Multiple Breaches of the Leadership Code and other Unlawful Conduct by Hon Barak T Sope [1996] VUOM 8; 1996.14 (10 December 1996)

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This report contains the findings of fact, opinions, views and of unlawful
conduct and the recommendations of the Ombudsman pursuant to the Constitution
of the Republic of Vanuatu and the Ombudsman Act No. 14 of 1995.

2 JURISDICTION
3 SCOPE OF INVESTIGATION
4 METHOD OF ENQUIRY
5 PRELIMINARY REPORT AND RIGHT TO BE HEARD

6.1-6.3 Introduction
6.4-6.9 William Edgell (personal car)
6.10-6.14 Numbawan Bottle Shop - full container liquor
6.15-6.18 Mr Carlot Korman - boat motor
6.19-6.21 4WD rural vehicles
6.22-6.27 Laho Ltd - Cigarettes
6.28-6.29 Summary

9 UNLAWFUL APPOINTMENT OF A PRIVATE FOREIGN FIRM C.E.E TO AN EXCLUSIVE MANDATE FOR DEVELOPMENTS

16 UNLAWFUL INTERFERENCE WITH THE VANUATU COMMODITIES MARKETING BOARD (“VCMB”)

16.1-16.7 Mr Sope allows Carmille to export copra
16.8-16.13 “Loan” of copra from VCMB to Carmille
16.14-16.16 Mr Crowby “requests” Mr Sope to terminate his job

“... Grant not O Lord, the desires of the wicked: further not their wicked device, let them not be exalted...” Psalm 140 v 8

“Incline not my heart to any evil thing, to practise wicked works with men that work iniquity...”

Evidence continues to accumulate of reckless wrongdoing and abuse of power among some leaders. It is easy to see the extent of financial loss to the people of Vanuatu from unlawful actions and foolish decisions by some of their representatives.

This environment of lawless manipulation and disregard of law can only lead eventually to disaster, unless severe and prompt action is taken to deal with the guilty in an appropriately severe fashion. The unavailability and lack of judicial action serves as encouragement to misbehaviour and a belief that there will be no severe consequences for violators.

These offences do not arise from a lack of knowledge of what is right or lawful but from a contempt for ethical standards and straight behaviour.

1.1 In this report the Office of the Ombudsman reports on breaches of the Leadership Code by the Hon Barak Sope and otherwise unlawful conduct. The matters examined are:

(ii) a container of alcohol imported by the Nambawan Bottle Shop (VT 4,033,348);

(v) a 4WD vehicle for West Malo but refusal for people from Santo, Tanna and Tafea Province.

(d) Unlawful appointment of an Italian firm to an exclusive right to development projects. Unlawful offer to provide a Guarantee from the Reserve Bank of Vanuatu on 30/07/96 in breach of s3 Public Finances Act and s3 of the Government Borrowing and Guarantee Act to an Italian company.

(e) Unlawful appointment of Italians to act as an “Investment Consultant” and “Investment representative”

(g) Unauthorised borrowing from the National Bank of Vanuatu for Mr Peter Swanson (VT 8,177,530).

(i) The Cybank matter and its apparent connection with the circulation of sexually explicit material that has now come to light since my public report (16 October 1996).

1.2 This enquiry looks into the conduct of Honourable Barak T. Sope, former Minister of Finance, former Minister of Trade and former deputy Prime Minister (“Mr Sope”) as a leader.

1.3 For the reasons that follow in this report my opinion is that Mr Sope has repeatedly breached the Leadership Code and is not fit to hold any Ministerial post or any position of public responsibility ever again. In broad terms this is because he:

1.4 Because of the opinion that I have formed of Mr Sope based on the evidence I have of his activities I have again recommended that he be excluded as a Minister or any responsible appointed position in the future. I have also recommended that the Attorney General’s Office and Public Prosecutor look at his conduct to find out if legal action should be brought against him. I consider that Mr Sope, as a leader, is a danger to the public of Vanuatu and its well being.

2.1 I have conducted the enquiry under Chapters Nine Part 2 and Ten of the Constitution and under s17 of the Ombudsman Act (“Act”). These constitutional laws allow me to enquire into, either on my own initiative or upon receiving a complaint from a person affected, "as a result of a particular conduct" on the part of a government department or ministry or any of their officers.

2.2 I can thus investigate the circumstances surrounding the matters raised above in the introduction because the repeated alleged breaches affect all people in Vanuatu badly. Some of the matters above were on my initiative, other from complaints and others are a combination of both.

2.3 Mr Sope as a Minister at the time of the conduct falls within my jurisdiction.

3.1 The purpose of my investigation in this instance was to determine whether or not the conduct of Mr Sope in the matters set out in the summary were in the words of art 63 (2) of the Constitution:

3.2 And in the words of Article 66 of the Constitution the conduct of Mr Sope was such as to:

(a) Place himself in a position in which he has or could have a conflict of interests or in which the fair exercise of his public or official duties might be compromised;

(d) endanger or diminish respect for and confidence in the integrity of the Government of the Republic of Vanuatu.

the law or administrative practice, the subject of the investigation, or any other law or administrative practice, is defective or

4.1 I obtained documents and other evidence from a number of different sources. This was pursuant to my powers as set out under art 62(3) of the Constitution and s17 of the Act. These laws entitle the Ombudsman to request the persons specified therein to furnish documents and information to me. Various people responded to my enquiries and provided me with documentation.

5.1 In October and November 1996, I circulated my preliminary report that outlined preliminary findings of fact and indicated concerns about the non-respect of laws, regulations and procedures by Mr Sope to him and other parties referred to in the preliminary report.

5.2 The purpose of seeking comments and submissions from those affected by this report was to discharge the Ombudsman’s constitutional obligation of granting “the person or body complained of an opportunity to reply to the complaints made against them” (art 62(4) of the Constitution), and of the legal obligation as outlined in s16(4) of the Act to allow a person who is the subject of an “adverse “ or “derogatory” opinion to make a statement in reply.

5.3 I received replies from all concerned with the exception of Mr Sope and Mr Korman. Mr Sope sought to obtain an injunction from the Vanuatu Supreme Court to prevent publication of this report. On 28 November the Acting Chief Justice denied Mr Sope’s application for an interim injunction and also dismissed Mr Sope’s case in full. Since then there still has been no reply from Mr Sope. Mr Sope has therefore for reasons known to himself alone chosen not to exercise his right under the Constitution and the Act to reply.

6.1 There is a committee called the “Duty Exemption Committee”. This Committee was established many years ago to advise the Minister of Finance in respect of duty exemptions. This is an ad hoc committee and is not provided for in the legislation. The Committee makes recommendations to the Minister as to the way in which an application for a duty exemption should be treated. The recommendations are not binding upon the Minister, but show the committee’s views. The recommendations are to be made based on the Import Duties Consolidation Act [Cap 91] and schedule 3 of that Act. Likewise, the Minister must make his decision granting exemptions or reductions in accordance with the law. The type of good that may receive an exemption are things that will contribute to Vanuatu’s economic well being; such as development projects, agriculture, inter-island shipping, new tourism projects and fisheries. Exemptions are also available for people’s personal effects and non-profit organisations such as schools and churches.

