Investigation into Improper Decision to engage Central Lands Limited to build a Government Office Complex: Full Report

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    Full report [without Appendices] on the investigation into the improper decision by the Government Office Allocation Committee to engage Central Lands Limited to build a 32 storey Government Office Complex at Waigani Central in the National Capital District.

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  • TABLE OF CONTENTS

    ABBREVIATIONS…………………………………………………………………………………………………………………………… VI
    PERSONS REFERRED TO IN THIS REPORT ……………………………………………………………………………….VII
    CHRONOLOGY OF EVENTS ………………………………………………………………………………………………………. VIII
    EXECUTIVE SUMMARY …………………………………………………………………………………………………………….XXII
    Overview……………………………………………………………………………………………………………………………………………… XXII
    Findings of Wrong Conduct …………………………………………………………………………………………………………………. XXIV
    1. JURISDICTION AND PURPOSE OF INVESTIGATION ………………………………………………………….1
    [1.1] INTRODUCTION ………………………………………………………………………………………………………………………….. 1
    [1.2] JURISDICTION OF THE OMBUDSMAN COMMISSION………………………………………………………………. 1
    [1.3] PURPOSE OF THE INVESTIGATION …………………………………………………………………………………………… 2
    [1.4] METHOD OF INQUIRY ………………………………………………………………………………………………………………… 2
    [1.5] PERSONS WHO GAVE EVIDENCE BEFORE THE COMMISSION ………………………………………………. 3
    [1.6] OMBUDSMAN COMMISSION NOT CONFINED TO REPORTING ON THE LEGALITY OF
    ADMINISTRATIVE CONDUCT ……………………………………………………………………………………………………. 3
    [1.7] DEFINING ―WRONG CONDUCT‖ ………………………………………………………………………………………………… 4
    [1.8] THE PROVISIONAL REPORT ………………………………………………………………………………………………………. 4
    2. FINDINGS OF FACTS ……………………………………………………………………………………………………………..6
    INTRODUCTION……………………………………………………………………………………………………………………………………… 6
    PART 1 THE NEC POLICY SUBMISSIONS AND DECISIONS ON THE ACCOMMODATION OF
    GOVERNMENT DEPARTMENTS AND ORGANIZATIONS IN THE WAIGANI CENTRAL AREA,
    NATIONAL CAPITAL DISTRICT …………………………………………………………………………………………………. 6
    [1] NEC DECISION NO: 53/96 ON THE CONSTRUCTION OF GOVERNMENT BUILDINGS IN THE
    WAIGANI CITY CENTRE, NATIONAL CAPITAL DISTRICT ………………………………………………………. 6
    [2] NEC POLICY SUBMISSION NO: 69/2001 AND NEC DECISION NO: 103/2OO1 ON THE
    REHABILITATION AND CONSTRUCTION OF GOVERNMENT OFFICE BUILDINGS IN THE
    WAIGANI CITY CENTRE …………………………………………………………………………………………………………….. 7
    [3] NEC POLICY SUBMISSION NO: 10/2005 AND NEC DECISION NO: 49/2005 ON THE
    REHABILITATION AND CONSTRUCTION OF GOVERNMENT OFFICE BUILDINGS IN THE
    WAIGANI CITY CENTRE …………………………………………………………………………………………………………….. 8
    [4] NEC DECISION NO: 293/2005 ON THE REHABILITATION AND CONSTRUCTION OF
    GOVERNMENT OFFICE BUILDINGS IN THE WAIGANI CITY CENTRE………………………………….. 10
    [5] NEC POLICY SUBMISSION NO: 102/2008 AND NEC DECISION NO: 164/2008 ON THE
    REHABILITATION AND CONSTRUCTION OF GOVERNMENT OFFICE BUILDINGS IN THE
    WAIGANI CITY CENTRE …………………………………………………………………………………………………………… 10
    [6] NEC POLICY SUBMISSION NO: 45/2009 AND NEC DECISION NO: 89/2009 ON RELOCATION
    OF CERTAIN GOVERNMENT DEPARTMENTS AND AGENCIES FROM KONEDOBU TO
    WAIGANI……………………………………………………………………………………………………………………………………. 12
    PART 2 THE INVOLVEMENT OF GOAC AND THE NEC POLICY SUBMISSIONS AND DECISIONS
    THAT LED TO THE, CALL FOR EOI, FACILITATION OF CLL PROPOSAL AND SIGNING OF
    THE MOU BETWEEN GOAC AND CLL FOR THE CONSTRUCTION OF THE 32 FLOOR
    GOVERNMENT OFFICE COMPLEX AT WAIGANI CENTRAL IN NCD…………………………………….. 14
    [1] REQUEST FROM THE SECRETARY FOR DPM AND CHAIRMAN OF THE GOAC, MR JOHN M.
    KALI, OBE, TO THE THEN LANDS SECRETARY, MR ROMILLY KILA PAT, TO MAKE LAND
    AVAILABLE UNDER CERTIFICATE AUTHORIZING OCCUPANCY FOR WAIGANI OFFICE
    DEVELOPMENT …………………………………………………………………………………………………………………………. 14
    [2] STATE‘S NEGOTIATION OF PRE – LEASE AGREEMENT WITH NAIMA INVESTMENTS LTD 15
    [3] NAIMA INVESTMENTS LIMITED – PROFILE …………………………………………………………………………… 16

    Table of Contents II

  • Page 2 of 147

  • [4] MoU BETWEEN NAIMA INVESTMENTS LIMITED AND THE GOAC FOR THE DEVELOPMENT
    AND LEASE OF NAIMA CENTRE AT WAIGANI, PORT MORESBY, NATIONAL CAPITAL
    DISTRICT ……………………………………………………………………………………………………………………………………. 19
    [5] ADVICE FROM STATE SOLICITOR TO SECRETARY FOR DPM AND CHAIRMAN OF THE
    GOAC REGARDING PROPOSAL BY NAIMA INVESTMENTS LIMITED FOR THE WAIGANI
    CENTRE DEVELOPMENT ………………………………………………………………………………………………………….. 23
    [6] STATE SOLICITOR‘S FURTHER ADVICE TO THE CHAIRMAN OF THE GOAC ON NAIMA
    INVESTMENTS LIMITED‘S PROPOSAL FOR A 24 STOREY BUILDING ………………………………….. 25
    [7] NEC POLICY SUBMISSION NO: 04/2013 AND NEC DECISION NO: 03/2013 ON THE APPROVAL
    FOR NATIONAL GOVERNMENT TO ENTER PRE LEASING AGREEMENT WITH PRIVATE
    INVESTOR ………………………………………………………………………………………………………………………………….. 31
    [8] STATE SOLICITOR‘S ADVICE TO SECRETARY FOR DPM REGARDING NAIMA
    INVESTMENTS LIMITED‘S NEW PROPOSAL TO CONSTRUCT A 29 STOREY BUILDING,
    CONVENTION CENTRE AND PODIUM FOR THE STATE TO LEASE ………………………………………. 32
    [9] REQUEST FROM DPM SECRETARY TO CSTB CHAIRMAN FOR EOI ON A BOLT FOR THE
    CONSTRUCTION OF THE MULTI STOREY BUILDING ……………………………………………………………. 35
    [10] LEGAL OPINION FROM THE THEN DIRECTOR LEGAL AND INVESTIGATIONS OF DPM TO
    SECRETARY FOR DPM ON APPLICATION OF SECTION 40(5) OF THE PUBLIC FINANCES
    (MANAGEMENT) ACT 1995 TO NAIMA INVESTMENTS LIMITED‘S PROPOSAL …………………… 37
    [11] NAIMA INVESTMENTS LIMITED‘S PROPOSAL AND APPLICATION OF SECTION 40 (5) OF
    THE PUBLIC FINANCES (MANAGEMENT) ACT 1995………………………………………………………………. 40
    [12] CSTB‘S REJECTION OF THE REQUEST BY GOAC ON EoI FROM INVESTORS FOR THE
    CONSTRUCTION OF THE MULTI STOREY BUILDING ……………………………………………………………. 43
    [13] SECOND LEGAL OPINION FROM THE THEN DIRECTOR LEGAL AND INVESTIGATIONS OF
    DPM TO SECRETARY FOR DPM ON NAIMA INVESTMENTS LIMITED‘S PROPOSAL …………… 45
    [14] LETTER FROM THE SECRETARY FOR DPM TO THE STATE SOLICITOR REGARDING NAIMA
    INVESTMENTS LIMITED‘S PROPOSAL AND APPLICATION OF SECTION 40(5) OF THE
    PUBLIC FINANCES (MANAGEMENT) ACT 1995………………………………………………………………………. 48
    [15] EXPRESSION OF INTEREST FROM THE THEN ACTING SECRETARY FOR DPM TO CSTB FOR
    THE CONSTRUCTION OF THE MULT-STOREY OFFICE COMPLEX ……………………………………….. 50
    [16] FURTHER ADVICE FROM THE STATE SOLICITOR TO SECRETARY FOR DPM REGARDING
    THE APPLICATION OF SECTION 40(5) OF PUBLIC FINANCES (MANAGEMENT) ACT 1995 TO
    THE NAIMA INVESTMENTS LIMITED‘S PROPOSAL ………………………………………………………………. 51
    [17] EXPRESSION OF INTEREST FROM THE THEN MINISTER FOR PUBLIC SERVICE TO PRIME
    MINISTER FOR THE CONSTRUCTION OF THE MULTI STOREY OFFICE COMPLEX …………….. 53
    [18] TENDER NOTICE REQUESTING FOR EXPRESSIONS OF INTEREST FOR DESIGN AND
    CONSTRUCTION OF MULTI STOREY OFFICE COMPLEX ………………………………………………………. 55
    [19] ADVICE FROM THE PRIME MINISTER TO THE MINISTER FOR PUBLIC SERVICE
    REGARDING EXPRESSION OF INTEREST FOR THE CONSTRUCTION OF MULTI – STOREY
    BUILDING ………………………………………………………………………………………………………………………………….. 56
    [20] LETTER FROM THE SECRETARY FOR DPM TO THE THEN CHIEF SECRETARY TO
    GOVERNMENT REGARDING REQUEST FOR EXPRESSION OF INTEREST FOR THE DESIGN
    AND CONSTRUCTION OF THE MULTI-STOREY OFFICE COMPLEX ……………………………………… 58
    [21] NEC POLICY SUBMISSION NO: 215/2013 AND NEC DECISION NO: 282/2013 ON THE DESIGN
    AND CONSTRUCTION OF NATIONAL GOVERNMENT‘S MULTI STOREY OFFICE COMPLEX
    ……………………………………………………………………………………………………………………………………………………. 59
    [22] NEC POLICY SUBMISSION NO: 229/2013 AND NEC DECISION NO: 300/2013 ON THE DESIGN
    AND CONSTRUCTION OF NATIONAL GOVERNMENT‘S MULTI STOREY OFFICE COMPLEX
    ……………………………………………………………………………………………………………………………………………………. 62
    [23] CENTRAL LAND LIMITED – PROFILE ……………………………………………………………………………………… 63
    [24] LETTER FROM THE SECRETARY FOR DPM TO THE CHIEF SECRETARY TO GOVERNMENT
    REGARDING AN URGENT MoU ON THE DESIGN AND CONTRUCTION OF MULTI STOREY
    OFFICE COMPLEX …………………………………………………………………………………………………………………….. 66

    Table of Contents III

  • Page 3 of 147

  • [25] RESPONSE FROM THE THEN CHIEF SECRETARY TO GOVERNMENT TO THE SECRETARY
    FOR DPM REGARDING THE DESIGN AND CONTRUCTION OF MULTI – STOREY OFFICE
    COMPLEX…………………………………………………………………………………………………………………………………… 68
    [26] LETTER FROM THE SECRETARY FOR DPM TO THE THEN CHIEF SECRETARY TO
    GOVERNMENT REGARDING THE STATE NEGOTIATING TEAM MEETING WITH CENTRAL
    LAND LIMITED ………………………………………………………………………………………………………………………….. 69
    [27] LEGAL ADVICE FROM THE STATE SOLICITOR TO THE SECRETARY FOR DPM ON THE
    CONSTRUCTION OF MULTI-STOREY BUILDING BY CENTRAL LAND LIMITED …………………. 70
    [28] MoU PREPARED BY THE OFFICE OF THE STATE SOLICITOR REGARDING THE
    CONTRUCTION OF THE MULTI STOREY BUILDING BY CENTRAL LAND LIMITED …………… 75
    [29] MoU BETWEEN THE GoPNG (ACTING THROUGH THE GOAC) AND CENTRAL LAND
    LIMITED FOR CO-OPERATION RELATING TO BUILDING OF OFFICE SPACE
    ACCOMMODATION FOR GOVERNMENT DEPARTMENTS AND OTHER STATE AGENCIES AT
    WAIGANI, NCD ………………………………………………………………………………………………………………………….. 80
    [30] LETTER FROM THE SECRETARY FOR DPM TO THE THEN CHIEF SECRETARY TO
    GOVERNMENT REGARDING PROPOSED PRE-LEASE AGREEMENT FROM CENTRAL LAND
    LIMITED …………………………………………………………………………………………………………………………………….. 82
    [31] LETTER FROM THE SECRETARY FOR DPM TO THE THEN SECRETARY FOR DEPARTMENT
    OF LANDS AND PHYSICAL PLANNING REQUESTING FOR THE GRANTING OF ACCESS TO
    DEVELOPER TO CARRY OUT SOIL TESTING – NATIONAL MAPPING BUREAU SITE,
    WAIGANI……………………………………………………………………………………………………………………………………. 83
    [32] NOTICE OF RESERVATION UNDER SECTION 49 (RESERVATION FOR LEASE OR FURTHER
    LEASE) OF THE LAND ACT 1996 ………………………………………………………………………………………………. 85
    [33] LETTER FROM THE SECRETARY FOR DPM TO THE MANAGING DIRECTOR OF CENTRAL
    LAND LIMITED GIVING APPROVAL FOR TEMPORARY OCCUPANCY OF THE OLD
    GOVERNMENT OFFICE BUILDING ………………………………………………………………………………………….. 85
    [34] ACKNOWLEDGEMENT FROM THE SECRETARY FOR DPM TO THE THEN SECRETARY FOR
    DEPARTMENT OF LANDS AND PHYSICAL PLANNING REGARDING RESERVATION UNDER
    SECTION 49 (RESERVATION FROM LEASE OR FURTHER LEASE) OF LAND ACT 1996 AND
    THE RELOCATION OF NATIONAL MAPPING BUREAU ………………………………………………………….. 86
    [35] LETTER FROM THE SECRETARY FOR DPM TO THE THEN SECRETARY FOR DEPARTMENT
    OF LANDS AND PHYSICAL PLANNING REQUESTING FOR THE ISSUANCE OF TITLE –
    ALLOTMENT 1 SECTION 391 HOHOLA (WAIGANI), NCD ………………………………………………………. 87
    [36] STATUTORY BUSINESS PAPER NO: 17/2014 AND NEC DECISION NO: 49/2014 ON THE
    APPROVAL OF LEASE ARRANGEMENTS FOR THE MULTI STOREY GOVERNMENT OFFICE
    COMPLEX…………………………………………………………………………………………………………………………………… 88
    3. INTERVIEWS WITH WITNESSES ………………………………………………………………………………………..92
    [3.1] EVIDENCE GIVEN BY MR CHRIS KABAURU, DIRECTOR OF THE OFFICE OF GOVERNMENT
    ACCOMMODATION AND PUBLIC SERVICE HOUSING WITH DPM ……………………………………….. 92
    [3.2] EVIDENCE GIVEN BY MR ISIKEL MESULAM, THE THEN DIRECTOR LEGAL AND
    INVESTIGATIONS, DPM ……………………………………………………………………………………………………………. 95
    [3.3] EVIDENCE GIVEN BY MR JOHN M. KALI, CMG, OBE, SECRETARY FOR DPM AND
    CHAIRMAN OF THE GOAC ……………………………………………………………………………………………………….. 98
    4. FINDINGS OF WRONG CONDUCT …………………………………………………………………………………….104
    [4.1] FINDING NO. 1 …………………………………………………………………………………………………………………………. 104
    [4.2] FINDING NO. 2 …………………………………………………………………………………………………………………………. 105
    [4.3] FINDING NO. 3 …………………………………………………………………………………………………………………………. 106
    [4.4] FINDING NO. 4 …………………………………………………………………………………………………………………………. 106
    5. RECOMMENDATIONS ……………………………………………………………………………………………………….107
    [5.1] CONSTITUTIONAL FRAMEWORK FOR MAKING RECOMMENDATIONS ……………………………. 107
    [5.2] RECOMMENDATIONS CONCERNING PARTICULAR INDIVIDUALS ………………………………….107
    [5.3] RECIPIENTS OF RECOMMENDATIONS ……………………………………………………………………………….108
    [5.4] RESPONSIBLE MINISTERS …………………………………………………………………………………………………..108

