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O’Neill’s illegal logging: 798 days and counting…

August 31, 2015 Leave a comment

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Peter O'Neill: Theft of forest resources: Guilty

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Court Rulings confirm SABLs null and void

August 27, 2015 Leave a comment

0428.woodlark.tree_.Forest.600_news.mongabay.com_

Special Agriculture Business Leases (SABL) have been used to secure the mass alienation of over 5 million hectares of customary land for periods of up to 99 years.While the debate over cancellation of the leases rages on between civil society groups, affected landowners and the State, it is interesting to examine what the Courts have said about these land deals.

Since 2007 there have been five reported legal cases in which the validity of an SABL has been challenged through the Courts. In all five cases the courts have found the SABL was not granted in accordance with the law and proper process and the breaches by Department of Lands Physical Planning (DLPP) were so serious that the lease was declared null and void.

These findings add weight to those of the SABL Commission of Inquiry which also found serious breaches of the law and proper process and recommended all but four of the 42 leases reported on be revoked.

Here is a brief summary of the Court cases:

Ramu Nickel Ltd v Temu [2007]

This case involved a SABL granted over land described as portion 19C, Milinch Sepu, Fourmil Ramu, Madang Province in August 2003. The Court, granted an order quashing the decision of the Minister for Lands granting the lease and the registration of the lease by the Registrar of Titles. The court also ordered the Registrar of Titles to de-register or cancel the registration of the lease.

Musa Valley Management Company Ltd v Kimas [2010]

A SABL over 211,600ha of land at Portion 16C, Milinch Gona, Fourmil Tufi was granted to Muida Holdings Limited in December 2008. In finding the lease null and void the Court declared that:

“The procedures for acquisition of the land by the State under Sections 10 and 11 and for granting of the lease under Section 102 were not complied with as the customary landowners or at least a substantial majority of them did not agree to either process…The errors of law were significant. The acquisition by the State of customary land, by lease, under Sections 10 and 11 of the Land Act and the subsequent granting of a lease by the State to a lessee can only proceed lawfully if a substantial majority of customary landowners agree. There was a lack of agreement in this case at both stages of the process…The Secretary’s decisions to grant the lease were seriously flawed and therefore his decisions were quashed and the leases declared null and void.”

Mahuru v Dekena [2013]

This case also involved a SABL granted over an 8.51 hectare block of land at Taurama Valley in the National Capital District in June 2010. The Court found that the procedures in the Land Act were not followed and the Minister erred in law by:

  • not meeting with the plaintiffs and agreeing on the terms and conditions on which the land would be acquired by the State, contrary to Section 10(2)
  • not inquiring into and being satisfied of the use of the land, contrary to Section 10(3)
  • not ensuring that an instrument of lease in the approved form was executed by or on behalf of the customary landowners, contrary to Section 11(2)
  • granting the lease to the fifth defendants, who had not been appointed by the plaintiffs or their clan members, contrary to Section 102(2)

The errors of law were so numerous and serious as to amount to constructive fraud. The Court’ quashed the lease and the lease was declared null and void.

Justice Cannings stated:

“To lawfully grant a Special Agricultural and Business Lease over customary land the Minister must comply with all of the requirements of Sections 10, 11 and 102”.

“The elaborate procedures in Sections 10, 11 and 102 of the Land Act have been inserted for a reason: to ensure that leases over customary land are granted only after a thorough identification and investigation of the land and the customary landowners and their agreement to what is proposed. In PNG land is a critical natural resource required by National Goal Number 4 to be conserved and used for the benefit of the present generation and for the benefit of future generations”

“Decisions about the transfer of interests in customary land must be made carefully and thoughtfully and in strict accordance with procedures prescribed by law.”

Maniwa v Malijiwi [2014]

This case involved a SABL over Portion 144C, East Sepik Province, granted to Sepik Oil Palm Plantation Limited in September 2008. The judge reiterated that in order to lawfully grant a Special Agricultural and Business Lease over customary land, the Minister must comply with all the requirements of Section 10, 11, and 102 of the Land Act.

In this case the Minister had failed to comply with those Sections.

The court also found the SABL was issued in breach of S.53 of the Constitution, in that the landowners were unlawfully deprived of their customary land.

For these reasons, the SABL was declared null and void and “Any other related actions or projects undertaken or done either pursuant to or in relation to the SABL, such as logging agreements and or planting of oil palm in the SABL area are also declared illegal and null and void”.