6.2 The Minister has a discretion in respect of a reduction on exemption from duties. A discretion means the Minister can think about something carefully and make a fair decision. It must also be in accordance with the law, including the Constitution. It strongly appears that Mr Sope has used his discretion many times for political favours and in what must be an entirely unfair way. That is, it has been given to some people so as to give them some money and advantage over competitors. In my opinion, the examples discussed in this report are examples of unfair and improper behaviour.

6.3 This report looks at and makes findings on a number of examples of duty exemptions that were given.

Request for duty exemption on a car to be used for private purposes by the Hon. Minister W Edgell.

The Committee noted that this will not be a G. plated vehicle, it does not fall under the terms of ministerial exemption. Support may be granted only on pick-up trucks for rural transport of goods and people.

6.5 This vehicle is a private car to be driven by a person who happened to be a Minister of State at the time of the application. If an “ordinary” person who does not hold high office had applied then the recommendation would have certainly remained “Refused”. However, on the 29/03/96 Mr Sope wrote “allow this” and signed it, crossing out the “Refused” recommendation. There can be absolutely no good reason for this. Mr Edgell can be seen driving in this vehicle. This has caused a significant gain for Mr Edgell and a big loss in duty (VT313,333) for the Government of Vanuatu.

6.6 A typed copy of Mr Edgell’s reply is annexed as “1”. Basically Mr Edgell said that he was granted an exemption along with 17 other MPs for a motor vehicle by a committee called the “Parliamentary Privileges Committee”. Mr Edgell also said that other political appointees and rural MPs in the islands got exemptions for cars so that he was justified in getting an exemption himself.

6.7 The Ombudsman’s office asked the Speaker of Parliament about the “Parliamentary Privileges Committee”. The Speaker told the Ombudsman that there was no such thing as a “Parliamentary Privileges Committee”! Parliament is looking at creating such a committee but it presently does not exist.

6.8 The Ombudsman’s Office asked the Director of Customs about the other 17 MPs who were granted duty exemptions on cars for their personal use. The Director replied as follows:

“We would like to advice [sic] your office that there has been no exemptions on vehicles for the 17 member [sic] of Parliament during the UMP, VP and MTF coalition. Therefore Mr William Edgell’s exemption was the only one ever been approved and of this particular nature by the then Minister of Finance, Honourable Barak Tame SOPE.”

6.9 I therefore conclude that there was no lawful or reasonable basis for Mr Sope having granted Mr Edgell’s duty exemption application.

6.10 On 12/06/96 the Exemption Committee looked at an application by the Hon T. R Willie Jimmy for an astounding application for exemption:

Request duty exemption on one (1) full container of Liquor. The Director of Customs and Taxes advised he had granted provisional exemption on 13/5/96 as authorised by the Minister of Finance, granting it on both duty and service tax, copy attached under exemption reference 020/0996/0/00.

The Committee took into consideration the fact that, the ministerial endorsement in such an operation supports and encourages Ni-Vanuatu businessmen and contributes towards the development of private sector.”

“Further to your letter dated 9 May, 1996, I hereby wish to inform you that your application for an exemption of Duty on your remaining stock was considered.

I herein gladly grant you total exemption of Duty on your remaining stock of Liquor from last year. I endorse your operations and will support fully Ni-Vanuatu businessmen to participate and contribute to the development of the Private Sector”.

6.12 Mr Jimmy when asked about the exemption he received said (full reply below):

“Reference is made to your letter of 30th October, 1996 concerning the report considered to be in [sic] Breaches of the Leadership Code and other unlawful Conduct by Hon. B.T. Sope, your opinion expressed in the report is once again bias, outrageous and tainted towards Hon. Sope and myself.

I applied to the Minister responsible to grant exemption on duty under the Act approved by Parliament. The Minister after having considered my request decided to exercise his power under the Act by granting me an exemption on the goods described, what’s wrong? Who else can approve the exemption duty on imported products?

All necessary document [sic] were completed with Customs department. I have no further comment to make. This reply is made for your reference purposes, seeing my time to respond had already lapsed.”

6.13 This action is entirely wrong and contrary to at least the spirit of the law. This is an entirely discriminatory action by Mr Sope and is a corrupt practice in which a Member of Parliament and Minister has been favoured above ordinary people. The loss of revenue on a full container of liquor is very big; presently worth VT 4,033,348. Mr Sope and Mr Jimmy are also really saying that no Ni-Vanuatu business person should pay any duty or tax on any item. Exemptions cannot be granted on the basis of race as that is prohibited by the Constitution of Vanuatu.

6.14 Furthermore, it is difficult to see how making it cheaper for a Member of Parliament to run his business selling alcohol contributes especially to the economy and to the Vanuatu people. The main result is that it makes it cheaper for Mr Jimmy to operate his liquor outlet which would presumably mean a higher profit. The loss of duty is at the expense of the people of Vanuatu. It has set a bad precedent and gives an unfair competitive advantage to businesses that pay their duties. All businesses can demand equal treatment under the law. This is a constitutional right. Mr Sope’s conduct here must be seen as a most fundamental breach of the Leadership Code.

6.15 On 04/07/96 Mr Sope received a letter from the private secretary to the former Prime Minister in which he sought a duty exemption for an outboard motor being brought into the country from overseas by Hon Maxime Carlot Korman:

“The Honourable Prime Minister, Hon. Maxime Korman Carlot is travelling back to Vanuatu with the above item and asks if you could authorise the Department of Custom, Rates and Taxes to grant him an exemption for the above item. The cost is USD 300.

“You may inform the Honourable Prime Minister, Honourable Maxime Carlot Korman that I herein grant a total Duty Exemption on the item as mentioned in your letter”.

6.17 The Exemption Committee noted the exchange of letters. This exemption appears to be based only on the fact that the former Prime Minister asked for it. No use is said for the motor that could bring it under any head of exemption. It is a gross abuse of office to have granted this exemption. It is also improper for it to have been sought by Mr Korman.

6.19 The documents obtained by the Ombudsman show that there have been many requests for duty exemption for 4 x 4WD vehicles for rural transport of goods and people within Santo, Tanna and Tafea Province. These fell within guidelines. The Exemption Committee recommended a reduction of duty by 50%. This was not approved by Mr Sope.

6.20 However, a similar application was made at the same time for a vehicle for West Malo. It received the same recommendation of a reduction of duty by 50%. This was approved by the Mr Sope. When these decisions are looked at together they show entirely inconsistent treatment of applications by Mr Sope.

6.21 One must ask why Mr Sope treated an application from West Malo differently from the ones from Santo, Tanna and Tafea province.

6.22 On 17/06/96 Laho Limited (“Laho”) wrote and requested a duty exemption in cigarettes which it had been exporting to Australia after, it is believed, they were repackaged and relabelled. It is understood that Australia became aware of this and stopped it as it was or had become illegal. Laho in their reply have not disputed this allegation. Australia has an agreement with a number of Pacific nations that gives them favourable treatment for exporting goods to Australia called the Spartica Agreement. Under Spartica goods must be manufactured by the Pacific nation to qualify for benefits. Laho’s cigarettes were not manufactured in Vanuatu.

