Commission of Inquiry into Special Agriculture and Business Leases: Final Report

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    Report of the Chief Commissioner, John Numapo

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    COMMISSION OF INQUIRY INTO
    SPECIAL AGRICULTURE & BUSINESS LEASES (SABL)

    COMMISSION OF INQUIRY INTO THE SPECIAL
    AGRICULTURE AND BUSINESS LEASE (SABL)

    FINAL REPORT

    John Numapo
    Chief Commissioner
    Port Moresby

    24th June, 2013

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    COMMISSION OF INQUIRY INTO
    SPECIAL AGRICULTURE & BUSINESS LEASES (SABL)

    EXECUTIVE SUMMARY

    This is our Final Report. It differs markedly from our Interim Report in structure and content layout
    as a direct result of the manner in which the government received our Interim Report. This change
    of strategy on our part, amongst other imperatives, is a full acknowledgement that the government
    is entitled to demand of us a Final Report of a kind that suits its purposes. However we do have a
    duty to report the truth as we discovered the truth through our investigations, in the context of our
    own experiences as well as offer best options on the way forward.

    This Commission of Inquiry (COI) was established by Acting Prime Minister Hon. Sam Abal MP
    pursuant to his powers under Section 2 of the Commission of Inquiry Act (Chapter 31) on 21st July
    2011 to investigate and inquire into SABLs and their operations.

    Growing concerns over the way in which SABLs were being acquired and the manner in which
    SABLs were being used for dubious agriculture and business purposes, as some instances indicated,
    generated heated debate. It was estimated that over 5.2 million hectares of customary land around
    the country had been alienated, mostly for ‘special agriculture activities’ over virgin forest tracts
    containing tropical hardwoods. It was estimated that more than 400 SABLs have been issued over
    customary land since the early 1980s to the time this COI was set up.

    The turnkey event that singularly galvanized government into action was the James Cook University
    conference in Cairns, Australia in March of 2011 where social and environmental scientists, natural
    resource managers and non-governmental organizations from Papua New Guinea (PNG) and other
    countries met to discuss future management and conservation of PNG’s native forest. An anecdotal
    figure of 5.2 million hectares of customary land being alienated through SABLs was first noted at
    that conference. It was resolved there that appropriate actions be taken to halt further grant of
    SABLs by Department of Lands and Physical Planning and issue of Forest Clearance Authority (FCA)
    by PNG Forest Authority. The conference called for an inquiry to be set up by government to
    inquire into the application, registration, processing and issue of SABLs. The conference further
    called for a moratorium to be imposed on processing of SABL applications while the inquiry was
    being carried out.

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    The government moved proactively and set up this COI. By a set of wide Terms of Reference (TOR)
    this COI was directed to investigate seventy-two (72) SABLs scattered around the country. During
    the course of our inquiry three (3) more SABLs were added, increasing the total number of SABLs
    we needed to investigate to seventy-five (75).

    We were initially tasked to complete inquires within three (3) months, by which time we were to
    provide a Final Report containing our findings and recommendations to the government. The initial
    three months was simply inadequate. We were directed to investigate a large number of SABLs and
    the wide ranging TOR obligated us to carry out investigations into many aspects. Critical intervening
    factors affected our progress too. Therefore an extension of a further three months was given.
    However, as it turned out, the extra time also proved inadequate. Our recommendation for the
    government to properly fund and capacitate future Commissions of Inquiry like ours is fully
    informed by hardships we faced.

    We adopted a three phased approach to our inquiry. The first phase involved a combined sitting of
    all three Commissioner Waigani, through which we received preliminary evidence from our Legal
    and Technical team on the 75 SABLs. Preliminary evidence was presented in the form of Opening
    Statements. Evidence provided in the Opening Statements was primarily sourced from Government
    Printing Office (National Gazette); Department of Lands and Physical Planning (DLPP); Department
    of Agriculture and Livestock (DAL); Department of Environment and Conservation (DEC); Papua
    New Guinea Forest Authority (PNGFA); Papua New Guinea Investment Promotion Authority (IPA);
    and through a combined presentation from the National Research Institute (NRI) and the National
    Land Development Program (NLDP) office.

    In the second phase the COI was divided into three teams, composed of a Commissioner and legal
    and technical officers, and dispatched to conduct onsite hearings in respect of the 75 SABLs
    individually.

    The third and final phase was a final hearing, conducted by the Commissioners separately or jointly
    as appropriate, to consolidate and adjust evidence contained in the Opening Statements with
    evidence gathered during the onsite hearings.

    For the record, phase two and three activities were disrupted by funding and other issues,
    including critical intervening events that have plagued this Inquiry.

    We provide a summary of our findings in the context of the legislative foundation for SABLs, the
    Department of Lands and Physical Planning processes by which customary land is acquired by the
    State and leased back to the customary landowners or their nominees, and the network of inter-
    departmental approvals and regulatory processes that facilitate agriculture and business activities
    on SABLs.

    SABLs are facilitated through Sections 11 and 102 of the Land Act 1996 (the Land Act) working
    together. The State acquires customary land under Section 11 of the Land Act through an
    “instrument of lease in an approved form”. The Land Investigation process, which is normally

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    carried out for the State to acquire customary land under Section 10 of the Land Act (Acquisition by
    Agreement), is also utilized to obtain informed consent of the affected landowners before their
    customary land is acquired and converted to SABL. The “instrument of lease” in Section 11 of the
    Land Act is often referred to as ‘Lease Agreement’ or ‘Head Lease’ in DLPP practice terms. Land
    acquired under Section 11 of the Land Act is simultaneously re-leased by title deed to an “agreed”
    person or entity under Section 102 of the Land Act as SABL. Hence the use of the term ‘lease-
    leaseback’ is both descriptive of the lease and re-lease of land back to the landowners, and the
    SABL process itself.

