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?
Minister Justin Tkatchenko has this week called for a Commission of Inquiry into the murky deals behind acquisition of Paga Hill land and the abuse suffered by its former residents at the hands of Gummy Fredriksson and the Paga Hill Development Company.
Meanwhile, PHDC has issued a defence, claiming it ‘has indefeasible title over Paga Hill, winning every legal challenge in District, National and Supreme Courts’.
We think we need to look again at the facts, and republish here an article from May 2016:
Peter O’Neill, Michael Nali, Gudmundur Fridriksson, Rex Paki, Jimmy Maladina, Dame Carol Kidu, Labi Amaiu, Tom Amaiu, these are just some of the names uncovered through an extensive probe that looks into the power players behind Port Moresby’s controversial Paga Hill Estate development, and their business partners.
The investigation was conducted by a senior criminologist Dr Kristian Lasslett, who began forensic research into the real-estate venture during 2012.
In the post, which first appeared on statecrime.org, Dr Lasslett raises new questions over the shareholders and executives standing behind the luxury real-estate development on Port Moresby’s harbour foreshores, and their connection not only to some of the biggest names in Southern Highlands politics, but numerous major corruption scandals.
Dr Lasslett connects Paga Hill executives and shareholders to major players into the Commission of Inquiry into the National Provident Fund, the Commission of Inquiry into the Department of Finance and the joint special inquiry into the Public Curator’s Office conducted by the Auditor General and Public Accounts Committee.
He also provides evidence documenting potentially illegal land transactions lying at the foundations of the luxury real-estate project.
And this couldn’t come at a more important time. It was recently revealed that the Paga Hill Development Company – under the leadership of Icelandic businessman Gudmundur Fridriksson – is bankrolling Dame Carol Kidu’s legal case to shutdown a film that documents the real-estate venture and the valiant efforts by our own justice fighters to save a historic national park from the developer’s knife.
Back in 2006 the Public Accounts Committee alleged the Paga Hill Estate was spearheaded by ‘foreign speculators’, who secured the title through ‘corrupt dealings’. A decade later it seems the controversy is still well and truly alive.
The Paga Hill Estate – A vision for a ‘progressive’ future
Once designated a national park, the majestic surrounds of Paga Hill have been eyed by numerous real-estate developers over the years. However, it is the Paga Hill Development Company (PHDC) which succeeded in clearing the land of its residents and national park status.
This paved the way for a development that will evidently include luxury hotels, 800+ residential apartments, sporting facilities, marina precinct, and multi-use commercial precinct.
PHDC boasts, ‘with tourists and visitors staying at the Hilton Hotel, residents of the site, together with city visitors enjoying the waterfront retail, restaurants and marina complex, the area will be a buzzing melting pot, creating a new image for a progressive Papua New Guinea’ (Hilton Hotels strongly denies any involvement in the project).
Even among the rubble produced by a brutal demolition exercise in 2012, the site’s development value is readily apparent.
Of course it is always important to ask, who in particular will benefit from the proposed real-estate venture? Rarely are such projects universally beneficial.
We at least know one core clientele. It was recently announced that the estate ‘will be the venue for the Leaders’ meetings at the Asia-Pacific Economic Co-operation summit in Port Moresby’ slated to take place in 2018.
This is one of the most important multilateral forums in the Asia-Pacific region. If this announcement is true – unlike the partnership with Hilton Hotels – this gives the venture a special strategic importance for the summit’s principal sponsors the PNG and Australian governments.
Although the construction timeframe looks tight, PHDC has announced that the Shenzhen based, Zhongtai company, will collaborate in the development, with Chinese government backing.
The project also evidently has the support of the National Capital District Commission and PNG’s national government. According to PHDC’s website the ‘PNG Government will provide the support through relaxation of import duties and taxes’.
However, over its twenty year lifespan what is perhaps most striking about the Paga Hill Estate is the project’s ability to weather controversy. In 2007 the Public Accounts Committee accused PHDC of acquiring the land through ‘corrupt dealings’.
Five years later the project hit the headlines again after residents faced a brutal demolition exercise, executed by the Royal PNG Constabulary, allegedly at the behest of the company. This event became iconic when the opposition leader, Dame Carol Kidu, was frogmarched from the scene by police officers who had used live ammunition on residents. She argued PHDC was not an appropriate company to be entrusted with Paga Hill (Kidu later retracted her statement, and entered into a consultancy contract with PHDC).
In October 2012 matters got worse when it was reveal that PHDC’s CEO, Gudmundur Fridriksson, has managed or owned businesses censured in investigations conducted by the Public Accounts Committee, the Auditor General’s Office and the Commission of Inquiry into the Department of Finance – seven in total.
The details were covered extensively by the Australian media, although sadly little of the controversy made its way into PNG’s muzzled press. That said, PNG citizens have created a vibrant social media alternative, which became a vital hub for circulating information on Paga Hill.
A month after this expose Fridriksson took leave from an Australian government funded think-tank where he was CEO, evidently to pursue business interests in PNG. His presence has now been wiped entirely from their website.
The wife of prominent Australian indigenous lawyer Noel Pearson – the latter is a key figure behind the think-tank – then disinvested of her shares in PHDC during January 2013.
