Having promised a Commission of Inquiry, under the predicted Chairmanship of (Rtd) Judge Graham Ellis, who cut his teeth in the National and Supreme Court during the 1990s, working a number of high profile anti-corruption inquiries, PM O’Neill has been in reverse gear ever since.
This culminated first in an announcement by the Attorney General, that his government had somehow overlooked court proceedings barring any Commission of Inquiry from being convened.
Then we learnt yesterday that an ‘administrative inquiry’ would be convened, under the leadership of John Griffin QC.
John Griffin QC is most well-known for dashing the hopes of the country, when he managed to secure for his client Jimmy Maladina, a suspended sentence after the latter confessed to misappropriating K2.65 million during his tenure as Chairman of the National Provident Fund, a time when he was joined at the corporate hip to Peter O’Neill. The court let Maladina go with a suspended 8 year sentence, and a 2 year good behaviour bond. On the other hand, a middle man Maladina acted through received 6 years prison.
Later Griffin managed to get even Maladina’s conviction overturned by the Court, despite the fact Maladina ‘admitted freely that he had committed the offence’.
Given Jimmy Maladina declared himself bankrupt, and claims to have sold off his Australian properties to pay restitution – it can only be assumed Maladina has good friends who could pay for a silk of Griffin’s stature.
However, with a budget of K2 million for this ‘administrative inquiry’ into Duma/Pok, paying for high priced silks will not be a problem.
We are told the inquiry began on 7 March, and will continue for 4 weeks, with a finishing date of 28 March. Ahem, that’s actually 3 weeks!
For this 3 week work period, the commission will have a budget of K666,666 – perhaps an appropriate enough sum! Even if the entire commission team furiously shovelled kina into an open fire, they couldn’t physically burn this sum of cash in three weeks.
If we assume Griffin QC is paid K85,000 per week – the sort of sum a QC fetches – that gets us through K255,000 over the three week period. You would need a team of 8 QCs working around the clock to expend this K2 million budget.
We assume in the interests of ‘accountability and transparency’, to quote the PM, he will publish the inquiry’s budget in full?
As we watch O’Neill’s stance over Manumanu dilute on a daily basis, it must be asked – did the PM overplay his original hand against Duma and Pok, and are we now seeing all parties backtrack so they can resume cordial relations at the top of the trough following this year’s national elections?
When evidence was made public on 1 February this year, linking the State Enterprises Minister, Defence Minister and Chair of the Central Supply and Tender Board, to a major land swindle, Prime Minister O’Neill swiftly announced a Commission of Inquiry.
He appeared to have his ducks lined up. The ABC reported just five days later that a retired judge was to be appointed head of the COI.
Two names were thrown around in the social media, Warwick Andrews and Graham Ellis.
Odds are it was the latter who had been approached by O’Neill.
After all, Ellis had previously been asked by the NEC to Chair the Interim Anti-Corruption Office. However, this appointment has been blocked by a court injunction, which wont be heard until April.
This has left Ellis in limbo. Cue the role as head of the Commission of Inquiry.
However, evidence coming from within the NEC indicates that Minister for Public Services, Puka Temu, among others, have deep reservations over O’Neill’s choice.
If the appointment is Ellis, this makes sense.
When he was a National Court Judge from 1990-1992, and 2009-2011, he had a reputation for effectively clearing out case backlogs and swiftly getting the wheels of justice into gear. The Poreporena Freeway Commission of Inquiry he chaired in 1992 was completed within 8 weeks and under budget. He also Chaired a 1991 Leadership Tribunal that led to the famous resignation of Ted Diro.
For a Minister such as Puka Temu, whose own connections with William Duma’s sticky fingers, has been documented by the National Court – the news that a no-nonsense judge, with a reputation of being fiercely independent, may not have come as welcomed news.
