Saturday, October 27, 2012

Evidence of crook dealings by Rex Paki, a reply to Kusai Mahn

By Dr KRISTIAN LASSLETT
International State Crime Initiative (ISCI) 

In a recent ISCI report on the demolition of Paga Hill, the prominent businessman Rex Paki received mention. According to Investment Promotion Authority records, he had been intimately involved in the Paga Hill property development during 1997-2000. ISCI queried Paki’s involvement in light of serious allegations laid against him by two Commission of Inquiries, two Public Accounts Committee inquiries, an Auditor General special investigation, and PNG’s Supreme Court.

Following the publication of our report, social media commentators noted with concern that Rex Paki has also been appointed to the Papua New Guinea Sustainable Development Program Ltd (PNGSDP) Board of Directors, by PNG’s Treasurer. According to PNGSDP’s 2011 Annual Report, Rex Paki is “a member of the Board of Bank of PNG and is the Chairman of the Civil Aviation Authority”, as well.

After these concerns were aired in PNG’s blogosphere, a supporter of Rex Paki, who goes by the name of Kusai Mahn, composed an article slamming the ISCI’s findings, see here. Mahn writes, “a recent report on the ‘Demolition of Paga Hill’ by a UK-based non-government organization…is merely a character assassination of Mr Paki on issues that are considered water under the bridge” (ISCI is in fact a research centre not an NGO, and it is run by King’s College London, Harvard University, the University of Ulster and Hull University).

Mahn continues, “Rex Paki has appeared before only the NPF Commission of Inquiry (COI) and not the Finance Department COI as alleged”. Of course, the report never said Paki appeared before the Finance Department COI, it said Paki’s firm Ram Business Consultants was censured by the Finance Department COI after it allegedly helped Andrew Mald inflate damages in a legal action against the PNG state. You can read the COI findings here. Though here is one telling extract from the report:
Ram Business Consultants deliberately inflated the NPV [Net Present Value] by K4,659,650 for reasons known only to themselves… From the review of the cash flow projection prepared by Ram Business Consultants we conclude that the Cash-flow projection was specifically engineered in a way to inflate the yearly income projection including NPV so that damages claim would be high. The Ram Consultants Report was based on mere trading assumptions supplied by Andrew Maid, not on proper business records and tax returns.
Mahn also argues: “Rex Paki was never ‘intimately’ involved in the Paga Hill development as alleged. He is not a director or shareholder and his only involvement was providing professional accounting services to the project developer for which he was duly paid”. According to Investment Promotion Authority records, Mahn is simply wrong. These records state Paki was a Director, Secretary and shareholder in the Paga Hill Land Holding Company (PHLHC), which was awarded an Urban Development Lease over Paga Hill in 1997 (you can view the lease here). Additionally, Paki’s firm Ram Business Consultants was PHLHC’s registered business address. You can see PHLHC’s company extract here.
Finally, Mahn claims, in reference to a recent Supreme Court decision, “Rex Paki was not ‘evasive and dishonest’ about his role as liquidator of the Motor Vehicle Insurance Ltd (MVIL)”. Once again, neither ISCI’s report or the Supreme Court said this. The Supreme Court’s remarks were in reference to Paki’s evident concerted attempts to avoid the legal process of discovery. Here is the relevant passage for Mr Mahn’s information, though the full decision can be read here:
It is clear to us that the appellant [Paki] was attempting to avoid giving discovery; the refusal was repeated, chronic and designed to conceal the true state of affairs. He was evasive and dishonest. He gave different reasons for not producing the invoices. He said copies of the invoices were available for inspection at Namaliu & David Lawyers, that the originals were in archives at Korobosea, that the copies on his computer have been lost because the computer crashed, that copies have been misplaced and he needed time to locate them, that copies were available at MVIL or at the offices of Mr. Kerenga Kua, a lawyer. He did not give discovery despite agreeing to Consent Orders of the National Court requiring him to produce the invoices for the entire period of the liquidation. Two (2) years after he verified a list of documents, the appellant was still looking for copies of the invoices. In fact, he never gave discovery. He was required by law to retain the accounts and records of the liquidation for seven (7) years (section 306 (1)(b) of the Companies Act). We agree with Mr. Brookes that the actions of the appellant have caused the respondent an enormous amount of wasted time, effort and money. We are of the view that the conduct of the appellant was improper, unreasonable and blameworthy.
And of course, Mahn failed to comment on the successive inquiries into the Public Curator’s Office made by the Auditor General’s Office and Public Accounts Committee. Here, once again, Ram Business Consultants came under fire. Despite being paid K1,561,062 over an eighteen month period, the Public Accounts Committee (2006) allege,
“there was no formal contract … there was no check of the claimed hours worked and no evidence that any benefit flowed to the Public Curator at all. The Auditor General finds that after eighteen months of work, the Public Curator could only a report that a small amount of computer equipment was provided”.
To conclude, there is one allegation Mahn makes which is rather serious, if credible: “Rex Paki was appointed to the PNGSDP Board by the Minister for Treasury as the State’s representative. He was not appointed by Prof Ross Garnaut who nonetheless values Mr Paki’s contributions as a Board member and will defend his appointment. CEO David Sode also holds Mr Paki in high regard”.
I have no evidence to suggest that what Mr Mahn says is true – my focus has been on Paga Hill –  but if the Treasurer, Prof Ross Garnaut and CEO David Sode, are not concerned by the findings of two COIs, two Public Accounts Committee inquiries, one Auditor General’s Office special investigation and a Supreme Court decision, that would indeed be a worrying new revelation.