Archive for November, 2013

Paraka scam reports finally released

November 30, 2013 2 comments

Forty-two months after PNGexposed first published them – The Paraka Scams: K780 million stolen from the people – the courts have finally sanctioned the release of the Finance Department Commission of Inquiry reports

Damning report released into PNG’s Finance Department

By Liam Fox 

A judge in Papua New Guinea has lifted an injunction preventing the publication of a damning report into corruption at the country’s finance department.

A Commission of Inquiry spent several years investigating allegations of widespread corruption at the Finance Department.

In 2010, the day after its report was tabled in parliament, lawyer Paul Paraka and the former Solicitor General Zachary Gelu obtained a court injunction suppressing the report.

They sought a judicial review of the inquiry but the National Court has rejected the application and discharged the injunction.

The report details how the department paid out hundreds of millions of dollars in sham compensation claims.

It recommended more than 50 people including lawyers, senior bureaucrats and businessmen be referred for criminal prosecution.


SABL Case Study 4: Department of Lands corrupt and incompetent

November 29, 2013 2 comments

“With corrupt government officials from implementing agencies riding shotgun for them, opportunistic loggers masquerading as agro-forestry developers are prowling our countryside, scoping opportunities to take advantage of gullible landowners and desperate for cash clan leaders.” [Report 1 p242]

SABL Commission of Inquiry Reports 1 and 2

The Department of Lands is corrupt, incompetent and incapable of fulfilling its statutory functions or protecting the interests of customary landowners, according to the report of the Commission of Inquiry into SABL leases.

The Commission says that instead of working in the interests if the people, the Lands Department and other agencies are working with logging companies to defraud landowners.

Yet rather than implementing the clear recommendation of the CoI that the SABL leases be REVOKED, (CoI emphasis) the Prime Minister has tasked the Department of Lands with coming up with its own solution to the land grab that it facilitated. This is a ludicrous and illogical decision by the PM and is rather like asking convicted criminals not only to decide on their own punishment but also to advise on criminal law reform..

“DLPP has been plagued with problems for a long time. People criticized DLPP for being incompetent and corrupt, among them senior government ministers. The Department has been described as totally dysfunctional and incapable of managing the most important asset belonging to the people of PNG, their land.” [Report 1 p237]

The Commission of Inquiry has highlighted numerous instances of lands officers inexcusable behaviour, here are just a few examples:

  • “Officers from DLPP were collaborating with lawyers” and using “intimidation tactics”, conduct that was highly suspicious [Report 1 p158]
  • DLPP “highjacked the process”, while the conduct of the logging company was “unethical, improper and wrong”. [Report 1 p198]
  • “Lands Official … be investigated for criminal misconduct and conspiracy..” [Report 2 p503]
  • “The funding and time spent on the Land investigation is a testament of the continuing ignorance of DLPP Management and its field officers in safeguarding the interests of the landowners…” [Report 2 p372]

The Commission says it was also “shocked” with the “sheer carelessness, negligence and plain incompetence” of the Register of Titles and his staff within the Department of Lands. [Report 1 p238]

It is not only the Department of Lands that comes in for the stinging criticism, all the agencies involved in SABLs including Department of Agriculture, PNG Forest Authority and Department of Environment failed in their duties:

 “The Commission of Inquiry found widespread abuse, fraud, lack of coordination between agencies of government, failures and incompetence of government officials to ensure compliance, accountability and transparency within the SABL process from application stage to registration, processing, approval and granting of the SABL” [ Report 1 p235]

“We found numerous examples of incompetence, failure, inaction and lack of commitment by officers of government agencies to properly and diligently carrying out their statutory functions. Legal requirements were deliberately breached and proper processes and procedures were either by-passed or simply ignored… agencies were reckless, careless and negligent” [Report 1 p236]

The SABL CoI has recommended “the current SABL set up be done away with entirely” and the current leases be revoked (with the exception of a couple of genuine small coffee plantations in the Highlands).

