PNG Power: Where’s the money (part two)

By PNG Echo.

The Fraud Squad is either grossly incompetent or corrupt – there is no third way.

The ineffective and ineffectual heads of the Fraud Squad
The ineffective and ineffectual heads of the Fraud Squad

companies related to Mr Tangit [CEO of PNG Power Ltd (PPL)]and his close relatives have received payment of K16 million from from PPL. Combined with the K15 million received from both the [East Sepik] Provincial (K10 million) and [Angoram] District Government (K5 million), it appears that Mr. Tangit and his close relatives have received K31 million through various entities for the period, 19 February 2009 to 30 September 2015.

As CEO of PPL, this represents a serious conflict of interests, even if that were all there was to it – but it’s not – the money has all been paid out, but as of October 2015 there was no evidence of even the commencement of the project referred to anywhere.

Highly confidential (and why’s that?)

The above quote was taken from a 35-page report marked ‘HIGHLY CONFIDENTIAL’ of which I am in receipt.

It was commissioned as a result of questions being asked in parliament as to why, when funds had been allocated and deposited by Members of Parliament into the coffers of PPL for the Rural Electrification Project (RE Project), these projects were not completed, were behind schedule or significantly over budget. It was the July 2015 session of parliament.

In response, on 15 September, 2015, the Minister then responsible, Hon Ben Micah along with Mr Garry Hersey Managing Director (MD) and Chief executive officer (CEO) of the IPBC and Mr John Mangos, then Executive Director of PPL engaged an Australian forensic investigation company to look into allegations of corporate impropriety at PPL.

Déjà Vu

I have read this report in detail, with a pervasive feeling of déjà vu: I’ve heard it all before: it was in different times and different places but a very familiar modus operandi.

It evokes the non-existent Wasa Bridge in Kandep, associated with Don Polye and the non-existent community colleges – a fraud for which the Grand Chief, Sir Michael Somare and certain members of his family have been implicated in the Singapore courts.

Coincidentally (or not?), the RE [non] Project also involves the Somares as the project was to be undertaken in the district of Angoram (Arthur Somare’s seat at the time) and involved the East Sepik Provincial Government.

The Angoram RE Project

It is the K15 million paid out to two contractors to which the report dedicates much investigation.

K10 million was from the coffers of East Sepik Administration that had been deposited by Sir Michael Somare into that account (it is not stipulated under what authority and from whence it came but the K10 million was earmarked for the project) and over K5 million that was received by the contractor from the Angoram District Administration for alleged variations to this non-existent project of which the investigators admitted finding no evidence  (and they looked)

The K10 million remained with the Provincial Government until the contracts to carry out the project were awarded and then it was transferred to PPL.

The report highlights the gross abuses of process that allowed vested interests to win the tendering process and commandeer the project without fulfilling the contract.

The tendering process

Implicated in just about everything – is John Tangit CEO of PNG Power whose ‘wantoks’ were the proprietors of the companies that won the four-part Angoram RE Project – three parts to PNG Engineering – the registered owner being Mr Richard Pii, brother-in-law of John Tangit and one part to Sepik Metal the registered owner being Mr Patrick Wolly Tangit, the brother of John Tangit.

John Tangit, erstwhile CEO of PNG Power Ltd.

The investigation team found evidence of John Tangit’s direct involvement with the tendering process on his desktop computer.

What’s more, these two companies seemed to have been made aware of the exact amount of money allocated for the project and their estimates coincided exactly (similar to insider trading). The three-parts of the project for which PNG Engineering won the tender were split into K3 million each, notwithstanding the very different parameters of each individual part. In other words the tender was neither accurate nor competent.

Further to the questionable estimates of PNG Engineering, the investigation teams noticed an assessment of 15/15 that had been awarded by the tenders’ assessment team to PNG Engineering for experience, a ridiculous score when the company was only five months old.

As for Sepik Metal, the other successful tenderer, they did not even gain the highest score in the assessment but got the contract because they came in exactly on budget – a little insider knowledge goes a long way.

As such, it could not be confidently asserted that either of these two companies were the best companies for the job regardless of conflicts of interest.

What’s more, on digging deeper into these two companies and their affiliates, many more links of John Tangit’s pecuniary involvement were uncovered.

