Mismanagement of the Tender Sale of 10 Deportees' Properties by the Formet Minister of Lands Mr Paul Telukluk [1999] VUOM 9; 1999.09 (28 May 1999)

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MISMANAGEMENT OF THE TENDER SALE OF TEN (10) DEPORTEES’ PROPERTIES BY THE FORMER MINISTER OF LANDS, MR PAUL TELUKLUK

PUBLIC REPORT ON THE MISMANAGEMENT OF THE TENDER SALE OF TEN (10) DEPORTEES' PROPERTIES BY THE FORMER MINISTER OF LANDS, MR PAUL TELUKLUK

'The night is far spent, the day is at hand: let us therefore cast off the works of darkness, and let us put on the armour of light; let us walk honestly, as in the daylight, not in rioting and drunkenness'.

Once again, we have to report a series of actions, unlawful, unethical, which were deliberately undertaken by leaders in official positions (against advice faithfully given) whose purpose was to enrich friends and relatives and to deprive the public of funds which were sorely needed. The custom of rewarding political friends and family relations at the expense of those who are deserving, is very destructive of public welfare and can only lead to a weakening of the nation and destruction of the aims of the Comprehensive Reform Program.

It is obvious that strict and effective action must be taken to break this habit.

In 1995 the Department of Finance complained to the Ombudsman that the tender process adopted by the former Minister of Lands, Mr. Paul Telukluk, now Assistant Minister of Trade and Ni-Vanuatu Business to dispose of ten deportees' properties (which are now government property) was contrary to the Finance Regulations. The improper tender board appointed by Mr. Telukluk also acted contrary to the said Regulations.

This report concerns the ten (10) deportees' properties which were disposed of improperly by the tender board appointed by Minister Telukluk. Mr. Telukluk decided that the properties were to be disposed of through a tender process but failed to make sure that the tender rules in the Finance Regulations were complied with.

Minister Telukluk appointed mostly the supporters and sympathisers of his political party, the UMP as members of the tender board. This comprised Mr. Malakai Russell (his first political secretary), Mr. Roger Tary (the Lands Director), Mr. Havo Moli (the Executive Officer of the Sanma Province), Mr. Francois Luc Baba (Councillor at the Luganville municipality), Mr. Gaetan Pikioune (President of UMP Santo area) and Mr. Peter Tulangi (Lands Officer). Minister Telukluk did not have any authority to appoint members of a tender board. The board breached Article 5 of the Constitution by giving first priority to Ni-Vanuatu tenderers and to political supporters and therefore discriminating on the grounds of political affiliation and place of origin. The ten properties were disposed of so cheaply that the total amount of money from the tenders as approved by the tender board was only 14,858,940 vatu. A second tender board which was established in accordance with the Finance Regulations by the Department of Finance reviewed the tenders on 28 February 1996 and accepted the highest tenders amounting to 45,573,893 vatu.

After the first and improper tender board's decision, the Department of Finance had issued an instruction to the Department of Lands, the Ministry of Lands and the Department of Land Records not to process their leases as they were disposed of improperly and in contradiction to the Government Finance Regulations.

This instruction was ignored when Minister Telukluk and Mr. Roger Tary, the Director of Lands then, advised the Principal Lands Officer Mr. Steven Tahi and the officers of the Santo Urban Lands Office to prepare the leases giving the reason that the matter had been sorted out with the Department of Finance. However, the matter had never been sorted out. If the matter had been dealt with, there would not have been a second tender board set up to review the tenders. The leases were then registered at the Department of Land Records by Mrs Lloyd Russell and the Deputy Director Mr. Bernard Sorineala.

The conduct of Minister Telukluk and his improper tender board had resulted in three deportees' properties being transferred contrary to the Finance Regulations and at very low tender prices. According to the information obtained from the Department of Finance, the cheques for two of the properties were returned to the Bank but the two individuals remain the registered proprietors and continue to occupy the properties and nothing has been done to correct the situation.

(a) Minister Telukluk's appointment of the tender board members contradicted the Finance Regulations and it was done without the knowledge of the proper authorities.

(b) It was contrary to law and blatantly unreasonable for the tender board to approve the members' sitting allowances, reduce the high tenders and not follow the tender rules. Instead, the Board adopted its own rules to dispose of the ten properties.

(c) Minister Telukluk and the improper tender board's conduct contravened ALL of the tender rules under the Finance Regulations.

(d) Mr. Francois-Luc Baba should not have been part of a board considering his own tender for one of the properties, which was approved by the board. Mr. Baba’s participation in a tender board considering his own tender placed him in a conflict of interest.

(e) The Department of Lands, the Ministry of Lands and the Department of Land Records have contributed to the improper transaction of the three leases. Although they were informed well in advance by the Department of Finance not to process the leases until the irregularities in the first tender process were sorted out, none of them followed the instruction.

(f) By his actions related to the tender board, Mr. Paul Telukluk breached the Leadership Code Article 66 of the Constitution.

1.1 Under the Constitution and Ombudsman Act, I have jurisdiction to enquire into the conduct of government and related bodies, which includes the conduct of the Minister of Lands, the tender board he appointed, and departments within the Ministry of Lands. I also have jurisdiction to enquire into defects in law or administrative practice and possible breaches of the Leadership Code.

1.2 The Ombudsman Act No.14 of 1995 continued to apply to this case regardless of the recent repeal, since the investigation began while the Act was in effect (Interpretation Act [CAP 132] s.11).

2.1 The purpose of this report is to present my findings as required by the Constitution and Ombudsman Act.

2.2 The scope of this investigation is to ascertain the relevant facts with respect to the sale of 10 deportees' properties and to determine whether the conduct of former Minister of Lands Mr. Paul Telukluk, the tender board, and employees of the Department of Lands and the Department of Land Records was proper. The scope of investigation also extends to determine whether the administrative practice and/or relevant laws for the sale of government properties is defective.