    We recommend that the current SABL setup be done away entirely. We have carefully considered
    the option of retaining the SABL setup as an optional method for availing customary land for
    national development. We have fully considered retaining the SABL setup with more stringent
    safety features. In the end our view is that the inherent risks associated with the option are
    unacceptable because we believe any reforms to the law or process may not satisfactorily remove
    the loop holes, inadequacies or permissive ambiguities that are being used to abuse the SABL
    process and hijack land use after SABLs are granted.

    Whilst we do note that there are some success stories, especially in relation to relatively smaller
    SABLs, we have discovered serious problems with most of the SABLs. Our findings in all the
    individual SABLs are set out appropriately, with their full details and respective recommendations.

    This COI’s main outcomes maybe categorized into four broad thematic areas:

    (i) In the first part we suggest way forward recommendations. We recommend that the
    mechanism for acquiring and releasing customary land as SABLs for land based development be
    reviewed with a view for it to be replaced with a better and risk free option. We recommend that a
    land policy platform that underpins land access and use options be adopted. We recommend that
    DLPP practices be streamlined and strengthened. We recommend that a better option for accessing
    customary land for development be identified and process pathway which clearly shows all the
    vital stop points on that better option’s process path be mapped out.

    (ii) We further recommend that the processes within DAL, PNGFA, DEC, and IPA be fully
    reviewed and mapped, to indicate their operating linkages. We have found inadequacies in all the
    respective implementing agencies. We therefore recommend options for their capacity and
    structural adjustments.

    (iii) In the second part we deal with SABLs we found to be irregular. We identify any irregular
    SABLs and describe the nature of their irregularity and provide options for rectification or
    nullification as the case may be.

    (iv) Thirdly we recommend prosecution of all persons and entities implicated in any unlawful
    activity.

    (v) Our final and signature recommendation is that the government urgently settle a National
    Land Policy platform. We recommend a critical review of all land laws to harmonize practice and

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    procedures for the land laws and their requirements, which will definitively settle the Overarching
    National Land Policy. A policy platform will set the foundation for harmonizing the legal framework
    and pave the way for the State to access customary land in a non-threatening and landowner
    friendly way.

    (vi) We recommend that this National Land Policy be settled first so that the legislative and
    process reforms, as well as capacity and structural adjustments for implementing government
    agencies, can be informed in the proper context.

    As we did in our Interim Report we acknowledge the cooperation of representatives of the
    agencies of government that deal with SABL, namely DLPP; DAL; PNGFA; DEC; IPA; and Department
    of Provincial and Local Level Government (DPLLG) and respective Provincial Governments of the
    provinces where the 75 SABLs are located, all stakeholders, all interested parties and everyone who
    came forward to provide information and assistance to this COI.

    John Numapo
    Chief Commissioner
    Port Moresby

    21 June, 2013

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    TABLE OF CONTENT

    Pages

    FOREWORD……………………………………………………………………………………………………… 1-5

    A. INTRODUCTION

    1. Background…………………………………………………………………………………. 9-10

    2. Establishment of the Commission of Inquiry……………………………………. 10

    3. Terms of Reference……………………………………………………………………… 11-12

    4. List of Special Agriculture & Business Leases (SABLs)……………………….. 12-16

    5. Legislative and Policy Framework on SABL………………………………………. 16-19

    6. Roles of Government Agencies in SABL…………………………………………… 19-52

    B. FINDINGS & RECOMMENDATIONS ON INDIVIDUAL SABLS

    7. SABLS:-

    (i) Roselaw Limited (Portion 160C)………………………………………………………. 53-70
    (ii) Ainbai-Elis Holdings Ltd (Portion 40C)………………………………………………. 70-80
    (iii) Nuku Resources Ltd (Portion 26C)……………………………………………………. 80-92
    (iv) Vanimo Jaya & One Uni Development Corporation ……………………………. 92-104
    (Portion 248C)
    (v) Wammy Limited (Portion 27C)…………………………………………………………. 104-117
    (vi) West Maimai Investment Ltd/Yangkok Resources Limited…………………… 117-128
    (Portion 59C)
    (vii) Bewani Palm Oil Development Ltd (Portion 160C)………………………………. 128-147
    (viii) Konekaru Holdings Ltd (1) – (Portion 2465C)………………………………………. 147-161
    (ix) Konekaru Holdings Ltd (2) – (Portion 2466C)………………………………………. 161-170
    (x) Veadi Holdings Ltd (Portion 2485C)……………………………………………………. 170-179
    (xi) Changhae Tapioka (PNG) Ltd (Portions: 444C; 446C; 517C;…………………… 179-202
    518C; 521C & 520C)
    (xii) Okena Goto Karato Development Corporation Ltd ………………………………. 203-211
    (Portion 146C)
    (xiii) Musida Holdings Ltd (Portion 16C)……………………………………………………… 212-213
    (xiv) Musa Valley Management Co. Ltd (Portion 17C)………………………………….. 213-225
    (xv) Kemend Kelba Kei Investment Ltd (Portion 155C)………………………………… 225-230
    (xvi) Porom Coffee Ltd (Portion 302C)………………………………………………………. 230-235
    (xvii) Hewai Investment Ltd (Portion 351C)………………………………………………… 235-239

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    C. SUMMARY OF FINDINGS

    8. Findings on Government Agencies Responsible for SABL:-

    (i) Department of Lands and Physical Planning…………………………. 241-249
    (ii) Department of Provincal and Local Level Government…………… 249-251
    (iii) Department of Agriculture and Livestock……………………………… 251-254
    (iv) PNG National Forest Authority…………………………………………….. 254-258
    (v) Department of Environment and Conservation. ……………………. 258-259
    (vi) Investment Promotion Authority………………………………………….. 259-260