It is not clear how the struggle within NEC will turn out. But it stands to reason if the retired Judge already appointed to head the country’s premiere anti-corruption office is selected, it is a sign that substance has trumped expediency. On the other hand, if we see hands ruffle down to the bottom of the barrel, we can safely assume a certain Prime Minister is being held over it – and is prepared to set up a COI, that will be little more than a whitewash.
Yesterday Peter O’Neill announced a Commission of Inquiry would be launched into the Manumanu land deal. We can welcome this move, without celebrating its author.
O’Neill has had numerous opportunities in the past to investigate major land frauds, yet has done nothing. NHC residents, warned O’Neill the public housing estate was being sold off on mass, and the proceeds were being pocketed by politicians and private developers. O’Neill promised action but nothing was done, and the NHC continues to be mired in corruption and fraud.
When Dame Carol Kidu warned the Prime Minister about major corrupt dealings behind the Paga Hill Estate – before she shifted sides following a A$178,000 consultancy payment – much was promised about investigating the project being pushed by Gudmundur Fridriksson (and it appears William Duma), but nothing was done.
So it would seem fair to ask, why the change in posture?
Lets look at the key suspects in the case. William Duma, and Fabian Pok have been at the centre of this scandal. Yesterday O’Neill revealed a new suspect. The owner of Portion 698, Kitoro No.64 Limited, who was paid K15.4 million for their state lease, after the Defence Department reclaimed the land.
It can be revealed that the owner of this company is Tim Neville, former United Resources Party Leader.
So at the moment we have three suspects, who are all linked to the United Resources Party.
Important questions emerge.
We know that O’Neill presides over a government of robber-barons. They do not operate, however, as a cohesive unit. Instead they divide up the government into territory, which different groups assume responsibility for and abuse for personal financial gain.
It appears from the evidence being presented the lucrative black market in land has been heavily exploited by United Resources Party heavyweights.
Which raises the question. Is this turf wars between different factions within government over lucrative corrupt industries?
Or are we seeing tensions within Cabinet now exploding, as O’Neill attempts to soil rivals in the lead up to the election?
We can only speculate.
Either way, this should not diminish support for a thorough investigation of this land fraud. There is a thriving black market in land and its impact on the nation is devastating.
But why stop at Manumanu – isn’t it time to prosecute all those involved in the abuse of state leases, whether they be sweetheart 99 year business leases given to political cronies for nothing rents, or SABLs acquired by defrauding landowners?
The National Court has ordered Defence Minister Fabian Pok give up the title to a home he illegally acquired from the National Housing Corporation (see newspaper report below).
Justice Canning’s has described the decision to allow Pok to buy the house – at a value less than that quoted to the home’s occupier – as “favors being done to big men.”
Not only was Pok not entitled in law to acquire the house, he purchased it without it being advertised and with no competitive bidding process.
MP’s title forfeited over fraud charges
Source: Post Courier
THE title to a property in Boroko, National Capital District was forfeited from Defence Minister Dr Fabian Pok after the National Court declared its acquisition a “case of constructive fraud.”
The ruling was handed down by Justice David Cannings last Friday who also ordered the National Housing Corporation to sell it at a lesser price to Vaki Vailala who had been occupying it for 23 years.
He said Mr Pok was not an eligible buyer according to the three requirements set out in Division IV, 4, Section 37 of the National Housing Corporation Act.
In 1994, Vaki Vailala moved into Section 6, Lot 45, Kanu Place, Boroko when he was a surveyor with the Department of Lands and Physical Planning.
In 2005, he found employment within the private sector and began paying rent to NHC.
During his occupancy, MrVilala made three offers to purchase the property but received no response from NHC.
In May 2013, Mr Pok wrote under the letter head “Office of the Minister for Defence,” expressing his interest in “any property that is available for sale.”
Five months later, the NHC managing director, John Dege offered to sell to Mr Vailala for K529, 599.60 with conditions that he accept within 14 days and make a 10 per cent deposit.
Mr Vailala asked for an extension of time to arrange finance.