6.23 Thus Laho Ltd was left with a substantial number of cigarettes which it said it could not sell. It wrote:

6.24 This did not of course actually express the real problem. The problem faced by Laho was allegedly that the “use by” date of the cigarettes was about to expire and a commercial loss would be suffered if Laho could not sell them locally. There was nothing to stop Laho from actually paying the normal custom duties and selling the stock locally as it usually does.

6.25 The application for the duty exemption was made because Laho wanted to stop the loss that it would suffer. This is a commercial risk run by all business people the world over and it is improper for governments to interfere - especially when it is government policy for free enterprise to apply - and especially when it appears that the whole operation may have been originally set up to abuse an international agreement. The reason that the Government should not interfere is that it discriminates against others who do not receive such assistance. In this matter on 03/07/96 Mr Sope wrote to Laho:

I hereby grant you Duty Exemption on your Cigarette Stock for further sales. It is in the best interest of this Government and Vanuatu that we help private enterprise as much as possible to minimise adverse effects of the current economic climate and to ensure their operations and services are maintained.

I trust that in granting the exemption, you will continue to maintain your services to your customers”.

6.26 Laho was given a copy of this part of my preliminary report. A copy of its reply is attached as “2”. Within its reply it states:

“1°) que j’ai adressé, le 17 juin 1996, une lettre à Monsieur le Ministre des Finances tendant à obtenir une exemption de douane sur des cigarettes dont la date limite allait arriver à expiration (voir copie ci-jointe). En effet, comme vous savez pertinemment, lesdites cigarettes n’ont pu être exportées.

Cette proposition a été faite dans le but de faire bénéficier aux Ni-Vanuatu de la Place de meilleurs conditions d’achat â l’occasion des fêtes de l’indépendance.”

(1) On June 17, 1996 I sent a letter to the Honourable Minister of Finance requesting custom’s duty exemption on cigarettes which had an expiry date coming to an end (see attached copy). As you very well know, these cigarettes are not exported.

My request was done so that Ni-Vanuatu here would be in a better position to buy as we were approaching Independence festivities.

6.27 Based on the logic applied by the Minister no taxes should be paid by any business in a difficult economic climate. That is not the law or policy of Government. This exemption does not fall within any guidelines and provides absolutely no benefit to Vanuatu - but rather an enormous loss of revenue VT 15,543,717. By this exemption Laho got a huge benefit from Mr Sope. The exemption had nothing to do with an adverse economic climate. It was simply that Laho had made a costly commercial mistake.

6.28 Mr Sope has clearly shown unethical prejudice in that he specifies again and again that Ni-Vanuatu business men should be encouraged - not simply citizens or business in general. It is also to be noted that three of those granted duty exemptions are present or former Government Ministers.

6.29 This conduct is all the worse because of the present budget constraints and the actual reduction in government income. The people of Vanuatu will see the effect of this type of inappropriate action through the projected reduction of government services (20% less to spend in schools, in health etc). The total amount of exemptions from the examples referred to above is over VT17,000,000. This can be compared with the 1996 annual budget of following:

7.1 Without any authority or discussion with the Council of Ministers or Air Vanuatu, at some stage in early 1996, Mr Sope, as Finance Minister, authorised some Italians, Mr Alessandro Parravicini and Mr Michael Rittie to negotiate the purchase of a B737/400 series and its financing. No doubt these “agents” were to receive a commission. This is an extraordinary unilateral (without telling anyone else) act by a Minister of State of any country, especially given the cost of such an aircraft as this.

7.2 This action is a serious breach of the Leadership Code. It was fortunately stopped by the then Prime Minister Hon Carlot Korman after Boeing contacted Air Vanuatu to report what was happening. In a letter to Mr Sope of 17/06/96 Mr Carlot Korman wrote:

“I view the actions of any Minister acting unilaterally without my knowledge or consent of the shareholders of Air Vanuatu and the agreement of the Council of Ministers as a misconduct which is intolerable in the interest and success of good and stable Government”.

8.1 In about March/April 1996 it was suggested to Mr Sope that Vanuatu should establish a cruise line. A purported business plan was prepared that showed very large percentage profits could be made, in excess of 40% per annum. Without consulting the Council of Ministers and entirely by himself Mr Sope wrote to Tour Vanuatu Ltd and said in part:

“ ... my Ministry will give every necessary assistance in providing the investment funds in this company.

We also confirm that we agree totally to a demand of financial assistance from the New Zealand and/or Australian governments which have dedicated financial assistance in the economic development of South Pacific Nations.

In addition, the Ministry of Finance may guarantee, if necessary, any bank loan up to a level of USD 15 million, for this project.

Hoping that your Project will give a consistent example of success to other Ni-Vanuatu in the development of our economy,...”

8.2 The sending of this letter is misleading and a gross example of bad administrative practice, because:

(a) there was no discussion by the Council of Ministers of the possible financial backing of the project and the possible guarantee of USD15,000,000; and

(b) Mr Sope told an officer of a foreign government corporation that such funds may be available. That officer would then be encouraged to continue to advance negotiations and might have then spent a lot of money for this country. Here it was an independent government owned corporation.

9 UNLAWFUL APPOINTMENT OF A PRIVATE FOREIGN FIRM C.E.E. (CONSULTING EUROPEAN ENGINEERING) TO AN EXCLUSIVE MANDATE FOR DEVELOPMENTS

9.1 On or about 09/07/96, without consent or having previously discussed the matter with the Council of Ministers, Mr Sope signed a “Declaration of Intents with” Mr Din Di Cesare, legal representative of C.E.E., Consulting European Engineering, with legal head office in Rome. I do not know at this stage what the cost is that is involved. I understand that it may be about US$4,000,000. There would already appear to have been a number of visits from Italian engineers and people from C.E.E. to Vanuatu.

9.2 From a fax of 30/07/96 from Mr Sope to one of the bosses of C.E.E. it appears that yet again Mr Sope planned to get Vanuatu to spend more money when it has not been properly authorised. The fax said:

“ ... I would like to inform you that the realisation of building works: airport, social housing, hospital, and roads, that the Government of Vanuatu intends to make the payments in 20 years time with the first five years of preammortization.

This form of payment will be guaranteed by the Reserve Bank of Vanuatu and counter-guaranteed by a prime European Bank. The details of the transaction will be debated in Vanuatu with the Italian Delegation. The Banking coordinates will be made known upon the stipulation of contract. The Bank that will provide the counter-guarantee will also be made known to you during our meeting in Vanuatu ... ”

9.3 The Declaration of Intents of 09/07/96 also gave an exclusive right to development works to C.E.E. It is noted that Mr Sope has also given many of these exclusive rights to another company, New Resources Group, at the beginning of 1996.

