Court Ruling Places Governor Parkop at the Centre of NCDC Scandal

The Crystal Rapids Project

At the centre of this scandal in the nation’s capital is Bani Investment Limited, a company which is owned and managed by Mr Onne Bani. According to Justice Shepherd, ‘the company was initially involved in the buying and export of rubber. It then expanded in 2012 into the area of civil construction’.

Bani claims he was an associate of the late Thomas Mauwe, who served as Governor Parkop’s Project Coordinator. According to Bani, Mauwe in consort with Governor Parkop and Acting City Manager Leslie Alu, offered his company two large road contracts, one of which was for sealing a feeder road leading to Crystal Rapids Park, a picnic area.

In a letter of offer dated 8 August 2013, signed off by Governor Parkop, Bani Investment is awarded K1.5 million to do the job. The former rubber trader, Onne Bani, gratefully accepted.

For any public official familiar with the basics of public procurement – which the Governor and his managers would presumably be – a contract of this amount must be the subject of a competitive and open public tender.

Justice Kandakasi in Patterson v National Capital District Interim Commission explains why:

The benefit of these requirements is not only to ensure transparency but is more importantly intended to ensure that all who are able to provide the kind of works, supplies or services under consideration are given the opportunity to get the best works, supplies and or services as the case may be, at the best possible price subject to its budget.

The only instance where public tender can be dispensed with, is when a certificate of inexpediency is issued. A certificate of inexpediency can only be granted in the event of a civil disturbance, natural disaster, health emergency or matters related to national security or defence emergencies. The certificate of inexpediency should be applied for and approved in advance of entering into a contract with the supplier.

In the case of the Crystal Rapids project, Justice Shepherd notes that an attempt was made by the NCDC to retrospectively approve the contract entered into with Bani Investment without public tender, through a certificate of inexpediency. The retrospective submission is endorsed by Governor Parkop.

What was the national emergency? The signed submission claims:

The road leading to Crystal Rapids Park is in dire need of urgent repair to provide a better road surface for the tourists and the general public who commute frequently for picnic and leisure during weekends or for site seeing.

The National Court notes that the submission was signed off by the NCDC Assembly Services, with a Certificate of Expediency No. 150/2013 issued (the numbering is a worrying signal of how many such certificates are potentially issued!).

When reflecting on the contract, a baffled Justice Shepherd remarked the picnic area was actually outside the NCD:

My immediate response to this Submission and purported COE [Certificate of Expediency] is that no justification was given in that document or elsewhere in evidence to explain why the NCDC should be legally liable or responsible to undertake the upgrading at its expense of a road in Central Province. The feeder road to Crystal Rapids on the Sogeri Plateau is a road leading to a scenic venue and recreational facility which is not within the boundaries of the National Capital District.

When the Certificate of Expediency was issued, Bani Investment had already begun work. It had also begun invoicing the Governor’s Office, asking for K375,000. This represented a payment for 25% job completion. As it would turn out, the NCDC’s Engineering Works Department claims only 14% of the job was complete.

When Bani Investment faced challenges getting paid, Justice Shepherd notes Governor Parkop came to the company’s aid. On 16 October 2013 Governor Parkop sent an inter-office memo to the NCDC’s Finance Department, stating ‘I now direct that you source all relevant funds from the engineering votes or tax rebate trust account which I believe have sufficient funds to sort this out. Ensure that these payments are made within this month of October 2013. Let’s not prolong the wait for these payments any longer!’.

Bani Investment did not receive the anticipated payment. There were also other NCDC contractors evidently waiting for payments, although we do not know if their contracts were secured through the same illegal means.

To address these issues Governor Parkop issued a second memo, which Justice Shepherd claims was sent in even ‘more terse terms’, demanding Bani Investment be paid. The National Court judge then notes:

The intervention by Governor Parkop achieved a major result in that on 24 December 2013 BIL [Bani Investment Limited] received a cheque dated 21 December 2013 for K350,000 from the NCDC’s Regional PSIP [Provincial Service Improvement Program] Account via the Office of Governor Parkop.

