PNGEXPOSED

Have a look at some of the Findings of the NPF Commission of Inquiry, you might just a have a better appreciation about the people now being talked about as a result of the SBS Dateline Video.
Look at how much money was lost then and since and this country continues to loose millions (by now it must be Billions) to a few filthy rich Papua New Guineans with their expatriate friends.
Corruption is derailing this country and the rights of the future generations to benefit from their equal share. We all have to act to stem this at the bud.

NPF Final Report
Post Courier, 2003
This is the 60th 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 20by Prime Minister Sir Michael Somare.

Executive Summary Schedule 6
Of major concern to the commission were large payments to Mecca No.36 Pty Ltd (now South Supa Store) owned by Peter O’Neill and NPF trustee Nathaniel Poiya.

Findings
The commission finds the deposit of K10,833.33 was in respect of Mr O’Neill’s rental allowance for April 1999 and in consequence that K10,833.33 of Mr O’Neill’s funds were held in this account.

* In paragraph 12.3.2.2, the commission made the following findings:
(a) PMFNRE cheque # 266923 for K45,000 was sourced from the NPF Tower fraud money;
(b) As a consequence, K5,000 of the Tower fraud funds remained in this account;
(c) As we have said earlier, we will come back to the payments to Williams Graham & Carman shortly. Mr O’Neill’s evidence was that none of these earlier payments had been made for his benefit so his K10,833.33 should still have been held plus the K5,000 of NPF Tower fraud moneys aggregating K15,833.33;
(d) The cashbook balance according to PMFNRE (Exhibit T1017) was only K10,854.68. Again it is clear either PMFNRE was “using” this money or Mr O’Neill’s or the NPF Tower fraud funds had been used to pay other cheques;
* In paragraph 12.3.2.3, the commission made the following findings:
The two cheques each for K50,000 presented on May 4, 1999, were funded from the NPF Tower fraud money;
* In paragraph 12.3.2.4, the commission made the following findings:
(a) After considering the whole of the available evidence, the commission finds that the sum of K102,300 paid by the Carter Newell cheque # 788441 which was derived from the NPF Tower fraud money was placed under the control of Maurice Sullivan and Ken Barker of PMFNRE upon its deposit on May 4. 1999, and that in exercise of the control so placed in him Mr Barker on the same day directed payment out of such funds of the two cheques # 266924 and 266925 each for K50,000 to PNGBC the first to make an International Money Transfer of the equivalent of K50,000 to Williams Graham & Carman, Solicitors of Cairns Australia and the second to make an International Money Transfer of the equivalent of K50,000 to Mr O’Neill’s former wife Cheryl Caley;
(b) The commission further finds that the bank fees of K36 were also paid from this deposit and that all of these payments were from funds derived from the NPF Tower fraud.
(c) It follows from these findings that of the funds remaining in this PMFNRE No.1 Trust Account after such payments and the debit of bank charges the residue of this K102,300 deposit amounting to K2264 plus the earlier residue of K5000, aggregating K7264 were held out of the NPF Tower fraud moneys and that K10,833.33 was held on behalf of Mr O’Neill;
* In paragraph 12.3.2.5, the commission made the following findings:
The commission finds that this deposit of K10,833.33 was in respect of Mr O’Neill’s rental allowance for May 1999 and in consequence of its other findings that the funds of Mr O’Neill held in this account increased to K21,666.66;
* In paragraph 12.3.2.6, the commission made the following findings:
There is insufficient evidence for the commission to make any definite finding in relation to these two payments of K6000 and K5000.
* In paragraph 12.3.2.7, the commission made the following findings:
The only source from which this cheque for K100,000 could have been fully funded was the deposit of K300,000 on the same day (see (m) above), which was derived from the NPF Tower fraud;
* In paragraph 12.3.2.8, the commission made the following findings:
(a) Cheques # 266930 and # 266931 aggregating K17,379.11 were paid from Mr O’Neill’s own funds;
(b) The dilemma, as we have said earlier, is that if the K10,833.33 of Mr O’Neill was applied in the earlier payment of K50,000 to his former wife, then there would not have been sufficient of his funds to cover this second payment to his former wife;
(c) Again the situation is confused by the use of the MJS/KB code on deposits of both NPF Tower fraud moneys and Mr O’Neill’s moneys and the payment out of moneys for the benefit of Mr O’Neill as well as others;
(d) Later investigations support the possibility that the various credits formed one common fund;
* In paragraph 12.3.2.9, the commission made the following findings:
(a) It is totally clear that the deposit of K300,000 on Friday, May 14, 1999, derived from the NPF Tower fraud was banked with the “MJS/KB” code; that the K100,000 transfer to PMFNRE No.2 Trust Account on the same day was sourced from this deposit; that the K100,000 transfer to Mecca (No.36) Pty Limited the following Monday also with the “KB/MJS” code was also sourced from this deposit and finally that the cash withdrawal of K100,000 on the following Friday yet again with the “KB/ MJS” code was also sourced from that deposit;
(b) As will be seen later in this report, the K100,000 transferred to PMFNRE No.2 Trust Account was also converted to cash on May 14, 1999, and could not be traced further;
(c) On the evidence before the commission, it is clear that the second K100,000 was received by Mecca (No.36) Pty Ltd and that such money was not earned;
* In paragraph 12.3.2.10, the commission made the following findings:
(a) The payment of K100,000 to PMFNRE No.2 Trust Account on May 14, 1999, derived from the NPF Tower fraud and could not be traced further;
(b) The cash withdrawal of K100,000 on May 21, 1999, was derived from the NPF Tower fraud and was received by Ken Barker and later paid to Jimmy Maladina;
(c) The payment of K100,000 to Mecca No.36 on May 17, 1999, was derived from the NPF Tower fraud and it was unearned by Mecca No. 36;
(d) Mr Poiya was a substantial shareholder in and director of Mecca No.36 Pty Ltd (now South Super Stores Ltd). At the time of the K100,000 payment to Mecca No.36 Mr Poiya was a trustee of the NPF;
(e) MR Poiya and Mr O’Neill benefited from the payment to Mecca;
(f) THE benefit received by trustee Poiya was improper and the commission recommends that he be referred to the Ombudsman to consider whether there had been a breach of the Leadership Code by Mr Poiya; and
(g) The benefit received by Mr O’Neill was improper and at the time he was subject to the Leadership Code, being executive director of Finance Pacific.
The commission recommends that Mr O’Neill be referred to the Ombudsman Commission to consider whether there has been a breach of the Leadership Code.
The payments made to Williams Graham & Carman were: See table 1.
The commission finds that all these payments were from NPF Tower fraud money and all were paid to the lawyers in relation to the purchase by Bethgold of the Kanimlba property. The K50,000.00 to Cheryl Caley on May 4, 1999 was from the same source and for the same purpose.
Although Mr Barker and Mr Sullivan are shown as the directors and shareholders of Bethgold Mr Maladina and/or Mr O’Neill had beneficial interests in that company held for him/them by Mr Barker and Mr Sullivan.
The commission’s investigations clearly showed the criminal activities of Mr Barker and Mr Sullivan, former PMFNRE managers who had fled to Australia. At paragraph 12.3.4.1, the commission has found:
(a) Both Mr Sullivan and Mr Barker were involved in the laundering and disposal of the proceeds of the NPF Tower fraud through the PMFNRE No.1 Trust Account and the use of a code in that process strongly suggests “guilty” knowledge which may render both men accessories after the fact to that fraud;
(b) The commission recommended that Mr Sullivan and Mr Barker both be referred to the Commissioner for Police to consider charges for aiding the offence of fraud and any other offences;
(c) The commission also considered that Mr Barker:
(i) LIED on oath regarding the refund of K99,000 to Mr Maladina;
(ii) falsely denied knowledge of payments of K102,300 and K300,000 made by Mr Maladina to PMFNRE No.1 Trust Account; and
(iii) falsely stated that K60,000 and K690,000 were used to purchase Treasury Bills (see paragraph 12.3.4).
As Mr Barker is now permanently residing in Australia it would be a waste of resources to refer him to the Commissioner for Police to consider charging him with perjury under the Commissions of Inquiry Act. If he ever returns to PNG, he should be so referred.
As the commission’s inquiries continued it became clear that many payments were made to or at the direction of Mr O’Neill, that these payments far exceeded the total funds legitimately held by PMFNRE and that a significant portion of these additional payments were sourced from funds which demonstrably were the proceeds of the NPF Tower fraud.
In trying to explain these matters, some of Mr O’Neill’s explanations were unacceptable, internally inconsistent and contrary to clearly documented factual evidence. As inquiries progressed further and the successive ledgers were examined in more detail it became clear that Ledgers 18 and 31 were Mr O’Neill’s own ledgers.
At the end of the day the commission was forced to conclude that Mr O’Neill actually owned PMFNRE.
To test Mr O’Neill’s unsatisfactory evidence, the commission constructed an extension of the cashbook as at paragraph 12.3.6 as follows:
The reconstructed extension of cashbook from May 30, 1999 to September 29, 1999. See table 2.
It was then able to make the following further findings.
Findings
This deposit of K10,833.33 was in respect of Mr O’Neill’s rental allowance for June 1999;
* At paragraph 12.3.7.2, the commission found that:
(a) The two cheques for K55,120 and K920 account exactly for the proceeds of the Nambawan Finance cheque for K56,040 banked the previous day and the commission so finds;
(b) The receipt of K55,120 into the No.2 Trust Account was kept “off book”;
* At paragraph 12.3.7.4, the commission found that:
The cheque #028585 for K275,000.00 obtained by Hunter Real Estate Limited was proceeds of funds paid out of IBD held by the Registrar of the National Court, which was the subject of litigation between Mr O’Neill and Mr and Mrs Donald.
* At paragraph 12.3.7.5, the commission found that:
The deposit was in respect of Mr O’Neill’s rental allowance for July 1999;
* At paragraph 12.3.7.6, the commission found that:
The deposit of K275,000 into PMFNRE No.1 Trust Account on July 16, 1999, was paid into the No.2 Trust Account in three separate cheques and receipted as a deposit on PMFNRE sale of property by Hunter Real Estate.
The evidence of Mr O’Neill’s involvement with regard to the No.1 Trust Account is discussed at paragraph 12.3.8 and it is clear that the only funds paid into or held in the No.1 Trust Account for Mr O’Neill aggregated K32,449.99 or on the view most favourable to Mr O’Neill the total would be K57,499.99. Yet quite clearly the sum of at least K167,397.11 was paid out for his benefit or at his direction.
At paragraph 12.3.8.1, the commission has found that:
(a) Given the above explanation, the commission is compelled to conclude that the source of the differentials was Mr Maladina’s funds from the NPF Tower fraud and the explanation given by Mr O’Neill does not withstand testing and cannot be accepted.
(Mr O’Neill’s explanation is further reported below at paragraph 12.3.8.2).
(b) The PMFNRE No.1 Trust Account appears to have been treated as a common account containing the funds of Mr Maladina and Mr O’Neill and some other transactions.
Mr O’Neill’s explanations included claims that some of the payments were sourced from or paid as rental on his properties but his claim did not withstand scrutiny as other arrangements for rent were actually in place as recorded in detail in paragraph 12.3.8.3 of the Schedule.