    Table of Contents IV

  • Page 4 of 147

  • [5.5] MINISTERS RESPONSIBLE FOR FOLLOWING UP IMPLEMENTATION OF
    RECOMMENDATIONS ………………………………………………………………………………………………………….108
    [5.6] DUTIES OF RECIPIENTS OF RECOMMENDATIONS…………………………………………………………….108
    [5.7] RECOMMENDATIONS …………………………………………………………………………………………………………….. 109
    6. CONCLUSION ……………………………………………………………………………………………………………………….112
    7. RELEVANT LAWS ………………………………………………………………………………………………………………113
    [7.1] CONSTITUTION OF THE INDEPENDENT STATE OF PAPUA NEW GUINEA…………………………. 113
    [7.2] ORGANIC LAW ON THE OMBUDSMAN COMMISSION…………………………………………………………. 117
    [7.3] PUBLIC SERVICES GENERAL ORDER 4TH EDITION (2012) ………………………………………………….. 118
    [7.4] PUBLIC SERVICES (MANAGEMENT) ACT 1995 …………………………………………………………………….. 120
    [7.5] PUBLIC FINANCES (MANAGEMENT) ACT 1995…………………………………………………………………….. 121
    ANNEXURES ………………………………………………………………………………………………………………………………………. 122
    ANNEX 1: RESPONSE BY HON. SIR DR PUKA TEMU, KBE, CMG, MP …………………………………………….. 122
    ANNEX 2: RESPONSE BY JOHN M. KALI, CMG, OBE ……………………………………………………………………….. 129
    ANNEX 3: RESPONSE BY JOHN M. KALI, CMG, OBE – (FINAL) ………………………………………………………. 136
    ANNEX 4: RESPONSE BY ISIKEL MESULAM …………………………………………………………………………………… 148
    ANNEX 5: RESPONSE BY CHRIS KABAURU …………………………………………………………………………………….. 152
    ANNEX 6: RESPONSE BY CSTB………………………………………………………………………………………………………….. 154
    ANNEX 7: RESPONSE BY ILAGI VEALI, MBE, MPS ……………………………………………………………………….155
    ANNEX 8: RESPONSE BY ROMILLY KILA PAT ………………………………………………………………………………… 156
    ANNEX 9: RESPONSE BY DR KEN NGANGAN, PhD, CMA, CPA ………………………………………………………. 157
    ANNEX 10: RESPONSE BY JOE SAPA …………………………………………………………………………………………….158
    ANNEX 11: RESPONSE BY NIL/CLL THROUGH HENAOS LAWYERS …………………………………………….. 159
    ANNEX 12: RESPONSE BY DANIEL ROLPAGAREA ………………………………………………………………………….. 161

    Table of Contents V

  • Page 5 of 147

  • ABBREVIATIONS

    Act Act of Parliament
    BOLT Build, Operate, Lease and Transfer
    Commission Ombudsman Commission of Papua New Guinea
    Constitution Constitution of the Independent State of Papua New Guinea
    CSTB Central Supply & Tenders Board
    DPM Department of Personnel Management
    EoI Expression of Interest
    GOAC Government Office Allocation Committee
    Hon. Honorable
    IPA Investment Promotion Authority
    Ltd Limited
    MoU Memorandum of Understanding
    MP Member of Parliament
    NCD National Capital District
    NEC National Executive Council
    OLOC Organic Law on the Ombudsman Commission
    PFMA Public Finances (Management) Act 1995
    PM Prime Minister
    PPP Public Private Partnership
    State The Independent State of Papua New Guinea

    Abbreviations VI

  • Page 6 of 147

  • PERSONS REFERRED TO IN THIS REPORT

    Mr Chris Kabauru
    Director, Office of Government Accommodation and Public Service Housing, Department of
    Personnel Management

    Mr Dairi Vele
    Secretary, Department of Treasury

    Mr Daniel Rolpagarea
    State Solicitor, Office of the State Solicitor, Department of Justice and Attorney General

    Mr David Wereh
    Secretary, Department of Works

    Mr Ilagi Veali, MBE, MPS
    Secretary, National Executive Council

    Mr Isikel Mesulam
    The then Director, Legal and Investigations Advisory Services, Department of Personnel
    Management

    Mr Joe Sapa
    First Assistant Secretary, Corporate Services Division, Department of Finance

    Mr John M. Kali, CMG, OBE
    Secretary, Department of Personnel Management and Chairman of the Government Office
    Allocation Committee

    Dr Ken Ngangan, PhD, CMA, CPA
    Secretary, Department of Finance

    Mr Lai Weng Hoo
    Managing Director, Naima Investments Limited and Central Land Limited

    Mr Phillip Eludeme
    Chairman, Central Supply and Tenders Board

    Hon. Sir Dr Puka Temu, KBE, CMG, MP
    The then Minister for Public Service

    Mr Romilly Kila Pat
    The then Secretary, Department of Lands and Physical Planning

    Persons Referred to in this Report VII

  • Page 7 of 147

  • CHRONOLOGY OF EVENTS

    1996

    1. On 17 April, the National Executive Council (NEC) during its Meeting No: 18/96,
    made, Decision No. 53/96, to construct Government Buildings in the Waigani City
    Centre, as follows:

    1) acknowledged that there is insufficient office space to accommodate all
    government departments in the Waigani City Centre;

    2) directed the Ministers for Finance, Public Service, National Planning, Housing,
    Lands and Justice to formulate and develop a master plan for government
    office requirements with the Waigani City Centre over a period of five (5) to
    ten (10) years to accommodate all government departments. The NCDC, be co-
    opted as a member of the Team for purposes of planning the governments
    office requirements;

    3) directed that various options be looked at to fast-track the construction of
    Government Offices at Waigani.

    2001

    2. On 14 June, Hon. Philemon Embel, OBE, MP, the then Minister for Public Service
    made a Policy Submission No: 69/2001 to the NEC, to Rehabilitate and Construct
    Government Office Buildings, in the Waigani City Centre. The purpose of the Policy
    Submission, was to seek Cabinet approval of the major initiatives to fast-track the
    implementation of the Waigani Government Centre Development, particularly the
    rehabilitation and reconstruction of existing Government Office Buildings, Audit and
    Installation of Effective Management of property leases of old and new buildings,
    owned by the State, and preparation of a Master Plan for the Waigani Office
    Development project.

    3. On 5 July, the NEC during its Meeting No: 21/2001, made Decision No: 103/2001 to
    Rehabilitate and Construct Government Office Buildings, in the Waigani City Centre,
    as follows:

    1) noted the contents of the Policy Submission No. 69/2001;

    2) directed establishment of an inter-departmental committee to determine current
    and future needs for office accommodation;

    3) directed the Office Allocation Committee, to proceed to rehabilitate the
    existing office buildings, particularly the Marea Haus and the Central
    Government Office through public tender; and

    4) further directed the Office Allocation Committee to report back to Cabinet in
    one month on the actions taken.

    Chronology of Events VIII

  • Page 8 of 147

  • As a result of this NEC Decision, the Government Office Allocation Committee
    (GOAC) was established. Hence, the establishment of the GOAC was done through a
    statutory arrangement.

    2004

    4. On 8 December, Hon. Sinai Brown, OBE, MP, the then Minister for Public Service,
    made a Policy Submission 10/2005 to the NEC, to Rehabilitate and Construct
    Government Office Buildings, in the Waigani City Centre. The purpose of the Policy
    Submission was for the NEC to:

    1) take note that it has catalogued four (4) major NEC Policy Decisions, since
    1996, to increase availability of office space for use by government
    departments. Nearly a decade has passed and no material success has been
    made in implementing these decisions largely, due to the State not securing a
    credible and serious financier and developer of the project.

    2) take note that the State has spent more than K600 million in office rentals, over
    this period, and that if it is to save some of these monies, it must give its most
    serious considerations to the present submission.

    3) take note of the proposal by Infratech Management Services, the consulting
    firm hired by the State to manage and report back to the State all transactions
    leading to fast track the maintenance and refurbishment of the Waigani Office
    Development Project.

    4) consider, endorse and give its approval to appoint a Contractor, to immediately
    commence the project of maintenance and refurbishment of the Pineapple
    Building or Marea Haus; and the construction of the six (6) Floors
    INDEPENDENCE HAUS Complex.

    5) consider and give its approval for Bond Glade Construction Pty Ltd of
    Australia to be appointed as the financier and developer of the Waigani Office
    Development Project, to the tune of US$97 million on a BOT arrangement, to
    run over a seven (7) year term.

    2005

    5. On 9 March, the NEC during its Meeting No: 11/2005, made Decision No: 49/2005, to
    Rehabilitate and Construct Government Office Buildings, in the Waigani City Centre,
    as follows:

    1) noted the contents of Policy Submission No. 10/2005;

    2) noted the additional information provided in the revised submission by the
    Minister for Public Service;

    3) did not accept the recommendations of the submission instead, directed the
    Minister for Public Service to:

    (a) call for public tender for the refurbishment of the Marea Haus and Central
    Government Building following the normal tendering procedures as

    Chronology of Events IX

  • Page 9 of 147

  • provided under the Public Finances (Management) Act for purposes of
    transparency and accountability;

    (b) directed the Minister for Public Service to consider the two projects,
    refurbishment of the Marea Haus and Central Government Building
    separately from the construction of Independence Haus given the legal
    complexities and major financial implications;

    (c) directed the Minister for Public Service to give priority to the
    refurbishment of the Marea Haus (Pineapple Building) and the Central
    Government Building as this will house more government agencies and
    thus greatly reduce government expenditure on rentals paid each year;

    (d) directed the Minister for Public Service to prepare the submission in close
    consultation with the Department of Personnel Management as the
    implementing agency seeking funding where possible through domestic
    sources such as POSF and NPF;

    (e) directed the Minister for Lands & Physical Planning to revisit the Land
    available for the Waigani City Centre as per the Master Plan and identify
    Land available for the purposes of accommodating all Government
    Agencies in Waigani; and

    (f) directed the Minister for Lands & Physical Planning in consultation with
    the Minister for Public Service, Minister for National Planning &
    Monitoring and Minister for Social Welfare Development to prepare an
    information paper for presenting to NEC as a matter of priority.

    6. On 22 December, the NEC during its Meeting No: 57/2005, made Decision No:
    293/2005, to rehabilitate and Construct Government Office Buildings in the Waigani
    City Centre.

    2008

    7. On 9 July, Hon. Peter O‘Neill, CMG, MP, the then Minister for Public Service, made
    a Policy Submission No: 102/2008 to the NEC, to Rehabilitate and Construct
    Government Office Buildings, in the Waigani City Centre. The purpose of the Policy
    Submission was to:

    1) inform NEC of progress in refurbishing Marea Haus (Pineapple Building) and
    the CGOs; and

    2) ask NEC to note the need to create a seat of Government in a central location,
    as a symbol of nationhood, unity and strength; and

    3) request NEC to approve all related structural, administrative and financial
    arrangements to speed completion of the projects; and

    4) request NEC to rescind all decisions not of contractual nature incurring
    financial penalties which have remained in force since 1996, and settle
    outstanding contractual matters with the Project Management Consultant, and

    Chronology of Events X

  • Page 10 of 147

  • 5) request NEC to approve prioritization of funding and construction of the
    refurbishment phase of the Waigani Office Development Project, and

    6) request NEC to direct the Minister for Treasury and Finance and the Minister
    for Public Service, to establish the Waigani City Centre Government Office
    precinct on land allocated in the Waigani City Town Master Plan for
    Government Office use.

    8. On 7 August, the NEC during its Special Meeting No: 25/2008, made Decision No:
    164/2008, to Rehabilitate and Construct Government Office Buildings, in the Waigani
    City Centre, as follows:

    1) noted the content of Policy Paper No. 102/2008;

    2) rescinded all its previous decisions regarding the Waigani City development
    project, except for retaining and honoring all contracts entered into by the State
    to date;

    3) directed the Minister for Public Services in consultation with the Minister for
    Treasury & Finance and the Minister for National Planning & District
    Development to obtain construction funding for refurbishment of the Central
    Government Office complex and the Marea Haus from an allocation of K110.0
    million from the supplementary budget;

    4) prioritized refurbishment of the Marea Haus and the Central Government
    Building Office and instructed the Minister for Public Services to immediately
    tender the contract for refurbishment through the Central Supply & Tenders
    Board (CSTB) in the form recommended by the Project Management
    Consultant;

    5) reaffirmed the contract of Project Management Consultant with Infratech
    Management Consultants and settle all outstanding claims, legal costs and any
    damages agreed;

    6) reaffirmed the composition of the Inter-Departmental Committee, to be chaired
    by the Secretary for the Department of Personnel Management; and

    7) directed the Minister for Public Services in consultation with the Minister for
    Treasury & Finance and the Department of Personnel Management to prepare
    the development strategy for the State Government office precinct in the
    government office zone of the Waigani City Town Plan, and phase the Waigani
    Office Development Project for the development of the overall Master Plan of
    the Waigani City Development.