Isu v Ofoi OS [2014]

This case involved two SABLs. First, the SABL over Portion 113C Milinch Murua Fourmil Tufi, Oro Province granted to Sibo Management Limited in July 2012 was declared null and void and was quashed.

Secondly, the SABL over Portion 143C Milinch Kupari Fourmil Tufi, Oro Province granted to Wanigela Agro Industrial Limited in July 2012 was also declared null and void and was quashed.

The court ordered the original owner copies of the title deeds be surrendered to the Registrar of Titles for cancellation and the Registrar to make all necessary amendments and deletions to the Register of State Leases to give effect to the Order.

Conclusions

These five cases have made it to the Courts because of the determination and drive on the part of landholder groups to organize, fundraise and seek justice from the Court. But what about the numerous others cases stalled in the judicial process or which are unable to even be registered because landholder groups do not have the means to engage in a court battle? When is the State going to intervene on behalf of its people and ensure the rule of law is upheld? What happens when the State fails to protect its own citizens where they suffer as a result of negligence on the part of State agents and employees?

While we wait to find the answer to these questions, the National Elections approaches!

O’Neill’s illegal logging: 791 days and counting…

August 24, 2015 1 comment

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There has still been NO ACTION to cancel the huge SABL land grab, revoke the unlawful leases or stop the illegal logging in Papua New Guinea.

It is now 791 days, more than two years, since Prime Minister Peter O’Neill was told that the SABL leases were unlawful and should be cancelled.

On June 24, 2013 O’Neill was given the reports of the SABL Commission Inquiry which detail the widespread fraud and mismanagement used by foreign logging companies to gain illegal access to over 5 million hectares of land.

Peter O'Neill: Theft of forest resources: Guilty

O’Neill has REPEATEDLY STATED the leases will be canceled and illegal logging stopped.

In September 2013 O’Neill told Parliament:

“We will no longer watch on as foreign owned companies come in and con our landowners, chop down our forests and then take the proceeds offshore”

In June 2014, announcing an NEC decision cancelling the leases, O’Neill said

“We are taking these steps to reclaim our customary land illegally lost to foreigners with the help of corrupt public servants and leaders”

“As a responsible government we want to ensure that all citizens have access to the lands of their ancestors. We will not allow our land to be lost to unscrupulous people out to con our people” 

Most recently O’Neill promised a new Task Force to look at the Commission of Inquiry recommendations and legislation to cancel some of the leases, but, WE ARE STILL WAITING for the leases to be cancelled and the logging stopped.

For 791 days O’Neill has failed to ensure the SABL leases are revoked and he has been complicit in the illegal logging of our forests by foreign logging companies.

Crucially he has failed to take any action to remove the corrupt public servants responsible for the land grab or distance himself from the politicians, including key Minister’s, complicit in the illegal deals and who are now blocking any positive action to revoke the leases and stop the logging.

Prime Minister Peter O’Neill has aided and abetted the theft of logs worth hundreds of million of kina and the destruction of thousands of hectares of pristine forest.

SABL_billboard

O’Neill’s illegal logging: 784 days and counting…

August 17, 2015 Leave a comment

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Peter O'Neill: Theft of forest resources: Guilty

px-logo land grabbing

SABL_billboard

More government lies, delays and deception over the SABL land grab

August 17, 2015 1 comment

More than two-years after the SABL Commission of Inquiry reported on the illegal SABL land grab, the government has come up with yet another bull shit excuse for its failure to implement the Commission recommendations!

The government does NOT need legislation to cancel the leases [the courts have already cancelled at least six] and even if it were true, why only start now???

The simple truth is the government is up to its neck in the corrupt deals with the logging industry and has no intention of ever stopping the illegal logging or returning stolen land to its rightful owners…

Govt plans to cancel SABLs

Source: The National [aka The Loggers Times]

THE Government is working on legislation to cancel Special Agriculture Business Leases, Minister for Lands and Physical Planning Benny Allan says.
Allan said the department tasked its legal division last week to start working.
The National Executive Council set up a taskforce to look at the SABL issue based on recommendations from the SABL report that was tabled in Parliament in 2013.
The legislation, Allan said, was to help the department cancel the licences of log exporters operating through the Forest Clearance Authority.
“At the moment, we cannot cancel any SABL so we have to come up with that legislation. And so we are now working on that,” Allan said.
“Once it comes out, we will use that legislation to cancel those ones that we feel have not met the requirements.
“Only those recommended by the taskforce team we will cancel and allow those genuine SABLs to continue, so that is where we are now.”
The legislation means abolishing provisions of the Land Act that allows the granting of SABLs.
Through SABLs, foreign companies have over the years used customarily owned land intended for agricultural projects to develop unlawful logging operations.
Allan said he had directed the legal division of the Lands Department to start working on the legislation as soon as possible.
The SABL report was presented to Prime Minister Peter O’Neill in March 2013 following a commission of inquiry that uncovered massive fraud and issuance of leases without proper processes, resulting in about 5.5 million hectares of PNG land taken by foreign companies.
Last week, Secretary for Lands and Physical Planning Romilly Kila Pat said six of the SABLs investigated were before the courts for judicial review.

