Former Ambassador to the European Union, Departmental Head and Consultant to the Prime Minister, Isaac Lupari stole K3.7 million from the people of PNG through false claims for breach of contract according to the findings of the Commission of Inquiry into the Finance Department.
The false claims were drafted and submitted by Guguna Garo, of Paul Paraka lawyers, and were illegally settled by the then Solicitor General, Zachary Gelu. In addition to the K3.7 million, a further K800,000 was paid to Paul Paraka lawyers from public funds for their role in facilitating the fraud.
The Commission of Inquiry has recommended Isaac Lupari, Zacchary Gelu and Guguna Garo all be investigated by the police with a view to prosecution for fraud and conspiracy.
From 1997 through to 2009, Isaac Lupari was employed by the State in a series of senior positions including Secretary Finance, Secretary Defence, Secretary Works, Special Advisor to the Prime Minister, Michael Somare, Secretary Transport, Ambassador to the European Union and Chief Secretary. In these positions Lupari was handsomely rewarded, receiving, for example K1,294,133 in the four-and-a-half year period between September 1997 and April 2002
But being paid over K270,000 a year wasn’t enough it seems because in December 2001 Lupari sued the State for breach of four separate employment contracts. Lupari claimed he had successively been unlawfully terminated as Secretary Finance, Defence, Personnel Management and Transport and was entitled to claim the balance of all pay and entitlements for the unexpired period of all four contracts. These claims were fraudulent as Mr. Lupari never suffered any loss of pay and entitlements and was employed by the State for the whole time that he claimed for and beyond.
However, Lupari’s initial legal claims were never pursued as when Somare was elected PM in 2002, Lupari agreed to withdraw them as part of the deal that saw him appointed as Ambassador to the EU. Lupari though did not honour that agreement and five months later, in January 2003, Paul Paraka lawyers resubmitted the four claims on behalf of their client.
Less than two months after the four claims were filed with the Court they were approved for settlement by Solicitor General Zachary Gelu. Gelu agreed to settle the claims despite clear instructions from the Department of Personnel Management that the claims were unlawful, without merit and should be vigorously defended.
Gelu personally signed the Deed of Settlement awarding Lupari K3,703,461.31 and at the same time approved the payment to Paul Paraka lawyers of an additional K800,000 for their costs (a hugely inflated figure given the claims had only been issued two months earlier).
Lupari’s illegal claims were drafted and filed by Guguna Garo of Paraka lawyers. The Commission found that Mr Garo must have known that at least one of the claims he submitted was baseless and that in all four cases he would have known Mr Lupari had suffered no loss. The Commission found Mr Garu knowingly misled the court from the very start.
Read the Commission report on Issac Lupari
We reported a few days ago on an email conversation with the Prime Minister’s daughter and Press Secretary about the Paraka Scams in which she struggled to explain why the government had not been to court to lift the injunction against prosecutions.
Since then a few more emails have passed back and forth (which you can read below) but now Betha Somare seems to have pulled the plug; leaving us with the astonishing assertion that while yes, there are illegal activities going on, the government cannot be blamed and there are many positive developments for which the government gets no credit.
Read the exchanges below and see if you are convinced….
Email 1. Betha Somare:
As I mentioned in my previous email, I am not a lawyer and will pass on matters you have raised to the Attorney General’s office. Hopefully they will be able to advise the way forward for government.
Regards, Betha Somare, PM’s Media Unit
Email 2. An observer responded:
Thanks Beta for “at least” responding. But to gain our trust remains a BIG question, due to the fact that there is Gross Negligence on the part of the Government to take action on the issues pressured to by pressure groups. I hope, you are not trying to divert the attention again.
Whether the Government acts on those issues raised remains to be seen.
Email 3. PNGexpose reply to Betha:
Thank you Betha
We all look forward to hearing what the Attorney Generals Office has to say – presumably they will be reporting back as a matter or urgency?
In the meantime, the Commission of Inquiry recommended it continue its work for another year as it had only been able to study a fraction of the cases of fraud and theft that it wanted to investigate.