PNG is growing and human capacity building has to be elevated to meet UN Development Goals and PNG Vision 2050. Through sports this government and future governments, if they are serious about this country will see massive progress and it is never too late to make a start somewhere. We have started by building our spectacular state of the art sporting venues and we are asking our good Minister for Sports and 2015 XV Pacific Games to consider some of the views expressed in this column.

In the age of modernity, Papua New Guineans are attracted to adopt European norms and values. In the process, Papua New Guineans are confused, and are faced with many dilemmas of modernization and lost touch with traditional cultures and values. Papua New Guineans are urged to look back to our ancestors’ wisdom, develop and adopt traditional values and norms again for the benefit of the whole community as expressed in our national constitution. And finally, as Papua New Guineas, what do we do to promote our cultural values in this time of cultural muddle?

by YAKAN LEPAKALI

The CEO and the Directors of Susu Mam Inch have to consider it as serious.

PNG NEWS


Tania Nugent is credited with starting popular Papua New Guinean children’s television program Kids Kona. She was a television presenter of Australian TV program ‘Nexus’ for many years before becoming the Managing Director of Makoda Productions Ltd, a PNG registered company incorporated on the 4th of July 2014 which has a total of 2 shareholders - one of whom is listed as Australian, and has 5 directors – two of whom are listed as Australian.

Over the last one week, Tania Nugent has personally received a lot of praise and credit for the production of the Opening Ceremony at the Fifteenth South Pacific Games. However, the Opening Ceremony which Prince Andrew, the Duke of York, personally described as the “most amazing spectacular opening ceremony” also received wide spread criticism - primarily due to the alteration of the National Anthem which Pastor Joseph Walters and also Hon. Tobias Kulang member of parliament for Kundiawa-Gembogl criticised in an article published by the Post Courier on Tuesday this week. It is an issue which more than 900 people are following on PNG NEWS and hundreds of people have commented about on PNG NEWS.

Original dress designed by Anna Amos – picture published in April this year by Legacy Talent Management

During the Opening Ceremony, as witnessed possibly by millions of viewers around the world, a group of children sang an altered “version” of the National Anthem with the inclusion of the word “daughters” at the beginning of the National Anthem and the omission of important wording at the ending of the National Anthem. Instead of singing the words “O arise all you sons of this land” the children sang “Oh arise sons and daughters of this land”.

The ending of the National Anthem, which arguably is the most fundamentally important part of the National Anthem, was excluded during the recitation on the night of the Opening Ceremony. The lyrics excluded being:

‘Now give thanks to the good Lord above for His kindness, His wisdom and love for this land of our fathers so free, Papua New Guinea. Shout again for the whole world to hear, Papua New Guinea. We're independent and we're free, Papua New Guinea’.

Tania Nugent was contacted on Tuesday and asked to respond to questions put to her as soon as possible about two separate but related issues. Firstly, Tania Nugent was asked “Is it true that Makoda Productions is responsible for altering the National Anthem and having the National Anthem incorrectly sung during the opening ceremony of the Pacific Games??”

Her response: “Regarding your question about the National Anthem lyrics, yes, Makoda Productions is responsible for all the components of the creative in the Opening Ceremony including that version of the National Anthem.”

As pointed out by a member of PNG NEWS, under the National Identity Act 1971 improper use of a National Anthem is an offence. However the Penalty which it seems has not been changed for more than 40 years is ‘A fine not exceeding K1,000.00’. Perhaps Hon. Tobias Kulang can address this issue on the floor of parliament on behalf of concerned citizens during the next sitting of parliament and move to have the penalty greatly increased as soon as possible.

The recitation of the Preamble to the Constitution during the Opening Ceremony also caused a lot of confusion. Its alteration made many people mistakenly believe that the National Pledge had also been altered. Most of the official Preamble (which includes the National Goals and Directive Principles) in the Constitution was excluded during the recitation of the Preamble during the Opening Ceremony. Instead selected wording derived under only two National Goals: ‘2. Equality and participation, and 4. Natural resources and environment’ were included at the end of the recitation. However both parts were also altered by the inclusion and exclusion of different words and therefore also incorrectly recited.

On the second issue, Tania Nugent was asked the following questions:

“Is it true that a fashion designer called Anna Amos approached you to buy a fashion design (described by Anna Amos as her 'red signature dress') which Anna Amos claimed you refused to buy?”

“Are you or any person employed by your company Makoda Productions in any way responsible for having any design by Anna Amos reproduced without the permission of Anna Amos for a model to wear during the opening ceremony of the Pacific Games?”

Anna Amos, a well-known PNG fashion designer who many people would agree produces unique, stunning, eye-catching pieces, had publicly alleged that Tania Nugent “stole” her red signature dress – a very striking design that captures and displays the very essence of modern PNG fashion in true PNG colours.

Anna Amos tagged Tania Nugent in a Facebook post on July 4 at 8:43pm and told her: “Oh my gosh Tania Nugent..you stole my red signature dress for the placard bearer at the pacific games opening...after you refused to pay for my original design.. do you understand that you stole my talent and intellectual property rights? AA tribal is a registered company so I’ll see you and your team on Monday..”

Tania Nugent expressed disappointment at the post by Ms Amos and has denied that any copyright laws were broken. “Suffice to say we have nothing to hide and did not break any copyright laws” she said in response to questions put to her.

“She has my number and could have spoken directly with me” she also said.

However, according to Section 4 of the Copyright and Neighbouring Rights Act 2000, it appears that the ‘red signature dress’ design which was easily recognizable to many people as a design created by Anna Amos would be legally considered “protected works” and eligible for copyright. Subject to Section 17 of the Act, ‘the economic and moral rights in respect of a copyright work shall be protected during the life of the author and for a period of 50 years of the date of his death’. The Act further stipulates under Section 17, “In the case of a work of applied art, the economic and moral rights shall be protected for a period of 25 years from the making of the work.”

In a prepared statement received by PNG NEWS on Thursday about the ‘Placard Bearer costumes’, Tania Nugent said “Makoda Productions approached fashion designer Anna Amos to see if she could make 24 red, black and gold costumes based on one of her AA Tribal dresses.”

“The obstacle That prevented us from using the AA Tribal original design was the fee that Anna Amos quoted of K1000 per garment, a total of K24,000.”

“To spend K1000 on one costume would be an extremely irresponsible use of the funding we had for this ceremony.”

“The costume is inspired by, but not stolen from AA Tribal. It is also inspired by our nation flag and traditional block printing techniques” Tania Nugent also claimed.

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*A statement by Anna Amos, the sole shareholder and director of AA’s Tribal Fashions Limited, in response to the statement by Makoda Productions Limited (as reproduced below) is expected to be made later after Anna Amos speaks with her team.

MAKODA PRODUCTIONS LIMITED

Public statement in response to the social media conversations and questions regarding the placard bearer costumes in the PNG 2015 Pacific Games Opening Ceremony.

Opening Ceremony Producer, Makoda Productions has never attributed the design of the placard bearer costume to anyone or denied any connection with the costume to the AA Tribal dress.

Makoda Productions approached fashion designer Anna Amos to see if she could make 24 red, black and gold costumes based on one of her AA Tribal dresses.

The obstacle That prevented us from using the AA Tribal original design was the fee that Anna Amos quoted of K1000 per garment, a total of K24,000.

To spend K1000 on one costume would be an extremely irresponsible use of the funding we had for this ceremony.

There was a cast of thousands to transport and feed every day for a month of rehearsals, hundreds of people who came from the Provinces to accommodate and look after, more than a thousand costumes to put together, the hundreds of props and set pieces to create and a crew working on round the clock shifts.

We understand that Anna Amos is a leading influence on the PNG fashion scene but we could not engage her services at that price.

With only 10 days until the ceremony and 24 tailor made costumes to produce we elected To proceed with our red, black and gold PNG theme. Appropriate changes were made for the costume pattern, alternative prints were sourced and the costume pattern and the print design do not breach any copyright. The costume is inspired by, but not stolen from AA Tribal. It is also inspired by our nation flag and traditional block printing techniques.

Makoda Productions is not selling the costumes or competing in AA Tribal’s marketplace.

In spite of it not being an original AA Tribal design, this costume was still an opportunity to make reference to PNG and Pacific fashion through the influence of one the regions emerging fashion designers.

We are disappointed that the exposure given to Anna Amos through her influence on this costume in The Opening Ceremony has been negative and not positive.

Makoda Production would like to thank the many numbers of other Leading Papua New Guinean artists, designers and musicians who so willingly embraced the opportunity to come On board and contribute in the true spirit of patriotism, in the biggest collaboration by our creative artists this country has ever seen.

by PAUL AMATIO
 
A wild beast from the jungle will always remain that – a wild beast. No matter how many years are put into taming it. Even if from birth, the beast is domesticated and trained by humans to recognise and conform to acceptable standards of behaviour, that beast will always remain wild and “uncivilised” at heart. And it is to be approached with caution at all times.
Are we humans any different? Or are we just putting on a façade and take off the mask to reveal the true beast within?

A lion brought up in a household as a household pet for 5 years and later released into the wild had no trouble whatsoever joining a pride and integrating into the lion society. Although he recognised his former keepers and invited his wives to come say hello, in the end he remained a lion. A crocodile kept as a household pet for 15 years turned on its keepers and attacked them. A boa constrictor turned on its keepers after 10 years of being “domesticated”. Other “pets” like tigers and leopards have been known to do the same. Hence the saying that you can take the animal out of the jungle but you cannot take the jungle out of the animal.

Papua New Guinea has experienced contact with the outside world for over 100 years now, the last 40 of which have been as a self governing and then politically independent state. Yet the behavioural patterns evidenced throughout the country call to mind the behaviour of wild animals. Watching some National Geographic movies of animals in their natural settings makes me believe that none of us are truly educated or as civilised as we would like ourselves to be.

So are we Papua New Guineans like these animals from the jungle? How is it that we cannot take the jungle out of ourselves after we have been taken from the jungle?

We put our self interests and welfare before that of the nation, friends and community; our politicians while preaching unity and one nation on the one hand, import their relatives and wantoks into national capital (and other towns and cities) to influence the outcome of elections on the other; our people forget that a game played on a field in another country thousands of kilometre away act as if it was a matter of life or death for them and react with extreme violence at the outcome of that game; we treat our symbols of national identity as temporary tags and rags of no significance; we quickly and easily forget matters that affect the community, society and nation which we are an integral part of which has significant social and economic ramifications for everyone and refuse to forgive the slightest personal insult to us even if that has no bearing what so ever on the quality of our life except our feelings; we always come up with the best and most novel excuses in the world to do nothing but take the opportunity to complain at the top of our voices whenever we can hoping that someone else will correct the cause of our complaints for us.

Now what is the best way to tame an animal? Keep it fed and it will stay quiet and content and let you get away with almost anything. And that is exactly how the outside world treats us. We are toothless dogs just good for barking. When a bone is thrown to us, we fight over it while someone else runs off with the meat.