sabl cartoon

O’Neill’s illegal logging: 777 days and counting…

August 10, 2015 Leave a comment

count

There has still been NO ACTION to cancel the huge SABL land grab, revoke the unlawful leases or stop the illegal logging in Papua New Guinea.

It is now 777 days, more than two years, since Prime Minister Peter O’Neill was told that the SABL leases were unlawful and should be cancelled.

On June 24, 2013 O’Neill was given the reports of the SABL Commission Inquiry which detail the widespread fraud and mismanagement used by foreign logging companies to gain illegal access to over 5 million hectares of land.

O’Neill has REPEATEDLY STATED the leases will be canceled and illegal logging stopped.

In September 2013 O’Neill told Parliament:

“We will no longer watch on as foreign owned companies come in and con our landowners, chop down our forests and then take the proceeds offshore”

In June 2014, announcing an NEC decision cancelling the leases, O’Neill said

“We are taking these steps to reclaim our customary land illegally lost to foreigners with the help of corrupt public servants and leaders”

“As a responsible government we want to ensure that all citizens have access to the lands of their ancestors. We will not allow our land to be lost to unscrupulous people out to con our people” 

Most recently O’Neill promised a new Task Force to look at the Commission of Inquiry recommendations, but, WE ARE STILL WAITING for the leases to be cancelled and the logging stopped.

For 777 days O’Neill has failed to ensure the SABL leases are revoked and he has been complicit in the illegal logging of our forests by foreign logging companies.

Crucially he has failed to take any action to remove the corrupt public servants responsible for the land grab or distance himself from the politicians, including key Minister’s, complicit in the illegal deals and who are now blocking any positive action to revoke the leases and stop the logging.

Prime Minister Peter O’Neill has aided and abetted the theft of logs worth hundreds of million of kina and the destruction of thousands of hectares of pristine forest.

Peter O'Neill: Theft of forest resources: Guilty

National Provident Fund Final Report [Part 2]

August 6, 2015 1 comment

Today 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.

This is the second 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 chairman Jimmy Maladina. The report was tabled in Parliament on November 20 by Prime Minister Sir Michael Somare.

Sale of the Waigani Land and tracing the proceeds

The commission investigated the subsequent sale of the Waigani land to a Rimbunan Hijau subsidiary company by sale of shares in Waigani City Centre Ltd (formerly Waim No.92) and reported upon further corrupt procedures and crimes in the Lands Ministry and the Lands Board involving Dr [Fabian] Pok, Mr [Ralph] Guise and Mr [Jimmy] Maladina, for which all have been recommended for referral to the Police and the Ombudsman Commission (See Schedule 5, paragraph 31.4 and the list of referrals below at paragraph 15.6).

The commission also traced the way the moneys obtained by the NPF Tower fraud were “laundered” through the books of Carter Newell and PMFNRE. This showed up the involvement of Peter O’Neill as one of those who benefitted from the Waigani Land and NPF Tower frauds.

The investments that caused the greatest losses and those which illustrate outstanding examples of corporate maladministration will be examined briefly below in paragraph 10.

BORROWINGS

Commissioner Manoa’s conflict of interest

From the mid 1990s to 2000, Commissioner Manoa was a member of the Board of ANZ. He declared this to the commission at a public hearing on August 9, 2000 (Transcript p.1352) and thereafter took no part in hearing or deliberations involving the ANZ.

Features of the borrowings

Each of the main borrowings (from PNGBC, ANZ and BSP) is reported upon in the Schedules in category 2. The features common to all the borrowings include:-

(a) The banks failed to perform adequate due diligence and so entered into loan facility agreements without ascertaining that NPF lacked the power to borrow or to pledge its assets (Schedules 2A, 2B and 2C). ANZ eventually obtained this advice from Allens Arthur Robinson on May 26, 1999, (Schedule 2E paragraph 19.6 – Appendix 6).