2.3 This Office acquired relevant information and documentation by informal request, summons, correspondence, personal interviews and research.

3.1 After independence in 1980, Port Vila and Luganville became public lands, that is owned by the Government of Vanuatu rather than the custom owners. Subject to the leasing rights of registered alienators, that is people who had certain rights to land at independence, and to land legislation, the Government was then free to use or lease government properties as it saw fit. Certain properties, such as the houses formerly 'owned' by the British, French and Condominium governments, are under the control of the Prime Minister's Office, although the land itself is the responsibility of the Ministry of Lands. These are generally called 'government houses', and are maintained and used or rented (short-term) within government. Other properties, including those without registered alienators and those formerly belonging to deportees, are under the sole control of the Ministry of Lands as government property and are generally leased on a long-term basis under the Land Leases Act. (The latter category of properties were previously managed by Port Vila Urban Land Corporation and Luganville Urban Land Corporation prior to the dissolution of these corporations in 1988 for financial mismanagement).

3.2 Although the government, the real estate industry and the grassroots all refer to the 'sale' of houses or properties, such 'sales' are in fact long-term leases to a maximum period of 75 years. In most cases of government houses and land, these leases are exchanged for a premium payment representing the value of property (in full or in instalments) plus an annual rent for the duration of the lease.

3.3 There is to date no law, regulation or written policy which sets out the principles or criteria in respect of the long-term leasing ('sale') of government lands and houses. This Office has previously recommended in a report on the Improper Transfer of Land Lease Title 11/OE22/016 and in the recent report on Minister Telukluk’s acquisition of land that the government develop policies to ensure the sale of its land at fair market value. The Minister of Lands has sole authority to grant and sign leases for government lands. He has an advisory committee, the Urban Land Leases Selection Committee, which makes recommendations; however, this Committee also does not have written published criteria or guidelines by which to make its decisions, and the Minister need not follow or even consider its recommendations.

3.4 In this case the Minister did not lease land by just issuing a new lease. He chose the process of tender but failed to act in accordance with the tender rules in the Finance Regulations. This choice included some strong guidelines and requirements. The purpose of a sale by tender is usually to obtain the best market price on the land sold without regard to the identity of the purchaser.

3.5 On 18 August 1994 the Council of Ministers approved the sale of deportees' properties. The first ten(10) properties out of over 30 properties were chosen for sale by a tender process with the intention of selling the rest later, also by tender. The idea came about due to a lack of proper maintenance of the buildings by the government. They were deteriorating significantly, thus losing their values. The Government was also trying to identify its key sources of revenue from which to fund its services, one being the sale of the deportees' properties in Luganville, Santo.

3.6 On 9 May 1995 the Minister of Lands, Mr. Paul Telukluk, established a Tender Board to sell the first 10 Luganville deportees' properties by a tender process. He appointed the following individuals to the Tender Board, all of whom were affiliated with his political party (UMP).

3.7 On 11 May 1995 the Tender Board had its first meeting. The Board approved the sales value of the properties provided by the Valuation Unit within the Lands Survey Department and decided on a one-month tender notice period. The then Director of Lands, Mr. Roger Tary, proposed and it was approved by the Board that:

(a) The Board members be paid sitting allowances of 7,000 vatu for the Chairman and 5,000 vatu for members; and

(b) After the sale, the Board members be paid a bonus of 1% of the sale of the properties.

3.8 On 8 July 1995 the tender notice was advertised in the Vanuatu Weekly Newspaper. The deadline for receipt of tenders was 28 July 1995.

3.9 On 8 August 1995 Mr. Paul Telukluk appointed Solicitor General, Mr. Oliver Saksak as a member of the Tender Board, three months after his appointment of the first six members of the same board and just three days prior to the tender board meeting to consider the tenders (See Appendix B).

3.10 On 11 August 1995 the Tender Board met to consider the tenders submitted. The following criteria/guidelines were adopted and used by the Board:

(c) 'Merit' of the tenderer (See Appendix C) - Merit was undefined and left to the members of the Board to determine.

3.11 The tenders had previously been opened; they were not submitted in sealed envelopes to the meeting of the Tender Board. The Board proceeded to choose the successful tenders and, in a number of cases, chose a tender that was not the highest bid for the property. Furthermore, four tenders were substantially reduced, at the sole initiative of the Board, all in favour of UMP supporters:

It appears that their political allegiance is common knowledge and their allegiance was confirmed too by staff of the Santo Land office. Furthermore this allegation was sent to them in a preliminary report, and they did not challenge that allegation.

These tenders were apparently reduced by the Board because of the large difference between the bids and the government values.

3.12 One successful tender was that of Mr. François Luc Baba, a member of the Tender Board. Mr. Baba had seconded the government value of this property in the Board's first meeting, and together with the whole Board approved his own tender for this property at a bid slightly higher than the government value.

3.13 The Board approved tenders totalling VT 14,858,940 for the ten properties. Had they approved the highest tenders, the total would have been VT 38,851,248, a difference of VT 23,992,308.

3.14 On 8 September 1995 a month later, the then Solicitor General Mr. Saksak wrote to the then Director of Lands, Mr. Tary, and advised that the Tender Board was not 'legally established'. This was confirmed in his letter of 6 November 1995 to Mr Tary. On 28 September 1995 Mr. Roger Tary wrote to the Urban Lands Office in Santo telling them to stop processing payments from the applicants whose tenders were approved by the Tender Board on 11 August 1995, until further notice (see Appendices D and E).

3.15 On 27 October 1995 then Director General of Finance Mr. Jeffery Wilfred wrote to Mr. Tary confirming an investigation by Internal Audit, outlining some of the problems with the Tender Board proceedings and advising that 'all activities in the processing of the sale should cease hereforth until further notice.' His letter was copied to the Ministry of Lands, Department of Land Records and Attorney General's Chambers, among others (including the Ombudsman's Office)(See Appendix F).