Can you please explain why the government has not agreed to this request and appointed the Commission for another 12 months?
Surely having already uncovered K780 million in stolen funds the PM is MOST keen for the Commission to continue its excellent work on behalf of the people of PNG?
Email 4. Betha again:
I forwarded your email yesterday to the Attorney General’s office and sent a follow up email this morning for a reply. I am still waiting.
On the COI I am not part of the decision making body, I only announce decisions that have been made by Cabinet so if that decision is made I will certainly inform the media.
Regards, Betha Somare, PM’s Media Unit
Email 5. Betha once more:
Dear nameless. I note that you have become very sure of yourself in soliciting answers from me. Your gutlessness astounds me. After informing you of the advice that I have received from the Attorney general’s Office I will not answer any further questions until you are man/woman enough to tell your fellow email buddies who you are.
You have been very good at pointing fingers but basic ettiquette such as standing up to what you believe is right and having the courage to defend that belief is sorely lacking.
It has been easy for some of you to use corruption to label government. Yes there are illegal activities that are going on but it does not mean government is condoning these actions.
You all know the system of government is slow. We are a long way from the days when there was no hope in PNG. Many of you refuse to acknowledge positive developments. I agree there is so much to be done but it is not because of the lack of will by government that service delivery is taking place at such a slow rate.
The answers to your queries are below:
1: Injunction by Paraka Lawyers. A private law firm is acting for the State on this. I believe the application to lift the injunction has been argued. We are awaiting a decision and advice from the law firm.
2. Gabriel Yer – non issue. Let the process take its course. there is no cause for alarm.
3. Gabriel Kapis allegations. Thise are matters for police investigations and indeed police have commenced investigations. These are not matters for us to discuss publicly. If anyone has evidence/information, please forward those to the police to assist them with the investigations.
Betha Somare, PM’s Media Unit
Email 6. PNGexpose has the last word?
I am sure everyone will welcome the news a private law firm is acting for the government in seeking to have the Paraka injunction lifted – let us hope there is a positive outcome very soon.
Also, it is good to hear the police are investigating Kapris’s allegations against Pruaitch et al
But it is sad that you have decided to resort to insults and shut down our conversation when so much is left to be discussed.
For example, how can you dismiss Yer as a non issue when he is the Secretary of Finance but has been recommended for prosecution for fraud by a Commission of Inquiry that found bountiful evidence he has stolen millions?
If the government is aware there are illegal activities taking place as you say and we see it takes no action then of course you will be labelled as either corrupt or incompetent. Which is it?
You speak of positive developments but where are they?
- Social indicators continue to slide
- Violence and crime are on the increase
- Housing becomes more and more unaffordable
- Services get worse and worse (unless of course yo have the money to fly to Singapore for your medical treatment)
And if the government is not responsible for the lack of service delivery then who is?
It seems from what you say the government is overwhelmed and unable to act?
If that is the case then surely it should step aside and let someone who can govern take over
Former Solicitor General, Zacchary Gelu, should never be employed again in a senior position in the public service. This is the stark recommendation from the Commission of Inquiry into the Department of Finance after it found Gelu implicated in many of the scams in which a total of K780 million was stolen from the people of PNG between 2000 and 2006.
The particular scam that prompted the Commission’s recommendation involved the former Administrator of the Southern Highlands, Tau Liu. In 1999 Liu claimed over K220,000 in damages from the State for alleged wrongful dismissal although in fact he had in fact only been suspended from duty, not terminated. In February 2003, then Solicitor General, Zacchary Gelu, agreed to the claim and signed a deed of release in the sum of K305,410.61 (which included more that K70,000 in interest payments).
The claim was approved by Gelu even though the State had initially filed a defence and had several good grounds to ask the court to dismiss the claim. This included the fact that Liu had not been terminated, that he had failed to answer the disciplinary charges against him and had failed to give proper notice of his claim. Even if the State had been liable then Liu would only have been entitled to damages equivalent to three months pay – a fraction of the sum he actually received.