That is PNG. That is you and I for we are PNG.

On the eve of the Pacific Games while we are heading for history and glory, I hope we take time to reflect of what it means to be a Papua New Guinean. Let us stand up for our country in all ways – together and as one – against corruption, against violence, against being second class in our own land. Our athletes have shown we can be first class. Can we as a country pull together and be first class as a nation in all other things?

by CHARLES KERUA

Background
I am prompted to write this after reading an article on the Australia’s Financial Review on a court battle between Oil Search Ltd & Inter Oil Ltd over the development rights (or pre-emptive rights) of the Elk-Antelope oil fields in the Gulf Province; a ruling which is expected to be handed down this March 2015 in London, UK. Many intelligent people will agree that our State & its people have “thrown away” so much of our natural resources so cheaply in the name of foreign investment and foreign capital injection. (Let us keep our discussion within the mineral & petroleum sector, and leave for a while other equally important sectors like forestry and fisheries). Proponents of foreign direct investments (FDIs) in our extractive industry have meticulously “seasoned” the spin offs, or so called “economic benefits”, of FDIs such as job creation, substantial foreign reserve base/cover, and tax revenue as a rosy cover to lure the State & its people into committing so much of our natural resources. However, looking at the other side of the coin, the picture is different. The State, on behalf of the people of PNG, may have unwittingly given up so much in exchange for an exceedingly lesser returns on our natural resources. We have become losers in most of these resource development deals since the 1980s beginning with the Bougainville Copper mine (BCM). Have we been exploited by foreign investors? We wonder. And the answer is “Yes” - we have been exploited to the core and our natural resources been “raped” with much consequences to our society and the environment. (As it is not the focus of this topic, let us self for a while the important discussion on social ills & environmental damage and degradation caused to our society and environment by the activities in the extractive industry).

Evidence of Loss Revenue in the Mining Sector (1982-2002)

Evidence from recorded data reveals the bleak reality of how Papua New Guineans have lost considerable amount of revenue in the extraction and sale of our natural resources. Between 1982 to 2002, PNG's extractive industry has reported to have extracted and sold K24 billion (2002 kina value) worth of minerals. And what portion of this remained onshore, including tax revenue, for the people of PNG? A mere 14.5%- which means 85.5% of the total proceeds from the extraction of our resources gone off shore to foreigners, either remitted out as capital expenditures, wages of foreign workers or dividends to foreign shareholders.

Leakages in the System

We need to close this massive leakage if we are to fully participate and benefit from our natural resources. Since the days of BCM we have been so generous to foreign multi-national corporations. We have given, and surprisingly continue to give, tax holidays, our “rights of ownership” over land and resources through prospecting & development licenses, exemption of import duties on capital equipment, and so generously giving without free-carry interest conditions to multi-national corporations. Ironically, most of these billion-dollar corporations’ total budgets and profits dwarf PNG's National Budget, or even the GDP. There are fears that imposing new rules or instituting aggressive regulatory regimes might act as a deterrent for these so called “most crucial economic players” to invest in our economy. Whether or not investors may react to these regime changes in the 21st century is something for the academicians and researchers to tell us. However, one truth that still remains is: so long has the global population maintains its growth, the demand for natural resources and the “hunt” for the natural resources to feed this demand will continue to co-exist. Hence, the notion that regime change will scare corporate conglomerates to invest in PNG is still a mare bluffing.

Options To Close the Leakages

The thrust of this article is to promote the idea of how we can close these unwarranted leakages of “our” revenue to foreign hands so that we can divert them internally to develop our economy. This is not to say we forget the interest of our foreign investors. Off course we need a win-win situation so that our foreign friends who come in to develop our natural resources make a “reasonable” return on their investment. The problem, however, lies in the State’s understanding of the term “reasonable return”. Most often, I suppose, we have given little consideration to understand the balance between how reasonable is a “reasonable return on investments” and how reasonable is the State’s willingness to give away our wealth. Have the State given away too much of our resources to foreign investors in guise of FDIs? I would likely think so. Contract negotiations by our governments with resource developers are held behind closed doors, while the general populace and resource owners are kept uninformed and suspicious. Most often we have seen resource owners being “dragged in” and “forced” to accept certain terms of the agreements relating to royalty payments that may or may not be in their favor in the long term. Have the “powerful” multi-national corporations thrown down our throat and dictated how much we should take? Since everything happens behind closed doors, we would not be able to understand the aggressions of corporate muscle and the State’s bargaining positions to counter these effects on the deals to our advantage. Only those representatives who are in the inner circle of negotiations would have a better knowledge. To stop such leakages, three approaches are recommended or proposed: (1) Increase Royalty Payments, & (2) Impose Free-carry Interest, and (3) Apply Corresponding Corporate Tax Reductions. A “proper combination” of the above three approaches can be used together to maximize the States returns on the sale of our natural resources. I’ll elaborate these three approaches further below.

Increase Royalty Payments

The first step is to increase the State’s share in “royalty payments”. Current royalty payments paid to our landowners and the State are calculated based on the “well-head value” (or “mine-head value”) of natural resources. Usually, wellhead (mine-head) value is derived by calculating the “gross value” of the total value of minerals (gold, copper, oil or gas) recovered from the project and deducting all the costs incurred for the project to the point of sales. These deductible costs are costs associated with the extraction, processing, storage and transportation of extracted (and/or refined) minerals to the point of sale. (Note that the details and methodologies of how such calculations done for our natural resources should be provided as a separate schedule by our respective regulatory authorities such as the Mineral Resources Authority or the Department of Petroleum & Energy). Under the existing legislations of Oil & Gas, the State is allowed a royalty of 2%, while the host provincial and local government is allowed another 2%, which is termed as the “development levy”. For the mining activities the royalty payable to the State is only 2%. All these royalty benefits are calculated as the proportion of the wellhead value and “not” based on the gross value. When comparing with other natural resource host countries, the royalty rates offered to us is significantly small. Our neighbor Australia, by law, have allowed for greater benefits under the royalty payment terms. In Western Australia, for example, the royalty rates for oil & gas development projects is around 10% based on the wellhead value. For coal in New South Wales in up to 8.2% also based on wellhead value. For Australian mining companies mining iron ore, the federal and state royalty rates are 6.5% and 22.5% respectively. In the USA, royalty payments to the State for producing oil & gas is around 12.5%, while some States in the USA are negotiating for still better terms. Russia also allows for better royalty terms which are around 6% and 8% for copper and gold productions respectively. These are few examples of other countries that have instituted favorable terms in royalty payments in their various legislative instruments.

For PNG, we must also improve our royalty rates. It is recommended that the State should look at increasing the royalty rates up from the current 2% to something better, for example between the range of 10-15%. In addition, we should look at calculating the royalty payments based on the “gross value” and not the well-head (mine-head) values. In the USA, for example in the States such as Kansas and Oklahoma are negotiating and bringing before the courts to change the old method of calculating royalties on well-head instead to base their calculations on the gross value oil & gas productions. If we take similar approach, we can maximize our value of our natural resources under this benefit sharing arrangement.

Impose Free-Carry Interest

A second approach, which can be used in conjunction with the first one, is to impose a “free-carry interest” condition in the development and extraction of our natural resources. Obviously, this has to be done by way of changing our existing laws governing our oil, gas and mining sectors. We need to learn from countries such as Ghana, Sierra Leone, Guinea and Ethiopia which respectively has a free carry interest of 10%,10%, 15%, and 5% in all mineral development projects. The South African government has made the headlines in 2013 for implementing free-carry interest policies on its oil and gas industry. It planned to have a 20% free-carry interest in all new oil and gas ventures and to acquire a further 30% at market- related rates. Also, while not going into the details, Saudi Arabia, a major member player in the OPEC, in the early 1930s developed a model through concessions that protected the interest of the State & its people from exploitation by foreign investors on its oil fields. Although the Arab state at that time had a weak bargaining power to negotiate favorable terms with the US giant Standard Oil Company of California, the wise king Rahman Al Saud cleverly inserted provisions in the agreement for reviews that later allowed them to negotiate favorable terms in ownership, profit sharing and share purchase options. From a 0 percentage (%) shareholding in 1933 in this oil producing company - Saudi Arabian Oil Company, the Saudi Arabia government increased its shareholding to 25% in 1973, 60% in 1974 and 100% in 1980. The Kingdom of Saudi Arabia now has full (100%) shareholding in Saudi Arabian Oil Company and is boasting as one of the largest oil producing companies in the world. These are few examples of what other States as custodians of their people’s resources have done. For PNG, we need to look out abroad, think ahead and learn from these countries to design policies and legislations that can give us the possible maximum returns on our natural resources.

Reduce Corporate Tax on the Extractive Industry

The third proposition is to reduce the corporate income tax for companies extracting our oil, gas and mineral ores. This is considered as a balancing approach. The principle idea behind this approach is in two facets: (1).To at least recognize the foreign investors for the loss they may have incurred as the result of the State imposing the above two approaches, i.e. increasing the royalty rates and for the free-carry interest, (2). The State’s “trade-off” of imposing increased royalties and free share interests. State’s revenue based on income tax is variable and can sometimes be as low as zero kina. We have seen such cases recently with Newcrest Mining Ltd in Lihir where the State never collected any revenue because the company reportedly made a loss. Revenue on income tax is unpredictable and unreliable which can have significant impact on the government’s fiscal forecast and needs. This is the same for dividend payments. If the companies make loss, the State cannot receive a dividend from these companies. To avoid such uncertainty corporate income taxes and dividend payments on all mining and oil & gas companies will never be considered as the main source of revenue generation for State on its natural resources. Instead, by imposing the above two approaches, the State is now in good footing not to panic when companies announcing losses. We just cannot rely on 30% tax revenue on declared profit as the reliable source of State’s income. There also risks of companies not reporting accurately or may even falsify balance sheets and profit and loss statements. We have seen cases like this in the USA where the accounting firm Arthur Andersen erroneously wrote the financial reports in what was then termed as the “Enron Scandal”. We have also seen cases with Newcrest Lihir which has been declaring loss after loss yet continues to produce gold bars. In such cases, tax revenue is always unpredictable. Reducing corporate tax rates while at the same time increasing royalties would place our State in better and predictable environment to meet its fiscal needs and develop our economy.

