AGO: Australian Rorts K13 million from Defence Budget

Sometimes when investigating one scandal PNGi trips over another. That happened during the case of Fabian Pok.

As we dug into the financial belly of Defence, a rort exposed by the Auditor General was uncovered.

At its centre is Australian national, Anubhav Yadav, and his shelf company Makro Limited.

The scenario in brief.

The Central Supply and Tender Board (CSTB) awarded a tender to reroof Goldie Barracks to the company Au Namona Ltd, which is owned by PNG national Gabutu Hariki. This tender, the Auditor General observes, was ‘later hijacked’ by the Defence Council. It illicitly awarded the contract to ‘a less reputable company’ Makro Limited, the Auditor General’s assessment states.

Image: Au Namona Ltd was awarded a contract to reroof Goldie Barracks. Makro Ltd the Auditor General claims was wrongly paid for the job.

The Defence Council is the supreme body that controls the PNGDF, and supervises the administration of the Defence Force and Defence Department. Its statutory members include the Minister of Defence, Secretary of Defence, and the Defence Commander. The Minister is the Council’s Chairperson.

During 2013/14  Dr Fabian Pok was Defence Minister, a politician implicated in a large volume of corruption scandals.

To cover up this sham deal, the Department of Defence evidently ‘misled the Department of Finance, National Planning & Monitoring, myself [Auditor General] and other stakeholders that Au Namona Limited was doing the re-roofing when the payments according to the expenditure report were paid to Makro Limited’.

Adding injury to insult the Auditor General discovered that the actual reroofing work was done by ‘the Defence Force based at the barrack’.

It appears Makro Limited was paid K4.5 million for labour done by the nation’s service people.

Makro Limited was then given a second bite at the cherry. In 2014 ‘the Department awarded another contract totalling K8.9 million to the same company Makro Limited to supply white goods to the Department’.

The Auditor General observes: ‘This project valuing more than K8.9 million did not go through CSTB [Central Supply and Tender Board]’. The report goes on: ‘There was no Company profile sighted, or whether it had the capacity to supply the white goods to the Department’.

So here we have an evidence based set of factual claims, made by the country’s highest auditing organ, which indicates two contracts were illegally awarded to an unreputable company. These contracts were awarded under conditions which suggest potential fraud and misappropriation.

The next step at PNGi when a report like this is uncovered is to follow the company’s corporate trail.

Ordinarily, for K13 million in construction and whitegood contracts we would expect to see a large company, with a significant number of full time employees, and a networth in the millions, if not tens of millions.

In light of the Auditor General’s comments, however, PNGi actually anticipated two things, based off verified patterns witnessed in corruption/fraud cases.

  1. A shelf company, with incomplete records.
  2. A shareholder and/or directors, with a chequered track record.

The first of these assumptions could be checked through the Investment Promotion Authority’s corporate register.

When PNGi examined the corporate records lodged by Au Namona, the firm originally awarded the reroofing contract legitimately by the CSTB, it broadly matched the description we would associate with an above board tender.

The company’s principal business is listed as road construction and civil works. It had 39 employees during 2014.

Image: A good sign, 39 employees. Source: Au Namona Construction Limited Annual Return 2014.

Furthermore, Au Namona’s networth was K5.3 million.

Turning then to Makro Limited.

During the offending period its sole shareholder/director is an Australian national by the name of Anubhav Yadav.

The company had fallen foul of the legally required reporting requirements for private companies. Makro Limited’s last annual return, for instance, relates to the year 2013.

On the plus side, that annual return does give us a window into the company during the proximate period documented by the Auditor General.

Working down the annual return the first thing to note is the business’ salubrious location, Room 601, Pacific View Apartments. With eye-watering rents, office blocks in this complex sell for K4 million.

Image: Makro Limited registered address. Source: Makro Limited Annual Return 2013

The next thing to note is that the company has no stated principal activities.

Which is not surprising perhaps given that it also has no employees.

And no stated assets.

Image: No stated assets. No employees. Source: Makro Limited Annual Return 2013

But according to the Auditor General it did have at least two contracts, illegally awarded, for K13 million to engage in construction activity and whitegood supplies!

An examination of the IPA’s foreign enterprise register reveals slightly different results. Makro Limited is certified to operate as a foreign owned enterprise. But this certification pertains to two areas, logging and gaming.

Not construction activity, or white-goods supply.

Which is not a matter of insignificance. As Makro Limited’s own IPA foreign certification points out.

Now lets drill into the Director/Shareholder Anubhav Yadav. He bought 100% of the company’s shares on 17/06/2013 for K1. They were purchased from Sameer Hassanali who is listed as a US citizen.

Image: Yadav acquires Makro Ltd for K1

Yadav was born on 21/09/1987. It appears at the tender age of 26 this Australian national had acquired a company for K1, and was soon winning contracts worth in the millions, albeit illicitly, according to the Auditor General.

All of which sound highly unusual.

So the next thing to do is to check out who this individual is affiliated too, using PNGi Portal. An application such as VIS helps project Yadav’s network, so we can begin to measure his influence.

Diagram: Yadav’s social network

In Yadav’s case his social network includes politicians, prominent Malaysian and Chinese businessmen, local executives with a chequered track record, and a senior civil servant. Set out below are key examples.

Name Direct affiliate One degree of separation Biographical notes
Belden Namah             X Politician + Former Deputy PM
Philip Eludeme             X                X CSTB Chair + Censured by CoI
Jimmy Maladina                X Businessman + Censured by CoI
Theo Constantinou                 X Australian businessman
Wandi Yamuna                 X Alleged cousin of Peter O’Neill + Censured by CoI
Sheng Liu            X Director China Railway Construction Engineering (PNG) Limited

It always pays to search the media and internet for further crumbs. Crumbs were found!

A series of allegations have been made against Anubhav Yadav on social media. Evidence has not been published that would allow these claims to be verified. So they cannot be reported here.

There was, however, a news report citing Anubhav Yadav. He was allegedly on board the now infamous Falcon private jet flight with Beldan Namah. It left Malaysia en-route to PNG when it was escorted from Indonesian airspace after authorities received intelligence it held a large stash of US dollars on board.

What this social network evidence indicates is that Yadav rubs shoulders with the nation’s political and business elite. In light of the fact he runs a shelf company with no employees and assets, which the Auditor General argues is being illegally awarded mega-contracts, this is a matter of some concern.

However, with powerful political figures using senior civil service appointments, including within the RPNGC, to muzzle executive agencies there is a significant risk the warnings sounded by the Auditor General will be swept under the carpet, if it could implicate anyone at the top.

Public pressure must be applied, if this defence rort is to be thoroughly investigated. Watch this space!