Australia gets another F: The Pacific International Hospital Contract

Australian nationals have been at the centre of corruption scandals in PNG for decades, stretching back to the 1980s. They have been the executives forging the paperwork, the lawyers laundering the money, and the businessmen paying the bribes. In short Australia has been a critical spoke in the giant corruption machine subverting democracy in PNG.

But hey its all PNG taxpayers money so who cares right?

Well now it appears the chickens may have come home to roost, as Australians discover hundreds of millions in their taxpayer dollars have been awarded to companies providing services to the Manus Island detention centre, under dubious conditions.

Not that we should take any pleasure in this. Its bad news for both countries.

The first revelation exposed in the Australian Financial Review involved half a billion dollars awarded to a security group, Paladin, through a limited tender. Paladin is said to be owned by a failed Australian businessman, and led in PNG by an ex-soldier currently facing over 100 fraud charges.

Now The Guardian reports that medical care at the Manus Island detention camp has been entrusted to Pacific International Hospital Limited (PIH), again through a limited tender.

A limited tender is used in exceptional situations, where the relevant service cannot be secured through an open tender. In such rare situations the Australian government approaches a contractor, and invites them to make a bid – in this case PIH was approached.

Evidently, to date, PIH has been paid A$21.5 million without even so much as a contract being signed.

Image: The Austender website lists the award made through limited tender

But who stands behind PIH? And critically has the Australian government done their homework before approaching PIH to make a bid for this big ticket item?

PNGi can reveal that PIH is closely linked to Prime Minister, Peter O’Neill, and a senior medical figure accused by the National Court of having abused his fiduciary position to misuse money ‘without appropriate and lawful authority’.

Was this hard to work out?

No, it took the PNGi team thirty minutes to connect the dots. Presumably Australian public servants spent more than thirty minutes on their due diligence before reaching out to PIH? Or did they?

Lets begin.

The biggest shareholder in PIH is Fairhaven No.72 Limited – a company accused by the NCDC Governor, Powes Parkop, of trying to illegally grab public land. Fairhaven has a 45% stake in PIH.

Fairhaven is owned by Australian National, Robert Moore. The company is managed by Moore, along with another Australian national, Antoinette Amputch.

Both Moore and Amputch are intimately involved in Insurance Partners (PNG) Limited. Insurance Partners has an interesting list of shareholders.

Prime Minister Peter O’Neill’s accountant, Joseph Kup, was one of the company’s first shareholder. Peter O’Neill personally acquired a direct stake in the company after his firm LBJ Investment Ltd purchased 407,000 shares for an undisclosed amount in June 2014. As a result, O’Neill held 37% of the company, while Kup possessed a 16% stake.

The other shareholders were Fairhaven No.72, owned by Robert Moore, Prime Locations (owned by the Moore family), and Carmor Pty Limited, owned by the Australian firm, Hezlet Investments.

A 2014 publication by the Oxford Business Group, suggests that Insurance Partners (PNG) Limited specialises ‘in government business’. 

Financial Statements submitted to the Investment Promotion Authority by its Australian Director and shareholder, Antoinette Amputch (cited above), indicate that over the years 2014 and 2015, 2 million kina was distributed as dividends to its shareholders (1,250,000 in 2015 and 750,000 in 2014). PM O’Neill then sold out of the company in 2016, to another Australian for an undisclosed amount, Sir Theophilus Constantinou.

So it would appear that PIH’s principal shareholder, is a recent business partner of the Prime Minister, and has been implicated in a major illegal land deal.

This in itself does not confirm any wrongdoing in the Manus Island case.

It does, however, raise a red flag, given serious allegations that the O’Neill Government exerted significant pressure on Australia to hand pick Paladin to provide security for the Manus Island detention centre, the other major contract awarded through limited tender.

Lets move on to look at another PIH shareholder, Mathias Sapuri International Limited, a company 100% owned by Dr Mathias Sapuri.

Well thats a good sign isn’t it? A company part-owned by an upstanding member of the medical profession?

Not quite.

In 2011 it was suggested Dr Mathias Sapuri and Dr Sylvester Lahe had misused over K1 million in PNG Medical Society funds while they were the association’s president and secretary respectively.

It was alleged there was K820,614 in spending that could not be accounted for and a further K297,802 in cash had been received by the pair, including a K100,000 withdrawal from the Medical Society’s account in Wewak by Dr Sapuri in August 2010, a day after he was replaced as President.

Although Sapuri claimed the allegations were ‘highly defamatory’ and were being ‘cooked up’ by ‘people trying to smear my reputation’, the National Court did not agree. It upheld the allegations and ordered Sapuri and Lahe repay K1,317,428 plus interest and return a Nissan Sunny motor car to the Society.

The court stated:

The evidence discloses that both defendants failed in their fiduciary duty by receiving income and expending it without appropriate and lawful authority and without full and clear acquittal.

Professor Glen Mola has also claimed that Greg Sheppard of Young and Williams Lawyers recommended:

Sapuri should be referred to the police for criminal investigation and prosecution for committing fraud and stealing offences under the Criminal Code.

