UNAUTHORIZED SETTLEMENTS COST PNG $33 MILLION

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By Frank Senge Kolma

PORT MORESBY, Papua New Guinea (The National, Sept. 27) – The State's total civil liability incurred by out of court settlements authorized by the Solicitor General stands at K106.2 million (US$33.1 million).

According to records obtained from both Finance Department and the Attorney General's office, these settlements were incurred between July 2002 and September 2004.

Under the law, out of court settlements of a substantial nature must be done on instructions from the National Executive Council to the Attorney General and from the AG to the Solicitor General. At least that is what the Supreme Court said in the case of Manorburn Earthmoving versus the State in August 2003.

The cabinet in 2002 outlawed all out of court settlements by the Attorney General's department.

The cabinet further directed the Attorney General and the Solicitor General to defend all cases. That decision, according to Justice Department insiders, still stands.

According to the lists obtained by The National, Solicitor General Zackery Gelu before his suspension and eventual termination in September 2003 authorized the bulk of these out of court settlements.

The charges relating to his suspension and dismissal were in relation to improper conduct relating to out of court settlements.

Mr Gelu was only last week reinstated to his substantive position following a Public Services Commission investigation into his dismissal.

Another officer who was later to act in Mr Gelu's position, John Kumura, was similarly suspended and later also reinstated.

Attorney General Francis Damem was last week charged and suspended from office by Public Service Minister Sinai Brown on two counts of improper conduct in relation to out of court settlements and with allegedly receiving kickback payments in both instances.

Mr Damem has denied the charges, and is back in office today after winning a 21-day injunction in the National Court.

Records obtained by The National indicated that the Department of Finance has already paid out millions of kina pursuant to the deeds of release signed by the Solicitor General.

Deeds of release are contracts that are signed between the claimants and the lawyer signing on behalf of the State for an agreed sum of money.

The procedure can be effected without the legal and factual basis of the claim being tested by a court.

The AG's Act provides that where exgracia settlements are concerned, that is where the State is under no legal liability, the procedure is for the AG to make a recommendation for settlement to the minister for finance who has the power to decide whether or not to accept the recommendation for settlement.

In many of the settlement cases where they related to exgracia settlement, this procedure was not followed.

In a number of these consent judgments and out of court settlements, the original amounts claimed has been blown out of proportion by the settlement amount.

For instance, in Manorburn Earthmoving Pty Ltd the original claim was for K481,000 plus interest, but it was settled on the authority of Solicitor General, Zackery Gelu for K8.6 million. About K2 million has been paid by the Department of Finance despite advice not to do so from the Attorney General.

In another example, in the case involving former Fly River Premier Isidor Kaseng and 24 others, the original claim was for K2.1 million and the settlement was offered at K20.25 million, an increase of K18 million.

From records obtained from the Department of Finance and the Attorney General's office, there is no evidence on the court files as to how the claim escalated from K2.1 million to K20.25 million in the space of six years, even if one were to add the simple interest applicable at 8% per annum.

There is no amended statement of claim on the court file to verify and substantiate this escalation.

Acting Solicitor General Francis Kuvi saw the need to sign a certificate of judgment approving payment of K20.25 million which was prepared and submitted to him by Powes Parkop Lawyers, the plaintiffs' lawyer.

Many of these matters are now active files with the Ombudsman Commission.

September 28, 2004

The National: www.thenational.com.pg/

 

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