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Posts Tagged ‘Papua New Guinea’

Tkatchenko happy to snuggle up with tax dodging logging company

April 26, 2016 Leave a comment

Rimbunan Hijau may be heavily embroiled in illegal logging, tax dodging and financial misreporting, the SABL land grab and human rights abuses, but none of that bothers Justin Tkatchenko (who of course has his own long history of fraud allegations)…

tkatchenko rh

Rimbunan Hijau opens newest hotel, suite

BY MIRIAM ZARRIGA in THE NATIONAL (also owned by tax dodging RH)

THE newest hotel and suite in the city is to be opened in September of this year. Stanley Hotel and suite is a massive investment by the Rimbunan Hijau Company which will see 95 per cent employment of nationals in the hotel and tourism industry. In an inspection on Friday afternoon, Minister responsible for National Events and APEC, Justin Tkatchenko visited the hotel to see for himself what has been done so far. The 18-level hotel contains 433 rooms and serviced apartment complexes, including the presidential suite. The hotel’s executive assistant manager Robert Schlenther said that the running of the hotel depends on the flexibility of its operations, in allowing visitors to be able to receive service without too much of a hassle. Mr Tkatchenko was equally impressed and said that the challenge was to maintain the hotel’s quality service and rooms for years to come. He added that the inspection reinforced the wow factor awaiting the delegates of the APEC summit and other delegates attending the FIFA World Cup this year and the World Cup next year. The standard and deluxe rooms offer all the amenities expected in a first class hotel, with the executive rooms accessible to the exclusive club lounge. The one or two bedroom apartments are the ideal place to call home with fully equipped kitchens. The hotel offers a restaurant, lounge, café, gym, pool, and spa with its ballroom able to seat from 10 to 1000 people.

Rimbunan Hijau puppets cartoon, 2003

O’Neill’s illegal logging: 1036 days and counting…

April 25, 2016 1 comment

count

px-logo land grabbing

Peter O'Neill: Theft of forest resources: Guilty

sabl cartoon

Media Intimidation, No Freedom

April 25, 2016 1 comment

Media-Intimidation
By Scott Waide – EMTV News

Another low point came yesterday when another Papua New Guinean journalist was threatened by senior members of the Royal Papua New Guinea Constabulary for maintaining contact with the suspended head of the Police Fraud Squad, Matthew Damaru.

The seasoned journalist working for a daily newspaper was threatened with arrest simply for doing his job and doing what is a fundamental part of his job – maintaining contact with an important source.

It is infuriating that we, as a country have allowed arms of government to stoop low to threaten those whose job it is to speak out for those who are unable.

It should be noted that over the last decade, there have been several attacks on journalists in PNG. Violent physical attacks affecting their families as well an legal intimidation by people who hold positions of power.

While the arrest did not eventuate, the fact that a threat was issued has struck at the heart of constitutional rights of freedom of the media and freedom of speech.

A free media able to challenge a government and those in positions of power and to hold them to account is vital for a vibrant democracy to thrive and to ride out political and economic turbulence a country many be going through.

A people cannot be silenced. The act to silence the masses by silencing the media is – as history has shown – always unsustainable and always short lived.

While Papua New Guineans have not protested violently, it does not mean a dissenting voice cannot be heard.

Silencing a journalist is so old school and reeks of 70s and 80s Latin American military dictatorships.

It is what is done by 21st century, Asian regimes that attempt to stifle and control public opinion in the age social media. It simply does not work.

Supreme Court quashes Maladina conviction! But your Honor, Jimmy confessed. 

April 22, 2016 Leave a comment
Either Prime Minister Peter O'Neill is deliberately lying or he has been misled by his advisors...

Was Jimmy’s appeal more about the Prime Minister than Maladina himself?

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.  

Read 85 extracts from the NPF inquiry report

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. 

Breaking the Grip of Rimbunan Hijau over Papua New Guinea

April 21, 2016 1 comment

RH boycott sticker

By Frederic Mousseau*, IPS news

James Sze Yuan Lau and Ivan Su Chiu Lu must be extremely busy men. Together, they are listed as directors of some 30 companies involved in various activities and services related to logging or agribusiness in Papua New Guinea (PNG). The former is the managing director of Rimbunan Hijau (RH) PNG and son-in-law of RH’s founder Tiong Hiew King; the latter is executive director of RH PNG Ltd.. All but two of these 30 companies have the same registered address at 479 Kennedy Road, in the national capital, Port Moresby–the headquarter of the RH group in the country.

Frederic Mousseau

Frederic Mousseau

How the group – the largest logging operator in PNG – manages to operate at a loss for so many years, and yet still remains in business? If it were unprofitable to log and export timber from PNG, why would these companies continue their operations? These are some of the critical questions raised in a report released in February 2016, The Great Timber Heist: The Logging Industry in Papua New Guinea, by the Oakland Institute. The report exposed massive tax evasion and financial misreporting by foreign logging companies, allegedly resulting in non-payment of hundreds of millions of dollars in taxes.

Their ability to magically fit into a relatively small office space on Kennedy Road is not the only puzzling fact about the subsidiaries of the Malaysian group, Rimbunan Hijau. Out of the 30 above mentioned companies, 16 subsidiaries that are directly involved in logging or agribusiness have one other thing in common. According to their financial records , they don’t make a profit. Most of them have been working at a loss for over a decade. During the 12 years for which financial records were available to the Oakland Institute’s researchers, all together, the subsidiaries declared an average loss of about US$ 9 million every year.

Recovering tax revenue would be certainly welcomed by PNG given the acute budget crisis the country has been facing in recent months. Yet, it is unclear whether the government of PNG will decide to take action following these revelations. After all, despite the promises made by the Prime Minister, still no action has been taken two and a half years after the damning report on recent land leases, produced by the Commission of Inquiry (CoI), which identified all sorts of malpractices and irregularities and concluded that most leases were illegal.

A first step for any government would be to start monitoring the declared sale prices of exported timber. PNG prices are much lower than those of other exporters of tropical timber (nearly 50% cheaper in 2014), which suggests that logging companies undervalue their exports and therefore their profits. But the recent statements by the Forest Minister in denial of the findings of the report, and given the well-documented deficiencies of the PNG Forest Authority, there is little hope of decisive action by this agency.

Another level of action is the enforcement of tax compliance by the Internal Revenue Commission (IRC), the government agency in charge of tax collection. However, although many RH companies are conveniently located at the same address, it may prove difficult for tax auditors to ascertain the extent of their wrongdoings. The Group has been built as a complex and opaque financial structure: almost all RH holding companies–the parent companies of those operating in PNG–are located in tax havens, primarily the British Virgin Islands, known for facilitating illicit financial flows.

Moreover, the use of multiple subsidiaries in logging operations makes auditing even more complex to conduct. For instance, in one single project in West Pomio, Gilford Ltd.’s records indicate financial transactions with 16 other RH subsidiary companies. This interrelation facilitates transfer pricing as companies of the same group can charge each other an artificially high price for goods, equipment, and services, thereby increasing the sister company’s operational expenses, and artificially reducing their profits. This interrelation would require investigators to not just focus on individual logging companies but to extend their audits to the larger RH Group. But who would they go after?

RH is controlled by Tiong Hiew King, one of Malaysia’s richest men. Although logging is the core business of the group – ‘Rimbunan Hijau’ ironically means ‘forever green’ in Malay, his empire covers a multitude of sectors, and all continents from fisheries in New Zealand, timber in Siberia, to Chinese speaking newspapers in California. RH’s grip over PNG goes far beyond the forests, as it is present across all sectors of the economy. The company’s most recent investment in the capital Port Moresby is a project known as Vision City, which contains the largest shopping mall in the Pacific Islands region and is expected to be expanded to include an office tower block, service apartments, a hotel and convention centre. It also owns the National, the largest of the two daily newspapers in PNG, an airline, Tropicair, as well as shipping and logistics companies.

