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Elomar brothers in $9 million legal row over PNG deal

April 23, 2018 Leave a comment

The Elomar brothers in Papua New Guinea.

By Patrick Begley, Sydney Morning Herald

Sydney businessmen the Elomar brothers were busy in 2014.

Mamdouh Elomar was publicly decrying the actions of his son Mohamed, an Islamic State fighter in Syria who would go on to be photographed holding severed heads.

Mamdouh was also vying for Iraqi construction contracts with his brother Ibrahim, arranging a $US1 million bribe for which they would both be jailed last year.

But the pair struck another deal that year, paying $6 million for a logging company only to end up negotiating a $9 million payment from the previous owners after a dispute.

The case, now before the courts, involves the forests of Papua New Guinea and a development fund meant to help lift locals out of poverty.

And it hinges on claims that another businessman stole more than $10 million in assets belonging to the Papua New Guinean people.

Mamdouh, 64, and Ibrahim, 61, were raised in Lebanon in a family of 12 children and worked manual jobs in Australia before building a large construction company, Lifese.

The firm counted a former Supreme Court judge as its chairman and completed projects worth hundreds of millions of dollars.

In time, though, the Elomar brothers became better known for the extremist activities of their relatives.

Mamdouh’s brother Mohamed Ali Elomar is serving 21 years’ jail for his role in planning attempted terrorist attacks in Melbourne and Sydney in 2005.

Mamdouh’s son Ahmed was jailed for four years for assaulting a policeman at the 2012 riots in Sydney’s Hyde Park, after carrying a sign that said “our dead are in paradise, your dead are in hell”.

Then his son Mohamed, formerly a promising boxer, travelled to Syria to become one of Australia’s most infamous IS fighters, before he was killed in an airstrike in 2015.

Terrorism headlines were hurting the Lifese business in 2014, shrinking revenue.

But the Elomars found money in February that year to buy a timber operation called Cloudy Bay from the PNG Sustainable Development Program, a charitable trust part-run by Australians.

Managing $US1.3 billion in assets, PNG SDP funds local development projects with proceeds from the Ok Tedi mine that was once owned by BHP, which handed over its stake in return for immunity from environmental lawsuits.

“We commit ourselves to improving the quality of life of the people of Western Province,” the program says on its website.

The Elomars were joined by another Australian, 25 per cent shareholder Nick Roniotis, in buying the Cloudy Bay timber operation – including logging permits, production plants and a commercial building in Port Moresby – for 40 million kina, about $17 million at the time.

They paid $6.5 million up front, but then defaulted on the rest.

As they faced charges over the bribery in Iraq, the Elomars were negotiating hard over the PNG business to strike a new and unusual deal.

It would have allowed them to keep control of the company while receiving millions of dollars more than they ended up paying for it.

The deal, signed last February, was meant to put an end to a murky dispute.

PNG SDP could have taken back all of the timber operations’ assets, but it decided to forgive the $11 million debt in return for the Port Moresby property alone.

On top of this, PNG SDP said it would pay the Elomars’ company $9 million.

Once the property was transferred back to the development program and the money paid, both sides would relinquish any right to sue over the initial sale.

The deal was fair, according to PNG SDP’s Australian chief executive John Wylie, because it compensated the Elomars for a massive theft on the timber operation.

A former public servant and management consultant, Mr Wylie said the theft was committed by someone working within the development fund before the sale to the Elomars and was only discovered later.

“Physical assets” were allegedly stolen and funds siphoned off to pay for personal expenses, including school fees in Australia.

“The validated quantum of the theft was much more than $9 million,” he said.

The alleged thief, who cannot be named for legal reasons, has been reported to an anti-corruption body in Singapore, where the company was incorporated, Mr Wylie said.

“The PNG authorities are in the process of being informed,” he said. “This is being done carefully through lawyers and has yet to be fully executed.”

Deeds sighted by The Sun-Herald refer not to a theft but “disputes” between the buyer and seller.

Asked why the $9 million payment was to go to the Elomars personally, not the Cloudy Bay company, Mr Wylie said Cloudy Bay had given a written executed authority for it.

“How they divvied up the spoils, as it were – we didn’t want to get involved in that. None of our business.”

The deal has yet to go through.

The Elomars’ former business partner, Mr Roniotis, claimed he was cut out of the $9 million payment. He launched action in PNG’s National Court of Justice to have the sum paid to the timber company, not the Elomars’ venture.

Mr Roniotis also questioned the idea of compensation for a theft, saying he and the Elomars conducted due diligence on the company before buying it and found nothing untoward.

His lawyer, Stewart Levitt, has questioned the negotiations between PNG SDP and the Elomars, who at the time had been facing foreign bribery charges for more than a year.

“It would be extraordinary for the trustees of a public trust to want to continue to do business with people known to be facing serious criminal charges which had been widely reported,” Mr Levitt said.

The Elomars, who pleaded guilty to the Iraq bribery last July, will be first eligible for release in September next year. Their lawyer at the time of the PNG deal negotiations, Abdul Reslan, did not return calls.

The establishment of PNG SDP and environmental damage from the Ok Tedi mine is now under investigation after PNG Prime Minister Peter O’Neill announced a public inquiry in parliament this month.

PNG’s media reeling from Government crackdown on dissent

November 14, 2013 4 comments

Source: Radio New Zealand

Papua New Guinea’s media are reeling from a crackdown by the Government as observers say media freedom is “non-existent”.

Three senior journalists were recently demoted by the national broadcaster, and a media adviser of the Sustainable Development Programme was deported last week.