It does not appear that the RPNGC ever followed up on this recommendation.

Sapuri is also closely linked to the principal behind Borneo Pacific Pharmaceuticals, Mr Sang Chung Poh. Borneo Pacific is accused of defrauding the people of PNG through rigged contracts and counterfeit medicines.

Image: Dr Mathias Sapuri’s link to Sang Chung Poh of Borneo Pacific Pharmaceuticals

Once we move from the private shareholders in PIH, and turn to some of the state enterprises with a share in the firm, the news doesn’t get better.

Take the example of Kumul Technology Development Corporation Limited, which has a 12% stake in PIH. It is ultimately owned by Kumul Consolidated Holdings.

Kumul Consolidated Holdings is the state enterprise at the centre of the Manu Manu land scandal. According to the Administrative Inquiry led by Australian QC John Griffin, Kumul Holdings paid a grossly inflated price for land, with the complicity of its management, that belonged to a company registered to the home address of the responsible Minister, William Duma, and owned by a gentlemen alleged to be the Minister’s brother in law.

Image: The Manu Manu land scandal

Ok, that is the shareholders, but PIH’s management must be top notch for the Australian government to target them through a limited tender?

Lets take a look at the Chairman of PIH, Sir Moi Avei.

The Guardian rightly notes ‘in 2007, Avei was found guilty of misconduct over his handling of public funds’.

He is also at the centre of two scandals involving the failed mega-projects, Central City, and the Konebada Petroleum Authority.

A full account of these scandals can be found here.

With respect to the Konebada scandal, the Public Accounts Committee observed:

Public money was handed to private individuals who expended that money as they thought fit – with no control or accountability imposed by Government

The two key private individuals being referred to here are, PNG national Kila Ai and, Australian national, Peter Nicholls. Having been appointed to administer these projects on behalf of the state – they then allegedly awarded themselves lucrative consultancy contracts without tender, and engaged in lavish spending without proper account.

PNGi discovered that one of these individuals, Kila Ai, was appointed to the Konebada project under highly irregular circumstances. The Public Accounts Committee notes:

The Auditor General finds that the position of Project Manager was not publicly advertised and this Committee has confirmed that advice. The Project Manager, Mr. Kila Ai, was appointed directly by the NEC without any competitive applications and solely upon the recommendation of Sir Moi Avei the then Minister for Petroleum and Energy. The Minister also advised the NEC that: “To publicly advertise the position will cause an undue delay and may diminish professional services offered by the successful applicant”.

PNGi also discovered that Sir Moi has an interesting connection with Peter Nicholls, an Australian banker with a questionable past.

Nicholls and his close business partner, a Filipino national named Ofelia Raymundo Carlos, list their registered address in IPA documents as Unit 306, Pacific View Apartments (the former address of disgraced politician Ted Diro, who Nicholls once worked for).

Another individual to list Unit 306 as their residence at the same time as Carlos and Nicholls, is Sir Moi Avei.

Image: Sir Moi Avei’s link to Peter Nicholls and Ofelia Carlos

Finally, if we turn to PIH’s Company Secretary, we see it is Indian national Rajesh Samnani.

A search shows he is a business partner of Australian national, Anubhav Yadav, and PNG national, Debra Victor, through the company Central Supplies Limited. All three are shareholders in this company.

According to the Auditor General a shell company owned by Yadav was illegally awarded contracts by the Department of Defence, valued at K13 million. Additionally, it is alleged he was on board the now infamous 2012 Falcon jet flight with Beldan Namah, that was said to be carrying a significant amount of US dollars.

Of course, there is no suggestion Samnani was involved in these episodes. However, this example raises questions over the people Samnani consorts with in business.

Samnani’s second business partner in Central Supplies Limited, Debra Victor, is a Director at Paradise Breweries Limited, which is fully owned by Prime Minister Peter O’Neill. She is also shares a postal address with the Prime Minister.

Finally, Samnani has a close relationship with another person who has been a business partner of the Prime Minister, Robert Moore, the owner of Fairhaven No.72. Samnani is a Director of Moore’s company Aequs Oil & Gas Limited.

So to summarise.

PIH is a company part-owned by 1) an Australian national who has previously been in a close business relationship with Prime Minister O’Neill and whose company is implicated in an illegal land deal, 2) a local Doctor, implicated in illegal use of funds entrusted to him as President of the PNG Medical Society, and 3) a state enterprise implicated in one of the largest land fraud scandals in PNG history. Its Chairman is a figure who when in government was found guilty of misconduct, and has been implicated by the Auditor General and Public Accounts Committee in a series of projects marred by illegal dealings, that led to the loss of tens of millions in public moneys. Finally, PIH’s secretary works for individuals with close business ties to the Prime Minister, and he is the partner of another individual implicated in various serious illegal dealings.

This is the company the Australian government awarded a major contract to through limited tender, to look after the health of asylum seekers outsourced to PNG, without even so much as a contract being in place.