    As a result of this Decision, the Secretary for Department of Personnel Management
    (DPM), Mr John M. Kali, CMG, OBE, was appointed to be the Chairman of the
    GOAC. Hence, the appointment of Mr Kali by NEC as the Chairman of the GOAC
    was done through a statutory arrangement.

    2009

    9. On 20 January, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Deputy Prime
    Minister and Minister for Lands & Physical Planning, made a Policy Submission No:
    Chronology of Events XI

  • Page 11 of 147

  • 45/2009 to the NEC to relocate certain Government Departments and Agencies, from
    Konedobu to Waigani. The purpose of the Policy Submission was to inform the NEC
    members on the difficulties faced resulting from the locations outside of Waigani that
    certain important government departments and agencies are located and to seek
    directives:

    1) that Konedobu Administrative area to be the administrative headquarters of the
    Central Provincial Government;

    2) that the National Government functionalities currently located in Konedobu on
    Portions 2396 and 2397 (with the exception of Police Head Quarters) be
    relocated to Waigani;

    3) that NHC relinquish its interest over Portion 479 back to the State in line with
    this submission;

    4) priority is given to Department of Agriculture & Livestock (DAL) &
    Department of Mineral Policy & Geohazards Management (DMP&GHM) for
    relocation to Waigani;

    5) for the GOAC to immediately consult the departments and agencies concerned
    and ascertain their requirements for their relocation;

    6) that following completion of rehabilitation of the Central Government Building
    & Pineapple Building that first priority be given to the two departments;

    7) for DLPP to reserve all parcels of land that are not leased land in the Waigani
    City Centre and facilitate titles for each of them in favor of the State for the
    purposes of future developments to house government departments and
    agencies;

    8) for DLPP to come up with long-term development plans for office
    constructions in Waigani City Centre to house government departments and
    agencies.

    10. On 26 June, the NEC during its Meeting No: 04/2009, made Decision No: 89/2009 to
    Relocate Certain Government Departments and Agencies, from Konedobu to Waigani,
    as follows:

    1) noted the content of Policy Submission No. 45/2009;

    2) approved that the Konedobu Administrative area to be the administrative
    headquarters of the Central Provincial Government;

    3) directed that the National Government Departments and National Government
    Agencies and statutory Bodies currently located in Konedobu, within Portions
    2396 and 2397 (with the exception of Police Headquarters) are to be relocated
    to Waigani;

    4) directed that the National Housing Corporation relinquish its interest over
    Portion 479 to the State for the Government to build the Commodity Haus to
    house all Agriculture Commodity Agents and Petroleum and Energy Haus;

    Chronology of Events XII

  • Page 12 of 147

  • 5) approved that the buildings vacated be occupied by the Central Provincial
    Administration for its operational purposes with the exception of the old
    administration office to be maintained as a historical building. It is to be
    subdivided and transferred to the Ministry of Culture and Tourism;

    6) directed the Office Allocation Committee to immediately consult the
    departments and agencies concerned and ascertain their requirements;

    7) directed the Department of Lands & physical Planning to reserve all parcels of
    land that are not leased land in the Waigani City Centre and facilitate titles for
    each of them in favor of the State for the purposes of future developments to
    house government departments and agencies; and

    8) directed the Department of Lands & Physical Planning in consultation with the
    Department of Personnel Management to come up with long-term development
    plans for office constructions in Waigani City Centre to house government
    departments and agencies.

    2011

    11. On 11 May, Mr John M. Kali, CMG, OBE, Secretary for DPM and Chairman of the
    GOAC, wrote to Mr Romily Kila Pat, the then Secretary for Department of Lands &
    Physical Planning, requesting Mr Kila Pat to make land available under Certificate
    Authorizing Occupancy, identified in Waigani Office Precinct for development or
    redevelopment.

    2012

    12. On 5 September, the then Minister for Public Service, Hon. Sir Dr Puka Temu, KBE,
    CMG, MP, wrote to Mr John M. Kali, CMG, OBE, Secretary for DPM and Chairman
    of the GOAC, advising Mr Kali, to negotiate pre-lease agreements with Naima
    Investments Limited. Naima Investments Limited did not submit any proposal to the
    Minister for Public Service.

    13. On 25 September, a Memorandum of Understanding (MoU) was signed by Mr Lai
    Weng Hoo, Managing Director, on behalf of Naima Investments Limited, and Mr John
    M. Kali, CMG, OBE, Secretary for DPM and Chairman of the GOAC on behalf of the
    Government of the Independent State of Papua New Guinea, and witnessed by His
    Excellency, Commodore (Retd.) Peter Ilau, DMS, CBE, Ambassador of the
    Independent State of Papua New Guinea for the Republic of Indonesia.

    14. On 16 October, the State Solicitor, Mr Daniel Rolpagarea wrote a letter to the
    Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE,
    confirming the Special GOAC Meeting held on 3 October 2012, where legal issues
    were raised, hence the State Solicitor‘s Office was requested verbally to provide an
    advice on the process in which to facilitate the proposal from Naima Investments
    Limited.

    15. On 29 November, the State Solicitor, Mr Daniel Rolpagarea wrote to the Secretary for
    DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, and provided the

    Chronology of Events XIII

  • Page 13 of 147

  • advice regarding Naima Investments Limited‘s Proposal for the construction of the 24
    Storey Government Office Complex.

    2013

    16. On 4 January, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for Public
    Service, made a Policy Submission No: 04/2013 to the NEC, seeking approval for the
    National Government to enter into a pre- leasing agreement with a Private Investor.
    The purpose of the Policy Submission was:

    1) to inform NEC of acute shortage of office accommodation faced by
    Government Departments, Agencies and Authorities, particularly in Port
    Moresby;

    2) to seek NEC‘s approval for GOAC and CSTB to invite and enter into pre-lease
    agreement with a private investor under normal legal and transparent business
    transaction.

    17. On 9 January, the NEC during its Special Meeting No: 01/2013, made Decision No:
    03/2013, and approved for the National Government to enter into a pre-leasing
    agreement with a Private Investor, as follows:

    1) noted the content of Policy Submission No. 04/2013;

    2) noted the submission is supportive of the recent decisions to refurbish Marea
    Haus;

    3) approved in principle the construction of a 24 storey office complex building
    by the Naima Investments Ltd under the ―BOT‖ arrangement and for the State
    to lease the new office complex next to Central Government Building at
    Waigani on State Land;

    4) directed the Secretary for Department of Personnel Management as Chairman
    of GOAC to relocate those approved Government Departments and Agencies
    to the new office complex consistent with its approved and established
    administrative guidelines;

    5) directed the Secretary for Department of Personnel Management, in
    consultation with the Chairman of CSTB, Secretary for Department of Finance,
    Secretary for the Department of Treasury, Secretary for the Department of
    National Planning & Monitoring and the Chief Secretary to Government to
    implement this decision; and

    6) directed the Secretary for Department of Personnel
    Management/Finance/Treasury/National Planning & Monitoring and CSTB to
    report back to the Council on the progress made.

    18. On 3 April, the State Solicitor, Mr Daniel Rolpagarea, wrote to the Secretary for
    DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, advising on the new
    proposal by Naima Investments Limited for the construction of a 29 Storey Building.

    Chronology of Events XIV

  • Page 14 of 147

  • 19. On 25 April, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the Central Supply & Tenders Board (CSTB) Chairman, Mr
    Phillip Eludeme, and requested CSTB, to advertise for public tenders for Expression
    of Interest (EoI) for the construction of the 29-Storey Building on a Build-Operate-
    Lease-Transfer (BOLT) arrangement.

    20. On 8 May, the then Director of Legal & Investigations Division of DPM, Mr Isikel
    Mesulam, wrote to the Secretary for DPM and Chairman of the GOAC, Mr John M.
    Kali, CMG, OBE, providing legal opinion on application of Section 40(5) (Tenders for
    Property, Stores, Works and Services) of the Public Finances (Management) Act 1995
    to Naima Investments Limited‘s Proposal.

    21. On 13 May, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the State Solicitor, Mr Daniel Rolpagarea, responding to the
    State Solicitor‘s letter dated 29 November 2012, on what to consider and the approach
    to take on the proposal, as well as requesting for consideration of some options that
    may be available to the State, and also providing some arguments for and against
    Section 40 (5) (Tenders for Property, Stores, Works and Services) of the Public
    Finances (Management) Act 1995, and the way forward.

    22. On 15 May, the above matter was discussed at the CSTB Meeting No. M-10/2013. In
    that meeting, the CSTB discussed the issue at length, and finally resolved to reject it,
    because the CSTB was only responsible for awarding of contracts using public funds,
    and in this instance, there would be no expenditure of public funds.

    23. On 21 May, the Chairman of CSTB, Mr Phillip Eludeme, wrote to the Secretary for
    DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, advising on
    CSTB‘s rejection of the GOAC‘s proposal in Mr Kali‘s letter dated 25 April 2013, for
    CSTB to call for EoI, from Investors on a BOLT arrangement for the construction of
    the proposed 29 Storey Government Office Complex.

    24. On 23 May, the then Director Legal & Investigations of DPM, Mr Isikel Mesulam,
    wrote to Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG,
    OBE, providing a Second Legal Opinion on the Naima Investments Limited‘s
    Proposal.

    25. On 24 May, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the State Solicitor, Mr Daniel Rolpagarea, regarding Naima
    Investments Limited‘s Proposal and the Application of Section 40 (5) (Tenders for
    Property, Stores, Works and Services) of the Public Finances (Management) Act 1995.

    26. On 18 June, the then Acting Secretary for DPM, Mr Chris Kabauru wrote to the
    CSTB, expressing interest for the construction of the Multi Storey Central
    Government Office Complex.

    27. On 20 June, the State Solicitor, Mr Daniel Rolpagarea wrote to the Secretary for DPM
    and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, advising him on the
    Application of Section 40 (5) (Tenders for Property, Stores, Works and Services) of
    the Public Finances (Management) Act 1995, and its application relative to options
    raised by the Secretary for DPM on the letter dated 24 May 2013.

    Chronology of Events XV

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  • 28. On 1 July, the then Public Service Minister, Hon. Sir Dr Puka Temu, KBE, CMG, MP,
    wrote to the Prime Minister, Hon. Peter O‘Neill, CMG, MP, regarding the EoI for the
    construction of the Multi Storey Central Government Office Complex in Waigani.

    29. On 3 July, there was a tender notice put out by the Secretary for DPM and Chairman
    of the GOAC, Mr John M. Kali, CMG, OBE, calling for EoI for the design and
    construction of the Multi Storey Central Government Office Complex.

    30. On 10 July, the Prime Minister, Hon. Peter O‘Neill, CMG MP, wrote to the then
    Minister for Public Service, Hon. Sir Dr. Puka Temu, KBE, CMG MP, regarding the
    EoI for the construction of Multi-Storey Government Office Complex.

    31. On 1 August, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the then Chief Secretary to Government, Sir Manasupe
    Zurenuoc, Kt, OBE, informing the latter on the Request for Expression of Interest
    (REoI) for design and construction of the Multi Storey Central Government Office
    Complex.

    32. On 12 August, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for Public
    Service made a Policy Submission No: 215/2013, to the NEC, in regard to the design
    and construction of National Government‘s Multi Storey Central Government Office
    Complex. The purpose of the Policy Submission was to seek Cabinet approval:

    1) to enhance its earlier Decision No: 3/2013 of 9 January 2013 for the
    construction of a Multi Storey office complex under ―BOLT‖ arrangement;

    2) to select a major developer from amongst the bids presented here;

    3) for development of a lease arrangement for all government
    departments/agencies to be accommodated in the proposed Multi Storey office
    complex; and

    4) to direct the relevant Government departments to implement this decision.

    In that Submission, the Public Service Minister recommended that the NEC:

    1) take note of the contents of that submission;

    2) approve to enhance NEC Decision No. 3/2013 of 9 January 2013 with
    particular reference to the construction of a Multi Storey Office Complex;

    3) approve the design and construction of a Multi Storey Office Complex together
    with separate office to accommodate the Office of the Prime Minister of Papua
    New Guinea and a 1 storey annexure for conference and functions, and a
    separate facility for car parking;

    4) approve in principle the financier and developer from the recommended short
    listing in the following order of preference:

    (a) Central Land Limited
    (b) Leightons PNG & Hassel
    (c) CoDA PNG Limited

    Chronology of Events XVI

  • Page 16 of 147

  • 5) direct the Secretary and the Minister for Lands to facilitate the transfer of
    Allotment 1, Section 391, Hohola, and any vacant undeveloped adjoining State
    land including Allotment 2, Section 391, Hohola to the Department of
    Personnel Management;

    6) direct the Secretary for Personnel Management, in consultation with the
    Secretaries for Finance, Treasury, National Planning & Monitoring, Lands &
    Physical Planning and the Chief Secretary to Government to implement this
    decision; and

    7) direct the Secretary for Department of Personnel Management in his capacity
    as Chairman of the GOAC to negotiate fundamental lease terms and conditions
    with the selected developer;

    8) direct the Minister for Lands to delegate his powers with respect to execution
    of lease agreements to the Secretary for Personnel Management in his capacity
    as Chairman of GOAC to fast tract the execution of that lease agreement and in
    all other outstanding lease agreements.

    33. On 14 August, the NEC during its Special Meeting No: 23/2013, made Decision No:
    282/2013, in regard to the Design and Construction of National Government‘s Multi
    Storey Central Government Office Complex, as follows:

    1) noted the content of Policy Submission Paper No. 215/2013;

    2) approved to enhance NEC Decision No. 03/2013 of 9 January 2013 with
    particular reference to the construction of a Multi Storey Office Complex;

    3) taking into consideration the views of the Members of the Council with regard
    to the lack of detailed information on the three recommended
    financiers/developers provided, agreed not to approve Recommendations 3 to 8
    of the submission, instead;

    4) directed that a State Negotiating Team, comprising the Chief Secretary to
    Government as Chairman, Secretary for personnel Management, Secretary for
    Treasury and the State Solicitor, is appointed to negotiate the terms and
    conditions of the project with the three recommended financiers/developers for
    consideration by the NEC.

    34. On 20 August, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for Public
    Service made a Policy Submission No: 229/2013, to the NEC, in regard to the design
    and construction of the National Government‘s Multi Storey Central Government
    Office Complex. The purpose of the Policy Submission was to seek Cabinet approval:

    1) to enhance its earlier Decision No: 3/2013 of 9 January 2013 for the
    construction of a Multi Storey office complex under ―BOLT‖ arrangement;

    2) to select a major developer from amongst the bids that were presented;

    Chronology of Events XVII

  • Page 17 of 147

  • 3) for development of a lease arrangement for all government
    departments/agencies to be accommodated in the proposed Multi Storey office
    complex; and

    4) to direct the relevant Government departments to implement this decision.

