INSIGHT INTO STATE vs TIENSTEN, KAVO & POTAPE
By BRYAN KRAMER
It seems many are still confused about the background, facts and the legal issues surrounding the above three cases. For the benefit of the readers I have provided an insight and analysis covering the three cases their distinct differences as well as their commonalties.
Part 1: STATE VS PAUL TIENSTEN
Background facts:
Paul Tiensten former Member for Pomino Open Electorate East New Britain Province and former Minister of National Planning was also a member of the kitchen cabinet in Somare Government and heavy weight in National Alliance Party.
In November 2011 he was charged with one count of conspiracy to defraud by conspiring with Eremas Wartoto, William Sent and Ruby Zarriga in 2011 to defraud the Independent State of Papua New Guinea by fraudulently causing it to pay K10 million to Travel Air. He was also charged with one count of dishonestly applying (misappropriation) to the use of Travel Air K10 million the property of the State. .
Conspiracy to Defraud (Section 407) and Misappropriation (Section 383A) are criminal offences under the Criminal Code. Penalty for conspiracy to defraud is imprisonment for upto 7 years and 5 to 10 years for misappropriation.
National Parliament had approved the budget appropriation of K10m to be set aside as air freight subsidy for existing airlines to tender for such funding. It was in the custody of the Department of National Planning and Monitoring and was parked there under the Public Investment Program (PIP).
The State alleged that the Tiensten and his co-conspirators Eremas Wartoto, together with Acting Department Secretary and Acting Deputy Secretary then caused the payment of the K10 million to be paid to Travel Air, a new private airline company which was not entitled to receive the K10 million.
Further that K10 million was paid not as an airfreight subsidy but as seed capital to start up a new Airline Company called Travel Air. In that regard therefore the State says Tiensten dishonestly applied to the use of Travel Air the K10 million.
In October 2010 Eremas Wartoto Managing Director, SWT Group of Companies submitted a proposal to Tiensten in his capacity as the Minister of National Planning to secure funding under airline subsidy.
The proposal was titled "Airline Subsidy Proposal for Papua New Guinea Development Strategic Plan 2010 – 2030" A cover letter was attached to proposal signed by Eremas Wartoto. The cover letter read:
"Please allow me to introduce "Travel Air". Travel Air is a 100% owned and operated airline that has been set up to cater for areas of Papua New Guinea that are not currently catered for by other Airlines currently operating within Papua New Guinea or have restricted or unreliable services in the areas".
A finding of the Court was that Travel Air was not even registered as a company at the time nor was it operating. It was only a business name and wasn't incorporated until some six month later on 15 June 2011,
After receiving the letter Tiensten wrote the following foot note on it addressed to his Department Secretary.
"Allocate K9.8 million seed capital as per this proposal for the implementation of South Coast Economic Corridor for both East and West Britain in 2011 PIP Budget."
However Parliament never approved budget allocation for seed capital for Travel Air but instead appropriated K10 million only as Airfreight Subsidy.
In March 2011 Eremas Wartoto then sent a second similar proposal to the Tiensten. Upon receipt Tiensten marked the proposal to the Acting Secretary, Department of National Planning and Monitoring and wrote in handwriting the following foot note:
"Acting Secretary – Ms Zarriga,
"Please facilitate the release of K10 million under the 2011 Budget for this very important ...(unreadable)... For the Corridor Development targeting the rural PNG."
The Acting Secretary then passed on the proposal to Acting Deputy Secretary Mr William Sent for him to "appraise and advise"
On 21st April, 2011 Mr William Sent sent a minute (memo) to the Acting Secretary saying the following:
"As per the endorsed submission received from the Minister's Office dated 23rd March, 2011, in regard to the above, a requisition form is now attached."
"The funding is earmarked for subsidizing the activities of Travel Air, a new Airline company servicing the remote areas of the country in particular, the remote areas of Kandrian, Bialla and Palmalmal will be the focus of the subsidy funding support."
"The three (3) areas are classified as "heavy losses areas' due to the routes being low capacity, and are within the South Coast corridor. The corridor is set out in the strategic Plan 2010 – 2030 as one of the areas in need of development."
"The funding is subsidizing the cost of travelling and transporting cargoes from these areas to the major towns and cities."
"The Airline operates two (2) DASH 8/100 aircrafts and will operate under the Civil Aviation Rule Part 121 (Large Aircraft)."
"Funding is directed to the company hence, the completed requisition forms (FF3 & FF4) are attached seeking your concurrence."
"The detailed Business Plan is also attached as well for ease of reference.
Please sign the requisition forms if you concur."
Based on that advice Acting Secretary went ahead and facilitated the payment K10m. It was paid to Mr Eremas Wartoto on behalf of Travel Air.