But the Prime Minister is refusing to follow this advice. Instead he is asking the Department of Lands to head a task force to come up with its own set of recommendations – an approach the CoI warns will “not satisfactorily remove the loop holes, inadequacies or permissive ambiguities that are being used to abuse the SABL process and hijack land”. [page 5]

SABL Case Study No.3: Tutuman and the Danfu Extension

November 28, 2013 2 comments

SABL Commission of Inquiry Report 2: Pages 359-384

“The C.O.I recommends that SABL Portion 817C be revoked on the basis that the integrity of the Lands Group Registration process and the Land Investigation process fundamental to good title was flawed and must be nullified” [p382]

“There was evidence of non-compliance with Immigration laws… We are concerned that Immigration and Tutuman officials have collaborated to short circuit the immigration work permit process.” [p368]

Much of the population… were totally surprised to hear that their land was subject of the SABL [and] Agriculture Sublesae agreement to TDL for 40 years” [p369/70]

“The SABL project has not yielded any significant progress and changes to the people of the Danfu SABL project area…” [p371]

“Tutuman Development Ltd funded the operational cost for the Officer conducting the land investigation and directed and took charge of the whole process” [p382]

“The funding and time spent on the Land investigation is a testament of the continuing ignorance of DLPP Management and its field officers in safeguarding the interests of the landowners…” [p372]

No files have been furnished by the Lands Department. This is one of the many that the system has either lost or simply cannot locate because of the chaotic and disastrous system it maintains.” [p373]

This case study covers the Special Agriculture and Business Lease over Portion 871C in the Namatanai District of New Ireland Province. 

SABL CoI report 2The SABL covers an area of 29,581 hectares and the lease was granted to Rakubana Development Ltd (RDL) in October 2007. The lease is for a period of 99-years.

RDL subsequently subleased to Tutuman Development Ltd (TDL) for a period of 40 years.

There are seven villages located within the lease area, which is located within the expired Danfu TRP logging concession area. RDL is a nationally owned company formed by villagers within the expired TRP concession area. It has 22 shareholder and the same number of directors.

On a site visit the Commission team saw no evidence of current logging operations but observed a log pond and makeshift harbor and jetty, an overgrow and neglected nursery for cocoa trees, cocoa trees planted along the roadside which were not yielding because of the wrong soil type. There were five Asian nationals on site who were engaged as store keeper, mechanic and in other general duties “normally work reserved for PNG Nationals”. [p367]

Tutuman Development Ltd was originally engaged by RDL to undertake logging under an agreement signed in 2005. In the SABL sublease Tutuman was to enter into an agriculture project to grow cocoa, coconut and oil palm.

The CoI heard complaints that logging roads and soil have been washed into rivers and polluted drinking water.

The Provincial Administrator in 2011 requested the SABL be extinguished ‘due to lack of due consideration and consultation’ by DLPP.

“His concern resulted from the constant complaints flooding his office…”

There was a lack of coordination between DLPP and the Provincial Office for the land investigation which evidence suggests was funded by TDL. The Lands Officer “was paid between K1-2,000 in allowances, accommodation and incidentals”. [p374]

There are no official records of the application for the Land Investigation and the CoI did not sight any Lease/Lease Back agreement.

“In view of the land form and mouton after the coastal strip, there was grave doubts as to any potential for cocoa or agriculture development”. [p374]

“DLPP never really took ownership and custody of what was supposed to be an independent investigation. This general trend continued in place of normal process and justifies nullification”. [p375/6]

There was no Certificate of Alienability issued to allow for the registration and issuance of the SABL.

The Agricuture Development plan has only 5 pages – the other 20 are missing. But DAL did approve the application by TDL for a Forest Clearance Authority (FCA).

TDL “did not develop a detail agriculture plan for growing of cocoa, coconut and oil palm after felling of the remaining stand of forest as required” [p377] TDL did not even prepare a detailed agriculture development plan.

