Archive for October, 2012

TI dismisses Commission of Inquiry findings

October 31, 2012 9 comments

In an astonishing statement, Transparency International Chairman Lawrence Stephens has dismissed the findings of two Commissions of Inquiry as ‘unproven accusations’ and says they ‘are not sufficient for responsible people to treat as facts’.

Stephens remarkable comments, which he published on this blog and which are reprinted below, were made in response to questions raised over the role of Rex Paki on the Boards of the Civil Aviation Authority, Bank of PNG and PNG Sustainable Development Program.

Paki has been implicated in the findings of both the Finance Department and National provident Fund Commissions of Inquiry as well as two Public Account Committee investigations and has been labelled by the Supreme Court as “evasive and dishonest”.

But this it seems is all worthless gossip to the Transparency International chief despite the fact the Commissions of Inquiry are conducted by qualified judges, are established under Statute and make findings of fact based on a “strict adherence to principles of natural justice” and “giving all person with an interest in matters before the Commission an opportunity to be heard”.

Stephens is right to say that Rex Paki has never been found guilty on any criminal charges, but to say the findings of a Commission of Inquiry merely raise ‘questions that are of concern’ and that often the ‘accusations prove baseless‘ is very misleading and insulting to the Commissioners.

Stephens is an employee of the PNG Sustainable Development Program.

Statement by Lawrence Stephens

This discussion in relation to Rex Paki draws on some useful sources. It raises questions which are of concern to many people. Questions however are not sufficient for responsible people to treat as facts. People accused are surely entitled to be heard out before being convicted, particularly if the convicting is being done by people who do not even give their real names!
TI PNG views with concern the official and unofficial records of many people holding public office and the disappointing regularity of appointments of reputedly inappropriate individuals to important positions. We are also conscious of the times where accusations prove baseless. Our approach is generally to encourage transparent scrutiny of all public appointments.
We are a partner to government in seeking to improve the manner in which governance is practiced. We do not normally focus on unproven accusations against individuals. We do focus attention on idications that, as a result of corruption, systems are failing or not operating as they should. Often our work is conducted quietly, working with like-minded public office holders and other community organisations, to assist bring about change. Occasionally public comment appears necessary and we are not constrained by relationships with governments, companies and individuals in so responding.
Individual TI PNG directors over the years have had interests in organisations and activities which have been subject to public debate and challenges. This does present the organisation with challenges which need to be worked through. In my experience we have, as a group of concerned individuals encouraging better ethical standards in government and business, faced these challenges without being constrained by our wide network of personal associates across the community.
Lawrence Stephens


Not Just ‘Criminals’: A response to the Paga Hill Development Company

October 30, 2012 Leave a comment

International State Crime Initiative

On 9 October 2012, the International State Crime Initiative (ISCI) released a report, The Demolition of Paga Hill, documenting a forced eviction that took place in Papua New Guinea’s capital, Port Moresby, on 12 May this year. Dozens of homes in the area of Paga Hill were demolished by the Royal Papua New Guinea Constabulary. Those residents who resisted or photographed the forced eviction, were attacked with sticks, iron rods and machetes. At one stage police even fired live rounds at bystanders.

The demolition was conducted in order to make way for a luxury estate being spearheaded by the Paga Hill Development Company (PHDC) – a company largely run from Australia. PHDC’s Chairman and Secretary is Gudmundur Fridriksson, an executive who heads the North Queensland, Cape York Institute for Policy and Leadership.

Since the publication of our report, Gudmundur Fridriksson, along with PHDC Director, George Hallit, have made a number of serious allegations on Radio Australia, SBS World News, The Australian and the Post-Courier. These allegations were also reproduced in a recent PHDC press-release. In the interests of clarifying the public record, ISCI has compiled the following response paper:

Not Just ‘Criminals’

Fugitive’s citizenship queried in PNG

October 29, 2012 3 comments

Eoin Blackwell | AAP

Papua New Guinea’s opposition is demanding answers on why an Indonesian fugitive wanted by Interpol was granted citizenship in June.

Djoko Tjandra has been on the run from Indonesian authorities since 2009 after allegedly embezzling millions in bailout funds from the now defunct Bank of Bali.

Tjandra reportedly fled Indonesia a day before the nation’s supreme court sentenced the now 62 year old in absentia to two years jail.

Papua New Guinea Prime Minister Peter O’Neill told Parliament on Friday he had been advised by the secretary to the Attorney General there were irregularities in the granting of citizenship to Mr Tjandra.