An evaluation conducted by the NCDC’s Senior Engineer (Works), claims at most the value of the work conducted to date by Bani Investment was worth K214,698.

Bani Investment refused to conduct any further work in 2014, arguing the K350,000 payment was K25,000 less than the invoice. In the end the project was abandoned.

The NCDC, labouring under the mistaken impression that the first invoice had not been paid, offered to settle the claim in the amount of K214,698 during 2014, on condition that Mr Bani signed a deed of consent that this payment would end the relationship without recourse to the Courts. Mr Bani signed the agreement, but neglected to inform the NCDC his company Bani Investment had already been paid K350,000 for the work.

In the end Bani Investment was paid K518,228.20, more than double what Engineers claimed had been completed. Adding salt into the taxpayer’s wound, Justice Shepherd noted with surprise that when Mr Bani elected to sue the NCDC, the NCDC did not submit a counter-claim for the overpayment, leaving Bani Investment Limited with a windfall.

It was Mr Bani, ironically, who in the end reported the matter to police. Bani claimed that the Governor’s Project Coordinator had extorted a K10,000 bribe from him, to ensure the Crystal Rapids project continued after it came to a standstill in 2014 (there is no allegation made by Mr Bani, that Governor Parkop was party to the alleged bribe). When his bribes failed to clear the impasse, Mr Bani went to the police and then initiated litigation.

In response to the criminal complaint, the RPNGC’s Corruption Directorate approached the NCDC’s Deputy City Manager Simon Vai for information on the matter. ‘Mr Vai stated in his letter of reply’, the National Court judgement claims, ‘that the Crystal Rapids Road Project was an initiative between the office of NCDC’s Governor and BIL [Bani Investment Limited]’.

It does not appear the police investigation into the bribery allegation ever progressed beyond preliminary inquiries.

Bomana Road Project

The Crystal Rapids road contract was not the only project to be thrown the way of Bani Investment, courtesy of the Governor’s office.

In 2013, a second certificate of expediency submission was signed off by Governor Parkop. It requested that a K10,721,372 contract be issued to Bani Investment Limited for work to upgrade the road servicing the Bomana Training College. In a submission dated April 2013, endorsed by Governor Parkop, it is claimed:

The Settlement Roads are in dire need for rehabilitation in preparation for 2015 Pacific Games and they need to be also improved together with the major road rehabilitation program.

Justice Shepherd concluded this certificate of expediency ‘was clearly designed with the view to purportedly validate the bypassing of inconvenient public tender and public procurement requirements of the PFMA [Public Finance Management Act]’.

The grounds underpinning this proposed certificate of expediency again falls outside the select emergency circumstances in  which a certificates of inexpediency can be issued. In the end this project did not proceed due to a lack of funds.

Bani Investment Limited unsuccessfully attempted to sue the NCDC for its mobilisation and demobilisation costs. Justice Shepherd concluded no contract at this stage had come into existence.

Abuse of Power?

Having considered all the facts, oral and documentary, surrounding these two road upgrade projects, Justice Shepherd concluded that while no contract came into being regarding Bomana, a contract was entered into between the NCDC and Bani Investment Limited regarding the Crystal Rapids feeder road. He remarked:

 I am satisfied on the evidence adduced by BIL at trial that contractual relations between the NCDC and BIL in connection with the Crystal Rapids Road Project did in fact exist and that a contract for this Project came into existence on 8 August 2013.

However, Justice Shepherd deemed that the contract was in clear violation of the Public Finances (Management) Act. He observed:

No evidence was given of a Commission resolution which delegated to the NCDC’s Board or to any committee of the NCDC any power or authority to determine matters such as the awarding of contracts for roading projects and/or to determine whether the particular circumstances of such projects were such that it would be “impractical or inexpedient” to refer those projects to the public tender process via the Central Supply and Tenders Board under the PFMA.