John Tangit has been much more brazen even than Don Polye was when he awarded the Wasa Bridge contract to a crony – at least he didn’t ostensibly hand the contract to himself.

There’s nothing new here

Of the three issues, Wasa Bridge, Community Colleges and now the Angoram RE Project, there is nothing new.

In Kandep, an estimate K71 million has been allocated to the project and the contractors – and no bridge.

In 17 districts of PNG a whopping K156 million has been allocated and spent – and not one Community College to show for it. (“Leave the Grand Chief alone – he’s the Father of the nation,” you say– where’s that ironic font?)

In comparison, the K31 million gone missing from the Angoram RE Project is a mere bagatelle but a huge amount none the less in any context, but especially in one where many people exist on a couple of kina a day and women still die in childbirth at alarming rates through lack of governmental services (maybe in Angoram it’s from lack of electricity.)

This was brutally brought home to me recently when I heard that there was a drive to vaccinate potential mothers in PNG against tetanus. What on earth for?

In my world, tetanus is not considered a risk factor for birthing mothers. But it is where mothers habitually give birth on the ground in the dust and the dirt or the mud and the filth.

Yet here we are – talking of K31 million as if it were nothing – because everything is relative and the relationship of various acts of thievery is regularly and usually counted in millions in PNG.

To date, no one has found a way or a will to successfully prosecute these crimes. Why not?

Inadequacy of the agencies of the state.

For a journalist, once is an incident, twice is suspect and by the third time, it’s a trend.  And this mode of corruption is quite the trend in PNG. Yet it’s brazen, and not even particularly sophisticated.

What’s more, in two of these cases, there has either been a very competent Singapore court (Community Colleges) that has done the hard investigative work or a thorough investigation by a reputable independent investigator (Angoram RE Project).  As for the Wasa Bridge, if the authorities wanted some evidence of where to look – they could do worse than start with PNG Echo’s own investigation.

Yet it doesn’t happen, does it?  Why not?

If the agencies of the state, and the state itself, cannot recognise this brazen and obvious trend and put in place ways to successfully prevent and prosecute the crimes, then the agencies are either incompetent or corrupt themselves.

I find it hard to believe that in the PNG Power saga ,all Fraud Squad’s energies were put into prosecuting John Mangos for alleged visa infringements and an alleged K62,000 for which there was no viable evidence – Mangos would argue that it doesn’t exist – yet with all the credible evidence available to them – nothing has been done on the missing millions.

I re-iterate – the Fraud Squad is either grossly incompetent or corrupt – there is no third way.

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Corruption: Sir Michael Somare’s Legacy

By PNG Echo

The Grand Chief
The Grand Chief

Revered as the founding father of Papua New Guinea, Grand Chief Sir Michael Somare’s political career pre-dates national independence by 8 years.

First elected to Papua New Guinea’s pre-independence parliament in 1967, he has had an unbroken run of almost 49 years as an elected Member of Parliament, 17 of those as Prime Minister of the independent state of Papua New Guinea.

On independence, Sir Michael had already done his political apprenticeship under Australia’s watchful eye and he’d had a full 8 years to learn the ropes (even as Chief Minister in the pre-independence, self governing parliament) before he became PNGs first Prime Minister.

If anyone was poised at the crossroads of history, with an opportunity to leave his indelible mark, Sir Michael was.

And he has – but it is not one of which to be proud and it could have been.

His was the unique opportunity to steer Papua New Guinea in any direction he wanted. He chose the path most travelled – self-interest.

An opportunity squandered

Dubai. Is this what Port Moresby could be like now?
Dubai. Is this what Port Moresby could be like now?

By now, PNG should be counted among other great, modern nations like Singapore and Dubai, it certainly had all of the potential.

And to a large extent, the future destiny of PNG had been trustingly placed in the hands of Sir Michael on independence. He had led the nation to that point and the people were confident he would lead them into a prosperous independent future.

They were disappointed.

Instead, Sir Michael spent his post-independence parliamentary life as the leading architect of Papua New Guinea’s shameful and ignoble political culture where precious little functions and only money talks.

And so, Sir Michael bows out of politics at a time when the social indicators in Papua New Guinea are abysmal (I needn’t expand on this as they are only too well known).