Despite the turbulence, Papua New Guinea’s O’Neill Government has time and time again rallied behind the venture. Ministers have issued supportive press statements, the government real-estate firm NHEL agreed to partner in the project on a 50/50 basis, and the development is now receiving generous tax breaks.
This is nothing new, from the project’s very inception in 1996 the executives pushing this luxury estate have proven adept at garnering support from some of PNG’s most powerful political forces.
A rejected planning application and Michael Nali MP
The first major challenge to getting the project off the ground was rezoning the land at Paga Hill and obtaining an Urban Development Lease. Back then it was the Paga Hill Land Holding Company (PHLHC) – a precursor to the Paga Hill Development Company – which led the way.
According to Investment Promotion Authority records – Papua New Guinea’s corporate registry – its shareholders included Rex Paki, Felix Leyagon, and the Western Australian company, Fidelity Management Pty Ltd. Its Directors were Rex Paki and Gudmundur Fridriksson.
Fridriksson used the same Perth address as Fidelity Management Pty Ltd in records he submitted to the Investment Promotion Authority for Asigau (PNG) Holdings Limited, a company he owned with his wife, Tau Fridriksson. Initially the landholding company’s Secretary was Tau Fridriksson, according to Investment Promotion Authority records she was replaced on 1 July 1998 by Rex Paki.
Clearly a key player during the project’s start-up period was the Shareholder-Director-Secretary, Rex Paki, who was also the principal of Port Moresby firm Ram Business Consultants. Ram would go on to collect its own share of official condemnation from the Commission of Inquiry into the National Provident Fund, in addition to Public Accounts Committee and Auditor Generals Office investigations.
Despite having up and coming executives at the helm, PHLHC’s initial proposal for a luxury estate at Paga Hill was rejected by the Physical Planning Board in late 1996. The board noted, ‘proper procedures in relation to the processing of Planning applications were not followed’. This seemingly put an onion in the ointment, unless the application was approved, and the land rezoned, the Land Board could not lawfully issue an Urban Development Lease.
However, the company received a major boost in 1997, when its proposal obtained the backing of Michael Nali, the Minister for Civil Aviation, Culture and Tourism. On 27 February 1997 he wrote to PHLHC stating: ‘It give [sic] me pleasure to confirm my full support to your proposed comprehensive mixed use development of Paga Hill … I am prepared to sponsor a submission to the National Executive Council [Cabinet] next month to have the project endorsed as a property of National Significance. It deserves the full support of Papua New Guinea’.
Subsequently, Michael Nali acquired a 9% stake in PHLHC’s successor vehicle the Paga Hill Development Company (PHDC) through Kwadi Inn Limited, which Nali is the sole owner of. However, it should be underlined this occurred in December 2011. By then Nali had lost office.
Yet the importance of Nali’s involvement in 2011 can’t be underestimated. A towering figure from Papua New Guinea’s Southern Highlands, Nali is in business with some of the nation’s most powerful individuals.
Take the example of NIU Finance Limited. According to Investment Promotion Authority records [PDF], Nali’s company Kwadi Inn obtained a significant stake in this company during 2009, joining a select cast of executives and investors.
According to its last Annual Return, the company’s Managing Director is Peter O’Neill, Papua New Guinea’s Prime Minister. Peter O’Neill again appears as the largest shareholder in NIU, through his companies LBJ Investments Limited, and Paddy’s Hotel & Apartments Limited. Another notable shareholder in this enterprise is Piskulic Limited, a company wholly owned by Ken Fairweather, Member of Parliament for Sumkar.
There is no evidence on the public record to suggest either O’Neill or Fairweather have been involved in the Paga Hill Estate. Nevertheless, it is clear Nali circulates in powerful business circles.
And it goes further than this. It appears that Nali had direct business links with PHLHC’s Rex Paki and Felix Leyagon dating back to 1996-1997, the period when he agreed to sponsor the Paga Hill development as a project of national significance in Cabinet.
According to company records kept by the Investment Promotion Authority, on 11 November 1996, a company Waim No.54 Limited, was incorporated. Its two Directors were Rex Paki and Felix Leyagon. The company also had two equal shareholders, the Tourism Minister, Michael Nali and Mary Nali.
In addition to this, Waim No.54 Limited’s registered address was Ram Business Consultants, ADF Haus, Ground Floor, Musgrave Street, Port Moresby, National Capital District, Papua New Guinea. This is the same registered address employed by PHLHC.
If accurate, IPA records suggest Rex Paki and Felix Leyagon were Directors at a company owned by Michael and Mary Nali. Furthermore, Michael Nali’s company, Waim No.54, also shared PHLHC’s registered address.
During this same period, Michael Nali, in his Ministerial capacity agreed to sponsor PHLHC’s proposed Paga Hill property development in Cabinet as a project of national significance, a venture in which Rex Paki and Felix Leyagon were shareholders, with executive involvement from Gudmundur Fridriksson and Paki.
Public Accounts Committee alleges ‘corrupt dealings’
Of course, it cannot be deduced from these facts that the above parties were involved in any wrongdoing. However, in light of a subsequent Public Accounts Committee inquiry, which alleged that the land at Paga Hill was secured by PHLHC through ‘corrupt dealings’, this new link raises questions.
