligibility to the two countries for disaster aid from the Federal Emergency Management Assistance program and restored eligibility for students from the countries to get Pell grants. Under the compact, both countries are able to participate in some U.S. government programs.

Under the scrapped Tyco proposal, the U.S. Army would have been authorized to proceed with an agreement for installation of fiber-optic cable systems, which would have been linked to a planned Tyco cable running from Guam to Australia. The plan called for the army to pick up $21 million of the cost, with the two island governments splitting the balance.

Earlier this week, the Congress in Micronesia gave its approval for the government-run phone company to apply for an $18 million loan from the U.S. Department of Agriculture to cover its share of the cost. That approval, however, did not come without lengthy debate.

According to an account of the proceedings on the government's Web site, some members questioned Tyco's commitment to the project. The company recently announced plans to sell its undersea systems, but it had given assurances that the sale wouldn't affect the project.

Backers of the cable project contend that while the system would cost more initially than the existing satellite network, annual operating costs would be reduced substantially and service would be vastly expanded.

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