Corruption in Papua New Guinea (PNG) is widespread and endemic, penetrating all levels of society. Although corruption is done in secret, the social and economic effects of it are visible and affect everyone in the country. This article presents the socioeconomic effects of corruption that are made visible through various social indicators of the country.
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This article is about the Questions without notice by the Deputy Opposition Leader – Sam Basil about the political impasse in 2011/2012 and the assumed pending court cases related to the impasse.
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Customary Land is being leased by the Lands Department by landowners. The department then leases it to businesses. In many cases it is alleged that the purpose for which the land is being used is not what was agreed to in the lease agreements with the landowners. In some cases it is alleged that landowners were not adequately consulted.
It is also alleged that large scale logging operations in the past (possibly ongoing) have been disguised as development projects using up nearly 5.2 million hectares of customary land.
A Commission of Inquiry (COI) was launched in June 2011 by the National Executive Council with commissioners John Numapo, Nicholas Mirau and Alois Jerewai in charge of the investigation and reporting its findings. The commissioners were given three months to produce a COI report. An extension was requested and granted to push the (parliamentary or public???) hearing dates to January 2012.
During the COI, no authorized suspensions of activity on the grants of new SABLs were made by Department of Lands and Physical Planning, regardless of the cabinet decision leading up to the COI.
Over one and a half years later, COI has produced only an interim report only and which is limited to providing a summary of the existing legal and administrative processes for issuing an SABL.
The unfinished report was tabled in parliament in late September 2013 with the PM expresses his disappointment that so many of the leases had not performed as they should.
Commission of Inquiry report incomplete and despite a moratorium being placed SABLs were still given out and operations of previous SABLs were not stopped during the inquiry and are still continuing.
Actions currently (October 2013) being taken by Government on this issue: None that we are aware of.
Action TIPNG wants to see
- The moratorium being implemented
- The COI report being finished
- The finished report tabled in parliament
- The report being made freely available
- Parliament taking actions on recommendations
- Those who have broken the law being prosecuted.
Useful Links: Google: The New Land Grab in Papua New Guinea
While Dr. John Mua was the CEO of MVIL, 100 million kina from the MVIL account was allegedly transferred without following proper procedures being applied. The funds were invested with a company in Lismore, NSW, Australia called Woodlawn Capital and then supposedly invested.
On the CEO being replaced, the MVIL board implemented an investigation through GadensLawyers and PWC and managed to bring back 9 million kina to PNG and froze the accounts of Woodlawn Capital Ltd, where another 50 million kina was identified.
It seems as if Woodlawn Capital Ltd, does not have the requisite licences to act as a fund manager and so has acted in breach of Australian financial laws.
It is as yet unclear where the remaining 41 million kina is. There have been claims that a portion was lost due to losses on investments as a consequence of the Global Financial Crisis.
In addition to this allegedly illegal 100 million kina transfer, there were also other apparently unexplained transactions on the MVIL account which in total appear to be worth about 50 million kina.
Some in the Social media have suggested that there is evidence that a very prominent former member of the PNG parliament have been involved in this- especially in regards to the role that member had in relation to the IPBC not giving approval.
It is also suggested that AUSTRAC the Australian body that is supposed to prevent money laundering could have taken a more active role in preventing incidents like this
Theft or at the very least gross mismanagement of public funds and improper process
Actions currently (September 2013) being taken by Government on this issue: On-going investigations by PWC and Gadens.
Action TIPNG wants to see
- The report to the MVIL board being prepared by Gadens and PWC being made freely available.
- That the government advise the public on the state of investigations into all other suspicious transactions on the MVIL account.
- Those who have broken PNG law being prosecuted – especially the former CEO and any MVIL senior staff who took no action to stop this -in a public trial.
- That any former or current members of parliament be prosecuted if they broke the law in any action they took in relation to the MVIL, or omitting to take an action that could have prevented this loss of public funds.
- Any board directors who took no action being sacked and being blacklisted so they cannot be on any other public boards
- The Australian Government prosecute the directors of Woodlawn Capital.
- That AUSTRAC pay more attention to large transfers like this.
Mr. Julian Moti, an Australian citizen, had been wanted in Australia for serious alleged overseas child sex offences. He was at the centre of an international dispute following efforts by the Australian Government to extradite him from both Papua New Guinea and Solomon Islands to face charges in relation to an incident alleged to have taken place in Vanuatu in 1997.
After his arrest in Papua New Guinea in September 2006, Moti was released on bail pending an extradition hearing, but went into hiding in the Solomon Islands High Commission in Port Moresby. (He later claimed that his life had been threatened, and so sought sanctuary.)