Whereas the group appears as PNG’s superpower, citizens are left powerless. As documented in 2013 Oakland Institute’s report and film, logging in PNG hides a multilayered tragedy of daylight robbery, whereby local communities are being deprived of their resources and their rights, with the complicity of their own government. RH has often been accused in the past of connections within the political elite in the country and of involvement in corruption and violence in relation to its logging operations. In a number of occasions, local police forces have been used to intimidate and arrest local landowners opposed to logging and land grabbing by RH subsidiaries.

A single corporate group, RH, thus materializes the betrayal of the unique constitutional protections that PNG citizens are supposed to enjoy. The 1975 Constitution guaranteed people’s land rights and upheld national sovereignty, self-reliance, and the preservation of natural resources as key principles for the country. It called on the State “to control major enterprises engaged in the exploitation of natural resources.” Ironically, today a major enterprise has turned the statement around and appears to be controlling the state and the country’s natural resources. Will Papua New Guineans eventually decide to put the things back in place?

*Frederic Mousseau, Policy Director of the Oakland Institute, coordinated the research for the Institute’s agroeocology project.

Jimmy Maladina acquitted??? Spare a thought for his partner in crime 

April 21, 2016 1 comment

jimmy maladina

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.

Forest Minister fails to discredit critical analysis

April 21, 2016 Leave a comment

timber heistBy ACT NOW!

The Forest Minister has taken out full page adverts in the media this month [see below] trying to refute allegations of illegal logging and financial misreporting by the logging industry. But his lengthy explanations fail to answer the central allegations and many of his admissions actually add weight to the arguments he is trying to dispute!

The Minister complains that ‘despite the assurances of the PNGFA that all logging is conducted within the law, various interest groups continue to use the issue of illegal logging for their own purposes’. What he fails to mention is that those ‘interest groups’ include bodies like the International Tropical Timber Organisation and the World Bank who were invited to do their studies by the PNG government and concluded the logging was unsustainabe and illegal. What possible motive could such organisations have for publishing false analysis?

The Minister claims ‘since 1994 the Government has engaged SGS to monitor the export of logs to prevent under-valuing and transfer-pricing’, which is completely untrue. SGS counts the logs and checks the export duty paid, it does not check or authenticate the declared log prices – as the Minister later implicitly admits!

The Minister says ‘SGS also confirms all the logs are sourced from legally approved and valid timber concessions‘ – which is completely misleading. SGS merely checks there is a logging permit or licence, it carries out no checks to see if that permit or licence was validly issued or is legal.

The Minister claims Oakland Institute ‘have deliberately used the ITTO composite price for tropical logs to distort the facts’ but then he admits PNGFA does not have any direct comparison figures to challenge the OI analysis, accepts such figures “would indeed be very useful” and then tries to rely on international export prices for plantation teak logs to disprove the OI analysis when such log exports “from PNG are of very insignificant volumes” and “constitutes a very minuscule proportion of PNG’s total log export volume”.  The Minister says the OI log price comparison is ‘rather simplistic’ but admits the  PNGFA does not have any data to allow it to do a better job!

The Minister further claims the OI report “is inept and inaccurate” but:

  1. Admits, since 2014 PNG is the biggest exporter of unprocessed tropical logs in the world
  2. Admits, the Forest Authority has approved logging in 785,000 hectares of land acquired under SABL
  3. Admits, cumulatively, some 11 million hectares of land have been industrially logged and a further 5 million hectares of forest is currently under active logging.
  4. Does not deny almost all logging operations and all log exports are driven by foreign owned companies.
  5. Does not deny the logging industry declares no profits year after and year and does not pay any corporate taxes.
  6. Does not deny the total land area leased under SABL is over 5 million hectares.
  7. Does not deny PNG Forest Products (a plantation based timber company) is the only forestry company paying corporate taxes
  8. Does not deny PNGFA struggles to monitor and verify log export prices and, admits, if given more resources, it would more closely monitor international prices.
  9. Implicitly admits transfer pricing is going on and says the log export tax was specifically imposed to counter transfer pricing!

PNGFA statement 5 April 2016 1

PNGFA statement 5 April 2016 2

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