The Department of Finance paid out over K773,000 to Mr Liu in settlement of this claim and a second claim in respect of his employment as Administrator for Western Province. That claim was also approved by Gelu.
The Commission concluded:
The amount paid by the State in settlement of the Plaintiffs claim is exorbitant, unreasonable and may have been calculated with a view to defraud the State of a large sum of money
In light of such conduct Mr. Gelu should never be allowed to hold a high position as that of SG ever again.
His conduct clearly showed that he was not there to protect the interest of the State but perhaps for his own gain.
This-is clearly negligence on the part of Mr. Gelu.
The Commissions report on the Liu scam is also scathing of the conduct of then Attorney General Michael Gene for his failure to protect the interests of the State in the advice that he gave in the matter.
The parts of the Commission report relevent to Mr Liu’s claim can be downloaded here Liu
Port Moresby MP, Andrew Mald, is identified in the Finance Department Commission of Inquiry report as having stolen K5,193,538 from the people of PNG
The MP, former Solicitor General Zacchary Gelu, former Attorney General Francis Damem and private lawyers Peter Pena and Jeffrey Abone are been recommended for prosecution over the unlawful payment to Mr Mald.
The Commission of Inquiry uncovered how MP Mald submitted a fraudulent claim against the State, which, despite numerous flaws, was approved for payment by Gelu and Damem.
Mald’s claim was in respect of a piece of land in Port Moresby, for which he claimed to have a valid lease. However the Commission of Inquiry found that Mald’s lease was unlawful and had been fraudulently obtained. That fraud included an illegal meeting of the Lands Board, falsification of the meeting minutes and a failure to gazette the lease.
Not only was Mald’s lease totally illegal, his claim for damages was similarly flawed. The claim did not satisfy the mandatory notice requirement under the Claims Against the State Act; the deed of settlement was not given the required Ministerial approval; and the damages claimed were hugely overstated.
Despite the fact that Mald did not have a legal lease and his claim was procedurally flawed, Solicitor General Zacchary Gelu approved the claim WITHOUT even seeking the advice of Secretary of Lands or his Department or the Register of Titles or the Attorney General. Gelu also accepted Mald’s gross inflated assessment of damages at K4.1 million.
This unprofessional conduct was then compounded by the Attorney General, Damem, who approved an overpayment of K520,571 in interest on the claim.
The Commission has recommended the Public Prosecutor seek to recover the K5,193,538 paid to Andrew Mald and K200,000 from Peter Pena under the Proceeds of Crime Act
As well as criminal prosecutions, the Commission has recommended all four lawyers, Gelu, Damem, Pena and Abone be referred to the lawyers’ statutory body for “dishonourable, improper and unprofessional behaviour”.
Betha Somare, the daughter of Prime Minister Michael Somare, and his Press Secretary has been been attempting to defend the governments lack of action on the Paraka Scams in an email correspondence forwarded to this blog.
As you can read below, while Betha has been willing to talk, which is commendable, she has not yet been able to provide legitimate answers to some simple questions like: Why has the government not tried to get the injunction against prosecutions lifted?
That question got a response any first year law student could spot was false and other questions about Gabriel Yer and the Kapris Tapes have been met with obfuscation – not answers.
While Betha should be congratulated for her attempts at open government her answers so far do nothing to challenge the fact that her father, Michael Somare, is the Chief of a government that is overseeing the theft of millions of Kina every week from the people of PNG.
Whether that is because:
- He is completely incapable of controlling the theft of public money by his Ministers and senior public servants, or
- He and his family are themselves benefiting from the theft – either directly in cash or indirectly by tolerating the scams in order to hang on to power.
does not matter.
The fact is Somare is not the Prime Minister OF the people he is the Chief of a House of Thieves who are stealing FROM the people.
No medicines in the hospital, no staff in the rural health centre, no books in the school library, giant pot holes in the road?
The Prime Minister knows why we suffer these injustices because he spent 5 MONTHS reading the Commission of Inquiry report into the Finance Department and how K780 was stolen over 6 years.