“The sublease granted to TDL for investment in large-scale agriculture and land use development is flawed… ” [p378]

A FCA was granted to Tutuman in August 2010 by the PNG Forest Authority. The Regional NFS office raised ongoing concerns about Tutuman’s lack of compliance with the Forestry Act. In a very rare positive comment the CoI noted “The NFS of PNG based in the New Guinea islands seem to have been vigilant, diligent in the implementation or administration of the tasks it is supposed to do” [p381]

DEC accepted the EIS submitted by Tutuman and issued an Environmental Permit but did so BEFORE any sublease to TDL was executed.

“The Notice of Direct Grant, Gazettal Notice, Registration and Issuance of Title are legally deemed to be void” [p383]

SABL Case Study No.2: Victory Plantations and Edward Studdy

November 26, 2013 4 comments

SABL Commission of Inquiry Report 1: Pages 198-206

“We found serious flaws and irregularities in the granting of the SABL… Not all the landowners gave their consent to lease out their land… the whole SABL [is] defective and therefore, null and void” [p204]

“The consider the conduct of the developer – VPL to be unethical, improper and wrong. The developer has taken over a role that clearly belongs to the State. Moreso [sic], the whole arrangement gives rise to a conflict of interest situation.” [p203]

“It is obvious from the terms of the MOA that VPL was more interested in logging rather than getting into a long term sustainable agro-forestry business…” [p205]

The sub-lease drafted by Gadens lawyers “is unreasonable and simply inadequate” and contains “defective” clauses [p204]

“The SABL is tainted with so many defects that it cannot lawfully stand as a legitimate SABL” [p206]

“We recommend that the SABL .. is to be REVOKED [p206 emphasis in the original] 

This case study covers the Special Agriculture and Business Lease over Portion 146C in Northern (Oro) Province.

SABL FINAL REPORT COVERThe SABL covers 28,100 hectares of customary land in the lower Musa area of Tufi in Northern Province.

The SABL was granted to Oken Goto Karato Development Corporation (OGKD) for a term of 99 years in March 2007 by Pepi Kimas as Secretary of the Department of Lands and Physical Planning (DLPP). The SABL was granted for an unspecified  “Tree Farming” project.

OGKD is a landowner company incorporated under the Land Groups Incorporation Act “and purports to represent the landowners in and around the project area” [p200]. The company has 14 shareholders (each with 1 share) and 10 Directors.

OGKD nominated Victory Plantation Limited (VPL) as the preferred developer. Both OGKD and VPL share the same registered address in Defence Haus in Port Moresby.

VPL is owned by an Australian, Edward Studdy, and has two Directors, Edward Studdy and Nicholas Studdy. The company has declared assets of K100,000. [Edward and Nick Studdy are the Managing Director and General Manager respectively for Capital Steel, an Australian company with offices in Sydney, Melbourne, Adelaide and Port Moresby].

Records indicate the land investigations were conducted by Hubert Murray Yaga from the Deprtment of Oro and Simon Malu from DLPP. They also prepared the Land Investigation Report (LIR). But Mr Yaga denied any involvement and told the inquiry VPL had engaged Simon Malu to do the work without his knowledge and he simply signed the completed documents when they were presented to him.

“It is clear from the evidence that the lands Officers in the department of Oro had little or no role at all in the land investigation process (LIP) and the preparation of the Land Investigation Report (LIR). We found that the whole process were been [sic] ‘high jacked’ by DLPP and were done without the knowledge of the Provincial Authorities. This is in breach of the established practice and protocols…” [p202/203]

There were no public hearings, officers talked only to a small number of landowners, they did not get the consent of the majority of people in the area and they did not walk the boundary (a pre requisite requirement for issuing an SABL).

“The developer – Victory Plantation Limited (VPL) played a major role is assisting the facilitation of the entire land acquisition process and collaborated with Simon Malu and Alois from DLPP…” [p203]

“We doubt if the land investigations was ever carried out at all and the LIR completed freely, fairly and independently without any undue influence from VPL…” [p203]

The LIR was incomplete and lacked vital information important to obtaining an SABL lease.

“Many names on the Agenct Agreement form appear to be signed by the same person which suggests fraud” [p203]

No Certificate of Alienability was issued by the Custodian of Trust Land.