Being ultra vires the NPF Act, the loans were invalid and it is doubtful whether interest was payable. As a result of the loans, which were advanced for specified purposes agreed between the banks and the NPF, money was spent on those purposes, interest payments were made and, during 1999, the NPF was obliged to sell off shares and other assets at a massive loss in order to repay the banks. This applied particularly to the ANZ, which obliged NPF to transfer share scrip as securities and to embark upon the big asset selldown.

It is possible that ANZ would be vulnerable to a suit brought by or on behalf of the NPF members directly for losses suffered by way of interest and bank charges and possibly for losses incurred as a result of ANZ’s pressure on NPF to sell off its assets at a loss (Schedule 2E see discussions at paragraph 11.2 and the criticisms of ANZ in paragraph 17).

The NPF Trustees were also in breach of their fiduciary duty to the members by entering the loan agreements with the various banks without obtaining independent expert advice about NPF’s power to borrow. They also could be liable to the members for losses suffered by their breach of duty (unless they can establish that they acted in good faith). If such an action was brought by the members as a class action against the NPF board, the bank could perhaps be joined as a third party (Executive Summary 2E, paragraphs 10.5, 13).

(b) On many occasions, management failed its duty to fully inform the board and seek approval before entering the loan facility agreements and before making drawdowns (Schedule 2A, paragraph 8.4,

Schedule 2E, paragraph 5.10 and paragraph 5.21 and 6.2). For instance, the PNGBC overdraft, which had risen to K6.77 million by 1998, had been in existence for several years before management made even partial disclosure of its existence to the board. In fact, its existence had been hidden in the NPF books of account by incorrect accounting procedures (Schedule 2A, paragraphs 4.1.9 & 4.3).

(c) There were several instances when loans were agreed or drawdowns were approved by the bank concerned without required ministerial approval (Schedule 2A, paragraph 9.3 and Schedule 2E, paragraph 5.15).

(d) NPF management rarely kept the board informed about the state of the loan accounts (Schedule 2E, paragraph 5.10 failure to advise board of additional K20 million facility obtained from ANZ; Executive Summary, paragraph 8.5.1). It was normal, for instance, that ANZ managers had far more knowledge of NPF management’s plans and strategies for using the drawdowns than had been disclosed to the NPF Board.

(e) Mr [Noel] Wright frequently pledged large parcels of share scrip to banks as security without consulting or advising the NPF board (Executive Summary 2E, paragraph 8.5.1(d)).

(f) The DoF was rarely consulted by NPF or the Minister and provided minimal input (Executive Summary 2E, paragraph 8.7.1).

(g) The ANZ’s review of the loan facilities extended to NPF were often superficial, without considering obvious risk factors (Executive Summary 2E, paragraph 8.10).

ATTEMPT TO ISSUE $A54m BOND

Management fails to advise NPF Board about negative expert advice

In October 1997, Mr [David] Copland and Mr Wright supported by then chairman Gerea Aopi, proposed issuing an $A54 million bond. If this happened, it would be the first such bond issue in PNG and NPF management lacked the necessary skills. It was also commercially impractical.

Expert advice from Consultant Jacob Weiss, BPNG and the ANZ opposed the idea, believing NPF could lose heavily if the kina depreciated in value. Mr Copland and Mr Wright persevered, however, and gained the NPF board’s immediate approval of the idea on a simplistic board submission, without disclosing the cautionary advice from the experts. The board accepted the idea enthusiastically, without insisting on expert opinion.

The dubious Canadian Jai Ryan (associated with Ambusa Sawmill) introduced an even more dubious Canadian Rudi Cooper, of Warrington International, a company registered in the tax haven of Antigua. Warrington became the proposed purchaser of the bond.

Every inquiry and every step taken raised further suspicion about Warrington, which was pointed out by NPF’s international lawyer, Clifford Chance. However, Mr Copland and Mr Wright kept up the pressure to proceed with the bond.

Governor of the BPNG intervenes under pressure

For a while the BPNG delayed the scheme when its Foreign Exchange Controller Benny Popoitai withheld essential approvals. This blockage was removed when Mr Copland, using his influence as a former director on the BPNG board, approached the Governor of the BPNG Mr Tarata directly and applied pressure. Mr Popoitai was then overruled by the Governor, who signed the approval papers himself (Schedule 2F, paragraphs 14.15, 13.1 and 13.2). Similar pressure was later brought successfully on Mr Tarata’s successor as Governor, John Vulupindi, when NPF was seeking an extension of the approval given by Mr Tarata (Schedule 2F, paragraph 14.15).