    35. On 28 August, the NEC, during its Special Meeting No: 25/2013, made Decision No:
    300/2013, in regard to the Design and Construction of the National Government‘s
    Multi Storey Central Government Office Complex, as follows:

    1) noted the content of Policy Submission No. 229/2013;

    2) approved to enhance the NEC Decision No. 03/2013 of 9 January 2013, in
    particular reference to the construction of a Multi Storey Office Complex;

    3) noted that the Office of the Prime Minister and the Department of the Prime
    Minister and NEC will be located at the Marea Haus which is currently under
    renovation and approved that the Multi Storey Office Complex will be to
    accommodate various key Government Departments and Agencies;

    4) approved in principle, Central Land Limited to be the financier/developer of
    this project;

    5) noted the issues raised with regard to the leasing period and land and directed
    the State Negotiating Team appointed in NEC Decision No. 282/2013 and
    Government Office Accommodation Committee (GOAC) to negotiate the
    leasing agreement with Central Land Limited for endorsement by the NEC;
    and

    6) in view of clause 5 above, did not approve Recommendations 5 to 8 of the
    submission.

    36. On 3 September, the Secretary for DPM and Chairman of the GOAC, Mr. John M.
    Kali, CMG, OBE, wrote to the then Chief Secretary to Government, Sir Manasupe
    Zurenuoc, Kt, OBE, highlighting the need for an urgent MoU (for Public Service
    Minister to report back to Cabinet) on the Design and Construction of the Multi-Storey
    Central Government Office Complex.

    37. On 5 September, the then Chief Secretary, Sir Manasupe Zurenuoc, Kt, OBE, wrote to
    the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE,
    delegating the Chairmanship of the State Negotiating Team (SNT) to Mr Kali and
    appointed Mr Trevor Meauri from Department of Prime Minister & National
    Executive Council (DPM & NEC), to negotiate the MoU on the Design and
    Construction of the Multi-Storey Central Government Office Complex.

    38. On 9 September, the Secretary for DPM and Chairman of the GOAC, Mr John M.
    Kali, CMG, OBE, wrote to the then Chief Secretary, Sir Manasupe Zurenuoc, Kt,
    OBE, informing him on the meeting between the State Negotiating Team and Central
    Land Limited (CLL), on the design and construction of Multi-Storey Central
    Government Office Complex, as per NEC Decision 282/2013 and 300/2013.

    Chronology of Events XVIII

  • Page 18 of 147

  • 39. On 12 September, the State Solicitor, Mr Daniel Rolpagarea wrote to the Secretary for
    DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, providing the Legal
    Advice on the Construction of the Multi-Storey Central Government Office Complex
    by Central Land Limited. He also attached a draft MoU which he prepared.

    40. On 12 September, a MoU was signed by the Secretary for DPM and Chairman of the
    GOAC, Mr John M. Kali, CMG, OBE, on behalf of the Government of Papua New
    Guinea (GoPNG), and Mr Lai Weng Hoo, Managing Director, for and on behalf of
    Central Land Limited.

    41. On 19 September, the Secretary for DPM and Chairman of the GOAC, Mr John M.
    Kali, CMG, OBE, wrote to the then Chief Secretary, Sir Manasupe Zurenuoc, Kt,
    OBE, regarding proposed Pre-Lease Agreement from Central Land Limited. In this
    letter, Secretary Kali advised that he had signed a MoU between the GOAC and
    Central Land Limited to start minor preparatory work and requested a meeting with all
    members of the State Negotiating Team.

    42. On 1 October, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the then Secretary for Department of Lands and Physical
    Planning, Mr Romily Kila Pat, requesting him to transfer the Certificate Authorizing
    Occupancy over land which National Mapping Bureau (NMB) is situated, to DPM for
    the construction of the new Multi-Storey Central Government Office complex.

    43. On 16 October, there was a Notice of Reservation under Section 49 (Reservation from
    Lease or Further Lease) of the Land Act 1996, from the then Secretary for Department
    of Lands and Physical Planning, Mr Romilly Kila Pat, outlining the Certification of
    Reservation to reserve the right of occupancy to DPM, over Land known as Allotment
    1 Section 391, Hohola, Waigani.

    44. On 21 October, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the Managing Director for Central Land Limited, advising him
    of the Temporary Occupancy of the Old Central Government Office (CGO) Building
    by Central Land Limited as per the approval from the GOAC following the direction
    from the Prime Minister. Central Land Limited to occupy the ground and the second
    floors as operation base for the duration of the construction of the new Multi-Storey
    Government Office Complex.

    45. On 21 October, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the then Secretary for Department of Lands and Physical
    Planning, Mr Romilly Kila Pat, acknowledging the reservation right of occupancy to
    DPM over Section 391, Allotment 1 and also advising him of the GOAC‘s approval
    for the relocation of the National Mapping Bureau to Infinite Haus (Unagi Oval,
    Gordons).

    46. On 25 October, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the then Secretary for Department of Lands and Physical
    Planning, Mr Romilly Kila Pat, requesting for his assistance in the issuance and
    granting of a 99 year lease title over Section 391, Allotment 1, Hohola, NCD.
    Attached with the letter was a receipt for the payment of K100.00 for Lease
    Application.

    Chronology of Events XIX

  • Page 19 of 147

  • 2014

    47. On 6 February, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for Public
    Service submitted a Statutory Business Paper No: 17/2014 to the NEC, in regard to the
    approval of lease arrangements for the Multi Storey Government Office complex. The
    purpose of the submission was:

    1) to seek NEC‘s approval for the Leasing Arrangement for the Multi Storey
    Government Office Complex, as established in Cabinet Decision No: 03/2013,
    Decision No: 282/2013 of 14 August 2013, and Decision No: 300/2013 of 28
    August 2013.

    2) to direct the relevant Government Departments to implement this decision.

    In the Submission, the Public Service Minister also advised NEC that the State
    Negotiating Team had concluded its negotiations with Central Land Limited on the
    following terms and conditions to be entered into a Lease Agreement:

    Land: Allotment 1, Section 391 Hohola, NCD for which a
    Certificate of Reservation of Occupancy has been
    issued to the Department of Personnel Management by
    the Department of Lands & Physical Planning.

    Lease Term: 10 years with an option for the State to purchase the
    property within the lease period.

    Lease Commencement On and from the date the lessor first hands over the
    Date leased premises in the building to the lessee pursuant
    to the lease agreement.

    Base Rental PGK1, 300-per square meter per year payable
    (Before GST) quarterly in advance. Rate is fixed for the first 3 years
    of the Lease Term with options for review.

    Fit-Out Charge PGK350-per square meter per year for all office fit-
    outs.

    Target Time for Building 18-months after the Lessor‘s ground breaking for the
    Completion construction subject to force majeure.

    48. On 17 February, the NEC during its Special Meeting No: 05/2014, made Decision No:
    49/2014, in regard to the Approval of Lease Arrangements for the Multi Storey
    Government Office Complex, as follows:

    1) noted the content of Statutory Business Paper No. 17/2014;

    2) approved the Lease Terms and Conditions as outlined in the attached schedule;
    and

    Chronology of Events XX

  • Page 20 of 147

  • 3) directed the State Solicitor to finalize a lease agreement for execution by the
    Chairman of the Government Office Accommodation Committee and Central
    Land Limited before 28th February 2014.

    SCHEDULE

    FUNDAMENTAL LEASE TERMS AND CONDITIONS

    To be entered into a Lease Agreement between the Chairman of the Government
    Office Accommodation Committee and Central Land Ltd

    Land: Allotment 1, Section 391 Hohola, NCD for which a
    Certificate of Reservation of Occupancy has been
    issued to the Department of Personnel Management
    by the Department of Lands & Physical Planning.

    Lease Term: 10 years with an option for the State to purchase the
    property within the lease period.

    Lease Commencement On and from the date the lessor first hands over the
    Date leased premises in the building to the lessee pursuant
    to the lease agreement.

    Base Rental PGK 1, 300-per square meter per year payable
    (Before GST) quarterly in advance. Rate is fixed for the first 3 years
    of the Lease Term with options for review.

    Fit-Out Charge PGK350-per square meter per year for all office fit-
    outs.

    Target Time for Building 18-months after the Lessor‘s ground breaking for the
    Completion construction subject to force majeure.

    Chronology of Events XXI

  • Page 21 of 147

  • EXECUTIVE SUMMARY

    Overview

    This is the Final Report by the Ombudsman Commission of an Own Initiative investigation
    under Section 219(1)(a) (Functions of the Commission) of the Constitution and Section 13
    (Functions of the Commission) of the Organic Law on the Ombudsman Commission (OLOC)
    into the alleged improper decision by the Government Office Allocation Committee to engage
    Central Land Limited to build a 32 Floor Government Office Complex, at Waigani Central in
    NCD.

    The Commission investigated the following issues:

    1. Whether procurement processes and procedures provided under the Public Finances
    (Management) Act 1995 were followed by the GOAC, in the entire process leading to
    the signing of the MoU and drafting of Pre-Lease Terms and Conditions between the
    Government of PNG and Central Land Limited, to construct a 32 Floor Government
    Office Complex at Waigani Central in NCD.

    2. Whether procurement processes and procedures provided under the Public Finances
    (Management) Act 1995 were followed by the GOAC, in the entire process leading to
    the facilitation of the proposal by Central Land Limited, to construct a 32 Floor
    Government Office Complex at Waigani Central in NCD.

    Between 1996 to 2009, there have been various NEC Decisions made in regard to the
    rehabilitation and construction of Government office building in Waigani City Centre.

    On 5 September 2012, the then Minister for Public Service, Hon. Sir Dr Puka Temu, KBE,
    CMG, MP, wrote an Inter-Office Memo to Secretary for DPM and Chairman of the GOAC, Mr
    John M. Kali, CMG, OBE, to assess the proposal for Government office Complex and proceed
    to negotiate pre-lease agreements with Naima Investments Limited.

    On 25 September 2012, Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, signed a MoU with Naima Investments Limited without legal clearance from the
    State Solicitor. The MoU was to establish the process leading to the lease between the Parties.

    On 4 January 2013, the then Minister for Public Service, Hon. Sir Dr Puka Temu, KBE,
    CMG, MP, made a Policy Submission to the NEC, in regard to the approval for National
    Government to enter pre- leasing agreement with a private investor. The purpose of the Policy
    Submission was to inform NEC of acute shortage of office accommodation faced by
    Government Departments, Agencies and Authorities, particularly in Port Moresby, and to
    seek NEC‘s approval for the GOAC and CSTB to invite and enter into pre-lease agreement
    with a private sector investor, under normal legal and transparent business transaction.

    Based on the above Policy Submission, the NEC on 9 January 2013, during its Special
    Meeting No: 1/2013, made a decision approving the National Government to enter into a pre-
    lease agreement with a private investor. The Decision No. 3/2013 “approved in principle the
    construction of a 24 storey office complex building by Naima Investments Ltd under the

    Executive Summary XXII

  • Page 22 of 147

  • BOT arrangement and for the State to lease the new office complex next to Central
    Government Building at Waigani on State land”.

    In that decision, the NEC directed the Secretary for DPM and Chairman of the GOAC, Mr
    John M. Kali, CMG, OBE “to relocate those approved Government Departments and
    Agencies to the new office complex consistent with its approved and established
    administrative guidelines”. He was further directed to implement this decision in consultation
    with the Chairman of CSTB, Secretary for Department of Finance, Secretary for Department
    of Treasury, Secretary for Department of National Planning and Monitoring, and the Chief
    Secretary to Government. These Departmental Heads, were directed to report the progress
    back to the NEC.

    On 12 August 2013, the then Minister for Public Service, Hon. Sir Dr Puka Temu, KBE,
    CMG, MP, made a Policy Submission to the NEC, in regard to the design and construction of
    National Government‘s Multi-Storey Office Complex. The purpose of the Policy Submission
    No. 215/2013, was to seek the Cabinet‘s approval, to enhance its earlier Decision No: 3/2013
    of 9 January, 2013, for the construction of a Multi-Storey Office Complex under ―BOLT‖
    arrangement, and select a major developer from amongst the bids that were presented. The
    Public Service Minister also recommended that the NEC approve the development of a lease
    arrangement for all Government Departments/Agencies, to be accommodated in the proposed
    Multi-Storey Office Complex; and then also direct the relevant Government Departments to
    implement this decision.

    Acting on the above Policy Submission, the NEC during its Special Meeting No. 23/2013
    held on 14 August 2013, made its Decision No. 282/2013, approving the enhancement of
    NEC Decision No. 3/2013 of 9 January, 2013, with particular reference to the construction of
    a Multi-Storey Office Complex. However, in that decision, the NEC Policy Submission in
    part states that “ taking into consideration the views of the Members of the Council with
    regard to the lack of detailed information on the three recommended financiers/developers
    provided, agreed not to approve Recommendations 3 to 8 of the submission, instead it
    directed that a State Negotiating Team, comprising the Chief Secretary to Government as
    Chairman, Secretary for personnel Management, Secretary for Treasury and the State
    Solicitor, be appointed to negotiate the terms and conditions of the project with the three
    recommended financiers/developers for consideration by the NEC.” Recommendations 3 to
    8 concerned matters related to the design and construction of a Multi Storey Office Complex
    together with separate office to accommodate the Office of the Prime Minister of PNG and a
    1 storey annexure for conference and functions, and a separate facility for car parking; the
    financier and developer from the recommended short listing in the following order of
    preference:(1) Central Land Limited (2) Leightons PNG & Hassel and (3) CoDA PNG
    Limited; the Secretary and the Minister for Lands to facilitate the transfer of Allotment 1,
    Section 391, Hohola, and any vacant undeveloped adjoining State land including Allotment 2,
    Section 391, Hohola to DPM; the Secretary for DPM, in consultation with the Secretaries for
    Finance, Treasury, National Planning & Monitoring, Lands & Physical Planning and the
    Chief Secretary to Government to implement that decision; the Secretary for DPM in his
    capacity as Chairman of the GOAC to negotiate fundamental lease terms and conditions with
    the selected developer; and the Minister for Lands to delegate his powers with respect to
    execution of lease agreements to the Secretary for DPM in his capacity as Chairman of
    GOAC to fast tract the execution of that lease agreement and in all other outstanding lease
    agreements.

    Again, on 20 August 2013, the then Minister for Public Service, Hon. Sir Dr Puka Temu,
    KBE, CMG, MP, made a Policy Submission No. 229/2013, to the NEC, in regard to the

    Executive Summary XXIII

  • Page 23 of 147

  • design and construction of National Government‘s Multi-Storey Office Complex. The
    recommendations made to the NEC in this submission, were exactly the same compared to
    those in the Policy Submission No. 215/2013.