Underpinning the Public Accounts Committee’s concern was the circumstances under which the lease was obtained. For instance the Urban Development Lease was awarded to PHLHC when the land was still zoned open space. Before she recanted, Dame Carol Kidu observed this was in violation of the Land Act 1996, section 67, which declares, ‘a State lease shall not be granted for a purpose that would be in contravention of zoning requirements under the Physical Planning Act 1989, any other law relating to physical planning, or any law relating to the use, construction or occupation of buildings or land’.
Subsequently, PHDC was awarded a full 99 year Business Lease, despite the fact the improvement covenant set out in the Urban Development Lease was not completed as required.
The Public Accounts Committee claimed it was not surprised this covenant remained unactioned. It observed, ‘the Lessee cannot pay the Land Rental and has sought relief from that obligation, much less fund a development of the magnitude required’.
However, apparently this is not the only occasion that a company connected with Ram Business Consultants is alleged to have been involved in illegal land dealings. Those familiar with the Commission of Inquiry into the National Provident Fund Chaired by Judge Tos Barnett, may have had a touch of déjà vu when the name Waim was mentioned.
Ram Business Consultants, Waim No.92 and the NPF Commission of Inquiry
It was another holding company, Waim No.92 Pty Ltd, that was allegedly used to defraud the National Provident Fund – a transaction that saw one conspirator sentenced to six years imprisonment with hard labour. According to the Commission of Inquiry, controversial PNG businessman Jimmy Maladina was the ‘secret owner of Waim No.92 Pty Ltd the shares of which he initially owned through his wife Janet Karl, and an accountant Phillip Eludeme. Ms Karl’s share was later transferred to Phillip Mamando who resided at the Mr Maladina’s residence’.
The Commission of Inquiry alleges that ‘Mr Maladina was responsible for bribing Land Board chairman Ralph Guise and Lands Minister Viviso Seravo, to ensure Waim No.92 was granted the lease of the Waigani Land on very favourable terms’. It continues: ‘The records of the Land Board indicate it notified Waim No. 92 that it had been recommended as the successful applicant and on September 28, 1998, Waim No. 92 received notice that a corruptly reduced purchase price of K1,724,726.10 was payable before title would issue, with annual rent to be K17,000 (instead of the legally correct amounts of K2,866,000 and K143,000 respectively)’.
The Commission of Inquiry claims that Waim No.92 frontman Philip Eludeme acted as a key fixer, ‘prior to the Land Board hearing, Mr Eludeme had approached Minister Seravo seeking favourable consideration for Waim No. 92’s application and, at Mr Seravo’s request, had performed, free of charge, accountancy services for Minister Seravo valued at K100,000′.
According to the company’s annual returns for 1998, Waim No.92’s registered office during this period was Ram Business Consultants, ADF House. While its two shareholders cited above, Philip Eludeme and Phillip Mamando, similarly list their registered office as Ram Business Consultants, ADF House.
During 1998 Maladina’s alleged fixer, Philip Eludeme, was a director of the company Sulawei Limited, along with PHLHC shareholder, Felix Leyagon. Sulawei Limited’s registered address was again Ram Business Consultants, ADF House.
It would thus appear there were multiple links between two networks alleged to have been involved in similar style illicit land deals by the Public Accounts Committee and the Commission of Inquiry into the National Provident Fund, respectively.
The Paki Fridriksson split and the Inquiry into the Office of the Public Curator
The original development vehicle was of course the PHLHC. However, the Auditor General notes in early 2000 its two Directors apparently part ways [PDF], with Gudmundur Fridriksson evidently leaving Ram Business Consultants where he was alleged to have been employed (Fridriksson is PHDC’s current CEO).
Fridriksson was then involved in setting up a number of companies including Anvil Legal Services Limited, Anvil Project Services (PNG) Limited, Anvil Commodities and Trading Limited, Anvil Marine Limited, Anvil Marketing Consultants Limited, and CCS Anvil Limited.
Anvil Project Services (PNG) Limited and CCS Anvil Limited have been censured in the course of inquiries conducted by the Auditor General, Public Accounts Committee and the Commission of Inquiry into the Department of Finance. Perhaps the most controversial of these companies is Anvil Project Services (PNG) Limited, which was awarded lucrative consultancy contracts with the Public Curator’s Office (shortly after Ram Business Consultants lost its contract with the same office).
This award wade made despite the fact the arrangement had been rejected by the Central Supply and Tender Board owing to no public tender – a procedure which is in violation of Papua New Guinea’s Public Finances (Management) Act1995.
The contract went ahead anyway, although it is alleged [PDF] by the Public Accounts Committee and Auditor General, that payments were made out of private estates held on trust by the Public Curator.
According to company records kept at the Investment Promotion Authority, Gomoga Jack Nouairi, the Acting Public Curator at the time which the Public Curator and Anvil began working together, had a 30% stake in Anvil Project Services (PNG) Limited – the remaining 70% was owned by Gudmundur Fridriksson and his wife through the company Asigau (PNG) Holdings Limited.