    9. Lack of Co-operation between Agencies………………………………………….. 260-261

    10. SABL Failed at Implementation Stage………………………………………………. 261-262

    D. MAIN RECOMMENDATIONS

    11. Current SABL Process – Recommendations for Improvement…………….. 262-267
    12. Way Forward for SABL – Land Reforms……………………………………………. 267-270

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    E. ACRONYMS

    1) COI Commission of Inquiry
    2) DAL Department of Agriculture & Livestock
    3) DEC Department of Environment and Conservation
    4) DLPP Department of Lands & Physical Planning
    5) DPLLG Department of Provincial Affairs & Local Level Government
    6) IPA Investment and Promotion Authority
    7) PNGFA Papua New Guinea Forest Authority
    8) SABL Special Agriculture & Business Leases
    9) TOR Terms of Reference
    10) FCA Forest Clearance Authority
    11) LIR Land Investigation Report
    12) LGIS Land Geographical Information System
    13) CoA Certificate of Alienability
    14) EIA Environment Impact Assessment
    15) EIS Environment Impact System
    16) NADP National Agriculture Development Program
    17) CHEC Changae Ethanol Corporation
    18) EIR Environment Inception Report
    19) OGKDC Okena Goto Karato Development Corporation Ltd
    20) MoA Memorandum of Agreement
    21) VPL Victory Plantation Limited
    22) MVMCL Musa Valley Management Company Limited
    23) MCL Musa Century Limited
    24) FMA Forest Management Agreement
    25) NFB National Forest Board
    26) LIP Land Investigation Process
    27) NARI National Agriculture Research Institute
    28) NLDP National Land Development Program

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    A. INTRODUCTION

    1. Background
    The introduction of Special Agriculture and Business Lease (SABL) by the government
    was noble and well-intended but with no proper checks and scrutiny overtime,
    scrupulous individuals and corrupt government officials took advantage and abused the
    SABL process. This resulted in land held under customary tenure been drastically
    reduced from 97% to 86% representing a decline of 11% in customary landownership
    over the years. This present a huge problem in a country such as PNG where bulk of its
    population live in rural areas and are subsistence farmers living on their land for
    sustenance and survival. In addition, the present population growth at 7.5% has now
    made customary land become scarce giving rise to land disputes and other social and
    law and order problems.

    Land under the lease-leaseback for Special Agriculture and Business Leases (SABL) is not
    meant to be sold or permanently alienated. The title held in SABL by a leaseholder is
    only temporary and the land reverts back to the customary landowners after the
    expiration of the lease. And because the acquisition of title is for temporary period only
    no payment of rent or compensation (for conversion to title) by title holders is
    permitted.

    SABL was introduced in the late 1970’s to encourage customary landowners to free up
    their customary land for business and other economic activities. It was established
    essentially to create business opportunities for the local people and empower them to
    participate meaningfully in the economic development of the country. The lease-
    leaseback scheme is intended to create a good title over the land which can be used as
    collateral to obtain mortgage for business activities.

    The primary reason for the State’s involvement in the lease-lease back is two-fold:
    firstly, converting customary land into a State lease provides the guarantee and the
    security for purposes of bank loans and; secondly, the State has a duty to protect and
    safeguard the interests of customary landowners to ensure that customary land is not
    permanently taken away from them (total alienation).

    The lease-lease back scheme was introduced because of the long delay in the
    introduction of customary land registration and the delays encountered in the tenure
    converting customary land. Tenure converted land was subject to very strict limitations
    which discouraged banks and other lenders from lending money on tenure converted
    freeholds. With the lease-leaseback, there are no legal limitations and it provided a

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    better security. Once the land is leased to the State it becomes a State Lease and
    classified as “alienated land” and customary laws including rights and practices over the
    land is suspended for the term of the lease. The State Lease is registered under the
    Land Registration Act (Chapter 191) and is governed by the provisions of that Act and
    the Land Act (Chapter 185). It would then be treated as a normal lease just like any
    other State leases recognized by law with government guaranteed title to the land. The
    only difference is that the land reverts back to the landowners after the expiration of
    the lease.

    2. Establishment of the Commission of Inquiry (COI) into Special Agriculture
    & Business Leases (SABL)
    The Commission of Inquiry (COI) into the Special Agriculture and Business Leases (SABL)
    was established by the Acting Prime Minister Hon. Sam Abal, MP by virtue of his powers
    conferred under Section 2 of the Commission of Inquiry Act (Chapter 31) through an
    Instrument dated 21st July, 2011. The instrument also appointed the following
    Commissioners:

    (i) John Numapo – Chief Commissioner & Chairman

    (ii) Alois Jerewai – Commissioner

    (iii) Nicholas Mirou – Commissioner

    The Counsel Assisting and other technical staff were also appointed to assist the COI
    consisting of the following:

    (i) Simon Ketan – Counsel Assisting

    (ii) Paul Tusais – Senior Counsel assisting the Counsel Assisting

    (iii) Jimmy Bokomi – Assisting Counsel

    (iv) Mayambo Peipul – Senior Technical Advisor

    (v) Mark Pupaka – Technical Advisor

    (vi) Avia Koisen – Technical Advisor

    (vii) Wemin Boi – Technical Advisor

    (viii) Mathew Yuangu – Secretary to COI

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    3. Terms of Reference (TOR)
    The Terms of Reference (TOR) provided and gives the Commission of Inquiry into the
    Special Agriculture and Business Lease (SABL) specific reference points to investigate
    and inquire into and report on them.

    The COI into the SABL were given the following Terms of Reference (TOR):

    (a) Determine the legal authority for the issuance of SABL; and

    (b) Determine the procedure for the issuance of SABL in accordance with the legal
    authority if any; and

    (c) Inquire into and confirm the number of SABL issued to date and the particulars of
    each including:-

    i. location; and

    ii. customary ownership whether there are any disputes regarding SABL; and

    iii. prior informed consent and approval by customary landowners for the issue
    of SABL over the particular customary the subject of each SABL; and

    iv. in whose name the title to the SABL is held; and

    v. if not in the customary landowners name then in whose name is the
    particular SABL title is held; and

    vi. if not in the customary landowners name then by what authority and
    whether it is lawful under the relevant legislation for the title to be held by a
    non-customary landowner of the land the subject of the particular SABL; and

    vii. if all of the matters in the preceding sub-paragraph (i) and (vi) involved duly
    granted approvals and permits from the Departments of Agriculture and
    Livestock; Environment and Conservation; Lands and Physical Planning and
    PNG Forest Authority; and

    viii. inquire into and determine if the requisite or subsequent approvals
    determined under proceeding sub-paragraph 3 (vi) were lawful and duly
    obtained; and

    ix. inquire into and determine if Forest Clearance Authority (FCA) in respect of
    each SABL complied with the proportionate agriculture development input;
    and

    x. inquire into and determine if FCA in respect of each SABL complied with the
    Environment Permit terms and conditions; and

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    xi. inquire into and determine if any official or individuals, both citizens and
    foreigners have engaged in unethical and/or criminal conduct in the course
    of the operation of each SABL including:

     employment of illegal Immigrants; and

     engagement in illicit or illegal trade including sale and consumption of
    drugs, prostitution, firearms and pornography; and

     unethical conduct in the disregard for the customs and traditions of
    the local area and sacred grounds; and unlawful and unethical
    mistreatment of the local people in undermining their dignity and
    respect; and

     inquire into and assess the effectiveness of existing legal and policy
    framework in the improved management of SABL in future including
    facilitating the applications from legitimate applicants; and

     inquire into and determine if all of the seventy-five (75) SABLs covering
    approximately 5.2 million hectares of customary land in PNG had
    complied with the existing legal and policy framework, incorporation
    of Land Groups Act 1974, the Land Act 1996, the Forestry Act 1991 and
    the Environment Act 2000.

    Note:

     There are certain aspects of the TOR (e.g. Clause xi (i) – (iii)) that were not investigated
    in greater detail due to time constraints and lack of resources.

    See Appendix ‘1’ for the following:

    (i) Instruments of Appointments

    (ii) Statement of Case

    (iii) Terms of Reference (TOR)

    4. List of Special Agriculture & Business Leases (SABLs) referred to the COI
    A total of seventy-two (72) SABLs were referred to the COI but during the course of the
    inquiry another three (3) more SABLs were added on. It is interesting to note that from
    the list that many of the SABLs were subleased to the developers for a period up to 99
    years for the same period as granted under the head-lease. This effectively means that
    the land owners have transferred all their rights to the developers leaving no residual
    rights of any kind to the land owners. In effect, the subject land has been ‘totally

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    alienated’ from the customary landowners and given to the developers who are, in
    most cases, foreigner companies or entities.

    Out of the seventy-five (75) SABLs referred to the COI, a total of fifty-eight (58) were
    granted 99 year leases under a ‘sub-lease’ arrangement. Five (5) SABLs were granted a
    70 year leases, two (2) were granted 50 year leases, one (1) was given a 45 year lease
    and eight (8) were given 40 year leases. One of the SABL does not have any detail
    relating to the term of the lease but it presumed that a 99 year lease would have been
    granted as a standard practice similar to the majority of the other SABLs.

    FULL LIST OF THE SEVENTY-FIVE (75) SABLS

    *(Refer to Annexure “1”)

    GAZETTED SPECIAL AGRICULTURE AND BUSINESS LEASES GRANTED TO COMPANIES NUMBERED

    NO GRANTEE Term Area Land Description
    (Years) (Hectares) Provinc Notes
    Portion Project Developer e
    1 VAILALA OIL PALM 99 11,800.00 377C GULF In process
    LTD
    2 TRUKAKE LIMITED 99 120.70 46 No record ENBP No record
    3 BARAVA LIMITED 99 244.7/00 307 No record ENBP No record
    4 LOLOKORU 45 1750.00 1C NBPOL NBPOL WNBP No record
    ESTATES LTD
    5 BAINA AGRO – 40 42,100.00 29C Baina Nasyl 98 CENTRA Approved
    FOREST Agroforestry L
    6 ROSELAW LTD Idumava Multi- Dynasty
    99 25.118 2541C Purpose Real Estate NCD No record
    Marine Facility (RH
    Subsidiary)
    7 PULIE ANU ?? see also
    PLANTATION 99 42,233.00 396C Pulie Oil Palm WNB No record
    Project Below
    8 VANIMO JAYA LTD West Aitape One-Uni
    & ONE UNI 99 47,626.00 248C (Port 248C) Developme WSP Approved
    DEVELOPMENT Agroforestry nt
    CORPORATION Project Corporation
    9 ZIFASING CATTLE 50 8374.23 79 No record Morobe No record
    RANCH
    10 PERPETUAL 50 283.29 19C No record GULF No record
    SHIPPING LTD
    11 CASSAVA ETAGON 99 20,000.00 884C No record NIP No
    HOLDINGS LTD record/DNPM
    12 EMIRAU TRUST 99 3,384.38 53C-58C No record NIP No record
    (LIMITED)
    13 CHANGHAE 40 1656.00 519C Cassava Changae CENTRA Not
    TAPIOKA (PNG) BioFuel Project Tapioka L FCA/Approve
    LIMITED (PNG) Ltd d
    14 CHANGHAE 40 74.87 444C Cassava Changae CENTRA Not
    TAPIOKA (PNG) Biofuel Project Tapioka L FCA/Approve
    LIMITED (PNG) Ltd d
    15 CHANGHAE 40 66.77 446C Cassava Changae CENTRA Not
    TAPIOKA (PNG) Biofuel Project Tapioka L FCA/Approve
    LIMITED (PNG) Ltd d
    16 CHANGHAE 40 2,514.00 517C Cassava Changae CENTRA Not
    TAPIOKA (PNG) Biofuel Project Tapioka L FCA/Approve
    LIMITED (PNG) Ltd d