14 days later, Mr Dege cancelled the offer due to Mr Vailala’s failure to comply with conditions and sold the property to Mr Pok at a price K 4065. 60 less than the one he had offered Mr Vailala.
Mr Vailala was given seven days to vacate so initiated the legal proceedings and an interim stay was issued.
Justice Cannings found the circumstance of the sale suspicious as it seemed like “favors being done to big men.”
“There were no evidence that any other person was offered this property, the sale of the property was not advertised and there was no competitive bidding,” he said.
The court found the NHC offer to Mr Vailala unreasonable as it came with little notice five years after his last offer to sell and an extension of deadline was never given that Mr Vailala had been living on the land for over 20 years.
Justice Cannings advised Mr Pok to seek refund from NHC as he was prejudiced; he had invested more than half a million in the property and has not been able to occupy it for one day since he bought it almost three years ago.
Below is the sixty-eigth 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.
This conclusively showed that Mr O’Neill had definitely benefitted from the proceeds of the NPF Tower fraud.
NPF Final Report
This is the 68th 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
(b) The K250,000 paid to Bank of Hawaii was for the benefit of South Super Stores Limited and both Peter O’Neill and Nathaniel Poiya received a direct benefit as this payment reduced their direct personal liability under their respective guarantees given to Imak International Limited;
(c) The K60,000 came from Carter Newell and was credited to this Ledger 18. The evidence of Mr Barker regarding that money was false and knowingly false. It is recommended that if Mr Barker ever returns to PNG he should be referred to the Commissioner for Police with a view to his being charged with perjury under the Commissions of Inquiry Act;
(d) The K60,000 paid into Ledger 18 from Carter Newell was part of the proceeds of the Waigani Land fraud. It was later combined with other moneys to enable Mr O’Neill’s children’s company LBJ Investments (see paragraph 22.214.171.124) to buy Remington Ltd from Baradeen Holdings.
Mr O’Neill’s rental income
In attempting to explain the expenditure of apparently excessive sums for his personal benefit Mr O’Neill claimed they were funded from rental income on his properties, which had been paid into PMFNRE on his behalf. At paragraph 12.4.25, the commission reported upon the procedures whereby PMFNRE accounted by monthly rental statements to Mr O’Neill for rental receipts.
Accordingly, payments were not made out of rentals unless they are detailed in the monthly rental statements.
Free rent for Minister Zemming
While investigating the rental payments, the commission discovered that rent was not charged for unit 105 Pacific View Apartments, which was occupied by Hon Mao Zemming, a Minister in the National Government. Mr O’Neill said Unit 403 was occupied by Mr Zemming’s first secretary Sam Basil and that Mr Basil’s company paid the rent for both apartments by one cheque.
At paragraph 126.96.36.199, the commission has found:
(a) Mr O’Neill’s statement that the payments out for his benefit are balanced by rental receipts from his rental properties managed by PMFNRE is not true; and
(b) Mr Zemming was occupying Unit 105 owned by Mr O’Neill rent free.
Money from Niugini Aviation Consultants and links to Chelsea Ltd
At paragraph 12.4.27 (12.4.21(f)), the commission revisited the Waigani land matters concerning money allegedly paid into Carter Newell Trust Account Niugini Aviation Consultants in Hong Kong. After the deposit was made large cheques were paid to PMFNRE, Biga Holdings and also a cheque for K333,200.00 for Chelsea Ltd.
A search of Chelsea Ltd shows probable links to Mr O’Neill (represented again by Jack Awela and other significant links).
At paragraph 188.8.131.52, the commission has found:
(a) There are clear links between the money from Hong Kong and each of PMFNRE and Mr O’Neill; the company Chelsea Security Limited and M Basil and Wandi Yamuna and the company Biga Holdings Limited owned by Ms Iaraga Asi (Mr Pok’s current partner);
(b) There are also rental arrangement links between Mr O’Neill, Chelsea Security and Mr Sam Basil and Hon. Mao Zemming and the commission so finds.