3.16 On 6 November 1995 Mr. Saksak confirmed to Mr Tary that the decisions of the Tender Board in its two meetings were null and void (see Appendix D).

3.17 Despite all of this advice, the lease documents for the three properties which had been approved by the improperly appointed Tender Board were processed after the advice of the Solicitor General declaring them null and void and the Department of Finance's advice to Minister Telukluk, Roger Tary, and the Department of Land Records not to process the leases. The leases were certified by the Principal Lands Officer in Luganville, Mr. Steven Tahi, signed by Mr. Telukluk, and registered by Land Records Deputy Director Mr. Bernard Sorineala and Senior Officer Mrs. Lloyd Russell on the following dates:

Land Title	Lessee	Principal Lands Officer	Minister of Lands	Land Records
03/OI84/006	Joel Tovor	13.10.95	18.10.95	12.02.96
03/OJ83/039	Johan Lawac	13.10.95	15.11.95	15.02.96
03/OI72/065	Aline Vira	27.10.95	12.12.95	27.06.96

In explanation of his Office's actions, Mr. Tahi advised the Ombudsman Office that Messrs. Telukluk and Tary informed all officers of the Santo Urban Lands Office (including himself) that the differences between them and the Department of Finance were sorted out and that the leases should be processed. Mr. Tahi did not check with the Department of Finance. There was no explanation as to why these leases were registered by Land Records contrary to the advice given by Mr. Wilfred (See Appendix G).

In a sworn statement to this Office, a UMP supporter stated that Mrs. Aline Vira is related to the wife of Minister Telukluk. Mr. Johan Lawac is from Malekula, Mr. Telukluk's constituency and is a supporter of Mr. Telukluk's political party, the UMP. Mr. Roger Tary was also a supporter of UMP. He strongly believes that it was through these connections that Mr. Tary and Mr. Telukluk decided to process and approve the leases although they were advised well in advance not to process them. Besides this, the tenderers were also advised by the Department of Finance and Department of Lands not to acquire the properties but the advice was totally ignored.

3.18 A second Tender Board was established on 28 February 1996 in compliance with the tender procedures set out in Chapter 22 of the Finance Regulations to review the tenders for these ten properties. The Board consisted of Mr. Wilfred, Director of Finance as Chairperson, Mr. David Schupp, Internal Auditor as Secretary, and Mr. Michael Mangawai, acting Director of Lands as member. (See Appendix H)

3.19 The tender notice was published in the Vanuatu Weekly newspaper on 3 February 1996 and 17 February 1996. The three previous tenderers, Mrs. Vira, Mr. Lawac, and Mr. Tovor were advised by Finance Department to resubmit their tenders to the properly established tender board for consideration. They in return submitted their tenders knowing that the first tender board was not properly established following the Finance Department's advice to them. The Tender Board sat on 28 February 1996 to review the tenders, and in every case accepted the highest tender for each property. Unfortunately, the tenders for the three tenderers, Mrs. Vira, Mr. Lawac, and Mr. Tovor were unsuccessful(See Appendix H). The total amount for the highest tenders accepted for the ten(10) properties was VT 45,573,893.

3.20 Lease, title 03/OI72/024, in the name of Pierre Andrew. This was prepared by Mr. Tahi on 28 October 1996, signed by then Minister of Lands Joe Natuman on 29 December 1996, and registered by Land Records on 26 May 1996. Although Mr. Andrew's tender was in the amount of VT3,000,000 the lease was processed following his deposit of VT600,000. He owes the Government VT2,400,000 which is to be paid in instalment payments.

3.22 Mr. Johan Lawac and Mrs. Aline Vira's Westpac Bank cheques were returned by Finance Department and Mr. Lawac's lease fees were refunded by the Department of Lands for the properties acquired through the first Tender Board proceedings(See Appendices I and J). Despite this, the two individuals remain the registered leaseholders of the two properties. This Office has not been able to find any documents from the Department of Finance's files or the Department of Lands to prove that Mr. Joel Tovor's cheque and lease fees have been refunded. Mr. Tovor later confirmed to the Ombudsman in a letter that he was never advised by either the Department of Finance or the Westpac Bank of the refund of his monies. This was further confirmed by Westpac Bank. It was reconfirmed by Banque d'Hawai'i that a Westpac Bank cheque issued on behalf of Mr. Tovor was deposited into the Government of Vanuatu Santo Account on 18 December 1995. To date, the Director of Land Records has not used his power under the Land Leases Act (s. 99) to rectify the Register. As a result, the government has effectively ceded rights to the Vira and Lawac properties without earning a single vatu on them.

3.23 Mr. Andrew is in arrears of his premium payments. According to an agreement dated 9 August 1996, he must pay a monthly instalment payment of 35,000 vatu (See Appendix K). From August 1996 to November 1998, Mr. Andrew should have paid an amount of 945,000 vatu. To date he has only paid an amount of 510,000 vatu. He has an outstanding amount of 435,000 vatu. Failure by Mr. Andrew to follow the agreement and the non-action by the Department of Lands to follow-up the repayments had allowed Mr. Andrew not to pay the remainder of his payments. To date, the Lands Department has not taken action to recover the debt or terminate the lease and Mr. Andrew remains the registered leaseholder. He confirmed with the Ombudsman that he has not received any notice or warning from the Department of Lands to pay the outstanding amount.

3.24 None of the other nine successful tenderers in the second Tender Board proceedings was able to make the necessary payments to secure a lease.

3.25 It was recommended by Mr. Schupp in March 1997, and agreed upon by the Director of Lands, Mr. George Tambe, in April 1997, that all the outstanding deportees' properties should be re-tendered following updated valuations, and that tenderers be required to submit proof of financing with the tender (a letter from a bank or other financial institution).