Setback of Our Mining Act 1992 and Oil & Gas Act 1998

Looking at our own governing laws for the extractive industry, the Mining Act 1992 & Oil & Gas Act 1998, there is no provision for a free-carry interest, compulsory future share transfer to the State, share options for State participation, or a provision to increase royalty payments. The Oil & Gas Act 1998 gives the State only the right (but not the obligation) to acquire up to 22.5% of interest in any oil & gas development projects, while Mining Act 1992 gives the State the right (but not the obligation) to acquire up to 30% of interest in any mineral development projects in the country. This right to participation is only allowed at the development stages, and not during the production periods. Using these provisions, we have seen the State through the former Somare government acquired 22.5% of the PNG LNG project through borrowed money from IPIC. Looking at it quite literally, I would consider this arrangement as a “national tragedy” when we had to borrow funds to buy our stake in our own natural resources. The current arrangement between the developers and the State is like this: The capitalists are coming in with their money into the country, buying out “full rights” for the use of our land through prospecting licenses and start looking for minerals. Once they have discovered some minerals, they give notice to the State to participate. But to do that, the State must bring in its required contribution as a proportion of the total project cost. (Whether or not the projects costing are properly done by the project proponents and not miss-leading is another important issue of discussion). Failure to provide these funds would be seen as the State not willing to participate and which gives the developers the automatic right to take full ownership over the project. The most logical question to ask against this type of arrangement is: Is the State being fairly compensated for offering its natural resources? This question becomes clear when we separate the State into two parts, one part as being an investor and the other as a resource owner. Under the current regulatory regime, the State is being compensated as an investor for participating in the purchase of share equity, either 22.5% oil and gas projects or 30% mining projects. The State, however, is never recognized or compensated as the owner of the natural resources. Therefore, it can be clearly noticed that we as resource owners have been unfairly treated and grossly underpaid under the current regulatory framework.

Conclusion & Recommendation

There are few recommendations I wish to provide after this lengthy discussion.

1. Review the Oil & Gas Act 1998 and Mining Act 1992, especially those that are governing the royalty payments. Increase the 2% rate to some rate higher, between 10-15%.
2. The royalty payments calculated must be based on the “gross value” and NOT “well-head or mine-head value”
3. Reduce the corporate income tax of all mining, oil & gas producing companies from 30% down to a reasonable rate.
4. A scenario analysis of the three approaches should be conducted to ensure the State gets the possible maximum benefit. It can also be used to find the appropriate corporate tax rate for the firms in the extractive industry.

Appeal and Advise To Our Politicians and Bureaucrats

As a general appeal to our government, let us reconsider and review some of the existing regulations that do not allow us to fully participate in benefit sharing. The rate at which we are giving in too easily to industrial lobbyists and multinational conglomerates is alarming and worrying. We need to take complete charge and control of our resources NOW! We should balance our current fiscal needs with the needs of the future generation. Our national leaders & bureaucrat should never be so quick and fuss about signing documents. They need, especially at this time, to critically analysis development prospects before putting the ink on any contract paper or issuance of prospect and development licenses. Let us think and do things better for the good of our country and its future.

Our politicians, law makers, and bureaucrats should be brave and think straight. Let us throw out of the window greed, ignorance and lack of understanding. Only strong man like Ghandi or Mandela “think” for their people, so lots hope to be such.

by CHRISTOPHER PAPIALI

1. Humble Beginning of the Pacific Games

2. Controversies

3. Commercial interest

4. Security – PNG provided the best security protection to properties and personnel over the two weeks. Hon. Beldon Namah, who is a vocal critic of the current government says the three disciplined forces – Police, Defense Force, and Correctional Services have provided effective security throughout the games (Post courier 17/07/15).  No vehicle theft, harassment and no misbehaviour was reported and this in itself is the measure of the prudent security management system of the Games Organising Committee. Prior to the games, Fiji cautioned its players, athletes and officials to be cautious while in Port Moresby and this has gone under the waters. The K70 million budget under security operations have got results. Amidst the tight security arrangements, something of trivial surfaced when some Port Moresby residents were complaining about the high heavy escorts to athletes and officials to and from events venues to Games Village. Could it be all right if the athletes were not escorted so that they can feel the free atmosphere and assimilate into the city life? A thought to ponder isn’t it?
5. The K1.4 billion budget, was it worth? – The national government budgeted K1.4 billion for the games. Critics to the government said it was too much money going into the hands of Justin Thatchenko.  When the 2014 Melanesian Festival of Arts and Culture was hosted in Port Moresby  last year the Minister for Sports and Pacific Games was the first to question the budget appropriations – whether the amount allocated by the National Government truly met its intended purposes of the festival. The critics think it is now appropriate also to tell the tax payers the details of the expenditure of the K1.4 billion; how much was given to foreign owned companies and consultants and how much was given to the nationally owned companies and individuals so that more than half of that spent was circulating in the local economy. Overall, this current government has to find money somewhere to meet the shortfalls as most District Service Improvement Project funds (DSIP) and Provincial Services Improvement Projects funds (PSIP) have not been released as we are approaching August.  During this month’s parliament sitting, the Prime Minister should be able to clear the air on this issue so that projects committed by MPs throughout the country are effectively delivered.

6. K5.5 million into PNG sports personnel. Is it justified? As of Friday 17th PNG’s tally was 64 Gold, 53 Silver, 51 Bronze. For 64 Gold it equates to K1,280,000, 53 Silver is K530,000 and 51 Bronze is K255,000. The total amount is K2,065,000. Speaking of government’s initiative Gold Medallist, Tika Toua says she has not received substantial amount of assistance from the successive governments although she has sacrificed her life and her family for lifting the image of the country that is ravaged by poverty, vicious cycle corruption, and the growth of politician-cum millionaires. Some think if the gold medallists pocket K20,000 each they may squander, while some say money should not be given as incentives as this will kill the true spirit  sportsmanship. Meanwhile the Sports Minister is adamant that such money should assist the athletes with their basic sporting needs so that they stay focused and competitive. Given these contrasting views, sports development is more than the oil and gas we all hear on every lips of politicians. Sports development transforms lives for the better and is the second most important social activity to religious activities in the history of mankind. Thus, it is better to take a step forward to walk the thousand miles rather than standing still, afraid to embrace change for the better.

7. Disqualification of NZ soccer team. Who was involved? In the U/23 men’s Olympic qualifiers game New Zealand was disqualified to play Fiji in the finals because of Deklan Wynne citing his ineligibility. Some questions have to be answered as to how Deklan was first identified as a player born outside of NZ and who was behind the push to kick off the World Cup Qualifier game as quickly as possible prior to the Opening of the 2015 Pacific Games.  FIFA politics infiltrated into the 2015 Pacific Games, which has never occurred before. The 2015 Pacific Games Organising Committee was very silent on this issue as many of them were new to OFC structural and political affiliations. During the FIFA World Congress Meeting, NZ put its hands up to vote against Joseph Blatter and this might be the reason the ball was dropped on NZ U/23 soccer team. Meanwhile, a NZ athlete posted some very racist comments on instagram saying what he saw during the Opening Ceremony depicted cannibalism and as a result he was kicked out to safe embarrassment to the whole NZ team that was participating at the games.  One formidable lesson Papua New Guinea can learn from this experience is that our cultures and traditions have not been marketed and known to our close neighbours like New Zealand. Secondly, there are foreign media out there who continue to write negativity on PNG and a huge challenge lays ahead for PNG Government and those work in Foreign Missions and tourism organisations to combine instead of operating separately and drive the message of PNG’s unique cultures and traditions to the outside world and also make available PNG’s profile to them so that people acknowledge and respect our traditions.

Note:  You can contact the writer on chrispapiali@gmail.com

by GREG WAIYAP
The XV Pacific Games celebrations are over and now we have to get back to business. Among the debriefing, a reconciliation of public funds spent on the various infrastructures will undoubtedly be carried out in due course. Though many unlearned Papua New Guineans naively celebrated the scenic modern infrastructures, the thinking ones held back their emotions as they rationalise the net benefit gained for the overly priced two weeks event.  

It is open secret that many of the companies involved in the construction of the Pacific Games facilities doubled, tripled or even quadrupled the price of those projects. Variations were approved in millions of kina. Whilst many facilitates were completed just before the games, one company that has let Papua New Guineans down big time is Curtain Brothers, owned by Townsville Based businessman Sir Mick Curtain.

This company was contracted to construct the Sir Hubert Murray Stadium at Konedobu. At some stage of the project, Curtain Brothers were complaining about not having the funds to complete the project. It is understood the State through the NEC approved a substantial tax rebate (believed to be 150%). Despite the generous tax incentive and numerous unjustified variations, the project was not completed on time. We had no choice but to host the games there in embarrassment. You need to just drive through and see the amount of work still pending completion.

Zooming further, Curtain Brothers were also contracted to complete the Paga Hill ring road before the games which they promised to deliver on time. It is believed the National Capital District Commission paid double the price of the road to get it ready. Still the road has not been completed and has come to an abrupt stop.    

Now Curtain Brothers is believed to be negotiating with the Government to sell its “dry dock” (not a wharf) at the Motukea for almost a billion kina. The controversial sale is believed to be overly inflated. Given the exorbitant value of the land, it was believed that the sale would be for the entire Motukea estate owned by Curtain Brothers. However, according to a recent report by the Townsville Bulletin, Sir Mick is quoted as saying “Curtain Bros hoped to sell a small part of the port ­development”. See http://www.townsvillebulletin.com.au/business/png-government-to-buy-part-of-curtain-bros-motukea-island-port/story-fnjfzyqo-1227354785277
One wonders how much is this small portion worth? How much are the taxpayers paying for this dry dock?
Can the authorities including Police Fraud Squad and Task-Force Sweep investigate this company and deal with those who are unjustly enriching themselves in broad daylight?

 byYAKAN LEPAKALI

It was shocking, shocking in a sense of embarrassment to read in the Post Courier (16/07/2015) the revelation of disparity that is evident in the city of Port Moresby. An athlete, after the games, went strolling to the outskirts of the city only to envisage people in settlements worse off than people in settlements in Fiji. Another commented, people have an attitude issue and generally dirty. 

I don’t want to buy into the comment on people being generally dirty but on the notion of attitude and poverty, this is a really check. Such observation must be considered as constructive criticism to take an informed approach alleviating the status quo rather than dwelling on the negativity. Adding to the despair, upon arrival of the athletes at Jacksons international airport, waiting buses ferried the athletes away to the gaming village but disgraceful to watch luggage loaded onto open-back trucks exposed. Luggage for the athletes should have been transported in an enclosed but wasn’t. 

It depicts lousy arrangement and those responsible should burry their heads in shame. If we are talking about competing in the international scene, potentially, 2015 Pacific games was the occasion to prove our competency and capacity to compete and organize events of international flavour impeccably from the minute to the magnificent facilities that we ever boastful about. We have showcased world class sporting facilities according to the testament and exaggerated on our achievement in short time frame. 

We may go around chest beating and ask for accolades and hold ourselves at high esteem for magnificent sporting facilities for 2015 Pacific games and success story on the delivery of games, however, the worst is, driving the athletes through flyover, what was seen speaks volume of the social disparity exist right in the heart of the city and it evidently depicts country as a whole. First impression is always important. 

We have impressed our visitors from the Pacific with the first impression when they were driven via flyover and showed them shady Erima suburb and just before reaching the newly constructed round about, to the right, tin makeshifts mushrooming on the hillside is a complete eye sore. It is disgusting to envisage slum on the hillside in the heart of Port Moresby city whilst enjoying the ride driving on the newly constructed flyover. Adding to the distastefulness, corrugated iron sheet fencing adds further dimension to the informed perception of the reality on the ground. Very ambitious Pawes Parkop very quickly wanting to bid to host the commonwealth games in PNG. 