Five long months while millions more Kina flowed out of the door.
And what has he done since getting the Report in October 2009 – NOTHING.
Come on Betha, no more excuses or obfuscation, the people deserve ACTION.
The conversation with Betha Somare - please read from the bottom up
1. On the Paraka injunctions it is nonsense to say the
government cannot do anything because of the doctrine of the separation
of powers. Any law student could explain this for you. Either you are
receiving very poor legal advice; or really don’t understand the
doctrine; or you are deliberately attempting to mislead. The government
employs whole teams of lawyers in both the Solicitor General’s office
and Department of the Attorney General who are in and out of court on a
daily basis on government business. This includes frequently trying to
overturn injunctions or questioning the earlier decisions of the court.
There is NOTHING in the doctrine of the separation of powers that stops
the government seeking to get the injunction lifted. Indeed, the
injunction that was granted was an ex parte temporary injunction given
as an emergency measure by the judge on hearing only one side of the
argument. The normal process when an ex parte injunction is given is
for the matter to go back before the judge a few days later for all
parties to be heard and for the judge to consider whether the
injunction should stay in place. By doing nothing to ensure an inter
parties hearing the government is failing in its duty to the people. If
the government is hiding behind a misguided reading of the Separation
of Powers as an excuse not to act then the people are entitled to
conclude the government endorses the K780 million scam. If you require
independent legal advice to assist you on this issue then happy to find
some lawyers who will help you and the PM on a pro bono basis.
question that was asked. To state that it was not the PM who appointed
Yer as Secretary of Finance some years ago is IRRELEVANT. The question
you were asked was, why has the Prime Minister, knowing Yer is heavily
implicated in the Paraka Scams decided in the last fortnight to hand
him all the financial powers of the Department of Planning? While it
was great the government responded to the scams in Planning by
taking powers away from Teinsten it was ridiculous to then give
financial control of that Department to Gabriel Yer. The PM said in the
statement you kindly circulated that he had spent 5 months studying the
Finance Department Commission of Inquiry report and therefore he must
know intimately all the ways Yer has allegedly stolen large sums of
money. Yet he gives him MORE power?
wholly misconceived. Nobody is suggesting that Pruaitch et al are not
entitled to a presumption of innocence. What the people are saying is
that serious allegations have been made and the police should
investigate them. Yes, Kapris is a convicted felon, but since when did
the Police start ignoring tip offs from criminals? Often such people
are the polices’ best source of information. Who better than a bank
robber to know who financed and profited from his crimes? To ignore his
sworn statements and not insist on a police investigation smacks of a
cover-up. If the politicians are indeed innocent what do they have to
fear? Why does the PM not ask them to stand aside and insist the police
conduct a full investigation? Or is it one law for MPs and another for
the rest of us?
3. I am not a lawyer but William Kapris is not a remandee, he is a convicted felon. He has no credibility. And you have no evidence that his utterance have any substance. Where are we heading when we begin to believe one person’s word without evidence is the truth? In PNG the law is still that one is innocent until proven guilty. Starting from the premise that people are guilty and then trying to make mud stick is an injustice.
1. What steps has the government taken to have the temporary injunction obtained by Paul Paraka lifted?
2. Why, knowing that Gabriel Yer is heavily implicated in the scams, has the PM given to him the financial powers taken from the Dept of Planning because of the scams involving Minister Tiensten?
3. What steps has the PM taken to investigate the claims by William Kapris against Minister Pruaitch, who also benefited from the removal of powers from Tiensten?
On 5/20/10, Betha Somare wrote:
Thank you for emailing me even though you are nameless. I am happy to inform you that the findings and recommendations of the commission of inquiry were presented to parliament by the prime minister during a recent session of parliament.
This means it became a public document and available for all to see.
Unfortunately, Paraka Lawyers took out a successfully court injunction
stopping publication and discussion on the Report.
Government is also unable to implement the recommendations of the Report
because of the pending court decision. For your information, I have
attached the PM’s statement to parliament when he presented the Report.
I hope that in your quest you can also expose the truth.