The relationship between Mr O’Neill and PMFNRE
At paragraph 12.5.2, the commission lists the many links between Mr O’Neill and PMFNRE, the many benefits he received from that company and the controls he exercised over the accounts and funds held by PMFNRE. The commission points out at paragraph 184.108.40.206 that:
(a) Mr O’Neill used PMFNRE as his banker with massive numbers of transactions treated as “Adjustments” and many entries on numbered sales ledgers attributable to Mr O’Neill and persons and companies associated with him and the commission so finds;
(b) Mr O’Neill also received funds for his personal benefit from sales “commissions” said to be earned by PMFNRE on property sales and which there were efforts to conceal;
(c) Mr O’Neill also borrowed large sums of money from PMFNRE, which were treated as “Adjustments” and many of which were not reimbursed even as late as 31st May 2001; and
(d) Mr O’Neill made, requested or gave directions to PMFNRE on multiple occasions concerned not only with his own funds but with funds derived from the NPF Tower fraud (credited to PMFNRE Ledgers 8, 9 and 18) and with transactions derived from those funds – one sees so often “REF P.ON” or “REF PO” or similar expressions that it is perfectly plain Mr O’Neill had dominion over these funds and gave directions in relation to them.
At paragraph 220.127.116.11 the commission describes how Mr O’Neill gave detailed directions to PMFNRE’s accountants on accounting matters. At paragraph 18.104.22.168, the commission reports on Companies Office records which show Mr Awela as owning 90 per cent of the shares in PMFNRE. Granted the commission’s previous findings that Mr Awela is a nominee for Mr O’Neill in Mecca No.36 Ltd, and Nama Coffee Exports Ltd, it is quite clear that Mr O’Neill himself owns the 90 per cent of shares in PMFNRE attributed to Mr Awela.
There are many reasons why Mr O’Neill would want to conceal his interests in PMFNRE including:
1. First, it would avoid the need for disclosure to the Ombudsman Commission during the time Mr O’Neill was executive chairman of Finance Pacific Group and subject to the Leadership Code;
2. Second, it would avoid the need for disclosure during the same period to PNGBC, which was a lender to each of these companies;
3. Third, it would conceal the fact that Mr O’Neill would receive benefits from the work that was directed to PMFNRE from the various Commercial Statutory Authorities; and
4. Fourth, it would mask Mr O’Neill’s connection with moneys that were being laundered through PMFNRE and used for purposes such as the acquisition of RIFL and the purchase by Bethgold Pty Limited of the Kanimbla property from Mr and Mrs Reynolds.
At paragraph 22.214.171.124, the commission has found that the:
(a) evidence is overwhelming that the true owner of PMFNRE is and was Mr O’Neill and that Maurice Sullivan and Mr Barker acted in accordance with his instructions.
(b) The commission recommends that the Prime Minister refer Mr O’Neill to the Ombudsman Commission to consider whether Mr O’Neill’s concealment of his interests in Nama Coffee Exports Pty Ltd and Port Moresby First National Real Estate Pty Ltd constitutes a breach of his duty under the Leadership Code and the need to submit full and honest Leadership Returns.
Concluding comments on the second acceleration claim
The investigation into the spurious second acceleration payment has clearly demonstrated that it involved a carefully planned fraud on the NPF, instigated and carried out by Jimmy Maladina, with the active involvement and support of Herman Leahy. Mr Leahy’s wife Ms Angelina Sariman played a supporting role as a principal offender.
Ken Yapane was also involved, at least as an accessory and receiver of fraudulently obtained money. The two managers of Kumagai Gumi were reluctant participants and are also principal offenders. Mr Fabila had knowledge of what was occurring. He failed to stop it and signed documents which helped to perpetrate the fraud.