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    17 CHANGHAE 40 3,573.00 518C Cassava Changae CENTRA Not
    TAPIOKA (PNG) Biofuel Project Tapioka L FCA/Approve
    LIMITED (PNG) Ltd d
    18 CHANGHAE 40 2,514.00 521C Cassava Changae CENTRA Not
    TAPIOKA (PNG) Biofuel Project Tapioka L FCA/Approve
    LIMITED (PNG) Ltd d
    19 CHANGHAE 40 2,514.00 520C Angoram Brilliant CENTRA Not
    TAPIOKA (PNG) Integrated Investment L FCA/Approve
    Project Ltd d
    20 BRILLIANT 99 25,600.00 146C Tufi Wanigela Victory ESP Approved
    INVESTMENT Agroforestry Plantation
    LIMITED Project Ltd
    21 OKENA GOTO 99 28,100.00 146C Yumu Agro- Aramia ESP Approved
    KARATO Forestry Project Plantation
    DEVELOPMENT Ltd
    CORPORATION LTD
    22 YUMU RESOURCES 99 115,000.00 30C CENTRA Approved
    LTD L
    23 KOARU RESOURCE 99 59,460.00 323C Kerema Agro- Pacific Approved
    OWNERS forestry Palm Internation Gulf
    COMPANY LIMITED Oil Project al
    Resources
    (PNG) Ltd
    24 RAKUBANA 99 24,581.00 871C Danfu SABL Tutuman Approved
    DEVELOPMENT Developme NIP
    LTD nt Ltd
    25 TABUT LIMITED 99 11,864.00 885C Mamiru SABL Tutuman NIP Approved
    Dev Ltd
    26 UMBUKUL LIMITED 99 25108.00 886C No Record NIP Approved
    27 CENTRAL NEW 99 56592.00 887C Central New Tutuman NIP Approved
    HANOVER LIMITED Hanover SABL Dev Limited
    28 MEKEO 99 116,400.00 45C Mekeo Albright Approved
    HINTERLANDS Hinterland Oil Limited CENTRA
    HOLDINGS LTD Palm Project L
    29 WOWOBO OIL 99 23,180.00 4C Wowobo Oil Reko (PNG) GULF Approved
    PALM LIMITED Palm Ltd
    Plantations
    30 AKAMI OIL PALM 99 231.20 104C Roka Mini Oil Expection Approved
    ESTATE LIMITED Palm Estate Hicks WNBP
    Constructio
    n Ltd
    31 AKAMI OIL PALM 99 345.75 2628C Roka Mini Oil Expectation No record
    LIMITED Palm Estate Hicks WNBP
    Constructio
    n Ltd
    32 POMATA 99 15,000.00 196C Sigite Mukus Gilfford Ltd No record
    INVESTMENT Integrated WNBP
    LIMITED Development
    Project
    33 NAKIURA 99 16,100.00 198C Sigite Mukus Gilfford Ltd No record
    INVESTMENT Integrated ENBP
    LIMITED Development
    Project
    34 RALOPAL 99 11,300.00 197C Sigite Mukus Gilfford Ltd No record
    INVESTMENT Integrated ENBP
    LIMITED Development
    Project
    35 BEWANI PALM OIL 99 139,909.00 160C Bewani Oil No record
    DEVELOPMENT Palm WSP
    LTD Development
    36 SEPIK OIL PALM 99 116,840.00 144C Turubu Wewak Approved
    PLANTATION LTD Integrated Agriculture ESP
    Agriculture Developme
    Project nt Ltd
    37 RERA HOLDINGS 99 68,300.00 2C Mukas Melkoi DD Lumber No Record
    LIMITED Integrated Ltd WNBP
    Agricultrue

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    Project
    38 ABEDA AGRO 99 11,700.00 409C Abeda Albright Approved
    FOREST LIMITED Integrated Limited CENTRA
    Agro-forestry L
    Project
    39 AKIVRU LIMITED 99 6,111.00 398 Puli Anu Oil Monarch No record
    Palm Project Investment WNBP
    s Limited
    40 IVAGA OUROUINO- 99 10,741.00 397 Puli Anu Oil WNBP No record
    MUSENAMTA Palm Project
    41 POLOPO LIMITED 99 8,328.00 35 Puli Anu Oil WNBP No record
    Palm Project
    42 KAVUN LIMITED 99 7,161.00 34 Puli Anu Oil WNBP No record
    Palm Project
    43 GORORANTO 99 8,893.00 33 Pulie Anu Oil WNBP No record
    LIMITED Palm Project
    44 MUSIDA HOLDINGS 99 211,600.00 16C Revoked – now n/a ORO Approval
    LIMITED (Court part of Portion Withdrawn
    Revoked) 17C
    45 EAST WAII OIL 99 21,108.00 5C ?? GULF No record
    PALM LIMITED
    46 AIOWA OIL PALM 99 12,341.00 6C ?? GULF No record
    LIMITED
    47 NUKU RESOURCES 99 239,810.00 26C Nuku (Port 26C Skywalker WESTE Approved
    LIMITED Integrated Global RN
    Agro-Forestry Resources
    Project (PNG) LTD
    48 TUMU TIMBERS 99 790,800.00 1C Kumul Dosa Rimbunan ESP & No record
    DEVELOPMENT Hijau WSP
    LTD
    49 LA-ALI 70 7,170.00 5C Wawoi Guavi Rimbunan WESTE Pending (in
    INVESTMENTS Oil Palm Project Hijau RN process)
    LIMITED
    50 MUDAU 70 10,450.00 6C Wawoi Guavi Rimbunan WESTE Pending (in
    INVESTMENT Oil Palm Project Hijau RN Process)
    LIMITED
    51 GODAE LAND 70 15,153.00 7C Wawoi Guavi Rimbunan WESTE Pending (in
    GROUP INC Oil Palm Project Hijau RN process)
    52 HAUBAWE 70 11,110.00 8C Wawoi Guavi Rimbunan WESTE Pending (in
    HOLDINGS Oil Palm Project Hijau RN process)
    LIMITED
    53 FOIFOI LIMITED 70 33,900.00 9C Wawoi Guavi Rimbunan WESTE Pending (in
    Oil Palm Project Hijau RN process)
    54 UNUNG SIGITE 99 13,000.00 27C Sigite Mukus Gilford WNBP Approved
    LIMITED Integrated Limited
    Development
    Project
    55 KONEKARU 99 457.00 2465C Konekaru Activities CENTRA No record
    HOLDINGS LTD Holdings under PNG L
    LNG
    56 KONEKARU 99 98.00 2466C Konekaru Activities CENTRA No record
    HOLDINGS LTD Holdings under PNG L
    LNG-
    Leighton
    (PNG) Ltd
    57 TORIU TIMBERS 99 11,240.00 904C ENBP Approved
    LIMITED
    58 TORIU TIMBERS 99 42,240.00 903C ENBP Approved
    LIMITED
    59 MAPSERA 99 54,384.00 54C ESP In Process
    DEVELOPMENT
    CORPORATION LTD
    WEST MAIMAI
    60 INVESTMENTS LTD 99 149,000.00 594C WSP Approved
    & YANGKOK
    RESOURCES
    LIMITED. PALAI

  • Page 16 of 272

  • 16

    RESOURCES LTD
    (JOINT TENANTS)
    61 POROM COFFEE 99 24.10 302C WHP No record
    LIMITED
    62 VEADI HOLDINGS 99 1057.45 2485C CENTRA No record
    LIMITED L
    63 KEMEND 99 41.30.00 155C WHP No record
    KELBAKEI
    INVESTMENT LTD
    64 TOSIGIBA 99 632,538.00 14C WESTE No record
    INVESTMENT RN
    65 NORTH EAST WEST 99 470,642.00 1C WESTE No record
    INVESTMENTS LTD RN
    (NEWIL)
    66 NORTH EAST WEST 99 149,117.00 27C WESTE No record
    INVESTMENTS LTD RN
    (NEWIL)
    67 MUSA VALLEY 99 320,060.00 17C ORO Approved
    MANAGEMENT
    COMPANY LIMITED
    68 WAMMY LIMITED 99 105,200.00 27C WSP Approved
    69 AINBAI-ELIS 99 22,850.00 40C WSP In process
    HOLDINGS
    LIMITED
    70 HEWAI 99 358.00 351C SHP No record
    INVESTMENT LTD
    71 PURARI 99 656,034.00 8C (GP) GULF No record
    DEVELOPMENT
    ASSOCIATION INC
    72 OSSIMA 99 31,430.00 163C WSP In process
    RESOURCES
    LIMITED
    73 VAILALA OIL PALM 99 11,800.00 377C GULF In process
    LIMITED
    74 URASIR 99 112,400.00 16C MOROB In process
    RESOURCES E
    LIMITED
    75 NUNGAWA 99 109,580 55C ESP Approved
    RAINFOREST
    MANAGEMENT
    ALLIANCE LIMITED

    5. Legislative & Policy Framework on SABL
    (i) Legislative Framework

    There are a number of legislations that provides the basic legal framework for the
    administration of SABL. The agencies of government responsible for SABL assume
    their powers and authority from these legislations to discharge their respective
    functions, roles and responsibilities pertaining to SABL.

    The principal legislation that deals specifically with SABL is the Land Act 1996.
    Sections 11 and 102 of the Land Act 1996 relates to acquisition of customary land.

    Sections 11 and 102 of the Land Act 1996 are set out below.

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  • 17

    Section 11 – ‘Acquisition of Customary Land for the Grant of Special Agricultural
    and Business Lease.’

    Sub-section (1): The Minister may lease customary land for the purpose of
    granting a special agricultural and business lease of the land. Sub-section (2):
    Where the Minister leases customary land under Subsection (1), an instrument of
    lease in the approved form, executed by or on behalf of the customary
    landowners, is conclusive evidence that the State has a good title to the lease and
    that all customary rights in the land, except those which are specifically reserved
    in the lease, are suspended for the period of the lease to the State. Sub-section
    (3): No rent or other compensation is payable by the State for the lease of
    customary land under Subsection (1).

    Section 102 – ‘Grant of Special Agricultural and Business Leases’.

    Sub-section (1): The Minister may grant a lease for special agricultural and
    business purposes of land acquired under Section 11.

    Sub-section (2): A special agricultural and business lease shall be granted-

    to a person or persons; or

    to a land group, business group or other incorporated body,

    to whom the customary landowners have agreed that such a lease should be
    granted.

    Sub-section (3): A statement in the instrument of lease in the approved form
    referred to in Section 11 (2) concerning the person, land group, business group or
    other incorporated body to whom a special agricultural and business lease over
    the land shall be granted, is conclusive evidence of the identity of the person
    (whether natural or corporate) to whom the customary landowners agreed that
    the special agricultural and business lease should be granted.

    Sub-section (4): A special agricultural and business lease may be granted for such
    period, not exceeding 99 years, as the Minister seems proper.

    Sub-section (5): Rent is not payable for the special agricultural and business lease.

    Sub-section (6): Sections 49, 68 to 76 inclusive, 82, 83, 84 and 122 do not apply to
    or in relation to a grant of a special agricultural and business lease.

    Sub-section (7): Notwithstanding anything in this Act, a special agricultural and
    business lease shall be effective from the date on which it is executed by the
    Minister and shall be deemed to commence on the date on which the land subject

  • Page 18 of 272

  • 18

    to the lease was leased by the customary landowners to the State under Section
    11.

    Sections 11 and 102 basically outline a ‘two-step processes’ in acquiring
    customary land for SABL purposes. Firstly, the State acquires a lease over the
    customary land which is often referred to as the ‘head lease’. The head lease is
    executed between the Minister for Lands & Physical Planning on behalf of the
    State and the customary landowners or their representatives pursuant to Section
    11 of the Land Act. The customary landowners must give their consent and sign
    the relevant lease documents to indicate that they are fully aware of the State’s
    acquisition of their land for SABL purposes. The second step involves the State
    leasing the land to a nominated developer (lessee) for Special Agriculture and
    Business purposes under a ‘sub-lease’ arrangement agreed to by the customary
    landowners pursuant to Section 102. In most cases, the sub-lease will outline the
    type of agricultural project and/or business activities to be undertaken on the
    land leased for SABL.

    (ii) Policy Framework

    There is no clear policy framework per se on SABL. The absence of a proper policy
    framework on SABL has resulted in ad hoc procedures and practices been used.
    This has resulted in abuse and manipulation of the process by corrupt individuals
    and people with vested interests. The Acting Secretary of the Department of
    Lands & Physical Planning (DLPP) Romily Kila-Pat in his evidence to the COI stated
    that there are no clear policy guidelines on SABL since the concept on lease-lease
    back was introduced. Mr Kila-Pat admitted that the department has failed to
    develop a workable policy framework that guides the administration and
    management including the implementation of SABL. 1 There is no clear policy
    particularly outlining the process and procedures relating to the application,
    processing, registration, approval and issuance of SABL titles. In the absence of a
    clearly prescribed procedures on SABL, DLPP often applies the same process that
    it uses for other general land acquisitions such as using of the ordinary ‘tender
    forms’ to apply for an SABL lease or advising prospective applicants to submit an
    ordinary letter of ‘expression of interest’ for an SABL lease. The significance of
    SABL is eroded by this ad hoc practice. To correct this defect, DLPP developed a
    set of new “proposed process and procedures”2 in 2011 to guide the process on
    SABL. Mr Adrian Abby, Acting Deputy Secretary Customary Land Services told the
    inquiry that the new ‘proposed process and procedures’ were developed because
    of concerns raised by the public over the manner in which SABL was managed. He

    1
    Affidavit “Exh. RKP 1” – Annexure „1‟
    2
    Affidavit “Exh. AAE 2”at p.2

  • Page 19 of 272

  • 19

    admitted that DLPP had to react quickly to the growing public concern and debate
    over the SABL processes. The whole purpose of the new procedures was to
    ensure clarity, consistency and certainty in the entire process.

    The lack of a proper policy framework has made it difficult for DLPP to properly
    manage SABL in a transparent and accountable manner as we discovered in our
    inquiry. There are no proper checks and balances which resulted in abuses and
    unethical practices creeping into the whole SABL process. Instances of abuse and
    malpractices are highlighted in the individual SABL reports.

    The COI note with concern that since the introduction of the SABL scheme in the
    late 1970’s, successive governments through their responsible agencies have
    failed to develop relevant and appropriate policy framework to guide the
    implementation of SABL resulting in massive procedural abuses on the lease-lease
    back scheme.

    6. Roles of Government Agencies in SABL
    There are five (5) agencies of government that are responsible for the administration
    and management of SABL. Their functions relates particularly to the SABL process from
    application, to registration, processing, and approval including issuing of titles for the
    SABLs. The agencies are; Department of Lands and Physical Planning (DLPP);
    Department of Environment and Conservation (DEC); National Forest Authority
    (PNGFA); Department of Agriculture and Livestock (DAL) and Department of Provincial
    Affairs and Local Level Government (DPLLG).

    The Investment Promotion Authority (IPA) also plays a significant role in ensuring that
    companies intending to carry out business in the country must comply with the laws of
    the country. It provides information relating to the company structure, shareholding in
    the company, names of shareholders and directors and the nature of their business
    operations. The information obtained from IPA has greatly assisted the COI to
    determine whether or not companies involved in SABL are conducting the exact nature
    of business they are registered to do in the country. We note instances of abuse of
    business permits by a number of companies engaging in different business activities
    from what they are originally registered to do. Instances of such abuses are highlighted
    in the individual SABL reports.

    There are other departments such as the Department of Transport, Department of
    Commerce and Industry and Department of Works that are also required to play a role
    in SABL but have not done so. For example; the ‘road line’ project requires the input
    and oversight of the departments of Transport and Works. Business activities other
    than agro-forestry projects would require the involvement of the department of

  • Page 20 of 272

  • 20

    Commerce and Industry. Department of Labour and Employment input is also required
    especially for foreign work permits and labour hire and mobilization for SABL projects.

    We outline below the respective roles, functions and responsibilities of the agencies.