Nouairi was also Director of Anvil Commodities and Trading Limited, in which Anvil Project Services (PNG) Limited had a 50% stake, and was a 50% owner of Anvil Legal Services Limited, along with Gudmundur and Tau Fridriksson.
Another company implicated in the inquiry into the Public Curator’s Office was Jac’o Business Consultants Limited, a concern owned by its principal Jack Naiyep. Despite being paid K1.5 million by the Public Curator’s Office, the Public Accounts Committee claims ‘there was no evidence that any formal procurement had ever taken place, nor was there any evidence of any formal contract’.
Naiyep and the Fridrikssons were business partners in a separate company they co-owned together, Anvil Business Services Limited. Naiyep also had a stake in Mamaku Mai No.3 Limited. Before the latter company was deregistered it was connected to the family of former Prime Minister Bill Skate. Also of significance is one of the company’s Directors, Paul Wagun.
It was a Paul Wagun who replaced Gomoga Jack Nouairi as Public Curator, and submitted evidence to the Public Accounts Committee and Taskforce Sweep contesting any wrongdoing by his office or Anvil (PNG) Project Services Limited. It cannot be confirmed this is the same Paul Wagun, however, given Jac’o Consultant’s role in the Public Curator’s Office, the overlap is concerning.
Sadly in a subsequent inquiry into this affair by Papua New Guinea’s anti-corruption agency, Investigation Taskforce Sweep, none of these crucial links between Fridriksson, Nouairi, Naiyep and Wagun were acknowledged in its case report, despite being freely obtainable from the Investment Promotion Authority company registry. When these flaws were noted by this author in a report published last year, Investigation Taskforce Sweep threatened to sue for defamation.
Another interesting company set up during this period under the Anvil stable, was Anvil Marine Limited. During its period of operation 2002-2005, the company was owned by Gudmundur and Tau Fridriksson, along with the father and son team, Tom Amaiu and Labi Alex Amaiu. Tom Amaiu is a former Member of Parliament, who was sentenced to five years prison for theft.
His son Labi Amaiu is the current Member of Parliament for Moresby North East, and has patronised PHDC, featuring prominently in the company’s promotional material. He can be seen in this video published by PHDC lauding Gudmundur Fridriksson. Amaiu states he would like to ‘congratulate and thank the CEO of Paga Hill development for a successful venture, this is what we call legacy, and I am proud to be part of that legacy’.
Fridriksson’s companies featured in a number of other inquiries during this contentious period, including the Commission of Inquiry into the Department of Finance. Nevertheless, public condemnation from Papua New Guinea’s anti-corruption agencies has not significantly impacted on PHDC’s grip over the land at Paga Hill.
Paga Hill Development Company’s Southern Highlands Connection
Part of PHDC’s success appears to be linked to its influential stakeholders. It will be recalled that the Urban Development Lease was originally awarded to PHLHC, a company jointly owned by Rex Paki, Felix Leyagon and Fidelity Management Pty Ltd. When the lease was converted into a 99 year Business Lease in 2000, the owner was a new corporate vehicle, PHDC.
The Public Accounts Committee in its inquiry drew attention to this – the recipient of any converted lease, it argued, should have been the initial owner PHLHC. At the time, PHDC was owned by Fidelity Management Ltd Pty, a holding company which shared a registered address in Perth, Australia with Gudmundur Fridriksson. But unlike PHLHC, Rex Paki and Felix Leyagon were not on the share register.
In 2005 ownership of the company changed hands, as Fidelity Management Ltd Pty’s shares were transferred to another vehicle, Anvil Holding Limited. At this time Anvil Holdings Limited was owned by George Hallit, along with Gudmundur and Tau Fridriksson. However, between 2008 and 2011 there were a series of further changes to PHDC’s ownership structure. By the end of it, the Fridrikssons’ apparently divested all their shares in the company. It was PHDC’s lawyer, Stanley Liria, who became the majority shareholder.
Originally from the Southern Highlands, Liria has published a number of legal texts. The first was launched in 2005 by Southern Highlands political heavyweight Peter O’Neill who informed the Post-Courier he would recommend to his ‘parliament colleagues that they buy the newly published book’.
Liria is also commercially linked to a number of high profile Southern Highland politicians. For instance, Liria is Director of Southern Highlands Holding Limited, along with former Minister, Michael Nali, who is also a PHDC shareholder via Kwadi Inn Limited. The sole shareholder of the holding company is the Southern Highlands Provincial Government.
In addition, there is Sharp Hills Investment Limited, a company fully owned by Southern Highlands Governor William Tipi, who entered parliament as an MP for Peter O’Neill’s People’s National Congress party. According to Sharp Hill’s company records, its registered office is Liria Lawyers, a firm which Stanley Liria is the principal of. William Tipi was also formerly a shareholder in Southern Highlands Holding Limited, presumably as a trustee for the provincial government.
Alongside Liria at PHDC is Michael Nali, who through Kwadi Inn, has acquired a 9% stake in the company – although this was reduced to 2% during April 2016. As we have already observed, Nali is in business with Papua New Guinea’s most powerful political players including Prime Minister O’Neill.
Curiously absent though is Gudmundur Fridriksson. Despite being the principal visionary and driver behind the project he has seemingly divested from the company, while retaining an executive role as CEO.
