National Provident Fund Final Report [Part 57]
“Most of the fraudulent funds, which were laundered through the accounts of PMFNRE, were for the benefit of Peter O’Neill”
Below is the fifty-seventh 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 57nd 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 6 Continued
The Fraudulent Payments
Once the scheme had been agreed and the February 8 board resolution was in place, no time was wasted transferring the money from NPF to Kumagai and sending the K2.5 million, via Kumagai, on route, through devious channels, towards the intended beneficiaries.
The first transfer of funds was the progress payment number one from Kumagai to Ken Yapane and Associates. Then the first tranche of NPF funds was paid from NPF to Kumagai.
Then in rapid succession, the second, third and fourth progress payments from Kumagai to Ken Yapane and Associates, were paid into Mr Yapane’s personal account with BSP, Waigani. The second tranche of money due from NPF to Kumagai was credited to Kumagai’s account on May 20, 1999.
After Kumagai had drawn the cheque for the fifth progress payment to Ken Yapane and Associates, Mr Yapane refused to allow his bank account to be used to launder any further payments and the cheque was altered, at Mr Maladina’s direction, to substitute Carter Newell as the payee and it was paid into the Carter Newell Trust account, as was the sixth progress payment.
The six payments from Kumagai are described at paragraph 5.6. Mr Yapane’s role is reported at paragraph 5.5.
Six progress payments made by Kumagai
The six progress payments paid by Kumagai to Ken Yapane, Ken Yapane and Associates and to Carter Newell are described in paragraph 5.6, (paragraphs 5.6.1 to 5.6.6). The six progress payments were banked as follows:
Tracing The Money Trail The tracing process
Commission staff expended an enormous amount of effort tracing the money trail, issuing more than 200 summonses in this process.
The task was made difficult because the fraudulent conspirators used devious methods to try and cover the trail by paying the six progress payments from Kumagai through a variety of bank accounts, including the trust and general accounts of Carter Newell, the accounts of Port Moresby First National Real Estate (PMFNRE) and through interest bearing deposits with Nambawan Finance and Fincorp into the accounts of various corporate entities owned by or associated with the conspirators. Most of the funds held in the Carter Newell accounts were for the benefit of Mr J. Maladina or spent on his direction. Most of the fraudulent funds, which were laundered through the accounts of PMFNRE, were for the benefit of Peter O’Neill.
The various streams of money went in and out of these accounts but the commission is satisfied that the vast bulk of it has been traced to an end destination. Even when the end destination turns out to be a large cash payment in K50 bills, in many cases the commission staff have been able to identify who collected the money from the bank by the notations made by bank staff on the cheques.
For example, in some instances, the notes were picked up by the Carter Newell driver or clerk and, in the absence of any alternative explanation, the commission has been able to find, on that and other evidence that the money was taken for the benefit of Mr Maladina.
With great skill and patience, those assisting the commission have traced and exposed all these devices, which formed the money “laundering” process.
The money trail is set out from paragraph 7 to paragraph 11, which deals with money held in the Carter Newell accounts and paragraph 12, which deals with the moneys paid to PMFNRE accounts and is depicted diagrammatically in Charts 1 to 4C which are attached to this executive summary and also to Schedule 6.
Those findings were made by the commission on the basis of the evidence of what occurred in the NPF (involving Mr Maladina, Mr Leahy and Mr Fabila), what occurred in Kumagai Gumi, what occurred in Carter Newell involving Mr Maladina, Ms Perks and Mr Lightfoot and of course Mr Yapane’s role in laundering the Kumagai payments.
The next step was to widen the net by tracing how the moneys were disposed of to see who benefitted. It also involved investigating the role of PMFNRE, its principals and employees and ascertaining the relationship between Carter Newell, its partner Mr Maladina, PMFNRE its managers Mr Sullivan and Mr Barker and Mr O’Neill whose activities and funds were intricately interwoven with the affairs of PMFNRE.
The commission reports firstly on its tracing of Kumagai’s six payments of the fraud money.
Each of the six Kumagai payments are methodically traced into the relevant Carter Newell account or PMFNRE account
Kumagai Payment No.1 for K401,032.30
As shown on Chart 1, Kumagai payment No.1 was traced in paragraph 7.1 through the account of Ken Yapane and Associates to PMFNRE from which some of it was invested on IBD with Nambawan Finance. In giving evidence Ken Barker of PMFNRE committed perjury and has been referred for prosecution.
He subsequently left PNG and the jurisdiction of the commission.