The tracing of the NPF money, paid as six progress payments by Kumagai Gumi, plus the K150,000 personal commission for Mr Maladina shows quite clearly who the beneficiaries of most of the Tower fraud moneys were.
These included Mr Maladina and his wife and companies, Mr Leahy and his wife and companies and Mr Yapane.
Substantial amounts were paid into PMFNRE accounts and substantial parts of these moneys were paid for the benefit of Mr O’Neill.
This finding was vigorously denied by Mr O’Neill, who argued that although it appears on paper that payments for his benefit came from ledgers containing NPF Tower fraud money, he in fact had other moneys of his own in other PMFNRE accounts, which were the true and “innocent” source of moneys paid out to himself, his companies and his family company.
To assess Mr O’Neill’s claim, the commission made a thorough study of PMFNRE’s accounts and traced all moneys paid in and out on account of Mr O’Neill.
This conclusively showed that Mr O’Neill had definitely benefitted from the proceeds of the NPF Tower fraud. It also showed that, despite his denial’s, Mr O’Neill is the beneficial owner of PMFNRE and that Mr Sullivan and Mr Awela are his nominee shareholders.
It is quite clear that there is a relationship between Mr Maladina and Mr O’Neill whereby they have benefitted jointly from the NPF Tower fraud.
The Proposed Sale Of 50 Per Cent Of NPF Tower To PNG Harbours Board
1. In paragraph 13 of Schedule 6, the commission describes the failed attempt by NPF to sell a 50 per cent ownership in NPF Tower to the Papua New Guinea Harbours Board (PNGHB) for K40 million.
The idea of selling off an interest in the uncompleted NPF Tower was a good one because it would enable NPF to pay off some of its K59 million debt to the PNGBC, the interest on which was a crippling burden to NPF.
The commission reports how a small group of conspirators plotted and manipulated events hoping to ensure that:
- Maurice Sullivan of PMFNRE would be appointed NPF’s agent to arrange the sale but this was without the knowledge and approval of the NPF board;
- NPF management would agree to pay 2.5 per cent commission to Mr Sullivan, which was then raised to 5 per cent, (K2 million) without the knowledge or approval of the NPF board;
- Mr Sullivan would take advantage of the inexperience of the PNGHB chairman John Orea to obtain his signature to a contract of sale;
- The board of the PNGHB would then approve the purchase of 50 per cent of the NPF Tower for K40 million with the responsibility to pay the K2 million commission to PMFNRE being shared between NPF and the PNGHB;
2. Fortunately, the management of the PNGHB, under managing director Bobby Kaivepa, resisted the political pressure and prepared an excellent brief to the members of the PNGHB pointing out that:
(a) PNGHB had no legal power to enter the agreement;
(b) the proposal was not financially viable; and
(c) PNGHB lacked the required funds and had no power to borrow for this purpose.
3. The sale to PNGHB was then dropped by NPF. Throughout the negotiations Mr Leahy and Mr Fabila had deliberately refrained from mentioning the unauthorised agency agreement entered into with PMFNRE and the 5 per cent commission, which had already been agreed by Mr Fabila and Mr Sullivan.
On the evidence, it is clear that this idea was being promoted in NPF mostly by Mr Maladina and Mr Leahy, with Mr Fabila’s support.
Mr Sullivan was obviously a principal in the conspiracy.
In relation to the attempted sale to the PNGHB, at the paragraphs in Schedule 6 referred to below, the commission has found that:
At paragraph 13.1.3:
(a) Mr Leahy was not in direct discussion with Mr Emilio;
(b) Mr Leahy, without any authority from the NPF board or Mr Fabila, engaged PMFNRE as NPF’s agent to sell equity in The Tower Pty Limited;
(c) Mr Leahy suppressed the fact that he had engaged PMFNRE from Mr Fabila and the NPF board.
