National Provident Fund Final Report [Part 53]
Below is the fifty-third part 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.
NPF Final Report
This is the 53rd 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 5 Continued
(a) Mr. Jimmy Maladina beneficially owned and controlled the shares in Waim No. 92 Pty Limited and that Messrs Philip Eludeme and Philip Mamando were mere “fronts” to conceal Mr. Maladina’s interest.
(b) Where tracing the money derived from the sale of WCC Ltd shares has been possible, the Commission’s findings as to the final beneficiaries are as set out in paragraph 32 and in Chart No. 2. In summary, the following persons corruptly received the amounts stated at the direction of Mr Jimmy Maladina:-
(i) Ferragamo Limited (funds invested on IBD with BSP) K700,000
(ii) Cash – recipient not established but said to be K100,000 for “Land Board Claim”
(iii) Cash – cheque drawn in favour of Mr Herman Leahy K50,000 and altered to cash
(iv) Mr. Philip Eludeme K20,000
(v) Ram Business Consultants K20,000
(vi) Cash – said to be for Mr Mickey Tamarua K3,000
(vii) Cash – said to be for Dr Pok (later said to be reversed) K10,000
(viii) Money paid to Carter Newell Trust Account which K100,000 is not able to be traced further
(ix) Mr. Philip Mamando K15,000
(x) Mr Jack Patterson K10,000
(xi) Mr M. Mel (cash) – no proof that this was corruptly received K70,000
(xii) PMFNRE K60,000
(xiii) Biga Holdings Limited (Iaraga Asi – wife of Dr Pok) K220,015.20
(xiv) Cash – recipient not identified (later said to be reversed) K6,000
(xv) Mr Viviso Seravo K49,598.49
(c) Mr. Jimmy Maladina as NPF chairman and Mr Herman Leahy as an officer of NPF failed in their respective fiduciary and management duties.
(d) Messrs Jimmy Maladina and Herman Leahy both provided false and misleading information to the NPF Board including false statements that the Valuer Generals valuation was K15 million, that other institutions had expressed interest and that no moneys had been expended by NPF on the Waigani land proposal.
(e) Mr. Jimmy Maladina failed to disclose his pecuniary interest in the Waigani land to the NPF Board.
(f) Mr Herman Leahy failed to disclose his pecuniary interest in the Waigani land transaction (namely his financial reward ultimately K50,000 cash)
(g) Both Messrs Jimmy Maladina and Herman Leahy failed to disclose to the NPF Board their resultant conflicts of interest in the Waigani land proposal.
(h) The following payments could not be traced further:-
(i) the cheque for K100,000 said to be for “Land Board Claims” as the evidence available from officers of the ANZ Bank is not sufficient to identify the recipient of the K100,000 cash.
(ii) the cheque for K100,000 which was re-banked to Carter Newell Trust Account as the available records do not enable further tracing.
(iii) the cheque for K220,015.20 in favour of Biga Holdings Limited as we are unable to locate Ms. laraga Asi. The Commission considers this amount was received for the benefit of Dr Pok.
(iv) the sum of K700,000 which was redeemed with interest from Bank of South Pacific Limited aggregating K710,539.79 and banked to Carter Newell Trust Account on 29th February or 1st March 2000 as the available records do not enable further tracing. The Commission considers this amount was held for the benefit of Mr Jimmy Maladina.
(i) On the available evidence the Commission considers that some of this untraced money has been used for corrupt purposes. The Commission recommends to the constituting authority that reference should be made to the Commissioner of Police and the Ombudsman Commission for further investigations into these untraced payments.
(j) The Commission recommends that the constituting authority should refer the matter of these payments to the Papua New Guinea Law Society to consider whether an inspection should be made of the Trust Account records of Carter Newell Lawyers having regard to the deficiencies in those records apparent from documents not being able to be produced to the Commission.
Messrs Patterson and Ketan
After the Commission of Inquiry was established on 13th April 2000, it actively set about summonsing documents and following the documentary trail – including the monetary trail which led through the books of Carter Newell and Port Moresby First National Real Estate. The trail also led through the books of Patterson Lawyers, Ketan Lawyers, the two valuers and some other accounts. Those in control of some of those books appear to have attempted to hide records of what had happened as those records would disclose the involvement of Mr Maladina, Mr Leahy, the important political figures and other conspirators and helpers.
This cover up included failing to find vital files, removing files, stripping files of vital documents, fabricating documents to insert in files, creating false accounting records, failing to cooperate in the production of summonsed records, committing perjury before the Commission and fleeing the jurisdiction (see paragraph 32.5).
These attempts to cover-up what had happened greatly extended the life of the Commission, as it then had to inquire into and expose the cover-up activity in order to discover the truth behind the false façade. Within weeks after its establishment on the 13th April 2000, the Commission had traced the valuation fees and WCC Ltd share sale proceeds into the Carter Newell Trust Account and had issued summonses seeking documents to enable further tracing to the final beneficiaries.
When the Commission issued a summons to Carter Newell seeking production of the file to which the share sale proceeds had been credited (namely file no. 200055) the conspirators must have seen the danger that the Commission would discover that the funds had been paid out to people involved in the Waigani land (and NPF Tower valuations) fraud and had not been received and held for the benefit of Mr Philip Eludeme at all.
