Is the net finally closing in on Isaac Lupari?
Isaac Brian Lupari has enjoyed a seat at the top table in Papua New Guinea’s political elite for more than two decades.
As a career public servant Lupari headed several government departments and served as Ambassador to the European Union. He then ascended to the coveted and powerful position of Chief Secretary in the Prime Minister’s Department during 2007.
Although he was sacked after just 12 months and then had to fend off detailed allegations of fraud, Lupari later re-emerged as the right-hand man to Peter O’Neill. In February 2016 Prime Minister O’Neill promoted Lupari from Chief of Staff back to his old job as Chief Secretary, ‘the most important position in the public service’, according to the PM.
But the loss of Lupari’s boss, PM O’Neill, from the top job in May this year has led to acrimony. Previously protected senior public servants who were appointed and served under O’Neill have started to point fingers at each other now that their activities are coming under renewed scrutiny.
Lupari’s new boss, Prime Minister James Marape, has deflected criticism by suggesting Lupari’s contract as Chief Secretary may not be renewed when it expires in February 2020. But as the number and breadth of scandal he is embroiled in continue to grow is it possible Lupari’s demise could come even sooner?
In today’s investigation PNGi takes a deep dive into the current scandals that have consumed Lupari.
But first we detail the damning findings of the Finance Department Commission of Inquiry. In 2009 it recommended that Lupari face police prosecution for defrauding the State of over K1m.
 The sacking was allegedly in response to Lupari’s attempts to block the inquiry into the Finance Department that would later uncover his own fraudulent activities. The National Court later quashed the NEC decision cancelling Lupari’s contract as it did not follow proper process, but the court refused to reinstate Lupari, a decision which Lupari unsuccessfully appealed to the Supreme Court.
Finance Department COI
Isaac Lupari started working for the government in 1988. After nine years he reached the highest levels of the civil service, being appointed Secretary of Finance in the now notorious government of William Skate in 1997.
From Finance, Lupari moved rapidly through a series of positions, including Secretary for Defence, Secretary for Personnel Management and Secretary for Transport and Civil Aviation. He then continued working for the government in various consultant roles before being appointed Ambassador to the European Union in 2003 and, finally, in 2007, Chief Secretary.
Despite the fact Lupari was, effectively, continuously employed by the government throughout this period, in 2003 he submitted legal claims totalling K3.7 million for alleged unlawful termination of four employment contracts. Simply put, Lupari was claiming that each time he was moved from one position to another, he was entitled to be paid out on the unexpired term of his previous contract.
This, says the Department of Personnel Management, was clearly fraudulent:
The real life period covered by the contracts on which Mr. Lupari was engaged is a 6 year 9 month period from start of first contract 17/ 09/ 97 through to the end of last contract 28/06/04. Compared to the 6 year 9 months period he is in fact making claims for a total 14 year period, by placing the contract periods end to end, when in fact they overlap. Apart from being contrary to public polity [sic] and the contractual provisions, the claims are clearly improper because they result in triple and sometimes quadruple payments for the same period of time. Mr. Lupari has received salaries, allowances and benefits continuously from 17/09/97 to the present day. He has lost no remuneration and has been paid a total K1,294,133 for the year period 17/09/97 to 17/04/02.
Despite the fact Lupari’s claims were unlawful, contrary to Department instructions, they were not defended by the State’s lawyers. As a result Lupari received at least K1 million in out of court settlements, as the Commission of Inquiry into the Department of Finance revealed in 2009.
Lupari was assisted in making his claims by Paraka lawyers, who the Commission of Inquiry said ‘deliberately and knowingly misled the court right from the start’ in a ‘serious breach of duty’. Despite this ‘culpable conduct’ Paraka lawyers received a hefty benefit, K800,000 in uncontested legal fees ‘for doing a minimal amount of work’ in a process the Commission of Inquiry described as ‘a charade to legimise excessive costs’.
The Commission of Inquiry recommended Lupari be ‘referred to the Fraud Squad for investigations with view to laying criminal charges for fraud’ and to the ‘Ombudsman Commission for investigations on whether he breached [the] leadership code’.
The Commission also recommended Guguna Garo of Paraka Lawyers and Zachary Gelu as Solicitor General be referred to the police for their part in facilitating Lupari’s claim.
No fraud changes appear to have ever been laid against Lupari, or against Garo or Gelu.
 All the information in this section is taken from the findings of the Commission of Inquiry into the Department of Finance published on 29 October 2009, and was previously published by PNGi in the article ‘Impunity gives green light for new offenders’.
It is not only the State that Lupari likes to unlawfully demand money from – if allegations made to the Australian government are true.
PNGi understands that Isaac Lupari is the ‘senior government official’ at the centre of the Paladin kickback scandal.
Paladin is the controversial security company engaged by the Australian government at a cost of more than $400 million to run its Manus Island detention centre.
Paladin has made repeated complaints to the Australian government that it frequently receives demands for kickbacks from PNG officials.
Those demands, say Fairfax media, include a text message from ‘a senior government official’ sent to a Paladin director in June this year, asking for a personal payment of K35,000.
The same official, it is alleged, had asked Paladin for a political donation of over K16 million in 2017.
PNGi has learned that Lupari is the most likely person to have made those requests.
If these allegations are true and the correspondence and text messages have been given to the police, it would appear Lupari could be at risk of arrest and prosecution in both PNG and Australia.
Isaac Lupari is also at the centre of allegations of the misuse of funds for the 2018 APEC Summit including payments for ‘hundreds of mystery hire cars and a consignment of overpriced guns’ according to The Australian.
The APEC Authority claims it is unable to account for millions of Kina in missing payments. Its chief executive Chris Hawkins says he has written numerous letters to the Prime Minister sounding the alarm over the suspect transactions and accusing Lupari of hampering efforts to wind up the Authority.
The Authority also alleges that Lupari approved 300 individual payments of less than K50,000 to a small number of companies over a four-day period late in 2018. These included 66 individual payments to one car hire company that totalled K2.6 million.
Hawkins says the company concerned had not been engaged by the APEC Authority and the cars were potentially never provided.
This is one example of more than a dozen hire car companies that received multiple payments of amounts under the K50,000 threshold.
And it is not just hire car companies that are alleged to have benefited. The Australian says the PNG police force paid nearly $20,000 each for 20 Glock pistols that can be purchased online from the US for $1600; that represents a potential overpayment of around K900,000.
In another twist, the Post Courier also reports that there are still a number of outstanding claims still to be settled by the government relating to APEC. These include a claim for K11.6m from a single car hire company for the use of its vehicles over just four days. Other car hire companies are claiming a further K6.5m. It is unclear whether Lupari has already approved these payments.
UBS - wrongful conduct
As then Chief of Staff to the Prime Minister Peter O’Neill it is not surprising that Isaac Lupari also features in the scandal over the UBS Loan and O’Neill’s fateful decision to invest money in Oil Search shares.
According to the Ombudsman Commission, the share purchase was unlawfully funded and approvals were improperly bulldozed through government by the Prime Minister and his cohorts. Those decision ultimately cost the country about K1 billion in losses.
Alongside then Prime Minister Peter O’Neill and Acting Treasury Secretary Dairi Vele, the Ombudsman Commission identifies Isaac Lupari as having played an important role.
It was Lupari, along with Minister Ben Micah, who ‘wrongly and improperly’ issued specific directives and instructions to the Independent Public Business Corporation and the National Petroleum Company of the NEC decision to purchase the shares and for them to approve and facilitate the interest payments of UBS.
In law, says the Ombudsman Commission, Lupari as Chief of Staff had no authority to issue any advice or directions to any government entity, his function was solely ’to assist the Prime Minister and manage staff employed in the Prime Minister‘s Office’. In issuing the directions Lupari was ‘wrongly asserting his political influence’.
The Ombudsman Commission has recommended Isaac Lupari be referred to the Leadership Division of the Ombudsman Commission to be investigated under the Leadership Code.
Lupari has been “embroiled in a conflict of interest scandal as a director of a company building a gas-fired power plant in Port Moresby while being responsible for the country’s state-owned electricity company and serving as gatekeeper to PNG’s cabinet”, according to The Australian.
The newspaper says the former managing director of PNG Power, Carolyn Blacklock has accused Lupari of exerting “extraordinary pressure” on her to sign a power purchase agreement with Dirio Gas & Power Company, where he is one of five directors.
Such directorships can be very rewarding. In April 2018, PNGi revealed that as director of the failing Kumul Minerals Holdings Limited, Lupari earned a cool K68,232 in 2016 alone. This was despite the State owned entity reporting a loss of K345 million.
Lupari is also the Chairman of the controversial Mineral Resource Development Company, which is currently under investigation by the Public Accounts Committee and has long been the subject of adverse findings by the Auditor General.
The net closes
Although Isaac Lupari may have escaped investigation and prosecution for allegedly defrauding the State of over K1 million through bogus legal claims, the Paladin kickback and APEC car hire rorts must surely give good grounds for the police to take another look at this career civil servant?
And it is not only the Royal Papua New Guinea police who should be investigating.
The evidence presented in Australian newspapers relates to kickback demands put to an Australian company and misuse of APEC funds which the Australian government contributed heavily to. This surely places an obligation on the Australian Federal Police to take a closer look?
Is the net finally closing in on Isaac Lupari?