Nevertheless, given the current political gravity in Papua New Guinea, having backers with strong Southern Highlands credentials cannot have harmed the company over the past five years, as it has navigated significant public resistance to its real-estate venture.
All this analysis is rather academic for former Paga Hill residents. Many had their homes, belongings, church and school destroyed through a number of demolition exercises between 2012-2014 (PHDC has only been directly linked to the first exercise in May 2012). The soul and life of the community is captured in a moving song they composed to commemorate the destruction:
As a result of the demolition exercise, the site is now being prepared for the luxury estate which Michael Nali lauded as Minister back in 1997. Twenty years on, as the development is promoted as a host site for APEC 2018, questions still linger over the land transactions that underpinned its inception and a number of executives involved in stewarding this project.
Given the systematic efforts being devoted to censoring a documentary film covering this controversial venture, one senses these questions may encroach on very powerful interests indeed.
Yet whatever happens with Paga Hill, audiences may sense the bell tolls for thee. As a real-estate venture Paga Hill is not unique or exceptional, even if its displaced residents are a very special group indeed.
Around the world cities are transforming through a process of creative destruction, or what geographer David Harvey calls accumulation by dispossession. They are becoming spaces moulded in the image of power, money, corruption and violence.
Indeed, the technical and often highly opaque character of urban governance is a breeding ground for abuse and inequality. It is a matter for wonks, bureaucrats and developers. It needs to be a space of popular, public participation.
The Opposition calls this to our attention. Of course, what we do to confront these dilemmas is the next urgent conversation to be had.
In most countries when a powerful national figure confesses to their crimes, expresses remorse, and offers to pay back the stolen money, it is often considered a fairly clear sign they are guilty.
Not in our country.
PNG Exposed reported yesterday that Jimmy Maladina’s conviction for misappropriation was recently quashed by the Supreme Court.
Yet it has gone unnoted in the media coverage, that Maladina actually confessed to the crime during the earlier National Court trial.
This was confirmed when the National Court passed sentence:
“The accused admitted freely that he had committed the offence. He stated that he is sorry for what he did. He further apologises and is remorseful especially to the contributors of NPF for what he had done that deprived them of their benefits which was to be enjoyed with their families and to his family for the sufferings, shame that he has brought on them for the last 17 years. He is making arrangements and is willing to repay the money owed back to the state”.
It was also noted in yesterday’s blog that Maladina had never been successfully prosecuted for his role in separate fraud involving Iori Veraga. In that instance Veraga was sentenced to six years hard labour, while the alleged mastermind behind the operation Jimmy Maladina escaped the charges.
Clearly Jimmy is a lucky fellow.
But the question remains why would Maladina confess to a crime, and then petition a higher court to quash the conviction?
A possible answer is provided by the Australian commentator Susan Merrell, who is a close ally of the PM’s clique. She remarked in the aftermath of the Supreme Court decision: ‘So, if Jimmy Maladina is innocent of misappropriation and the accusation against the Prime Minister is that he received monies from Maladina that Maladina had misappropriated in this matter, (NPF) then it stands to reason that this exonerates the Prime Minister of any accusations of impropriety’.
So, perhaps this appeal was less about Jimmy Maladina and more about Prime Minister O’Neill.
Those familiar with elite business circles know Jimmy Maladina and Peter O’Neill were for a significant period married at the hip in their affairs. As a result, when those involved in Maladina’s schemes were successfully convicted in two separate criminal prosecutions, a certain bad smell clung to the PM, especially given that O’Neill featured heavily in the NPF inquiry findings (but don’t expect to find a copy of the NPF inquiry report anywhere, conveniently it was never made public!).
Indeed, when Jimmy Maladina fled to Australia in 1999/2000, he informed the Australian courts that he ‘was fearful of violence at the hands of persons who suspected that he might be in a position to make serious allegations against them’. It was never specified who these ‘persons’ were.
This Supreme Court decision it would seem is just as beneficial for the PM as it is for Maladina, at least if we follow the perverted logic of the PM’s cheer squad.
Sadly, all of this comes as public confidence in the integrity of the judiciary is dropping.
It is increasingly apparent that the judiciary is not immune to the disease of corruption – in fact there is a growing body of evidence and inside information that some judges are accepting bribes, to return favorable judgements. Of course, no one has suggested, despite the strange occurrences noted above, that either Mr Maladina or Mr O’Neill bribed/pressured the judiciary.
Yet the growing inconsistent and at times illogical decisions being delivered by the courts, will fuel speculation and concern.
The Supreme Court it appears has quashed Jimmy Maladina’s conviction for misappropriation, which emerged out of the National Provident Fund inquiry. We are told Maladina is away on business, but will hold a press conference shortly.
No doubt Mr Maladina will claim full vindication, and protest his innocence. But don’t get the tissues out just yet for Jimmy. In fact spare a thought for one of his conspirators, who does not appear to have the same luck as Jimmy Maladina when it comes to the courts.
