PNG’S ABAL DEPOSITS $2.4 MILLION INTO HIS ACCOUNT

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PNG’S ABAL DEPOSITS $2.4 MILLION INTO HIS ACCOUNT Interim Prime Minister says nothing sinister in transaction

By Peter Korugl and Yehiura Hriehwazi

PORT MORESBY, Papua New Guinea (PNG Post-Courier, July 11, 2011) - Public finance management procedures may have been breached involving 5.6 million kina [US$2.4 million] in public funds that were deposited in May last year into the account of a private company owned by Acting Prime Minister Sam Abal and three other people.

However, Mr. Abal said last night there was nothing sinister and there was no impropriety in the establishment of the company which was set up on behalf of three local councils that included Maramuni LLG and Wabag LLG.

The company, Wabag District Rural Holdings Ltd, was established to bring in economic development for the area which he described as a "fighting district" which was in transition into a more peaceful area after his "Lusim gun, holim savol" (Throw away the Gun, Pick up a Shovel) campaign and needed a major catalyst to kick-start the economy.

No investors were keen to go to Wabag and the government must put the money down to help the people, he said.

He said if it was his private company, he would have used private lawyers to set it up and nobody would know about it.

"I have signed millions of kina all my life," he said and described this latest revelations as "political bickering" by certain disgruntled individuals within the Enga branch of National Alliance party who lost out on contracts for the construction of the 7 million kina [US$3 million] Wabag market and a 6 million kina [US$2.6 million] chicken processing plant.

Details of the transactions and documents obtained by Post-Courier showed a cheque (sequence no. 14540010019) worth 228,690 kina [US$99,400] from the Wabag District Services Improvement Program and another cheque (sequence no. 14094150021) worth 5,400,000 kina [US$2.3 million] from the National Planning Department were deposited into the bank accounts operated by Wabag District Holdings Limited (WDHL).

WDHL operates two bank accounts – 1001561218 and 1002012076 - with the Bank South Pacific branch in Wabag and the cheques were deposited into the accounts on 1 April 2011 and 14 May 2010.

According to the documents, the signatories to the accounts are Mr Abal, Nicholas Mangen who is the company secretary and Ms Esther Ere, one of the directors of the company and also the Wabag District Treasurer.

According to Investment Promotion Authority records, WDHL was incorporated on September 25m 2008 and its shareholders are Samuel Abal (70,000 shares) Yako Kameso (15,000 shares) Londe Kangapun (10,000 shares) and Roy Kipalan (20,000 shares).

Apart from Ms Ere, the other directors are Mr Abal, Yako Kameso, the President of the Maramuni Local Level Government, Londe Kangapun, the Wabag Town Mayor, Roy Kipalan, the President of the Wabag Local Level Government and the late Peter Yange who was the District Administrator.

"The company is a private company, set up under the PNG Companies Act owned by the four (4) shareholders. There is no trust document (instruments) that says the four are holding the money in trust for the people of Enga," the report said.

"If there was a trust deed, there is no PEC (provincial executive council), NEC (National Executive Council) or relevant policy or legislation backing up the setting up of this company and the reasons for it.

"When you have NEC or PEC or the relevant legislation, it will clearly set out who should be the directors and the shareholders and who they should report to. In this case this company does not report to anybody."

The report questioned whether proper procurement procedures as provided in the Public Finance Management Act were followed when the large amounts of money deposited into this company accounts and spent.

"Judging from the bank’s transactions, it appears they have not followed the Public Finance Management Act, they have not got approvals from the Provincial Supply and Tenders Board or the Central Supply and Tenders Board," the report indicated.

The report showed that as the MP for Wabag, Mr Abal should not be the chairman of the board and signatory to the bank accounts.

It said the DSIP guidelines stipulate clearly that the Member is merely the chairman of the Joint District Planning and Budget Priority Committee (JDP&BPC) and the public funds go through the normal district treasury account.

The report said there was no evidence of the JDP&BPC setting up the company and the recruitment of company workers did not follow Public Services Management Act, as it should happen.

The report called for the immediate audit of the company books by the Auditor General and the company appeared not to have produced any financial statements and tax returns have not been lodged since its establishment in 2008.

The report also indicated that the directors and shareholders were covered under the leadership code and it appears they have not notified the Ombudsman Commission and filed the relevant returns.

"The relevant Government authorities such as the Auditor General, Ombudsman Commission, Department of Finance and Treasury and Department of National Planning must conduct a thorough investigation into the use of these public funds and determine whether or not they have complied with all relevant legislations," the report recommended.

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