Justice Shepherd also pointed to the illegal footing on which the certificate of expediency was made both for the Crystal Rapids project and Bomana. The National Court judge observed at a general level:

… it is common knowledge that over the years following the coming into operation of that Act in 1995, the exemption under s.59(2)(b) PFMA had resulted in a proliferation of “certificates of inexpediency” which allowed public bodies and their contractors to abuse and bypass the requirements under the PFMA for the awarding of high value contracts for goods and services by the Central Supply and Tenders Board.

Set against this concerning backdrop, Justice Shepherd concluded the two certificates endorsed by Governor Parkop were ‘classic examples of that abuse’, stating:

The two COEs [Certificates of Expediency] produced to the Court in this instance, which purported to be the equivalent of legally competent certificates of inexpediency under s.59(2)(b) PFMA, which they most certainly were not, are classic examples of that abuse, irrespective of whether that abuse was knowingly or unwittingly committed by officials of the NCDC. And in each instance, no proof was adduced at trial that the two COEs were ever approved by the Commission itself, or by the Board of the Commission or by a committee of the Commission duly authorised by Commission to deal with COEs under s.59(2)(b) PFMA.

As a result the Crystal Roads contract was declared ‘illegal ab initio and therefore void and unenforceable’.

Perhaps the most powerful line in Justice Shepherd’s decision is his observation that the certificates of expediency endorsed by Governor Parkop, ‘are classic examples of that abuse, irrespective of whether that abuse was knowingly or unwittingly committed by officials of the NCDC’.

This raises a critical question. Did Governor Parkop know he was potentially abusing his power when he signed off on these certificates, and when he then petitioned the NCDC to make large payments to Bani Investment Limited?

In another ironic twist, the NCDC claimed Mr Bani had no right to damages, as any prudent businessmen should be aware of public tender requirements.

Shouldn’t then an experienced lawyer and Governor such as Powes Parkop also be aware of these requirements? The Governor did not respond to our queries in this regard.

This is not an inconsequential matter.

For example in April this year, former Works Secretary Joel Luma was found guilty of abuse of office, after issuing road maintenance contracts in violation of the Public Finance (Management) Act. In that case Justice Berrigan remarked:

The certificates of inexpediency issued by the accused [Works Secretary] in support of the 2011 contracts were non-compliant with the Public Finance (Management) Act. The certificates had not been issued by either the Minister or the CSTB [Central Supply and Tender Board] as required. The accused had no authority to issue such certificates himself.

Justice Berrigan goes on to state, ‘that the approval of the contracts [by the Works Secretary] was prejudicial to the Independent State of Papua New Guinea because it committed its scarce financial resources to the purchase of products which had not gone through a transparent and accountable procurement process to consider their comparative quality, cost and value for money’.

On the basis of Justice Shepherd’s decision in Bani Investment Ltd v Parkop, a similar accusation could be reasonably directed at Governor Parkop and his colleagues, whose actions in the Crystal Rapids project led to the loss of significant moneys.

Next Steps

Govenor Parkop, like any citizen, has the right to the presumption of innocence in a criminal matter, and the right to defend his actions if charged.

Be that as it may, he is also a public office holder, who is subject to the rule of law. Section 92 of the Criminal Code, Justice Berrigan explains, ‘recognises that those who are entrusted to exercise the power and authority of public office must be accountable to the public. The offence involves, broadly speaking, a wilful abuse of the authority of office that amounts to an abuse of the public trust’.

He continues:

To prove the offence of abuse of office under s. 92(1) the State must establish beyond reasonable doubt that the accused: Whilst employed in the Public Service; In abuse of the authority of his or her office; Did or directed to be done any arbitrary act; Prejudicial to the rights of another.

The facts detailed in Justice Shepherd’s judgement in the Bani Investment case point to factual grounds which could potentially violate s92(1) of the Criminal Code. This is a matter that therefore requires urgent, transparent follow up from law enforcement to determine whether further action ought to be taken.