SYSTEMATIC ABUSE & CORRUPTION AT NIUSKY



ALLEGATION OF SYSTEMATIC CORRUPTION AND ABUSE OF OFFICE AT NIUSKY PACIFIC LIMITED (formerly PNG Air Services Limited)
*******************************************

The purpose of this Write-up is to bring to everyone's attention a number of serious allegations (issues and concerns) in the manner in which major financial decisions were made by the Board and management of one of the State-owned Aviation Entity Niusky Pacific Limited (formally and officially still known as PNG Air Services Limited) to disburse millions of Kina through the endorsement of non-critical/ non-essential rehabilitation (gardening) projects during the pandemic year of 2020. The decisions that were made has significantly affected NSPL's financial position which has resulted in a loss declared in its 2020 financial year. The compounding effect of these decisions have now stressed the company to operate on its reserves thereby compromising the financial wellbeing and sustainability of the NSPL.

As such this Write-up seeks to inform the general public and more specifically responsible government institutions including the government itself to immediately intervene to appoint a new board and suspend the current management and carry out a completely independent audit and investigation into the conduct of individual members of the board and senior management with the aim to ascertain facts, take necessary and appropriate actions and to restore organizational trust and confidence, accountability and transparency and prudent management.

The compilation of the facts and supporting arguments alleges a great deal of abuse of office and power by certain senior officers working in this state owned aviation company by colluding with contractors to misappropriate, mismanage and steal public funds. Their actions amount to systematic fraud and corruption.

The report briefly begins with the NiuSky Pacific’s Tender Procedures, followed by the engagement of an expatriate as the Property Manager (the master mind), and continues on with facts supporting the allegations of lack of probity, unfair disclosure of tender information and budget figures, engagement of relatives and close acquaintances, deliberate and intentional inflated project costs and estimates.

Attempts to report this within the company following in-house processes and protocols have all failed resulting in a negative feedback. They continue to witness continuous spending of company funds by certain managers engaging contractors and suppliers of same ethic background especially during the pandemic.

Key Messages:

1. The Board and management have irresponsibly dispersed millions of kina by endorsing non-critical/ insignificant non- operational projects in July of 2020 to date totaling over K20million.

2. Instead of the Board and management suspending all these non-critical projects as a result of the pandemic, these careless financial decisions were made regardless, after the government sanctioned lockdowns were made around mid 2020.

3. Even after the pandemic was declared in March of 2020, contracts were approved by the Board and management and issued in June/ July 2020 to 4 Filipino owned companies to the exclusion of some of PNG's very own capable (nationally owned) companies.

4. These non-critical projects were as follows;

* New Assembly Area – Contract was given to Wel Builders totalling K3miilion. A Filipino owned company.

* Office Refurbishment – Contract was given to Salcon Builders totalling K3millio. A Filipino owned company.

* Carparks – Contract was given to ADE Engineering totalling K3million. A Filipino owned company.

* Water Fountain – Contract was awarded to Salcon totalling K2.8million.

* NiuSky Avenue Road – Contract was awarded to Wel Builders totalling K4.3million

* Kennedy Estate Housing Refurbishment – Contract was given to FVC Investments totalling K1.2million. A Filipino owned company.

5. It must also be noted that ADE Engineering was the contractor who built the new Skylounge Building through several suspecting contract variations resulting in the total cost close to K8million when it in fact it originally bided to build the Lounge for K3million. It is also this same contractor that has installed the cheap solar power system to power the new Skylounge Building however the solar panels are deteriorating faster than usual and the Hybrid Power System has now failed to work only after a year of installation and use.

6. All these projects were initiated by a Filipino national who was favorably selected from Philippines by the senior management to join the company as the Properties Manager in mid-2019.

Serious Concerns:

1. Property Manager – The recruitment of the Property Manager (Filipino national) who facilitated the procurement of these 4 contractors with the endorsement of senior management. Locals in numbers who are qualified as Property Management Professionals, Builders and Architects have been overlooked. The HR and the recruit
Peterson Peterson Senityment process need to be properly investigated.

2. The Procurement - The procurement approach for all these projects was selective, meaning only a few contractors were identified by the Property Manager himself and approved by EXCO. The manner in which information was exchanged and communicated between and amongst themselves including the bidding documents has not been explicitly made public, even to date. This is a very serious issue and a red flag already as far as governance and accountability is concerned. This needs to be independently investigated by a competent auditor.

3. The Tender Evaluation – The manner in which evaluations were carried out remains questionable. How was it possible that the Evaluation Team recommended all the Filipino contractors?

4. Filipino contractors without any nationally owned companies being selected remains to be known. TEC and its members need to be separately investigated by an independent competent auditor.

5. Inflated Costs - The fact that one contract worth K4.3million (1.6km road contract) was further sub-contracted at a value of K2.1million is highly questionable. It is dubious in nature and is already a red flag for fraud and corruption.

6. Construction/ Refurbishment of certain EXCO Member’s Houses – During the project stage, it is known that certain senior managers 'engaged' a couple of these contractors to renovate and construct their houses. Information gathered clearly showed that employees of these contractors were engaged while the contracted projects at NSPL were still underway. This is highly questionable and must be investigated.

7. Bribes and Kick Backs - The very long delays in some of these projects being completed on time or as per project completion schedules and dates indicates strong allegations of kicks backs and money under the table deals. Contractors have mentioned that certain high-profile managers have taken huge sums of money as  their 'agreed cuts'.

8. Personal/ Family relationships – One contractor FVC is alleged to be closely connected to the Property Manager, FVC owner is the brother-in-law of the Property Manager.

9. Cover-up into the K4.3million road project audit – An audit was conducted internally on the road project after several staff members raised concerns about the procurement process. That audit/ investigation was biased and was,a cover-up. The senior manager who did the audit even admitted that 'his hands were tied'.

Current Situation:

* We were well informed that as a result of all these allegations and dealings and everything else associated to the misuse, abuse and mismanagement of state-owned Entity money, most of the staff have become very aware and wary of what is going on at top management level and are very much dissatisfied. People (staff) are beginning to ask a lot of questions about all these procurement dealings and non-operational projects that have costed NSPL over K20million since 2020.

* Staff work moral has dropped to an all time low. There is no longer strong motivation, dedication and commitment to work. This in itself is a business and operational risk. Additionally, the fear of losing highly skilled staff, especially the air traffic controllers, specially trained engineers and technical staff is compounding by the day and until proper interventions are done to investigate and hold people accountable including the much-needed changes at the Board, there might be reprisals such as staff resigning or walking out of their jobs.

Recommendation:

*It is with all issues, concerns and serious allegations of systematic corruption that this Write-up now recommends the immediate invention of the appropriate government bodies and institutions including the government, Ministers and even the Prime Minister to act in the best interest of this state owned entity  by taking the necessary statutory  legal actions to address these serious concerns and allegations.

With honesty,
Concerned Whistle-blowers

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