3.26 Mr. Tambe advised this Office that the land valuations were completed by the Valuations Department, and that building valuations were completed but not released by Public Works because of a dispute over payment. These valuations are now out of date.

3.27 No other action has been taken to lease these nine properties and other deportees' properties in Luganville. The properties and buildings are apparently in a state of disrepair. The Government is currently not even earning rental income from these properties. The Director of Lands did not provide any explanation as to why the properties have not yet been retendered.

4.1 5(1) The Republic of Vanuatu recognises, that, subject to any restrictions imposed by law on non-citizens, all persons are entitled to the following fundamental rights and freedoms of the individual without discrimination on the grounds of race, place of origin, religious or traditional beliefs, political opinions, language or sex .... -

4.2 Chapter 18 of the Finance Regulations, established in 1993, requires Boards of Survey to be appointed by the Director General of Finance to 'verify the correct procedure concerning the disposal of Government property' (FR 313). The Board of Survey can recommend sale by auction, tender or fixed price, or that the property simply be written off (FR 316). Where the sale is by Tender, 'the matter should be passed on to the Tenders Board' (FR 320).

4.3 Chapter 22 of the Finance Regulations sets out the Tender procedures which presumably apply to disposal of government property, although this Chapter is placed in the context of the purchase of goods and services. The membership of the Tender Board is prescribed (FR 365). Other rules relate to advertising, sealing of tenders, opening and listing of tenders by a Board, and prohibiting individuals from sitting on a Board if they stand to gain from a tender (FR 362-366). The only criterion to be applied in awarding tenders is financial (the lowest bid for purchase of goods and services, impliedly the highest bid for disposal of property) (FR 368).

99(1) Subject to section 100(2), if it appears to the Director that any register does not truly declare the actual interest to which any person is entitled under this Act or is in some respect erroneous or imperfect, the Director after taking such steps as he thinks fit to bring to the notice of any person shown by the register to be interested his intention so to do, and giving every such person an opportunity to be heard, may as from such date as he thinks fit, rectify the register...

Every officer commits a disciplinary offence for the purposes of disciplinary proceedings who -

(b) in the course of his duties disobeys, disregards or makes wilful default in carrying out any lawful order or instruction given by any person having authority to give the order or instruction or by word or conduct displays insubordination;

(i) is guilty of any improper conduct in his official capacity, or of any other improper conduct which is likely to affect adversely the performance of his duties or is likely to bring the Public Service into disrepute.

66.(1) Any person defined as a leader in Article 67 has a duty to conduct himself in such a way, both in his public and private life, so as not 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.

(2) In particular, a leader shall not use his office for personal gain or enter into any transaction or engage in any enterprise or activity that might be expected to give rise to doubt in the public mind as to whether he is carrying out or has carried out the duty imposed by sub-article (1).

5.1 The full replies to the preliminary report are listed as appendices to this report. Below is a summary of each reply and comments.

(a) 'Only when a lease is presented for registration in registrable form that it is accepted for registration. There is no legal requirement for both the lessor and lessee to disclose the origin of any lease at the time they are lodged for registration, and upon acceptance of any such applications for the registration of a lease, Land Records Office is neither systematically required to investigate the origin of all leases'.

If Mrs. Russelll and the Director of Lands Records, Mr. Tamata had established a proper internal administrative procedure to double check any lease documents before registration, the Government would not have lost its revenues from the lessees who have acquired the deportees’ properties without paying any land premiums to the government. While these lessees continue to enjoy the use of government lands, the Government, Mrs. Russelll’s employer, continues to lose its revenue which belongs to the people of Vanuatu. Mrs. Russell could have helped stop this bad practice by refusing to register the leases until land premiums were paid had there been a proper and effective way of checking the documents before registering them and should have referred them to her Director Mr. Tamata, to make the decision.

(b) 'Unfortunately when the leases referred to in your report were lodged for registration, we were not informed that they were leases of deportees’ properties. Therefore they were processed and registered as any other leases'.

According to the Director of Finance’s letter of 27 October 1995 to the Department of Lands, which was also copied to the Department of Land Records, and the Ministry of Lands, they were informed not to process any lease documents for the deportees’ properties approved by the Board until appropriate action had been taken to sort out the matter. The leases were approved by Minister Telukluk in 1995 and it took three to six months for them to be registered in 1996. It is difficult to understand why Mrs. Russelll was never aware of the problem. She could have checked with the Santo Urban Lands Office to ensure that Luganville leases lodged for registration were not the deportees’ properties approved improperly by the improper Tender Board headed by her husband, Mr. Malakai Russell.

(a) 'At this same time, the Attorney General's Chamber (Oliver Saksak) and the Ministry of Finance (Jeffrey Wilfred) were fully aware of this matter: the AG since he attended the Council of Ministers meeting, and the Ministry of Finance since it had to do with collecting revenue for the Government'.

It might be true that the Attorney General attended the Council of Minister's meeting, but the Council of Ministers did not decide that the ten deportees' properties were to be disposed of through a tender process. This can be confirmed with the decision of the Council of Ministers dated 18 August 1994 and attached to this report as Appendix L. The decision was made by Minister Telukluk which resulted in an improperly appointed tender board. If Mr. Russell and Minister Telukluk had had a wider consultation with the Attorney General to advise them on the tender process before the appointment of the improper tender board, they both would have acted in accordance with the Government Finance Regulations. The Audit Section of the Department of Finance confirmed to the Ombudsman that the appointment of the tender board by Minister Telukluk and the processing of the tenders were done secretly.

(b) 'Therefore on 18th October, neither Oliver Saksak nor Jeffrey Wilfred who are considered as advisors to the Council of Ministers, did not advise either the Government or the Ministry of Lands on the right procedure to follow in keeping with existing laws'.

