dollar nightmare
pp. 42-43 · Read in the full issue
Cooks' multi-million dollar nightmare
THE Cook
Islands commer cial sec tor says the country needs to be exorcised from the nightmare it plunged into when government entered a series of often fool ish, sometimes seem ingly dubious finan
cial deals that landed the nation in an extraodinary financial mess.
Missing from draw downs from an Italian bank to build the Vaimaanga Hotel in Rarotonga is an estimated NZ$2O million - and business people say, the exocism means finding out
what happened to those missing millions.
That job has been given to the Public Expenditure Review Committee. But PERC’s lack of finances to con duct a full investigation requiring tracing paper work back to Italy, may mean Cook Islanders will never find out what hap pened. Chairman Mike Mitchell says they are still deciding whether to tell government they don’t have the resources to conduct a full investi gation.
“The Cook Islands public have a right to know where those mil lions went - a new govern ment must mount a full scale investigation,” said a businessman who did not want to be named.
Leaked official records draw a strange
picture of the deals the government entered into. It all began in December 1987 when the government entered into a building contract with Italian building company SICEL SpA. Despite international advice concerning SICEL SpA’s financial stability, a draw down in excess of
$2O million of the loan went ahead. But no work or materials were ever supplied. The Cooks lost about $25 million when Sicel collapsed - money that has dis appeared.
This is the area of greatest concern
to Cook Islanders. Allegations are that if there had been any backhan ders or instances of bribery, it would have been in this area.
A new building contract is negoti ated with another Italian company Stephany SpA - but the building con tract was never properly publicly ten
dered in the manner usually adhered to by governments. Business people ask, because of this, what assurances did Cook Islanders have it was fair?
By November 1992, Stephany is well behind on construction work and requested a delay in final draw
downs. The Italian compa ny also wanted extra money - over $lO million to complete the hotel. This was unusual - a contractor wishing to complete a hotel having over-runs almost half the size again of the original building contract.
Allegations have been made that either the con tractors architects and quantity surveyors were totally incompetent or there were backhanders.
Italian government’s Treasury finally pulled the plug on the project after they found out they were guaranteeing a loan of about $7O million for a hotel worth only between $45 million to $5O million.
Work on the building stopped because the flow of money also stopped the Italian bank refusing to pay out more without
insurance protection from the Italian government.
Despite the shonky deals and total uncertainty facing the incomplete hotel, prime minister Sir Geoffrey Henry made numerous announce ments predicting breakthroughs. But between 1995 to 1998 nothing was accomplished by government.
Cook Island Sir Geoffrey Henry, seen here at a recent meeting in Hawaii, has a lot on his plate back home
Meanwhile interest and penalty rates were mounting - the building was rotting away and equipment rusting in the end the Cooks was faced with a $126 million dollar debt that would be a burden for every Cook Islander to carry.
Because of unpaid land rentals, landowner Pa Ariki took over owner ship of the Vaimaanga Hotel. The para mount chief negotiated a sale to two overseas entities which has seen work recommence on the incomplete hotel.
Calls on the prime minister and his main negotiator Vincent Ingram to clarify what happened to the missing millions have brought forth no satis factory explanations over the years.
A political observer says for the rul ing Cook Islands Party it’s much more than winning the next general elec tions - “they need to stay in to perpet uate the cover-up.”
Widely known is that without prior Cabinet approval, Vincent Ingram was
given free rein to spend funds held by ECIL —the company government set up to oversee the hotel’s construction.
Ingram reported only to the prime min ister. Also known is on that basis Ingram bought a Mercedes which he kept in Auckland for his own use.
Records of the extravagant spend ing in Europe and elsewhere by Ingram and Sir Geoffrey is contained in the Book of Shame produced by New Alliance Party leader Norman George .
Ingram’s work was rewarded by gov ernment - he got the post of Cook Islands High Commissioner to Australia.
Some business people say with another general election due, govern ment needs to “come clean and tell people what happened to those mil lions.”
And if government won’t or can’t, then a full scale inquiry by qualified fraud investigators must happen, they say. ■