A GROWING MOUNTAIN OF STRANGENESS REGARDING ISRAEL’S LR GROUP ATTEMPT TO TAKE OVER PROVISION OF ELECTRICITY TO PAPUA NEW GUINEANS


By     אנשים ישראליים טובים עוזרים לנו לחקור אותך


LR Group, the company that Peter O’Neill and State Enterprises Minister Ben Micah have already apparently made a deal with to take over PNG Power, superficially appears like a company without workers.   Based in Israel it lists at least one non-existent address for its office sites and its other supposed offices seem to be in warehouse like buildings which may house other companies as well.  LR Group relies mainly on contract employees, recruited from around the world on the basis of their CVs.  It throws them all together to create projects in developing countries, many of which seem hopelessly unsustainable and uncapable of being taken over and run by local people.  Developing countries are the ideal location for these kinds of throw together operations as the level of scrutiny and quality control is usually low.  Once started, local governments may desperately keep the operations going by continuing to pay LR Group to run the show.  The article in the following link covers much of this information:

LR Group promotes itself on LinkedIn as having “an unequalled record of success in some of the world’s largest sustainability projects”.   Yet, it only has 503 followers on LinkedIn, in comparison to a company like the National Petroleum Company of PNG which hardly anyone even in PNG has heard of (it is the PNG government company which has 16% interest in the LNG project), which has 660 followers.   LR Group tends to publicise large proposed projects about which nothing can later be found on the internet concerning their outcome.  One example was the 100,000 houses that LR Group announced in 2010 it was going to build in Angola before 2012.  Nothing more was heard of that project, not even on the LR Group website.   What is unusual about this is that most companies would bend over backwards to show the end products of successful activities.  In LR Group’s case, it seems to mostly advertise what it wants to do, or plans to do.

The allegation has been made that LR Group has no experience running a power company.  An extensive internet search reveals not one completed project of any major proportion in the area of electrical service management.   Only a single proposed project to install power meters in Honduras was revealed:

Only a few months after this announcement was made, the LR Group was embroiled in corruption charges regarding this project:

with the English translation of the article here: 

What the article reports is that the private Honduras consortium Services Electrical Measurement of Honduras (Semeh) had been performing meter reading and billing services for the Honduran government’s National Electricity Company (ENEE).   The ENEE union workers protested against the private Semeh doing what they felt they felt government ENEE employees should be tasked with. The government responded that when ENEE workers did the meter reading, there was corruption.  The government still made a decision not to renew the contract with Semeh.  Following that, to everyone’s surprise, ENEE hired LR Group to perform the work, rather than going through the normal tendering process.   The Honduras Prosecutor Against Corruption stepped in to investigate the case.   Nothing more appears on the internet nor any indication that LR Group ever got the contract or installed the meters. 

Later that year (2012), LR Group was trying to get into position to make a bid to buy into 50% of Honduras Telecommunications:

Nothing seemed to come of that.  Amother LR Group idea that didn’t bear fruit.

It was also in 2012 that LR Group was in negotiations to take over Port Moresby’s power.  Sir Mekere Morauta, then Minister for State Enterprises, was heavily involved:

Morauta states the following in that press release:   “If current negotiations with LR Group are successful, LR Group and PNG Power will have a 50-50 management contract to refurbish, maintain and manage the assets owned by Port Moresby Power Limited. LR will have a half share in managing the assets, not any form of ownership at all.”

The above goes against what was stated in a recent article concerning the strange business deal related to the 2 generators, but I will leave that to others to puzzle out.   There are many larger discrepancies about the generator purchase that Peter O’Neill has yet to explain clearly and fully, such as:  
-Why K50 million for the generators was wired directly to LR Group and not to Israel General Electric Corporation or to General Electric USA, where the generators were manufactured.

-Why the Bank of PNG (not a commercial bank like BSP) facilitated and effected the K50 million transfer to LR Group?

-Why generators were purchased to solve Port Moresby’s power problem (only 1 of the 2 generators will be based there), when even LR Group didn’t recommend generators as a solution to the Moresby power problem when they prepared a feasibility study earlier.   See:   http://www.pngblogs.com/2014/05/lr-groups-plans-to-take-over-png-power.html 

-If it was true that members of the PNG Power Board accompanied the PM to Israel and were involved in negotiating with Israel General Electric, as noted by the Prime Minister himself, who were these individuals and why didn’t these discussion become known to other relevant senior managers of PNG Power back in PNG?

- If it was true that members of the PNG Power Board accompanied the PM to Israel and were involved in negotiating with Israel General Electric, why then did the Prime Minister chose LR Group to facilitate discussions between the PNG Government and the Israeli State-owned company Israeli electric to deal with General Electric Corporation (also the Prime Minister’s own words)?   Why the 2 layers of middlemen organisations?   Why couldn’t PNG Power complete the negotiations without LR Group’s help, being that PNG Power personnel were brought to Israel to start those negotiations?