As a major investigation into corruption from within the Government continues, the Prime Minister is leading a campaign to silence its critics.

Alex Perrottet reports:

In this year’s Reporters Without Borders media report, PNG has dropped six places in the rankings. This month, three editors and producers with decades of experience were told by NBC management they would be continuing in the archives section. It came after reports on the government take-over of the Ok Tedi mine, and on allegations the prime minister is implicated in the allegedly corrupt payments to the arrested lawyer Paul Paraka. The Chair of the Pacific Freedom Forum, Titi Gabi, says there has been strong pressure from the Government.

“TITI GABI: There is concern from individuals about what this means and where the industry might be heading because you know, managers have become the editors and it’s just quite silly, it’s quite dangerous.”

Titi Gabi says the pressure is not just on the national broadcaster.

“TITI GABI: This particular TV company has got instructions from the top, saying you can’t run anything on us that’s negative because if you do, you know, we’ll force you to sell your shares, we won’t renew your licence. So what you have is managers interfering with news – how ridiculous is that?”

The PNG media council has long been accused of inaction. A former editor of the Post Courier newspaper, Bob Howarth, says there’s a deafening silence, apart from social media sites and some brave journalists.

“BOB HOWARTH: It appears that the PNG Media Council has virtually collapsed and there are several looming threats to press freedom in terms of journalists being downgraded in the National Brodacasting Corporation.”

“The managing director of NBC, Memafu Kapera, declined to speak, but issued a press release saying the veteran broadcasters breached editorial policy and failed to follow instructions. But in an email, he would not say which reports undermined NBC’s reputation of fairness and impartiality. Of the three demoted, he writes: Two have fully understood the requirements of their new assignments and they are happy to take on the new responsibilities. They cannot run to the industry for protection using media freedom as a front.

Before his arrest, Paul Paraka had filed an injunction against the media for reporting on the allegations he had received massive payments from the Government. Police say they are now investigating people in high places in the Government, and since the arrest of Mr Paraka, the Government itself has issued directives on reporting.

Last week the media advisor for the Sustainable Development Programme, Mark Davis, was arrested by heavily armed police and deported to Australia with nothing but his passport, after criticising the Government for taking over the fund. The Prime Minister, Peter O’Neil, defended the move, saying Mr Davis’ had breached his work permit by playing politics. Mr Davis defended his role.”

“MARK DAVIS: Of course it’s going to have a political element. I write media releases for the chairman and the chief executive criticising the government, I write advertisements criticising the government’s actions and calling into question its behaviour, that’s my job.”

Social media sites have been campaigning for the PM to explain himself.

Paki’s departure from PNGDP/OTML is a good thing Mekere!

October 4, 2013 2 comments

Is the government’s grab for PNGSDP/OTML a good thing? Its hard to say. What about the departure of Rex Paki from its Board of Directors? To this we can issue a much more definitive yes. While Sir Mekere Morauta may have slammed his replacement by Isaac Lupari, Papua New Guineans should breathe a sigh of relief.

In October 2012 PNGexposed raised serious concerns about Paki’s position on the board following the release of a report on the Paga Hill demolition by the International State Crime Initiative. For our efforts, we were slammed by Transparency International PNG Chairman, Lawrence Stephens, who is also a senior manager at PNGSDP.

He claimed:

“Come on oh nameless ones! Take some deep breaths and ask yourselves if you are really prepared to publicly defend the rights of Papua New Guineans and if it is really necessary for you to throw stones from the shelter of annoninimity. Much as you might like to claim the oppositie there is nothing astonishing in any loyal Papua New Guinean seeing the difference between accusations and convictions. Shame on you, whoever you are”.

The irony is we have men like Stephens and Morautu being held up in the international media as anti-corruption warriors, but what did they do about Rex Paki for all these years?

For those unfamiliar with Paki’s past, here is our original post from 2012:

Over the past 20 years Paki has appeared before two Commission of Inquiries (Finance Department and National Provident Fund), two Public Account Committee Inquiries, and a Supreme Court case where he was slammed by the full court.

Paki was intimately involved in the Paga Hill development in Port Moresby between 1997-2000, a development which has recently been making headlines for forced evictions and corrupt property deals – link.

In January 2004 the Public Accounts Committee reprimanded Paki’s company Ram Business Consultants (RAM) for issuing an “empty cheque” to the Accountants Registration Board, and then “practicing without … formal registration”.

Two years later in a separate investigation – which Paki attempted to block – the PAC found that over an 18 month period (1998-2000) the Public Curator’s Office had paid RAM K1,561,062 (approx US$640,000), without the existence of a contract, proper invoices, or evidence that any work had been done.

Two Commission of Inquiries (COI) also found reason to censure RAM. Following its first appearance, RAM was accused by the COI of receiving “improper benefits” and charging clients “excessive” fees; in the firm’s second appearance, the COI found that RAM had substantially inflated a cash-flow projection, so a prominent client could amplify his damages claim against the state.

In light of these PAC/COI findings, it is perhaps not surprising that most recently in an appearance before the Supreme Court, Salika DCJ, Gabi J and Hartshorn J, described Rex Paki as “evasive and dishonest”, following Paki’s extraordinary efforts to frustrate the process of discovery (Paki was being sued for allegedly overpaying himself as liquidator of Motor Vehicle Insurance Ltd).

Those interested can access the original story in full here:

A second article by Dr Kristian Lasslett:

The debate with Transparency International PNG can be viewed here: