‘Scam’ nearly costs

Special Reports

‘Scam’ nearly costs Vanuatu $100 million

Reports by Patrick Decloitre

Vanuatu Prime Minister Maxime Carlot on July 8 denied allega tions that the Island state could have faced bankruptcy after so-called “let ters of guarantee” had been issued for twice its reserves, saying it had “avoided something very serious”.

Speaking at a Press conference here, Carlot was reacting to a damning report made public by the Ombudswoman, Marie-Noelle Ferrieux-Patterson, who the week before had alleged Vanuatu could face bankruptcy because of a scheme involving letters of guarantee worth SUSIOO million signed by Carlot, his finance minister, Barak Sope, first secre tary, George Borugu, and Reserve Bank governor Samson Ngwele. The report said they had signed instruments to issue 10 letters of guarantee worth SUSIO million.

“Evidence has emerged that Vanuatu has been and still is at this moment the victim of a fraudulent scam,” she said.

She said that IOUs had been circulat ing internationally and “if these IOUs are presented Vanuatu can be bankrupted”.

She alleged that letters had been provided to the Finance Ministry which appeared to indicate that $U5250,000 would be gener ated from the SUS 100,000 by April 1998.

“This, in my view, is not possible in any circumstances,” she wrote in the report. She recommended the finance minister be dismissed and the prime min ister be “at least” reprimanded by the state president. “The ombudswoman has gone too far, she based her report on rumours,”

Carlot said, adding Ferrieux-Patterson should have observed the Secrecy Act and that she and the Press had “destabilised” the country.

He told journalists he did not intend to follow the ombudswoman’s recommenda tions in dismissing his finance minister.

The ombudswoman the same day stressed she met Carlot and his deputy,, Donald Kalpokas, on June 13 to present a preliminary report. “Fm bound by the constitution and the Ombudsman Act to give my report to the authorities con cerned and to make it public. This implies publication in the media,” she says. * On July 9, the ombudswoman repsond ed to Carlot’s comments against her as

“unjustified attacks”, saying that although

she had requested comments from Carlot, Sope and Kalpokas, no answer came.

“It is not the duty of the ombudsman to collude with the government to keep quiet about violations which they wish to cancel or label ‘confidential’. The prime minister declared again and again that he would have eventually taken action without the ombudsman’s intervention. I leave to the public to decide on the worth of this claim... Somebody at least was acting as a watchdog for Vanuatu interests ... I have acted according to law throughout. It is the government which has not acted in accordance with the law and made grave errors,” she said.

Vanuatu’s opposition leaders on July 11 demanded that Carlot resign for being involved in the alleged scam. Speaking at a Press conference here, former prime ministers Serge Vohor and Walter Lini and opposition leader Willie Jimmy said action needed to be taken quickly to rem edy “a very serious” political situation.

Jimmy said he was “ashamed to see the PM defend this scandal and lie to the peo

ple”.

“He has just sold the country for SUSIOO million.”

“If after this conference, we hear he resigns, our hearts would be lighter,” Lini said.

“Until the court case is over, we cannot ask anybody to resign,” Carlot said, adding he was surprised to see Jimmy ask for his successor’s resignation when

Vanuatu lost around SUS7O,OOO of public funds to the Waratah Group, a similar fraud when (Jimmy) was still minister of finance. Jimmy, a finance minister until late February, was last November found

guilty by the ombudswoman of breaching

the leadership code when he last year

granted “special” 24-hours-a-day, seven

days-a-week business licences to a liquor shop he was the major shareholder in.

Meanwhile, an Adelaide-based 44year-old Australian “financing consul tant”, Peter Swanson, who was arrested June 22 here in connection with the let ters, is remanded in custody pending his trial here and further advancement of the police investigation. On June 25, the Supreme Court charged him with “obtain ing property via false pretences”.

He was granted bail on condition that he surrendered the letters of guarantee, put up a surety of 90,000 US dollars and handed in a Vanuatu diplomatic passport which the court heard was issued by the Foreign Affairs Department. The Australian said he was “quite innocent” and that the operation he is alleged to have masterminded is “totally valid”.

“He infiltrated Vanuatu and the Ministry of Finance as a technician, a champion for winning money. The finance minister believed him, but the government investigated. And if we decided to arrest him, this is because of our findings,”

Carlot said. “We didn’t believe him and now there’s a liar in our jails. If someone has to pay, it will be him, not the govem

The Vanuatu Reserve Bank

ment. But I confirm we have perhaps avoided something very serious,” he admitted.

Carlot announced the 10 letters, which were held by a custodian bank there, had been repossessed by British police in London, and were to be shortly repatriated to Vanuatu “through diplomatic channels”.

“Not one vatu (the local currency) has been committed into this scheme, but because this report was made public, we lost 150 million vatu (SUSI. 3 million)”

from investors freezing planned spending

in the Island state or selling their vatu.

“Our reserves are untouched and safe,”

Carlot said, adding all documents and powers of attorney had been revoked.

The bank guarantees state “the under

signed (...) hereby irrevocably and uncon

ditionally without protest or notification promise to pay against this Bank guaran tee to the bearer or holder thereof, at matu rity, the sum of SUSIO million”. The Ombudswoman quotes Carlot as saying he “only signed the bank guarantees because he saw the signature of the governor of the Reserve Bank and thereby assumed that all proper authorisations had been given”.

“Swanson and his associates have claimed to be international securities deal ers,” Ferrieux-Patterson writes. “The promise was that the government of

Vanuatu would receive, on a risk-free basis, SUS2SO million over a 40-week period,” she adds, pointing out the “simi larities” with the recent Cook Islands scam. “In the Cook Islands, a power of attorney was also sought, it was not given.

In Vanuatu, it has been given.” Public Prosecutor John William Timakata said the Vanuatu police were liaising with sev eral law enforcement agencies overseas, including FBI, Interpol and Australia Federal Police.

After filing her report with the Vanuatu government 21 days ago, she stated the only reply she obtained from Sope (who formed a local company called New Resources Group Vanuatu Limited with

Swanson) was that the matter was “highly confidential” and “an essential project of the highest nature for Vanuatu”.

Vanuatu’s attorney-general, Oliver Saksak, also said the report had been released “prematurely”. Saksak said because the report contained classified documents on a politically sensitive matter that could have undesirable effects that could affect the safety of this country, it should not have been made public.

“It contains documents which are clas sified, so it’s still a classified document.

Also, the matter is still before the Court

and is currently being investigated,”

Saksak said.

Article 63 (3) of the Vanuatu Constitution states that the report of the Ombudsman shall be pubic unless he decides to keep the report, or parts of it, confidential to the prime minister and the person in charge of the relevant public ser vice, on he grounds of public security or

public interest.

“I sent the Ombudsman a letter by fax asking her not to release the report prema turely, but it is obvious that she has decid ed to go ahead”, the AG said.

“Everyone has to respect the law; under the constitution, the Ombudsman can release a report but she also has to observe provisions of secrecy,” he added. ■

Barak Sope...dismissal recommended