THE COURT REPORT
Scandal Prone Gummi Fridriksson Back in Court
The Iceland-Australian businessmen Gudmundur “Gummi” Fridriksson is synonymous with controversy dating back to 1996.
Back then he was eviscerated by Sean Dorney over an inflated public contract to produce the book Destination PNG. Dorney claims the deal was secured illegally and the book was riddled with errors.
Since then Fridriksson has the unenviable distinction of running businesses censured in four Public Accounts Committee reports, two Auditor General reports, and a Commission of Inquiry.
Seven in total.
Far from facing the sharp end of the stick, Fridriksson has been the one wielding the legal sword in PNG, with notable success.
It has been directed against those attempting to challenge the very business deals which have earnt so much scorn from national oversight agencies.
Screenshot: Lands Minister and NCDC Mayor pose with ‘Gummi’ Fridriksson (far right) in a promo shot posted on pagahill.com
Now Fridriksson and his business partners are on the cusp of receiving a major payout after suing the East Sepik Provincial Government over the cancellation of a contract with their consultancy firm, CCS Anvil, back in 2005.
The East Sepik Provincial Government claims the contract was secured through misrepresentation and fraud. A Public Accounts Committee inquiry in 2006 labelled the dealings illegal and referred CCS Anvil to the RPNGC for investigation.
This it appears wont stop CCS Anvil receiving a multi-million payout.
Alongside this civil litigation, another company led by Fridriksson – Paga Hill Development Company – has made a recent court appearance.
This time in an attempt to have the anthropologist Joe Moses prosecuted for contempt of Court. The contempt charges centres on Moses’ role speaking out against the company’s acquisition of the former Paga Hill national park in the documentary film, The Opposition.
PHDC’s acquisition of a state lease over the former national park, is another deal slammed by the Public Accounts Committee. It claims the state lease was acquired through ‘corrupt dealings’.
This litigation offers a window into the serious challenges which the Courts face in delivering justice, when the government fails to enforce the law, or submit timely defences, and everyday citizens are priced out of defending the public interest owing to the prohibitive costs of litigation.
Having your cake and eating it too
CCS Anvil (PNG) Ltd claims on 19 March 2003 it entered into a Project Management Agreement with the East Sepik Provincial Government.
Graph: CCS Anvil’s ownership structure overlaps with PHDC’s management structure
The contract was terminated by the East Sepik administration on 18 March 2005. Now Gudmundur Fridriksson and his colleagues claim general and special damages.
The Provincial Administration argues that the contract was cancelled due to “non-performance of work, misrepresentation, fraud and failure to comply with the Public Finance Management Act”.
In response the presiding Judge, Derek Hartshorn, has rejected the East Sepik government’s submission, owing to the “inordinate delay” in making it and questions over the defence’s veracity.
The East Sepik Provincial Government it appears, has not only been late in filing a defence, it has failed to collate the evidence that would allow it to substantiate its claim.
What makes this all the more galling, is that the deal was scrutinised and slammed by the Public Accounts Committee back in 2006.
The Public Accounts Committee observes: “On the 4th February 2003 a Special Provincial Supply & Tenders Board Meeting awarded a contract to CCS Anvil Limited Consultants on a Certificate of Inexpediency”.
The Committee concludes:
The value of the Consultancy was K300,000. The Auditor General was not provided with any documentation regarding the basis for the issue of the Certificate of Inexpediency or any material showing the extent of the project to be carried out. A Certificate of Inexpediency can only be issued for reasons of emergency. What emergency could possibly justify this Certificate of Inexpediency is unknown. This Committee concludes that the Certificate was issued to evade the requirement of law for competitive tenders and therefore, that the State could not be satisfied that it obtained value for money.
The Committee claims there is little evidence of any deliverables being received for this allegedly illegal contract: “A corporate plan was produced to the Auditor General but no other outcomes were able to be ascertained by the Auditor”.
As a result the Committee recommended that “the Office of the Solicitor General, the Investment Promotion Authority and the Royal Papua New Guinea Constabulary investigate” CCS Anvil.
Is this the same contract being litigated over in the current National Court struggle, which could deliver a major financial windfall to Fridriksson and his business partners?