Mr Wright acts without authority

Negotiations to complete the agreement with Warrington proceeded for many months. During this process, Mr Wright frequently exceeded his authority in his desperate endeavours to complete the deal (He needed the money to pay outstanding interest on NPF’s debts and to provide more securities for the banks). Mr Wright’s unauthorised actions included-

  • Approaching Nara Investments (Mr Ryan) and granting a 5 per cent commission (Schedule 2F, paragraph 6.1);
  • Paying Mr Ryan an unauthorised advance of $US15,000 (Schedule 2F, paragraph 6.3);
  • Assuring Warrington that its profits would be tax free and giving a guarantee that NPF would itself meet any tax liability imposed on Warrington
  • Offering NPF share scrip worth $A77 million as security for the bond (Schedule 2F, paragraph 11.3) and transferring share scrip without authority (Schedule 2F, paragraph 14.3 & 14.8).

Advised by Clifford Chance, NPF’s lawyers held out against Warrington’s pressure by insisting that an appropriate security guarantor must be found.

Brown Bai leads NPF to terminate negotiations

When Warrington notified NPF it intended to assign NPF’s securities to a shady entity known as the RH Foundation of Anacirema, Mr Leahy and Mr Fabila confronted Mr Wright and Mr Copland in an endeavour to have NPF withdraw from the negotiations. Eventually, on the eve of the signing of the agreement, Mr Bai, who had recently become chairman of NPF, guided the NPF board to terminate the agreement with Warrington at the 115th NPF board meeting on November 6, 1998.

It had, however, been a wild and giddy ride and Mr Wright and Mr Copland almost succeeded in exposing NPF to a dubious international organisation, which may well have been involved in illegal activities and money laundering.

Had the bond been issued, there seems no way that NPF could have met the $A54 million bond plus 14.67 per cent interest in nine years time. This would have endangered NPF assets.

Mr Wright, Mr Copland and Mr Leahy and all NPF Trustees at the time were in serious breach of fiduciary duty to the members of the Fund (See comments and findings Schedule 2F, paragraph 16 titled concluding comments and paragraph 17 which discusses the roles and responsibility of the major participants).

Fortunately, it did not succeed but in the process it showed the BPNG can be moved by insistent lobbying. The attempt to issue the bond cost the NPF K244,762 in legal fees and a great deal of management time and effort.

The commission has found that Mr Wright was guilty of improper conduct by making false representation and by exceeding his authority on many occasions. There were numerous serious breaches of fiduciary duty by the trustees and by Mr Leahy, who failed to advise the trustees that NPF had no power to borrow or issue a bond and by Mr Wright for not passing on Gadens lawyers advice that NPF lacked the power to borrow.

FUNDING THE STATE

Occasions arose throughout the period under review when the NPF was called upon to provide money to the State to fund infrastructure projects and to meet other requirements or obligations of the State. Occurrences of this nature which the commission was asked to investigate were the:

  • Loans to fund the Poreporena Freeway (Schedule 7B)
  • NCD Water and Sewerage loan (Schedule 7C)
  • K17 million Southern Highlands 4 Roads Project (Schedule 7D) and
  • Niugini Insurance Corporation K2 million loan (Schedule 7A).

There was also a loan component associated with the transfer of former POSF members to NPF upon the corporatisation of Air Niugini, PostPNG Ltd and Telikom PNG Ltd. This was because the State was unable to fund its obligation to pay its unpaid employer’s contributions and, in effect, NPF “loaned” back the K24.4 million due to NPF at a commercial rate of interest (Schedule 8).

In each of these loan to the State projects, there were common features:

(a) The Government’s need was great and considerable political pressure was therefore applied to NPF to provide the funds.

(b) NPF had to borrow the funds from the commercial banks at a commercial rate of interest in order to be able to on-lend to the State.

(c) There were serious conflicts of interest when senior DoF officials made recommendations to the Minister advising the Minister to approve loans from NPF to the State. Both the Minister and the public servants had duties to consider the interest of the State as well as to the NPF.

The conflicts of interest were particularly acute for the Secretary of DoF, who was also the chairman or nominator of the chairman of NPF as well as being responsible for administering the finances of the State. Vele Iamo as Deputy Secretary for DoF and a very long time Trustee of the NPF had a similar conflict.

(d) The loan arrangements and even the ministerial approvals were often put in place between DoF officers and NPF management prior to consultations with the NPF board.

(e) NPF management failed to keep the NPF board properly informed and to always obtain board approval.