“Without the CoA, customary land cannot be alienated”. [p206]

There is a Memorandum of Agreement (MoA) signed in January 2007 between OGKDC and VPL for VPL to develop an agriculture project under a sub-lease. The sub-lease provides for an annual rental of K14,000 at the rate of 50 toea per hectare payable to OGKD.

The sub lease was drawn up by Gadens Lawyers of Port Moresby on the instructions of VPL.

“The annual rent payment of K14,000 (at the rate of 50 toea per hectare) payable to the landowners … is unreasonable and simply inadequate”. There are no mention of other benefits. [p204]

The MoA requires VPL to sublease land back to the landowners to build their homes and make gardens which may attract rental payments from the landowners to VPL.

“This provision is simply outrageous as the customary landowners are entitled to some ‘residual or reserve rights’… the landowners cannot be totally excluded from having access to their land”. [p204/5]

“It is obvious from the terms of the MOA that VPL was more interested in logging rather than getting into a long term sustainable agro-forestry business… Generally, the MoA simply does not promote the objectives and purpose of the SABL.” [p205]

There is no Agriculture Development Plan (ADP). Without an ADP no Forest Clearance Authority (FCA) can be issued. There is no Environment Impact Assessment (EIA). There is no Forest Working Plan or Annual Clear Felling Plan.

“VPL has failed on its obligations to provide the Plans”. [p205]

No Forest Clearance Authority (FCA) has been issued, but evidence suggests VPL has already carried out some clear felling logging operations.

“VPL is using tree farming as a ‘front’ to go into a full scale logging operation… the inquiry has also found similar situations in other SABLs” [p205]

The SABL is stated to be for 99 years. In the Lease-Leaseback Agreement the landowners gave their consent of a 60 year lease. In the LIR a term of 33 years is stated. This is a “serious inconsistency and anomaly. A fundamental error or oversight has occurred regarding the term of the lease that could render the whole SABL defective” [p206]

“We recommend that the SABL .. is to be REVOKED. The SABL is tainted with so many defects that it cannot lawfully stand as a legitimate SABL. This effectively means any sublease … with … Victory Plantation Limited (VPL) is void and is of no effect.” [p206 emphasis in the original]

Attempt at major corruption at the Medical Supplies branch Health Dept

November 25, 2013 5 comments

Will the Prime Minister step in and stop this attempt at grand theft before it is approved?

By Profs Nakapi Tefuarani & Glen Mola (PNG Medical Association)

There have been many reports in the daily print media about suspected corruption with regards procurement by the National Department of Health for the medicines and other medical supplies required by the hospital, health centres and aid posts of the country, – including  “Fake drugs sold widely in PNG”.  “Fake drugs on the market”  “Sweep team eyes Health Dept

It seems that this year the process will be corrupt once again.  Medical supplies procurement is worth up to K100m per year, – so this is no small money we are talking about.

The story of 2014 medical supplies procurement starts on May 6th this year when the Health Dept. put out a request through the Central Supply and Tenders Board (CSTB) for a 3 year contract for procurement of health centre (medical supply) kits by international tender with a closing date of 30.5.2013.  The tender request states that suppliers who wish to put in tenders must meet certain standards,  ie, have

  • International Standards Organization (ISO9001:2008)  for Quality Management System Accreditation of the Tenderer
  • Quality assurance covering supply chain, manufacture and delivery of medical supply kits
  • Certification for Good Manufacturing Process (GMP) of the medicines to be supplied and Good Distribution Practice (GDP).

The deadline for tenders was the end of May.  However, someone must have realized that the Tenderer who is renowned for giving presents to people in the government procurement system did not have ISO ‘Quality Management System Accreditation”, because at the end of May the CSTB extended the deadline for tenders submission to 20th June.  And then on the 6th June, the Secretary for Health announced that the requirement that tenders must have ISO Quality Management System Accreditation was removed.

