Pacific Scoop

PNG state recovers K52m in corruption probe – more to come

PNG corruption watchdog

PNG corruption watchdog reports back to Parliament. Photo: Post-Courier

Pacific Scoop:
Report – By Henry Yamo

Fifty two million kina (NZ$32 million) has been recovered by Papua New Guinea’s Task Force Sweep corruption watchdog and the government hopes to double that to more than K100 million in the next six months.

Chairman Sam Koim reported this to Prime Minister Peter O’Neill when winding up TFS operations investigating alleged corruption and mismanagement in the public sector.

The TFS was set by the National Executive Council to weed out corruption in the country.

The money reported to be recovered is believed to be part of the controversial K125 million ($76 million) loan reported by The National last June  to be taken from NASFUND, a leading state superannuation fund in the country purportedly for projects in the Kokopo District on behalf of the state.

According to reports in the PNG daily newspapers, the Post-Courier and The National, some assets and machinery bought under controversial Sovereign Community Infrastructure Treasury Bill (SCITB) arrangements had been seized.

The reports state that the PNG Central Bank has also frozen the balance of the funds to the tune of K55 million in National Capital Ltd’s bank accounts, which is to be paid over to the state.

National Capital Ltd was engaged by the former Treasurer, Patrick Puraitch, on 5 March 2010, when entering into an Investment Management Agreement with National Capital Limited.

Kokopo development
This agreement engaged National Capital Limited to be the issuing agent for K125 million of Treasury Bills, called Sovereign Community Infrastructure Treasury Bills, for financing water and infrastructure development in Kokopo.

However, in June, 2011 The National reported that this agreement and the eventual loan from NASFUND were claimed by the Central Bank to be illegal in a brief to government. to be illegal and placed contributors’ savings at considerable risk.

The brief revealed that the loan, obtained via a Treasury Department mechanism called the sovereign community infrastructure Treasury bill (SCITB), did not have approval from Parliament, cabinet, treasury and the Central Bank and was outside the national budget.

According to a Finance Ministers’ statement in Parliament on 9 August 2011, the State Solicitor provided legal advice against the deal in March 2010. This was further reinforced by former Attorney-General Sir Arnold Amet’s advice to then Prime Minister Sir Michael Somare early in 2011.

The advice then was that the isssuing the SCITB was unconstitutional and illegal because it did not comply with Section 209 of the Constitution and the Public Finances (Management) Act.

But a term sheet was prepared for investors containing the details of the SCITBs and signed by the former Minister for National Planning and District Development in March 2010

Despite all opposition the agreement was nevertheless witnessed and endorsed by the former Minister for National Planning and District Development Mr Paul Tiensten, according to reports tabled in Parliament.

Middlemen fees
The National’s report last June revealed that that middlemen, companies and individuals received K20 million in fees and commissions long before any project got off the ground in Kokopo.

The bulk of the fees from the K20 million, was said to have been paid to Malco, a company incorporated in 2008 and owed by a single proprietor, one Alan Waters.

Then Communications Minister, the late Patrick Tammur, appointed Malco on 27 November 22009, as the exclusive coordinator for fund raising, fund management and legal requirements for the CSITB.

TFS chairman Sam Koim. when presenting the report, said among those people tried, three prominent political leaders had been arrested and faced the National Court for their part in various corruption deals.

Former Minister for National Planning and District Development Paul Tiensten was arrested and charged among the three and is out on K5000 bail.

Henry Yamo is a postgraduate journalist from Papua New Guinea on the Master of Communication Studies programme at the Auckland University of Technology.