Iori Veraga was found guilty of misappropriation and conspiracy in 2005, for his part in the fraud Maladina is alleged to have masterminded. According to the National Court Mr Veraga was a registered valuer, who was recruited by Jimmy Maladina to provide services to the National Provident Fund at a grossly inflated price. The proceeds of the scam were then shared between the two.
The court accepted:
‘the State evidence, once again confirmed by the accused’s own evidence that 50% of the proceeds of each of these cheques went to Maladina as his share of the fees as agreed between them’.
The National Court also claimed it was:
‘satisfied beyond reasonable doubt that before Maladina’s meeting with the accused, there had been an agreement with … [NPF executives] Herman Leahy and Henry Fabila about this criminal enterprise. These two officers were to be the conduits for the successful prosecution of the conspiratorial agreement. The events which took place throughout the entire affair did not, in my opinion, take place by accident. There was here the hallmark of preconcert. These events occurred pursuant to a pre-existing, antecedent, agreement’.
‘The conspiracy also depended on the accused performing his part by over-pricing or exaggerating the values of the two properties and charging excessive fees to be shared with Jimmy Maladina. The fees had to be large enough to be worth sharing. Messrs Leahy and Fabila were important elements, conduits, in the conspiracy. They were in the position to ensure secrecy, non-compliance with tendering requirements, keep the [NPF] Board in the dark, and ensure further that the fees quoted were accepted, thus committing the Fund to paying them, and paying them quickly.’
The National Court, therefore, concluded:
‘the funds [misappropriated by Veraga and Maladina] were the funds of the NPF. They remained the property of the Fund because neither the accused nor Jimmy Maladina had any legitimate claim over them. Thus, the sharing of the fees between the accused and Jimmy Maladina constituted the dishonest application to his own use and to the use of another person, property belonging to another as defined [by the Criminal Code].’
Veraga was sentenced to six years hard labour. Curiously Maladina – the alleged mastermind – was never successfully prosecuted for this crime.
Instead his recently quashed conviction related to yet another act of misappropriation against the National Provident Fund.
So when you hear Jimmy Maladina waltz around the media claiming he is the true victim in all this, spare a thought for his partner in crime, Mr Veraga, who spent six years inside for a crime Mr Maladina was allegedly the primary author of.
Here we go again. It appears there is a two-tier justice system, one for the poor and one for the rich.
Earlier this month the National Court sentenced a Bank of South Pacific employee David Poholi to five years imprisonment with hard labour, for misappropriating K688,000 from his employer, BSP.
Just deserts perhaps.
But when the elite businessman Jimmy Maladina appeared before the same court and the same judge, for misappropriating K2.65 million from the National Provident Fund, he was let free with a suspended sentence.
How can this be you ask?
Well the Courts have built into sentencing procedure a mechanism, that in effect, lets the rich and powerful off with minimal punishment. A close look at sentencing decisions for misappropriation reveal that the courts are prepared to suspend sentences for offenders, when they agree to return the stolen money to the victim.
In reality, what this means is, a poor worker who wrongly steals money to feed their children, goes to prison because they can’t return the illicit proceeds. On the other hand, rich politicians and businessmen, simply have to keep a slush fund handy – or a few wealthy friends – in the unlikely event they are ever convicted.
If that unlikely event does ever occur, the wealthy criminal simply draws from their slush fund to avoid prison, or they turn to a few cashed up pals, who loan them the money.
It is time that Judges look very carefully at sentencing procedure, and ask what message are they sending to elite criminals and the people of Papua New Guinea.
In May last year the National Court found disgraced lawyer Jimmy Maladina guilty of misappropriating K2.65 million from the National Provident Fund.
Jimmy dodged at least one bullet. The Courts were only asked to consider charges relating to the NPF Tower fraud. Had they cast their eye over a certain Waigani land sale, documented by the NPF Commission of Inquiry, Mr Maladina may have felt the temperature rise.
Although at K2.65 million, the water was still hot.
Under the Criminal Code a maximum sentence of 7 is available for conspiracy and 10 years for misappropriation. Maladina was found guilty on both fronts.
Surprisingly, the Court set him free with a two-year good behaviour bond. His eight-year custodial sentence was suspended in its entirety.
Deputy Chief Justice Salika outlined his reasons:
‘I take into account these following factors that will enable me to exercise the Courts discretion in the way I will. They are:
- Full restitution over and above what the prisoner dishonestly obtained has been made by the prisoner.
- A civil action was taken against him by Nasfund wherein he was declared bankrupt and his properties in Australia sold for over AUD$500,000.00 which was given back to Nasfund.
- Nasfund is now in a better position than it was those 17 years ago. It and the contributors are now happy that they have got back what was stolen from them by Kumagai and the prisoner.
- The prisoner will no longer be able to practice law ever again and I think he is aware of that fact.
- His co-accused’s case has been permanently stayed by the National Court. Others involved in the case have never been charged, thus issue of where is fairness is asked.
- I am aware that he brought all these on himself and he has no one to blame; but he was now put right in full and over what he did wrong. He will still suffer in that he will have to find other ways to survive in this world as he will no longer practice law.
- There has been a long undue delay to have this matter tried, thus his constitutional right to a trial within a reasonable time denied. The State had the primary role to expedite his trial.
