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FINAL REPORT Containing Findings, Implementations and Recommendations

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FINAL REPORT Containing Findings, Implementations and Recommendations :s 1" ■‘s ...... afr, 1 %;:11.Vil 'I c-J t ua New CI' INVESMIGATION T 1SK-F®E CE SWEEP Sweialigatimg 4 eafaaptiza at efaz Depaiitraera 4 .Nationat Piezm ming and Musitoring. FINAL REPORT Containing Findings, Implementations and Recommendations 5 Dated th6s Day of ay, 2012 7-5 1 ; 41 ' 7 -1' , - 1 ASV TEE INDEPENDENT STATE GE PAPUA NEW GUINEA INVESTIGATI N TASK-FORCE SWEEP FINAL REPO R.7'- Prepared y Sam Koim, LILT; [ ins] Chairman Draft Report 1 Last printed 4/27/2012 4:24:00 PM IREE.PORII 7:A113LE Ski CONTE.i. .7 1 -PRELIMINARY ................... 6 1 ABBREVIATIONS USED IN 11-11S REPORT .......................................................................... 2 GLOSSARY ........................................................................................................................................................ 6 3 ACKNOWLEDGEMENT ............................................................................................................................... 4 INTRODUCTION .......................................................................................................................................... 7 4.1 Executive Summary ....................................................................................................................... 7 4.2 Terms of Reference 7 4.3 Scope of Investigations ................................................................................................................. 8 4.4 The Team Structure ....................................................................................................................... 8 4.5 Investigations Methodology .......................................................................................................... 9 PART H —LEGAL PROCESSES AND ESTABLISHMENT ....................................................................... 10 5 ESTABLISHED STATE PROCUREMENT PROCESS ..................................................................... 10 3.1 Budgetary Process and Appropriations ...................................................................................... 10 5.2 The Law Governing State Tenders and Contracts ..................................................................... 12 5.2.1 Issuance of Certificate of Inexpediency (COI) ................................................................................... 13 5.2.2 The use of Authority to Pre Commit Expenditures .......................................................................... 14 5.2.3 Rational behind Public Tender Process .............................................................................................. 15 5.3 Established position by the Courts on illegal contracts and their enforcements ..................... 15 6 DEPARTMENT OF NATIONAL PLANNING AND MONITORING ....... 15 6.1 Establishment of DNPM ............................................................................................................. 15 6.2 Core Functions of DNPM .......................................................................................................... 16 6.3 Project Appraisal Guidelines ....................................................................................................... 17 6.3.1 The PIP Guidelines .............................................................................................................................. 17 6.3.2 The Development Projects Documentation Guidelines ................................................................... 18 6.4 DNPM's Capacity ........................................................................................................................ 18 PART III —FINDINGS ......................................................................................................................................... 19 PART III.1 -GENERAL FINDINGS ............................................................................................................. 19 PART 111.2 -DETAILED FINDINGS .......................................................................................................... 19 7 DNPM'S DEVIATION FROM PRIMARY ROLE ................................................................................ 19 7.1.1 Mischievous Gazettal of Ministerial Functions 19 7.1.2 Observations on the Gazettal Notices conferring of powers to successive National Planning Ministers 21 7.1.3 DNPM turned into a Cash Cow .......................................................................................................... 22 7.1.4 Corruption and Malpractices ............................................................................................................... 23 7.1.4.1 DNPM peormingCST7.3 .Roles ...................................................................................................... 23 7.1.4.2 Lack of Capacity to implement Projects ............................................................................................... 24 7.1,4.3 DNPM's Lack of Capacity to Monitor Pr jectr .................................................................................. 25 7.1.4.4 Lack of proper documentation and record keeping ................................................................................ 26 7.1,4.3 Release of payments in full amounts ................................................................................................... 26 7. 1.4.6 Conflicts of Interest Situations ............................................................................................................ 26 7.1.4.7 Lack of Due Diligence ...................................................................................................................... 27 7.1.4.8 Deviation of Payment Votes ............................................................................................................. 27 8 ABUSE OF CERTIFICATE OF INEXPEDIENCIES ........................................................................ 27 8.1 Some examples of Abuse of COI: .............................................................................................. 28 8.2 Recommendations ....................................................................................................................... 31 9 ILLEGAL C NTRACTS .............................................................. 31 10 INDIVIDUAL CASES ................................................................................................................................... 31 10.1 Detailed Investigations ................................................................................................................ 31 CASE 1: PAYMENT AND RELEASE OF K180,000 TO KAJAH DEVELOPMENT & BUSINESS SERVICE CENTRE .............................................................................................................. 32 CASE 2: PAYMENT OF K100,000 TO KEREKAMB ISLAND CORPORATIVE SOCIETY .............. 34 Case 3: Payment and Release of K547,000 to K-Island Builders Ltd .................................................. 36 CASE 4: PAYMENT AND RELEASE OF K1.0 MILLION TO XONINGI COFFEE LIMITED ..... 39 27 April 2012 Page 2 Tint LInveslAga1ion Tan-Tona iweei DepoLl lo Ma0on,ai incecutIve Pro/t eauncAl °Tut roalings, kkplemenlagons, anal FIrtaerr laevonamendagons. IFUNAL REPORT- CASE 5: PAYMENT AND RELEASE OF K1.5 MILLION 0 METTLE LIMITED ............... 42 Case 6: Payment and Release of K3.5 million and K1,108,650.18 to Niugini Star Transport Limited45 Case 7: Payment and Release of K5.0 million to Niugini Star Transport Limited ........................ 49 Case 8: Payment and Release of K5.0 million to Niugini Star Transport Limited ..........................54 CASE 9: PAYMENT AND RELEASE OF K3.0 MILLION TO HILAND FARMS LIMITED .58 Case 10: Payment and Release of K3.0 million to Agricultural Development Limited ........................ 61 Case 11: Payment and Release of K3.0 million to Rait Hela Coffee Limited .......................................... 63 Case 12: Payment and Release of K2.0 million to Yapiok Contractors Limited .......................................... 66 Case 13: Payment and Release of K700,000 to Tild Coffee Estate Limited ............................................. 69 Case 14: Payment and Release of K2.0 million to Wando No.2 Coffee Estate Limited ....................... 72 Case 15: Payment and Release of K7.5 million to Rait Fama Limited .................................................... 75 -4- CASE 16: PAYMENT OF KIMILLION TO NEW STAR CENTURY LIMITED FOR ESA-ALA DISTRICT ....................................................................................................................................................... 78 CASE 17: COMMUNITY COLLEGE CONCEPT ................................................................................. 81 CASE 18: KOGE COFFEE AND PYRETHRUM PROJECT —K5MILLION ................................ 94 CASE 19: K3,400,000.00 PAYMENTS TO TOL PORT SERVICES FOR FUNDING REHABILITATION OF KARL PLANTATION. ................................................................................ 97 Case 20: Payment and Release of K10 million to Travel Air Limited .................................................. 105 10.2 More cases in Brief .................................................................................................................... 110 10.2.1 Sarakolok West Transport Ltd and Chain of Companies ................................................................ 110 11 SCITB (K125 MILLION KOKOPO COMMUNITY PROJECTS) ................................................... 114 11.1 Introduction 114 11.2 Treasury
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