The K2.65 million question: Jimmy Maladina and Meck Luo

In 2015 Jimmy Maladina was staring down the barrel of 8 years in prison for his role in the National Provident Fund scandal. Enter Haozhong ‘Meck’ Luo. Court documents reveal Luo paid the State K2.65 million in restitution on Jimmy Maladina’s behalf, through the company Isles Builders and Contractors.

When he is not playing guardian angel, Mr Luo heads China Jiangsu International Group’s PNG operations. China Jiangsu has recently attracted big ticket contracts from the O’Neill government. They have also been blacklisted by the World Bank for fraud. 

This PNGi Investigates asks why would the head of a controversial Chinese conglomerate pay millions in a bid to reduce Jimmy Maladina’s custodial sentence?

Jimmy Maladina is a household name for all the wrong reasons.

He starred in the National Provident Fund (NPF) Commission of Inquiry. Judge Tos Barnett concluded Maladina was the mastermind behind a Waigani land scam, and a scheme to defraud the NPF.

Subsequently Maladina was mired in protracted civil and criminal proceedings, which he resisted from Australia.

The criminal prosecutions had a number of plot twists.

Charges relating to Maladina’s role in  the Waigani land fraud were dropped in 2007 due to a lack of evidence. Yet his co-conspirator was successfully convicted two years earlier and ordered to serve six years hard labour.

Image: Jimmy Maladina has been a regular feature at the Waigani Court complex

Charges relating to the NPF fraud stuck, at least for a short period. While Maladina evidently confessed to the fraud, and paid K2.65 million in restitution, his conviction was overturned by the Supreme Court, again due to a lack of evidence.

Maladina has now seemingly bounced back. He is alleged to be Prime Minister O’Neill’s ‘chief adviser’. O’Neill was another high profile individual in the NPF Commission of Inquiry crosshairs.

Maladina has also renewed his business interests in PNG. This has seen the former lawyer cultivate ties to another notable individual from the NPF days, Philip Eludeme. The NPF Commission of Inquiry argued Eludeme was a proxy, fixer, and bag-man for Jimmy Maladina. Subsequently, Eludeme has gone on to become Chair of the Central Supply and Tender Board.

Not content to merely restart his business, in 2018 Maladina initiated litigation against the government to reclaim the K2.65 million paid in restitution.

The subsequent National Court decision opens up a Pandora’s Box.

Maladina v The State

On 6 July 2017 Jimmy Maladina filed proceedings against the State of Papua New Guinea. He claimed K2.65 million, plus interests and costs. Maladina’s counsel in the action was Pacific Legal Group.

Diagram: The NPF CoI claims the original K2.65 million derived from stolen proceeds laundered through Japanese firm Kumagai Gumi.

The state’s intention to defend against the action was submitted by the Solicitor General. However, no defence was subsequently filed.

Maladina asked for default judgement.

It is Maladina’s claim he made the restitution payment by ‘mistake’ during 2015. This he suggests lead to the state’s unjust enrichment.

Presiding Judge Polume-Kiele cast serious doubt over the merits of this argument.  She quotes from Maladina’s sworn affidavit, which states: ‘In consequence of the National Court convictions and pending sentence, I paid the sum of K2, 650,000 for the express purpose of restitution in relation to the conviction’. 

It is concluded by Judge Polume-Kiele: ‘The plaintiff knew very well why this matter or this payment was made; it was not a mistake’.

At paragraph 34 of her decision Judge Polume-Kiele discloses a  startling fact.

Jimmy Maladina, she claims, was not the actually the individual who paid the K2.65 million in restitution to the state. The money was paid by a benefactor.

The Court observes ‘the cheque which is attached to that affidavit, cheque number 00113, ANZ bank is made on the account of Isles, I-s-l-e-s, Builders and Const., Kokopo Branch’.

Judge Polume-Kiele concludes, ‘if any person would be entitled to this sum of money, it would be the drawer of the cheque or the drawer of that account and would it be Isles Builders and Const’.

In the Pre-Sentence report submitted to the Court during 2015 Maladina and his family said all steps were being taken to secure the funds to pay back the state.

Janet Maladina stated that what her husband has gone through for the last 17 years the suffering, humiliation and shame is seen to, as being penalized enough. Their family accepts the guilty verdict and are now doing everything possible to assist pay restitution to the amount of K2,650,000.00 back to the State

The Pre-Sentence report continues:

The accused admitted freely that he had committed the offence. He stated that he is sorry for what he did. He further apologises and is remorseful especially to the contributors of NPF for what he had done that deprived them of their benefits which was to be enjoyed with their families and to his family for the sufferings, shame that he has brought on them for the last 17 years. He is making arrangements and is willing to repay the money owed back to the state.