In the circumstances as pointed above I will exercise the courts discretion and suspend all the 8 years and place him on good behaviour bond for 2 years.’
This stands in marked contrast to the treatment dealt out to those found guilty of theft under the Criminal Code.
For those lacking a white collar, the punishments can be severe.
Take the hapless Mathias Watt, he broke into his brother in law’s business and stole K11,300.
The National Court declared ‘a strong deterrent sentence is necessary to punish the prisoner for his crime as a lesson to him and others with similar inclinations’. A four year custodial sentence was given.
So, Mathias steals K11,300 and receives four years hard labour. Jimmy ‘misappropriates’ K2.65 million and receives a good-behavior bond. Is this justice?
Below is the eighty-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 83rd 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 9 Continued
Ken Yapane & Associates
Ken Yapane & Associates were employed to refurbish an office on the ground floor of NPF’s Head Office. This work was not tendered and Ken Yapane was paid an exorbitant K40,000 contract sum in advance without any work being done on the office refurbishment. He paid half this amount back to Mr Maladina.
This same Ken Yapane was also involved in the NPF Tower fraud when Mr Maladina utilised Mr Yapane as a notional contractor and laundered money through his bank account to transfer money from Kumagai Gumi to Carter Newell’s office.
Mr Maladina paid Mr Yapane a generous commission for his service. The similarities between Mr Yapane’s role in the Tower fraud and this office refurbishment contract are compelling. In both cases, the payment from Mr Yapane to Mr Maladina was laundered through the Carter Newell John Losuia account then paid to Mr Maladinas company, Kuntila No. 35 Pty Ltd.
The commission has found that the advance payment to Mr Yapane of K40,000 for work he did not do was improper, that Mr Leahy was knowingly involved and that the ultimate beneficiary was Mr Maladina.
At paragraphs 9.3.5 and 9.6.1, the commission has found that:
(a) The advance payment to Mr Yapane & Associates was improper. Management, and more specifically, Mr Leahy should be held responsible as he was the one responsible for authorising this payment;
(b) Mr Leahy was responsible for fabricating the minutes of a fictitious NPF board resolution increasing his financial delegation to K50,000 in order to enable him to authorise the payment of K40,000 to Mr Yapane;
(c) Mr Leahy should be held accountable for improperly paying K40,000 to Mr Yapane because no work had been or was done;
(d) Management failed in their fiduciary duties to properly tender this job and obtain board approval for this expenditure;
(e) The fact that Mr Maladina demanded and received at least K20,000 of the fees paid to Mr Yapane is grossly improper;
(f) The evidence of criminal interest and association coupled with the evidence of similar conduct in the NPF Tower fraud involving the same persons strongly suggests that there was a criminal conspiracy to cheat and defraud the NPF involving Mr Maladina, Mr Leahy and Mr Yapane which was successfully implemented; and
(g) MR Maladina, Mr Leahy and Mr Yapane should be referred to the Commissioner of Police to consider whether criminal charges should be laid against them.
In September 1996, Hon. Chris Haiveta wrote to Mr Kaul and requested a donation towards the payment of sing-sing groups that were to perform at an NEC meeting in Vanimo.
Mr Haiveta has given evidence (Transcript p. 8477) that he asked NPF management if they could help.
He was not told that NPF was not able to help. He said (Transcript p. 8479) that at the time he requested NPF to help, NPF had previously given donations and sponsored other activities like golfing days.
Mr Kaul responded positively to this request.
At paragraph 9.7.1, the commission has found that:
(a) MR Haiveta’s request for K1600 was improper and he should be referred to the Ombudsman Commission to consider taking action for a breach of the Leadership Code;
(b) THE decision by Mr Kaul and Mr Wright to agree to the payment was a breach of their duty to the members of the fund and amounted also to improper conduct;
(c) AS Mr Kaul was subject to the Leadership Code, he also should be referred to the Ombudsman Commission.
Disposal Of Assets
During the period covered by this enquiry, NPF disposed of some office furniture and equipment through tenders restricted to NPF staff members and by “in-house” raffles to fund Christmas parties and the like. This action by management deprived members of the fund from realising maximum financial benefits from the sale of these assets.
In paragraph 10.3, the commission has found that:
The sale of NPF assets, such as the Kwila table and television and video deck, to staff without determining a reserve price for the items and without open tender, can lead to accusations of nepotism against NPF management. This method of disposal is also contrary to Government procedures on disposal of assets by organisations like NPF.
Procurement Of Computer Hardware And Software
It is relevant to note that the underlying data of members records were held in the Niugini Assets Management (NAM) operated system. At the February 18, 1993 board meeting, it was noted that NPF were in discussion with NAM to purchase NAM’s system. At the July 30, 1993 board meeting, the board resolved for management to explore other alternatives.
At the August 30, 1993 board meeting, the minutes show that management had negotiated a lease arrangement with McIntosh Securities in respect of computer hardware and software. Datec were appointed as advisers to NPF in late 1993, and undertook to review NPF’s software requirements. Datec recommended in their proposal, that following Datec’s development of the new software, NPF would be entitled to a 50 per cent interest in the proprietary rights, and that Datec would market the software to other clients.