(f) NPF management and trustees failed to seek independent expert advice outside of DoF (which in these situations was biased in favour of the State and unable to give truly independent advice to NPF).

(g) There was a mismatch between the arrangements between NPF and the lending banks on the one hand, which were at variable rate of interest repayable at call and the arrangements between NPF and the State on the other hand, which were at a fixed interest rate for a fixed term of years. There was thus a potential risk for NPF if interest rates payable by NPF to the bank rose, as it would erode the profit on its fixed rate of interest from the State.

This potential risk eventuated and these “investment loans” became less and less profitable for NPF.

There was also the problem that the so called “road stock”, which NPF acquired through the Poreporena Freeway loans aggregating K62 million, were not readily assignable, as the State guarantee was not transferable.

(i) Because of Government pressure for NPF to provide funding in this way NPF distorted the balance of its portfolio in favour of this government “stock”.

(j) Despite these problems these investment loans were “safe” and provided a reasonable return, in marked contrast to most of NPF’s other investments.

Each of these loans to the State is reported upon in detail in a separate schedule. The executive summaries provide easy access to the schedules by stating main themes and giving references to relevant paragraphs in the schedules.

The transfer of members from POSF to NPF described in Schedule 8, raises many other issues as well as the issue of the loan which NPF was reluctantly obliged to provide.

The whole transfer process was badly planned and it started before basic political and administrative decisions had been made. The State had not been paying its employer contributions to POSF so members transferring to NPF were justifiably anxious about their entitlements and did not trust the State’s intention or ability to pay them. This stimulated demands for extra-legal payouts of entitlements under threat of industrial action. NPF was pressured by the Sate to agree to payouts to some employees, which were contrary to the NPF Act. This raised serious questions of improper political interference (Schedule 8, paragraphs 4.22, 4.22.1). Having reluctantly organised the lending of K24.4 million of borrowed funds to the State, NPF management was negligent in administering the loan, causing a loss of K4 million.

As further corporatisation of public institutions is likely, these issues need to be addressed. See concluding comments (Executive Summary 8, paragraph 33).

THE BIG LOSS-MAKING EQUITY INVESTMENTS — STC and CXL – Schedule 4D

Acquisition of STC shares “on-market”:

NPF commenced to buy STC and CXL shares on-market in March 1996. The NPF board had approved by circular resolution, the purchase of K1 million worth of STC shares in 100,000 share lots for a price between $A2.85 and $A3 per share. Mr [Robert] Kaul, however, misrepresented this resolution and obtained Minister [Chris] Haiveta’s approval to buy one million shares at that price. He also failed to mention the limitation on the size of the parcels, which had been imposed by the board. Mr Haiveta approved the application without seeking or obtaining DoF or any other expert advice. Management then proceeded to buy one million shares in larger sized parcels. This was far more shares and at far greater cost than the board had authorised.

The authorisation had been by circular resolution, which was not a valid means of decision-making. The purchase was not subsequently ratified by the board at a face-to-face meeting. This single approval demonstrated many of the faults which plagued NPF investments throughout the period:

(a) It was a risky and inappropriate investment.

(b) The NPF board approved the resolution by way of illegal circular resolution with little briefing by management and no expert financial advice.

(c) Management then misrepresented the limited nature of the board’s approval and obtained ministerial approval for the expenditure of a far larger sum

(d) Mr Haiveta neither sought nor received expert advice from DoF or elsewhere before granting the excessive approval.

(e) Management then purchased the excessive number of shares at prices, which sometimes exceeded the maximum price approved by the board

(f) the circular resolution was not ratified by a subsequent face-to-face board meeting

(g) The NPF Board of Trustees did not criticise or reprimand management for failing its duty to the board by exceeding their authority

(h) BPNG foreign currency exchange approval was not obtained for all of the transactions (Schedule 4D, paragraphs 4.1 and 4.2).

Acquisition of CXL shares “on-market”

Also in April, the NPF approved, by circular resolution, the purchase of up to K1 million worth of CXL shares. Again, Mr Kaul twisted the wording of the board’s resolution and obtained Mr Haiveta’s approval to buy one million CXL shares. This time the DoF did provide a recommendation to the Minister. However, it contained no critical analysis of NPF’s request but merely repeated the points made by NPF.

Mr Haiveta then gave an open-ended approval for NPF to acquire CXL shares for prices between $A2.20 and $A2.50 in 100,000 share lots without setting a total purchase limit. Again, management acquired many more shares than authorised by the board for significantly more cost.

CONTINUED TOMORROW

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