- the Government of the Republic of Vanuatu is promoting the development on its Territory of:

1) The Design and Construction of a 747 International Airport in Espiritu Santo;

3) The Design and Development of various infrastructures in order to facilitate the Economic and Tourist Development;

4) The Design and Construction of Hospitals, Dispensaries and Secondary Schools;

- C.E.E. Company, represented by Mr Dino Di Cesare, is interested in performing the design, the technical coordination, the search and enlistment of Companies qualified to perform the above works, and finally to carry out all the activities connected with said works

B) The Government of the Republic of Vanuatu considering the intent of C.E.E. Company to carry out the above activities, is pledging formally to confer an exclusive mandate to C.E.E. Company, legally represented as above, in order to have all the previously mentioned works duly accomplished, conferring to C.E.E. and, on behalf of the same, to Mr. Dino Di Cesare the exclusive mandate to; contact, select, examine the most qualified European Companies and consequently to award the relevant Contracts, covering the subject works, to the selected Companies at the sole unique judgement of C.E.E.

The present mandate shall be ratified during the official meeting to be held on 17th July, 1996 and which shall be attended by a C.E.E. Company delegation and by the Government of the Republic of Vanuatu, represented by the Honourable Minister Barak T. Sope.

In order for said ratification to be legally valid it shall have to be immediately transmitted as a consular protocol and promptly confirmed by fax.”

9.5 It is apparent that on 17/07/96 this was made official by Mr Sope. If that were not so then the letter of the 30/07/96 would not have been sent.

9.6 The fax of the 30/07/96 (above) refers to payment to be made and guarantees to be given. None of this has been before the Council of Ministers, let alone approved by them. This is yet a further example of Mr Sope failing to behave properly, and demeaning his position as a leader.

9.7 From enquiries made, C.E.E. was incorporated in Italy only this year. As a company it therefore has no experience and no record of achievement.

I, as Minister responsible for Finance, on behalf of the Government of the Republic of Vanuatu, herein confirm your appointment to represent and participate on behalf of the Government of the Republic of Vanuatu,

to negotiate, but with the provision that the Government must approve the terms of negotiations for the development of the Espiritu Santo Airport to I.A.T.A. International Standards.

This letter of appointment is exclusive for 6 months duration, by which your services to the Government will enhance our endeavours and capacity to promote and develop Tourism, and considered most essential for the development of our nation’s Economic and Social Well being.

I wish to convey my kindest appreciations for your concerted effort and precious time... ”

10.2 I have not seen any authorisation of this appointment by the Council of Ministers. It is noted that Mr Parravicini was also appointed to negotiate to purchase the B737-400 as outlined above.

10.3 By a further letter of the same date, 15/05/96, Mr Sope appointed Mr Jimmy Giovanni as an Investment Consultant and Representative. Again, I have not seen anything from the Council of Ministers authorising this second appointment. Mr Sope said:

“I write to inform you that I herein, appoint you as the Investment Consultant and Investor Representative of our Government to interested overseas investors ...”

10.4 There is no mention of any fee in either of the letters. In my opinion such fee for representation would or could be claimed. There has been no budgeted amount for such consultants of this kind. Their appointment has not been notified to or been approved by the Council of Ministers. Both of the agents appointed are associated with C.E.E. Mr Jimmy Giovanni’s job would appear to involve getting money on Vanuatu’s behalf. This also has not been authorised by the Council of Ministers. Annexure “A” is a copy fax of 29 July 1996 to Mr Giovanni from Mr Sope’s secretary, Mr George Borugu which confirms this involvement.

11.1 The National Bank of Vanuatu (“NBV”) is an independent Bank. It cannot be interfered with by any politicians. Mr Sope, as Minister of Finance, wrote to all Ministries and told them strongly that they must not interfere. He said in a memo sent to all Ministries dated 19 July 1996 as follows:

“The National Bank of Vanuatu was established by the Vanuatu Government in December 1991 to provide commercial banking services to Vanuatu and to act in competition with the other foreign owned commercial banks operating in this country.

As such, the National Bank of Vanuatu is required to operate as a commercial bank adopting commercial banking principles at all times. The NBV is not a development bank.

It has come to my attention that some Ministries are seeking to exert political pressure on the bank’s management in endeavours to gain special consideration for loans for some of the Bank’s customers who do not have viable loan proposals or who cannot meet the bank’s policy requirements as far as contributions, repayments capacity and/or security are concerned. Also, I am aware that similar political pressures are being made to the Bank for the Bank to give special treatment to, or stop legal action against, some of the bank’s defaulting borrowers.

The Board and Management of NBV have, quite rightly, rejected these pressures and have continued to operate the National Bank along the commercial principles under which the Bank was established.

As the Minister with the overall responsibility for the National Bank, I have always fully supported the Bank’s Board and Management’s approach to their responsibilities and I have specifically requested that they continue in this way to ensure that the Bank is not brought into disrepute or suffer losses because of unacceptable political pressures.

I would ask you all to respect the reasons for the NBV being established and refrain from continuing the previous bad practice of soliciting, through political pressures, special consideration for some of the bank’s customers. I myself have advised the bank that, as far as the Ministry of Finance is concerned, I agree that all the Bank’s day to day affairs must be left in the hands of the Bank’s Management, without political interference, and I have full confidence in their ability to operate the Bank in the correct manner, with fair treatment to each of its customers, and for the ultimate benefit of Vanuatu.

11.2 But Mr Sope and his staff have done the opposite. They interfered with the NBV themselves. I have been provided with copies of letters written by Mr Sope and his staff, where they clearly put pressure upon the NBV. Copies of these letters are attached to this report. I set out the dates below and whether they were from the Mr Sope or not. I believe this to be only a small selection of such letters.

30/04/96	B. T. Sope	Mr Henderson Kalsakau (stop Legal action)
07/06/96	B. T. Sope	Mr Alfred Carlot (loan)
26/06/96	B. T. Sope	Mr Edgell (home loan)
11/07/96	B Kaltonga	Mr Clera Peter (job)
17/07/96	B. T. Sope	Vanuatu Holdings Ltd (increase overdraft)
05/08/96	B. T. Sope	Mrs Leiwani Serei (loan)

11.3 Additionally there was a “request” for a loan for Mr PH Swanson. This is discussed below in detail as it is a bad example of political pressure being brought to bear on the NBV.

11.4 These letters range in text from directions to NBV that are indirect. In other instances the approach is direct. In one case (26 June) in respect of a wantok Minister, Mr Sope wrote:

Subject: Housing Loan for the Honourable William Edgell, Minister for Lands, Mines and Rural water supply to purchase the Ex-NHC office

“I write to advise you of an arrangement that my office has made with Mr Paul Willie of the National Housing Corporation for the purchase of the ex-office of the NHC by the Honourable Minister of Lands.

The NHC has agreed to sell the ex-office to the Honourable Minister for the sum of VT 5,000,000. This purchase price is to be made from loan funds from the NBV to the Honourable Minister.

I have advised the Minister that VT 3,500,000 of this fund will be paid direct to NHC for the purchase of the house by the Bank and VT 1,500,000 to be paid direct to the Minister’s Bank Account to cover the cost of repairs, stamp duty, registration fees and other such fees relating to the transfer of the plot of land to the Minister. The Minister’s account to which the funds should be paid to is an NBV account number [Omitted] (the Minister has a cheque account with the NBV).