Apparently, there was hype about infrastructure and world class sporting facilities. Remember, 99% of Papua New Guinea does not have the infrastructure let alone world class sporting amenities. Furthermore, we must never forget that we are a third world country and haven’t reached the level of developed economies and it makes one wonder, who is PNG benchmarking against?. PNG got her independence from the neo-colonial administration only 4 decades ago. 

We are still in the transition stage or at the cross road not fully embracing civilization. Given the level of corruption at unprecedented level and issues of attitude, these are recipe for doom and gloom. It is a laughing matter when politicians in the likes of Parkop and Justin (sports minister) want to talk about an extravagance of hosting 2015 Pacific games and on the eve of closing, hastily want to bid for commonwealth games whilst the disparity between the haves and have nots forever widening courtesy of totalitarian regime. Not again another inviting ridicule. 

Completely obliterate this city with razor wire, corrugated iron sheet fencing, tuckshops, outlaw sale and spitting of betel-nut, all constructions either that is road or building, it should be constructed in accordance to Australian standards (AS) since we have adopted the west system of governance. Building must be erected to standard pattern. Settlements must be regulated. Municipal authority must take full account of municipal services to city residence that including those residing along the city precincts.

Should the leadership doesn’t get the basics right but yet talking extravagance, how can the tail lead when the head is sick? I am optimistic that sporting facilities of world standard will stand the test and endure and more so, annual budgetary allocations will be sure for its upkeep for domestic use and international events in future.

Maprik Open MP, John Simon (centre) celebrating the golden victory of the Simbinali family; Cesley (left of MP Simon) displaying her double gold medals and mum Angela (right of MP) also displaying her gold medal while dad Alois (left of Cesley) was flanked by the Maprik community in Port Moresby in the celebration. Pic by CYRIL GARE.

by CYRIL GARE

• Touch Football: mother Dianne Vetu and son Samuel;
• Weightlifting: sisters Dika and Thelma Toua;
• Athletics: Toea Wisil and her brother Kupun Wisil;
• Swimming: sisters Savannah and Ebony Tkatchenko while brother Jordon in Rugby Sevens;
• Tennis: sisters Abigail and Marcia Tere-Apisah and cousin Violet Apisah;
• Squash: Madako Suari Junior and sister Alma;
• Soccer: brothers Alwin and Felix Komolong;
• Rugby Sevens: brothers Max and Wesley Vali;
• Boxing: sisters Raphaella Baki and Debbie Kaore
• Sailing: John, Boisen and sister Roselee Numa;
• Basketball: the Muri brothers - Apia, Dia, Purari and sister Maka Muri. Also brothers Liam and Lloyd Wright;
• And other such contenders in Taekwondo, Table Tennis, Volleyball and Shooting.

The Maprik MP also congratulated Wimbledon Tennis heroin Heather Watson (UK) who nearly beat world’s No.1 Serena Williams (USA) in women singles recently. Heather is half British (father) while her mother hails from Kuminimbus village, Maprik, East Sepik.

by PAUL J REINBARA

Name alike, do alike –Geoffrey Vaki v Gari Baki
It is not an uncommon incident to see those who are named alike do alike. The two names Geoffrey Vaki and Gari Baki rhyme but do they in conduct? Some Commonalities observed are as follows.


APPOINTMENT

Both men were budded (taken from outside) into the post of the Commissioner of Police by the Prime Minister Peter O’Neill under very suspicious circumstances. The appointments were made amidst imminent arrest of PM O’Neill relating to his approval of fraudulent payments to controversial law firm Paul Paraka Lawyers.

The appointment and/or removal of Commissioner of Police just like any other head of a Department, goes through a merit based appointment process, which includes public advertisement, consultation with the Public Service Commission and NEC. Public records show that none of these processes were invoked in the appointment/removal of these two Commissioners.

THE FIRST ORDER OF BUSINESS AFTER APPOINTED AS COP

The first order of business embarked on by these two Commissioners was their attempt to interfere with the criminal case against PM O’Neill. Poor Geoffrey Vaki, as fervent as he is, demonstrated overtly that he was there to interfere with the arrest of the PM. At the outset he had no time to sit down with the investigators and find a way forward.  His actions have now tied a stone around himself with a prison term of three years with hard labour. He is a State prisoner on bail. He paid the ultimate price of protecting his master –PM.

Gari Baki on the other hand comes with a wealth of experience and skill, being former COP and director of National Intelligence Organization.  He said all the right words at the time of taking office; may be because he wanted to be viewed differently from his name alike; or may be because his master (PM) cleverly did not instruct him but allowed him to settle in first.

Information gathered from very reliable sources reveal that Assistant Commissioner Thomas Eluh who is at the forefront of the investigations against PM was served his suspension notice last Tuesday.  In further developments, Mr Baki is calling Director of National Fraud Directorate, Chief Superintendent Mathew Damaru to surrender all PM’s files and provide a brief on the cases including why Damaru and Gitua are instituting various legal proceedings to challenge the PM.

At some point in time, Baki was expected to make this call and it just happened.

THREE CARRIER POLICE COMMISSIONERS ARE BUTCHERED JUST TO PROTECT THE PM.

Sir Toami Kulunga, a career professional Police Commissioner was unceremoniously deposed when he approved the arrest of PM O’Neill. Geoffrey Vaki, another career police officer was appointed and unceremoniously removed in anticipation of his conviction. He served for less than a year as the COP.  Both Kulunga and Vaki are now State prisoners on bail pending the outcome of their respective Supreme Court appeals.

It is believed that Gari Baki is being put under immense pressure to destabilize the team that is mounting the case against the PM. Baki is told that he does it or would be removed as the shortest serving COP in the history of the RPNGC.

Three COPs have are being destroyed by just one man for his own survival, not to mention the amount of destruction he is doing to the sanctity and constitutional independence of the office of the COP and the RPNGC.

It is believed that PM is under extreme pressure to find another way out because the protection that he enjoyed from the Judiciary had now lapsed, exposing him to immediate arrest.

How long can this person trample over our institutions and the rule of law? I guess only to the extent of our ignorance.

Diari Vele Secretary of Treasury is wanted by Members of Task Force Sweep and National Fraud & Anti-Corruption Directorate to effect his arrest and lay formal charges of official corruption, misappropriation and fraud. Sources at the District Court confirmed warrant of arrest was issued on Wednesday 22nd July 2015. It's alleged Vele has gone into hiding after being tipped about his planned arrest.

The charges against him relate to allegations he facilitated a secret transaction of K50 million through Bank of PNG to an Israeli Company LR Group for the purchase of two power generators on 19th of December 2013.

It's alleged Vele acted on the written directions of Prime Minister Peter O'Neill to secure K50 million from the 2013 Budget and transfer the funds to Bank of PNG to facilitate the transaction. In doing so breached the proper processes under the Public Finance (Management) Act rendering the payment unlawful. Thus amounting to Official Corruption, Misappropriation and Fraud.

Prime Minister wrote to Secretary of Treasury on 4th December 2013. In his letter he said,

…”as per our discussion on the above subject, please identify savings of K50.0 million within the 2013 National Budget and have it transferred to the Bank of Papua New Guinea for the procurement and installation of two turbine generators for Port Moresby and Lae.”

Charges against Vele stem from a complaint by former Opposition Leader Belden Namah on 15th April 2014 against the Prime Minister Peter O'Neill for allegedly directing Vele to make the payment. Namah wrote to Director of National Fraud & Anti-corruption the contents of which were as follows:

15th April, 2014

Chief Superintendent Mathew Damaru
Director of Fraud and Anti-Corruption Directorate
Royal Papua New Guinea Constabulary
Police Head Quarters
KONEDOBU
National Capital District

My Dear Chief Superintendent Matthew Damaru,

SUBJECT: CRIMINAL COMPLAINT AGAINST PRIME MINISTER, PETER O’NEILL, MP

As the Leader of Opposition and Alternate Prime Minister, I am duty bound to keep the Prime Minister and his Government honest and accountable to the people of Papua New Guinea. High among my responsibilities is the duty to ensure prudent and transparent management of the affairs of the Independent State of Papua New Guinea, and more particularly the prudent management of the public finances of Papua New Guinea.

In this regard, I have the unpleasant duty of formally requesting, through this letter, the Royal Papua New Guinea Constabulary to investigate the Prime Minister of Papua New Guinea, Peter O’Neill, for fraud, misappropriation and official corruption. This complaint stems from the payment of K50 Million of public funds to an Israeli company called LR Group, purportedly for two (2) 15 megawatt diesel turbine power generators for Port Moresby and Lae between the periods 04th – 20th of December 2013.

The facts are as follows:

• On the 4th of December 2013, the Prime Minister, Peter O’Neill by-passed his Minister for Treasury and directly wrote to the Acting Secretary for Treasury, Mr. Dairi Vele to source K50 Million and have it transferred to the Bank of Papua New Guinea for the purchase of two power generators. The letter does not even state who the payee is. The Acting Secretary acknowledged receipt of the Prime Minister’s letter on the 17th of December 2013 and immediately organized a Cheque numbered 004621 for K50 Million, and remitted same to the Bank of Papua New Guinea on the 18th of December 2013. There is no supporting documentation as you would normally expect in a major transaction of this nature, such as a contract between the State and LR Group or between PNG Power Limited (The Beneficiary) and LR Group (The Supplier). To say the least, this transaction is not normal.

• On the same date, 18th December 2013 and from the blue, LR Group issued a Commercial Invoice Number: A130001 for (USD20, 400,000.00) which is equivalent to K50 Million, to the Independent State of Papua New Guinea and at the same time, emailed or faxed to the Bank of PNG the company’s account details. Furthermore, the LR Group lodged with the Bank of Papua New Guinea, an application for Telegraphic Transfer of the K50 Million and a Balance of Payment Reporting Form. It must be noted that the invoice was issued well after the Prime Minister’s directive of 4th December 2013 and well after the payment was processed by the Finance and Treasury Departments.

• On the 19th of December 2013, the Internal Revenue Commission issued a Tax Clearance Certificate. However, the certificate is issued to Israel Electric Corp (IEC) and not LR Group. It must be noted that this is not a mistake. It is by design that the certificate is issued to the name of Israel Electric Corp and not to the LR Group. The company name is not Israel Electric Corp as written on the certificate.

• On the 20th of December 2013, the K50 Million was transferred to the nominated bank of the LR Group in Israel, Bank Leumi in Tel Aviv, Israel. You would have to wonder how the Bank of PNG could go ahead and transfer the funds to LR Group, when the Tax Clearance Certificate was issued under Israel Electric Corp and not LR Group. You would also wonder why the Tax Clearance certificate is valid for three (3) months, that is, from 19 December 2013 to 30th March 2014.

As best as I can recall, there hasn't been any official or public disclosure of the purchase of these two generators by the Prime Minister, from December 2013 up to this complaint date. While keeping it under rap, the Prime Minister convened an NEC Meeting on the 25th of February 2014 to seek Cabinet approval for the funding of two power generators.