(d) Mr Leahy provided false information to the NPF board that he was holding direct discussions with Mr Emilio and in failing to disclose his engagement of PMFNRE;
(a) Mr Leahy exceeded his authority in entering arrangements with PMFNRE in August 1998 without the approval of the NPF board or Mr Fabila;
(b) Mr Leahy was the recipient of Mr Sullivan’s letter of March 5, 1999, and the author of Mr Fabila’s letter of March 10, 1999. Mr Leahy exceeded his authority in entering into these altered arrangements with PMFNRE in March 1999 without NPF board and Ministerial approval. Mr Leahy was remiss in his duty to fully and properly inform Mr Fabila of the content and legal effect of the letter of March 10, 1999, which he arranged for Mr Fabila to sign;
(c) Mr Fabila was remiss in his duty as managing director of NPF in signing the letter of March 10, 1999, without properly reading and understanding it and without apprehending that the letter constituted a contract beyond his approved financial delegation, which required both NPF board and Ministerial approval;
(d) February/ March 1999 was a time of financial crisis at NPF and concurrently with this arrangement, Mr Leahy was heavily involved in the Waigani Land proposal and the NPF Tower claims with Kumagai. In those contexts, Mr Leahy also wrote and arranged for Mr Fabila to sign other letters in respect of which Mr Leahy also did not fully and frankly brief Mr Fabila; and
(e) MR Leahy, Mr Sullivan and Mr Fabila should be referred to the Commissioner of Police to consider whether charges of criminal conspiracy, attempted fraud or other offences should be brought against them.
Both Mr Fabila and Mr Leahy failed in their duties in not fully and frankly informing the board of this contractua* obligation they had entered into to pay 5 per cent commission to Mr Sullivan and by not openly seeking board ratification of their action despite the clear opportunity to do so.
The commission finds, on the balance of probabilities, that it is likely that this approval was prepared in Carter Newell’s office after March 25, but backdated to March 22.
There are at least two possible explanations for the sense of urgency about obtaining the Minister’s approval for the sale of 50 per cent of the Tower to the PNGHB. Firstly, NPF desperately needed the money. Secondly, the conspirators were greedily awaiting payment of the 5 per cent commission.
The three identical approvals by Ministers Lasaro, Pok and Auali, which were sent to the PNGHB were also dated 22nd March 1999, but were worded differently from the approval faxed from Carter Newell on 1st August 1999.
(a) THE approval for the sale of 50 per cent equity in the NPF Tower signed by Minister Lasaro dated March 22, 1999, which was faxed by Carter Newell Lawyers to NPF on April 1, 1999, was drawn up by Carter Newell and backdated to March 22, 1999;
(b) The approvals to sell to the PNGHB which were given by Ministers Lasaro, Pok and Auali, dated March 22 and 24, 1999, were also drawn up by Carter Newell, for the purpose of applying pressure on the management and members of the PNGHB to approve the purchase of 50 per cent of the NPF Tower;
(c) Mr Leahy acted unprofessionally in drawing up a certificate recording a circular resolution of the NPF board dated March 26, 1999, without indicating that it had not been ratified by the board at a properly constituted meeting and that it was therefore not a valid board resolution;
(d) THE payment to Kumagai authorised by Mr Fabila on March 31, 1999, was part of a fraudulent scam involving Mr Leahy and Mr Maladina to fraudulently obtain K2,505,000 for the benefit of Mr Maladina. On the face of the documents Mr Fabila was also involved;
(e) The responsibility for the scam involving the 5 per cent (K2 million) commission to Mr Sullivan of PMFNRE lies with Mr Leahy, Mr Maladina and Mr Sullivan. On the face of the documents, Mr Fabila was also involved;
(f) MR Fabila as managing director and Mr Maladina as chairman, knowingly withheld from the NPF board the fact that Mr Fabila had signed an agreement to pay Mr Sullivan of PMFNRE a 5 per cent commission on the sale of the 50 per cent interest in The Tower. This was a breach of fiduciary duty by Mr Fabila and Mr Maladina.
