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

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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

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    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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    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

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    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

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    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

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    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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    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

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    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.

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    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/objections from the public to be submitted to the National Physical Planning Board within a certain period. If no comments or objections are received from the public regarding the Land Use Plan then a notice is published in the National Gazette to declare the approval of the plan and date of the effectiveness of the execution of the land use plan. According to Adrian Abby, the Acting Deputy Secretary-Customary Land Services of DLPP, the Land Use Plan approval was introduced to refine the new process on SABL.

    (iv) Land Investigation Process (LIP)

    The Land Investigation Process (LIP) starts when DLPP issued a Land Investigation Instruction Number to the Provincial Lands Office from where the SABL application is lodged. Upon the receipt of the instruction number, a land investigation is carried out by an Officer from the Customary Lands Division of DLPP with the assistance of the Provincial Lands Officer and a District Lands Officer. As part of the investigation, the Officers are also required to conduct an awareness to ensure that the landowners are fully aware of the SABL including the advantages and disadvantages of it. They must also understand the sub-lease agreement and the term of the lease including the development agreement between the developer and the landowners and the benefits that may be derived from the project. Land boundary inspection for the proposed SABL is carried out and clearly demarcated by a surveyor from DLPP. Physical inspection of the boundary is also carried out by the Officers of the State and the landowners. This will also include landowners from the adjacent land that shares a common

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    boundary with the SABL applicant to ensure that they do not encroach onto the other land. A declaration of ‘Recognition of Customary Rights’ is then certified by the Provincial Lands Officer if it is established that there is no dispute over the land proposed for SABL by the adjoining landowning clans.

    During the land investigations, the Lands Officers from DLPP and Officers from the Provincial and District Administrations also conducts awareness program with all the villages making up the SABL area and must obtain their ‘informed consent’ to lease their customary land for the propose SABL projects.

    (v) Land Investigation Report (LIR)

    The Land Investigation Report (LIR) is crucial to the granting or refusal of an SABL. The LIR contains vital information to proceed with acquiring the lease. A typical LIR would contain the following information:

     Name, location and type of land

     Identification of the customary landowners (genealogy)

     Area / size of land to be acquired ( a survey plan)

     Proposed term of the Lease

     Declaration of land boundaries with other landowning clans and adjoining landowners

     Types of rights enjoyed by the clan members on the land;

     Purpose of land alien