There has not been proper consultation by the Ministry of Lands with the Attorney General and the Department of Finance. There was no written request for advice by the Ministry of Lands to the Attorney General on the tender procedures. Mr. David Schupp from Internal Audit within the Department of Finance confirmed to the Ombudsman that the appointment of the tender board by Minister Telukluk was done without the knowledge of the responsible authorities. They were only aware of the tender board when one of the tenderers wrote to the Department of Finance complaining about the decision of the improper tender board. This reconfirms that there was no consultation between the Ministry of Lands, the Attorney General and the Department of Finance, and Mr. Schupp's advice that the appointment of the tender board and the consideration of the tenders were done without the knowledge of the proper authorities.

(c) 'With reference to your para. 3.6, I do not appreciate the way you point your finger at people. It is quite normal that the Minister should choose UMP supporters to fill in posts that are being sought out by the UMP Government. He could not really appoint VP or NUP supporters'.

Mr. Russelll’s statement reconfirms his ignorance of the Finance Regulations. The Regulations state very clearly who is eligible to be a member of a tender board, depending also on which department and ministry are responsible for a government asset to be disposed of by tender process. The Finance Regulations do not allow for politicians and party supporters outside the government to be appointed as members of a tender board. Minister Telukluk did not have any authority under the Regulations to appoint members of a tender board. If Mr. Russelll had known the content of the Regulations which are provided in both English and French languages, and are free at the Department of Finance, he would have advised Minister Telukluk that his appointment of the tender board was wrong. Regulation No.12 states that all public officers must be aware of the content of the Finance Regulations and that ignorance of its content shall not be accepted as a defence where a loss, error, or inaccuracy in any record of any type has been created by a public officer. Mr. Russelll was supposed to advise or check the Financial Regulations.

(d) 'In fact I have been a member of a number of Tender Boards in the Government and I know perfectly well how it works'.

Mr. Russelll’s statement contradicted the actions of the tender board of which he was the Chairman. If he had known how a tender board works, there would not have been reductions made to the tenders by his tender board. There is no section in the Finance Regulations which allows a tender board to reduce tenders. He would have also realised that appointing party supporters to the tender board by Mr. Telukluk totally contradicted the Government Finance Regulations. Regulation No.365 states very clearly who is eligible to be a member of a tender board. A minister like Mr. Telukluk does not have any power to appoint members of a tender board. These are the requirements laid down in the Government Finance Regulations in regard to tenders, which Mr. Russell failed to consider before he proceeded with the tender board to dispose of the ten deportees' properties. This Office has therefore reached the conclusion that Mr. Russell did not and still does not know how a tender board works. If he had known, he would have applied the relevant Finance Regulations. The whole process of setting up the tender board by Mr. Telukluk and the decisions made on the tenders by Mr. Russell (as Chairman) and his board members totally contradicted the Government Finance Regulations.

(a) 'Firstly, the report is too radical. The report makes no effort to indicate the qualifications of the members of the special committee in question. Why they came to be members in the first place or their role as members of the said committee'.

The report only talks about the actions of Mr. Baba and the other members of the tender board in dealing with the people's assets by disposing of them so cheaply. Despite the members’ qualifications, the tender board was not properly established under the Government of Vanuatu Finance Regulations.

(b) 'The report also quotes some regulation that no member of the Special Committee was aware of apart from the Legal Officer and I do not recall him making any mention of such a regulation because if he did, I would have left the Committee for the sake of maintaining my loyalty'.

Even the appointment of the Legal Advisor himself to the tender board was not in line with the Finance Regulations and he was appointed three(3) days prior to the tender board approving the tenders. Minister Telukluk, his first secretary Mr. Russell or Mr. Tary the Director of Lands, should have requested legal advice in writing from the Attorney General's Chambers before they proceeded to deal with the sale of the ten deportees' properties. Not being aware of the Regulations further confirmed that Mr. Baba and the other board members should never have been appointed by Minister Telukluk. They should have asked Mr. Telukluk or contacted the Attorney General about whether their appointment had any legal basis as soon as they received their letter of appointment, since the Legal Officer from the Attorney General's Office was appointed three(3) months later (and 3 days before the tender board meeting). There is no reason why Mr. Baba did not take any initiative to check with the Attorney General on the legality of his appointment three months earlier. They could also have checked with the Department of Finance as they were dealing with money matters. One month later, after the second meeting, the Solicitor General stated that the board was illegal.

5.5 The individual purchasers mentioned in this report all replied. Their responses do not dispute the facts and are appended to the report.

6.1 Finding 1: The conduct of the first Tender Board (Messrs. Malakai Russell, Oliver Saksak, Roger Tary, Havo Moli, Francois Luc Baba, Gaetan Pikioune and Peter Tulangi) violated fundamental rights set out in Article 5(1)(k) of the Constitution in giving priority to indigenous ni-Vanuatu. The first Tender Board with the exception of Mr. Saksak also violated fundamental human rights set out in Article 5(1)(k) of the Constitution by favouring their wantoks and political friends.

6.2 The Tender Board was engaged in administrative action in developing criteria and making decisions to lease government property (land and house) to certain individuals. The Board breached its obligation to give equal treatment without discriminating on the basis of race, place of origin and political opinion. They violated fundamental human rights protected by our Constitution.

6.3 It is worth noting with respect to this and the following two findings that Mr. Saksak retracted his support for the Tender Board within a month by stating his view that it was not legally established, and later confirmed that the Board's decisions were null and void.

6.4 Finding 2: The conduct of the first Tender Board in awarding themselves sitting allowances and a percentage of the value of the sales was contrary to law and blatantly unreasonable.

6.5 The Tender Board had no legal authority to grant itself allowances or a bonus. Most of these people were public servants and the Public Service Manual forbids public servants to receive such income.

6.6 Finding 3: The irregularities of the first Tender Board, especially the approval of member Mr. François Luc Baba's bid, created an unjust tender process.

6.7 Mr. Baba was obviously in a position to secure a winning bid, through his inside knowledge of the government valuation and the goodwill of his fellow Tender Board members and UMP supporters. Mr. Baba, with the approval or acquiescence of the other members, took part in the decision to award himself the tender. This is a blatant conflict of interest between his duty to secure the highest price for the government land and his private interest in the land. These advantages were unfair to others who submitted tenders for this property.

6.8 Other unjust irregularities include the fact that tenders were not kept sealed before being opened and read to the Tender Board at its meeting; four tender bids were reduced by the Board; the Board did not award the property to the highest bidder in each case; and improper consideration was given to the place of origin and 'merit' (political affiliation) of the tenderers. 'Merit' ended up being political affiliation, for wantok (including family members) and friends. All of these irregularities are contrary to proper, fair tender procedures such as those detailed in the Finance Regulations as follows:

6.9 Finding 4: The conduct of then Minister of Lands Mr Paul Telukluk in appointing a Tender Board of UMP political friends and directing the completion of certain leases despite the advice of the Department of Finance and the Solicitor General, was in breach of the Leadership Code.

6.10 Mr. Telukluk, a Minister and hence a Leader under the Constitution, allowed his integrity to be brought into question by favouritism toward his fellow UMP supporters. His actions contradicted Finance Regulations Numbers, 316, and 365 and the tender board was not instructed to follow any proper tender procedures. Furthermore, he directed his staff to proceed with issuing leases and he himself signed these leases after knowing that the Solicitor General had found the Tender Board not to be legally established and that the Department of Finance had directed all processing to cease. Minister Telukluk acted wilfully against the advice of the Solicitor General. He knew he was acting illegally and he still proceeded in order to give favours. Mr. Telukluk did not display the moral excellence required of leaders by our Constitution. He later on instructed lands officers to proceed with the transfers (3 leases of the deportees’ properties) as he said that the problems with the Department of Finance had been sorted out, when in fact they had not. He therefore even lied.

6.11 Finding 5: The actions of Mr. Roger Tary, Mr. Steven Tahi, Mr. Bernard Sorineala and Mrs. Lloyd Russell appear to constitute disciplinary offences under the Public Service Act.

6.12 Mr. Tary received a direction from the Director of Finance to stop processing leases from the first Tender Board, as well as advice from the Solicitor General that this Board was illegally established and its decisions were null and void. Nevertheless, Mr. Tary did not act to prevent the preparation, signing and registration of three leases. Together with the improper conduct of the Tender Board of which Mr. Tary was a member, he appears to have committed an offence under s.11 of the Public Service Act.

6.13 Mr. Tahi prior to receiving direction from Finance not to process the leases, was apparently advised by Mr. Tary and Mr. Telukluk to go ahead as the matter had been sorted out. Mr. Tahi was careless in his duties by proceeding without determining from the Department of Finance whether their instruction was no longer effective. Mr. Tahi appears to have committed an offence under s. 11 of the Public Service Act.

6.14 Although the Director of Finance advised the Department of Land Records that there should not be any transfer of the deportees’ properties until the matter regarding the Tender Board decisions were dealt with, Mrs. Russell and Mr. Sorineala went ahead to register three leases. The two Officers signed the lease documents to be registered on behalf of their Director Mr. Reuben Tamata. They too disregarded the above instruction, and were negligent and careless in carrying out their duties, actions which appear to constitute offences under s. 11 of the Public Service Act.

6.15 Finding 6: The Director of the Department of Lands Mr. George Tambe and the Director of the Department of Land Records Mr. Reuben Tamata have delayed taking appropriate action to lease the properties and to rectify the Register, without justification.

6.16 The Department of Lands has not followed the agreed-upon course of re-tendering all the deportees' properties in Luganville by using the procedures in Chapter 22 of the Finance Regulations. Although valuations were requested, they are now out of date and must be re-done. Three years have passed since the first Tender Board sat, and 2 1/2 years since the second Tender Board sat. The properties are apparently in a state of disrepair and are not earning revenue for the government. There is no explanation or justification for such costly delay.

6.17 The Department of Lands and the Department of Land Records have not taken action to rectify the Register which gives lease title to three individuals who acquired the leases through the first Tender Board. The Director of Land Records has the power to rectify the Register under the Land Leases Act (s. 99) but has not done so. Alternatively the Director could seek Rectification by the Court (s.100), but has not done this either. As a result of this inaction, government land is held by people who are not entitled to it and whose payments were refunded!

6.18 In addition, the Department of Lands has no documentation explaining how Mr. Andrew’s unpaid premium of VT2,400,000 is to be paid to the Government, although the Principal Lands Officer, Mr. Michael Mangawai who was also a member of the second Tender Board confirmed Mr. Andrew’s deposit (VT600,000) and the unpaid amount as mentioned above.

6.19 Finding 7: The administrative practices used in the long-term leasing of government properties are defective. In the absence of clear procedures in law, regulations or written policy, the 'sale' of government properties has been, and will continue to be, marked by inconsistency, injustice, favouritism and low government revenues (cheap sale value of properties).

6.20 The potential benefits of the Urban Land Leases Selection Committee are limited by the lack of principles and criteria, and also to their own bias to their wantoks, family and political friends and the fact that the Minister can circumvent or simply ignore the Committee's recommendations. Furthermore the Committee’s recommendations do not appear to have any directing policy guiding them in their decisions. The indecision over whether and when to use the procedures in the Finance Regulations leads to different procedures for different properties. Similarly, the joint responsibility over government houses by the Prime Minister's Office together with the Ministry of Lands leads to inconsistent procedures.

6.21 Ministry of Lands has not yet developed a coherent, fair system of leasing of government lands. As a result, government assets are wasted, government revenues are lost, and people interested in obtaining leases cannot expect a fair, impartial procedure. The people of this country have been losing revenue because of the low valuation (far under any market value) of these blocks. Only a few people benefit from this approach of Government land sales, not the people of Vanuatu.

RECOMMENDATION NO. 1: A COMPREHENSIVE POLICY AND MANDATORY PROCEDURES SHOULD BE PUT IN PLACE BY THE GOVERNMENT TO ENSURE THE PROPER AND FAIR LEASE OF GOVERNMENT LANDS AT FAIR MARKET VALUE

7.1 It is the most important measure for the Government to take and implement. The Government should create a proper policy and procedure, in the form of Rules under the Land Leases Act, to govern the lease of Government land. This measure was already recommended in a report on the Improper Transfer of Land Lease Title 11/OE22/016 that the Government develop policies and sell its land at market value, and in the recent report on 'The granting of leases by the Former Minister of Lands, Mr. P. B. Telukluk to himself, family members and wantoks'.

7.2 The policy and procedure must respect the Constitution (particularly equal treatment in s. 5 and the Leadership Code in s. 66), and must maximise the revenue (both lump sum and ongoing lease payments) for the benefit of the people of Vanuatu. As such, the policy and procedure must be designed to ensure that:

- Individual applicants are treated equally and without discrimination on the grounds of race, place of origin, religious or traditional beliefs, political opinions, language or sex;

- Favourable status may only be given in accordance with a program designed to benefit women, children, young persons, members of under-privileged groups or inhabitants of less developed areas;

- The discretion available to the Minister or other person or committee to choose among applicants is either eliminated entirely (for example, leased to occupant or by lottery) or kept to a minimum by utilizing strict criteria;

- The Minister or other persons empowered to approve applications may not make such decisions where they have a personal connection to the applicant or property, where there is or appears to be a conflict of interest, or where there may be personal gain;

- Valuation of government land leases which belong to the people of Vanuatu must be based on actual market value as assessed by qualified Valuation Officers for the purpose of collecting maximum revenue for the people of this country;

- Lands Officers are authorised to suspend the processing of a lease if it is not in accordance with the policy, Rules, Constitution or other laws of Vanuatu.

7.3 Land is a Government asset and should be leased in accordance with proper procedures. The people of Vanuatu have not been treated fairly when it comes to the lease of Government lands. Land should not have been leased on favourable terms to wantoks of people in power. The Government (and hence the people) has lost and continues to lose a lot of revenue through very cheap valuations produced by the Government Valuation Unit.

RECOMMENDATION NO. 2: MR TELUKLUK SHOULD NOT BE CONSIDERED TO HOLD ANY MINISTERIAL PORTFOLIO IN ANY FUTURE GOVERNMENT

7.4 Mr .Telukluk has had previous findings of maladministration and breach of the Leadership Code made against him in the following Ombudsman's public reports:

Mr. Paul Telukluk as Acting Minister of Finance in 1997 breached Finance Regulation No. 176 in authorising his own payment voucher as quickly as possible even though the Ex-Gratia payments were not authorised by Parliament.

(b) Improper Sale of Government houses by the Office of the Prime Minister under Prime Minister Maxime Carlot Korman.

Although Mr. Telukluk was advised by the Attorney General that the Sale was improper, he took no appropriate steps to stop the transfers and registration of the leases. He did it for his own benefit and the benefit of his political friends in Government then.

Mr. Telukluk placed himself in a position of conflict of interest between his official duty and his desire to serve the interest of his relatives when he used his ministerial power to grant the lease to Mr. and Mrs. Edmond Rory. He also breached the Leadership Code under Art. 66 of the Constitution.

(d) Illegal Tender Procedure adopted by Former Director of Lands Roger Tary and Former Minister of Lands Paul Telukluk for Canal du Segond ll and Pepsi water installation projects.

Mr. Telukluk instructed Mr. Tary to grant the two projects to Sowy Leing Company owned by the Malekula people and supporters of his political party, the UMP. He did this for his own political gain. The two projects were not done to standard and an amount of over 19 million vatu from public funds has been wasted on the projects. Mr. Telukluk's action totally contradicted the tender rules under the Government Finance Regulations.

(e) The granting of leases by the Former Minister of Lands Mr. P. B. Telukluk to himself, family members and wantoks

During his term, Mr. Telukluk assigned 15 titles to himself, members of his family and wantoks:

- In 2 cases signing the lease 2 days after he ceased to be the Minister of Lands etc...

Mr. Telukluk breached each and every section of the Leadership Code in the Constitution and acted unjustly and contrary to Art. 5 of the Constitution.

Mr. Telukluk has recently been appointed as Assistant Minister of Trade and Ni-Vanuatu Business.

Should he have committed these above breaches and the breaches outlined in this report after the 01.07.98, date of passing of the Leadership Code Act, he could have been prosecuted under this new law.

RECOMMENDATION NO. 3: MR TARY, FORMER DIRECTOR OF LANDS NOT TO BE CONSIDERED FOR ANY POSITION IN ANY FUTURE GOVERNMENT

7.5 Mr. Roger Tary has had previous findings of maladministration and breach of the Leadership Code made against him in the following reports made public by the Ombudsman's Office:

(a) Improper Sale of Government Houses by the Office of the Prime Minister under the former Prime Minister Mr. Maxime Carlot Korman.

Mr. Tary committed direct misappropriation when he proceeded with his own transfer of the government house without paying any monies to the Government for the property. He acted contrary to law and for his own gain to acquire the house.

Mr. Tary acted contrary to art. 5 of the Constitution by not treating equally the first applicant for the above lease. He instead made sure that the interests of Mr. Telukluk's relatives were served when he instructed his officers to process the lease documents for Mr. and Mrs. Edmond Rory for Mr. Telukluk's approval. He also breached the Leadership Code under art. 67 of the Constitution and s.14(12)(g) of the Ombudsman Act.

(c) Illegal Tender Procedure Adopted by former Director of Lands Roger Tary and former Minister of Lands Paul Telukluk, for Canal du Segond ll and Pepsi Subdivisions water Projects, Luganville

Mr. Tary was instructed by Mr. Telukluk to make sure that Sowy Leing Company which was owned by the Malekula people and supporters of his political party, the UMP get the two projects. Mr. Tary followed his instructions to grant the projects to the company even though it did not have qualified manpower, no experience, and no proper trading license. Mr. Tary's actions contradicted the tender rules provided in the Government of Vanuatu Finance Regulations. The works were not properly done and the Government has wasted over 19 million vatu which was paid to Sowy Leing Company. The payment was made possible due to the fact that Mr. Tary was responsible for signing payment vouchers.

It was recommended that Mr Tary should not be accepted as Director or officer of any government departments or government statutory body in future.

Mr. Tary was convicted and jailed in July 1996 (when he was still the Director of Lands) for misappropriation of public funds.

RECOMMENDATION NO. 4: MESSRS MALAKAI RUSSEL, ROGER TARY, HAVO MOLI, FRANCOIS LUC BABA AND PETER TULANGI NOT TO PARTICIPATE IN ANY TENDER BOARD IN FUTURE

RECOMMENDATION NO. 5: THE PUBLIC SERVICE COMMISSION TO CONSIDER DISCIPLINARY ACTION AGAINST MR PETER TULANGI

7.6 Mr. Tulangi as the secretary of the improper tender board was informed on 28 September 1995 by Mr. Tary not to collect any deposits from the tenderers until further notice. Despite this instruction, Mr. Tulangi failed to make sure that the leases were not registered. As a public officer, he was required by the Finance Regulations to know the content of the same and that ignorance of it cannot be accepted as a defence where errors are committed. Had he known the content of the Regulations, he would have advised the improper tender board that it was not following the tender rules. Mr. Tulangi's action has contributed towards the registration of government lands with no monies paid to the Government of Vanuatu, a great loss to the people of this country.

RECOMMENDATION NO. 6: THE PUBLIC SERVICE COMMISSION TO CONSIDER DISCIPLINARY ACTION AGAINST MRS RUSSEL

RECOMMENDATION NO. 7: PUBLIC SERVICE DEPARTMENT TO PUT THE REPORT IN THE PERSONAL FILES FOR MR STEVEN TAHI, FORMER PRINCIPAL LANDS OFFICER AND MR BERNARD SORINEALA, FORMER DEPUTY DIRECTOR FOR THE DEPARTMENT OF LAND RECORDS TO BE CONSIDERED BY THE PUBLIC SERVICE COMMISSION ON ANY FUTURE JOB APPLICATION TO THE PUBLIC SERVICE

7.7 Mr. Tahi was informed by Mr. Tary not to collect money deposits from the tenderers for the deportee's properties. Mr. Tahi after being instructed by Messrs. Telukluk and Tary to process the leases, he failed to check with the Department of Finance to make sure that their instruction was proper prior to preparing the leases. As a public officer he was also required by the Finance Regulations to know the content of the same. Ignorance of it cannot be accepted as a defence where errors or inaccuracies are made in any record of any type. Had he known the content of the Regulations, he would have helped to stop the improper transfer of the above mentioned leases. His action has also contributed to the loss of revenue to the government and the improper transfer of the said leases.

Mr. Sorineala made it possible for the tenderers to acquire legal rights over the deportees' properties when he registered the leases under their names. He had acted contrary to the instruction given by the Director of Finance not to process the lease transactions until the matter was dealt with. He too had contributed to the loss of revenue and improper transfer of these government lands.

Mr. Tahi and Mr. Sorineala were made redundant under the Government's Comprehensive Reform Program.

RECOMMENDATION NO. 8: THE DIRECTOR FOR THE DEPARTMENT OF LAND RECORDS SHOULD TAKE NECESSARY STEPS TO REVERSE THESE IMPROPER LEASE TRANSACTIONS IN CONSULTATION WITH THE ATTORNEY GENERAL. HE SHOULD ALSO CREATE AN INTERNAL SYSTEM WITHIN HIS DEPARTMENT TO PROPERLY CHECK ALL DOCUMENTS BEFORE THEY ARE REGISTERED, TO AVOID LOSS OF GOVERNMENT REVENUE AND IMPROPER LEASE TRANSACTIONS.

7.8 These lease transactions in favour of the three (3) lessees may possibly be reversed by rectification of the lease register under s. 99 or 100 of the Land Leases Act, or nullified as having been made contrary to law. The current Director of Land Records, with the advice and assistance of the Attorney General, should proceed with efforts in this regard. This may ultimately give the Government the right to repossess the land titles.

An internal effective system should be created at the Department of Land Records to properly check all documents before they are registered. This is to avoid the government losing its revenue as well as stop improper lease transactions.

RECOMMENDATION NO. 9: THE DIRECTOR OF LANDS TO FOLLOW UP ON MR PIERRE ANDREW'S OUTSTANDING INSTALMENT PAYMENT AND MAKE SURE THAT IT IS PAID, OR TAKE APPROPRIATE MEASURES TO HAVE THE LEASE FORFEITED UNDER SECTION 43 OF THE LAND LEASES ACT CAP. 163

8.1 To comply with Article 63(2) of the Constitution and Section 22 of the Ombudsman Act, the Ombudsman requests the Prime Minister, the Minister of Lands, the Director General for the Ministry of Lands, the Director of Lands, the Director of Land Records, the Attorney General and the Chairman of the Public Service Commission to consider these recommendations and to put them into effect.

8.2 The Office of the Ombudsman must be notified of the decision and proposed steps to implement these recommendations within 30 days of the date of this report.

Vanuatu Ombudsman's Reports

Mismanagement of the Tender Sale of 10 Deportees' Properties by the Formet Minister of Lands Mr Paul Telukluk [1999] VUOM 9; 1999.09 (28 May 1999)