Michael Nali Part 2: Friends, Allies and Business

Corporate network

PNGi has identified six companies directly or indirectly owned by Michael Nali, a further company in which he holds a controlling 51% stake, two companies in which he has a minority interest, and five companies where he is Director.

According to the company register maintained by the Investment Promotion Authority, Michael Nali is the owner of:

• Simply Blue Collar Limited;
• Pua Consultancy Services Limited;
• Kwadi Inn Ltd;
• Kwadi Hires Limited;
• With A Driver Hires Limited.

Through Kwadi Inn Ltd, he also owns Great Land Investments Limited and 10% of the shares in Niu Finance Limited.

Through Simply Blue Collar Michael Nali owns 51% of Nation Building Construction Ltd.

Simply Blue Collar is one of Nali’s most active companies, having won a significant number of high price government contracts. In the last Annual Return (2015) submitted to the Investment Promotion Authority, Simply Blue Collar is said to have 2 full time employees, 0 part-time employees, and a networth of K1.7 million. Its principal activity is listed as “Property rental/Lease. Repair & Maintenance”.

Another key vehicle for Nali’s private interests is Kwadi Inn Limited. Its most recent Annual Return on file at the Investment Promotion Authority (2015) states that the company has 20 full time employees, and no part-time employees. Its principal activity is “Motel Operations”. The company’s stated networth in 2015 was K638,957.

Michael Nali has previously owned shares in the now de-registered Waim No.54 Limited and Family Real Estate Limited.

Michael Nali is the sole director of Amender Ltd, a company owned by Supreme Industries which is, in turn, owned by Mohammed Sultan and Sanjay Shah. Michael Nali is also a director of Kwadi Construction Limited, a company owned by Mary Nali.

His various business interests and directorial roles, have connected him to a select number of high profile businessmen and politicians.

An analysis of Nali’s corporate network shows he is in business with Prime Minister O’Neill, a man whose commercial dealings have been censured in two Commissions of Inquiry. Additionally, Nali has also acted as a Director for a company owned by, William Powi, in his capacity as Southern Highlands Governor. That company is now owned by the Southern Highlands Provincial Government. Nali is also Director of Highlands AIC Limited which is 50% owned by the Southern Highlands Provincial Government.

Outside of his commercial connection to politicians and political entities, Nali has been affiliated with Gudmundur Fridriksson and Rex Paki, businessmen whose commercial dealings have been slammed on numerous occasions. Paki’s businesses have been censured in two Commissions of Inquiry, a number of Public Accounts Committee investigations, along with a Supreme Court proceeding. Fridriksson’s dealings similarly have been censured in 4 x Public Accounts Committee reports, 2 x Auditor General Reports and 1 x Commission of Inquiry.

Of course, as Part I of this investigation noted. Nali has had his own brushes with the law, with a Leadership Tribunal still pending.

This corporate snapshot projects a man with close ties to two of the most powerful political figures from the Southern Highlands. It also projects a man with commercial ties to individuals who are among the most cited in public investigations into corruption and malfeasance. Nali has not been implicated in these scandals. However, he has elected to consort with those standing on the ethical margins of the national business community.

Partnership with the Prime Minister

Immediately following his re-election to parliament in 2017, Michael Nali was appointed Minister for Works and Implementation in the government of Peter O’Neill. The two men have a much longer commercial relationship.

Since 2009, Michael Nali and Peter O’Neill have both been shareholders in the consumer finance lending company, Niu Finance Limited.

Niu Finance is majority owned by Peter O’Neill through a number of firms. In 2009 Nali’s company Kwadi Inn Ltd acquired a 10% stake in Niu Finance._[i] The paperwork filed with the Investment Promotion Authority detailing the share purchase by Kwadi Inn was personally signed by Peter O’Neill.

The business relationship between Nali and O’Neill though can be traced back further to 2004. This was when Michael Nali became the only listed director of the company Amender Limited. During the same general period both men were facing investigations of different sorts. O’Neill through the National Provident Fund Commission of Inquiry. Nali by the Ombudsman Commission for breaches of the Leadership Code.

Amender is owned by an Indian businessman Sanjay Shah and an Australian, Mohammad Sultan, through their company Supreme Industries Limited.

Between 2000 and 2007, Amender Limited held a 40% stake in the bar and casino venture Omerta Limited._[ii] The other shareholders of Omerta (the name is synonymous with the mafia’s code of silence) were Jimmy Maladina and his wife (30% shareholding through Ferragamo Limited – a company at the heart of the NPF scandal), and Peter O’Neill (30% through LBJ investments Limited). O’Neill has also served two terms as a director for Omerta._[iii]

In 2007, Amender, the company where Michael Nali is the sole director, sold its shares in Omerta to Peter O’Neill and his wife Lynda Babao. At the same time, Jimmy Maladina also sold his stake to the Prime Minister (via O’Neill’s company LBJ).

Omerta later merged with Paddy’s Hotels and Apartments Limited, one of the largest of Peter O’Neill’s current business assets._[iv]

Between 2001 and 2007, Amender also owned a 25% stake in Niu Finance Limited._[v]

There is not necessarily anything wrong with a close business association between political colleagues. However, it does impose an ethical duty on those concerned to recuse themselves from any political decision that may impact on the other’s business interests.