On the 20th June the CSTB had a meeting which revealed the following tenders submitted:

Company Tender Bid (Kina) ISO Quality Management System Accreditation ?
Sesago Ltd 111,329,916 No
Boucher & Muir Ltd 108,436,029 No
Green Limited 99,480,703 No
Borneo Pacific Pharmaceuticals Ltd 71,478,316 No
International Dispensary Association (IDA) 51,142,940 Yes
Missionpharma/City Pharmacy Limited 48,028,677 Yes

The CSTB uses a multi parameter method of evaluating tenders; the bidding price is just one of the factors taken into account.  Other factors include whether the bidding company “understands the project objectives”, “the methodology and resourcing of the bid” (ie quality medicines will be supplied) and whether the company “supports local industry”.  Information is that the CSTB has recommended to government that the K71m bid by Borneo Pacific Pharmaceuticals Ltd be accepted.  Search of the PNG Companies office reveals that this company is owned by two Malaysian businessmen.

Research published internationally shows that there have been a lot of substandard and counterfeit drugs brought into PNG in the recent past.  In 2011, Nair et al in the Journal of Pharmaceutical Sciences reported that all samples of medicines supplied to PNG from the North China Pharmaceutical Group did not meet quality standards and one sample was clearly counterfeit (ie. a non active substance masquerading as medicine – usually starch or flour). Borneo Pacific Pharmaceuticals gets a lot of its medicines for importing to PNG from the North China Pharmaceutical Group.

A lot of money from overseas development partners assists PNG in the supply and distribution of medicines around the country.  AusAID has supported the Dept of Health with hundreds of millions of kina over the past several years and last year sponsored the distribution of health centre kits to every health facility in the country.  This resulted in remote health facilities receiving adequate supplies of medicines for the first time in many years. AusAID have agreed to distribute medical supplies again in 2014 as long as the tendering process for procurement is transparent and leads to the procurement of quality certified medicines.  However, if the successful bidder procures medicines from non-GMP (International Good Manufacturing Process) certified products Ausaid will withdraw its support.  Then we will be left with local ‘wantok’ distribution companies sending out low quality and possibly counterfeit medicines to our hospitals and health centres.  This will lead to the deaths of many Papua New Guineans and also much disability.  We all need say “NO”.

The Medical Society of PNG appeals to the Prime Minister to reject the recommendation from the CSTB in this case, and insist that tenders for the nation’s medicines only be accepted from ISO Quality Management System accredited companies who promise to only supply medicines from GMP accredited manufacturers.  Could the leaders of all public spirited organizations please support the Medical Society in the matter.

SABL Case Study No.1: Puka Temu and the Changhae Tapioka cassava project

November 25, 2013 6 comments

SABL Commission of Inquiry Report 1: Pages 174-198

“This is total alienation of customary land and we find the transaction to be highly irregular, improper and unlawful and defeat [sic] the whole purpose and intent of lease-lease back and especially, landowner participation… It goes against every grain of the concept of SABL” [p195]

 “Minster Temu’s direct involvement and active interests in the processing and approval of these SABLs raises a lot of questions” [p181]

 Landowners’ consent which is pivotal to granting an SABL was not obtained [p196]

 “The actions taken by the Minister … is unlawful and defeats the whole purpose of the SABL” [p189]

 “laws were breached and short-cuts were made to issue the grants” [p180]

 “The handling of the whole SABL relating to the cassava bio-fuel project … was a complete mess. {p181]

 “State lawyers involved in this project were reckless in the discharge of their official functions” [p189]

This Case Study includes seven Special Agriculture and Business Leases over Portions 444C, 446C, 517C, 518C, 519C, 521C & 520C 

SABL FINAL REPORT COVERThe 7 SABLs cover approximately 13,7000 hectares of both customary and State land within the Launakalana area of Rigo District in Central Province.

The Department of Agriculture and Livestock (DAL) and Central Province Government decided to develop this cassava bio-fuel project under a public/private partnership. The project was approved in principle by the National Executive Council in July 2004 based on a submission from DAL which followed a proposal from Changhae Ethanol Corporation of South Korea (CHEC).

In February 2005 a Memorandum of Agreement was signed between the State of PNG and CHEC through its subsidiary Changhae Tapioka PNG Limited (CTL) to develop a cassava bio-fuel project.

