Trust Fund Chairman assures that illegally withdrawn funds are fully restored
- Category: News
- Published: Sunday, 19 November 2017 16:07
- Written by Trust Fund for the People of the Republic of the Marshall Islands
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Fund security strengthened, custodian replaced, investigation continues
Trust Fund for the People of the
Republic of the Marshall Islands
WASHINGTON (October 26, 2017) – Chairman Nik Pula of the Trust Fund for the People of the Republic of the Marshall Islands (the Trust Fund) confirmed this week that funds compromised by cyber-attacks at State Street Financial Services Company (State Street) have been fully restored and diligence stepped up after the discovery of fraudulent withdrawals of more than $600,000.
“Trust Fund staff first detected irregularities in early July 2017 and alerted custodian State Street leading to the discovery of fraudulent activity in the Trust Fund.” said Chairman Pula. “All Trust Fund members and staff have been collaborating closely with State Street in monitoring and resolving the situation with the Republic of the Marshall Islands (RMI) Attorney General, RMI Auditor, and other officials from the Marshall Islands, Taiwan, and U.S. governments,” continued Pula. “Together we will continue to protect and maintain the integrity of the Trust Fund for the People of the Republic of the Marshall Islands.”
In late June and the first half of July 2017, a series of 8 fraudulent wire transfers occurred in the Trust Fund totaling $685,595.08.
The irregular activity violated proper protocol, processes, and procedures established to protect the Trust Fund.
All illegally withdrawn funds from the Trust Fund have been returned by State Street; no funds are missing.
State Street is in the process of reimbursing all funds fraudulently transferred out of a separate account which is managed and administered solely by the RMI Government.
In late July 2017, the Trust Fund initiated transfer of custody from State Street to Vanguard. The transfer was planned prior to the fraudulent activity and based on a previous RFP process. The Trust Fund will finalize closure of its account with State Street once the accounts are fully reconciled.
Trust Fund staff continues to maintain rigorous monitoring and reporting activities on a daily, weekly, monthly, and quarterly basis to protect the integrity of the account.
An investigation by the State Street Cyber-Security team is on-going and the FBI has also been called upon to investigate.
The Trust Fund Chair and Members continue to be fully apprised of the situation and will continue to be diligent in protecting the Trust Fund.
The value of the Fund as of September 30, 2017, preliminary and unaudited for fiscal year 2017, was $354,656,481.
As provided for under the Compact of Free Association agreement, as amended (U.S. Public Law 108-188), the Trust Fund was established to contribute to the economic advancement and long-term budgetary self-reliance of the people of the Republic of the Marshall Islands when annual grant assistance under the Compact expires after fiscal year 2023.