FEEDING THE HUNGRY CORRUPT OCTOPUS - CLOUDY BAY THE NEXT TARGET
It is very interesting that Prime Minister Peter O’Neill has announced an “inquiry” into the sale of PNG Sustainable Development Program’s 100-percent-owned Cloudy Bay company, and other SDP transactions and investments.
Why now? He has known about the sale for fours years and has investigated it once already, resulting in it being cleared.
The reason is that he is trying once again to get his “sticky fingers” on the PNGSDP assets - $US1.3 billion in the Long-Term Fund, plus hundreds of millions of kina in cash and other investments.
Cloudy Bay is one of PNGSDP’s richest assets, owning land on the outskirts of Port Moresby worth approximately K100 million.
Mr O’Neill, who is known as the Octopus, desperately wants the land, and has delegated one of his criminal cronies, Chief Secretary Isaac Lupari, to look for any remotely plausible way in which it can be expropriated without payment.
Illegal expropriation was the tactic used by Mr O’Neill to steal PNGSDP’s 63.4 shareholding in the Ok Tedi mine by special legislation in 2013.
He has previously attempted to get ownership of the Cloudy Bay land through another of his cronies, businessman, bagman and money launderer George Constantinou.
Land grabs and other secret property dealings are a favourite way for the Prime Minister and other prominent politicians and businessmen to launder money in PNG, Australia and elsewhere in the world.
Mr O’Neill’s mastermind in the Cloudy Bay deal is none other than prominent businessman Rex Paki, who has probably been involved in more illegal corporate activities than anyone else in PNG.
He and his company RAM Business Consultants have been named as guilty parties by the NPF Inquiry, along with Mr O’Neill, the Finance Commission of Inquiry, an International State Crime Initiative report on the Paga Hill Scandal, in which he was a principal player along with Mr O’Neill, inquiries by the Auditor-General’s Office and the Public Accounts Committee, and a Supreme Court case over a fraud at the state-owned motor vehicle insurer MVIL.
Mr Paki has been an O’Neill Government appointee on many companies and statutory authorities, and in almost every case he has skimmed off millions and millions of kina. His fraudulent activities are a byword in PNG business circles.
Cloudy Bay is no exception. A Public Statement on the PNGSDP web site reveals and explains Paki’s instigation and management of a massive fraud there, although obviously the company did not want to name him.
Mr Paki was an O’Neill Government representative on the PNGSDP and Cloudy Bay boards from 2011 to 2017, when he was sacked for grand corruption.
He directed and managed the sale of Cloudy Bay to a PNG-registered engineering company, Lifese Ltd, owned by Sydney brothers Mamdouh and Ibrahim Elomar.
The sale, on vendor-finance terms, was forced on PNGSDP by Mr O’Neill’s illegal expropriation of the company’s majority owned OK Tedi copper mine and his many illegal attempts to take over PNGSDP itself.
PNGSDP’s Public Statement says: “That sale was driven by a prominent businessman who, at that time held a role with PNGSDP and, in that capacity, was appointed to the Cloudy Bay board.”
That is code for Rex Paki.
While he was negotiating the sale, PNGSDP says, Mr Paki secretly obtained money and other benefits to which he was not entitled.
One benefit included a 25 per cent carried interest in Cloudy Bay granted by the Elomar brothers once they had agreed to the purchase from PNGSDP and had made a down-payment.
The 25 per cent carried interest is through a secret British Virgin Islands company called OPPA Ltd, part-owned by Paki and a well-known Australian con man, Nick Roniotis.
The PNGSDP statement says: “Mr Paki did not reveal his involvement in OPPA, nor his relationship with its principle shareholder, to PNGSDP at any point during the sale process despite the clear conflict of interest.”
The next year, 2015, Cloudy Bay suddenly stopped making its scheduled loan repayments as required under the vendor finance arrangements.
PNGSDP was told by Lifese that, after assuming control of Cloudy Bay, it discovered valuable assets were missing and a series of damaging contracts signed shortly before settlement.
Lifese says these actions had significantly eroded the value of the company and that it would take legal action to recover its losses.
At that point PNGSDP immediately began an internal investigation into the matter, which revealed extensive corruption.
This included substantial payments in exchange for which PNGSDP was to forgive its vendor finance loan to Cloudy Bay.
The deal was organized and implemented by Mr Paki, who was acting secretly and without any authority as required from PNGSDP.
PNGSDP says its board was unaware of that arrangement and would never have consented to it.
There are believed to be other allegations, including a multi-million payment to Mr Paki, and unauthorized use of Cloudy Bay funds.
As soon as the internal investigation was finalised, the findings were discussed by the PNGSDP audit committee. In view of the seriousness of the matter, the committee decided to commission an independent investigation.
It verified the fact that very serious corruption had in fact taken place and that Mr Paki was at the centre of it. “He was given an opportunity by the PNGSDP board to refute the allegations against him, but he failed to do so satisfactorily,” the PNGSDP statement says.
PNGSDP says it took a number of actions in response. Firstly it reported the facts to the relevant authorities, secondly it sacked Mr Paki, and thirdly it is taking legal action against Mr Paki and his associates.
It is not known if PNGSDP is informing the authorities of the illegal activities of Mr O’Neill, Mr Lupari, and other corrupt politicians said to be involved with Mr Paki.
Many similar examples of corrupt behavior by Mr O’Neill, Mr Paki, Mr Lupari and corrupt politicians exist, and the modus operandi revealed in official inquiries and court cases bears striking resemblances to the fraud committed on Cloudy Bay.