This will only be a temporary arrangement until the NHC has finalised the necessary arrangements to transfer the house to an NHC Housing Scheme. This will be accomplished after I have appointed new members of the Board of Directors for the NHC and members of the management team.

... I am suggesting you set the repayment rate for the loan at VT 30,000 per month and arrange to have the mortgage for the house held by the Bank.

I would be very grateful if you could contact the Minister directly to finalise detail arrangements for the loan. . . .”

11.5 This is very bad. Mr Sope is telling the Bank what to do. All details are covered - even down to the fact that the Mr Sope has suggested a 100% funding from NBV and a very small repayment each month! Quite properly NBV did not accept the pressure from the former Minister.

11.6 In all of the above instances an attempt was made either by Mr Sope or his secretaries, using Ministry letterhead, to influence the Bank. This is very bad and shows a cynical disregard for the law and the independence of a commercial bank. It is an abuse of power.

11.7 Also between 29/03/96 and 17/05/96 Mr Sope improperly and without authorisation caused the NBV to either pay directly to or on behalf of Mr Swanson the sum of VT8,705,703. This sum now forms an unauthorised loan from the Bank to the Government of Vanuatu. This is dealt with in the next section.

12.1 On or about 29/03/96 Mr Sope as Minister of Finance obtained a loan from the National Bank of Vanuatu for A$50,000. In a letter to the NBV Mr Sope wrote, in part:

“We request that National Bank of Vanuatu issue a bank draft of A$50,000 (fifty thousand dollars) in the name of Peter H Swanson to cover his travelling and working expenses. We are unable to issue a cheque from Government because we have not passed our 1996 National Budget. We need this bank draft by 2 p.m. this afternoon and will refund this money as soon as we pass the 1996 National Budget”.

12.2 The loan request was not authorised or discussed by the Council of Ministers. The loan was approved by the Bank on the same day as requested. It was to be repaid on 30/04/96. The budget came on 21/04/96. The terms of the loan were accepted by Mr Sope.

12.3 On 12/04/96 Mr Sope asked for more money. A further sum of A$16,666.66 and VT 366,441 was given to Mr Swanson at the request of Mr Sope. The total of the loan at this point was VT 6,303,774. The terms were agreed to by Mr Sope.

12.4 The money was not repaid by the due date (30/04/96) in spite of the National Budget having been passed (21/04/96). It was not repaid because it was not an authorised loan.

“I am writing to advise you to extend our Credit Facility to cover for a Government Project we have been undertaking.

I request that the Bank issue AUD 18,750 (Australian dollars). As mentioned earlier we will make a full payment of this account pending the completion of this project.”

12.6 In the earlier correspondence the loan was to be repaid on the passing of the budget. It could not be repaid because the whole “project” was unauthorised. The project was the US$100,000,000 Bank Guarantee “Project”.

12.8 On 29/05/96 NBV wrote to Mr George Borugu confirming that the loan was due to be repaid on 31/05/96 in the sum of VT8,177,530. Copies of all the letters referred to above in 12.1 to 12.8 are annexed as “C” together with further demands from NBV to be repaid. The money still remains outstanding..

12/04/96 - VT 1,844,274 - AU$5,000 in favour of Richard Kaltonga, VT 366,941 to pay for accommodation of Swanson at Le Meridien

17/05/96 - VT 1,673,438 - (AU$18,750 drawn in cash under receipt of Bakoa Kaltonga).

12.9 This money was requested by Mr Sope for an entirely unauthorised “project”. He has got VT 8,177,530 in the name of the Government of the Republic of Vanuatu without any authority. Annexed as “D” is a copy of a document showing the payment of this money.

13.1 I do not set out again the Reports upon the US$100,000,000 Bank Guarantees matter. I do note however that it would appear that Mr Sope, whilst still the Minister of Finance, became aware of the fact that there was “dealing” (monies being paid or monies being reused from the Guarantees) in the Guarantees, or a least copies of them. He did not tell the Prime Minister or any other person in the Government despite the fact that he must have known that there was a big concern about this.

13.2 In doing so he clearly put his own interests well in front of those of his country and its Government. I set out as Annexure “D1” a copy of a fax received by the then Minister of Finance on or about 4 August 1996. I set out below the finding against Mr Sope in the USD100,000,000 Report. The remainder of the report is not included in this report.

A breach of Section 3(3)(b) of the Government Borrowing and Guarantee Act Cap.149 in that the Minister of Finance, the Honourable Barak Sope did not obtain prior approval of the Council of Ministers before the execution of the Guarantees.

A breach of Section 13 of the Public Finance Act Cap.117 in that the Guarantees were executed by the Minister of Finance, the Honourable Barak Sope, without having obtained a resolution of Parliament before the guarantee is given effect to.

Funds have been committed in the Non-Circumvention Agreement by the Minister of Finance Hon Barak T. Sope, in Breach of Section 3(3)(b) of the Government Borrowings and Guarantee Act without approval of the Council of Ministers.

The structure and effect of the agreements was to transfer or give away the entirety of the external assets of the Republic of Vanuatu.

And I find the following GENERAL BREACHES OF THE LEADERSHIP CODE and PROPER GOVERNMENT PRACTICE have been made:

(i) No, or no proper inquiries were made by the Minister of Finance, Barak T. Sope, of Peter H. Swanson and his associates before executing the Guarantees.

(ii) No legal advice was obtained by the Minister of Finance Barak T. Sope before executing the Bank Guarantees. Such advice was not sought until at least five weeks after the event.

(iii) No check was made by the Hon. Barak T. Sope, of the incorporation of New Resources Group (Vanuatu)Ltd, which was in fact not incorporated on the date of the purported execution by it of the Non-Circumvention Agreement.

(iv) By executing the Bank Guarantee the Minister, the Honourable Minister of Finance Hon. Barak T. Sope has risked losing the entirety of the external assets of the Republic of Vanuatu and have thereby exposed the Republic to total Bankruptcy.

(v) If the guarantees are enforced then Vanuatu will have been led into bankruptcy by the Minister of Finance Hon. Barak T. Sope Minister and the as the sum guaranteed greatly exceeds the external assets of the Republic of Vanuatu.

(vi) The Minister of Finance Hon. Barak T. Sope must be taken to have been purposeful in the actions by him given that the documents involve the largest sum of money ever committed by Vanuatu. He can deny liability by saying that they signed because the others did and thus assumed that the proper procedures had been gone through. To do so would be an abrogation of responsibility and of his high office. He held power over the assets of this nation in trust for the people.

(vii) To have acted as he has as outlined above he has diminished respect and confidence in the Government the Republic of Vanuatu in a way contemplated by Article 66 of the Constitution. The former Minister of Finance Hon. Barak T. Sope, arguably one of the most important political leaders in Vanuatu, and certainly the most important so far as the Finance Centre is concerned, chose deliberately and forcefully to entirely disregard the Laws of the Republic of Vanuatu. The Laws that he has breached or caused others to breach were put in place by Parliament to ensure that what has now occurred would not happen.

