Home > Corruption, Pacific Medical Centre > National Provident Fund Final Report [Part 43]

National Provident Fund Final Report [Part 43]

Below we continue the re-publication of the serialized edited version of the National Provident Fund Commission of Inquiry Final Report that first appeared in the Post Courier newspaper in 2002/3.

The Inquiry findings provide an unprecedented insight into the methods that are still being used today by the mobocracy that is routinely plundering our government finances. The inquiry uncovered for the first time how the Waigani mafia organise complex frauds using mate-networks, shelf companies, proxy shareholders, and a willing fraternity of lawyers, accountants, bankers and other expert professionals.

The Commission findings also reveal the one grand truth at the centre of all the corruption in Papua New Guinea: it is pure theft, no different from an ordinary bank robbery. However, if you steal the money by setting up, for instance, a bogus land transaction, the crude nature of the criminal enterprise is disguised to all but forensic experts, making it seem the perfect crime! 

NPF Final Report

This is the 43rd extract from the National Provident Fund (now known as NASFUND) Commission of Inquiry report. The inquiry was conducted by retired justice Tos Barnett and investigated widespread misuse of member funds. The report recommended action be taken against several high-profile leaders, including former NPF chairman Jimmy Maladina. The report was tabled in Parliament on November 20 by Prime Minister Sir Michael Somare.

Executive Summary Schedule 4F Continued 

Table of Niugini Mining share purchases in 1996 

npf 43 a

Source: NPF accounting records/Wilson HTM records (Exhibit NM2-NM4).

The purchases in January to February were authorised by the board by circular resolutions. No advice was given to the trustees other than that Mr Wright believed it was a good idea and that some Oil Search shares should be sold to finance Niugini Mining purchases as the latter had more significant upside than Oil Search.

The board endeavoured to inject some control over the widespread use of circular resolutions by resolving on February 23, 1996:

“. . . that management seek formal approval from the board for all circular resolutions obtained in between board meetings by tabling those resolutions at the first board meeting after the resolution has been taken.” (Exhibit NM58)


(a) THE NPF management, (particularly Mr Kaul and Mr Wright) did not present to the board any independent advice in respect of the investment in Niugini Mining;
(b) MR Kaul and Mr Wright failed to properly discharge their duties by not making timely disclosure to the Board of Trustees of the unauthorised purchases;
(c) THE NPF management failed to properly discharge their duties by purchasing shares without the board’s approval
(d) THE Board of Trustees failed to reprimand or question management over the unauthorised share transactions; and
(e) NPF management acted in excess of their delegated authority by purchasing shares without express board approval.

Sale Of Shares In 1996

In 1996, NPF also sold shares as per the following table. This was authorised by management without board approval.

Table of Niugini Mining share sales – 1996 

npf 43 b

Source: NPF accounting records/Wilson HTM records (CD 748), Exhibits NM2-NM4.


(a) MANAGEMENT sold 370,000 shares in 1996 for $A1,292,974 without prior board discussion or approval and the sale was not subsequently ratified by a formal board resolution. No loss was incurred by NPF;
(b) SPECIFIC Ministerial approval was not required as the sales were within the general K1 million approval previously granted by Minister Haiveta;
(c) ROBERT Kaul and Noel Wright jointly bear responsibility for these unauthorised sales. It was a breach of Mr Kaul’s fiduciary duty to the contributors and a breach of Mr Wright’s duty to NPF. No loss to NPF has been established.

Sale Of Shares – 1997 

In January and February 1997, NPF management arranged the sale of 1,300,000 for $A4,090,158 without the approval of the NPF board. In doing this, Mr Wright was in breach of his duty to the NPF board and Mr Kaul who, as managing director, was also a trustee, was in breach of his fiduciary duty to the members.

Management never disclosed these sales to the trustees explicitly but they were shown in the schedule of investments placed before the board in May, 1997. This did not provoke discussion at the May board meeting and the trustees once again failed to reprimand management for exceeding their authority.


(a) NPF management sold 1,300,000 shares in 1997 for $A4,090,158.00 (K4,377,541) without prior board discussion or approval and the sales were not subsequently ratified by the board;
(b) THE sale on February 21, 1997, of $A2,013,954 (K2,169,040) was more than K1 million and therefore required ministerial approval. As ministerial approval was not obtained there was a breach of Section 61 of the PF(M) Act;
(c) MR Kaul and Mr Wright were responsible and Mr Kaul breached his fiduciary duty to the contributors and Mr Wright breached his duty to NPF. No loss to the NPF has been established.

