PAPUA NEW GUINEA PM BLAMES ADVISER FOR BUDGET FAILURE

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PORT MORESBY, Papua New Guinea (August 4, 1999 – Post-Courier)---Prime Minister Sir Mekere Morauta has blamed the collapse of the 1999 Budget on controversial economic adviser Dr. Pirouz Hamidian-Rad.

In a brief explanation to Parliament, Sir Mekere said: "The name is Pirouz. That man who came to help us arrived here and destroyed us. And we paid him K 7 million (US$ 2.624) to destroy us."

He was responding to a series of questions from Jacob Wama (Madang) who asked about the treatment of Dr. Hamidian-Rad and why Sir Mekere was dismantling the budget put together by a government he was a part of.

Sir Mekere, who has announced the new government's intention to bring down a mini budget during this session of Parliament to correct serious problems in the budget, laid the blame squarely on Dr. Hamidian-Rad.

He asked of Dr Hamidian-Rad: "Why is he running away? Why is he chartering aircraft to Western Province at night and trying to run away? Is he hiding anything?

"Let me make it clear, the consultancy is between the State and Ikub, not Pirouz. He was just employed by Ikub.

"There is evidence that monies have been passed between Ikub and Pirouz. Now, State has an agreement (with) Ikub that the consultancy firm is tax exempt but Pirouz has received some money for his consultancy. And those incomes are subject to tax . . . he has not paid any tax.

"In brief, that's one of the cases. There are many others.

"What is happening now is the tax office is performing its functions unhindered.

"Structures of government are doing their job and I have no part in it, and I won't interfere.''

Dr. Hamidian-Rad, who has repeatedly been prevented from leaving the country, is being investigated by the International Revenue Commission to verify whether or not he has paid taxes for income earned from his contract.

He was hired from the World Bank by the Skate government for K 7 million through his consultancy firm Ikub to provide quality economic advice.

However, since the beginning of the contract in June last year, the economy has turned from bad to worse with no financial rescue in sight.

Traditional financial sources such as the World Bank and International Monetary Fund are reluctant to lend any money; so did the much hoped-for European banking syndicate and a Eurobond issue.

Since the election of the Morauta government, the attitude of the IMF and the World Bank have changed for the better, and even Australia has promised immediate help.

Pangu Pati leader Chris Haiveta has urged Papua New Guineans to pin their hopes on the mini budget as the key to restructuring the economy.

He told journalists at a press conference yesterday that the economy was in deep trouble and the mini budget would only be the start of a long process to correct past mistakes.

He said that while the IMF and World Bank have promised to return, it could take up to March next year to finalize a loan package from them.

"We really are in deep trouble and a mini budget is in fact important,'' Mr. Haiveta said.

"It is vitally important for the people of Papua New Guinea that we have a look at the mini budget now so that we know what the actual state of the economy is, because what the former government did not do was to tell the people of PNG what the state of the economy was. The PM and the Treasurer never did that, so we need to know.

"There's been a lot of assessment and analysis of expenditure plans, revenue inflows, and the capacity of institutions to actually implement them.

"My own view is that, and this is just an educated guess. If we ratify the package put together by the World Bank and IMF, this will exactly be the same package, but with different conditions from 1997.''

CONSULTANT HAMIDIAN-RAD OWES K 900,000 IN PNG TAXES

PORT MORESBY, Papua New Guinea (August 4, 1999 – Post-Courier)---The Internal Revenue Commission has assessed controversial economic adviser Dr. Pirouz Hamidian-Rad's personal income tax liabilities at K 900,000 (US$ 337,331) for this year alone.

The amount is almost half of his contracted salary of just over K 2 million (US$ 750,000) and is calculated from an amount of K 2 million for this year.

Yesterday, the Prime Minister Sir Mekere Morauta in Parliament described the adviser as a destroyer.

Dr. Hamidian-Rad has maintained that he is not liable to pay tax because of an indemnity approved by the State under a consultancy agreement signed between the Iranian and former Treasurer Iairo Lasaro and witnessed by the then Governor of the Bank of PNG, Morea Vele.

Lawyer Powes Parkop, for Dr. Hamidian-Rad, also maintained yesterday that his client was not liable to pay tax.

In any case, he argued, the earnings for this year were less than what the tax office had assessed them to have been.

Mr. Parkop said Dr. Hamidian-Rad's contract, which ends next May, was still in the first quarter of the second period and questioned how the IRC could assess K 900,000 for a year that had not yet ended.

"The IRC has assessed tax liability at K 2 million. Now where has that K2 million come from?'' he asked.

The IRC has made three separate tax assessments to Dr. Hamidian-Rad in the space of a week since last Monday (July 26).

Mr. Parkop claimed the IRC never claimed any tax from his client last year and a tax clearance certificate to Dr. Hamidian-Rad and his company, Ikub Consulting Limited, was issued on June 23 this year.

Apart from that, as per the consultancy agreement, all consultants including the Iranian, he said, were paid "net of tax" by the State, so in any case, the State should be liable to pay tax if it was owed.

IRC Commissioner General David Sode has said the tax exemption is applied to Ikub Limited as "the consultant" to the State, and does not cover payments to Ikub's workers, including Dr. Hamidian-Rad.

Mr. Parkop has filed documents seeking orders against Mr. Sode from preventing Dr. Hamidian-Rad from travelling overseas.

The adviser has been stopped from leaving PNG at least four times already.

For additional reports from The Post-Courier, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Post-Courier (Papua New Guinea).

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