The Court finding of fact was that it was a total misrepresentation and a blatant lie. At the material time of the memo by Deputy Acting Secretary, Travel Air was not in operation nor did it have (2) Dash aircraft. Therefore how could it possibly be servicing the remote areas of the country to justify it receiving the K10m airfreight subsidy funding.
Further, Travel Air was given that money for the purpose of subsidising airfreight and it was not used for that purpose by Travel Air and instead used for seed or start up capital to set up the Airline.
Even if the funding was directed for the purpose of allocation to Travel Air, the proper process of having the funds allocated or released to Travel Air were not followed. The proper process being that the Department of National Planning would have discussions with the Departments of Treasury, Transport and Civil Aviation Authority. After this a submission would be made to the National Executive Council for its consideration and approval. The NEC approval was required for such an expenditure to be released. This was not done in this case.
In it's final judgement the National Court did not find any direct evidence to prove the charge of conspiracy to defraud between Tiensten and Department Officers. The foot notes confirmed the officers were merely following his direction to facilitate the release of the K10m payment to Travel Air. To establish conspiracy you must prove that the accused and co-accused made secret plans to commit a crime.
On the charge of Misappropriation the Court found that Tiensten did dishonestly apply K10m.
In order to establish misappropriation under section 383A of Criminal Code it must prove each element of offence beyond reasonable doubt. That a person:
a) dishonestly
b) applied to his own use or to the use of another
c) property belonging to another
In this case the Court formed the view that Teinsten "knew or ought to have known that his direction or directive to the Acting Secretary to facilitate release of K10 million was wrong for the reasons that he had no authority to give such a direction to the Acting Secretary and also for the reason that approval for release of such funds must come from the National Executive Council. Moreover he knew that he was wielding his political muscle over an Acting Secretary and her officers."
Further Tiensten presented the cheque to Eremas Wartoto who is a close associate (friend) of his and party member of National Alliance.
The National Court Trial Judge Deputy Chief Justice Sir Salika held the view given Tiensten's level of education, his intelligence, skills and experience in the Public Service and in Politics, He had no doubt in his mind that Tiensten knew that what he was doing was wrong and that it was dishonest; that is directing the Acting Secretary to facilitate the release of K10 million was improper and dishonest. He effectively caused the Department officers to break rules.
"Evidence showed that the Tiensten was involved in the application of the money to Travel Air. This was confirmed by his own written (footnote) directing the Department staff to release the K10 million. Without his directive, the K10 million would not have been released. He commenced the process of the release of the money through his direction or directive. He presented the cheque to Eremas Wartoto to complete the facilitation and application."
Was that application dishonest? The direction from him and causing the department officers to bypass the proper appraisal process under the guidelines and by bypassing the Public Finance Management Act and the deliberate lies in the way appraisal process and the speed in which the facilitation of the release of the funds were orchestrated, His honour concluded that the accused and his officers in the department dishonestly applied K10 million to the use of Travel Air thereby contravening s.383A(1)(a) of the Criminal Code.
In the end Court found him guilty of misappropriation.The maximum penalty for misappropriation is 10 year because of the large amount misappropriated (K10m) he was sentenced to serve 9 years hard labour in prison. However, if he repays the money then four years would be suspended and he would serve only five years.
Tiensten filed an appeal in the Supreme Court challenging his conviction (guilty verdict) by the National Court. His appeal was heard on 31st October 2014.
His lawyer Greg Sheppard made submissions arguing that the footnote by Tiensten to pay K10 million to Travel Air Limited was not a direction and could not amount to the charge of dishonest application of the money.
He said it would be rather a recommendation, request or a consent from the political head for section 32 officers, in that case, the Acting Secretary for National Planning, who as the departmental head, has the financial powers to consider and make such payments, which they did. He argued Tiensten was wrongly charged with dishonest application of funds he did not apply. The funds were applied by officers in the National Planning, he said, adding that they should be held accountable and not Tiensten.
Mr Sheppard maintained that a direction by law must be binding on someone in authority which his client was not in authority as he was not in financial authority to make a direction.
On 19th of December, 2014, a three-man bench Supreme Court (SC) handed down it's ruling dismissing Tiensten’s appeal. Supreme Court unanimously upheld the conviction of the National Court as per Deputy Chief Justice Sir Gibbs Salika judgement. It stated that the trial judge, DCJ Salika, did not fall into any error and concluded that the conviction of the former Pomio MP was satisfactory.
Following the decision of the Supreme Court dismissing Tiensten's appeal he is no longer a Member of Parliament.
Insight into the conviction and appeal of Havilo Kavo was posted in an article December 2014.
Part 2 of this article will cover insight into Francis Potape conviction
Part 3 will cover their differences and commonalities the issues raised in their appeals and an opinion on the chances of success or failure.