(g) In relation to the attempted sale to PNGHB, it is recommended that the Prime Minister should refer the following people to the authorities named:
(i) TO the commissioner for Police – Herman Leahy, Jimmy Maladina, Henry Fabila, Maurice Sullivan, and Angelina Sariman to consider criminal charges;
(ii) TO the Papua New Guinea Law Society – Mr Leahy and Mr Maladina and Ms Sariman to consider disciplinary measures.
TO BE CONTINUED
Below is the fifty-ninth 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 59th 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
At paragraph 126.96.36.199, the commission has found that:
(a) The K3752 part of the funds transferred from Carter Newell trust account to Carter Newell No.2 account was transferred in reimbursement of the payment made by Carter Newell No.2 account cheque # 788532 and that such payment as so paid was sourced from the NPF Tower fraud; and
(b) The residual K3248.64 so transferred and paid out appears to have been sourced from other funds.
At paragraph 188.8.131.52, the commission has found that:
The payments of K140,000 and K250,000 as so paid, were sourced from the NPF Tower fraud.
At paragraph 184.108.40.206, the commission has found that:
(a) THE K40,000 part of the funds so transferred from Carter Newell trust account to Carter Newell No.2 account was transferred in reimbursement of the payment made by Carter Newell No.2 account cheque # 788548 and that such payment as so paid was sourced from the NPF Tower fraud; and
(b) THE residual K638.05 so transferred and paid out appears to have been sourced from other funds.
Looking as a whole at the disposal of the fraud moneys which had been received into Carter Newell accounts, the commission found at paragraph 11.5.23:-
(a) There were four sums as specified in 11.5.1, 11.5.3, 11.5.9 and 11.5.10 above received in the Carter Newell trust account aggregating K1,187,387.21 credited to this file which were derived from the NPF Tower fraud.
(b) From these funds, four payments as specified in 11.5.4, 11.5. 16, 11.5.19 and 11.5.20 above aggregating K572,850.64 were made direct from the Carter Newell trust account to Port Moresby First National Real Estate (three payments) and Ram Business Consultants (one payment). These payments have been dealt with earlier.
(c) The residue of these funds aggregating K614,563.57 plus K8847.23 from other sources was transferred from Carter Newell trust account to Carter Newell No.2 account and expended from the latter account;
(d) It is not possible to identify which part of the aggregate payments of K623,383.80 sourced from these transferred funds was funded from the K8847.23 of funds from other sources but it can be said they were sourced to the extent of K614,536.57 from the NPF Tower fraud.
(e) Those payments aggregating K623,383.80 which required further investigation are: See table 1.
The commission then set out to investigate the payments referred to in (e) above and made the following findings in sub-paragraphs 220.127.116.11 to 18.104.22.168.
At paragraph 22.214.171.124, the commission has found that:
A sum of K600 derived from the proceeds of the NPF Tower fraud was received by Jimmy Maladina in cash on July 27, 1999;
At paragraph 126.96.36.199, the commission has found that:
The payments aggregating K7656.30 for airfares were made from the proceeds of the NPF Tower fraud and that Mr Maladina, his family and Mr P Maladina received the resultant benefits.
At paragraph 188.8.131.52, the commission has found that:
The sum of K4,927.10 spent on air tickets for Mr Maladina and Dr Pok was sourced from NPF Tower fraud and the tickets were used by Mr Maladina and Dr Pok.
At paragraph 184.108.40.206, the commission has found that:
(a) The air tickets for Mr Maladina and Mr Paki on August 13, 1999, for K3773 were financed from the proceeds the NPF Tower fraud;
(b) Mr Paki was referred to the Commissioner for Police to investigate whether he committed perjury by denying his trip to Cairns and Brisbane was paid for by Mr Maladina;
At paragraph 220.127.116.11, the commission has found that:
(a) The withdrawal of K400,000.00 (or $A226,754.22) on July 30, 1999, was sourced from the NPF Tower fraud, that such payment was a benefit received by Mr Maladina and that such benefit was improper.