Interestingly, on the 25th of February 2014, a Policy Paper, numbered 61/2014 and titled “URGENT SOLUTION TO PORT MORESBY AND LAE POWER SUPPLY” was presented to the Cabinet under the joint signature of the Prime Minister and the Public Enterprises Minister. The submission sought Cabinet approval of K94 Million to purchase 2 x 26.2 megawatt gas turbines from Israel General Electric Corporation of Israel for use in Port Moresby and Lae. It is to be noted that the generators are being sought from Israel General Electric Corp and not from LR Group. As the name suggests, Israel General Electric Corp is an Israeli Government owned electric company, whereas LR Group, is a private company specializing in Agriculture and agricultural technology.

This development must be carefully noted as what happens here in and through this NEC Submission would explain the startling discrepancies discussed above.

Recommendation (a) of the Submission reads, and I quote, “It is recommended that the NEC decide and approve the Procurement of 2 x 15 MW (megawatt) new gas (dual fuel) turbines which is now revised to 2 x 26.2 MW (megawatt) turbines (GE Model TM2 500+) from Israel General Electric Corp at a cost of K94 Million as urgent solution to power generation capacity in Port Moresby and Lae”.

The NEC submission and the recommendations state that there is a change of plan where the initial 2 x 15 megawatt gas turbines are to be abandoned in favor of 2 x 26.2 megawatt gas turbines. However, there is no mention or explanation in the Submission as to why such an upward revision is necessary or warranted. The Submission also fails to state or disclose any previous NEC decision or any commitment to buy 2 x 15 MW gas turbines, from which the Submission seeks to revise upwards.

It is remarkable that the Submission does not mention anything at all about the generators paid for with K50 Million of public funds in December 2013. This is startling. It is incredible, that the Prime Minister conceals the December deal for reasons only known to himself and his Minister for State Enterprises. The Members of the NEC were obviously not aware that the Prime Minister had personally authorized and supervised the purported purchase of two (2) 15 megawatt generators in December 2013 from an agriculture company, while they were on Christmas vacation. The Prime Minister has kept it highly confidential or top secret which only he will explain why.

The whole episode raises many serious questions which I pause here for police to query;

1. Why is it that the Prime Minister and the State Enterprises Minister have not disclosed to Cabinet, the purchase of the 2 x 15 MW diesel generators for K50 Million in December 2013?

2. Why is it that K50 Million was wired to the LR Group which is a private company, when all understanding reached with the Israeli Government is for PNG Power to enter into direct business deals with Israel General Electric Corp?

3. Why is it that the Tax Clearance Certificate issued by the Internal Revenue Commission is to the benefit of Israel General Electric Corp and not LR Group which was the immediate beneficiary of the tax clearance, and why is it that the clearance is valid for 3 months (December 2013 to 31st of March 2014)? Was it schemed intentionally so that the same Tax Clearance Certificate could be reused to facilitate transfer of the K96 Million to Israeli General Electric Corp? Was the NEC Meeting perfectly timed to suit the PM’S scheme to cover his secret deal?

4. What was the reason for Internal Revenue Commission to issue tax clearance to Israel General Electric valid for three (3) months?

5. Why did the IRC willingly issue the certificate to Israel General Electric when Israel General Electric Corp had not applied for the certificate?

6. Why did the Bank of Papua New Guinea facilitate and effect the transfer of the K50 Million to LR Group when LR Group did not possess a valid Tax Clearance certificate?

7. Why did the PM state in the NEC Submission, that 2x15 megawatt power generators was revised upwards to 2x26.2 megawatt generators, and yet, he did not elaborate or explain why? In other words, why does the Submission not provide the nexus?

As can be seen here, the whole transaction raises more questions than answers. I have no doubt in my mind that the Prime Minister, the State Enterprises Minister and the Acting Secretary for Treasury have conspired to deprive the people of Papua New Guinea of K50 Million. The application of the K50 Million to the benefit of LR Group by the two individuals and the actions and inactions of the three gentlemen and the Internal Revenue Commission and others, suggest, that the whole transaction was dishonest, corrupt and fraudulent.

In addition to the above, the following information adds further credence to my claim of misappropriation, fraud and corruption against the Prime Minister:

1. There is no evidence that the National Executive Council approved the K50 Million which was paid to LR Group in December 2013, purportedly for the purchase of 2 x 15 MW diesel turbine generators.

2. There was no contractual relationship between the State and the LR Group for LR Group to supply power generators to the Independent State of Papua New Guinea.

3. There was no contract signed between PNG Power and LR Group for the supply of the two (2) 15 MW generators, and, apart from the two (2) 26.2 MW generators which Cabinet approved, PNG Power is not aware of the December 2013 transaction, which only Peter O’Neill and Dairi Vele are privy to.

4. There was no public tender called for the supply of the 2 x 15 MW generators. The K50 Million transaction was effected with lightning speed, yet three months on, no one knows what became of the whole deal.

5. Other relevant state agencies such as the Central Supply and Tenders Board, the office of the Attorney General and the IPBC as the sole shareholder of PNG Power were not consulted and are not aware of the K50 Million deal.

6. The Prime Minister has no power or discretion to commit more than K50 Million.

Mr. Director, the above facts and circumstances point very strongly to the suggestion that the Prime Minister of Papua New Guinea, Peter O’Neill has deliberately and intentionally engaged himself in a grand scheme to defraud the Independent State of Papua New Guinea of K50 Million. The outline and chronology of deliberate actions and inactions of the Prime Minister and public officials as outlined above clearly demonstrate that the Prime Minister was dishonestly directing traffic to achieve a particular outcome, and that outcome is to deprive the people of PNG of K50 Million and apply it to the use of LR Group. This, I believe amounts to the crime of fraud. .

Secondly, the Prime Minister’s blatant disregard for established systems and due processes, including wilful disregard for compliance with the Public Finance Management Act and other relevant laws, I believe, amounts to “Official Corruption”.

Thirdly, the dishonest application of K50 Million to the use of LR Group, I contend, amounts to an act of "misappropriation of public funds”.

On the basis of all of the above, I submit that an immediate and thorough investigation of this matter is warranted, and I ask therefore, that it be undertaken forthwith in the public and national interest.

Yours Faithfully,

Hon. Belden Norman Namah, MP
Leader of Opposition

(source of the letter former Opposition Press Release of 30th April 2014.

Namah produced copies of the Prime Minister's letter, Treasury and Central Bank of PNG Procurement Documents, LR Group’s Commercial Invoice No# AL3001 and Internal Revenue Commission (IRC) Tax Clearance Certificate issued under Israel Electric Corporation; NEC Submission No.61/2014, NEC Decision No.74/2014 and ‘MOU between PNG Power Ltd and Israel Electric Corporation Ltd.

On the same date Prime Minister, Peter O’Neill responded to Namah's allegations saying "the K50 million was part payment, and was still in a trust account at the Central Bank of PNG, and will be transferred once the Israelis get the generators installed and running, including the balance of K44 million." He said LR Group of companies was only facilitating the discussions between the state of PNG and Israeli State owned company, Israeli Electric, who further negotiated the deal with General Electric Corp. He said a good deal was negotiated to fix power problems in Port Moresby and Lae.

On 2nd May 2014 Office of Prime Minister issued the following formal press statement on behalf of the Prime Minister.

"Prime Minister Hon. Peter O’Neill yesterday welcomed a complaint lodged with the Police by Namah relating to the government’s decision to purchase two gas turbines from an Israeli company."Namah raised this issue on April 15 and I provided a response. He has proceeded with a police complaint today, which I welcome."But it’s another act of madness by Namah which Papua New Guineans are getting fed up with."The suggestion by Namah that the LR Group and myself are swindling K50 million in this transaction is absolutely false and a disgraceful allegation to make. I hope he can prove it," the Prime Minister said.

"The Prime Minister said following his trip to Israel last year, the government decided to proceed with buying two turbines from an Israeli company, Israel General Electrics. The PNG Power Board accompanied the PM to Israel and were involved in negotiating with the company."

"In March this year, Cabinet approved the procurement of two 26.2 Megawatts gas turbines (dual fuel) (GE Model TM2 500+) from Israel General Electric at a cost of K94 million. The LR Group acted as their agent in the negotiations. It was an upgrade from the two 15 megawatt turbines that were initially negotiated. Prime Minister Hon. Peter O’Neill said his letter to the Treasury Secretary was simply to source savings, if any, from the 2013 Budget for this purchase. "As Prime Minister, I am concerned about the power situation that affects us daily, and proving very costly to businesses."What is wrong with me actively seeking a solution to this power nightmare? If Namah has a solution, what is the solution?"If his action is aimed at creating political steam, he won’t succeed because leaders and the public at large are fed up with empty politics," the Prime Minister said. The purchase agreement with Israel General Electric includes installation and training of PNG personnel to operate the turbines."

Part 2 of the article will cover an in depth analysis on the issues and facts as presented; charges defined by law and the key elements of the offence to establish guilt beyond reasonable doubt.

by BRYAN KRAMER
Part 1 of this article was relation the Secretary of Treasury Dairi Vele being wanted by Members of Task Force Sweep and National Fraud & Anti-Corruption over allegations of Official Corruption, Misappropriation and Fraud. The article canvassed the allegations that facilitated a secret payment of K50 million to procure the purchase of two turbine generators in December 2013.

This article will cover an in depth analysis on the issues and facts as presented in Part 1; charges defined by law and the key elements of the offence to establish guilt beyond reasonable doubt.

Official Corruption is a criminal offence prescribed under the Section 87 of the Criminal Code. It relates to a person employed in the public service or holding any public office, who corruptly asks, receives, or procures (facilitates) any property or benefit for himself or any other person, is guilty of a crime. The penalty is imprisonment for a term not exceeding 7 years and a fine at the discretion of the Court. The provision also states that a person cannot be arrested for Official Corruption without first obtaining a Warrant of Arrest. (Court order directing Police to effect a person's arrest and that they be brought before the Court to answer to the charges).

Misappropriation is criminal offence defined by Section 383A of Criminal Code. It relates to a person who "dishonestly" applies property including money belonging to another, held under their trust or control, and applied to their own benefit or the benefit of another person. The penalty being upto 10 years imprisonment.

By law the Prime Minister has no power or authority to enter into contracts or direct any payments for goods or services of behalf of the State. Any disbursements or expense of public funds must be in accordance with strict guidelines and regulations provided under the Public Finance (Management ) Act.

Under Section 39(1) of the Act, Central Supply & Tenders Board (CSTB) is the only lawful authority to control and regulate the payments for purchase of property or services on behalf of the State. By law CSTB may enter into a contract on behalf of the State for any amount up to K10 million. Amounts upto K5 million maybe approved by Provincial Supply & Tenders Board Any amount in excess of K10 million must be approved by National Executive Council (NEC). However NEC approval is still subject to compliance with Public Finance (Management) Act. The Act requires CSTB calling for public tenders and after assessing all the applicants make a final recommendation to NEC to consider. Section 40(3)(b) states CSTB may waiver calling for public tenders if it certifies that the inviting of tenders is impracticable or inexpedient; (not advisable). The law Section 47(11) prescribes that any recommendation by the CSTB to NEC must be in the form of a submission containing the reasons for their decision.

