THE TOKAUT BLOG
Facts trump government spin in Maserati furore
A storm of public criticism and protest has erupted after the publication of photographs showing the delivery of 40 Maserati luxury supercars to the O’Neill government.
The white-jacked Maserati Quattroporte cars were shown being off-loaded from two chartered Boeing 747 aircraft at Port Moresby’s Jackson’s airport.
The luxury cars have been brought to Port Moresby to chauffeur world leaders and other VIP guests around the capital for three days during next months Asia Pacific Economic Cooperation summit.
The public furore has put the PNG government onto the back-foot as locals fume at the highly visible excess in a country where basic health, education and transport infrastructure and services are in a deplorable condition and public health outcomes are among the worst in the world.
The PNG government has made a number of claims to try and justify their apparent extravagance and to deflect criticism. Unfortunately those claims do not stack up to any serious scrutiny.
Lets start with APEC Minister, Justin Tkatchenko’s first press statement on the affair.
Tkatchenko’s news release
Tkatchenko’s statement doesn’t start well. It is dated 10 November, 2018. Clearly a mistake. Perhaps someone was in a hurry or it had to be released ahead of schedule?
“Maserati Quattroporte sedans have been secured and delivered, and are being committed to be paid for by the private sector,” says Minister Tkatchenko in his signed statement.
“Having vehicles paid for by the private sector is the smartest way to have use of the vehicles for APEC at no overall cost to the State”.
The language is slightly tortured, but the message seems clear? The Maserati supercars have been paid for by some mysterious benefactors and bringing the cars to Port Moresby for use during the APEC summit is “at no overall cost to the State”.
However, it didn’t take long for a different truth to start emerging; one that sheds considerable doubt on the veracity of the Minister’s claims. And then, as his story started to unravel, so the Minister’s statements to the press started to change…
It costs about US$25,000 an hour to operate a Boeing 747. Flight time from Milan in Italy to Port Moresby is around 20 hours, plus a refuelling stop. Flying two 747s, each loaded with 20 Maserati cars, would cost around $1 million in aircraft operating costs alone.
Then there are the profits for the freight company and the loading and refuelling times and the airport landing costs all to be added.
It is hard to see how the freight costs could be less than US$1.2 million (K3.9 million); they could easily have amounted to much more.
Were these freight costs paid by the private sector? No, not according to the specialist freight company that delivered the Maserati cars.
AirBridgeCargo Airlines says its specialist planes were chartered by the PNG government.
Mr Tkatchenko needs to confirm the cost to the PNG taxpayer of the charter and explain how that expense is going to be recovered if indeed the cars have come “at no overall cost to the State”.
Ownership or theft?
So who actually owns the 40 Maserati cars now in Port Moresby?
According to the Minister, as quoted in the Post Courier newspaper on October 11, it couldn’t be the government as they haven’t paid for them.
For those who continue to spread lies and bring hype to the issue of the vehicles being brought into the country, the national government did not pay for any of the vehicles; these vehicles have been bought by the private sector.
But perhaps all is not as it seems as the Minister adds, “And once we conclude the APEC summit, the vehicles will be sold to individuals or businesses that wish to acquire such a car.”
For the government to sell something that it does not own would be theft; for it to sell something it hadn’t paid for would be fraud.
Perhaps this realisation has made the Minister change his story?
First, he admitted to The Australian newspaper that “of course we have paid a deposit to get everything here”. This contradicts his earlier statements that everything was being paid for by the private sector and “the national government did not pay for any of the vehicles“.
But he was still still sticking to the idea that all the governments costs will be ultimately covered…. “all costs will be totally reimbursed and there will be no burden at all to the government at the end of the day. They are selling like hotcakes”.
Less than 24 hours later, in an interview with the ABC, the Minister had again subtly changed his position. Rather than speaking about a deposit he told the ABC the government’s APEC Authority had paid for the whole fleet. The Guardian suggests the figure paid could be as high as K40 million; MP, and anti-corruption crusader, Bryan Kramer says he believes a copy of an invoice, apparently showing the government paid US$6,357,684 (K20 million), is genuine. Interestingly that invoice suggests the cars were purchased, not from Italy, but from “a backyard workshop” in Sri Lanka.