At the June 29, 1995 board meeting, the minutes record that NPF had shifted over to the new computer system with effect from May 12, 1995. Datec recommended that NPF utilise an AS400 platform and that Datec would develop software tailored to NPF requirements. The suitability of this recommendation was not challenged by NPF.
Cost of computers
The decision to develop the company’s own software on the AS400 platform, came at a significant cost to NPF.
As at December 31, 1999, the following computer costs, including consumables, had been expended:
Software development costs between January 1, 1995 and December 31, 1999 were as follows:
Computer hardware 1995
From the authorised auditors files, NPF had the following computer hardware as at 1st January 1995.
According to the fixed assets register, NPF only acquired one computer and disposed of two computers in 1996. The disposed computers were fully written down in the books. The commission has been unable to determine what happened to these two computers.
The table below shows the status and value of computers held by NPF in 1997.
The table below shows computers purchased in 1997.
At paragraph 188.8.131.52, the commission has found that:
From the commission’s review of the pattern and manner in which NPF purchased computer equipment, we find that:
(a) The purchase of computer equipment was adhoc and did not comply with annual budgets or a specific IT plan;
(b) There is no evidence that NPF sought to negotiate better than normal prices with any supplier;
(c) From 1998 onwards, NPF purchased predominantly from Tanorama Limited and Datec, with no documented attempts to extract better prices from these suppliers; and
(d) Judging by the payment requisition records, the purchases from Tanorama Limited and Datec were made without reference to any comparison of prices from other suppliers.
There are imperfections in NPF’s accounting records for the 1998 and 1999 financial years because the fixed asset register does not reconcile with the general ledger.
The following computer items “disappeared” from the register without explanation.
- 1 Compliance Section PC;
- 3 IBM PC’s from MD’s office; and
- 1 UPS from operation.
With regard to the acquisition of other computers in 1997, NPF management obtained quotes from various suppliers before making a commitment to purchase the equipment.
There is no documentary evidence found by the commission that would suggest that NPF management or the trustees sought to establish a documented and formal purchase policy in respect of computer equipment.
The purchase of computer equipment, particularly at NPF where IT is a critical function, required careful scrutiny by management and the trustees, both in terms of enforcing an appropriate and proper functioning system, but also because of the high level of cost involved.
Computers purchased in 1998
Chq No 20953, 15-Sep, Datec (PNG) Ltd, K587,837.07(amount), K587,837.07 (capital), AS400 hardware, 9406-620-2175, approved by board, See ref 2, no other quotes attached;
Chq No 0952, 15-Sep, Tanorama Ltd K9301.67 (amount), K4789.50 (capital), two P166 multimedia packs for Ms Dopeke / J Sema, approved by Ms Dopeke, within delegation, no other quotes;
Chq No 20952, 15-Sep, Tanorama Ltd, K2220 (capital), one P166 mmx 15” monitor, approved by Ms Dopeke, within delegation and no other quotes;
Chq No 20952, 15-Sep, Tanorama Ltd, K695 9capital), HP Scan jet Desktop scanner, approved by Ms Dopeke, within delegation, no other quotes;
Chq No 20952, 15-Sep, Tanorama Ltd, K955.75, procurement plus set up, approved by Ms Dopeke, within delegation, no other quotes;
Chq No 20252, 27-May, Tanorama Ltd K21,060.86 (amount), 26,450.40 (capital), 12 P166MMX 16Mb RAM 2.5gb, 15”, approved by Mr Wright, see ref 1 below, no other quotes;
Chq No 20253, 28-May, Tanorama Ltd, K9146.40 (capital), four P166MMX 32Mb RAM 2.5gb, 15, no other quotes;
Chq No 20254, 29-May, Tanorama Ltd, K700.40 (capital), software, no other quotes;
Chq No 20255, 30-May-98, Tanorama Ltd, K1814.86 (capital), procurement charges, no other quotes;
Cheq No 20256, 31-May-98, Tanorama Ltd, K3840 (capital), set up costs, no other quotes;
Chq No 20256, 31-May-98, Tanorama Ltd, K169.65 (capital), sales tax, no other quote;
Chq No 19892, 27-Mar-98, Tanorama Ltd, 21,060.86 (amount), items detailed above, approved by Mr Wright, see ref 1 below, no other quotes
Chq No 19665, 26-Feb-98, Datec (PNG) Ltd K8667.56 (amount), K5065.54 (capital), two Datec Millennium internet and monitor, approved by Mr Wright, within delegation, no other quotes;
Chq No 2108, 24-Jun-98, Datec (PNG) Ltd, K64,129.97 (amount), K64,129.97 (capital), 10 per cent deposit on AS400 machine, approved by Mr Wright, see ref 2, no other quotes.
Purchase of AS400 machine
The purchase of the new AS400 computer hardware seems to have resulted from concerns about the “Year 2000 Bug” and the capacity and efficiency of NPF’s current computer system to cope beyond the year 2000.
Failure to seek analysis by an Independent expert
Quite glaringly, NPF did not seek independent advice about the AS400 machine. However, it is apparent that NPF relied on Datec’s recommendation. There is no evidence that NPF sought a second opinion on its proposal to purchase this AS400 machine from an independent computer consultant.
TO BE CONTINUED