“the MoA was drafted by the developer – CHEC. The Government of PNG had very little input if not, none at all… This is apparent from the terms… which weighs very much in favor of the developer” [p193]

Immediately after the MoA was signed an ‘Inter Departmental Committee’ was set up comprising DAL, Department of Lands and Physical Planning (DLPP), Departments of Central Province, Department of Trade and Industry (DT&I) and Investment Promotion Authority (IPA). The government allocated K1 million through the National Agriculture Development Plan in the 2007 and 2008 budget to support the cassava industry.

Customary landowners were encouraged to lease out their land under a ‘Land Mobilization Program’ to provide sufficient land for the cassava cultivation and processing of bio-fuel. Under the MoA the State was obliged to deliver a total land area of 20,000 hectares to make the project viable.

“The whole land investigation processes including completion of the LIRs [Land Investigation Reports] were done in a rush. The LIRs were incomplete and defective and not capable of producing an SABL… This clearly shows the lack of professionalism on the part of officers carrying out the investigations” [p196]

Seven SALS’s were granted to CTL, each for a term of 40 years. Eleven Incorporated Land Groups (ILGs) representing 7 villages granted SABLs although only 6 ILGs were identified in DLPP records [page 177].

The total customary land included in the seven SABLs was 10,900 hectares together with 2,800 hectares of State land. This was 6,300 hectares less than the government was obliged to provide under the MoA.

For two SABLs two Notices of Direct Grant were issued, one signed by the then Secretary for DLPP,  Pepi Kimas, the other by the Minister for Lands, Puka Temu.

“There were a lot of inconsistencies in the manner in which direct grants were made by DLPP. In some cases direct grants were made directly to the developer – CTL whist some were issued to the registrered ILG” [page 179]

The direct grants to TCL were made by the Minister against the advice of DLPP and without the consent of the landowners – which DLPP says means the Minister was acting outside his powers and was cutting the landowners out of any direct benefits. [p180]

“The actions taken by the former Minister for Lands Puka Temu to issue grants directly to the developer – CTL without any agreement or approval of the landowners … is… unlawful”. [p180]

“There was a total lack of coordination, consultation and dialogue between the former Secretary of DLPP Pepi Kimas and his Minister for Lands Puka Temu resulting in the double issue of leases over the same portions of land… It was clear from the outset that both … were operating in total isolation and doing there own thing… It was a clear breach of existing laws including procedures relating to SABL and reflects badly on DLPP” [p181]

The project was expected to take 5 years to develop from 2007 and to achieve fu;ll completion by 2012 by which time an Ethanol Plant would be constructed for downstream processing. However to date only 800 hectares have been used for cassava production and no cassava has been sold yet. The project has come to a virtual standstill.

The MoA gives ‘exclusive monopoly’ to CTL to produce bio-fuel and other ethanol products in the country and is intended to prevent the cultivation and processing of other crops with the potential of producing bio-fuel such as jethropa, oil palm and coconut. This does not reflect the fact DAL has given approvals for jethropa and oil palm plantations which are fully operational in other parts of the country.

“There is no evidence to suggest the Environmental Permit has been issues to the developer and DEC has no records to verify a permit has been issued… it is unlawful for the developer… to proceed with the cassava project, especially the activities that have already been carried out on 600 hectares of land” [p197]


1. All the SABL leases/titles and Direct Grants are to be REVOKED forthwith [emphasis in the original]

2. The MoA be REVIEWED [emphasis in the original]

3. No further work be carried out on the project until new SABL leases and titles are properly issued

The SABL Commission of Inquiry reports

November 24, 2013 1 comment

Hundred of stories waiting to be told of corruption, illegality, fraud and incompetence.

5.2 million hectares of land have been stolen from the people and unlawfully vested in the hands of foreign corporations. But so far no action has been taken to revoke the leases, restore the land, stop the illegal logging and identify and punish the guilty.

The Commission of Inquiry reports have not even been made public – clearly the government and the politicians would rather these stories were not revealed…