PM’s Media Unit
Papua New Guinea
Tel: (675)3276525 (675)3276525
When is the PM going to do something?
The Paraka Scams – K780 million stolen from the people<http://pngexposed.wordpress.com/2010/05/15/the-paraka-scams-k780-million-stolen-from-the-people/>
Yama and Gelu conspired to steal K15.5
Former Solicitor General Zacchary Gelu and lawyer Mundua Kua have been recommended for prosecution for fraud by the Finance Department Commission of Inquiry over yet another theft from the people of PNG – this time in the sum of K1.7 million
In 2001, Mundua Kua in the Solicitor General’s office conspired with private lawyer Joe Wal, to fraudulently resurrect an old and out-of-date claim for damages against the State. Not only was the claim resurrected, the lawyers added 77 new plaintiffs to the claim (new plaintiffs that the Commission describes as “patently false”) and increased the amount of damages claimed from K123,000 to over K2 million.
Despite the fact the resurrected claim was out of time, there was no requisite Section 5 notice and the Solicitor General’s office had clear instructions disputing the facts of the original claim, the Solicitor General’s office consented to the changes.
Then in October 2002, Zacchary Gelu signed off on a Certificate of Judgment in the sum of K1.7 million despite the claim being patently flawed and never having been tested in court and without seeking the necessary Ministerial approval. Gelu then sent the Certificate off to the Finance Department with a covering letter asking for immediate payment.
Although by the time of the Commission hearings Joe Wal had died, his daughter Maryanne, who had taken over his legal practice, had already collected the K1.7 million from the Department of Finance. The Commission has recommended legal action to recover this money.
Read the full Commission findings on this scam here Kua and Gelu
Finance Secretary Gabriel Yer conspired with Francis Damem, Paul Paraka and Zacchary Gelu to steal K1.6 million from the people of PNG as part of the Paraka Scams.
Gabriel Yer, through his lawyer Paul Paraka, submitted a false claim for damages against the State, using the name of his then 9-year-old son, Umba Y Gabriel, to cover his tracks. The Commission of Inquiry found the claim
had all the hallmarks of a scam claim created and facilitated by a triad of people in- the highest offices of the PNG bureaucracy. It was initiated by a serving Deputy secretary for Finance (current Secretary, Mr. Gabriel Yer) as principal plaintiff… The claim was settled in record time by a willing Solicitor General (Mr. Zachary Gelu) and an even more obliging Secretary for Justice Department (Mr. Francis Damem).
Yer should be immediately sacked and then investigated by the police says the Commission report, along with Paraka, Damem and Gelu.
The claim filed by Paraka lawyers on behalf of Gabriel Yer related to an alleged raid by police on Yer’s home village in August 2000. Paraka knew all about the alleged raid as he had successfully defended a claim by the genuine villagers for compensation against the State just a few months earlier. But having defended that claim he used exactly the same set of facts to submit the false claim on behalf of Yer.
The claim was allegedly filed in the National Court (although no record can be found in the Court Registry) and just FOUR weeks later a cheque was issued for K1,649,130 to settle the matter.
It was settled in record quick time by Gelu and Damem despite:
- the fact the claim was out of time;
- the proper legal notices were never filed;
- the court has no record of the claim;
- a nine year old has no legal standing to bring a claim; and
- the State had already successfully defended a claim based on the same facts.
The Commission of Inquiry, headed by Justice Sheehan with Justice Davani and Don Manua, is scathing in its criticism of all four men involved in the scam.
Although appointed in August 2006, the Commission faced numerous legal challenges, mainly from Paraka lawyers who represented Yet, Damem and Gelu throughout the hearings.
The Commission also suffered interruptions to its funding so that in the three years from 2006 it was only able to operate for a total of 12 months and its final report, published in October 2009, only contains the findings from 45 full investigations with 212 more still outstanding.
The Commission Report relating to Yer and his triad can be downloaded here:
Controversial businessman and former politician, Peter Yama, conspired with then Solicitor General, Zacchary Gelu, to steal K15.5 million from the people of PNG, according to the report of the Department of Finance Commission of Inquiry.
