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$49,000 paid to agency chief

By Helen Greig

RAROTONGA, Cook Islands (Cook Islands News, Sept. 2, 2008) – Alleged corrupt activity within the ministry of works has come under heavy fire from the audit office in its new report.

The highly critical report relates to payments made by works to two unregistered companies owned by senior managers.

One of the recommendations of this report is for the Public Service Commissioner to consider its findings and whether there are grounds for the sacking of works secretary Atatoa Herman. Audit’s view is that Herman failed in his responsibilities.

Over a four-year period from 2003, works made payments totaling about NZ$72,000 [US$49,000] to two unregistered companies, TNN Supplies and Sirus Enterprises, owned by its works coordinator Tearii Tipokoroa.

Tipokoroa never declared any of this extra income and the true extent of who benefited financially from this activity will never be known, according to the report, as Tipokoroa passed away last December.

Audit, however, interviewed Herman along with other key management of works.

Audit concluded that Herman knew about the Tipokoroa’s conflict of interest and ignored government’s policy of tendering or obtaining quotes for goods and services.

Herman admitted to audit investigators that he had known since 2003 that there was a conflict of interest but continued the arrangement because he believed it was saving the ministry money. The companies supplied sand, equipment and labour to works. Audit found that there were poor internal controls to check the materials against the invoices and payments, leaving the process wide open to abuse.

In this case, because Tipokoroa was responsible for finding out how much materials and services were needed as well as supplying them, audit viewed this as a fraudulent practice.

Audit also questioned just how involved Herman was in Tipokoroa’s two companies after he admitted to using both of them to invoice the Ports Authority for consultancy work. On top of this, audit says it was apparent that Herman had billed the Ports Authority under Sirus Enterprises because he intended to avoid paying tax and to avoid any unwanted interest in his consultancy work. At one point the audit report quotes him as saying that Tipokoroa told him to use the company name so no one would find out he was making extra income.

Herman apparently decided not to tell the PSC that he was carrying out his own private work as a consultant. The report says audit found that Herman breached his employment contract by ignoring this obligation.

Director of water works Ben Parakoti’s employment by S&T Contractors has also brought into question how legitimate contracts between the company and works are, given the conflict of interest this presented.

Former road supervisor William Heather Jnr also admitted during the course of the investigation to invoicing works for cleaning of water intakes to the tune of $1700. He told then this was work carried out after hours.

Herman, Heather and works policy advisor Keu Mataroa were alleged to have borrowed or loaned money from Tipokoroa. Herman and Mataroa admitted to audit they had borrowed money but claimed they always paid it back. Audit found this unusual and said the obvious assumption would be that money Tipokoroa loaned came from the profits of TNN and Sirus.

Now the audit office is recommending immediate action to restructure works and put controls in place to avoid any future abuses by management.

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