In general, despite all the rebuttal that Peter O’Neill has made that he cleared the generator purchase through the NEC, the fact remains that PNG Power has policies and procedures for such purchases that could easily have been used by the Prime Minister if he had so chosen.  That he did not has generated the following concerns:     That there was no due diligence, cost benefit analysis, compatibility of technology analysis and budget and financing arrangements as such are important procedural requirements to making decisions to acquire goods and services. That PNG Power’s comprehensive procurement process in place in acquiring goods and services, long administered by highly qualified staff, was not used.. It was a transaction concluded outside of the PNG Power systems and processes for good governance and transparency.   There is no possible argument that the Prime Minister can give regarding PNG’s power shortages that explain why he would bypass PNG Power to get this transaction completed and deal directly with an Israeli company whose knowledge about national power provision seems limited to the hiring of consultants. 
After the generator scandal began to fade from people’s minds came this month’s announcement that LR Group was going to construct a substantial hydro project in Southern Highlands.  Actually this project has been bouncing around for more than a year:

It appears that while LR Group proudly lists one of its areas of expertise as renewable energy and power, it shows no evidence on its website or in any internet stories that it has in-house expertise for this kind of project.    As the article whose link is given above indicates, LR Group had to contract Endura, the consulting arm of Hydro Tasmania (the company supplying electricity to Tasmanians) to do a feasibility report for the PNG Hydro scheme as it seems to have no expertise at its own fingertips.   Why did LR Group contract Endura, instead of PNG Power directly?   After all, Endura was contracted by PNG Power directly from 2005-2009 to upgrade the Rouna 2 underground hydropower station supplying electricity to Port Moresby.   

More evidence that LR Group actually knows close to nothing about hydro power comes from an advertisement posted on the internet site LinkIn.   The advertisement conspicuously doesn’t mention Papua New Guinea, but there is no indication LR Group has hydro projects going on anyplace else in the Pacific. 

The advertisement contents are copied below.  Note that the advertisement was placed by a Ms Yalli Hermish, a law student formerly with the LR Group, but employed only from March 2011 to August 2012, during which she served as Human Resources Coordinator.  One wonders why the advertisement wasn’t placed directly through the LR Group’s official company account that exists with LinkedIn.  The giveaway that this advertisement refers to a position with LR Group is the e-mail address at the bottom of the page:

--------------------------------------------------------------------------------------------------
Project Manager for Hydropower Project in Southeast Pacific Region
Yalli H.Law Student
Large-scale Hydropower project manager required to manage all Hydropower activities in Southeast Pacific Region.
The job includes: To be responsible for the overall direction, coordination, construction, execution of the project, such as engineering, construction, budget, procurement and more.
Manages day-to-day operational aspects of a project and scope. Define project tasks and resource requirements, plan and schedule project timelines, present reports defining project progress, problems and solutions
Requirements:
At least 10 years of experience in management of Mega Hydropower projects.
Experience with managing International projects abroad- advantage.
Bachelor's degree (BS) in mechanical, electrical, or related technical discipline. MBA - advantage
Possesses a hydraulic and electronic/electrical background.
Technical experience on various types of mechanical & Hydraulic Equipment
English mother tongue level.
The position requires a self-motivated, energetic individual with excellent communication skills.
Readiness for long stays overseas.
Please send your CV in English:
hr@lr-group.com
--------------------------------------------------------------------------------------------------


As if enough suspicious things about LR Group haven’t already come out, the PNG Industry News website article that discussed Hydro Tasmania’s involvement in the SHP hydro plant planning also shared these interesting thoughts:    The project, based near Hewai Falls to harness the Tagali river system, will take six years to build at a cost of K1 billion, according to Hela governor Anderson Agiru, with private equity funding expected.   This capital expenditure figure is curiously larger than the project’s K700 million estimate reported by this publication in 2012 and the K300 million it reported in 2011.”   Indeed, even K300 million is a lot of money for a hydro scheme expected to generate so little power.    Inflated numbers in PNG nearly always mean politicians getting kickbacks from infrastructure development projects and the sad thing is that they arrange the finances so nicely (always using overseas accounts) that they never get caught, much less prosecuted.  Could LR Group be a willing party in kickbacks?   We don’t know at the moment, but there have been problems over many years aof Israelis involved in overseas contracts being involved in kickbacks, which have involved General Electric itself, maker of the 2 generators bought through LR Group for K94 million:
  
It would be nice if the Israeli government could investigate and keep better tabs on their own fly by night companies.  But don’t bother to make a complaint here in PNG to the Israeli government, because they’ll probably contact PNG’s honourary consular general to find out more what’s going on.   Who might they be talking to?   It would be none other than Jacob Weiss aka Jakob Weiss aka Ya'akov Weiss, father of Ilan Weiss who works for LR Group, as reported in the most recent PNG Blogs article on this scandal.   

Jacob Weiss aka Jakob Weiss aka Ya’akov Weiss served on the PNG Sustainable Development Project Trust (which allocated interest monies from Ok Tedi’s profits to sustainable development projects throughout PNG) for over 10 years.   In 2012, he was forced to step down because of conflict of interest problems and replaced by Sir Wilson Kamit.    Subsequently Weiss participated in negotiations between PNGSDP and the PNG government, serving the government’ side.   He then let Peter O’Neill carry out the one day nationalisation coupe d’etat in parliament:

After which Peter O’Neill then reappointed Jacob Weiss to the new PNGSDP board!  

Note that the government who now runs and acts as though it owns Ok Tedi and its PNGSDP is the same government that says it cannot properly manage state-owned enterprises and thus is moving to sell them.  

Note that the same Peter O’Neill who is always talking about maintaining investor confidence is the same individual who committed the ultimate horror for private investment anywhere in the world:  government nationalisation of private enterprises.

The relationship between the Weiss son and father, LR Group, and Peter O’Neill has too many unexplained events and bypassing of good governance procedure.    A Commission of Inquiry is badly needed to investigate the various activities of LR Group in this country since it first arrived.   Under the O’Neill government, you’ll never see it happen, unfortunately, because this is the government that only talks about fighting corruption but takes every possible move to obstruct any corruption investigations that might possibly point in the direction of Peter O’Neill.       

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