“I know there is a lot of speculation in the press that this guy is a fugitive and needs to be repatriated, (but) I have not received one single request from the Indonesian government,” Mr O’Neill told parliament on Friday.

“I am advised … there are some irregularities in respect to the issuing of citizenship.

“Once we have a detailed report from that investigation we will be in some position to make decisions.”

Mr O’Neill said he would raise the issue with Indonesian president Susilo Bambang Yudhoyono at a scheduled meeting in late November.

Opposition Leader Belden Namah urged the government to come clean on why Tjandra was granted citizenship in the first place.

“They have to declare why they are defensive of this particular person who is a fugitive to our nearest neighbour, whom we have a very good diplomatic and bilateral relationship with,” he said.

“What has happened to Djoko Tjandra’s Indonesian passport when we issued him the citizenship of this country? What criteria was used in awarding Mr Tjandra the citizenship of Papua New Guinea?”

According to PNG’s Department of Immigration website, a person can only apply for citizenship if they have lived “continuously in the country for at least eight years.”

An applicant must also make a full statement of assets, liabilities, investments, business interests and savings accounts both within and outside PNG indicating their values and locations.

Former foreign minister Ano Pala, who is reported in the local press to have overseen Mr Tjandra’s citizenship application, said the Interpol fugitive was being defamed.

“Raising serious allegations is beyond the dignity and decorum of this parliament,” he said.

“The person is a citizen and enjoys the same privileges that you should enjoy and every person in PNG should enjoy.”

Why is TI silent on the prominent role of Rex Paki in our State owned entities?

October 29, 2012 9 comments

Businessman Rex Paki has been heavily criticized in a number of investigations into alleged corruption and fraud involving millions of kina.

His business activities have attracted the censure of two Commissions of Inquiry and the Auditor Generals in a special investigation; he has been investigated twice by the Public Accounts Committee and Mr Paki has been described as “evasive and dishonest” by the Supreme Court which also found his conduct to be “improper, unreasonable and blameworthy”.

The Finance Department Commission of Inquiry found Paki’s firm RAM Business Consultants helped Andrew Mald inflate damages in a legal action against the State. The Commission found “Ram Business Consultants deliberately inflated the [value] by K4,659,650 for reasons known only to themselves… we conclude that the Cash-flow projection was specifically engineered in a way to inflate the yearly income projection… so the damages claim would be high”.

The Public Accounts Committee in a completely separate investigation found that RAM was paid K1,561,062 over an 18 month period by the Public Curator’s Office, yet “there was no formal contract… there was no check of the claimed hours worked and no evidence that any benefit flowed to the Public Curator at all”. The Auditor General found that after eighteen months of work, the Public Curator could only report that a small amount of computer equipment was provided.

Yet, Rex Paki sits on the Board of the Bank of Papua New Guinea, is Chairman of the Civil Aviation Authority and has more recently been appointed to the Board of the PNG Sustainable Development Program.

Why is Transparency International so quiet on the apparent disconnect between Rex Paki’s dubious business history and his prominent public roles?

One observer has pointed out that Lawrence Stevens, Chairman of TI PNG is a program manager employed by PNG Sustainable Development Program – where Rex Paki is now a Director.

It is to be hoped that Lawrence Stevens does not feel constrained by this relationship and that the silence of TIPNG is not a result of any undue pressure.

It is time for TI to speak out on the inappropriate role Rex Paki has in the governance of some of our key institutions.

PNG slammed over citizenship offer to ‘fugitive’

October 25, 2012 12 comments

From Radio Australia

Members of Parliament in Papua New Guinea have criticised the government for granting citizenship to an Indonesian fugitive.

Djoko Tjandra fled to PNG before Indonesia’s Supreme Court sentenced him to two years jail for fraud over the misuse of Bank Indonesia funds.

Despite being on the run, he was granted PNG citizenship earlier this year.

Governor Gary Juffa asked the Immigration Minister, Rimbink Pato, in parliament to review the decision.

“Why are we accommodating this person? It’s an embarrassment. He should be immediately deported,” Mr Juffa said.

Ano Pala, the former immigration minister who granted Mr Tjandra citizenship, tried to have the question ruled out of order but the Speaker allowed it.

Mr Pato says the proper processes have been followed.

Mr Tjandra is alleged to have been involved in a banking scandal in Indonesia where billions of dollars were allegedly laundered or transferred to his businesses and companies.