The Papua New Guinea and Solomon Islands Governments denied knowledge of his whereabouts, but on 10 October he was secretly flown aboard a Papua New Guinea Defence Force aircraft to Solomon Islands where he was arrested by officers of RAMSI on his arrival in Munda, Western Province. When he left PNG, Moti was in breach of the bail conditions imposed by Madam Justice Catherine Davani of the PNG National Court, and had failed to appear at a PNG court hearing on 30 September. The PNG Government declined to say who in the PNG Defence Force or Government had given the order to fly Moti out. In response, the Australian Government immediately cancelled planned visits by the PNG Prime Minister, Grand Chief the Right Honourable Sir Michael Somare, and Defence Minister Martin Aini, and postponed the annual Australia-PNG Ministerial Forum, and called for an investigation into the flight and prosecution of whoever was responsible.
A PNG Defence Force Board of Inquiry into the escape recommended that Sir Michael Somare and a number of his advisers be charged with offences in relation to the escape, including breaching PNG’s constitution. Sir Michael Somare sought to suppress the Inquiry’s report, challenging the Inquiry’s standing in PNG’s National Court. As yet the Court has not ruled on the validity of Sir MichaelSomare’s challenge to the public release of the Commission of Inquiry’s findings.with the presiding judge likening Sir MichaelSomare’s attempts to suppress the findings of the report as a scandal on par with Watergate.
Prime Minister Sir Michael Somare of Papua New Guinea reportedly “threatened local media with contempt of court over their calls for the official release of the PNG Defence Force Inquiry report that recommends he faces charges” and Somare reportedly does not now support Mr Moti. It does not yet reliably appear that any untoward payment has been made to Sir MichaelSomare for his alleged part in Moti’s passage through Papua New Guinea.[It should be noted that Julian Moti was later extradited and after a trial it was concluded that he was not guilty. ]
This is an adaptation of the relevant excerpts from:
This is adaptation of excerpts from
A Chinese company, China Railway Construction Engineering (CRCE) PNG, was awarded a contract worth more than K263 million to build the 2015 Pacific Games Village at University of PNG, despite the job being valued at only K190m.
Documents provided to The National show that CRCE was not in the top three of the 10 companies that bid for the contract, however, was approved ahead of the rest at an additional cost of more than K73 million to Papua New Guinea.
Sports and Pacific Games Minister Justin Tkatchenko, when contacted for comment, said there was “nothing sinister” about the awarding of the contract to CRCE.
A government source said a professional New Zealand engineering consultancy firm, Warren and Mahoney, did the scoping and estimation for the project which it said was worth K190m.
Moreover, the tender evaluation committee (TEC) of the Central Supply and Tenders Board (CSTB), disqualified CRCE from further evaluation, however, it was somehow awarded the contract.
The 10 companies that bid and their respective prices were:
- China Railway Construction Group PNG (K149, 549, 896.90),
- China Railway Construction Engineering PNG (K263, 973, 822.56),
- Associated Builders (K389, 699, 629.50),
- J4J Construction & Hardware Supplies (K179, 550, 813.20),
- China Harbour Engineering Ltd (K153, 307, 006.19),
- PNG Construction Ltd (K223, 437, 500),
- Digara Construction Ltd (K226, 479, 798.16),
- Fletcher Morobe Construction (K191, 453, 653.80),
- JIC Niugini Engineering (K173, 236, 504.02), and
- China Railway Group (K189,033, 309.98)
Fletcher Morobe Construction was recommended by the tender evaluation committee (TEC) of the Central Supply and Tenders Board (CSTB) to be awarded the contract at a cost of K191, 453, 553.80.
The other two top companies after that were China Harbour Engineering Ltd (K153, 307. 006.19), and JIC Niugini Engineering Ltd (K173, 236, 504.02)
“Members of the TEC assessed individual bids according to the evaluation criteria for technical scores out of 100, and average totals established to determine the ranking of the bids,” according to the TEC report.
“Emphasis was placed on technical scores for ranking individual firms, while financial capacity was assessed based on the available working capital.
“China Railway Construction Engineering failed to meet the annual turnover requirements and his (sic) failure to provide the working capital, liquid assets and/or credit facilities information, and no certificate of compliance to confirm payment of tax to the IRC, disqualifies him for further evaluation.
Fletcher Morobe topped with 84 out of 100 followed by CRCE (77.3), China Harbour Engineering (77.2), JIC Niugini (76.7), China Railway Construction Group (76.5), China Railway Group (74), PNG Construction (63.5), J4J Construction & Hardware (70.5), Digara Construction (61.3), and Associate Builders (61.2).
While currently there is no evidence of deliberate misdoing, we wonder:
- What process and criteria was applied to the selection
- Why other companies which did meet the qualification criteria and with lower prices were not accepted
- Under what circumstances does the government consider it necessary to ignore the recommendations of the CSTB
This case is still evolving. Clear risks are that:
- company is a unable to deliver on time
- the CSTB and its processes are bypassed
- later it transpires that inducements were involved
- later a “shelf” company with little or no capacity wins a contract for say 270 million and then sub contracts back to one of the real companies which put in a bid for 200 million. The shelf company then collects the 70 million for basically doing no work.
In 1995 the Public OfficersSuperannuation Fund paid a company owned by the Australian property developer, Warren Anderson, 18.72 million dollars for the Cairns Conservatory which Mr Anderson’s company had bought only a month before for about half that amount.
The PNG Auditor General’s report, tabled in the Parliament in Port Moresby in 1997, criticised the POSF for relying on a valuation provided by Mr Anderson’s company and it contained an assessment from the Valuer General’s office in Brisbane stating that the Conservatory’s market value at the time was about eight million dollars.
The evidence was all there for a trial for at very least gross incompetence and possibly fraud but it never went ahead.
Actions currently (September 2013) being taken by Government on this issue: None
Action TIPNG wants to see
- The case brought to trial and if there is evidence of fraud the offenders punished.
- If as the government claimed at the time that there is no case to answer then this should be found out in public trial and not by a member of parliament.
- That all the evidence be made public.
Useful Links: http://www.abc.net.au/4corners/stories/s590512.htm
In 2003 the Parliamentary Accounts Committee was asked by Parliament to conduct an investigation into alleged corruption in the Parliamentary Service. The Committee submitted its report in September 2003 after summonsing witnesses and hearing evidence given on oath.
The PAC investigation found Justin Tkatchenko’s company Kitoro No.33 was awarded a K1.5 million contract to maintain parliamentary gardens, in breach of procurement procedure. The Kitoro tender was received 3 months AFTER the closing date. The tender submitted was only for twelve months but a three year contract was awarded. The original contract amount of K490,000 was K190,000 above the limit imposed by the Public Finance Management Act. The lowest bid for the project tender was just K12,000 per year. Kitoro was awarded contract totalling K837,738 that did not go to public tender.
The PAC recommended the contracts with Kitoro No.33 be terminated immediately and the officers responsible for the tendering, awarding and executing of the contract face ‘appropriate action’.
AN Indonesian tycoon who fled Jakarta a day before he was sentenced to jail for fraud by the Supreme Court, and who is on the Interpol wanted list, has been granted citizenship of Papua New Guinea at a secret ceremony.
The constitution and associated regulations of PNG require new citizens to be resident in the country for eight years. They also include a number of other stringent conditions, including strictly policed financial probity.
JokoTjandra, 61, was first charged with corruption in 1999, over $57 million which he allegedly received illegally via PandeLubis, who was the deputy chairman of the Indonesian Bank Restructuring Agency set up following the Asian financial crisis.
Pande was convicted in 2004 and jailed for four years, over his misuse of Bank Bali funds. Joko was acquitted.
But under a new chief justice, the Supreme Court granted the prosecutor’s request for a review of the case. As a result, in June 2009 former central bank governor SyahrilSabirin was jailed for two years.
Two days later, and a day before Joko was to return to court for its verdict and possible sentencing, he fled. The court this time convicted and sentenced him, also to two years’ jail, in absentia.
He was ordered in addition to repay the $57m he received over the sale of Bank Bali debt collection rights.
He flew in a private jet to PNG, where associated family members own a large conglomerate, Papindo Trading, which is an especially large retailer, owning Super Value Stores, and which has recently bid to lease 100,000ha in Central Province for a rice-growing project.
When Joko fled, Indonesian Attorney-General’s Office spokesman JasmanPandjaitan said: “We’ve asked Interpol to help us to bring Joko back to serve his sentence.”
It is believed that he has split his time since then, chiefly between Singapore, Malaysia, Dubai and PNG, travelling by private jet.
Late last year, he is understood to have been flown in a Falcon jet between Malaysia and PNG, necessitating travelling over Indonesian air space – and provoking a diplomatic incident.
The Falcon was originally owned by the PNG government when Michael Somare was prime minister, and was sold and leased back to the government after Sir Michael lost office last August.
A week ago, 11 people, from six countries including Australia, were granted PNG citizenship at a ceremony in the state function room of Parliament House.
Joko, the 12th person to be awarded the honour last week, was not present. But it is understood he received his citizenship documentation in private, before the ceremony.
The citizenship was awarded only a few days from the start of voting, on Saturday, in a tumultuous national election, when PNG is at its most distracted.
The Post-Courier newspaper asked in an editorial: “Who endorsed Joko’s application for citizenship? Is it true that Prime Minister Peter O’Neill tried to stop the presentation of the certificates?
“We have not only given refuge to an international fugitive but given him citizenship. What are our international obligations? PNG’s image is at stake.”[SOURCE: ROWAN CALLICK, ASIA-PACIFIC EDITOR, THE AUSTRALIAN]