As well as admitting to the ABC the government has actually paid for the cars, Tkatchenko also changed his story on their re-sale. Rather than “selling like hotcakes“, as he had earlier claimed, the Minister now says there has just been “a lot of interest” from prospective buyers.
“A lot of interest” in a bunch of second hand cars is a long way from the Minister’s original signed media statement stating the private sector had “committed” to pay for the new cars and there was ‘no overall cost to the State’.
After all, even if the government does manage to sell all forty cars, what about the depreciation?
If the truth of the matter is that what the private sector is actually going to be paying for is the privilege of owning the second-hand Maseratis after the government and Port Moresby’s notorious streets have finished with them then surely there is going to be a heavy dose of depreciation that the PNG tax payer is going to be lumbered with?
Experts estimate that a new car looses 10-20% of its value as soon as it is driven off the retailers forecourt. But, in truth, the real figure depends on supply and demand.
Unfortunately for anyone wanting to sell a used Maserati Quattroporte in Port Moresby, there is currently a gross oversupply (the government has forty to sell) and very low demand (Maserati’s are unknown in PNG and for a very good reason).
The only luxury cars to be seen on the streets of Port Moresby or any other town in PNG are top of the range Toyota Prado four-wheel drives. Anyone who has travelled on PNG’s potholed and mainly unsealed roads will have the aches and bruises that attest to the reason why.
There is also going to be the small problem of servicing. Any buyer will be hard pressed to find a mechanic in Port Moresby trained to tune the Maserati’s V6 Ferrari engine.
Gross oversupply and low demand, it is hard to see how the PNG government can possibly offload 40 used Maseratis at anything close to cost in the local market. Anyone from Australia or Asia wanting to pick up a bargain is going to be faced with considerable freight costs that will affect the sale price.
Lets be generous, maybe the PNG government can offload 40 Maserati’s at a modest 20% discount on the list price. Cost to the PNG taxpayer, at around A$40,000 per vehicle, would total some A$1.6 million (K4 million).
This calculation though depends on the true cost of the cars to the PNG government. PNGi has used the figure of A$200,000 in the above calculation – but the cars could be worth far more, or less, depending on your source.
How much are the forty Maserati Quattroporte cars delivered to the PNG government really worth?
According to Minister Tkatchenko, they retail for US$107,000 in the United States (K350,000). The PNG media though has reported their value at substantially less, just US$70,000 (K230,000) .
According to the ABC though, the cars retail for between A$209,000 and $345,000 in Australia (K500,000 – K810,000).
The Times of London meanwhile says that in the UK the cars retail from GBP75,000 (K325,000) – but then those models haven’t had to fly halfway around the world in a chartered Boeing 747.
If Bryan Kramer is correct, and the PNG government has paid US$125,000 for each of the cars, it could be the eventual buyers will be getting a substantial bargain, particularly if they are not invoiced for freight and the normal import duties. One hopes government Ministers and their friends will not be the ultimate beneficiaries.
Storm in a teacup
All this is, of course, just a storm in a teacup. What really matters to families in PNG is not a few million kina wasted on some fancy supercars, it is not even the billions wasted by the government on the glitzy APEC party, what really matters is the children being paralysed by polio, the families being ripped apart by tuberculosis, maternal mortality and rates of domestic violence and child sex abuse that are so high they are an international scandal.
These are all statistics that are underpinned by rampant corruption, an illegal logging industry, mining companies that pay no taxes and state-sanctioned land grabbing. Papua New Guinea is a country ruled by a kleptocracy that clearly doesn’t care about anything other than private profit and is propped up by international neighbours who are happy to exploit the country, its resources, geo-political location and, ultimately, its people, for their own gain.
Forty Maserati Quattroporte luxury supercars with their V6 Ferrari engines are just the latest meme.