He reportedly left Indonesia on a chartered flight from Halim Perdanakusumah Airport in Jakarta to Port Moresby on June 10 2010, just one day before the Supreme Court issued a verdict in his case.

The Evidence on Rex Paki: A Reply to Kusai Mahn

October 24, 2012 3 comments

Dr Kristian Lasslett | International State Crime Initiative (ISCI)

In a recent ISCI report on the demolition of Paga Hill, the prominent businessman Rex Paki received mention. According to Investment Promotion Authority records, he had been intimately involved in the Paga Hill property development during 1997-2000. ISCI queried Paki’s involvement in light of serious allegations laid against him by two Commission of Inquiries, two Public Accounts Committee inquiries, an Auditor General special investigation, and PNG’s Supreme Court.

Following the publication of our report, social media commentators noted with concern that Rex Paki has also been appointed to the Papua New Guinea Sustainable Development Program Ltd (PNGSDP) Board of Directors, by PNG’s Treasurer. According to PNGSDP’s 2011 Annual Report, Rex Paki is “a member of the Board of Bank of PNG and is the Chairman of the Civil Aviation Authority”, as well.

After these concerns were aired in PNG’s blogosphere, a supporter of Rex Paki, who goes by the name of Kusai Mahn, composed an article slamming the ISCI’s findings, see here. Mahn writes, “a recent report on the ‘Demolition of Paga Hill’ by a UK-based non-government organization…is merely a character assassination of Mr Paki on issues that are considered water under the bridge” (ISCI is in fact a research centre not an NGO, and it is run by King’s College London, Harvard University, the University of Ulster and Hull University).

Mahn continues, “Rex Paki has appeared before only the NPF Commission of Inquiry (COI) and not the Finance Department COI as alleged”. Of course, the report never said Paki appeared before the Finance Department COI, it said Paki’s firm Ram Business Consultants was censured by the Finance Department COI after it allegedly helped Andrew Mald inflate damages in a legal action against the PNG state. You can read the COI findings here. Though here is one telling extract from the report:

Ram Business Consultants deliberately inflated the NPV [Net Present Value] by K4,659,650 for reasons known only to themselves… From the review of the cash flow projection prepared by Ram Business Consultants we conclude that the Cash-flow projection was specifically engineered in a way to inflate the yearly income projection including NPV so that damages claim would be high. The Ram Consultants Report was based on mere trading assumptions supplied by Andrew Maid, not on proper business records and tax returns.

Mahn also argues: “Rex Paki was never ‘intimately’ involved in the Paga Hill development as alleged. He is not a director or shareholder and his only involvement was providing professional accounting services to the project developer for which he was duly paid”. According to Investment Promotion Authority records, Mahn is simply wrong. These records state Paki was a Director, Secretary and shareholder in the Paga Hill Land Holding Company (PHLHC), which was awarded an Urban Development Lease over Paga Hill in 1997 (you can view the lease here). Additionally, Paki’s firm Ram Business Consultants was PHLHC’s registered business address. You can see PHLHC’s company extract here.

Finally, Mahn claims, in reference to a recent Supreme Court decision, “Rex Paki was not ‘evasive and dishonest’ about his role as liquidator of the Motor Vehicle Insurance Ltd (MVIL)”. Once again, neither ISCI’s report or the Supreme Court said this. The Supreme Court’s remarks were in reference to Paki’s evident concerted attempts to avoid the legal process of discovery. Here is the relevant passage for Mr Mahn’s information, though the full decision can be read here:

It is clear to us that the appellant [Paki] was attempting to avoid giving discovery; the refusal was repeated, chronic and designed to conceal the true state of affairs. He was evasive and dishonest. He gave different reasons for not producing the invoices. He said copies of the invoices were available for inspection at Namaliu & David Lawyers, that the originals were in archives at Korobosea, that the copies on his computer have been lost because the computer crashed, that copies have been misplaced and he needed time to locate them, that copies were available at MVIL or at the offices of Mr. Kerenga Kua, a lawyer. He did not give discovery despite agreeing to Consent Orders of the National Court requiring him to produce the invoices for the entire period of the liquidation. Two (2) years after he verified a list of documents, the appellant was still looking for copies of the invoices. In fact, he never gave discovery. He was required by law to retain the accounts and records of the liquidation for seven (7) years (section 306 (1)(b) of the Companies Act). We agree with Mr. Brookes that the actions of the appellant have caused the respondent an enormous amount of wasted time, effort and money. We are of the view that the conduct of the appellant was improper, unreasonable and blameworthy.