As we observed in Part I, Peter O’Neill has apparently failed to recuse himself from at least one major decision which had a beneficial impact on a Nali company, Kwadi Inn. Kwadi Inn it was noted holds shares in a company majority owned by O’Neill, and where he has been listed as Managing Director.

This relationship also show that even while Michael Nali was out of political office between 2007 and 2017, he still had a very close relationship to someone at the centre of political power._[vi]

_{FOOTNOTES
[i] Niu Finance Limited, Notice of issue of shares signed on 04/12/2008, IPA
[ii]Omerta Limited, Notices of change of shareholder (share transfer) recorded by IPA on 24 February 2000, 30 November 2000 and 17 July 2008, IPA. Omerta Limited, Notice of issue of shares recorded by IPA on 24 February 2000, IPA.
[iii] Omerta Limited, Historical Directorship, IPA
[iv] Paddy’s Hotels & Apartments Limited, Application for registration of Amalgamation for Amalgamation on 2 January 2009, IPA.
[v] Niu Finance Limited, Notice of change of shareholder signed on 04/12/08, IPA.
[vi] O’Neill was Minister for the Public Service from 2007, Minister for Finance from 2010 and has been Prime Minister since 2011}

Government Contracts

Michael Nali was forced out of politics in 2007 when he was an unsuccessful candidate for the Southern Highlands regional seat. He also failed to reclaim the Mendi Open seat in 2012.

While out of political office, Nali’s business interests flourished.

Between 2009 and 2016, his companies were reportedly awarded government contracts worth at least K75 million.

Despite Simply Blue Collar listing its principal activity as “Property rental/Lease. Repair & Maintenance”, it has won major construction and road contacts.

Some of Nali’s most important contracts, worth at least K21 million, have come from the Southern Highlands Provincial Government under the controversial governorship of William Powi. A recent court decision confirming the re-election of Powi in the 2017 elections led to rioting over alleged vote rigging and the declaration of a nine-month state of emergency in the Province.

In 2015, William Powi was featured on television news personally handing a cheque for K2 million to Michael Nali. This money was to pay for the construction of a new administration building in the Kagua Erave district of Southern Highlands.

While Michael Nali assured the media his company was awarded the Kagua Erave construction contract on merit, other contracts with the Southern Highlands government have raised controversy.

Car hire controversy

In January 2013, the Chairman of the Business Coalition Against Corruption in the Southern Highlands, Garry Kulangil, publicly called on_[vii] William Powi to cancel a car hire contract worth K3 million allegedly awarded to a business owned by Michael Nali._[viii]

It was reported Nali had purchased 20 vehicles and offered them to the provincial administration for hire at a rate of K900, per vehicle, per day. It was also said the value of the contract could rise to K20 million in subsequent years.

Kulangil pointed out that the government would be paying more on hire cars than they would if they were to acquire vehicles directly. The contract also grated against an announcement by Minister for National Planning, Charles Abel, who directed every government department to do away with hire cars.

Powi though refused to cancel the contract. He said it had been awarded through a normal tender process and was a ‘public-private partnership.’

The extraordinary level of spending on hire cars by government entities is a recurrent problem that PNGi has reported on several times.

_{FOOTNOTES
[vii] R. Wama, ‘Powi called to cancel hire car contract,’ PNG Post Courier, 28 January 2013.
[viii] The name of the company has not been disclosed, although it may have been  With a Driver Ltd, which was incorporated by Nali at the end of 2012.}

Nali, Powi and Stanley Lira

A close examination of company records reveals an interesting circle of connections between Michael Nali, William Powi and Stanley Liria.

Michael Nali and William Powi have a direct corporate relationship through the company Southern Highlands Holdings Limited.

Michael Nali has been a director since November 2013. William Powi was the only shareholder from November 2013 until August 2014, when the shares were transferred to the Southern Highlands Provincial Government.

Stanley Liria also served as a director of Southern Highlands Holdings Limited from its establishment in 2013 until 2016.

Stanley Liria’s law firm is  the registered address for William Powi’s company, Sharp Hill Investments Limited.

Liria and Nali are themselves connected, as we saw in Part 1 of this profile, via Paga Hill Development Limited, and Great Land Investment Limited.

It cant be inferred that there was any wrongdoing with the K21 million in contracts awarded to Nali companies by the Southern Highlands Provincial Government. However, it does point to the close relationship Nali has with key provincial power-brokers.

Difficulties with reporting obligations

Like some other prominent businessmen involved in politics, such as his business associate Peter O’Neill, Michael Nali it appears has struggled to keep up with his financial reporting obligations.

Seven companies Nali is involved with as a Director, shareholder or company secretary, appeared on the Investment Promotion Authorities list of defaulting companies as at 30 June 2018.

Not complying with reporting obligations is an offence under the Companies Act.

Although Michael Nali’s two largest companies, Kwadi Inn and Simply Blue Collar, are rather more up-to-date with their obligations, Annual Returns for 2010 – 2015 were only filed in 2017, just before his successful attempt to re-enter Parliament as an MP.

It would appear Nali is a figure with significant business interests in construction, and car-hire. As he rejoins the front bench as Minister for Works, Part III of this series looks at his close relationship with Chinese investors, and the potential conflicts of interest this poses.