    Based on the above Policy Submission, the NEC on 28 August 2013, during its Special
    Meeting No: 25/2013, made a decision approving the enhancement of the NEC Decision No.
    3/2013, of 9 January 2013, in particular reference to the construction of a Multi-Storey Office
    Complex. The Decision No: 300/2013 states that ―approved in principle, Central Land
    Limited to be the financier and the developer of this project.‖

    In that decision, the NEC “noted that the Office of the Prime Minister and the Department
    of the Prime Minister and NEC will be located at the Marea Haus, which is currently under
    renovation, and approved that the Multi-Storey Office Complex will be to accommodate
    various key Government Departments and Agencies.” The NEC also “noted the issues
    raised with regard to the leasing period and land and directed the State Negotiating Team
    appointed in NEC Decision No. 282/2013 and Government Office Accommodation
    Committee (GOAC) to negotiate the leasing agreement with Central Land Limited for
    endorsement by the NEC.”

    The NEC, in view of the above decision, did not approve Recommendations 3 to 8 of the Policy
    Submission No. 229/2013.

    The State Solicitor provided advice to the GOAC, on compliance with the tender requirements
    under the PFMA, after NEC approved CLL‘s proposal for the construction of the 32 Floor
    Government Office Complex, but this was not complied with by GOAC.

    Findings of Wrong Conduct

    [1] In the opinion of the Ombudsman Commission, the actions of the GOAC were wrong
    and improper when it:

    (a) obtained NEC endorsement of CLL (by way of EoI) which was outside of the
    procurement process provided in the PFMA and Part 13, Division 2,
    Paragraphs 3 & 4a of the Financial Manual;

    (b) did not inform NEC to re-tender CLL‘s proposal in line with the PFMA;

    (c) proceeded to sign a MoU with CLL;

    (d) facilitated the engagement of CLL on the construction of the Multi-Storey (32
    Floor) Central Government Office Complex, though that should have been
    done by the CSTB.

    (e) proceeded with the signing of MoU and negotiated pre-lease arrangements with
    CLL to construct a 32 Floor Central Government Office Complex, which was
    exceeding 12 storeys and in breach of the Waigani City Centre Development
    Control Policy.

    [2] In the opinion of the Ombudsman Commission, the actions of the GOAC were wrong
    and improper when it called for EOI which was outside of the PFMA and not
    following the legal advice of the State Solicitor to re-tender CLL‘s proposal under

    Executive Summary XXIV

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  • PFMA for the construction of the 32 Floor Central Government Office Complex
    building project and service through CSTB.

    [3] In the opinion of the Ombudsman Commission, the action of GOAC was wrong and
    improper when it did not fully and properly inform NEC on the technical and
    economical advice for the 32 Floor Central Government Office Complex building
    project and service that will cost the State millions of kina.

    [4] In the opinion of the Ombudsman Commission, the action of GOAC was wrong and
    improper when it withheld vital clause in the MoU regarding the cost of the BOLT
    arrangement on the 32 Floor Central Government Office Complex building project
    and service which will cost the State approximately K981, 760,000 in one year which
    is much more higher than the National Government‘s annual budget for
    accommodation/rental which is at K230, 000,000. This particular information did not
    reach NEC.

    Irregularities

    Non-compliance of the tender requirements, and provisions of the Public Finances
    (Management) Act 1995 by the GOAC on the facilitation of the proposal and
    engagement of CLL to construct the 32 Floor Government Office Complex.

    The EoI process which GOAC followed in the engagement of CLL was outside of the
    procurement process provided in the PFMA and the Financial Manual in particular Part
    13, Division 2, Paragraphs 3 & 4a.

    Signing of MoU with Central Land Limited by GOAC after State Solicitor advised not
    to do so until the procurement process is followed.

    Bypassing of due process and hijacking roles and responsibilities of CSTB by the
    GOAC.

    Non-compliance with the building height restrictions of the Waigani City Centre
    Development Control Policy which provides for buildings not exceeding the height
    restriction of 12 storeys.

    Findings of Wrong Conduct

    [1] Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for Public Service

    [2] Mr John M. Kali, CMG, OBE, Secretary for DPM and Chairman of the GOAC

    The following legislations have been breached by Hon. Sir Dr Puka Temu, KBE, CMG, MP,
    the then Minister for Public Service, and Mr John M. Kali, CMG, OBE, Secretary for DPM and
    Chairman of the GOAC, who were implicated in relation to the engagement of Central Land
    Limited to construct the 32 Floor Central Government Office Complex at Waigani in NCD:

    [1] Sections 39 (Central Supply and Tenders Board) & 40 (Tender for Property, Stores and
    Services) of the Public Finances (Management) Act, 1995.

    [2] Part 13, Division 2, Paragraphs 3 & 4a of the Financial Manual.

    Executive Summary XXV

  • Page 25 of 147

  • [3] Waigani City Centre Development Control Policy.

    Conclusion

    The Commission has observed that the above mentioned leaders and persons failed to follow
    proper processes and procedures outlined in the above Laws, relating to the engagement of
    Central Land Limited to construct a 32 Floor Central Government Office Complex at Waigani
    in NCD.

    Recommendations

    [1] The Ombudsman Commission recommends that, the GOAC through the then Minister
    for Public Service, Hon. Sir Dr Puka Temu, KBE, CMG, MP:

    (a) inform NEC of State Solicitor‘s advice for Waigani Multi-Storey Central
    Government Office Complex (CLL Proposal) to be procured by CSTB in
    accordance with the PFMA;

    (b) inform NEC that no lease agreement has been executed between the State
    (DPM) and CLL as yet;

    (c) recommend for NEC to revoke its earlier decision for State Solicitor to finalize
    leasing agreement to be signed by DPM and CLL;

    (d) seek NEC approval for the Waigani Multi-Storey Central Government Office
    Complex Project (CLL Proposal) to be procured through CSTB;

    (e) inform NEC that according to the Waigani City Centre Development Control
    Policy, the highest building allowed is 12 storeys and cannot be beyond that.
    The different zones within the city have specific building requirements and for
    the areas that the proposed building is intended to be built on would not allow
    for a 32-storey building.

    [2] The Ombudsman Commission recommends that the State Solicitor as delegated by the
    Attorney General and mandated by the Attorney General Act (Amended) 2013, is the
    only Principal Legal Advisor of the government in terms of clearance on MoUs and
    agreements, hence in future, projects and services of such nature must fully comply
    with the advice of the State Solicitor.

    [3] The Ombudsman Commission recommends that in future, NEC must be fully and
    properly informed with the technical and economical advice so that NEC is properly
    guided to make informed and proper decisions on projects and services that will cost
    the State millions of kina.

    [4] The Ombudsman Commission recommends that CSTB is the only mandated procuring
    authority of the national government, hence in future; projects and services of such
    magnitude that will cost the State millions of kina must be procured through CSTB.

    Executive Summary XXVI

  • Page 26 of 147

  • [5] The Ombudsman Commission recommends that the BOLT arrangement under PFMA
    on projects and services is done away with. Although it has good intentions, the
    provision can be abused.

    Executive Summary XXVII

  • Page 27 of 147

  • 1. JURISDICTION AND PURPOSE OF INVESTIGATION

    [1.1] INTRODUCTION

    This is the Final Report by the Ombudsman Commission of an Own Initiative investigation
    under Section 219(1)(a) (Functions of the Commission) of the Constitution, and Section 13
    (Functions of the Commission) of the Organic Law on the Ombudsman Commission,
    conducted into the improper decision by the Government Office Allocation Committee to
    engage Central Land Limited to build a 32 Floor Government Office Complex at Waigani
    Central in NCD.

    Notice pursuant to Section 17(1) of the Organic Law on the Ombudsman Commission, dated
    26 May 2014 were issued to Secretary for DPM and Chairman of the GOAC, Chairman of the
    CSTB, and the State Solicitor, advising them of the Commission‘s intention to investigate this
    matter.

    Table 1: List of individuals, who were issued notice pursuant to Section 17 (1) of the
    Organic Law on the Ombudsman Commission are:

    No Name Position Department/Agency
    1. Mr John. M Kali, OBE Secretary Department of Personnel Management
    2. Mr Daniel Rolpagarea State Solicitor Office of the State Solicitor, Department
    of Justice and Attorney General
    3. Mr Phillip Eludeme Chairman Central Supply and Tenders Board

    [1.2] JURISDICTION OF THE OMBUDSMAN COMMISSION

    Sections 218(b) and (c) of the Constitution, states that two of the purposes for establishing the
    Ombudsman Commission are:

    to help in the improvement of the work of the governmental bodies and the
    elimination of unfairness and discrimination by them; and

    to help in the elimination of unfair or otherwise defective legislation and practices
    affecting or administered by governmental bodies.

    Section 219(1)(a)(ii) of the Constitution, empowers the Commission to investigate on its own
    initiative or on complaint, by a person affected by any conduct on the part of any
    governmental body, or an officer, or employee of a governmental body in the exercise of the
    powers or functions vested in it, him or her by law, in cases where the conduct is or may be
    wrong, taking into account, amongst other things, the National Goals and Directive Principles,
    the Basic Rights and the Basic Social Obligations.

    Schedule 1.2(1) of the Constitution defines ―governmental body‖ as:

    (a) the National Government; or
    (b) a provincial government; or

    Chapter 1: Jurisdiction and Purpose of Investigation 1

  • Page 28 of 147

  • (c) an arm, department, agency or instrumentality of the National Government or a provincial
    government;
    (d) a body set up by statute or administrative act for government or official purposes.

    The Government Office Allocation Committee is a government authority, and its functions
    are provided for by the Public Finances (Management) Act, 1995 and have been allocated to
    the Department of Personnel Management by a policy decision of the NEC as stated in the
    General Order 19.

    The Commission, therefore has jurisdiction, to inquire into the question of whether the
    Government Office Allocation Committee made a proper decision to engage Central Land
    Limited, to build a 32 Floor Government Office Complex at Waigani Central in NCD.

    [1.3] PURPOSE OF THE INVESTIGATION

    The purpose of this investigation, is to determine whether any of the conduct under
    investigation was wrong, and to determine, whether any laws or administrative practices were
    defective in relation to the Government Office Allocation Committee‘s decision on the
    engagement of Central Land Limited for the construction of a 32 Floor Government Office
    Complex at Waigani Central in NCD.

    [1.4] METHOD OF INQUIRY

    The Commission, issued the notices under Section 17(1) of the Organic Law on the
    Ombudsman Commission (OLOC), on 26 May 2014 to the Secretary for DPM and Chairman
    of the GOAC, the Chairman of CSTB and the State Solicitor, advising of its intention to
    investigate the allegation.

    Section 17(1) of the OLOC states:

    Before investigating any matter within its jurisdiction, the Commission shall inform the
    responsible person of its intention to make the investigation.

    The Commission, obtained documents and other evidence, from a number of sources and used
    its powers under Section 18(1) of the Organic Law on the Ombudsman Commission, to
    require people to produce documents and information.

    Section 18(1) of the OLOC states:

    Subject to the provisions of this Section and of Section 19, the Commission may from time to
    time require any person who in its opinion is able to give any information relating to any
    matter that is being investigated by the Commission to furnish to it that information and to
    produce any documents, papers or things that, in the opinion of the Commission, relate to
    any matter being investigated by it and that may be in the possession or control of that
    person.

    Chapter 1: Jurisdiction and Purpose of Investigation 2

  • Page 29 of 147

  • [1.5] PERSONS WHO GAVE EVIDENCE BEFORE THE COMMISSION

    The following persons gave evidence before the Commission:

    No Name Designation Organization
    1. Mr John M. Kali, Secretary, Department of Personnel Department
    CMG, OBE Management and Chairman of the of Personnel
    Government Office Allocation Committee Management
    2. Mr Chris Kabauru Director, Office of Government Department
    Accommodation and Public Service of Personnel
    Housing Management
    3. Mr Isikel Mesulam The then Director, Legal and Department
    Investigations Advisory Services of Personnel
    Management
    4. Mr Daniel Rolpagarea State Solicitor, Office of the State Department
    Solicitor of Justice and
    Attorney
    General
    5. Mr Phillip Eludeme Chairman Central
    Supply and
    Tenders
    Board
    6. Mr David Wereh Secretary Department
    of Works
    7. Dr Ken Ngangan, PhD, Secretary Department
    CMA, CPA of Finance
    8. Mr Joe Sapa First Assistant Secretary, Corporate Department
    Service Division of Finance
    9. Mr Romily Kila Pat The then Secretary Department
    of Lands and
    Physical
    Planning
    10. Mr Dairi Vele Secretary Department
    of Treasury
    11. Mr Ilagi Veali, MPS Secretary National
    Executive
    Council
    12. Mr Alex Tongayu Registrar of Companies Investment
    Promotion
    Authority

    [1.6] OMBUDSMAN COMMISSION NOT CONFINED TO REPORTING ON THE
    LEGALITY OF ADMINISTRATIVE CONDUCT

    When the Commission conducts an investigation, it is not only confined to reporting on
    whether or not there have been breaches of the law. The Commission‘s constitutional mandate
    is broader than this. It is authorized to report on what, in its opinion, is ―wrong conduct‖,
    irrespective of whether that conduct has been in accordance with the law.

    Chapter 1: Jurisdiction and Purpose of Investigation 3

  • Page 30 of 147

  • Under this provision conduct for which reasons should be given, but were not, whether or not
    the act was supposed to be done in the exercise of deliberate judgement within the meaning of
    Section 62 (―decisions in deliberate judgement‖) of the Constitution is deemed to be wrong
    conduct.

    [1.7] DEFINING ―WRONG CONDUCT‖

    The Constitution gives some guidance to the Commission, when it is deciding whether
    administrative conduct is ―wrong‖.

    Section 219(2) (Functions of the Commission) of the Constitution states:

    Subject to Subsections (3), (4) and (5), and without otherwise limiting the generality of the
    expression, for the purposes of Subsection (1)(a) conduct is wrong if it is –

    (a) contrary to law; or

    (b) unreasonable, unjust, oppressive or improperly discriminatory, whether or not it
    is in accordance with law or practice; or

    (c) based wholly or partly on improper motives, irrelevant grounds or irrelevant
    considerations; or

    (d) based wholly or partly on a mistake of law or of facts; or

    (e) conduct for which reasons should be given but were not, whether or not the act
    was supposed to be done in the exercise of deliberate judgment within the meaning
    of Section 62 (decisions in ―deliberate judgment‖).

    The above list is not exhaustive. The phrase ―and without otherwise limiting the generality of
    the expression‖ indicates that conduct, which does not fit into any of the descriptions in
    paragraphs (a) to (e), may still be regarded as wrong. The Commission is entitled to regard
    conduct as wrong, even if the conduct does not appear in the list of descriptions given in
    Section 219(2) of the Constitution.

    [1.8] THE PROVISIONAL REPORT

    When the Ombudsman Commission prepares a Report of this nature, it has a duty to observe
    procedural fairness. This duty is imposed by Section 17(4) (Proceedings of the Commission)
    of the OLOC.