(vii) Hon Barak T. Sope the former Minister of Finance has acted contrary to the Leadership Code by regarding himself as being above the Laws of the Republic of Vanuatu and has thereby caused incalculable damage to the Republic of Vanuatu internationally.

(viii) Vanuatu will now be regarded as being a money laundering centre by its involvement in this scam through the participation of former the Minister of Finance, Hon Barak T. Sope.

(ix) The former Minister of Finance has brought Vanuatu into international disrepute and thereby forever damaged its hereto good international financial reputation in general and with the International Monetary Fund, the World Bank, The Asian Development Bank and all aid donors to Vanuatu.

(x) The former Minister of Finance has further caused a serious breach of the Leadership Code by acting as he did on the advice of a non-citizen. He permitted him to prepare documents which take the control of the assets of this country from the leaders of this country. He failed to consider properly or at all the ramifications of bearer instruments which, from banking experience, will almost certainly be purchased at a discount by somebody unknown and unapproved by Vanuatu, who will use them as security loans and will then default causing the liability and bankruptcy of Vanuatu to occur in April 1998.

(xi) The former Minister of Finance failed to properly analyse and consider the scheme or make any or any appropriate researches.

(a) a gross breach of the Leadership Code by the Honourable Minister for Finance, Barak Sope in that by the actions referred to above he has, within the terms of Article 66(1) of the Constitution:

(iii) endangered or diminished respect for and confidence in the integrity of the Government of the Republic of Vanuatu;

13.3 I have also been provided with copies of documents that show that an approach was made to a former Minister of Finance, Hon Willie Jimmy to enter into a Bank Guarantee scam. Mr Jimmy properly asked advice from his department. Mr Jimmy’s department advised him that the scheme was a scam and that it should not be entered into. Mr Jimmy took the advice and the transaction was not proceeded with to the credit of all in the Ministry of Finance at the time. This shows clearly that the systems can work when they are respected. Mr Jimmy showed good leadership in this instance.

14.1 Below I set out my findings in this case. Again I do not set out the body of the report.

14.2 What has since come to my Office’s and the public’s attention is Cybank’s apparent connection to the circulation of pornography (degrading and sexually explicit pictures (primarily of women I am advised)). If Mr Sope was originally unaware of this he could have and should have researched the matter or engaged independent advisers to give him a full background on the matter. A search on the Internet at Cybank’s Website (a Website is like a notice board that people with computers who are connected to the Internet can read) would have revealed this.

14.3 It is possible Vanuatu was chosen because a recent change in the law in Australia makes it unlawful for pornography to be sent from within Australia. Whatever the reason behind it, is indeed very sad that Mr Sope chose to get this Christian country mixed up in the Cybank venture that makes most of its money from pornography according to the computer magazine, PC User. I have also been given copies of documents off the Internet which confirm this. Copies of the article and an Internet document are attached as “E”.

MISLEADING AND DECEPTIVE CONDUCT BY MESSRS SOPE AND MALSUNGAI DEMEANING THEIR OFFICES AS LEADERS

In my view the single worst piece of conduct by Messrs Sope and Malsungai was authorising the release of the $US250,000 from escrow to Oxford Media (Vanuatu) Corp by Mr Sope’s letter of 1 July 1996 accompanied by the authorisation signed by Mr Malsungai (refer annexures “L”). By doing this, Mr Sope’s unequivocal statement to the VNPF Board in his letter of 5th June 1996 (refer annexure “F”) where he advised that the money would be held in a suspense account and stated that:

This amount will not be released until a final Agreement is signed by the parties

rendered meaningless. Mr Sope has shown that his word cannot be relied on?????
Mr Malsungai allowed himself to be persuaded to sign a document that was false. His signature on the undated plain paper allowed money belonging to the workers of Vanuatu to be paid away to third parties. He did this in the full knowledge that it was without the knowledge or approval of his other Board members.

Mr Sope breached the provisions of Section 13 of the Public Finance Act in that he gave a Guarantee on behalf of the Government and represented it to be valid in circumstances where it was not authorised by Parliament and was unenforceable.

Breach of section 3 of the Government Borrowing and Guarantee Act by Mr Sope

Breach of Section 3 of the Government Borrowing and Guarantee Act in that he did not have the prior approval of the terms of the Guarantee from the Council of Ministers before giving the Guarantee to the VNPF.

Mr Sope caused pressure to be placed upon the Board of the VNPF and thereby attacked its integrity and independence.

Minister Sope made a false representation to the Board of the VNPF to the effect that the Guarantee given by him was valid and of full force, when it was not, and he knew that it was not.

Mr Sope acted in breach of directions of the Prime Minister contained in his letter of 13 June 1996. Such breach was constituted by:

(b) Purporting to have authority to release or cause to be released the sum of US$250,000.00;

Mr Sope assumed power over the assets of the VNPF, namely US$250,000.00, which power he did not have. He thus acted in breach of and outside of the law.

Mr Sope failed to consult Government legal and independent technical experts before executing the Heads of Agreement and thereby failed to properly administer his Ministry.

Mr Sope entered into the Heads of Agreement in respect of a proposed business when in fact it was not a matter proper for the Minister of Finance, but rather should have been dealt with by the Ministers for Commerce and Industry and Telecommunication.

The Board of the V.N.P.F. wrongly and in breach of the law sought to characterise its expenditure of US$250,000.00 upon the business investment as Government loans or bonds when such was not the circumstance. This may have been an attempt at false accounting, however it is more likely that occurred as a result of the Board (or some members of it) bowing to the political pressure that was placed upon it.

The Board of the VNPF failed to act independently and permitted itself to be the subject of pressure from the Mr Sope. By so doing it acted in breach of its duty as trustee of the Provident Funds held by it. I find that the conduct of Mr Malsungai, the chairman, was reprehensible and considerably worse that that of the other Board directors.

15.1 In 1991, Mr Sope, then a Minister of State, in response to a series of invoices from “Comptoir Material Professional” a company in Noumea, New Caledonia wrote personal cheques for a total value of CFP3,662,202. This company supplied Mr Sope with supplies for his motel, the Talimoru. These cheques were not paid. They “bounced”.

15.2 To write a cheque which is then not honoured is a very serious matter. To do so knowingly is fraudulent. For a Minister it is entirely unacceptable behaviour. Annexed and marked “F” are copies of the cheques and letters of dishonour from the Westpac Banking Corporation.

16 UNLAWFUL INTERFERENCE WITH THE VANUATU COMMODITIES MARKETING BOARD (“VCMB”)

16.1 In March 1996, without any lawful basis Mr Sope unilaterally ended the VCMB’s lawful monopoly over the copra market in Vanuatu. This was said to be because it would create competition which would ultimately benefit producers. The Ombudsman makes no criticism or comment otherwise about the policy reason behind the decision. However the policy reason behind the act does change what is illegal to legal.

16.2 Mr Sope would be well aware that the VCMB, by s2 of the VCMB Act [Cap 133], is the only body authorised by law to export copra. The section says:

From and after the commencement of this Act, no person other than the Board, its agents or persons authorised in writing by the Board shall export a prescribed commodity out of Vanuatu.

16.3 Yet in his letter dated 21 March 1996 to the General Manager of VCMB Mr Sope advised that a company called Carmille (Vanuatu) Ltd (“Carmille”) was:

16.4 Mr Sope at some point in May 1996 then purported to arrange for Carmille to be given export license authorising it to export copra. This act also does not make what was null and void from the start any less unlawful. Presumably this was Mr Sope’s attempt to clothe what he was doing with some veneer of credibility and legitimacy; in other words to try and make it look official and legal.

(a) the fact that, according to the Carmille’s 1995 annual return, prepared by its accountant and signed by one of its directors and its secretary, one of the beneficial owners of Carmille is his MPP party colleagues Hon Sato Kilman, the MP for Malekula; and

(ii) terminating the VCMB’s assistant General Manager and appointing Mr A Carlot in his place - all without any VCMB Board involvement.

Annexed as “G” is a copy of the 1995 annual return of Carmille showing Mr Kilman as a beneficial owner of Carmille. It also shows a Mr Ronald Joseph as a director who is a MPP party member. I also note that Carmille has a paid up capital of 200 vatu.

16.6 Carmille and Mr Sato Kilman were given a copy of this part of the report in its preliminary form. They replied that Mr Kilman was not and never has been a beneficial shareholder and that the annual return for the company was in error. A copy of the reply and attached documents are annexed to this report as “3”. Within the reply, Carmille’s accountants said:

“All operating and working capital for the company has been supplied by Isabell Gidley. Sato Kilman has provided other services and unpaid financial help’

“ . . . did not act in that role of Director or did not put any capital or funds into the company.

The other services that you [Mr Kilman]did provide as far as I am aware was to act as agent for the Carmille in Malekula and liaised on the company’s behalf with the ship owners in Santo.”

16.7 It is difficult not to view the explanation after the fact with some scepticism since an annual report of a company is document required by law, prepared by an accountant and signed off by a director and secretary as a correct statement of a company’s details. Whatever the details of ownership, Mr Sope’s actions to directly assist a company with which a party colleague (Mr Kilman) was involved with, at the least, in my view leaves both vulnerable to charges of conflict of interest. I leave it for the public to make up their own minds.

16.8 On 18 July 1996 Carmille wrote to the VCMB. Carmille asked to urgently “borrow” 1500 tonnes of copra. Mr Joseph said in this letter:

“This copra will be replaced immediately as we bag and run our copra up to Santo.”

16.10 On 24/07/96 VCMB’s General Manager, Mr F Kere wrote back and informed Carmille that it could not help. This letter too was copied to Mr Sope. Carmille wrote the next day repeating the request. Again this letter was copied to Mr Sope. Mr Kere agreed this time and gave Carmille three different options. However, what is not apparent from the letters is that Mr Sope’s secretaries, Mr Pekoa Kaltonga and Mr George Borugu were telephoning Mr Kere and his assistant Mr Crowby to put pressure on them to agree. I was informed by these men that VCMB agreed because they did not want to be seen as “an obstacle”.

“ . . . pay VCMB US$100,000.00 deposit guarantee against potential death (sic) freight charges for 1,500 MT to be borrowed and which shall be replaced in full with quality standard ensured acceptable to the VCMB before VCMB’s ship arrives in August, 1996.”

16.12 This “loan” of copra is worth about US$712,500 (@US$475/tonne). It was lent on the “security” of a US$100,000 security and a promise by a company with a paid up capital of VT200 to return it “in August”.

16.13 As at the date of this report all the “borrowed” copra has not been returned. Despite written requests from VCMB, by both Messrs Kere and Crowby in August 1996 to Carmille 600 tonnes of copra worth almost US$285,000 have not come back to VCMB.

16.14 Mr Crowby wrote to Carmille on 6 August 1996 asking for the VCMB’s copra back. Strangely enough, three days later Mr Crowby was “requesting” that Mr Sope terminate his job. Mr Alfred Carlot was appointed on the same day in Mr Crowby’s place. Annexed as “I” are copies of Mr Sope’s letters granting Mr Crowby’s “request” and appointing Mr Carlot. VCMB paid VT 1,000,000 to Mr Crowby to dismiss him illegally.

16.15 Mr Sope had no legal power to do this. Mr Sope acted illegally and arbitrarily. S9(1) of the VCMB Act says:

The Board shall appoint, at such remuneration and upon such terms as it thinks fit -

(c) such other officers and employees as may be required for the proper and efficient discharge of the functions of the Board.

16.16 S8(5) of the VCMB Act says that the decisions of the Board are to be by a majority vote. Therefore to dismiss Mr Crowby and appoint Mr Carlot the VCMB would have had to had met, considered the matters and then voted in favour of it. None of this happened. The Board did not vote, the Board did not meet. In fact there was no VCMB Board to meet. That raises the question why was there no Board. A Board, by s5 of the VCMB Act, is supposed to be appointed by the Minister responsible for Finance. This would appear therefore to have been Mr Sope’s responsibility. Mr Sope plainly was not doing his job. Mr Sope, however, by his actions showed that he considered that he could exercise powers of the VCMB Board and did so, again without any lawful authority.

17.1 In June 1996 I received a complaint from a “grass roots” Ni Vanuatu. Mr Y of Tanna says that he met Mr Sope in 1991 when Mr Sope was campaigning in that Island with his candidate for Tanna. Compared to some of the matters I have enquired into about Mr Sope this complaint was not big compared to others such as the US$100,000,000 guarantee scam. However, for this man it was significant. It also showed me that Mr Sope, in this case at least, does not care about the “grass root” Ni Vanuatu. For that reason I considered it important for my Office to look into the matter. Mr Y’s story goes as follows.

17.2 Mr Sope offered to buy 10 bags of potatoes from Mr Y. Mr Sope did not pay for the potatoes at the time. Mr Sope asked for Mr Y’s NBV account number and promised to pay the money into his account when Mr Sope returned to Vila.

17.3 Mr Y gave Mr Sope 5 bags to take on the plane and Mr Y arranged for the other 5 bags to be shipped. Mr Sope did not pay the money into the Mr Y’s account as promised. Therefore when the Mr Y’s boys travelled to Vila in 1991, 1992, 1993 they asked Mr Sope to pay for the potatoes. Mr Sope did not pay.

17.4 Finally, in June 1993 Mr Y went to Vila himself. He went to the Talimoru Motel. He found Mr Sope and asked for his money. Mr Sope told him not to worry and to come back at 2.30 pm. When Mr Y came back at 2.30 pm Mr Sope was not there. Mr Y still wants to be paid the money Mr Sope owes for the potatoes.

17.5 Despite two letters from the Ombudsman’s Office on 5 August and 25 September 1996 asking Mr Sope for his side of the story I am yet to receive a response detailing his explanation.