    I. Department of Lands and Physical Planning (DLPP)

    The Department of Lands and Physical Planning (DLPP) is the ‘lead agency’ of
    government responsible for SABL and has the mandate by virtue of the Land Act
    1996 to manage the whole SABL processes. It is responsible for the processing of
    SABL applications including registration, approvals and issuance of SABL titles
    after all the legal requirements are satisfactorily fulfilled. DLPP is also responsible
    for maintaining accurate and current land records and maintaining an up-to-date
    titles register and data base on all the SABLs issued throughout the country. In
    addition, DLPP is required to conduct regular inspections, audits and checks on
    SABLs after they have been granted. DLPP also has the authority to revoke SABLs
    for breaches and non-compliance with the conditions of the leases issued.
    Essentially, DLPP plays a major and important role in the administration,
    management and supervision of the SABLs in accordance with the relevant
    provisions of the Land Act 1996. One of the important functions of DLPP is to
    prepare the instrument of lease (lease-leaseback) after the grant is made through
    to gazettal of the lease and finally issuing of the lease once all the pre requisite
    requirements have been met (including input from other agencies) and approval
    given by the Minister responsible for DLPP or his appointed delegate. Pursuant to
    Section 11 of the Land Act, once the instrument of lease is executed by or on
    behalf of the customary landowners, it is conclusive evidence that the State has a
    good title to the lease and all customary rights in the land are suspended for the
    period of the lease to the State.

    (a) Acquisition of Customary Land for SABL

    Sections 11 and 102 of the Land Act 1996 provides for the acquisition of
    customary land for the lease-leaseback through a direct grant for SABL
    purposes. However, the Act does not make provisions for the actual step-
    by-step process and procedures for SABL applications and this has resulted
    in the DLPP developing its own process and procedures on SABL alluded to
    above. Much of these procedures however, are ad hoc and without legal
    basis.

    There are four (4) Divisions within DLPP that manages the SABL process. The
    Divisions being; Customary Leases Division, Land Information Services

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  • 21

    Division, Office of the Surveyor General and the Office of the Registrar of
    Titles. The Office of the Secretary for DLPP gives the final approval and issue
    the instrument of lease through a direct grant issued by the Minister
    responsible for Lands and Physical Planning or his authorized delegate.

    Acquisition of customary land for SABL would normally begin with some
    initial discussions taking place between the developer/investors and
    landowners who wanted their customary land to be used for agro-forestry
    projects or other business activities. DLPP has no involvement in the initial
    negotiations between the landowners and the developers but it is
    understood that the Department of Agriculture & Livestock (DAL) is often
    approached for technical advice and assistance during the negotiation
    stages.

    The Registrar of Incorporated Land Groups (ILGs) plays no role at all in the
    SABL process as it was not a requirement previously for landowners to have
    their ILG registered before applying for SABL. It was discretionary on the
    part of the landowners to form their ILGs before applying for an SABL.
    However, under recent amendments to the Incorporated Land Group Act
    2004 it is now compulsory for landowners to register themselves into ILGs
    before applying for an SABL. The relevant provision is Section 5 of the Land
    Group Incorporation Act 2004.

    (a) SABL Application Process

    The following new ‘proposed process and procedures’ is currently
    used by DLPP for SABL3:

    (i) Lodgement of SABL application

    The landowners or their representative(s) with the
    developers/investors would approach DLPP if both parties
    agreed to develop agro-forestry projects or other business
    activities on the customary land. DLPP will explain the processes
    involved in the lease-leaseback for an SABL grant.

    The landowners would then engage a surveyor to survey the
    subject customary land. In most cases, the developers/investors
    would assist the landowners with funding to engage surveyors
    to undertake surveying work for the proposed SABL. After the

    3
    Ibid p. 2 – 11

  • Page 22 of 272

  • 22

    land is surveyed it is lodged by the surveyor to the office of the
    Surveyor General for examination, approval and registration.
    The registered copy of the survey plan is then referred to the
    Chief Information Officer for file creation of the registered
    parcel of land.

    Customary landowners or their representative(s) applying for
    SABLs are required to submit their application in an approved
    form to the Director of Customary Lease. However, there is no
    prescribed application form specifically for SABL and customary
    landowners are usually adviced to use the “ordinary standard
    tender form” or “just write a letter of application”. The following
    documents must accompany the application form:

    (a) Development proposal indicating the level of impact of the
    project and its viability – two categories of projects; major
    impact project or minor impact project

    (b) Type of lease – (agriculture or business)

    (c) Consent/Approval forms from relevant government
    agencies (Department of Environment and Conservation,
    National Forest Authority and Department of Agriculture
    and Livestock)

    (d) Topographical Map – includes sketch map of the land,
    description of the land

    (e) Registered Survey Plan

    (f) Incorporated Land Group Certificate (Land Groups
    Incorporation Act 2004)

    (g) Genealogy

    (h) Land Use Plan

    (ii) Zoning Proposal of the Area

    SABL applications can either be submitted through to the Provincial Lands Office
    in the provinces or submitted directly to the DLPP headquarters in Port Moresby.
    A Land Investigation Instruction number is issued to conduct the land
    investigation.

  • Page 23 of 272

  • 23

    After receiving the SABL application form, the Customary Lands Division of DLPP
    conducts due diligence checks to ensure that there are no pending disputes over
    the subject land proposed for SABL, no other existing leases on the land (e.g.
    mining leases, petroleum development licences, forest management area,
    protected wild life habitat and other SABLs etc.) and the land is customarily
    owned. This is also to confirm the status of the land and also to ensure that the
    land is free from encumbrances. Evidence of landowner’s consent to lease the
    land is also very important.

    (iii) Land Use Plan

    The Physical Planning Division of the DLPP is responsible for approving the Land
    Use Plan depending on its assessment of the SABL application. The Chief Physical
    Planner will assess and determine the magnitude of the project and land use
    requirement. He will assess if it is a major impact project or minor impact project.
    He will then formulate a Development Plan and publish the draft Land Use Plan in
    the media inviting comments and/object