(a) From Kumagai payment No.1 of K401,032.30, the sum of K2,032.30 was retained by Ken Yapane and Associates;
(b) The residual sum of K399,000 was laundered through the bank accounts of Ken Yapane & Associates then Kuntila Company No.35 Limited then Mr and Mrs Barker and then deposited into the account No. 246204 of Port Moresby First National Real Estate with PNGBC Port Moresby Branch;
(c) The sum of K300,000 was withdrawn from this account and invested by Port Moresby First National Real Estate in an IBD with Nambawan Finance Limited;
(d) The residual sum of K99,000 deposited into Port Moresby First National Real Estate Account No.246204 with PNGBC Port Moresby was disbursed from that account as reported at paragraph 12.3.2;
(e) Ken Barker gave false evidence before the commission on December 1, 2000. Normally the commission would direct counsel assisting to refer Mr Barker to the Commissioner for Police to investigate whether he has committed the crime of perjury. Mr Barker, however, is now residing permanently in Australia and to refer him would be a waste of resources. If he should ever return to PNG, he should be referred for investigation.
Kumagai Payment No. 2 for K652,421.29
As shown on Chart No.1, Kumagai payment No.2 for K652,421.29 was traced through Mr Yapane’s personal account to Finance Corporation and hence, after Mr Maladina’s instructions to Barbara Perks, office manager at Carter Newell Lawyers, was withdrawn and paid to Carter Newell Trust Account and to PMFNRE.
(a) Mr Yapane retained K5,409.29 and K30,000 for himself;
(b) He split the balance into two streams of K285,000 and K332,000, both of which he paid into the Finance Corporation (Fincorp);
(c) These two streams were split into four sub-streams, three of which were paid into the Carter Newell Trust Account as follows:
- Fincorp # 794643: K70,000 John Lousia
- Fincorp # 794721: K216,156.65 John Lousia; and
- Fincorp # 821685: K189,854.27 Kerowa Tiki
These amounts will be further traced at paragraphs 9.2.2, 9.2.3 and 9.3.2 see Chart 2;
(d) The fourth sub-stream was paid into PMFNRE account 613086 Ledger 9 by Fincorp # 794559 for K150,000. (Follow trail on Chart No. 4A and paragraph 12.2.2).
Kumagai Payment No. 3 for K595,453
The commission has traced this money through Mr Yapane’s personal account onwards at Mr Maladina’s direction to Fincorp on behalf of Carter Newell’s Trust for John Louisa (pseudonym for Jimmy Maladina) from which it was split and paid partly to PMFNRE and partly to Carter Newell (see Chart No. 1).
(a) Of the K560,000 not retained by Mr Yapane, Finance Corporation cheque # 776040 for K300,000 dated May 12, 1999, went to Port Moresby First National Real Estate (follow up at paragraph 12.2.3 and Chart No. 2);
(b) The balance the commission finds, went to Carter Newell Lawyers with interest as follows:
(i) Finance Corporation cheque # 794454 for K150,000 on June 11, 1999 (CN No.2 Account)
(ii) Finance Corporation cheque # 794483 for K112,768.35 on June 16, 1999 (John Lousia file follow on Chart No.2).
Kumagai payment no. 4 for K446,841.84
The commission has traced this money through Mr Yapane’s personal account onwards on Mr Maladina’s instructions to be invested in Fincorp for Mr Maladina’s company Ferragamo Ltd and then into Carter Newell Trust Account (Kerowa Tiki file) — follow on Chart No. 2 and paragraph 9.4.1.
The payment for K440,000 derived from fraudulent Kumagai payment No.4 and interest went to Carter Newell Lawyers in the form of Finance Corporation cheque # 821711 while Mr Yapane retained the difference of K6,887.84 plus K50 cash. It was eventually paid into Carter Newell Trust Account (Kerowa Tiki File).
Kumagai Payment No. 5 and 6 for K421,651.57 and K132,500
The commission has traced this money directly to the bank account of Carter Newell (Kerowa Tiki File) — (see Chart No. 1 and paragraphs 7.6.1 & 7.6.2).
Mr Yapane’s role and his referral for prosecution is described in detail in paragraph 8 and at paragraph 8.5, the commission has found:
(a) The total received by Ken Yapane & Associates out of Payment # 1 was K2032-30;
(b) The total received by Mr Yapane personally was:
- Payment # 2 -K35,409.29
- Payment # 3 -K35,445.00
- Payment # 4 -K 6937.84
(c) These moneys were received as a result of a criminal fraud and were benefits received within the meaning of the commission’s terms of reference;
(d) Mr Yapane should be referred to the Commissioner for Police to consider whether he should be charged with a criminal offence in relation to these payments.
(e) Mr Yapane should also be referred to the Commissioner for Police for being party to the manufacturing and production of false documents intended to interfere with the work of the commission of inquiry.
Further Tracing Of Fraudulent Money Paid Into Bank Accounts of Carter Newell
This further tracing is described payment-by-payment in paragraph 9 of the Schedule.
It is depicted on Chart No.2 and each onward payment is dealt with in separate subparagraphs with the number of each subparagraph also indicated in the chart to facilitate the tracing.
When a cheque has been traced to an end destination it is made the subject of a separate finding in the text.
The moneys were paid variously into trust accounts for the Kerowa Tiki file 990393 and John Lousia file 980246.
Tracing money in John Lousia file 980246
The payments into and out of the John Lousia Consultancy file 980246 are further traced in paragraph 10 where a trust ledger was reconstructed by the commission as follows: