The Compact of Free Association Trust Fund Board of Trustees is tasked with the oversight and management of the Compact of Free Association Trust Fund, which was established in 1994 when the Compact agreement between the Republic of Palau and the United States came into effect. Under the Compact, seventy million U.S. dollars was appropriated towards establishing a Trust Fundto support Palau’s national budget asthe nation progresses towards economic independence and self-sufficiency.
Initial capital contributions from the U.S. government amounting to sixty-six million U.S. dollars established the Trust Fund in 1994, and the remaining four million U.S. dollars was contributed in 1998 making up the total of the seventy million U.S. dollars appropriated. Since its inception, the Palau COFA Trust Fund has grown considerably with no additional capital contributions as a result of its investment gains. Performance reports will be made available on this site showing the growth of the Palau COFA Trust Fund since inception.
Shortly after establishment of the COFA Trust Fund (‘Fund’) in 1994, a Board of Trustees was created to oversee the Fundand monitor its investment. Responsibility for the oversight and management of the Trust Fund was entrusted to a Board of Trustees until 2007 when the Board was dissolved through passage of legislation. The Fund was then monitored and managed by a Trust Fund Committee in collaboration with the Ministry of Finance. RPPL 9-20, signed into law in January 2014, re-established the COFA Trust Fund Board of Trustees and once again fiduciary responsibility fell upon the Board to manage the COFA Trust Fund assets and monitor its’ investments.
The Board of Trustees has historically relied on the expertise and advice of an Investment Consultant, with whom there is a shared fiduciary responsibility, to ensure the prudent management and investment of the Trust Fund.
Trust Fund assets are maintained and kept secure by a fund Custodian, a service provider formerly separate from the Investment Consultant until 2008 when these services were provided by a single U.S. firm. To illustrate, at inception, Merrill Lynch and First Hawaiian Bank, both U.S. financial institutions, were our Trust Fund Consultants and Custodian, respectively. Custodianship changed to Bank of Hawaii during Merrill Lynch’s tenure as Consultant until 2008, when, through a formal RFP (Request for Proposal) process, Morgan Stanley, another large U.S. firm, was selected as both Consultant and Custodian of the COFA Trust Fund assets. Following re-establishment of the COFA Trust Fund Board of Trustees in 2014, Morgan Stanley announced that it was pulling out of this region, and in 2015, the Board selected Raymond James & Associates, a U.S. firm, once again through a formal RFP process, to serve as both Consultant and Custodian of the Fund’s assets.
About the Board
Pursuant to RPPL 9-20, the legislation signed into law on January 21, 2014, the Board of Trustees was reinstituted.According to RPPL 9-20, there shall be five members on the Board that are appointed by the President of the Republic and confirmed by the Senate. In addition, the law specifies that the Chairman of the Senate Ways & Means Committee, the Chairman of the House of Delegates’ Ways & Means Committee, and the Minister of Finance shall serve as Ex-Officio members of the COFA Trust Fund Board of Trustees.
In March 2014, three individuals were appointed and confirmed to the Board of Trustees, namely, Mr. Otoichi Besebes, Ms. Mingrang Kloulechad, and Mr. Regis Emesiochel. In October 2015, full Board composition was achieved when Mr. Keiden Kintol and Ms. Lindsay Timarong were appointed by the President and confirmed by the Senate.
The COFA Trust Fund Board of Trustees does not maintain its own office, although it has been assigned a dedicated personnel, namely Mr. Masato Ushibata, AIF®, from the Ministry of Finance to perform administrative functions. Records are generally maintained and kept centralized at the Ministry of Finance’s Koror office within the office of the Minister. Information regarding the Trust Fund may be requested in writing via correspondence with any confirmed Trustee. E-mail contact information for the Board may be obtained from the Ministry of Finance.
Role & Responsibilities
Board duties and responsibilities are specified in RPPL 9-20, ratified by Board Resolution, and highlighted within the COFA Trust Fund Investment Policy Statement (IPS). At the same time, the Board adheres to its Board By-laws adopted in December 2015.
The Board of Trustees meets regularly each month to review and discuss the Trust Fund’s investment performance. In addition, annual review meetings are held with each investment manager together with the Board’s investment advisor.
Current ROP COFA Board of Trustees Investment Advisor:
Raymond James & Associates’ Asia Pacific Group based in Guam