It is impossible to say with 100% clarity, but the agreement at the heart of the current litigation was signed on 19 March 2003. This is just a month after the Provincial Supply and Tender Board issued – illegally according to the Public Accounts Committee – a certificate of inexpediency.
One thing certainly appears clear, there is a very strong prospect that far from facing sanctions for its business deals with the East Sepik Provincial Government, CCS Anvil may be rewarded to the tune of many millions.
According to testimony given during the Commission of Inquiry into the Department of Finance this is not the first time CCS Anvil has profited from questionable litigation.
CCS Anvil and the Finance Dept Commission of Inquiry
The relevant Commission of Inquiry findings centre on civil action led by Lynette Malu. During 1997 she claimed K1,094,762.99 in damages following a police raid on her village.
The state was warned by David Keta Lawyers that this cause of action had already been litigated back in 1995.
Mrs Malu’s husband, Benny Malu had evidently been awarded K35,008 in the original litigation.
In other words she and her husband were potentially double dipping.
Far from fighting this claim for damages, the state settled. The Commission of Inquiry observes, “on 27 November 2002 a Deed of Release was allegedly signed in which a consideration of K4.5 million was offered for settlement [to Lynette Malu], which is purportedly inclusive of interest and costs”.
This is four times the original amount demanded in the duplicate claim during 1997. It is over one hundred times the amount paid out to Benny Malu in 1995.
In the end K3.88 million in taxpayers money was paid to Lynette Malu and her legal team.
This significantly increased amount was allegedly demanded by Ms Malu based on advice from Gamoga Jack Nouairi of Nouairi Lawyers & Associates.
The Commission of Inquiry concluded Ms Malu’s action was a duplicate claim, and “the matter appears to be a fraud”.
However, hearing transcripts add an extra twist.
Benny Malu claims CCS Anvil managed the claim on behalf of his family, in partnership with Nouairi Lawyers.
According to Malu it was CCS Anvil who came up with the figure of K4.5 million.
Furthermore, it is alleged by Malu that the K3.8 million payout was channelled through CCS Anvil and Gamoga Jack Nouairi.
Mr Malu explained: “Previous payments were collected by CCS Anvil and Nouairi lawyers themselves”.
According to Malu CCS Anvil kept K1.4 million of the payout. The litigants got K1.5 million.
This is not the first time though that Jack Nouairi and Gudmundur Fridriksson have been accused of conspiring in illegal activity.
The Public Curators Office
According to the Auditor General, Mr Gudmundur Fridriksson, set up a company Anvil (PNG) Project Services Limited shortly after he left employment at Ram Business Consultants in 2000 – a firm led by Rex Paki.
Anvil Project Services was then contracted “to audit the work undertake by previous consultants [including Ram Business Consultants], review the current situation of the Public Curator’s Office, develop a project plan for the future and implement the plan”.
The Auditor General observes “the Public Curator applied to the Central Supply and Tender Board for a certificate of inexpediency but was rejected on the ground that the engagement had not been advertised”.
Despite the rejection, “the Public curator entered into” a contract with Anvil “to undertake the work”.
Payments to Anvil totalled K4,872,375.
A subsequent Public Accounts Committee inquiry concludes this payment was not made from the Public Curator’s allocated budget.
It was allegedly taken from funds belonging to private estates held on trust by the Public Curator’s Office for third party beneficiaries.
The Auditor General observed “the Public Curator had entered into a relationship with Anvil and its officers that did not provide for effective management and scrutiny of their activity”.
While the Public Accounts Committee concluded “the retainer of Anvil by the Public Curator was riddled by illegalities and unlawful waste of Estate monies”.
Who was the Public Curator responsible for protecting private estates when this scandal kicked off?
Gamoga Jack Nouairi!
Who owned a 30% stake in Anvil (PNG) Project Services Limited, with Gudmundur Fridriksson and his wife?
Once the Auditor General and Public Accounts Committee findings are cross-referenced with the Investment Promotion Authority corporate registry, it appears the then Public Curator, Gamoga Jack Nouairi, illegally awarded a contract to a firm he co-owned with Gudmundur Fridriksson, which was allegedly paid for out of private estates.
According to evidence submitted during the Commission of Inquiry into the Finance Department – the same pair then conspired in another deal. In this instance they are accused of potentially defrauding the state through litigation both men are said to have managed on behalf of their clients, Benny and Lynette Malu.