Sale Of Shares – 1998

Once again, management purchased 32,300 shares on January 12, 1998, and sold them again on January 29, 1998, through Wilson HTM without the knowledge or authority of the board. A profit of $A13,890 was made. It was yet another breach of duty by Mr Wright and possibly Mr Kaul, which may have had connections with Mr Wright’s trading in Lihir options.


This risky, unwise investment returned a small profit and was sold off voluntarily, not part of the 1999 forced sale. Both management and the trustees displayed the same failure to perform their common law and fiduciary duties as demonstrated throughout the period under review.

Executive Summary Schedule 4G 


Oil Search Ltd (OSL) was PNG’s largest oil and gas explorer and producer in December 1995 and the fourth largest oil and gas exploration company registered on the Australian Stock Exchange (ASX).

NPF had bought 4,954,000 shares in OSL in 1994 and was still holding them at the beginning of the period under review. During 1996 NPF sold off all its OSL shares for a realised profit of $A3,571,011.

In 1998 NPF acquired 222,000 shares and disposed of them in January 1999 for a loss. See table 6.

npf 43 d

Source: NPF accounting records / Wilson HTM records (Commission Documents 748, 525) Exhibits OS4 and OS5.

The total realised profit on OSL at December 31, 1999, was $A3,034,637.

The stated reason put forward by Mr Wright for selling off OSL shares in 1996 was because he thought the share price would decline and he recommended that the proceeds of the sale should be used to purchase shares in Niugini Mining Ltd (NML) which he said had more “upside” than OSL.

In fact, the price of OSL rose significantly after NPF sold out and the price of NML fell significantly after NPF bought in.

Oil Search Share Price 

npf 43 e

Source: ASX (Commission Document 752)

Sale Of OSL In 1996 

During the time NPF held the OSL shares, they showed an unrealised gain of $A2,724,700 at December 31, 1995. Management never reported to the board on, or analysed, the investment.

Attractiveness Of NML – The Lihir Factor 

Mr Wright and Mr Kaul, with the enthusiastic support of Mr Copland and Minister Haiveta, felt NML was selling at a “one off” low price and acquiring NML shares would give NPF an interest in Lihir Gold, as NML held 17.15 per cent of Lihir. A management paper, signed by Mr Wright and Mr Kaul, was circulated to NPF trustees on January 11, 1996, advocating the disposal of 954,000 OSL shares, in three tranches, at $A1.20 and acquiring 420,000 NML shares at $A2.70.

The NPF board approved this proposal by way of circular resolution, despite receiving no investment advice or report.

NPF sold its OSL shares on January 11 and 12, at $A1.20 and $A1.23 respectively, after which the price rose (paragraph 4.3)

Further Sales

At the 99th NPF board meeting on February 23, 1996, Mr Kaul sought approval to sell a further two million OSL shares. The board resolved to approve the sale. Mr Wright and Mr Kaul did not advise the board they had already sold 1,000,000 OSL shares, without the board’s knowledge or approval. Another 100,000 shares were sold (on their prior direction) on the day of the meeting. This was a breach of duty by Mr Kaul and Mr Wright and amounted to improper conduct.

Management then proceeded to sell off the remaining two million OSL shares without further reference to the board. When the board was informed of this at the June 1996 meeting, there was no criticism of management for these further breaches of duty.

The sale of NPF’s OSL shares in 1996 was as follows:

npf 43 c

Source : NP accounting records/ Wilson HTM records (Commission Documents 748, 525), tendered document OS4 and OS5.


The sales of 1,100,000 shares, prior to the February 23, 1996, NPF Board resolution, were made without the Board of Trustees’ approval.

Lack of Ministerial Approval

Although the Minister had purported to grant a standing approval in January 1996, for NPF to acquire and dispose of shares in batches up to a limit of K1 million without needing to apply to him, that approval was invalid as it had been signed and gazetted using the wrong sections of the PF(M) Act.


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  1. October 6, 2015 at 12:00 pm

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