Finding No 1 - Unreasonable and unconstitutional duty exemptions (refer section 6 above)

18.1 Mr Sope acted unreasonably, contrary to the Constitution and the spirit of the guidelines in the custom’s schedule 3, by granting exemptions, to parliamentarians, to subsidise the cost of cigarettes and alcohol to private enterprise companies, and to effectively make items for personal use cheaper for politicians. He thereby lost the country in excess of VT 17,000,000 revenue. He also ignored a reasonable request for exemption on a 4WD vehicle in a rural community. By treating these applications differently, Mr Sope breached these parties’ constitutional right to equal treatment under the law.

Finding No 2 - Unlawfully and repeatedly acting without approval of the Council of Ministers (refer sections 7-10)

18.2 In attempting to purchase a Boeing B737, attempting to help start a cruise line, appointing “investment consultants” and “representatives” from Italy to act on behalf of Vanuatu, offering the possibility of guarantees Mr Sope has again acted unlawfully and has brought disrespect for his Office and the Government of Vanuatu.

Finding No 3 - Unlawful and political interference with the National Bank of Vanuatu (refer section 11)

18.3 Mr Sope (and some of those working under him in the Finance Ministry) blatantly abused his position of power to place pressure on a commercial bank to obtain loans outside normal criteria. Mr Sope acted almost as if the NBV was his bank. His actions in private are hypocritical when one reads his memo of 19 July 1996 to all ministries (refer 11.1 above) and his public speech to Parliament when presenting the 1996 budget. He condemned political interference but then did this very thing.

Finding No 4 - Securing unlawful loan for PH Swanson from NBV (refer section 12)

18.4 One of the worst examples of manipulation of the NBV is securing loans worth A$66,000 for Mr PH Swanson for use in a Government “project”. This was without the authority of the Government although Mr Sope clearly led NBV believe that it was. As at the date of this report this money is unpaid. The inevitable result is that respect for the Finance Ministry and Government will have been lost because they could not control Mr Sope to stop him from illegally obtaining this money.

Finding No 5 unlawful and political interference with the Vanuatu Commodities Board (refer 16.1-16.12)

(a) took over the VCMB Board’s authority in handling the country’s copra market;

(b) directed the VCMB to “lend” Carmille 1500 tonnes, 600 tonnes (US$285,000) of which is still unreturned;

(c) sacked Mr Crowby and replaced him with Mr Alfred Carlot with VCMB Board approval; and

Finding No 6 unjustified and unexplained failure to pay his debts (refer sections 16 &17)

18.6 It is very important that leaders do not and are not seen to be using their positions of power to avoid such basic responsibilities as paying one’s accounts. Mr Sope by failing to pay the two debts mentioned in this report or at least explain why they were not paid has shown himself as leader who sees himself as better or different from the grassroots. Mr Sope is no different and his attitude and conduct in these matters is contrary to the spirit and letter of the Leadership Code in the Constitution.

19.1 All duty exemptions given by Mr Sope and not used be cancelled and re-considered according to the law and reason.

19.2 The Duties Consolidation Act be amended to provide for strict and defined criteria so that exemptions are not granted in the absolute discretion of the Finance Minister. If the criteria are not met then the exemption cannot be granted unless by Act of Parliament. This will remove the opportunity for corruption.

19.3 That all letters appointing agents by Mr Sope without authority of Council of Ministers or Parliament be cancelled by the Attorney General writing to the recipients cancelling the same, including those included in this report.

19.4 That the Prime Minister require Mr Sope to disclose to the Prime Minister all letters of appointment and other such documents and instruments signed by Mr Sope and all such that are unauthorised be cancelled in writing by the Attorney General.

Instruction prohibiting interference by politicians and political appointees in matters outside their responsibility

19.5 The Prime Minister issue a written memo to all Ministers, politicians, political secretaries and appointees not to interfere with matters outside their responsibility, including, for example, not to write letters or put pressure on banks seeking loans or other favourable treatment on behalf of the others.

19.6 The VCMB and its Board not be subject to Ministerial interference and be allowed to make its decisions and conduct its business uninterrupted with the exception of general policy advice. The Attorney General advise on or the Government provide for payment of legal advice for the VCMB and to take any action against Mr Sope and any other party to recover the unreturned copra back to the VCMB. I understand that at the time I am making this pubic report, the new Board of the VCMB which has just been appointed has decided to start legal proceedings against Carmille.

Exclusion from Council of Ministers or other position of public responsibility and the leader of Opposition to formally reprimand Mr Sope

19.7 Single-handedly, Mr Sope has in the space of less than a year cost Vanuatu a fortune by reason of his repeatedly illegal and unauthorised conduct; enough to provide free education for years or to upgrade health facilities throughout the country or to run some Government departments for a year.

Because Mr Sope has repeatedly breached the Leadership Code in the Constitution, breached the letter and spirit of the Constitution and ignored and broken the laws of Vanuatu. I recommend that he never again be considered for a Ministerial post or any other position of public responsibility.

19.9 I recommend that the Public Prosecutor consider prosecuting Mr Sope under the Penal Code for, inter alia, making a false document (refer ss 139-141) and any other relevant provisions of that Act.

19.10 I recommend that the Public Prosecutor and the Attorney General consider the prosecution of Mr Sope under the Prevention of Fraud (Investments) Act [Cap 70] for, inter alia, for failing to hold a business licence to deal in securities.

ANNEX	DATE	DESCRIPTION	PG
A	29/07/96	L Sope to Mr Giovanni	1
B	30/04/96	L Sope to NBV	3
	07/06/96	L Sope to NBV	4
	26/06/96	L Sope to NBV	5
	11/07/96	L Kaltonga to NBV	7
	17/07/96	L Sope to NBV	8
	05/08/96	L Sope to NBV	9
C	29/03/96 29/03/96 12/04/96 17/05/96 17/05/96 29/05/96 16/07/96 17/10/96	L Sope to NBV L NBV to PH Swanson L NBV to Sope L Sope to NBV L NBV to Sope L NBV to Borugu L NBV to Sope L NBV to (cc) Sope	10 11 13 14 15 16 17 18
D D1	undated 02/08/96	Schedule of indebtedness of Sope and PH Swanson F Salerno to Sope	19 19a
E	14/09/06 undated	PC USER magazine Cybank Internet documents	20 21
F	15/08-15/10/91 05/08-18/09/91	6 Sope cheques 4 Bank dishonour notices	23 25
G	undated	Company search of Carmille	29
H	21/03/96 09/05/96 18/07/96 23/07/96 24/07/96 25/07/96 25/07/96 25/07/96 25/07/96 06/08/96 27/08/96	L Sope to VCMB L Sope to VCMB L Carmille to VCMB L VCMB to Carmille L Carmille to VCMB L VCMB to Carmille L Carmille to VCMB L Carmille to VCMB L Carmille to VCMB L VCMB (Crowby) to Carmille L VCMB to Carmille	36 37 38 39 40 41 42 43 44 45 46
I	09/08/96 09/08/96	L Sope to Crowby L Sope to Carlot	47 47

Vanuatu Ombudsman's Reports

Multiple Breaches of the Leadership Code and other Unlawful Conduct by Hon Barak T Sope [1996] VUOM 8; 1996.14 (10 December 1996)