By Jacob Nakamura
A Guam businessman, who had no business license in the CNMI, was paid nearly 100 percent of the millions he charged the Commonwealth government for medical supplies and equipment BEFORE either he or the attorney general even signed the contract for products.
International Royal, owned by Bic Sobti, was a uniform clothing company on Guam that had no experience or business license to sell medical supplies and equipment, either on Guam or in the CNMI, until months after the governors of both territories awarded the company millions in contracts.
Mr. Sobti profited from Guam COVID-19 contracts paid through federal funds, too. While the islands were suffering and struggling from the public health emergencies declared by both governors in the first quarter of 2020, Mr. Sobti was raking in millions.
The fleecing of the public continues into the new school year. Despite the unemployment and economic situation of most Guam public school families, and above the objections of students themselves, several schools are requiring parents to purchase uniforms from International Royal to the tune of more than $100 for a one-day set of uniforms.
Payments made before contracts executed
According to documents Kandit obtained from an Open Government Act request for documents to the CNMI Secretary of Finance, Sobti charged the Commonwealth government $4,247,957.55 for medical supplies such as gloves, face masks, thermometers, and hand sanitizers at bulk prices grossly inflated from retail prices. According to the documents, including wire transfers and payment vouchers, Mr. Sobti was paid 100 percent of his invoices, with more than 90 percent of the invoices paid even before the contract for products was signed by Sobti and fully executed by the Commonwealth government.
In one set of the procurement documents, the CNMI Governor's Office of Homeland Security and Emergency Management Agency created an undated request for price quotation for 400,000 N95 face masks, 200,000 disposable generic face masks, 1,000 face shields, 4,600 Dupont TYVEK disposable HazMat suits, 20,000 vital transport mediums and flocked swabs for COVID-19 testing, 1,000 infrared thermometers, and 50,000 KN95 face masks.
A price quotation for the products dated April 22, 2020, was submitted by Safety Management System, which operates in Susupe, Saipan. On April 24, 2020, Sobti submitted a price quotation for $2,817,400 for all the products. On that same day at 11:15 a.m., deputy incident commander Pedro Leon Guerrero issued at urgent Resource Request for the products, naming Sobti's company, International Royal as the suggested source. The resource request was signed and approved by section chief Mark Borja, logistics chief Patrick Cepeda, and finance section chief Vivian Hocog.
A day later, Ms. Hocog issued the purchase requisition for the $2.8 million in supplies. By April 27, the Governor's Office had issued the purchase order, and on the very same day, the Commonwealth government obligated and prepared $1.4 million for wire transfer to Mr. Sobti's Bank of Guam account.
The selection of Sobti for the procurement - using federal funds - and the obligation of funds and payment voucher all happened before the emergency contract for products was even signed by the homeland security special assistant, the attorney general, or Sobti himself. The contract was fully executed June 19, 2020, when Sobti finally signed it. He had already been paid.
Not only was the procurement completed without a contract in place, the Governor's Office did not even request Attorney General Edward Manibusan's clearance of the emergency procurement justification required under the Commonwealth Code at 1CMC §20144(a)(b)(c)(1) until May 2, 2020.
Despite his assurance to the CNMI in his price quotation of April 24 that he had all supplies on hand and ready for delivery to Saipan, a January 4, 2021 memo from homeland security special assistant Gerald Deleon Guerrero indicates Sobti only delivered $1.6 million of the $2.8 million in products originally promised. He was paid the balance of $204,369 within days of the memo.
That wasn't the first or the worst instance of payment to Sobti, who in April, May, and June of 2020 had no business license in the CNMI, and had never done business in the CNMI, according to Finance and Commerce records.
According to the payment records for Purchase Order No. 698925, Sobti was paid $2,533,069 for an assortment of supplies, including more generic face masks, toilet paper, hand sanitizer and soap, more gloves, more face shields, and hoodies.
There was no request for price quotation, or record of any other price quotes submitted for this purchase order. The official record of it begins April 4, 2020, when Sobti sent what appears to be an unsolicited price quote, for 24 different types of products. No documents show how Mr. Sobti knew what products the Governor's Office needed, or how he knew what to quote the Commonwealth government. The price quotation itself was stamped "Approved for Payment" and dated April 25, 2020.
However, according to an April 6, 2020 letter from the Department of Finance to Bank of Guam vice president Marcie Tomokane, CNMI Treasurer Asuncion Agulto directed the wire transfer of $1,250,000 to Sobti's business. A payment voucher for the full amount of $2.5 million was executed April 27, 2020.
As with the previous payment, Purchase Order 698925 was paid far in advance of an executed contract. Mr. Deleon Guerrero signed the contract the same day the $1.2 million payment was wired to Sobti. It was not until 14 days later that the attorney general approved the contract. It was signed by the governor's authorized representative, Patrick Guerrero, on April 21, and by Sobti June 19.
Four other purchase orders, all executed in April 2020, none with any procurement record but unsolicited price quotes and purchase requisitions, totaling $101,819.25 was paid via wire transfer on April 27, 2020 to Sobti.
Sobti was paid more than the ledger displays
While the total amount documents indicate was paid to Sobti equal $4,247,957.55, the ledger of the purchases from International Royal provided by Department of Finance totals only $4,014,407.55. According to the ledger and the payment documents, Sobti was paid $233,550 more than the products he delivered to the Commonwealth. According to these documents, Sobti was paid 105 percent of what the Torres administration owed him.
By comparison, another company that provided medical supplies and equipment to the Commonwealth for the coronavirus response - MedPharm - has been paid only 46 percent of the $3.7 million the Commonwealth government owes it for supplies and equipment procured even earlier than those from Sobti.
MedPharm also is a company on Guam; however, unlike International Royal, MedPharm has been doing business in Saipan for years under an established business license. Unlike Sobti, MedPharm had already been an established vendor of the Commonwealth government, the documents bearing out its number and identification.
And according to the documents, MedPharm provided some supplies that Sobti also provided, and at far cheaper rates.
Stay tuned for Part II of this three-part series, where we will report on rip off prices Sobti charged the Commonwealth and the government of Guam.