Both Yama and Gelu, together with State lawyers, Neville Devete and Lais Kandi have been recommended for prosecution by the police for their roles in the scam which involved an unlawful claim against the State which the lawyers failed to defend.
Peter Yama’s claim was based on his contention that for 9 years from 1990 he was prevented access to a piece of State land that he had leased for 99 years in 1988. Yama filed his claim through Poro lawyers in August 2002, demanding K38 million in damages.
The Commission of Inquiry found that Yama’s claim was entirely fraudulent in that:
- he failed to comply with a mandatory procedural requirement,
- filed his claim many years too late,
- had no cause of action,
- filed the claim in respect of a piece of land that DID NOT exist
- did NOT have a lease over the land named in his claim,
- filed the claim despite OWING the State K60,000 in rent arrears, and
- NEVER served his claim on the Department of Lands.
Despite these numerous legal flaws, Attorney General Zacchary Gelu executed a Deed of Settlement in November 2002, granting Yama K15.5 million from the public purse.
The Commission of Inquiry reports details the many “serious failures” of Zacchary Gelu in the performance of his duties and the “ample evidence” of his culpability in authorizing the payment of K15.5 million which was “baseless and patently flawed”.
Police are currently prevented from investigating Yama and the lawyers because of a court injunction obtained by Paul Paraka and Zacchary Gelu challenging the legitimacy of the Commission of Inquiry.
The Commission of Inquiry was headed by Justice Sheehan with Justice Davani and Don Manua.
Although appointed in August 2006, the Commission faced numerous legal challenges from parties under investigation and interruptions to its funding so that in the three years from 2006 it was only able to operate for a total of 12 months and its final report, published in October 2009, only contains the findings from 45 full investigations with 212 more still outstanding.
The Commission Report relating to Yama and Gelu can be downloaded here:
Prominent PNG lawyer Paul Paraka is accused of being the primary beneficiary of a decade long series of scams in which more than K780 million has been stolen from the people of PNG.
The scams involved lawyers making over 700 false claims for compensation against the State which were then approved for payments by government bureaucrats, including the offices of the Solicitor General and Finance Secretary, without the claims ever being tested in court.
The Commission of Inquiry which has revealed the scams, and which comprised Justices Sheenan and Justice Davani with Don Manua, says in its final report
“The plain conclusion is that in all but a handful of claims the statutory process has been grossly abused allowing illegitimate and improper claims and excess payments and excessive payouts to be legitimized
The Commission also reveals that in four of the six years that it investigated the illegal payments made by the State to settle the fraudulent claims EXCEEDED THE TOTAL BUDGET APPROPRIATION FOR THE WHOLE HEALTH SECTOR in PNG.
Paul Paraka was able to profit most from the scams as not only was he responsible for 3 of the largest fraudulent claims, he was paid an additional K41 million by the State between 2003 and 2006 to act on the State’s behalf to deal with claims submitted by other law firms!
In 2007 the government set up a Ministerial Inquiry into the K41 million but the report has never been published as Paraka has a temporary injunction preventing disclosure. On this issue, the Commission noted:
“it is a sad commentary on the Attorney General’s office that it has taken no steps to set aside that temporary order for any number of lawful reasons, but at the least for want of prosecution
The latest Commission of inquiry has recommended a total of 58 people for criminal prosecution including these lawyers:
Paul Paraka, Zacchary Gelu, Francis Damem, Peter Pena, Dan Kakaraya, Francis Kuvi, John Sinaka Goava, Mundua Kua, Joseph B Nanei, Simon Norum, Kumuro Sino, Dawa Agu-Klewaki, Eric Kiso, Daniel Kop, and Jeffery Abone.
As well as the lawyers the Commission of Inquiry was very critical of certain government departments:
“The Department of Finance did not meet its obligations to protect the State and the offices of the Attorney General and the Solicitor General have not advanced and protected the State to an acceptable and competent standard
Follow the link below to download Part I of the Commission of Inquiry report