Pacific Transport

Tt Troubles-Transpac Founders

And Air Route Wrangle Re-Opens

Transport in Micronesia is operat ing in murky water and cloudy skies.

Transpacific Shipping Lines (Trans pac) has been placed in receivership, and the line’s exclusive franchise is apparently at an end. In the air, the wrangle about the right for the lucra tive Saipan-Japan route was reopened by the US Civil Aeronautics Board, and Air Micronesia has asked the CAB to allow it to suspend its weekly Saipan-Okinawa service.

February was a month of drama for Transpac, with a confused situ ation developing about who was the receiver, and some doubt about whether Transpac was in default of its franchise. The sequence of events was: • A meeting in Honolulu between representatives of the United States and Trust governments to discuss Transpac’s position. Among those who attended were the TT High Commissioner, Mr Edward E. John ston, and the Director of Territorial Affairs, Mr Stanley S. Carpenter; • The resignation of the managing director of Transpac, Mr C. Douglas Echols, who said two things should have emerged from the Honolulu meeting: (1) An infusion of working capital from the government, or a government-guaranteed line of credit should have been set up with a Micronesian financial institution. (2) A positive statement of assurance :ould have been given to Transpac :reditors that the TT Government stood behind its shipping line; • Infighting at a meeting of share holders which ended only after a shareholder produced a court order .emporarily restraining the govern ment from exercising voting rights for H 0,000 Transpac shares held in trust ?y the Attorney-General, Mr Richard • Miyamoto; • An ultimatum from the owners }f the Lotte Reith, on charter to Franspac, that the ship would be liverted with her cargo in mid-ocean f back payments due on her charter vere not paid. The ship was then on

her way to Saipan from Japan with more than 2,000 tons of pre-paid cargo, said to be worth S 2 million, for all TT districts; • Transpac was officially declared m a ‘‘state of insolvency”; • Mr David M. Sablan, a Saipan businessman, was appointed receiver; i Mr Sablan resigned ° n February 19, four days after appointment, but had to remain as receiver till a suecessor was chosen and recognised by the IT High Court; • Mr Michael J. Oremus, former lianspac manager of operations and traffic was then appointed receiver, but resigned after being notified of the government s intention to place Transpac in default of the franchise.

This resignation apparently left Mr Sablan as the receiver as Mr Oremus had not been recognised by the TT High Court, although it is possible that recognition would have been forthcoming had Mr Oremus not re signed; • The Transpac general manager, Mr William Penrose, who remained in his position at the specific request of Mr Sablan, said that as far as he was concerned the franchise was not in default, and ‘‘we have received no notice of default”; • Mr Johnston, speaking to the Guam Chamber of Commerce on February 27, said that a decision to terminate the Transpac franchise for servicing the islands was made follow

ing the Honolulu meeting three weeks earlier.

Mr Oremus received a letter giving nodce of default soon after he was named receiver, but he declined to sign it to acknowledge receipt.

Mr Penrose said Mr Sablan had told him that he, too, had not re ceived any notice of default.

The situation about the Lotte Reith was not at all clear. The owners, Orion Shiffahrts Gasellschaft, of Hamburg, could have sold the cargo at auction. The Deputy High Com missioner, Mr Peter T. Coleman, when he received the owners’ ulti matum, placed Transpac in receiver ship. A telegram was then sent to the owners saying the government would guarantee the “receiver will be prepared to pay regular charter hire payments that are now due”. The owners replied they would need pay ment before the ship would be allowed to enter any port, but there were signs that she would not be diverted.

Mr Sablan, after his appointment, and before his resignation, spoke of needs for containers at Guam to be moved to the TT districts. The port authority was one of the Transpac creditors, and earlier this year re fused to handle any further Transpac voyages till past bills had been paid.

A legal complication developed while there was a doubt whether Transpac was in default of its fran chise. Mr Penrose said he had learned that plans were being made to have a Daiwa Company (Japan) ship, the Ponape Maru, call at Saipan. Mr Penrose said approval of entry would be a violation of the franchise agree ment. On this and other legal prob lems a conference was to be held be tween Mr Miyamoto and a law specialist from the US Admiralty, Mr John Meadows.

Transpac, formerly MILI, has served Micronesia under an almost entirely exclusive franchise since 1968.

Mr Johnston, in his Guam speech, said the TT Government was in terested in lines which wanted per mission to discharge and pick up cargo, but which were not seeking any kind of exclusive franchise or guarantee. The whole question of TT shipping would be resolved “in a few weeks”, when a decision would be made about which of several pro posals from other shipping companies would be accepted. Both US and Japanese companies had expressed an interest in serving Micronesia.

Transpac has faced a mounting list of problems, mostly financial, and has been under steady attack by congress men. Congressmen are now con cerned about the plight of employees

of Transpac.