How to Bag a Million in New Ireland

While families across the country struggle to make ends meet, it appears for a small minority the path to millions is exceedingly easy, so claims the Ombudsman Commission (OC).

The OC’s investigation into the award of K1 million to KPE Investment Ltd for the provision of agricultural services found that the Namatanai District Administration and the New Ireland Provincial Administration failed to comply with fundamental provisions of the Public Finance (Management) Act 1995. 

Download the OC Report: Investigation into the alleged improper awarding of the Namatanai District Agriculture Development Program Contract to KPE Investment Ltd

The decision to unilaterally award the contract to KPE Investment Ltd, without public tender, was made at Namatanai Joint District Planning and Budget Priority Committee Meeting No.01/2013 on 22 February 2013.

The OC claims the then Chairman of the Namatanai Joint District Planning and Budget Priority Committee, Byron Chan MP, ordered the illegal award:

In the opinion of the Ombudsman Commission, the conduct of Hon. Byron Chan, MP and Chairman of the Namatanai Joint District Planning and Budget Priority Committee was wrong when he instructed the members of the Namatanai Joint District Planning and Budget Priority Committee to award the Contract for the Namatanai District Agriculture Development Programme to KPE Investment Ltd.

This follows in the wake of a slew of inquiries that have slammed the Chan family elder, New Ireland Governor Sir Julius Chan, for similar style breaches of the Public Finance (Management) Act.

The absence of public tender was one red flag, another was KPE Investment Ltd itself.

At the time the award was made to the company, it didn’t exist! The OC adds, KPE Investment “did not have the financial capability to undertake a contractual agreement”.

The company was actually incorporated some 8 months later on 24 September 2013. The sole owner and operator of KPE is Mr Kunibert Kanai. Kanai’s company has never submitted an annual return, which is potentially an offence under the Companies Act 1997.

Despite these raft of illegalities the provincial administration and outside agencies rushed through approvals and payment.

To circumvent the notable lack of public tender on 16 August 2013, the Namatanai District Administration raised a Certificate of Inexpediency. This was a clear abuse of the Certificate of Inexpediency mechanism as set out in the Financial Instructions. They are a special measure restricted to emergency situations only, they are not a mechanism that can be used to retrospectively authenticate contracts awarded illegally without tender.

As a result the OC argues, “the conduct of Mr. Linus Yipma, Namatanai District Administrator was wrong when he awarded a Certificate of Inexpediency to avoid public tendering the project”.

Despite these glaring illegalities, the OC claims, the Provincial Administrator, Monovi Amani, signed and approved the Authority to Pre-commit which would realise the K1 million to the Namatanai District Administration.

KPE Investment was then paid in three instalment.

K300,000 was paid in September 2013, K300,00 in October 2013, and a final payment of K400,000 was made in December 2013.

These payments were endorsed and approved by Provincial Treasurer Ralph Kotauga. He was wrong to do so, the OC claims.

So there you have it folks. To make a million, you do not apparently need financial capacity, a legally registered firm, or an ability to compete against other market actors. All you need, according to the OC, is a public administration and politician ready to ignore mandatory requirements set out in the Public Finance (Management) Act.

It appears unfortunately we have a surplus of such officials in our country. Perhaps its time we all become millionaires.

For further reporting on the documented mismanagement in New Ireland Province see:

An Emergency in New Ireland

Good Times Fast Money in Sir Julius Chan Country