At that stage, it is thought that Mr Maladina was still in PNG and it was probably under his direction that incriminating documents which would implicate him, such as Carter Newell file no. 200055, were removed and false documents were fabricated to make it appear that the money had been held for Mr Eludeme. To achieve this appearance a false file no. 20054 was created, probably in early May but its opening date was backdated to January 2000. A false Trust statement was fabricated and placed on the file showing that the share sale proceeds had been received and credited to this file on 21st January 2000 and held there until 2nd May 2000, except for payment of a cheque clearance fee and payments to Messrs Eludeme and Mamando of K20,000 and K15,000 respectively and then invested on IBD with RIFL on 2nd May 2000.
To enable the investment in RIFL to occur, it was necessary to bring funds back into the Trust Account and this was to be by way of tele-transfer from an off-shore account of Mr Maladina’s, Niugini Aviation Consultants. Prior to the arrival of these funds, Mr Maladina instructed the Carter Newell office manager, Ms Barbara Perks, to prepare the cheque for RIFL for K1,382,613.69 and a covering letter both dated the 2nd May 2000.
When Ms Perks pointed out there were insufficient funds to cover the cheque, Mr Maladina told her to get the cheque and letter signed but then to hold them until the funds arrived from overseas.
Mr Lightfoot signed both documents knowing there were insufficient funds to meet the cheque. The cheque and letter were hand delivered to RIFL on the 2nd May, (according to Ms Perks, this was by mistake) and receipted by RIFL and acknowledged on 3rd May. This was a serious breach of Trust Account regulations. Ms Perks said that she arranged for RIFL to delay presentation.
When the overseas funds arrived from Niugini Aviation Consultants by tele-transfer on 12th May 2000, it was K148,045.79 short. A cheque for K148,045.79 was accordingly drawn and signed by Mr Lightfoot to the debit of the ledger card of Mr Maladina’s Ferragamo Pty Ltd on 15th May 2000. Only then was RIFL cleared to present the Carter Newell cheque to complete the investment said to be on Mr Eludeme’s behalf.
On 17th May 2000, two days after these devious and dishonest activities to cover up the reality of what had happened at Carter Newell had been completed; Mr David Lightfoot produced the false and fabricated file no. 20054 to the Commission. This was in answer to the summons seeking the file to which the WCC Ltd share sales proceeds had been credited. He made no mention of the correct file no. 200055 to which the monies had actually been credited. That file is now said to be missing. These transactions are depicted on Charts 3 and 4.
There is strong reason to believe that Mr Lightfoot must have known that the Trust Statement on file no. 20054 was false as he had knowledge that the proceeds of the sale had not been held to the credit of that file and had participated in covering up the resulting overdrawing of that account. He had signed the cheque, which brought it back into balance using Ferragamo funds only two days prior to producing file no 20054 and stating that it gave a full account of the funds.
Sometime after the 17th March 2000, someone at Carter Newell realised that it would be necessary to provide an explanation for why the money left file no. 20054 and then was re-credited to it on the 12th and 15th May. A false authority, backdated to 24th January 2000, was then fabricated and signed by Mr Eludeme. It purports to authorise Carter Newell to lend the funds to Global Halshaw a company owned by Mr Maladina. Another false document was fabricated and backdated to the same day, purporting to be an acknowledgement of the loan by Global Halshaw. Neither of these documents were on file no. 20054 when it was produced to the Commission on 17th May 2000. Mr Lightfoot produced them later saying they had been recently found in Carter Newell’s records.
The Commission gained knowledge of the missing file 200055 and some copies of documents from that file by summonsing the report written by Mr Stephen Beach who had inspected Carter Newell records on behalf of the PNG Law Society.
The Commission has given full particulars of these matters to Mr Lightfoot who has declined to give evidence or offer explanations.
Sometime after May 2000, it seems that Mr Maladina left Papua New Guinea for Australia, where he is said to have permanent residence status. Attempts by the Commission to arrange for him to return to Papua New Guinea and give evidence have failed.
On several occasions the Commission, has written to him at his last known address in Australia and the transcript of the proceedings are available on the Prime Minister’s website on a daily basis. He has, however, not offered any statement or explanation.
Mr J Maladina
The lawyers, Messrs Patterson and Ketan have given evidence that Mr Maladina contacted them from Australia when they were under summons from the Commission and that he instructed them to fabricate documents and to remove documents from their files which might incriminate him. This may constitute the crime of suborning witnesses and Mr Maladina has therefore been referred to the Commissioner for Police to investigate whether charges should be laid.
Messrs Patterson and Ketan Messrs Ketan and Paterson have been referred to the Commissioner for Police and to the PNG Law Society over this.
When the Commission sought to question Mr Eludeme on his inconsistent statements it discovered that he too had departed for Australia in breach of the Commission’s summons. He has been referred to the Commissioner for Police to consider whether charges should be laid against him for perjury.
Those who have obstructed the work of the Commission in this way have been referred by the Commission, directly to the appropriate authorities, as set out in Section B below.
In addition to those direct referrals of persons who interfered with the Commission’s inquiries, the Commission has also recommended to the Prime Minister, as the constituting authority, that many other persons should be referred to relevant authorities such as the Commissioner for Police, the Ombudsman Commission, the PNG Law Society, the PNG Accountant’s Board, the PNG Valuer’s Registration Board and the Internal Revenue Commission. The persons referred are mentioned in the body of the report and are listed in paragraph 35.10. They include:-
TO BE CONTINUED