CSTB is made up of six members, Secretary of Finance, Secretary of Works, Secretary of Trade & Commerce, Solicitor General (Govt lawyer); two other persons nominated by the Universities and PNG Chamber of Commerce & Industry who have impeccable reputations with relevant experience in procurement or contract practices.

Following final approval by NEC the CTSB will issue a certificate of Authority to Pre-Commit Expenditure (APE). Section 47B of Act states it may only do so provided the contract has complied with the tender processes and that funds will be available to meet the payments.

Government may not enter into a formal contract until the APE is issued confirming the details of the purchase of property, goods or services including the authorised contract amount. In accordance Section 47C of Public Finance (Management) Act, any contract entered into on behalf of the State without issuance of APE is null and void.

These strict administrative processes and procedures are to avoid fraud and misuse of public funds by public officials including Members of Parliament. In other words its to protect the peoples money from corrupt politicians and public service colluding with white collar criminals.

The Act also provides clear guidelines of authority and duties of the appointed Minister and officers of the Department. Essentially, failure to comply with the regulations is to act unlawfully. All Department Heads are made aware of the strict regulations and procedures and therefore claiming ignorance is not a excuse or defence against culpability (guilt)

This is confirmed by the recent criminal conviction of former Minister of National Planning Paul Tiensten. He was found guilty of misappropriation for directing his Acting Secretary of Department to facilitate payment of K10 million to the benefit of Travel Air. However the payment was in breach of the finance management regulations. The K10 million was specifically allocated for rural airfreight subsidise third level airlines but was instead directed by Tiensten to be misapplied to Travel Air to funds its operations.

The reason most corrupt public officers avoid complying with the Public Finance (Management) Act is because by calling for public tenders or having CSTB review the contract exposes their scheme to defraud the State. Where they deliberately and dishonestly inflate the contract price for the benefit of their close friends or associates or to receive kick backs following the transaction.

After considering all the facts its my opinion that following the Prime Ministers visit to Israel in October 2013 LR Group, Prime Minister hatched a scheme to purchase two second hand 15 mega watt turbine generators from Israeli State Owned Power Company, Israel Electric Corporation. The plan being that LR Group would act as the middle man to facilitate the fraudulent sale at an inflated price.

Soon after returning from Israel on 4th December 2013 the Prime Minister secretly without the knowledge of the Minister of Treasury or NEC directed the then Acting Secretary of Treasury Dairi Vele to identify K50 million from 2013 Budget and transfer the funds to the Bank of PNG to be remitted to LR Group's Israel account.

The transaction was rushed without any proper assessment, all lawful procedures were completely by-passed to avoid detection.

Sometime between 20th December 2013 and February 2014 the sale must have fallen through. In that Israel State Owned Electric Company may have refused to be part of the scam withdrawing from the sale.

To cover their tacks Prime Minister and Minister for IPBC Ben Micah quickly tabled a submission in February 2014 before NEC for purchase for two brand new generators from General Electric Corporation, Israel Branch for K94 million.

You will notice the Prime Ministers initial response to Namah's compliant on 15th April 2014 claims the K50 million was part payment and held in a trust account with the Central Bank of PNG. This was a false statement because the bank documents produced confirm the payment by Bank of PNG was made to LR Group on 19th December 2013. LR Group's invoice was only issued on the same day of the transfer. This statement by Prime Minister after the fact was calculated publicly stating the funds were held in trust in an effort to cover up he knew about the secret transaction K50 million to LR Group. Therefore whoever paid K50 million LR Group did so without his knowledge or authority. The normal procedure is obtain approval then arrange the funding, not the other way around.

Prime Minister's response made on 2nd May 2014 confirms a number of important facts:

1) Prime Minister acknowledges his letter to Secretary of Treasury directing him to secure K50 million and transfer it to Bank of PNG for procurement and installation of two turbine generators. This was a fatal mistake on his part and key piece of evidence confirming his knowledge and authority of the transaction from Treasury to Bank of PNG to purchase the generators.

2) In March 2014 NEC or Cabinet approved the procurement of two 26.2 Megawatts gas turbines (dual fuel) (GE Model TM2 500+) from Israel General Electric at a cost of K94 million. It was an upgrade from the two 15 megawatt turbines that were initially negotiated by LR Group. This is the second most important fact in that Prime Minister confirms NEC approval was granted in March 2014 after he already directed the payment of K50 million in December 2013. Therefore the transaction made in December 2013 under his direction was without the proper authority of NEC or CSTB and failed to comply with Public Finance (Management) Act. Thus confirming it to be unlawful.

The Prime Minister tried to justify payment of K50 million by claiming;

1) the decision to purchase the generators was following his trip to Israel in October 2013. The government decided to proceed with buying two turbines from an Israeli company, Israel General Electrics and the PNG Power Board accompanied him to Israel and were involved in negotiating with the company

2) The LR Group acted as their agent in the negotiations.

3) His letter to the Treasury Secretary was simply to source savings, if any, from the 2013 Budget for this purchase.

4) he was concerned about the power situation that affects us daily, and proving very costly to businesses.

5) What is wrong with me actively seeking a solution to this power nightmare? If Namah has a solution, what is the solution?"

There is nothing wrong with Prime Minister's claim he was actually seeking a solution to the Nations power issues. However he is required to follow the proper process. A former Minister of Finance & Treasury there can be no mistake he was aware of these guidelines. He instead by-passed all legal processes issuing a written direction to a Department Secretary to secure K50m and have the funds transferred to Bank of PNG without the knowledge of the Minister of Treasury, consent of NEC or compliance with Public Finance (Management) Act.

Prime Minister says LR Group was only engaged as a third party to facilitate discussions between the State Israeli State Owned Company and PNG Government. LR Group is involved in agriculture and had no track record or expertise in the electricity industry. An important fact is that Chairman of LR Group is a person by the name of Ilan Weiss, the son of Jacob Weiss who is a known close associate of the Prime Minister and long time senior advisor to the Bank of PNG. Both father and son were in Israel during the Prime Minister's visit. So why was K50 million paid to LR Group and how much did they pocket from acting as a middle man?

Why didn't Government just purchase the generators straight from General Electric US who actually manufacturer and sell the generators, and who in the end shipped the Generators to PNG?

The controversial Generators arrived in PNG in 29th June 2014 after being purchased from Israel General Electric and shipped from their headquarters in the US. However they have yet to be installed or commissioned.

When they arrived Prime Minister issued a press statement confirming the total cost ended up being K104 million. He said "that the Minister and I had to put pressure on the PNG Power Board and management."

In recent times a number of Members of Parliament have been charged and facing criminal prosecution for allegedly abusing their office, misapplying public funds by using third parties (middle men) to make purchases of plant and equipment at inflated prices and receive kick backs from the proceeds.

Hence why Public Management Finance Act makes it mandatory to call for public tenders to be vetted by Central Supply & Tenders Board to avoid collusion, fraud and misappropriation of public funds through secret transactions.

So is Vele and Prime Ministers guilty of Official Corruption? Key elements or facts that need to be proven beyond reasonable doubt that a person is guilty of Official Corruption are that:

a) a person employed in the public or holder of public office who
b) corruptly
c) gives, confers or procures,
d) any property including funds or benefit
e) to himself or any other person, is guilty of a crime.

Based on the evidence the elements confirmed beyond reasonable about are (a) Dairi Vele was Acting Secretary of Treasury, a person employed in public office, (c) Confirmed by the Prime Minister statements he did procure the payment of (d) K50 million property belonging to the State (e) to the benefit of another person namely LR Group. The only essential element to prove is (b) whether Vele "corruptly" procured the payment.

To establish whether or not the payment was corrupt is to determine whether it is unlawful and dishonest.

Vele procured the payment of K50 million of public funds to LR Group without even going through the processes and procedure under his Department's own guidelines. He failed to adhere to Public Finance (Management) Act. The whole process was short circuited and done by himself to facilitate the release of K50 million. There was no serious and genuine effort to properly appraise the transaction to check if the proper documentation were in place, whether the proper process and procedures had been followed; or proper authority and approval was obtained from NEC.

To establish misappropriation under s.383A (j)(a) of the Criminal Code the State has the duty to prove the following key elements of the charge beyond reasonable doubt that the Accused:

a) dishonestly
b) applied to his own use or to the use of another
c) property belonging to another

In this case it is beyond doubt Vele applied K50 million belonging to the State to the use of LR Group confirmed by documentation and Prime Minister's own public statement. So the only remaining element to prove is whether he "dishonestly" applied it.

In the Paul Tiensten case the National Court when considering the same question based on the evidence in that case. The Court held that "the word 'dishonestly' under the charge of misappropriation relates only to the state of the mind of the person who does the act which amounts to misappropriation. His Honour Deputy Chief Justice Salika Gibbs who presided over Paul Tiensten's case said;

"The state of mind when a person applies is a question of fact for the trial judge to determine on all the facts presented before him. And when the judge considers the facts on how the property was applied, he uses the 'ordinary standards of reasonable and honest people' test to determine whether or not the property so applied was dishonestly applied. 'Dishonest' is defined in the Oxford Advance learners dictionary of Current English as 'intended to cheat, deceive or mislead'".

His Honour made reference to the case of The State v Francis Natuwohala Laumadava [1994] where the Chief Justice Salamo Injia said: "The court must look into the mind of the Accused and determine whether, given his intelligence and experience, he would have appreciated, as right-minded people would have done, that what he was doing was dishonest."

Deputy Chief Justice said the "Accused knew or ought to have known that his direction or directive to the Acting Secretary to facilitate release of K10 million was wrong for the reasons that he had no authority to give such a direction to the Acting Secretary and also for the reason that approval for release of such funds must come from the National Executive Council. Moreover he knew that he was wielding his political muscle over an Acting Secretary and her officers."

"Given the Accused's level of education, his intelligence, skills and experience in the Public Service and in Politics, I have no doubt in my mind that he appreciated and knew that what he was doing was wrong and that it was dishonest; that is directing the Acting Secretary to facilitate the release of K10 million was improper and dishonest. He effectively caused the Department officers to break rules."

"Evidence shows that the Accused was involved in the application of the money to Travel Air. He facilitated the release of the K10 million by his direction. Without his directive, the K10 million would not have been released. He commenced the process of the release of the money through his direction or directive. He presented the cheque to Eremas Wartoto to complete the facilitation and application. Was that application dishonest? The direction from him and causing the department officers to bypass the proper appraisal process under the guidelines and by bypassing the Public Finance Management Act and the deliberate lies in the way appraisal process and the speed in which the facilitation of the release of the funds were orchestrated, I conclude that the accused and his officers in the department dishonestly applied K10 million to the use of Travel Air thereby contravening s.383A(1)(a) of the Criminal Code." Accordingly the Court found him guilty of Misappropriation and sentenced him to 9 years in prison.

