Authorities ignore serious fraud allegations at the Livestock Development Corporation
The Marape government has placed agricultural growth at the very heart of its development policies. It has backed its commitments with large allocations of public money.
At the same time, the national government has acknowledged the crippling impacts corruption is having on the economy and urged whistleblowers to come forward to expose the rot in the public service.
Yet serious allegations of fraud, misappropriation and corruption at the very top of the Livestock Development Corporation, which should be leading the government’s drive for agricultural growth, have reportedly been ignored by both the Department of Finance and the police.
The allegations include millions of Kina in cash payments authorised or collected by the Managing Director but never accounted for. This includes large cash payments made to purchase cattle which have never been delivered, fraudulent rental and car hire payments, double-dipping by the Minister for vehicle allowances and private staff payments, excessive Board stipends, and K583,000 paid for an over-valued and unneeded excavator.
It is alleged that large sums of money have been fraudulently paid out from the accounts of the Livestock Development Corporation for the rehabilitation of cattle farms, but there has been no visible impact and no livestock has been purchased.
It is alleged that in May 2021 the Livestock Development Corporation received a request for K1.1 million from the privately owned Wasu Cattle Ranch Limited for rehabilitation work.
Although only K100,000 was approved for payment, it is alleged the ranch owners have not acquitted for the use of the funds, no visible rehabilitation work has been carried out and no cattle have been purchased.
Similarly, it is alleged that Livestock Development Corporation Managing Director, Terry Koim, approved the release of K50,000 in cash to pay for the purchase of cattle for the Zuguru cattle ranch.
The monies were part of a request for K60,000 submitted by Livestock Development Corporation accountant Allen Ehava after he apparently visited the ranch to assess its needs.
The cash cheque for K50,000 was drawn against the Livestock Development Corporation account at the BSP bank.
Again, it is alleged there is no evidence any cattle were purchased and there has been no acquittal of the monies.
Both Mr Koim and Mr Ehava were approached for comment on all the allegations contained in this article. Mr Koim responded, describing the allegations as “malicious”. He said that he had “already provided detailed responses to each of these allegations” to the Minister”. He failed though to provide a copy of those responses or any documents or other evidence to refute the allegations. No reply was received from Mr Ehava.
In July 2021, it is alleged MD Terry Koim also approved K80,000 to be withdrawn in cash for the rehabilitation of the Sialum cattle project. Again the funds were apparently requested by Livestock Development Corporation accountant Allen Ehava.
According to the payment documentation, K20,000 was for the construction of a stockyard, K30,000 for local labour, K20,000 for the purchase of cattle and K5,000 each for security and ‘miscellaneous’.
Again it is alleged there has been no acquittal of the cash funds and there is no evidence of any cattle purchased.
To facilitate these large cash withdrawals from the Livestock Development Corporation account at BSP bank and placate any concerns from bank staff, the MD wrote a reassuring letter to the bank. The letter explained that as the cattle-owners did not have bank accounts it was necessary to pay them in cash for their animals.
More cash payments unaccounted
Large cash payments for the rehabilitation of cattle ranches and purchase of livestock are alleged to be just the tip of the iceberg when it comes to the distribution of cash by the Livestock Development Corporation.
Over an eight-month period from November 2020 to June 2021, it is alleged K4.3 million was paid out in cash by the Livestock Development Corporation, with no receipts ever produced to acquit for the use of the funds.
The largest cash withdrawal was made on 21 May 2021 and was for K195,743.25.
Other six figure cash payments include K110,144 on 26 Feb 2021 and K112,350 on 30 April 2021
Other withdrawals were typically between K10,000 and K60,000.
The withdrawal of large sums of cash from any State owned enterprise is always a matter for suspicion and deserving of further scrutiny, particularly where it is alleged there has been no acquittal of the funds, no invoices or receipts filed and no tangible assets that can identified as having being purchased.
Rental, car hire and other abuses
It is also alleged that in 2020 the Livestock Development Corporation paid K64,000 to a property company in reimbursement for the rental on a property occupied by the Managing Director from April 2014 to March 2015.
It is alleged this payment was fraudulent as at the time of the rental, Mr Koim was not employed by the Livestock Development Corporation.
It is also alleged a total amount of K114,000 was paid to a hire car company, Jimepos Limited based in Mt Hagen without clear justification.
Four payments in total were made between February, 2021 and July, 2021. It is alleged there is no information on the payment files to establish which Livestock Development Corporation officers used the vehicles and for what official Livestock Development Corporation business.
There are also allegations the Livestock Development Corporation Board of Directors have awarded themselves excessive stipends.
Board Minutes show the Livestock Development Corporation directors awarded themselves annual stipends ranging from K60,000 to K78,000 in addition to sitting allowances of K500 – K600 per day.
There are also serious questions that have been raised over the purchase of an excavator for over half-a-million Kina in June 2021.
The machine was allegedly purchased from UMW for K583,000 and shipped to the Erap station in Morobe Province, but since its acquisition it has been sitting idle. It is alleged the machine, although purchased ‘as new’ was in fact substandard, overvalued and non-functional
It is alleged that in October 2020 a total of K194,730 was paid by the Livestock Development Corporation to import a car for then Agriculture Minister John Simon.
The vehicle, a 4.5L V8 black Toyota Land Cruiser, was purchased through a company called Special Vehicle Imports PNG. Correspondence shows the purchase was approved by both the Livestock Development Corporation’s MD Terry Koim and the Secretary for the Department of Agriculture, Daniel Kombuk.
It is alleged that this purchase was a misuse of LDC funds and amounted to double-dipping by the Minister as at the same time he was also being paid a generous vehicle allowance.
It is also alleged the former Minister unlawfully benefited by having ten casual staff at Kwimbu cattle ranch, which it is alleged he personally owned, paid for by the Livestock Development Corporation.
It is alleged the ten staff received a total of K3,000 per fortnight from the Livestock Development Corporation.
PNGi was unable to reach the former Minister to get his response to these allegations.
End note - no audit reports
The financial records of the Livestock Development Corporation should be audited every year by the Auditor General and the audit findings published.
Unfortunately, in his latest Part IV Report on the accounts of Public Authorities, Statutory Bodies and Government owned Companies, published in September 2021, the Auditor General notes the Livestock Development Corporation had failed to submit its financial statements for 2019 or 2020.
The Auditor General has therefore been unable to conduct his audit investigation.