The company implicated in the latter scandal, CCS Anvil, is the one now looking for a major pay out over a cancelled contract with the East Sepik Provincial Government. Public Accounts Committee findings strongly suggest this contract was also illegally procured, through a certificate of inexpediency.
Persecution of Joe Moses Hits Snag
One of the strongest critics of ‘Gummi’ Fridriksson is anthropologist and UPNG graduate, Joe Moses.
His family once resided on reclaimed land lying next to the former Paga Hill national park.
The former national park at Paga Hill is now the subject of a 99 year state lease awarded to the Paga Hill Development Company (PHDC).
PHDC’s CEO is Gudmundur Fridriksson.
Image: PHDC Management
Moses is a keen historian of Paga Hill, having traced the history of its customary owners who lost title to the British back in the 1880s. He is also an advocate for preserving Paga Hill as a national park, and a cultural centre for the enjoyment of all Port Moresby residents.
This stance put him into confrontration with PHDC, and its CEO ‘Gummi’ Fridriksson. For over two decades Fridriksson has pursued plans to turn Paga Hill into a luxury playground.
Since initiating a grassroots campaign against the proposed development, Moses has faced systematic persecution. This has occurred at the hands of PHDC, the O’Neill government and police.
His home was demolished in May 2012 in a demolition exercised organised by PHDC. This demolition was potentially unlawful. Moses home lay outside PHDC’s lease.
Moses then faced systematic persecution at the hands of police.
At the same time, the RPNGC command have issued numerous press releases praising PHDC for making significant donations to the police force and policy legacy.
Moses has also endured death threats, delivered anonymously to his place of work.
When a filmmaker made a documentary about the struggle to save Paga Hill, centring on the grass roots campaign led by Moses, she was subjected to litigation in the Australian courts. The litigation was bankrolled by PHDC.
It failed. The damning Supreme Court judgement is well worth reading.
Facing constant police surveillance, death threats, and day to day harassment, Moses is now claiming asylum abroad.
This has not stopped the harassment.
PHDC have attempted to prosecute Moses for contempt of Court.
On this occasion their legal suit has been unsuccessful.
The National Court observes: “The plaintiff [PHDC] claims that the defendant [Joe Moses] made statements within a film entitled, ‘Opposition’ which impugn or breach one National Court order and two Supreme Court order”.
However, the Court concluded “there is no evidence of personal service upon the defendant of the subject orders”. As a result, “the proceeding of the plaintiff should be dismissed”.
This attempt to silence Moses has failed.
On the upside for Fridriksson and his colleages, the state lease that was illegally awarded back in 1997 – through “corrupt dealings” the Public Accounts Committee claims – remains in the hands of the firm he leads, PHDC. This has allowed the company to acquire eviction orders against those resident on the land portion.
Investors stand to make a fortune.
Historically, PHDC’s shares have been owned by a range of high profile actors, including Fridriksson himself, his business partner, George Hallit, and Michael Nali the current Works Minister. Recently they have all been funnelled to one person, PHDC’s lawyer, Stanley Liria.
Because there is no requirement for companies in PNG to disclose their beneficial owners, it is impossible to know who, if anyone, Liria may be holding these shares for.
However, at the very least PHDC acknowledges that William Duma has an interest in the venture, after he contributed adjacent land to the property development which he acquired in 2009 under irregular circumstances.
Courts of Justice ... for who?
The East Sepik case is a reminder of the lamentable position the Courts have been put in by national and provincial governments.
On the one hand, the latter stand accused of illegally awarding contracts and valuable assets, to companies overseen by foreign businessmen with a chequered track record. On the other, they have failed to heed the advise of oversight agencies, and investigate these illicit dealings.
On those occasions when action is taken against illicit deals documented by the nation’s oversight bodies, the affected parties can sue. The government serially fails to file a defence, or what it does file is tissue paper thin.
As a result, the National Court is placed in a position where it potentially has to enforce legal rights secured through illegal mechanisms or indeed “corrupt transactions”.
And even when grass-roots activists attempt to make up for governmental shortcomings, the cost of successful public interest litigation is out of their reach.
The courts have reluctantly become places where bad deals are enforced, often at a heavy cost to everyday citizens.
