COVID-19 Expenditure: Reporting the Red Flags
PNGi has conducted a preliminary analysis of suppliers selected by the Department of Health to help combat the COVID-19 epidemic. Today we present a shortlist of the companies exhibiting red flags that deserve close audit scrutiny.
COVID-19 is a global emergency. In the event of an emergency procurement processes, which ordinarily require public tender and transparent selection processes, are dispensed with in order to provide the timely supply of goods and services.
For a public procurement system underpinned by a history of integrity, accountability, and transparency, the threat of abuse is reasonably low. But in a public procurement system typified by unlawful decision making, bribery and rigging, there is a much higher risk of abuse during national emergencies.
Unfortunately the public procurement system here in PNG has a well earned reputation of being abused systematically, in order to award inflated contracts to applicants who have solicited bribes, or who have powerful political patrons.
Given this history, it is the responsibility of citizens, journalists, and responsible public officials to closely scrutinise emergency COVID-19 spending to ensure abuse is not taking place.
As part of this public effort, PNGi has conducted an initial analysis of the suppliers selected by the Department of Health to provide essential goods and services for COVID-19, and the major procurement contracts already awarded to these suppliers.
We have identified a shortlist of corporate suppliers that exhibit attributes that warrant close audit attention. It cannot be inferred wrongdoing has taken place. But the red flags documented here do denote areas of risk in need of close governmental scrutiny.
The basis for this analysis is a list of COVID-19 suppliers, and major procurement contracts, published by the National Procurement Commission. The Commission should be commended for providing a clear and accessible list of COVID-19 related spending. If the Commission provides further timely details, including contract data, this would be a significant contribution to the public good during this emergency period
PNGi's COVID-19 Short List
1. WJ Nuigini Limited
The first contract to highlight is for Minor Upgrading & Improvement Works on the COVID-19 Isolation Wards in Port Moresby. This contract was approved by Dr Dakulala at the Department of Health. It is for K487,932.50 and is dated 26 March 2020. The recipient of this contract is WJ Niugini Limted.
WJ Nuigini is jointly owned by Mr Xiang Zhong Chen, and Property & Investment Consultants Ltd. The shares in Property & Investment Consultants are held by Jimmy Maladina (50%), and his wife Janet Karl (50%). Its registered address is Philane Accountants, a company owned by Phillip Eludeme a former Chairman of the Central Supply and Tenders Board.
Maladina has been implicated in a series of serious scandals – notably by the NPF Commission of Inquiry. The most recent scandal involves serious allegations that Maladina was running a procurement fixing racket.
2. NKW Holdings Limited
The next example involves the appointment of NKW Holdings Ltd as a Department of Health supplier for COVID-19 related building and construction services.
According to the National Procurement Commission its beneficial owners include former Supreme Court Judge, Don Sawong (he is only listed as a Director on the corporate registry administered by the IPA). It was recently reported by PNGi that PNG Metal Fabricators, a company in which Sawong has an interest and oversight role (Director), was awarded a Durand Farm contract that was subsequently cancelled by the Housing Minister, for alleged breaches of the Public Finance (Management) Act.
NKW Holdings has also attracted controversy. It was at the centre of a major exposé published last year by the Fairfax media group in Australia. According to Fairfax journalist Richard Baker, a ‘company paid $82 million by Australian taxpayers to feed and house asylum seekers on Manus Island is suspected by its own bank of inflating invoices, while making millions of dollars in profits’. The company was revealed to be NKW Holdings.
Baker notes, NKW Holdings ‘was on Bank South Pacific’s “watchlist” for unpaid debts at the time it was engaged by [Australia’s] Home Affairs [Department]’. Baker continues, ‘its directors include provincial government officials and retired PNG Supreme Court judge Don Sawong, who in 2017 unsuccessfully ran as a candidate for Prime Minister Peter O’Neill’s political party’.
A leaked email acquired by Fairfax from a Bank South Pacific manager states ‘Australian Department of Immigration and Border Protection are paying every invoice [to NKW] – I suspect there are some inflated quotations and invoices’. The feature article continues: ‘One email states landowners would receive less than $30,000 per month for the lease of camp sites while NKW would be paid more than $500,000 per month by Home Affairs for access to the sites’.
NKW Holdings has denied issuing inflated contracts.
3. Wintop Investment
Next up is a COVID-19 contract for medical equipment and personal protection equipment signed on 19 May 2020. It was awarded by direct selection to Wintop Investments by the Department of Health. The contract amount is K176,125.40.
The company is owned by Chinese national Ruien Lin.
What sparks concern is that Wintop Investments’ area of expertise is the supply of surveillance equipment. There is no evidence from its website, that the company has a substantive role in medical supplies.
Further to this, Wintop Investment has not been certified to supply medical goods in Papua New Guinea, according to IPA records.
4. Think Creative Management
Think Creative Management is another company that has been appointed a COVID-19 supplier. Its area of expertise is consulting. The company’s two primary shareholders are Yumei Ni Cragnolini (40%) and Michelle Monsour (40%). Yumei Ni Cragnolini is a reported associate of former Prime Minister, Peter O’Neill.
Creative Management Services is also a shareholder in Ela Beach Paradise Limited. Ela Beach Paradise Limited has two Directors, one of which is Sir Sang Chung Poh. Sir Sang Chung Poh is the sole shareholder of Borneo Pacific Pharmaceuticals Limited. Borneo Pacific Pharmaceuticals has been credibly accused of winning inflated contracts to supply medical goods, which have been found in some instances to be substandard in nature.
If Think Creative Management is used to provide consultancy services to the Department of Health, there is the potential for conflicts of interest to emerge. This would especially be the case if it provides advice on matters that may enrich directly tied companies such as Borneo Pacific Pharmaceuticals.
5. TWM PNG Limited
TWM PNG Limited is owned by Irok Ltd (20%) and Posh Holdings Limited (80%). Irok Ltd in turn is owned by Michael Chan, while Posh Holdings Limited is owned by Shirley Chan.
Michael Chan appears to be tied closely to Sir Julius Chan, Governor of New Ireland Province.
6. Pacifica Ltd
Last but not least is Pacifica Ltd. It has been contracted by the Department of Health to provide communication coordination. The agreement was approved on 7 April 2020, and is in the amount of K394,000.
One of the company’s beneficial owners is Mandeep Newton, who recently finished as Team Leader for a youth employment project run by the NCDC, with World Bank funding. Newton is currently in business with the wife of Port Moresby Governor, Power Parkop, through the company Ethos 4 Limited.
This is not necessarily improper. It does however demonstrate that Ms Newton has business ties to politically exposed persons.
Pacifica Limited claims ‘it was first established in 2002 to service the recruitment and Human Resource requirements in PNG’. It is unclear what particular expertise it has in the area of public communications.