It seems many are still confused about the background, facts and the legal issues surrounding the above three cases. For the benefit of the readers I have provided an insight and analysis covering the three cases their distinct differences as well as their commonalties.
Part 1: STATE VS PAUL TIENSTEN
Background facts:
Paul Tiensten former Member for Pomino Open Electorate East New Britain Province and former Minister of National Planning was also a member of the kitchen cabinet in Somare Government and heavy weight in National Alliance Party.
In November 2011 he was charged with one count of conspiracy to defraud by conspiring with Eremas Wartoto, William Sent and Ruby Zarriga in 2011 to defraud the Independent State of Papua New Guinea by fraudulently causing it to pay K10 million to Travel Air. He was also charged with one count of dishonestly applying (misappropriation) to the use of Travel Air K10 million the property of the State. .
Conspiracy to Defraud (Section 407) and Misappropriation (Section 383A) are criminal offences under the Criminal Code. Penalty for conspiracy to defraud is imprisonment for upto 7 years and 5 to 10 years for misappropriation.
National Parliament had approved the budget appropriation of K10m to be set aside as air freight subsidy for existing airlines to tender for such funding. It was in the custody of the Department of National Planning and Monitoring and was parked there under the Public Investment Program (PIP).
The State alleged that the Tiensten and his co-conspirators Eremas Wartoto, together with Acting Department Secretary and Acting Deputy Secretary then caused the payment of the K10 million to be paid to Travel Air, a new private airline company which was not entitled to receive the K10 million.
Further that K10 million was paid not as an airfreight subsidy but as seed capital to start up a new Airline Company called Travel Air. In that regard therefore the State says Tiensten dishonestly applied to the use of Travel Air the K10 million.
In October 2010 Eremas Wartoto Managing Director, SWT Group of Companies submitted a proposal to Tiensten in his capacity as the Minister of National Planning to secure funding under airline subsidy.
The proposal was titled "Airline Subsidy Proposal for Papua New Guinea Development Strategic Plan 2010 – 2030" A cover letter was attached to proposal signed by Eremas Wartoto. The cover letter read:
"Please allow me to introduce "Travel Air". Travel Air is a 100% owned and operated airline that has been set up to cater for areas of Papua New Guinea that are not currently catered for by other Airlines currently operating within Papua New Guinea or have restricted or unreliable services in the areas".
A finding of the Court was that Travel Air was not even registered as a company at the time nor was it operating. It was only a business name and wasn't incorporated until some six month later on 15 June 2011,
After receiving the letter Tiensten wrote the following foot note on it addressed to his Department Secretary.
"Allocate K9.8 million seed capital as per this proposal for the implementation of South Coast Economic Corridor for both East and West Britain in 2011 PIP Budget."
However Parliament never approved budget allocation for seed capital for Travel Air but instead appropriated K10 million only as Airfreight Subsidy.
In March 2011 Eremas Wartoto then sent a second similar proposal to the Tiensten. Upon receipt Tiensten marked the proposal to the Acting Secretary, Department of National Planning and Monitoring and wrote in handwriting the following foot note:
"Acting Secretary – Ms Zarriga,
"Please facilitate the release of K10 million under the 2011 Budget for this very important ...(unreadable)... For the Corridor Development targeting the rural PNG."
The Acting Secretary then passed on the proposal to Acting Deputy Secretary Mr William Sent for him to "appraise and advise"
On 21st April, 2011 Mr William Sent sent a minute (memo) to the Acting Secretary saying the following:
"As per the endorsed submission received from the Minister's Office dated 23rd March, 2011, in regard to the above, a requisition form is now attached."
"The funding is earmarked for subsidizing the activities of Travel Air, a new Airline company servicing the remote areas of the country in particular, the remote areas of Kandrian, Bialla and Palmalmal will be the focus of the subsidy funding support."
"The three (3) areas are classified as "heavy losses areas' due to the routes being low capacity, and are within the South Coast corridor. The corridor is set out in the strategic Plan 2010 – 2030 as one of the areas in need of development."
"The funding is subsidizing the cost of travelling and transporting cargoes from these areas to the major towns and cities."
"The Airline operates two (2) DASH 8/100 aircrafts and will operate under the Civil Aviation Rule Part 121 (Large Aircraft)."
"Funding is directed to the company hence, the completed requisition forms (FF3 & FF4) are attached seeking your concurrence."
"The detailed Business Plan is also attached as well for ease of reference.
Please sign the requisition forms if you concur."
Based on that advice Acting Secretary went ahead and facilitated the payment K10m. It was paid to Mr Eremas Wartoto on behalf of Travel Air.