After considering Prime Minister's comments in his press statement it suggests he will try avoid prosecution by claiming that he did not direct the payment of K50m in December 2013 but merely directed the Secretary to identify the funds to be parked in a trust account with Bank of PNG pending the formal submission to NEC in March 2014. However his letter provided no evidence of such a direction other than to transfer funds to Bank of PNG to facilitate the purchase of two turbine generators. In the Tiensten case the Acting Secretary facilitated the payment but escaped prosecution because the was pressed to by his Minister. So whether not Vele is guilty will come down to whether he will acknowledge he was pressured to.

Prime Minister's letter does not state whether LR Group were to be paid but his own press release acknowledges LR Group involvement and K50 million was part payment only establishes beyond reasonable doubt it was his directive. The fact that the K50 million payment was facilitated without any proper documentation and even before an invoice existed smacks of dishonesty.

A further twist in this case is that Parliament on 18 September 2013 passed stricter penalties for persons found guilty of misappropriation. The new penalties state that a person found guilty of misappropriation shall now be sentenced to 50 years imprisonment where the amount is more than K1 million and less than K10 million. Where the amount is more than K10 million then the penalty is "life imprisonment without parole." This case involves allegations of misappropriation of K50 million, unlike other offences where the Court has the discretion to order a lessor sentence in this case if the Court makes a finding of guilty the Court has no discretion but to sentence a person to life imprisonment.

Right now the Prime Minister is protected by Supreme Court interim stay order preventing Police from investigating or arresting him in relation to this matter or any other matter. The proceedings in the Supreme Court relate to James Marape's appeal against National Court's earlier ruling in July 2014 refusing the Prime Minister and his application to stay their arrest in relation to Paraka Lawyers matter. In that case Prime Minister is facing arrest for allegedly writing to the Minister Finance & Treasury directing him to facilitate fraudulent payments of K71.8 million to Paraka Lawyers. In that matter the Prime Minister claims he never signed the letter.

Director of National Fraud & Anti-corruption Directorate Mathew Damaru and his Deputy Timothy Gitua have joined as party to those Supreme Court proceedings and filed an application to remove the stay. The matter returns to Court on 3rd August 2015 to confirm the proceedings are ready for substantive hearing before a three man bench. The matter maybe listed before last week of August 2015. If the Supreme Court upholds Damaru and Gitua's application removing the stay then Prime Minister may face multiple arrests over numerous charges of corruption, fraud and misappropriation. Whether or not these matters will be progressed will come down to the authority of Commissioner of Police. The only matters beyond the the authority of the Commissioner are warrant of arrests in relation to Paraka Lawyers matter and the warrant against Dairi Vele.

Part 3 of this article will cover what possible course action the Prime Minister may take to avoid facing the same charges, criminal prosecution and conviction.

bySAM BASIL MP, Deputy Opposition Leader

The Opposition have always been critical of how Papua New Guinea’s (PNG) economy has been financially mismanaged by the O’Neill government and we still believe this, when the 2015 Pacific Games has placed a further financial burden on PNG’s economy.

As Deputy Opposition Leader, I do not question that all those associated with the 2015 Pacific Games, held here in PNG, should be acknowledged for a successful event given the short time span to organise; credit must be given to all these professionals, volunteers and sponsors for their commitment and determination.

But the reality check needs to occur when the Pacific Games have left PNG’s shores and we are reminded about the recession we are currently in, and the loans that the O’Neill government have exposed PNG to; both issues will be strongly denied by the O’Neill government through their media propaganda announcements.

What the O’Neill government won’t tell you, is that most major sporting events like the Pacific Games are a very expensive exercise for the host country and a major financial loss to PNG.

Since 2012, the three supplementary budgets of close to PGK2 Billion have gone to making sure these 2015 Pacific Games have gone according to plans and with success.

Since the O’Neill government has taken office, our budgets have exceeded deficit amounts, being paid off by exorbitant loans with no avenue to repay quickly, given the associated high interest rates.

The large budget deficits and loans are a clear indication that the current government are not seeing the long term financial picture of the current state of economy because they were seeing the short term gain, from Pacific/international attention and major spending associated to hosting the 2015 Pacific Games.

Time to the next elections and beyond, will determine how far the 2015 Pacific Games has contributed to a financial situation PNG citizens are currently facing, with high inflation and high unemployment rates married with depreciating exchange rates and low foreign reserves.

The warning signs of the economy’s current financial status has easily been dismissed and though we now have stadiums that’s visibly internationally recognised, the patriotism of seeing our athletes win medals at these venues will be easily forgotten if they lie abandoned and not utilised, for a combination of profit revenue and offsetting the losses gained from hosting the 2015 Pacific Games.

Sports Minister Hon Justin Tkatchenko and NCD Governor Hon Powes Parkop have publicly stated that PNG is ready to host the Commonwealth Games.

I do not doubt that given the efficient capacity and effective capability we have shown in appropriately managing the 2015 Pacific Games, we can but it usually takes minimum 10 years to recover financially from hosting a large sporting event such as this.

The sight of our stadiums gives us the authority to say we can host but it’s the financial implications associated with supporting a larger sporting event like the Commonwealth Games that has got me questioning the reality connected to Tkatchenko and Parkop’s statements.

Yes, we are proud Papua New Guineans and our nationalism has been unified by our athletes, topping the gold medal/overall medal tally on home soil and this alone, will strengthen us through the tough financial times ahead when the construction industry will dissipate because there are no more funds to develop future construction work with the drying up of major spending opportunities and the lack of liquidity facing PNG’s economy.

As Deputy Opposition Leader, I do not see any net economic benefit to PNG, for hosting the 2015 Pacific Games as how can the citizens of this country quantify claims that the stadiums we have built, only in Port Moresby, will have a lasting benefit on the PNG economy. I am sure retail sales will increase, as the confidence and patriotism associated with hosting the most successful of Pacific Games, is a testament to knowing our position, internationally.

But the O’Neill government will harness this as a “feel good” factor for political gain, at the expense of what our current economical situation is facing; a Recession that can be tantamount to PNG’s economy moving into a Depression, if we are not managing our finances appropriately.

With the 2015 Pacific Games gone, the O’Neill Government need to face the hard reality and put forth a supplementary budget, to factor in the economic shortfalls we are facing.

The O’Neill government’s propaganda regarding our economy needed a beacon that would make PNG’s citizens forget the current state of PNG’s economy; that came in the form of the 2015 Pacific Games and PNG rising to the challenge in the sporting arena.

But PNG is no longer earning the revenue that the O’Neill government has heavily relied and their heavy dependence on our oil and gas industry to prop up PNG’s economy made them borrow heavily, eg. The illegal UBS loan, and as Deputy Opposition Leader, I predicted these erratic forms of spending/borrowing has led to the financial mismanagement of an economy that is in the middle of a recession.

A call for the 2015 Budget to be reviewed and amended accordingly, must occur to cater for the losses in revenue PNG will experience, from the substantial decrease in international oil and gas prices.

The loss in revenue from the fall in oil and gas prices will impact heavily on PNG repaying the loans the O’Neill government has exposed PNG to and even with no checks and balances or reconciliations on the financial balance sheet of PNG’s economy in 2015, Papua New Guineans should expect this to occur again in 2016 as most financial allocations have not been followed through.

The appropriate financial controls put in place, for a country like PNG that’s rich in resources, to take advantage financially, has been manipulated and the weakening of valid solutions has only increased the nightmare PNG is facing, ie. inefficient mismanagement of PNG’s economy by the O’Neill-led government, their combined lies which contradict the real economic figures that PNG is facing as well as the combination of corruptive practices with largest overspending by any government of PNG.

The large borrowings by the O’Neill government, part of it going to the building of stadiums for the 2015 Pacific Games, has resulted in PNG now being a high risk country further affecting PNG’s credit rating and investor confidence; the government can only be blamed with PNG facing financial challenging times and the stressful effects its imposed on PNG citizens.

The spending disregard associated with the current O’Neill government in badly managing the economy, is already occurring as visibly seen in our economic indicators and Papua New Guineans aren’t blind to the lies because we are all suffering from this inefficiency, both individually and as a country.

We are now past the midway point of 2015 and PNG’s current state of the economy contradicts the content behind the announcement of the 2015 Budget.

In terms of liquidity, there seems to be a Government Funding shortfall from its own raising source at the Bank of PNG (BPNG), namely the Government Inscribed Stock (GIS’s) and Treasury Bills (T-Bills).

There is a visible fact that the O’Neill Government has failed in raising more than K2 Billion in the GIS and T-Bills since the announcement of the 2015 Budget.

This figure is increasing into the end of the 2nd Quarter of 2015, as quoted in the BPNG website and the weekly auction results, which reflects a substantial lack of liquidity in PNG’s economy.

This is evidenced when government sector workers are not being paid their fortnight salaries on time, parliamentary member’s have not been paid their DSIP fund allocations and government departments have not been given all their budgets, to perform duties and operations.

The lack of liquidity is not because the rates are not sufficient but because the PNG investment community and international community have lost complete faith in the economic management and repayment of these GIS and T-Bills by the current O’Neill government.

The hosting of the 2015 Pacific Games has become a beacon of motivation and demand for everything that is PNG so with its success, the Opposition hope that the lost faith can be restored, all because of the successes of our athletes in the 2015 Pacific Games.

By failing to raise more than K2 Billion in GIS’s and T-Bills since the 2015 Budget announcement, BPNG is assisting with O’Neill’s financial mismanagement of the economy by “printing money”, to purchase all the GIS’s and T-Bills that are not purchased by investors.

This will lead to massive inflation problems in PNG. The inflation forecasts will increase to 9% and this rather large inflation rate will further drive down an already negatively geared exchange rate of our currency.

This will mean that Papua New Guineans are going to pay more just to survive, from day to day, and with the average family not having enough funds, this will lead to greater law and order issues, higher unemployment and less certainty about the economy of Papua New Guinea.

There will be no clear and transparent delivery of what the people of PNG need in terms of service delivery and the current trend of O’Neill’s mismanagement of the economy is about to have a massive and immediate impact on every man, woman and child in Papua New Guinea today; that alone is enough incentive to review the 2015 Budget!

The timing for this to occur is eventful, given we have hosted the most successful Pacific Games in history and this has acted as a cushioning effect in what we are all currently facing, financially.

From this media announcement, PNG will realise what the Opposition already know, we now have a larger than expected deficit from the 2015 Budget of K16.1 Billion that will run increasing deficits into 2016 and into 2017 as there is no realistic plan.

The Opposition are not scared to demonstrate that the fiscal and monetary mismanagement of the O’Neill government is not looking after the ordinary man, woman and child in PNG in terms of service delivery.

Given PNG’s current economic situation, it has taken PNG’s athletes and our patriotism to their performances on home soil to make us forget, temporarily, what our economy is facing.

Thank you to the PNG athletes in the 2015 Pacific Games for giving us the dream to believe knowing that with our determination and strength as one country, that dream can be made a reality.

You alone have given us, the Opposition, the strength that through trials and tribulations we can succeed and the current O’Neill government should take lessons learnt from all of you and put our economy back onto the financial road to recovery…

GOD BLESS PAPUA NEW GUINEA’S ATHLETES IN THE 2015 PACIFIC GAMES!