Konebada Petroleum Park Authority too corrupt to fall?

KPPA's Nine Lives

The Konebada Petro-Chemical Plant as envisioned in the government magazine ‘PNG Today’ in 2014.

The Konebada Petroleum Park was envisioned as an industrial precinct outside Port Moresby that would promote large-scale petroleum processing and other energy projects. It began life in 2005 as a private limited company. This arrangement was superseded in 2012 by a statutory authority – the Konebada Petroleum Park Authority.

After a series of embarrassing revelations which exposed questionable land deals, extravagant expenditure, evidence of misappropriation and shady corporate dealings, the Departments of Finance and Treasury stepped in. At their bidding in November 2017, the National Executive Council decided to abolish the Authority and transfer it powers and assets to the Department of Finance and Department of Petroleum.

This decision was not immediately implemented. Malignant forces then set to work. Just three months later, in February 2018, the NEC amended its previous decision.

Without giving reasons, it was decided the KPPA should be kept open. However, the NEC did order that its Board be investigated and any land sold by the Authority be re-acquired ‘immediately’.

There is no evidence this amended decision was ever implemented. It now appears to have itself been superseded.

The 2019 National Budget Papers include a statement that the KPPA is to be abolished after all. Now its policy functions are to be transferred to Treasury, while the park’s management is to be merged with the operations of Kumul Petroleum.

Yet, as recently as July this year, KPPA CEO Donald Valu, was still occupying his office, meeting with Ministers and reassuring staff that the Authority would soon be ‘back to normalcy under the new Minister Kua and Prime Minister Marape’s Government’. 

Irregular Land Deals

With the KPPA mysteriously clinging to life and Donald Valu issuing orders from his CEO’s office, PNGi has been handed even more documents revealing new details about some of the land deals the Authority has been facilitating.

In 2009 the Department of Lands granted KPPA an Urban Development Lease over 194 hectares of land described as Portion 578, Granville, about 10 km outside Port Moresby.

The lease was for five-years, a term that was back-dated to start in in April 2007.

This land was intended to be the site of a Petroleum Park where the KPPA would oversee the development of large-scale petroleum processing and other energy projects. The Authority, its Board and senior management seem to have had a ‘better’ idea. Divide the land into small parcels that can be sold and leased, in some cases to their own cronies. Then, use the funds generated to bankroll extravagant travel and lifestyles.

In 2013, after the state lease’s five-year term had already expired, the land was subdivided. About one-fifth of the land, 37 hectares, was divided into 24 Portions numbered from 2669 to 2692. The remaining 157 hectares was renumbered as Portion 2693.

It is alleged by staff within the Authority that these portions were then either leased, sold or unlawfully occupied with no proper administration or financial accountability.

KPPA itself constructed a total of seven buildings on Portions 2688, 2689, 2690 and 2691. They comprised an office building, a police post, health post and four staff houses.

Only two of the staff houses are currently occupied by KPPA. The rest of the buildings, its is alleged by the whistleblowers, are unlawfully occupied either by local landowners or other people.

Exactly what has happened to some of the others portions is unclear.

We know that in 2015, for example, Mapai Transport was interested in buying Portion 2693, because they sought legal advice from their solicitors on the proposed purchase.

That legal advice raised a number of serious questions about the sale documents, including:

1. No copy of the title to confirm it was registered, that KPPA was the owner and what type of lease was being sold;
2. No confirmation the section had been properly subdivided and granted a legal description;
3. No evidence that Donald Valu had authority to sell the land;
4. No evidence to show KPPA had complied with the law in acquiring the land;
5. Various anomalies and omissions in the proposed contract including details about who the deposit would be paid to, where it would be kept in Trust and the timeframe for completion of the sale and possession of the land.

The lawyers recommended that if Mapai wanted to proceed with the purchase it needed to ensure extensive warranties, indemnities and guaranties were included in the contract and further assurances were given by KPPA.

It is also alleged by insiders that Portion 2681 is the subject of an agreement dated 15 August 2014 between KPPA and Equip Plant Hire Limited, for the development of a Gas Service Station.

Adding to this, there is further evidence in the form of two statutory declarations and other documents that in July 2015, Portion 2683 was purchased by Bige Petroleum Limited for K748,800. The two statutory declarations were signed by Donald Valu as KPPA CEO and by Bige Petroleum Managing Director, John Bige.

The record of payments received by KPPA reveal four payments were received from Bige, for a total of K1,656,800.

These payments were variously recorded as ‘Land Lease’ payments and ‘Sale of Land’ relating to Portion 2684 (not 2683).

Two of the payments made by Bige have been recorded as being made before the  contract of sale and purchase date. Additionally, the total sum received by KPPA was more than K900,000 above the agreed sale price.