The Court finding of fact was that it was a total misrepresentation and a blatant lie. At the material time of the memo by Deputy Acting Secretary, Travel Air was not in operation nor did it have (2) Dash aircraft. Therefore how could it possibly be servicing the remote areas of the country to justify it receiving the K10m airfreight subsidy funding.
Further, Travel Air was given that money for the purpose of subsidising airfreight and it was not used for that purpose by Travel Air and instead used for seed or start up capital to set up the Airline.
Even if the funding was directed for the purpose of allocation to Travel Air, the proper process of having the funds allocated or released to Travel Air were not followed. The proper process being that the Department of National Planning would have discussions with the Departments of Treasury, Transport and Civil Aviation Authority. After this a submission would be made to the National Executive Council for its consideration and approval. The NEC approval was required for such an expenditure to be released. This was not done in this case.
In it's final judgement the National Court did not find any direct evidence to prove the charge of conspiracy to defraud between Tiensten and Department Officers. The foot notes confirmed the officers were merely following his direction to facilitate the release of the K10m payment to Travel Air. To establish conspiracy you must prove that the accused and co-accused made secret plans to commit a crime.
On the charge of Misappropriation the Court found that Tiensten did dishonestly apply K10m.
In order to establish misappropriation under section 383A of Criminal Code it must prove each element of offence beyond reasonable doubt. That a person:
a) dishonestly
b) applied to his own use or to the use of another
c) property belonging to another
In this case the Court formed the view that Teinsten "knew or ought to have known that his direction or directive to the Acting Secretary to facilitate release of K10 million was wrong for the reasons that he had no authority to give such a direction to the Acting Secretary and also for the reason that approval for release of such funds must come from the National Executive Council. Moreover he knew that he was wielding his political muscle over an Acting Secretary and her officers."
Further Tiensten presented the cheque to Eremas Wartoto who is a close associate (friend) of his and party member of National Alliance.
The National Court Trial Judge Deputy Chief Justice Sir Salika held the view given Tiensten's level of education, his intelligence, skills and experience in the Public Service and in Politics, He had no doubt in his mind that Tiensten knew that what he was doing was wrong and that it was dishonest; that is directing the Acting Secretary to facilitate the release of K10 million was improper and dishonest. He effectively caused the Department officers to break rules.
"Evidence showed that the Tiensten was involved in the application of the money to Travel Air. This was confirmed by his own written (footnote) directing the Department staff to release the K10 million. Without his directive, the K10 million would not have been released. He commenced the process of the release of the money through his direction or directive. He presented the cheque to Eremas Wartoto to complete the facilitation and application."
Was that application dishonest? The direction from him and causing the department officers to bypass the proper appraisal process under the guidelines and by bypassing the Public Finance Management Act and the deliberate lies in the way appraisal process and the speed in which the facilitation of the release of the funds were orchestrated, His honour concluded that the accused and his officers in the department dishonestly applied K10 million to the use of Travel Air thereby contravening s.383A(1)(a) of the Criminal Code.
In the end Court found him guilty of misappropriation.The maximum penalty for misappropriation is 10 year because of the large amount misappropriated (K10m) he was sentenced to serve 9 years hard labour in prison. However, if he repays the money then four years would be suspended and he would serve only five years.
Tiensten filed an appeal in the Supreme Court challenging his conviction (guilty verdict) by the National Court. His appeal was heard on 31st October 2014.
His lawyer Greg Sheppard made submissions arguing that the footnote by Tiensten to pay K10 million to Travel Air Limited was not a direction and could not amount to the charge of dishonest application of the money.
He said it would be rather a recommendation, request or a consent from the political head for section 32 officers, in that case, the Acting Secretary for National Planning, who as the departmental head, has the financial powers to consider and make such payments, which they did. He argued Tiensten was wrongly charged with dishonest application of funds he did not apply. The funds were applied by officers in the National Planning, he said, adding that they should be held accountable and not Tiensten.
Mr Sheppard maintained that a direction by law must be binding on someone in authority which his client was not in authority as he was not in financial authority to make a direction.
On 19th of December, 2014, a three-man bench Supreme Court (SC) handed down it's ruling dismissing Tiensten’s appeal. Supreme Court unanimously upheld the conviction of the National Court as per Deputy Chief Justice Sir Gibbs Salika judgement. It stated that the trial judge, DCJ Salika, did not fall into any error and concluded that the conviction of the former Pomio MP was satisfactory.
Following the decision of the Supreme Court dismissing Tiensten's appeal he is no longer a Member of Parliament.
Insight into the conviction and appeal of Havilo Kavo was posted in an article December 2014.
Part 2 of this article will cover insight into Francis Potape conviction
Part 3 will cover their differences and commonalities the issues raised in their appeals and an opinion on the chances of success or failure.