(b) The description of the purpose of this payment was clearly false and evidences a dishonest intention on the part of Mr Maladina in relation to these moneys; and
(c) Limitations on the territorial jurisdiction of the commission prevented it from further tracing these funds in Australia.
At paragraph 18.104.22.168, the commission has found that:
The payment of K100,000 by cash cheque # 788504 on July 12, 1999, was sourced from Tower fraud money and was drawn for the benefit of Mr Maladina, probably for political purposes.
At paragraph 22.214.171.124, the commission has found that:
The clear inference is that this K700 cash was drawn for use on Mr Maladina’s trip to Cairns on July 30, 1999, and the commission so finds.
At paragraph 126.96.36.199, the commission has found that:
Cheque # 788518 for K17,000 was cashed and the recipient cannot be traced;
At paragraph 188.8.131.52, the commission has found that:
It is likely that cheque # 788523 for K5000 was cashed for the benefit of Mr J Maladina and a Mr P Maladina;
At paragraph 184.108.40.206, the commission has found that:
It is likely that cheque # 788527 for K45,000 was cashed for the benefit of PMFNRE;
At paragraph 220.127.116.11, the commission has found that:
It is likely that cheque # 788529 for K2500 was cashed for the benefit of Mr J Maladina;
At paragraph 18.104.22.168, the commission has found that:
Cheque # 788549 which was cashed for K40,000 could not be traced further, although there is a link to Mr Maladina through the Morea Henry connection;
At paragraph 22.214.171.124, the commission has found that:
Cash cheques totalling K110,200 cashed between July 29 and September 7, 1999, were sourced from the Tower fraud money and the cash was used for Jimmy Maladina’s benefit or at his direction.
Further Tracing Of Money paid Into The Accounts Of PMFNRE
The NPF Tower fraud money paid into PMFNRE came from three sources:
(a) Kumagai payment No.1 indirectly from Ken Yapane and Associates via payments variously through Kuntila Company No.35, Mr Barker and PMFNRE;
(b) Carter Newell’s investment of fraud money in Finance Corporation; and
(c) Carter Newell by cheque or cash.
The trust account books of PMFNRE are described in paragraph 12.1.2, consisting of the earlier manually recorded No.1 Trust Account and the later computer recorded No.2 Trust Account.
“Off-book” transactions are described in paragraph 12.1.3. These often involved fraud moneys which were received and banked but for which no receipt was issued or recorded. Often they were coded “MJS/KB” (referring to Mr Sullivan and Mr Barker who had personal knowledge of these transaction as described in paragraph 12.1.4. At a later date these non-property management transactions were recorded in numbered ledgers – but still some “off-book” transactions occurred for which minimal records were kept. By calling for production of documents from banks on summons and by other means described in the Schedule, the commission has been able to elicit details of most of the “off-book” transactions.
In paragraphs 12.2.1 to 12.2.5, the commission discusses the various amounts of fraud moneys, which were paid into PMFNRE No.1 and No.2 trust accounts and this is summarised at paragraph 12.2.6 where the commission has found that the following fraud moneys were received into the ledgers indicated.
(a) Account No.246204 – the Number 1 Trust Account
(b) Account No.613086 – the Number 2 Trust Account
The amounts received into the PMFNRE No.1 Trust Account were examined in paragraph 12.3. A major problem for the investigation was that PMFNRE personnel claimed that most relevant records had been lost or removed by Mr Barker and Mr Sullivan and by their failure to co-operate with the commission. At one stage, commission staff were unexpectedly invited to visit PMFNRE premises and in one day gained considerable knowledge of how and where the records were kept. This proved most helpful.
The commission was able to reconstruct a cash book from available records which is set out at paragraph 12.3.1, as follows: See table 4.
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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:-
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