Indeed, according to leaked diplomatic cables, Sir Michael is the founding father of

…a dysfunctional blob.

On the possibility of Sir Michael coming back into power after the 2011 political coup, a diplomatic source (Wikileaks) called the Somare regime:

…a cesspit of corruption, incompetence and mediocrity.

Entrenching an aberrant Modus Operandi

PNGs Hous Tambaran (parliament)
PNGs Hous Tambaran (parliament)

Remember. It was the Somare government who enshrined such manipulative tactics as controlling parliamentary procedures by sheer weight of numbers, together with the convenient adjournment of parliament to avoid adverse parliamentary votes, according to a paper on the DevPolicy blog by the well-credentialed, Ronald May.

For example, the Somare government had its own self-interested at heart when in November 2010 – it adjourned the parliament to 10 May 2011. The long recess was to avoid the opposition moving a motion of no confidence in the government.

It was during Somare’s Prime Ministership that “executive dominance’ started to be remarked upon in the media.

What’s more, the sacking of Gari Baki and appointment of Tony Wagambie as acting commissioner in 2010 was then seen as a political act that left a divided police force.

Sounding familiar? But wait, there’s more:

For several years prior to his options running out, Sir Michael had been taking court action to prevent the Ombudsman Commission from investigating violation of the leadership code for his failure to lodge complete financial returns for fifteen years beginning in 1992–93.

When he was finally found guilty, one of the three judges, Sir Robin Auld, thought the offense should result in Somare’s dismissal because he’d shown

…a disregard bordering on disdain for his constitutional obligations.

In the end Somare was suspended for two weeks without pay.

But the irony of this should not be lost when Somare evoked the sacred nature of the PNGs ‘Mama Lo’ (the constitution) to rail against his own overthrow in the political coup of 2011 – craven hypocritical pragmatism?M

I would moot, that the methodology pioneered by Sir Michael, owing to his political dominance and its efficacy, has left a legacy where it is almost impossible to survive politically without employing the same tactics – they’ve become entrenched and seemingly impossible to bypass.

Nepotism and the art of corruption

Neither has Sir Michael ever been averse to employing a bit of nepotism –I mean, it’s so much easier to control the political environment, and the flow of anticipated largesse, when you have your cronies on the inside – better still if they’re family… and Sir Michael’s family has benefited in spades with government jobs and lucrative board appointments.

If you want to be sure of commissions (also known as kickbacks), it’s handy to have a son on the board of the trust that awards the contract (with the proviso of the said commission) and decides the beneficiaries.

Sir Michael, the family man.
Sir Michael, the family man.

And so Michael Somare Jnr (also known as Moox), became the Deputy Chairman of a trust that administered a multi-million dollar governmental loan from the Chinese Exim bank to build community colleges (variously reported – but around $US36 million)

In regard to this fund, and the subsequent awarding of contracts, both Somares – father and son – are embroiled and implicated in corruption allegations in the Singapore courts that involve substantial kickbacks to them and charges of conspiracy to falsify a document, wilfully and with intent to defraud – levelled against another trustee of the same trust of which Moox is the Deputy Chairman together with the company that was eventually awarded the contract.

In a sworn statement to the police, one of the accused Lim Ai Wah when asked whether she understood/knew that money she had had deposited into an account to pay “commissions” was proceeds of crime, she answered:

I wish to say yes but wish to say that if you don’t pay to the PM PNG you will not be able to get business from Papua New Guinea.

She was speaking of Grand Chief, Sir Michael Somare who had, at the time, been Prime Minister for the previous eight years.

This case was still being decided in the Singapore courts until recently and I am in the process of finding out more details which will follow in a separate article.

However, not in dispute and listed in the prosecutions submission to the court under “Undisputed background facts” is that both Somare’s received six figure sums (in US $) as commissions/kickbacks. This notwithstanding there is still no sign of the colleges – just commission payments.

The younger Somares Betha and Arthur.
The younger Somares Betha and Arthur.

Other Somare children have been similarly blessed with son, Sana Somare’s appointment to the board of PNG Power in 2005, while daughter Betha earned her keep by looking after public and media relations for her father.

