Deals under scrutiny

By Craig Skehan

IN the rural areas of Vanuatu’s 80-odd scattered islands, there is not a lot money floating around but in the picturesque capital of Port Vila it is quite a different matter. While a handful of locals are regulars at the casino of the Radisson Royal Palms Resort, others prefer to stick to business wheeling and dealing.

But some of the deals, made in the shadows and allegedly overlapping with the interests of people in positions of public trust, are coming under scrutiny.

In February this year, a commission of inquiry was given terms of reference covering matters ranging from the prices paid by government bodies for various buildings to the sale of government equipment and the awarding of tenders.

The head of the inquiry is Clarence Marae. He is a law graduate from the University of Papua New Guinea, but not admitted to the Vanuatu Bar. Marae had his own problems back in 1989 when he was convicted of accepting a bribe from an Asian logging company and fined. He says he accepted a loan from the company involved and that this was found to be a technical breach of the law.

“That was in the past but I don’t have anything to hide. In my view I didn’t do anything wrong,” he told PIM.

In any event, Marae says he is now

enthusiastic about tackling corruption

and irregularities in official decision making. Marae has so far handed to deputy prime minister and Minister for Justice Sethy Regenvanu an interim report and two final reports. They are expected to be tabled in parliament in November or December. The reports cover purchase by the Vanuatu National

Provident Fund of Moore Stephens’

House in Port Vila and allegations that politicians in the pre-1991 government of Walter Lini got personal loans from the Asian Development Bank (ADB). It is understood that Marae had recom mended prosecutions One term of reference on land sales involves former minister Barak Sope

Port Vila: one of the upper class residential areas in the capital

who is now an opposition MP. Others relate to government purchases of stevedoring equipment from local Dinh Van Than business family interests, 1978 government losses in relation to a Hong Kong company’s involvement with Air Vanuatu, alleged irregularities involving European Community agricultural subsidies, shipping deals, and land pur chases by the Vanuatu Development Bank. Marae says that prime minister Carlot Korman recently gave him some additional terms of reference involving other transactions and he now expects his inquiry to run until at least September of next year.

The big question is whether wrong doers will be charged, allowing the courts to fulfil their function of protecting the public by dispensing justice. If both sides throw mud then agree to a trade-off whitewash, not much will have been achieved. Marae says he can only recommend that charges be laid, as the office of public prosecutions has the final say. He believes that it’s time to make use of an existing unexercised provision of Vanuatu’s constitution allowing for the appointment of an ombudsman. “My view is that some of these types of cases could, and should, be handled by an ombudsman,” he said.

On another front, there is the perplex ing story of plans by Vanuatu treasurer Willie Jimmy to raise US$2OOO million (two billion) foreign loan. Vanuatu’s annual government budget is about US$5O million.

The Australian Waratah Group has dready been paid U 5575,000 by the

Vanuatu finance ministry as a brokerage

In Vanuatu, a corruption commission of inquiry has presented finalised reports on 2 specific terms of reference, recommending prosecution in one of the cases

fee for the claimed loan. According to correspondence already exchanged, the huge sum would be delivered by a firm called Hannes Lenz Gesmbh and Co, which is based in the Philippines capital, Manila. A letter signed by Jimmy nominates three Vanuatu Government officials Harry Collins, Wreath Buie and Edward Bani as being authorised to carry out loan raising negotiations.

All three men have been seen in Suva, Fiji, where they have apparently held meetings with representatives of the Waratah Group. Another letter from the finance minister dated June 1, 1993 and addressed to Peter Johnston and Allan Bristow of the Waratah Group states; “Please accept this letter of appointment as your legal mandate to represent the Ministry of Finance, government of Vanuatu, in the effort to syndicate US$2 billion to facilitate a loan for the development of projects in our country”.

The letter stated the money would be used for housing, power generation, oil refineries, telecommunications, agricul tural projects and health programs.

According to Helen Fraser’s Canberra-based Pacific Report newsletter, Peter Johnston on behalf of Waratah said Vanuatu would not be obliged to take up the whole loan and that a reinvestment package would be pro posed. Fraser said Vanuatu had been told it would be paying a variable interest rate of around four to six per cent on the borrowed money but would receive 15 per cent on reinvested funds.

Waratah maintains that the money available for lending consists of “good clean funds which have been cleared via world banking sources” and that Citißank is part of the transaction chain.

According to other documents, the alleged Philippines lender linked success ful conclusion of the loan to being given first right of refusal on oil and mineral exjploration as well as fishing, timber and infrastructure projects. Sceptics wonder whether large scale loan funds will come through at all. They note that if negotiations break down, the U 5575,000 brokerage fee already paid will be lost. In other parts of the Pacific in recent years, there nave been a number of cases of big foreign loans being offered to govern ments. But in many instances, the deals looked like a ploy by scheme operators to get up-front money then disappear.

Many people in the Vanuatu finance ministry have heard local stories about huge transfers of funds. After all, Vanu atu is a long-established tax haven and financial centre used by international money men. Maybe this has helped to foster a new political cargo cult which believes wealth can wash up on your shores if you have the right connections. □

apital: the main street in downtown Port Vila