Ngerulmud, Palau – On Thursday, March 11, 2021, the Palau Supreme Court Appellate Division issued its ruling in the Tulop family’s appeal.
On July 28, 2020, the Trial Division found Barbara Tulop and her daughter Shirley Tulop guilty of violations of the Unified Tax Act and engaging in business without a business license. In addition, the Trial Division found that Barbara Tulop violated the code of ethics when she failed to “file proper disclosure of assets including earned income from rental payments on a sublease and assets and bank accounts as charged.”
Defendants exercised their right of appeal on September 28, 2020. In Appellant’s opening brief, Defendants raised several new arguments that had not been argued at trial. Among these claims was that the Republic’s investigation was “unfair” because SP Cripps allegedly “investigated and charged the Tulops because of her friendship with Tansella.” The OSP in its response brief and in oral argument explained that the true motivations of its investigation were free of undue influence. The Appellate Division held that because the Tulops did not raise this argument at the trial level, they waived their right to argue it on appeal. As the Appellate Division explains, they “do not have fact-finding authority (or ability), [the appeals court] is not the right forum to introduce new evidence on this matter.” Unlike the Appellate Division, at the Trial Court level both sides may present evidence. Given the proper opportunity to address this defense claim, the Special Prosecutor would have been able to present factual evidence that defends the decision to prosecute.
Similarly, the Defendants-Appellants’ claims that the OSP withheld evidence beneficial to the Defense (Brady violation) and infringed on their right to examine all witnesses were also rejected.
Defendants argued that prosecutors are required to issue warnings to delinquent taxpayers prior to filing criminal charges. In the words of the Appellate Division, “nothing in our laws or the Constitution prohibits prosecutors from ‘unilaterally filling criminal charges for tax code violations.” The ruling on this point provides clear legal support for several OSP prosecutions. We hope citizens see this decision and understand that they cannot and should not wait to receive a letter from the Bureau of Revenue and Tax before paying taxes – prosecutors can file charges on violations of criminal law without warning offenders.
The Appellate Division reversed the decision of the Trial Court on Count Two, a violation of the Code of Ethics, which included (1) the issue of whether bank accounts are required disclosures under the Ethics Code and (2) whether Barbara Tulop’s failure to report a $10,000 payment for a lease was “knowing or willful.” As to issue (1) the three-judge panel held that bank accounts are not income under the Code of Ethics Act. As to issue (2), the Appellate Court reversed the Trial Division’s decision that Barbara Tulop’s failure to report a $10,000 payment received from and later returned to Tansella was “knowing or willful” because she may have had a good faith belief the rental deposit by Tansella was not income under the circumstances of this case. The OSP accepts this ruling as given.
We note, however, that Public Law, RPPL 5-32, which created the Code of Ethics Act, states “Assets and income of public officials which may be affected by their official actions should be disclosed to allow the public to determine whether public officials have a financial interest in the decisions they make.” RPPL 5-32 does not define “assets.” Likewise, the statute implementing RPPL 5-32, i.e., 33 PNC § 605, did not include the term “assets” from the public law but only requires certain financial interests to be included in the Financial Disclosure Statements. However, the Financial Disclosure Statements lists “Assets” as needing to be disclosed without providing any definition and goes on to require a listing of “income and sources of income.”
Therefore, there appears to be a disconnect between the Public Law, RPPL 5-32, the Code of Ethics Act under 33 PNC § 605, and the Financial Disclosure Statement created by the Ethics Commission. The plain meaning of “assets” generally includes bank accounts. But whether the Republic of Palau meant for “assets” to include bank accounts, or the term “asset” was mistakenly or intentionally left out of the Public Law’s enabling statute for some reason, or whether the Financial Disclosure Statement should or should not have included the term “asset,” all must ultimately be resolved by the Legislative Branch and the Ethics Commission.
Financial disclosure systems, as noted by the World Bank, Transparency International, and other international bodies including the G20 leaders, are a primary way of preventing, detecting, investigating, and prosecuting public official corruption. Palau’s Code of Ethics disclosure forms play a vital role in keeping officials honest and in maintaining a transparent government. Having clarity on the issue of assets and income will help officials more easily comply with the law, lead to fewer cases of negligent disclosures, promote accountability, and help increase citizen trust in their public officials.
In summary, the Appellate Division reversed Barbara Tulop’s conviction for a Code of Ethics violation (Count 2). Barbara Tulop’s convictions for the remaining counts remain intact (Counts 3, 4, and 5 – failure to pay taxes; and Counts 6 through 10, failure to have a business license). Shirley Tulop’s conviction for Count 3 needs to be vacated because she was not charged in Count 3. Shirley Tulop’s remaining convictions on Counts 4 – 10 (same as above), remain intact.
There will be a resentencing for Barbara and Shirley Tulop to reflect the Appellate Division’s changes to the verdict. The sentencing hearing will be scheduled and presided over by Presiding Justice Salii.
To see the full opinion, please visit the Office of the Special Prosecutor website at palauosp.org.
Download: Tulop v. ROP, 2021 Palau 9