Betha would brook no criticism of her father and was known to respond to difficult and probing questions like those from The Australian with a three-word reply, “Go to Hell.” Not a usual tactic for a public relations professional but not many have a doting Daddy as the boss.

Then there was Arthur who was awarded prestigious Ministries when he became an MP, up to and including Minister for Public Enterprises, where he was instrumental in setting up the Arab loan that preceded this government’s refinancing and restructuring through the controversial UBS loan.

It was a lemon handed to this government by Somare junior on attaining power – whether the O’Neill government will go on to succeed in making lemonade is yet to be determined – but make no mistake, the present government was forced to act because of the legacy that the Somare government had left them thanks to the Junior Somare, Arthur.

What’s left to posterity from this greatest of opportunities?

…precious little really, certainly not another Singapore or Dubai. If the Hippocratic oath tells us to “firstly, do no harm,” no one told the Somares, led by the patriarch of the clan, that it was an oath worth subscribing to.

A hideous political culture had life breathed into it by Papua New Guinea’s founding father, Sir Michael Somare – a good father does not leave such a millstone around the neck of his children.

If corruption, as so widely quoted, is systemic and systematic – it’s the Somare legacy.  Hail the Grand Chief!

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SDP is not Mekere Morauta’s retirement fund, nor the SOEs the Somare’s honey pot

By PNG Echo.

The Prime Minister hits back at his critics
The Prime Minister hits back at his critics

Prime Minister, Peter O’Neill has hit back at the continued and sustained attack on the government by former Prime Minister Mekere Morauta, saying his…

…ongoing stream of hate and malice  is all about the former Prime Minister trying to undermine the Government to keep control of the Sustainable Development Program (SDP) money…

He went on to say:

[Morauta] thinks that if there is a change of Government he might get to stay on and keep spending the money belonging to SDP [Sustained Development Program associated with compensation for the OkTedi mining environmental damage].

The Prime Minister, admonished the former Prime Minister, now retired politician, for playing politics from outside the parliament  He said Sir Mekere was

… a failed Prime Minister who initiated Papua New Guinea’s lost decade

(Sir Mekere’s Prime Ministership from 1999 – 2002 was followed by that of Sir Michael Somare lasting until the political coup of 2011 and is no doubt the “lost decade” of which O’Neill is referring.)

An unholy alliance

Is this alliance forged under the premise that ‘my enemy’s enemy is my friend?

In spite of the recent alliance between Morauta and Somare, where they teamed up to criticize the government’s UBS deal, the fact is, Sir Mekere Morauta, has never been an admirer of the politics of Sir Michael and stood in opposition to him for most of that decade.

More recently (2011) he made a scathing attack on Sir Michael’s government and especially the performance of Sir Michael’s son, Arthur Somare on inheriting the IPBC from him. He said:

As Minister, Arthur Somare regarded the SOEs [state–owned enterprises] as toys to be owned to glorify his image,… It seems that the IPBC and its SOEs were seen as the Somare family “honey pot”

Morauta was scathing about the abortive deal done by Arthur Somare that, arguably, was the precedent that made the UBS deal necessary and he questioned “the motives of the borrowers.”

It is therefore a considerable irony that these two have become allies against the government – with the Grand Chief even willing to play second fiddle to Don Polye (the Leader of the Opposition ) – a man he never trusted to deputize for him while he was Prime Minister.

Leader of the Opposition, Don Polye
Leader of the Opposition, Don Polye

Given that Polye has had an alleged hand in so many corrupt deals, that these two strange bedfellows (Somare and Morauta)  would happily fall in behind him while claiming to still have altruism as their only motivation, would need a complete suspension of all disbelief.

It all smacks of self preservation and the protection of vested interests.

These government’s accusers do not have clean hands and neither do they have a right to lifetime stewardship and control of governmental assets (however controversial or fiercely fought for) and/or the right to expect that the Prime Minister position should be a sinecure or something that can be gifted to their children.

All of this belongs to the people of Papua New Guinea.

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People in glass houses…: A timely reminder by Hon Mao Zeming

By PNG Echo.