What the additional payments were for, and what is the nature of the full agreement between KPPA and Bige are unknown. In another twist, Bige Petroleum is now allegedly operating from the much larger Portion 2693.

Local landowners and their MP, Peter Isoaimo, are evidently unhappy with KPPA and its land deals. They have petitioned the government to abolish the Authority, accusing it of squandering funds and allowing the ‘illegal acquisition of large portions of land for unplanned and unregulated developments’.

Lavish Spending and Shadow Budgets

According to KPPA staff there are no records within the Authority’s office attesting to any land sales or lease agreements beyond those disclosed above. However, financial records show a number of companies have been making substantial rental and purchase payments.

For the period from December 2014 to February 2017, payments totalled over K7.5 million.

Identified companies and persons include ‘PAGAHILL DEV’, ‘Bige Petroleum’, Protocal Investment Png Ltd’ and ‘Jeff Kennedy’.

Alongside the question of what these payments were for, there is the question of what happened to the money after it was received by KPPA?

The largest single payment, recorded as received for ‘land sales’, was K3 million.

It is alleged by staff within the Authority that within weeks of that payment being received almost all the monies had been expended and there was nothing left in the account to pay their salaries.

Documentary records suggest some of the money was used for extravagant international travel. Within just four months the Board and senior management spent over K1 million on international trips.

This included over K575,000 spent on a trip to Tapei and a further K300,000 on a trip to Hong Kong.

A staggering K72,000 was given to the then Minister of Petroleum, Nixon Duban, as his travel allowance for a trip to Sydney. This could potentially be a case of double-dipping by the Minister, as his travel allowances would normally be paid by the government or his Department.

Two other payments stand out. K50,000 was given to Donald Valu as ‘additional T/A’ for the trip to Taipei which was on top of K58,456 he received for the same trip on the same day (3 November 2016). Also there is the example of a further K50,000 given to Valu on 15 February as ‘Reimbursement trip to Manilla’.

Other payments apparently funded by KPPA from the monies it received for land sales include K3.5 million expended on individual contracts within a six week period. These payments included

• K700,000 for legal fees to Amet Lawyers;
• K738,000 for car hire (paid to four companies – Pyramid Hire Cars, Seped Ltd, Lama rent a Car and Kameape Holdings Ltd);*
• K250,000 paid to John Tekwie as ‘advisor on special economic zone’;
• K370,000 to Lamari Crossings Ltd (owned by Igitava Yoviga) for ‘preparation of corporate strategic plan’;
• K210,300 to H S Enterprises for ‘fabrication and installation of KPPA signboard’;
• K150,000 to Papua Niugini Ltd for ‘consultation fees’.

There was also K120,000 paid to Laba Holdings Limited for ‘site clearance on Portion 578’. It is alleged by staff within the Authority that no work was done to justify the payment.

Laba Holdings Chairman, Raho Kevau, is also Chair of the KPPA Board. He allegedly received K51,439.96 as travel allowance for the trip to Taipei and a further K36,950.83 for a trip to Sydney.

* These four car hire businesses were all featured in an earlier PNGi exposé that revealed KPPA spent over K2.65 million in a single year, 2016, on hiring cars from a total of 18 different firms.

Conclusion

Quite extensive behind-the-scenes effort has gone into preserving and reviving KPPA, despite the significant public and departmental pressure to shut it down.

This investigation reveals part of the reason why.

KPPA, it appears, has been able to secure an off-the-books budget, generated through the sale and lease of land allocated to it for supporting downstream activity in the energy sector. This is then facilitating wasteful expenditure on overseas travel, and other dubious contracts, many of which exhibit highly irregular characteristics suggesting they may not be for legitimate purposes.

The Minister for Police, Bryan Kramer, has set out his anti-corruption credentials, claiming the public will see dedicated prosecutions under his watch.

KPPA is the very kind of gross abuse that would have once stimulated the outrage of Bryan Kramer the blogger. Now as Police Minister he has the power and capacity to investigate the litany of abuses within KPPA documented with primary records, here and elsewhere.

This would appear to be the anti-graft equivalent of a Turkey shoot. The evidentiary crumbs are piled mountains high.

In the world of science there are what is known as most likely cases and least likely cases.

A hypothesis must hold in ‘most-likely’ cases if it is to be true.

The Marape government has put forward the hypothesis that it is serious about tackling corruption. The KPPA is ripe for investigation and prosecutions. Accordingly, it is a ‘most likely’ case. If the Marape Government’s hypothesis is true we should see decisive action. If we do not, that would appear to negate the government’s claim of being a corruption buster.