    Section 17(4) of the OLOC states:
    Nothing in this Law compels the Commission to hold any hearing and no person is entitled as
    of right to be heard by the Commission except that –

    (a) Where a report of the Commission may affect a State Service, Provincial
    Government or Statutory Body, the Commission shall provide reasonable
    opportunity for the Permanent Head of that service or the Statutory Head of that
    body, as the case may be, to comment on the subject of the investigation; and

    (b) the Commission shall not make any comment in its report that is adverse to or
    derogatory of any person without –

    (i) Providing him with reasonable opportunity to be heard; and

    Chapter 1: Jurisdiction and Purpose of Investigation 4

  • Page 31 of 147

  • (ii) Fairly setting out his defence in its report.

    In order to discharge its duty of procedural fairness, the Ombudsman Commission distributed
    a Provisional Report of this investigation on 20 June 2016. The Provisional Report allows
    persons who may be affected by the Commission‘s Final Report to respond to any adverse
    findings, and correct any factual errors the Commission may have made. The purpose of the
    Provisional Report is to state the Ombudsman Commission‘s preliminary findings of facts and
    preliminary views on the matter under consideration and to seek comments and submissions
    from those affected.

    The table below lists all the recipients of the Provisional Report and was invited to respond to
    the Commission‘s preliminary findings:

    RECIPIENT DESIGNATION STATUS OF
    RESPONSE
    1. Sir Dr Puka Temu, KBE, The then Minister for Public Service Written
    CMG, MP response
    received
    2. Mr John M. Kali, CMG, Secretary for DPM and Chairman of the Written
    OBE GOAC response
    received
    3. Mr Chris Kabauru Director, Office of Government Written
    Accommodation and Public Service response
    Housing, DPM received
    4. Mr Isikel Mesulam The then Director, Legal and Written
    Investigations Advisory Services, DPM response
    received
    5. Mr Daniel Rolpagarea State Solicitor Written
    response
    received
    6. Mr Phillip Eludeme Chairman of CSTB Written
    response
    received
    7. Mr David Wereh Secretary for Works No response
    8. Dr Ken Ngangan, PhD, Secretary for Finance Written
    CMA, CPA response
    received
    9. Mr Joe Sapa First Assistant Secretary, Corporate Written
    Service Division, DoF response
    received
    10. Mr Romily Kila Pat The then Secretary for Lands & Physical Written
    Planning response
    11. Mr Dairi Vele Secretary for Treasury No response
    12. Mr Ilagi Veali, MPS Secretary for NEC Written
    response
    13. Lai Weng Hoo Managing Director, NIL and CLL Written
    response

    The Commission has discharged its duty of procedural fairness and natural justice by giving
    the above persons the opportunity to respond to the Provisional Report.

    Chapter 1: Jurisdiction and Purpose of Investigation 5

  • Page 32 of 147

  • 2. FINDINGS OF FACTS

    INTRODUCTION

    This Chapter is divided into two parts; each part will deal separately with the manner in which
    this entire facilitation and approval process for the construction of the 32 Floor Government
    Office Complex was carried out.

    Part 1 of this Chapter addresses the Policy Submissions and Decisions by the NEC for the
    accommodation of Government Departments at the Waigani Central area in NCD.

    Part 2 of this Chapter addresses the involvement of the GOAC and the NEC Policy
    Submissions and Decisions, in the whole process that led to the call for EoIs, facilitation of
    the proposal and signing of the MoU between the State (GOAC) and CLL for the construction
    of the 32 Floor Central Government Office Complex.

    PART 1 THE NEC POLICY SUBMISSIONS AND DECISIONS ON THE
    ACCOMMODATION OF GOVERNMENT DEPARTMENTS AND
    ORGANIZATIONS IN THE WAIGANI CENTRAL AREA, NATIONAL
    CAPITAL DISTRICT

    [1] NEC DECISION NO: 53/96 ON THE CONSTRUCTION OF GOVERNMENT
    BUILDINGS IN THE WAIGANI CITY CENTRE, NATIONAL CAPITAL
    DISTRICT

    On 17 April 1996, the NEC during its Meeting No: 18/96, made its Decision No. 53/96 in
    regard to the construction of Government Buildings in the Waigani City Centre. Below is an
    extract:

    1. ―acknowledged that there is insufficient office space to accommodate all government departments
    in the Waigani City Centre;

    2. directed the Ministers for Finance, Public Service, National Planning, Housing, Lands and Justice
    to formulate and develop a master plan for government office requirements with the Waigani
    City Centre over a period of five (5) to ten (10) years to accommodate all government
    departments. The NCDC, be co-opted as a member of the Team for purposes of planning the
    governments office requirements;

    3. directed that various options be looked at to fast-track the construction of Government Offices at
    Waigani.‖

    Comments

    The NEC saw the need to create sufficient office spaces to accommodate all government
    departments.

    Chapter 2: Findings of Facts 6

  • Page 33 of 147

  • An Intergovernmental Committee was to be created to formulate and develop a Master Plan
    for government office requirements. This was an NEC Decision made in 1996, in regard to
    the construction of government buildings in the Waigani City Centre, when Sir Julius Chan,
    was the then Prime Minister and Chairman of the NEC, while Mr Peter M. Eka was the then
    Secretary for NEC. The decision was endorsed on 18 April 1996, and copies were distributed
    to Department of Finance, Public Service Commission, Department of National Planning and
    Monitoring, National Housing Corporation, Department of Lands and Physical Planning,
    Department of Justice and Attorney General, Prime Minister and National Capital District
    Commission.

    [2] NEC POLICY SUBMISSION NO: 69/2001 AND NEC DECISION NO:
    103/2OO1 ON THE REHABILITATION AND CONSTRUCTION OF
    GOVERNMENT OFFICE BUILDINGS IN THE WAIGANI CITY CENTRE

    On 14 June 2001, Hon. Philemon Embel, OBE, MP, the then Minister for Public Service,
    made a Policy Submission to the NEC, in regard to the Rehabilitation and Construction of
    Government Office Buildings in the Waigani City Centre. The purpose of the Policy
    Submission, was to seek Cabinet approval of the major initiatives to fast-track the
    implementation of the Waigani Government Centre Development, particularly the
    rehabilitation and reconstruction of existing Government Office Buildings, Audit and
    Installation of Effective Management of property leases of old and new buildings, owned by
    the State, and preparation of a Master Plan for the Waigani Office Development project.

    On 5 July 2001, the NEC during its Meeting No: 21/2001, made its Decision No: 103/2001, in
    regard to the Rehabilitation and Construction of Government Office Buildings in the Waigani
    City Centre. Below is an extract:

    1. ―noted the contents of the Policy Submission No. 69/2001;

    2. directed establishment of an inter-departmental committee to determine current and future needs
    for office accommodation;

    3. directed the Office Allocation Committee, to proceed to rehabilitate the existing office buildings,
    particularly the Marea Haus and the Central Government Office through public tender; and

    4. further directed the Office Allocation Committee to report back to Cabinet in one month on the
    actions taken.‖

    Comments

    Hon. Philemon Embel, OBE, MP, the then Public Service Minister, saw the need for an
    Effective Management of property leases of old and new buildings owned by the State. He
    also requested that a Master Plan be developed for the Waigani Office Development project.

    The NEC Decision No. 103/2001 was based on NEC Policy Submission No: 69/2001, in
    regard to the rehabilitation and construction of government office buildings in the Waigani
    City Centre. This was made, when Sir Mekere Morauta, was the then Prime Minister and
    Chairman of the NEC, while Ms Winnie A. Kiap, was the then Secretary for NEC. The
    decision was endorsed on 11 July, 2001, and copies were distributed to Minister for Public
    Service Commission and Department of Personnel Management, Attorney General and
    Minister for Justice, Prime Minister & NEC, Minister for Treasury, Minister for National
    Planning & Monitoring, Minister for Finance, and Minister for Works & Transport.

    Chapter 2: Findings of Facts 7

  • Page 34 of 147

  • Clause 2 of the NEC Decision directed the establishment of an inter-departmental committee
    to determine current and future needs for office accommodation.

    As a result of this Decision, the Government Office Allocation Committee, was established to
    facilitate the rehabilitation and construction of government office buildings, in the Waigani
    City Centre.

    [3] NEC POLICY SUBMISSION NO: 10/2005 AND NEC DECISION NO: 49/2005
    ON THE REHABILITATION AND CONSTRUCTION OF GOVERNMENT
    OFFICE BUILDINGS IN THE WAIGANI CITY CENTRE

    On 8 December, 2004, Hon. Sinai Brown, OBE, MP, the then Minister for Public Service,
    made a Policy Submission to the Members of the NEC, in regard to the Rehabilitation and
    Construction of Government Office Buildings in the Waigani City Centre. The purpose of the
    Policy Submission was for the NEC to:

    1) take note that it has catalogued four (4) major NEC Policy Decisions, since 1996, to
    increase availability of office space for use by government departments. Nearly a
    decade has passed and no material success has been made in implementing these
    decisions largely, due to the State not securing a credible and serious financier and
    developer of the project.

    2) take note that the State has spent more than K600 million in office rentals, over this
    period, and that if it is to save some of these monies, it must give its most serious
    considerations to the present submission.

    3) take note of the proposal by Infratech Management Services, the consulting firm hired
    by the State to manage and report back to the State all transactions leading to fast track
    the maintenance and refurbishment of the Waigani Office Development Project.

    4) consider, endorse and give its approval to appoint a Contractor, to immediately
    commence the project of maintenance and refurbishment of the Pineapple Building or
    Marea Haus; and the construction of the six (6) Floors INDEPENDENCE HAUS
    Complex.

    5) consider and give its approval for Bond Glade Construction Pty Ltd of Australia to be
    appointed as the financier and developer of the Waigani Office Development Project,
    to the tune of US$97 million on a BOT arrangement, to run over a seven (7) year term.

    On 9 March, 2005, the NEC during its Meeting No: 11/2005, made its Decision No: 49/2005,
    in regard to the Rehabilitation and Construction of Government Office Buildings, in the
    Waigani City Centre. Below is an extract:

    1. ―noted the contents of Policy Submission No. 10/2005;

    2. noted the additional information provided in the revised submission by the Minister for Public
    Service;

    3. did not accept the recommendations of the submission instead, directed the Minister for Public
    Service to:

    Chapter 2: Findings of Facts 8

  • Page 35 of 147

  • (a) call for public tender for the refurbishment of the Marea Haus and Central Government
    Building following the normal tendering procedures as provided under the Public Finances
    (Management) Act for purposes of transparency and accountability;

    (b) directed the Minister for Public Service to consider the two projects, refurbishment of the
    Marea Haus and Central Government Building separately from the construction of
    Independence Haus given the legal complexities and major financial implications;

    (c) directed the Minister for Public Service to give priority to the refurbishment of the Marea
    Haus (Pineapple Building) and the Central Government Building as this will house more
    government agencies and thus greatly reduce government expenditure on rentals paid each
    year;

    (d) directed the Minister for Public Service to prepare the submission in close consultation with
    the Department of Personnel Management as the implementing agency seeking funding
    where possible through domestic sources such as POSF and NPF;

    (e) directed the Minister for Lands & Physical Planning to revisit the Land available for the
    Waigani City Centre as per the Master Plan and identify Land available for the purposes of
    accommodating all Government Agencies in Waigani; and

    (f) directed the Minister for Lands & Physical Planning in consultation with the Minister for
    Public Service, Minister for National Planning & Monitoring and Minister for Social
    Welfare Development to prepare an information paper for presenting to NEC as a matter of
    priority.‖

    Comments

    For so long there has not been any material success on development of office space for use by
    government departments, despite NEC Decisions made on the subject, since 1996, due to the
    State not securing a credible and serious financier and developer of the project. The State has
    spent more than K600 million in office rentals, over that period, therefore, if it was to save
    some of those monies, it must give its most serious considerations to the present submission.

    The NEC Policy Submission No. 10/2005, dated 18 December 2004 was from the then
    Minister for Public Service, Hon. Sinai Brown, OBE, MP, to the Members of the NEC
    regarding the rehabilitation and construction of government office buildings in the Waigani
    City Centre. Based on this NEC Policy Submission, the NEC Decision No. 49/2005 was
    made.

    The NEC Decision No. 49/2005, was made in regard to the rehabilitation and construction of
    government office buildings in the Waigani City Centre, when Grand Chief Sir Michael
    Somare, was the then Prime Minister and Chairman of the NEC, while Mr Manly Ua, was the
    then Acting Secretary for NEC. The decision was endorsed on 14 March 2005 and copies
    were distributed to Minister for Public Service, Minister for Lands & Physical Planning,
    Minister for Social Welfare Development, Prime Minister & NEC, Department of Personnel
    Management, Minister for National Planning & Monitoring, Minister for Community
    Development, Attorney General and Minister for Justice, Minister for Treasury, and Minister
    for Finance.

    Clause 3 (e) of this NEC Decision directed the Minister for Lands & Physical Planning, to
    revisit the Land available for the Waigani City Centre, as per the Master Plan and identify
    Land available for the purposes of accommodating all Government Agencies in Waigani.

    Chapter 2: Findings of Facts 9

  • Page 36 of 147

  • [4] NEC DECISION NO: 293/2005 ON THE REHABILITATION AND
    CONSTRUCTION OF GOVERNMENT OFFICE BUILDINGS IN THE
    WAIGANI CITY CENTRE

    On 22 December, 2005, the NEC during its Meeting No: 57/2005, made its Decision No:
    293/2005 in regard to the Rehabilitation and Construction of Government Office Buildings in
    the Waigani City Centre. Below is an extract:

    1. ―deferred consideration of the matter to the first 2006 meeting of the NEC on 25 January 2006;

    2. directed the Minister for Public Service to revise the submission to include:

    (i) expenditure report on the K2 million expended in 2005;

    (ii) details on proposed contract variation for the costing and design of the 2 nd phase of the
    project;

    3. directed that the design contract be tendered in the interest of transparency;

    4. directed that the refurbishment of the Government Office Buildings Projects be separated from the
    concept of the medium to long term holistic development plan for Government Offices in Waigani
    City Centre; and

    5. directed the Minister for Works and the Chief Secretary to Government to assist the Minister for
    Public Service in this matter.‖

    Comments

    This was an NEC Decision made in 2005, in regard to the rehabilitation and construction of
    government office buildings in the Waigani City Centre, when Grand Chief Sir Michael
    Somare was the then Prime Minister and Chairman of the NEC, while Ms Winnie A. Kiap
    was the then Secretary for NEC. The decision was endorsed in 24 December, 2005, and
    copies were distributed to Minister for Public Service, Minister for Works, Department of
    Personnel Management, Prime Minister & NEC, Minister for National Planning &
    Monitoring, Attorney General and Minister for Justice, and Minister for Finance.

    Clause 4 of the NEC Decision had directed that the refurbishment of the Government Office
    Buildings Projects, be separated from the concept of the medium to long term holistic
    development plan for Government Offices in Waigani City Centre. This was a result of
    having the need for more office spaces to house government departments.

    [5] NEC POLICY SUBMISSION NO: 102/2008 AND NEC DECISION NO:
    164/2008 ON THE REHABILITATION AND CONSTRUCTION OF
    GOVERNMENT OFFICE BUILDINGS IN THE WAIGANI CITY CENTRE

    On 9 July 2008, Hon. Peter O‘Neill, CMG, MP, the then Minister for Public Service, made a
    Policy Submission to the members of the NEC, in regard to the Rehabilitation and
    Construction of Government Office Buildings in the Waigani City Centre. The purpose of the
    Policy Submission was to:

    1. inform NEC of progress in refurbishing Marea Haus (Pineapple Building) and the
    CGOs; and

    Chapter 2: Findings of Facts 10

  • Page 37 of 147

  • 2. ask NEC to note the need to create a seat of Government in a central location, as a
    symbol of nationhood, unity and strength; and

    3. request NEC to approve all related structural, administrative and financial
    arrangements to speed completion of the projects; and

    4. request NEC to rescind all decisions not of contractual nature incurring financial
    penalties which have remained in force since 1996, and settle outstanding contractual
    matters with the Project Management Consultant, and

    5. request NEC to approve prioritization of funding and construction of the
    refurbishment phase of the Waigani Office Development Project, and

    6. request NEC to direct the Minister for Treasury and Finance and the Minister for
    Public Service, to establish the Waigani City Centre Government Office precinct on
    land allocated in the Waigani City Town Master Plan for Government Office use.

    On 7 August 2008, the NEC during its Special Meeting No: 25/2008, made its Decision No:
    164/2008 in regard to the Rehabilitation and Construction of Government Office Buildings in
    the Waigani City Centre. Below is an extract:

    1. ―noted the content of Policy Paper No. 102/2008;

    2. rescinded all its previous decisions regarding the Waigani City development project, except for
    retaining and honoring all contracts entered into by the State to date;

    3. directed the Minister for Public Services in consultation with the Minister for Treasury & Finance
    and the Minister for National Planning & District Development to obtain construction funding for
    refurbishment of the Central Government Office complex and the Marea Haus from an allocation
    of K110.0 million from the supplementary budget;

    4. prioritized refurbishment of the Marea Haus and the Central Government Building Office and
    instructed the Minister for Public Services to immediately tender the contract for refurbishment
    through the Central Supply & Tenders Board (CSTB) in the form recommended by the Project
    Management Consultant;

    5. reaffirmed the contract of Project Management Consultant with Infratech Management
    Consultants and settle all outstanding claims, legal costs and any damages agreed;

    6. re-affirmed the composition of the Inter-Departmental Committee, to be chaired by the Secretary
    for the Department of Personnel Management; and

    7. directed the Minister for Public Services in consultation with the Minister for Treasury & Finance
    and the Department of Personnel Management to prepare the development strategy for the State
    Government office precinct in the government office zone of the Waigani City Town Plan, and
    phase the Waigani Office Development Project for the development of the overall Master Plan of
    the Waigani City Development.‖

    Comments

    In the NEC Policy Submission No: 102/2008, Hon. Peter O‘Neill, CMG, MP, the then Public
    Service Minister asked NEC to note the need to create a seat of Government in a central
    location, as a symbol of nationhood, unity and strength. The then Public Service Minister also
    requested NEC to approve all related structural, administrative and financial arrangements to
    speed completion of the projects. He further requested NEC to direct the Minister for

    Chapter 2: Findings of Facts 11

  • Page 38 of 147

  • Treasury and Finance and the Minister for Public Service to establish the Waigani City Centre
    Government Office precinct on land allocated in the Waigani City Town Master Plan for
    Government Office use.

    The NEC Decision No: 164/2008, in regard to the rehabilitation and construction of
    government office buildings in the Waigani City Centre, was made when Grand Chief Sir
    Michael Somare was the then Prime Minister and Chairman of the NEC, while Ms Winnie A.
    Kiap was the then Secretary for NEC. The decision was endorsed in 11 August, 2008, and
    copies were distributed to Minister for Public Service, Minister for Treasury & Finance,
    Department of Personnel Management, Prime Minister & NEC, Minister for National
    Planning & Monitoring, and Attorney General and Minister for Justice.

    Clause 2 of the NEC Decision, stated that NEC has rescinded all its previous decisions
    regarding the Waigani City development project, except for retaining and honoring all
    contracts entered into by the State to date. This means that all the NEC decisions made earlier
    had been withdrawn, but facilitated all the contracts which the State was a party to.

    Clause 6 of the NEC Decision stated that NEC has re-affirmed the composition of the Inter-
    Departmental Committee, to be chaired by the Secretary for Department of Personnel
    Management.

    As a result of this Decision, the Secretary for Department of Personnel Management, Mr John
    M. Kali, CMG, OBE, was appointed to be the Chairman of the Government Office Allocation
    Committee.

    [6] NEC POLICY SUBMISSION NO: 45/2009 AND NEC DECISION NO: 89/2009
    ON RELOCATION OF CERTAIN GOVERNMENT DEPARTMENTS AND
    AGENCIES FROM KONEDOBU TO WAIGANI

    On 20 January, 2009, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Deputy Prime
    Minister and Minister for Lands & Physical Planning, made a Policy Submission to the
    members of the NEC, in regard to the relocation of certain Government Departments and
    Agencies from Konedobu to Waigani. The purpose of the Policy Submission was to inform
    the NEC members on the difficulties faced resulting from the locations outside of Waigani
    that certain important government departments and agencies are located and to seek
    directives:

    1. that Konedobu Administrative area to be the administrative headquarters of the
    Central Provincial Government;

    2. that the National Government functionalities currently located in Konedobu on
    Portions 2396 and 2397 (with the exception of Police Head Quarters) be relocated to
    Waigani;

    3. that NHC relinquish its interest over Portion 479 back to the State in line with this
    submission;

    4. priority is given to Department of Agriculture & Livestock (DAL) & Department of
    Mineral Policy & Geohazards Management (DMP&GHM) for relocation to Waigani;

    Chapter 2: Findings of Facts 12

  • Page 39 of 147

  • 5. for the GOAC to immediately consult the departments and agencies concerned and
    ascertain their requirements for their relocation;

    6. that following completion of rehabilitation of the Central Government Building &
    Pineapple Building that first priority be given to the two departments;

    7. for DLPP to reserve all parcels of land that are not leased land in the Waigani City
    Centre and facilitate titles for each of them in favor of the State for the purposes of
    future developments to house government departments and agencies;

    8. for DLPP to come up with long-term development plans for office constructions in
    Waigani City Centre to house government departments and agencies.

    On 26 June, 2009, the NEC during its Meeting No: 04/2009, made its Decision No: 89/2009
    in regard to the Relocation of Certain Government Departments and Agencies from
    Konedobu to Waigani. Below is an extract:

    1. ―noted the content of Policy Submission No. 45/2009;

    2. approved that the Konedobu Administrative area to be the administrative headquarters of the
    Central Provincial Government;

    3. directed that the National Government Departments and National Government Agencies and
    statutory Bodies currently located in Konedobu, within Portions 2396 and 2397 (with the exception
    of Police Headquarters) are to be relocated to Waigani;

    4. directed that the National Housing Corporation relinquish its interest over Portion 479 to the State
    for the Government to build the Commodity Haus to house all Agriculture Commodity Agents and
    Petroleum and Energy Haus;

    5. approved that the buildings vacated be occupied by the Central Provincial Administration for its
    operational purposes with the exception of the old administration office to be maintained as
    ahistorical building. It is to be subdivided and transferred to the Ministry of Culture and Tourism;

    6. directed the Office Allocation Committee to immediately consult the departments and agencies
    concerned and ascertain their requirements;

    7. directed the Department of Lands & physical Planning to reserve all parcels of land that are not
    leased land in the Waigani City Centre and facilitate titles for each of them in favor of the State for
    the purposes of future developments to house government departments and agencies; and

    8. directed the Department of Lands & Physical Planning in consultation with the Department of
    Personnel Management to come up with long-term development plans for office constructions in
    Waigani City Centre to house government departments and agencies.‖

    Comments

    In the NEC Policy Submission No: 45/2009, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the
    then Deputy Prime Minister and Minister for Lands & Physical Planning had requested for the
    GOAC to immediately consult the departments and agencies concerned and ascertain their
    requirements for their relocation. The then Deputy Prime Minister and Minister for Lands &
    Physical Planning also requested for Department of Lands and Physical Planning to reserve
    all parcels of land that are not leased land in the Waigani City Centre and facilitate titles for
    each of them in favor of the State for the purposes of future developments to house
    government departments and agencies as well as for DLPP to come up with long-term

    Chapter 2: Findings of Facts 13

  • Page 40 of 147

  • development plans for office constructions in Waigani City Centre to house government
    departments and agencies.

    The NEC Decision No: 89/2009, in regard to the relocation of certain Government
    Departments and Agencies from Konedobu to Waigani, was made when Grand Chief Sir
    Michael Somare was the then Prime Minister and Chairman of the NEC, while Mr Manly Ua,
    was the then Acting Secretary for NEC. The decision was endorsed on 30 June 2009 and
    copies were distributed to Deputy Prime Minister & Minister for Lands & Physical Planning
    & Mining, Minister for Agriculture & Livestock, Minister for Petroleum and Energy, Culture
    & Tourism, Department of Personnel Management, Prime Minister & NEC, and Attorney
    General and Minister for Justice.

    Clause 6 of the NEC Decision directed the GOAC, to immediately consult the Departments
    and Agencies concerned and ascertain their requirements. This was to be done to know what
    type of office space and requirements each government department needs.

    Clause 8 of the NEC Decision directed the Department of Lands and Physical Planning, in
    consultation with DPM to come up with long-term development plans for office constructions
    in Waigani City Centre to house Government Departments and Agencies.

    PART 2 THE INVOLVEMENT OF GOAC AND THE NEC POLICY
    SUBMISSIONS AND DECISIONS THAT LED TO THE, CALL FOR
    EOI, FACILITATION OF CLL PROPOSAL AND SIGNING OF THE
    MOU BETWEEN GOAC AND CLL FOR THE CONSTRUCTION OF
    THE 32 FLOOR GOVERNMENT OFFICE COMPLEX AT WAIGANI
    CENTRAL IN NCD

    [1] REQUEST FROM THE SECRETARY FOR DPM AND CHAIRMAN OF THE
    GOAC, MR JOHN M. KALI, OBE, TO THE THEN LANDS SECRETARY, MR
    ROMILLY KILA PAT, TO MAKE LAND AVAILABLE UNDER
    CERTIFICATE AUTHORIZING OCCUPANCY FOR WAIGANI OFFICE
    DEVELOPMENT

    On 11 May, 2011, Mr John M. Kali, CMG, OBE, Secretary for DPM and Chairman of the
    GOAC, wrote to Mr Romily Kila Pat, the then Secretary for Department of Lands and
    Physical Planning, and requested Mr Kila Pat to make available land under Certificate
    Authorizing Occupancy identified in Waigani Office Precinct for development. The letter
    reads:

    MR ROMILLY KILA PAT
    Acting Secretary
    Department of Lands and Physical Planning
    PO Box 5665
    WAIGANI, NCD

    My dear Acting Secretary,

    SUBJECT: REQUEST TO MAKE AVAILABLE LAND UNDER CAO INDENTIFIED IN
    WAIGANI OFFICE PRESCINCT FOR DEVELOPMENT/REDEVELOPMENT

    The reason for this request is that for many years National Public Servants have been housed in various
    locations around Port Moresby. Some departments are housed in Government owned offices but the vast

    Chapter 2: Findings of Facts 14

  • Page 41 of 147

  • majority occupy leased premises. The annual cost for leased accommodation in Port Moresby has risen to
    approximately K108 million.

    The Government has, as a result of the above situation, determined that the public service should be
    concentrated in Waigani and the Government land be developed/redeveloped in order to accommodate
    staff in owned premises i.e. a Waigani Office Precinct should be developed. The objective of the project is
    twofold:

    to provide better service delivery to public via co-location of government services
    to save public monies currently expended on lease payments

    Therefore, the Department of Personnel Management through the Office of Government Accommodation
    and Public Service Housing (OGAPSH) makes this formal request to be issued a Certificate Authorizing
    Occupancy in respect to the following lands being Section 278 Lots 22, 28, 29, 33, 34 – Hohola, Section
    135, Lots 15, 17, & 18 – Hohola, Section 391, Lot 1 & 2 and Portion 1010, 2352, 2126 & 2049 Granville,
    NCD.

    We request that where necessary any leases held by private individuals or companies over the land be
    revoked for non-compliance of terms & conditions stipulated in the title and once this is done, a
    Certificate Authorizing Occupancy should be issued to DPM for purposes of Government Office Complex
    Development.

    Yours sincerely,

    [ Signed ]
    JOHN M. KALI, OBE
    Secretary

    Comments

    This request from Mr John M. Kali, CMG, OBE, Secretary for DPM and Chairman of the
    GOAC to Mr Romilly Kila Pat, the then Secretary for Department of Lands and Physical
    Planning, was following the NEC Decision No. 89/2009 made on 26 June 2009.

    [2] STATE‘S NEGOTIATION OF PRE – LEASE AGREEMENT WITH NAIMA
    INVESTMENTS LTD

    On 5 September, 2012, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for
    Public Service, wrote to Mr John M. Kali, CMG, OBE, Secretary for DPM and Chairman of
    the GOAC, advising Mr Kali to negotiate pre-lease agreements with Naima Investments
    Limited. Below is an extract:

    MINISTRY OF PUBLIC SERVICE
    Level 2, Morauta Haus, Waigani
    PO Box 519, Waigani, NCD, Papua New Guinea

    Telephone: (675) 327 6418/6365 Facsimile: (675) 325 0835 Email: publicserviceministry@dpm.gov.pg

    INTER OFFICE MEMO

    To : Mr John Kali, OBE
    Secretary
    Department of Personnel Management

    FROM : Hon. Sir Puka Temu, KBE, CMG, MP
    Minister for Public Service

    Chapter 2: Findings of Facts 15

  • Page 42 of 147

  • DATE : 5th September 2012

    SUBJECT : NEGOTIATE PRE-LEASE AGREEMENTS WITH NAIMA

    I‘m advised that many Departments do not have proper office space to operate efficiently.

    The proposed office complex under Naima Group of Companies requires serious consideration, as a
    benchmark for public office buildings.

    I now request you to begin the process of assessing the proposal and if feasible and meets our terms and
    conditions, proceed to finalizing pre-lease agreements.

    I look forward to making real progress on this matter.