And of course, Mahn failed to comment on the successive inquiries into the Public Curator’s Office made by the Auditor General’s Office and Public Accounts Committee. Here, once again, Ram Business Consultants came under fire. Despite being paid K1,561,062 over an eighteen month period, the Public Accounts Committee (2006) allege,

“there was no formal contract … there was no check of the claimed hours worked and no evidence that any benefit flowed to the Public Curator at all. The Auditor General finds that after eighteen months of work, the Public Curator could only a report that a small amount of computer equipment was provided”.

To conclude, there is one allegation Mahn makes which is rather serious, if credible: “Rex Paki was appointed to the PNGSDP Board by the Minister for Treasury as the State’s representative. He was not appointed by Prof Ross Garnaut who nonetheless values Mr Paki’s contributions as a Board member and will defend his appointment. CEO David Sode also holds Mr Paki in high regard”.

I have no evidence to suggest that what Mr Mahn says is true – my focus has been on Paga Hill –  but if the Treasurer, Prof Ross Garnaut and CEO David Sode, are not concerned by the findings of two COIs, two Public Accounts Committee inquiries, one Auditor General’s Office special investigation and a Supreme Court decision, that would indeed be a worrying new revelation.

Is Paga Hill developer Fridriksson being given a hard time?

October 22, 2012 3 comments

Kristian Lasslett | International State Crime Initiative

Police open fire on unarmed civilians during Paga Hill forced evictions – see larger image below

Some people feel the international media is treating Gummi Fridriksson unfairly over his involvement in the Paga Hill forced evictions in Port Moresby and various other alleged corruption scandals in PNG. For example, see Bonip Panuta’s response to Natasha Robinson’s article in The Australian.

Well let’s have a look at the hard evidence.

Fridriksson’s companies have been censured in two Auditor General reports and four Public Account Committee reports.

Concerned Papua New Guineans should read about Mr Fridriksson’s company CCS Anvil.

PNG’s Auditor General and Public Accounts Committee, allege that when improperly contracted by the Public Curator’s Office (the PCO administers deceased estates) “Anvil …withheld a significant amount of monies it has received from the proceeds of the realisation of assets of deceased estates, including sale of properties, shares and investment and rent…The AGO can find no evidence that any money realised by Anvil on behalf of estates has been paid into the Estate Trust Account”.

You can read their findings here:

Police pointing guns at unarmed civilians during the Paga Hill evictions – see larger image below

Of course, many people in Papua New Guinea also remember another one of Mr Fridriksson’s ventures, the Destination PNG book. Sean Dorney provided some interesting coverage.

Now with respect to the other points raised by those defending Mr Fridriksson.

1. “The rights of ‘Illegal’ settlers versus the rights of legal owners”: The Public Accounts Committee suggest PHDC’s lease over Paga Hill was acquired through “corrupt dealings”. You can read about it here:  . Moreover, we should also keep in mind that many of the properties demolished were on Section 26 Lots 16-20:  PHDC do not own this land.

2. “Human rights abuse” versus the need to uphold the law: Police certainly should enforce the law. No one denies that. But using live ammunition on unarmed civilians, cutting young men with machetes, and punching women, this was not proportionate or warranted. Nor should they have moved in on a community when their case was before the National Court.

3. “Development and progress versus the rights of ‘illegal’ squatters” The people at Paga Hill have been there since the 1960s. They were given permission to live there by the traditional landowners, who deny having alienated the land to the state. It is a complex situation. See: . I am sorry to hear some landowners in Port Moresby have had their land damaged by gamblers and blackmarket alcohol sales (see Bonip Panuta response). Paga Hill is nothing like this. 54% of the working population are employed in the formal economy, while 45% work in the informal economy, like many Papua New Guineans.

Of course, some people seem confident that PHDC will achieve great things. Fair enough. Indeed, the developer told the public Hilton Hotels were going to help run the proposed 5-star hotel (see their 20/4/12 press release). Sadly, it is not true:

Finally, you might ask, if all this evidence exists why is Mr Fridriksson still a member of such prestigious organisations like the PNG Institute of Directors (see his CV here)? Well, according to the PNG Institute of Directors’ Executive Officer, “we have never heard or come across anyone of that name”. You can consult their membership list here.

It is always wise to verify claims, before accepting them.

People can read the International State Crime Initiative’s report on the forced eviction here:

Police open fire on unarmed civilians during Paga Hill forced evictions

Police pointing guns at unarmed civilians during the Paga Hill evictions

Paga Hill evictions