Hon Mao Zeming deputy leader of PNC
Hon Mao Zeming deputy leader of PNC

The Hon. Mao Zeming, MP, the Deputy Leader of the People’s National Congress Party (PNC) and Minister for Fisheries and Marine Resources, has questioned the motives of one of the Grand Chief, Sir Michael Somare’s, children – the former MP for Angoram and Minister for State Owned Enterprises under his father’s government, Arthur Somare.


While the cameras roll,

said the Hon Zeming, commenting on Somare Junior’s reported intention to stand outside ASC in Australia,

I wonder how eager he will be to discuss his own ministerial record and the charges that were leveled against him in his own political career.

The sins of the son

All 105 of them apparently.

Father and son - the PMs role not a birthright says Zeming
Father and son – the PMs role not a birthright says Zeming

They are charges that were lodged by the Public Prosecutor with the Leadership Tribunal for misconduct in office against Somare Junior in 2011.

However, in a stroke of good luck for him (although not for the unfortunate member of the three-man bench) Somare came out of it unscathed when the Leadership Tribunal was adjourned indefinitely following the passing of a member presiding over the hearing.  And with the loss of his seat in 2012 election, it was thought he’d largely disappeared into oblivion.

But lately, Arthur Somare has risen to prominence as the negotiator for the landowners in the LNG deal and has been eager to defend himself against the charge Prime Minister O’Neill leveled when he said that the UBS loan was necessary to sort out the mess that was left by the previous Continue reading People in glass houses…: A timely reminder by Hon Mao Zeming

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When you’re handed a lemon – make lemonade. The PNG Oil Search shares saga.

By PNG Echo.

Prime Minister Peter O'Neill has hit back at critics
Prime Minister Peter O’Neill has hit back at critics

Prime Minister, Peter O’Neill has defended his government’s position on the controversial UBS loan in the wake of an article published by Fairfax Media saying:

The cost of losses we suffered to the Arabs are far worse than the cost we pay on the loan from UBS.”

He went on to explain:

PNG paid $8.20 when the Somare government agreed to pay $8.50 to the Arabs, Oil Search is our country’s biggest tax payer and one of the largest employers of our citizens so why is it wrong for us to be a stable shareholder in that company?

In reality, this is a question that only time will answer – but the other often overlooked reality is that it was a decision that was forced upon the Prime Minister by the actions of a previous government – that of the Somare government and its Minister Arthur Somare and the disastrous deal with Arab money.

While it is true that there was more than one solution to the situation forced upon this government, it is also true that given the current state of the market, it is moot whether any alternative would have yielded a better result.

The Deal

UBS-small-business-loan-fundReading the information provided in the aforementioned article (written by John Garnaut – son of Ross Garnaut an erstwhile Chairman of the PNGSDP and someone that the Prime Minister declared “unwelcome” to return to PNG) the deal has its weaknesses but it also has its strengths.

Being given that its weaknesses have already been amply explored and exaggerated  – let’s now consider it’s strengths.

Garnaut describes a situation whereby 20-30 of the best financial minds worked 24/7 for two weeks to create a deal that was a win-win-win situation: for PNG, for Oil Search and for UBS.   It was acknowledged that no one else could have offered PNG a deal on better terms than UBS.

And sometimes even the perceived “weaknesses” turned out to be strengths when the Continue reading When you’re handed a lemon – make lemonade. The PNG Oil Search shares saga.

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Polye or Namah? Rearranging deckchairs on the Titanic.

By PNG Echo.

imagesIn an interview given to EMTV at the end of last week, Prime Minister, Peter O’Neill commented on a number of issues including:

  • the recent defections (?) to the Opposition,
  • the Grand Chief’s move to the middle benches (or the opposition depending on who you listen to)
  • and the UBS loan.

The Prime Minister reminded his audience that PNG, as an adherent to democratic principles, was governed by the virtue of numbers – and he had them

In fact, O’Neill has almost 60 Members of Parliament in his own PNC party, according to figures he quoted. With the PNG parliament having 111 seats, O’Neill’s PNC Party has the numbers to govern on its own if it so desires. I cannot recall another time in post-colonial history that that has ever been the case.

However, this government is a coalition government and holds the seats of around 100 members (once again according to the Prime Minister’s estimations). So even with Polye, Soso et al joining the Opposition, the opposition is still going to be largely irrelevant.

Continue reading Polye or Namah? Rearranging deckchairs on the Titanic.

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