After reviewing the mitigating circumstances, including the restitution payment, the National Court suspended Maladina’s sentence and placed him on a two year good behaviour bond.

So who is this mysterious benefactor who decided to take pity on Jimmy Maladina and pay restitution to the state?


Meck Luo

A search of IPA records revealed the business Isles Builders and Contractors. It is headquartered at China Jiangsu International Building in Kokopo.

Isles Builders is a shelf company with K1,000 in assets, and no employees. Its sole owner is Chinese national, Haozhong Meck Luo.

Image: Isles Builders is a shelf company

A search of company records reveal that Meck Luo is a Director at Paradise Breweries Limited. Paradise Breweries is 100% owned by Prime Minister Peter O’Neill. Maladina is alleged to be the Prime Minister’s Chief Adviser.

There are other links.

Meck Luo and Jimmy Maladina are tied through Sun Pacific Investments Limited. Luo and Maladina jointly own the company. They are its sole Directors. The company’s assets are stated to be K3,356.

Diagram: Meck Luo, Peter O’Neill and Jimmy Maladina

But these are in effect shelf companies. It doesnt explain where Mr Luo might have got K2.65 million from to support Jimmy Maladina’s sentencing plea.

The answer may lie in the company China Jiangsu International (PNG) Limited.

Meck Luo holds 49% of the company’s shares. The remaining 51% belongs to Chinese state vehicle, China Jiangsu International Economic and Technical Cooperation Group Limited.

Meck Luo is also listed as the General Manager of China Jiangsu International Group.

Image: Meck Luo signs a contract on China Jiangsu’s behalf

The company has been blacklisted by the World Bank for ‘a repeated pattern of misconduct by submitting fraudulent documentation’.

Nevertheless, both China Jiangsu International (PNG) and the China Jiangsu International Group have received numerous public contracts in Papua New Guinea.

  • Company ‘China Jiangsu’ was commissioned by Commerce Minister Gabriel Kapris to upgrade Madang Town for an unknown amount (Source: Post-Courier 26 February 2008)
  • ‘China Jiangsu’ was commissioned to upgrade health centres at Palmalmal and Matong (Source: Post-Courier, 12 May 2009).
  • ‘China Jiangsu International’ was awarded a contract to complete Wabag water supply project, valued at K30 million (Source: Post-Courier, 4 March 2009).
  • ‘China Jiangsu International’ was awarded Gagidu town water project valued at K5 million. (Source: Post-Courier, 12 November 2012)
  • ‘China Jiangsu International’ was awarded a contract to upgrade Maprik water supply at a reported cost of K9 million. The project was said to be the initiative of Maprik MP, Gabriel Kapris (Source: Post-Courier 1 May 2013).
  • Kerema Water Supply Project contract was awarded to ‘Jiangsu International Group’. The contract was valued at K3.2 million (Source: Sunday Chronicle, 27 October 2013).

The reported size of contracts awarded to China Jiangsu and its PNG subsidiary notably increase from 2015:

  • ‘China Jiangsu International Corporation’ awarded contract to redevelop K54 million Rita Flynn Netball Courts (Source: Post-Courier, 19 June 2015).
  • ‘China Jiangsu International PNG Limited’ awarded K39,927,525 contract to upgrade Morauta House in preparation for APEC (Source: The National, 19 March 2018).
  • ‘China Jiangsu International ETCG Limited’ was awarded on 22 June 2018 a contract valued at USD14,328,422 to conduct follow on work for a bridge construction project in West New Britain (Source: Asia Development Bank).
  • There are reports that China Jiangsu International was awarded a contract to complete a Drill Hall & Sports Field. However the value of the contract is not known. (Source: Independent State of Papua New Guinea 2015).

There is no evidence on the public record documenting a causal relation between the generous K2.5 million payment made by Meck Luo to reduce Jimmy Maladina’s prison term, and  the notable spike in value of the public contracts awarded to the China Jiangsu group in 2015. On the basis of the evidence currently available, it can only be described as a coincidence.

However, the growing size of contracts awarded to the group could explain why Mr Luo had K2.65 million to pay restitution on Maladina’s behalf.

The K2.65 Million Question

Meck Luo is an influential man. He is the operational chief for a major Chinese multinational. Luo has a major stake in its PNG subsidiary.

We also know Meck Luo is trusted enough by Prime Minister Peter O’Neill to retain a key executive position in his brewing operation.

Although only a shelf company, Luo is also in business with Jimmy Maladina, a man closely linked, again, to the Prime Minister.

It is not clear why this prominent Chinese businessman advanced K2.65 million to pay restitution on Maladina’s behalf through Luo’s company Isles Builders and Contractors.

Perhaps  Mr Luo can supply the answer.