Luen Thai and Pohnpei settle court actions and agree to fish farming project

 MG 1645By Bill Jaynes

The Kaselehlie Press

August 13, 2018

Pohnpei—Governor Marcelo Peterson and LianCheng Overseas Fishery FSM Corporation, Luen Thai Fishing Venture represented by Deng Lu today signed settlement agreements on the long standing civil actions between the State and Luen Thai.  They also signed an agreement for Luen Thai to lease land on Pohnpei Port Authority property, as well as an agreement to begin a tuna farming pilot project in Pohnpei waters.

Governor Peterson called the moment an important event for Pohnpei Economic Development.

Luen Thai currently employs approximately 100 people in Pohnpei.  Deng says that the new agreements will pave the way for at least 100 more jobs that don’t currently exist in Pohnpei.

The Governor and Deng said that the pilot program for tuna farming would be in waters near the APSCO dock in Sokehs.  The Mackerel Tuna (Euthynus affinis) that would be raised there, if the project is successful, would be exported as fresh high grade sashimi quality.  Deng said that the current market value for sashimi grade Mackerel Tuna in the Japanese market is at just over $16 per pound varying with exchange rates.

The settlement documents and Lease Agreement were accompanied by a memo to Governor Peterson from Pohnpei Attorney General Dana Smith who explained each element of the agreements.

He said that the documents memorialize the agreement that Luan Thai Fishing Venture would pay Pohnpei State $35,000 for the December 27, 2007 grounding of the Gow Rong 23 vessel.  “The vessel was a total loss and is no longer in existence.  The parties agreed that the reef area that was damaged by grounding has regenerated and this is little or no evidence of damage to the reef where the grounding took place.  Payment for this settlement will be made by offset of lease rent payments,” Smith’s memo said.

Luen Thai agreed to accept the settlement offer of Pohnpei State “for damages resulting when former Governor John Ehsa and the Pohnpei State Government interfered with the operations of Luen Thai at the PFC dock area.  This action was originally filed by Miju Mulsan in the Pohnpei Supreme Court.  The original Miju Mulsan claim has been dismissed in the FSM Supreme Court,” Smith’s memo said.  Luen Thai had originally asked for $121,833.35 for damages.  They ultimately accepted Pohnpei State’s settlement offer of $85,000 for damages.  Again, payment will be made by offset on lease rent payments.

“LianCheng Overseas Fishery (FSM) Company, Luen Thai Fishing Venture, Ltd., the State of Pohnpei, OFA and Governor Marcelo Peterson agree to release, waive and discharge any claims which they have against each other in all of the pending law suits, some of which involve Miju Mulsan and agree to assist one another in defending any of the claims which remain brought by Miju Mulsan,” Smith’s memo said.

“The outstanding litigation not resolved by the settlement agreements and the lease agreement is the case brought against Pohnpei State Government challenging the enforcement of the Pohnpei transshipment tax and the payment of $115,861.30 under protest by Luen Thai,” Smith’s memo said.  “This action is stayed until December 31, 2018 to enable the Legislature to consider repeal of 29 PC 1-139.”

The 25 year lease agreement is for land that Luen Thai currently occupies.  The agreed upon base rent for that property is $156,000 per year.  Smith provided an analysis of annual income from current holdover lease agreements on a per square meter basis.  Luen Thai had been paying $19.23 per square meter per year.  The agreement signed today will have them paying $30.00 per square meter per year.  The closest to that figure is Taiyo Micronesia Corporation who is paying $18.00 per square meter per year.  The lowest two figures on the list were the land where the US Embassy is located at 44 cents per square meter per year based on their advance payment of $800,000 for a 110 year lease, and PPA land for Pohnpei Transfer and Storage at 75 cents per square meter per year.

In order for the lease to be fully enacted, the Legislature will need to make some corrections to current law, the wording of which used some incorrect square meter calculations and figures from a faulty survey.

Luen Thai has also expressed interest in the EDA and Taiyo properties at the dock area as well, if the Legislature makes them available.  If they do become available, the annual lease rate for those properties would be $50,000 for both buildings, or $28.23 per square meter per year.

“Safeguards have been built into the lease agreement to protect the security interests of the Pohnpei Port Authority,” Smith’s memo says.