    [ Signed ]
    HON. SIR PUKA TEMU, KBE, CMG, MP
    Minister for Public Service

    [3] NAIMA INVESTMENTS LIMITED – PROFILE

    The following is the full company extract of Naima Investments Limited which was obtained
    from the Investment Promotion Authority (IPA):

    Investment Promotion Authority
    P.O Box 5053
    BOROKO, Port Moresby
    National Capital District

    INVESTMENT PROMOTION AUTHORITY
    Papua New Guinea

    INDEPENDENT STATE OF PAPUA NEW GUINEA

    Companies Act 1997

    COMPANY EXTRACT
    As at 26 June 2015

    NAIMA INVESTMENTS LIMITED
    1-10655

    General Details

    Company Type: Local

    Company Status: Registered

    Incorporation Date: 24 May 1985

    Cessation Date:

    Business Activity: Other

    Annual Return Filing Month: May

    Own Constitution?: No

    Previous Names

    Chapter 2: Findings of Facts 16

  • Page 43 of 147

  • Previous Name

    Name: NAIMA INVESTMENTS PTY. LIMITED

    From Date: 24 May 1985

    To Date: 1 September 1998

    Addresses

    Registered Office Address: Section 387, Allotment 11, HOHOLA, National Capital District,
    Papua New Guinea

    Address for Service: C/- Taurama Supermarket, Section 45, Allotment 4, BOROKO,
    111, National Capital District, Papua New Guinea

    Postal Address: P.O Box 1180, PORT MORESBY, 121, National Capital
    District, Papua New Guinea
    Directors

    Director

    Individual Name: Eleana TJANDRANEGARA

    Nationality: Papua New Guinea

    Residential Address: Section 14, Allotment 25, Granville, Port Moresby, National
    Capital District, Papua New Guinea

    Postal Address: P.O Box 1899, Boroko, National Capital District, Papua New
    Guinea

    Appointment Date: 2 February 2010

    Secretaries

    Secretary

    Individual Name: Djin TJAN

    Nationality: Indonesia

    Residential Address: Section 387, Allotment 11, Hohola, National Capital District,
    Papua New Guinea

    Postal Address: P.O Box 1180, Port Moresby 121, National Capital District,
    Papua New Guinea

    Appointed Date: 2 June 1987

    Shareholding

    Total Shares: 10000

    Extensive Shareholding?: No

    Share Bundles and Shareholders

    Share Bundle

    Number of Shares: 7600

    Chapter 2: Findings of Facts 17

  • Page 44 of 147

  • Shareholder

    Individual Name: Tjan Leng HO

    Nationality: Papua New Guinea

    Residential Address: Section 45, Allotment 4, Boroko, National Capital District,
    Papua New Guinea

    Postal Address: P.O Box 1180, Port Moresby, National Capital District, Papua
    New Guinea

    Appointed Date: 2 June 1987

    Share Bundle

    Number of Shares: 2376

    Shareholder

    Individual Name: Djin Tjan

    Nationality: United States

    Residential Address: Section 45, Allotment 4, Boroko, National Capital District,
    Papua New Guinea

    Postal Address: P.O Box 1180, Port Moresby, National Capital District, Papua
    New Guinea

    Appointed Date: 2 June 1987

    Share Bundle

    Number of Shares: 24

    Shareholder

    Individual Name: Erica Fiona GAERLAN

    Nationality: Papua New Guinea

    Residential Address: Section 14, Allotment 25, Granville, Port Moresby, National
    Capital District, Papua New Guinea

    Postal Address: Not Supplied,.., National Capital District, Papua New Guinea

    Appointed Date: 2 February 2010

    Last Annual Return Lodged

    Financial Year Start Date:
    1 June 2010

    End Date:

    Annual Meeting Date: 31 May 2011

    Return Made Up To Date: 30 May 2011

    8 June 2011

    Chapter 2: Findings of Facts 18

  • Page 45 of 147

  • — END OF EXTRACT —

    Comments

    Naima Investments Limited was registered as a local company and incorporated on 24 May
    1985. It does not have its own constitution. Its previous name from 24 May 1985 to 1
    September 1998 was Naima Investments Pty. Limited. Its Registered Office Address is
    Section 387, Allotment 11, HOHOLA, National Capital District, Papua New Guinea, while
    the Service Address is C/- Taurama Supermarket, Section 45, Allotment 4, BOROKO, 111,
    National Capital District, Papua New Guinea. The Postal Address is P.O Box 1180, PORT
    MORESBY, 121, National Capital District, Papua New Guinea.

    The Inter-Office Memo from the then Minister for Public Service, Hon. Sir Dr Puka Temu,
    dated 5 September 2012 to Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, requested him to seriously consider and assess the proposal from Naima
    Investments Limited for an office complex and if feasible proceed to finalize the pre-lease
    agreements.

    [4] MoU BETWEEN NAIMA INVESTMENTS LIMITED AND THE GOAC FOR
    THE DEVELOPMENT AND LEASE OF NAIMA CENTRE AT WAIGANI,
    PORT MORESBY, NATIONAL CAPITAL DISTRICT

    On 25 September, 2012, a MoU was signed by Mr Lai Weng Hoo, Managing Director, on
    behalf of Naima Investments Limited, and Mr John M. Kali, CMG, OBE, Secretary for DPM
    and Chairman of the GOAC on behalf of the Government of the Independent State of Papua
    New Guinea, and witnessed by His Excellency, Commodore (Retd.) Peter Ilau, DMS, CBE,
    Ambassador of the Independent State of Papua New Guinea for the Republic of Indonesia.
    Below is the MoU:

    MEMORANDUM OF UNDERSTANDING

    BETWEEN

    NAIMA INVESTMENTS LIMITED
    AND

    THE GOVERNMENT OFFICE ALLOCATION COMMITTEE ON
    BEHALF OF THE INDEPENDENT STATE
    OF
    PAPUA NEW GUINEA

    ON THE PROPOSAL OF NAIMA INVESTMENTS LIMITED FOR THE DEVELOPMENT AND
    LEASE OF NAIMA CENTER AT WAIGANI, PORT MORESBY, NCD, PAPUA NEW GUINEA

    This Memorandum of Understanding (MoU) is made on the 25 th day of September 2012, by and between:

    1. NAIMA INVESTMENTS LIMITED, a company duly incorporated in Papua New Guinea of Sec.
    378, Lot 11 Hubert – Murray Highway 4 -Mile, P.O Box 1899, Boroko, Port Moresby, NCD,
    Papua New Guinea (―Part A‖); and

    Chapter 2: Findings of Facts 19

  • Page 46 of 147

  • 2. THE GOVERNMENT OFFICE ALLOCATION COMMITTEE ON BEHALF OF THE
    INDEPENDENT STATE OF PAPUA NEW GUINEA c/- Department of Personnel Management,
    Level 2, Morauta Haus, P.O Box 519, Waigani, Port Moresby, NCD, Papua New Guinea (―Part
    B‖).

    Part A and Part B jointly called the ―Parties‖ and individually called the ―Party‖.

    RECITALS:

    A. WHEREAS, PARTY A is registered as proprietor of the land described as Section 38, Lots 21, 22
    and 23 of Waigani, Port Moresby, NCD (―Land‖).

    B. WHEREAS, following discussions between the Parties, PART A undertakes to develop a building
    on the Land to be named the ―Naima Centre‖ or as subsequently renamed by PART A
    (―Building‖), which will be fully developed, financed, designed, engineered, constructed,
    commissioned, operated and managed by Party A as an entire turnkey developer fit and suitable
    for the purposes of a commercial office building.

    C. WHEREAS, the Parties understand that at the moment, the feasibility of PART A proceeding to
    develop the Building is contingent on Party B being able to commit to lease for at least 19
    (nineteen) floors of the proposed Building or a total of 45,030 m2 (forty five thousand thirty
    square meters) with details as set out in Exhibit A (―Gross Floor Area‖, for and on behalf of the
    user Ministries/Departments (―Lease‖), whereby therefore Party B shall note and consider this in
    its discussions with the prospective tenancy departments.

    D. WHEREAS, in consideration thereto, the Parties agree to execute the MoU to establish the
    process leading to the Lease between the Parties.

    NOW, THEREFORE, it is agreed as follows:

    1. The Parties hereto agree to continue to work with each other towards finalizing the agreement for
    Lease.

    2. Unless otherwise mutually agreed to be extended, Party B will undertake the following activities
    within the period of 30 (thirty) days from the date of this MoU:

    (a) Chairman of Government Office Allocation Committee (―GOAC‖) to fully brief the
    Minister of Public Service (― Minister‖) of the outcomes of the trip and secure the support
    from the Minister;

    (b) CGOAC to convene a meeting of the members of Party B for the purpose of:

    i. informing all its members, especially the Department of Lands and Physical
    Planning and Department of Works of the outcome of Party B‘s study trip with
    regards to Party A‘s properties, expertise and experience thereunder;

    ii. considering and determining the prospective tenants of the proposed Building
    following the plans of Party A as outlined in Exhibit A;

    iii. directing the Office of Government Accommodation and Public Service Housing
    (―OGAPSH‖) to provide the staff establishments and lay-out requirements for the
    prospective tenants;

    (c) State Solicitor‘s Office to provide a copy of draft standard lease agreement to PARTY A;

    (d) (i) CGOAC to convene another meeting with the prospective tenants for the purpose of
    advising them of Party A‘s proposal and the likelihood of their tenancy and
    arranging a meeting and presentation between them and PART A;

    (ii) CGOAC will secure the support of the Minister to ensure that the department heads
    who are members of the Committee to attend the aforesaid meeting;

    Chapter 2: Findings of Facts 20

  • Page 47 of 147

  • (iii)CGOAC to determine the contents of the pre-lease agreement and advise PARTY
    A in writing for mutual agreement and finalization.
    3. Party A undertakes the following activities in conjunction with the other activities as undertaken
    by PARTY B:

    (a) to proceed, revise and update its design for the Building, to be presented to Party B, not
    later than 10 (ten) working days from the date of receipt of user requirements provided by
    Party B to Party A in writing;

    (b) upon receipt of pre-lease agreement, PARTY A will within 7 (seven) working days, provide
    its comments and discuss with Party B, for the execution;

    (c) to finalize the lease terms and conditions for the Building together with Party B.

    4. This MoU and all terms and conditions respectively thereunder shall be kept confidential and
    restricted only to persons and/or parties who require information hereunder as part of their
    administrative duties/or responsibilities.

    5. All communications and/or notices with respect to this MoU shall be given and addressed to the
    following:

    – If to Party A:

    NAIMA INVESTMENTS LIMITED

    Address : Sec. 387, Lot 11, Hubert-Murray Highway, 4-Mile,
    P.O Box 1899, Boroko,
    Port Moresby, NCD
    Papua New Guinea

    Attention : Mr. Andi Soerjanto – Director
    +62811 889 3515 (mobile phone)
    andisoerjanto@mulialand.co.id (e.mail)

    – If to Party B:

    THE GOVERNMEMT OF THE INDEPENDENT SATE OF PAPUA NEW GUINEA
    (represented by the Department of Personnel Management of the Ministry of Public Services)

    Address : Level 2, Morauta Haus,
    P.O Box 519, Waigani,
    Port Moresby, NCD,
    Papua New Guinea

    Attention : Mr Chris Kabauru – Director OGAPSH
    +67573 888 5854 (mobile phone)
    chris_kabauru@dpm.gov.pg (e-mail)

    6. This MoU may not be modified or amended except by mutual agreement of the Parties. No waiver
    of any breach of any term of this MoU shall be effective unless in writing signed by the Parties
    having the right to enforce such breach and no such waiver shall be construed as a waiver of any
    subsequent breach.

    7. If any part of this MoU for any reason becomes invalid or unenforceable, the remainder
    continues to be valid and enforceable and the invalid and enforceable part is severed without
    affecting the remainder.

    8. This MoU shall be governed by and construed in accordance with the laws of the Independent
    State of Papua New Guinea and the Parties hereto irrevocably submit to the non-exclusive
    jurisdiction of the relevant courts in the Independent State of Papua New Guinea.

    Chapter 2: Findings of Facts 21

  • Page 48 of 147

  • 9. Notwithstanding this MoU is executed by Naima Investments Limited, Party A reserves the right
    to finally execute the appropriate Lease Agreement, by a specifically constituted company.

    IN WITNESS WHEREOF, the Parties of this MoU have set their hands on the date as mentioned in the
    beginning of this MoU.

    SIGNED FOR AND ON BEHALF OF )
    NAIMA INVESTMENTS LIMITED )
    [ Signed ]
    Name : Lai Weng Hoo
    Title : Managing Director

    SINGNED FOR AND ON BEHALF OF )
    THE GOVERNMENT OF THE )
    INDEPENDENT STATE OF )
    PAPUA NEW GUINEA ) [ Signed ]
    Name : John M. Kali, OBE
    Title : Secretary for Department of
    Personnel Management and
    Chairman of Government Office
    Allocation Committee

    WITNESSED BY HIS EXCELLENCY,
    The Ambassador of The Independent State of Papua New Guinea
    For the Republic of Indonesia

    [ Signed ]
    Commodore (Retd.) Peter Ilau, DMS, CBE

    EXIBIT A

    Prospective Tenants:

    (1) Education Department : Up to 7 Floors

    (2) Health & HIV-AIDS Department : Up to 5 Floors

    (3) Foreign Affairs and Immigration Department : Up to 3 Floors

    (4) Transport Department : Up to 2 Floors

    (5) Public Services Department : Up to 2 Floors

    Comments

    This MoU was established between Naima Investments Limited and the GOAC following the
    advice from the then Minister for Public Service, to the Secretary for DPM and Chairman of
    the GOAC, dated 5 September 2012 regarding the State to Negotiate Pre-Lease Agreement
    with Naima Investments Limited.

    The Parties in the MoU agreed to execute the MoU to establish the process leading to the
    Lease between the Parties. The MoU was witnessed by Commodore (Retd.) Peter Ilau, DMS,
    CBE, PNG‘s Ambassador to the Republic of Indonesia indicating that it may have been
    signed in Indonesia.

    Chapter 2: Findings of Facts 22

  • Page 49 of 147

  • Naima Investments Limited is a company duly incorporated in PNG, whose residential
    address is Section 378, Allotment 11, Hubert Murray Highway, 4 Mile and the postal address
    is P.O Box 1899, Boroko, NCD.

    Under the Recitals A and B of the MoU, Naima Investments Limited, as registered proprietor
    of Section 38, Lots 21, 22 and 23 of Waigani, NCD undertook to develop a building on the
    land to be named as the ‗Naima Center‘, which will be fully developed, financed, designed,
    engineered, constructed, commissioned, operational and managed.

    [5] ADVICE FROM STATE SOLICITOR TO SECRETARY FOR DPM AND
    CHAIRMAN OF THE GOAC REGARDING PROPOSAL BY NAIMA
    INVESTMENTS LIMITED FOR THE WAIGANI CENTRE DEVELOPMENT

    On 16 October, 2012, the State Solicitor, Mr Daniel Rolpagarea, wrote a letter of advice to the
    Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, advising as a
    result of a Special GOAC Meeting held on 3 October 2012, where legal issues were raised
    and the Office of the State Solicitor was requested verbally, to provide an advice on the
    process, in which to facilitate the proposal from Naima Investments Limited. Below is the full
    extract of the letter:

    Our reference:
    Action Officer: B.K. Vitata

    16th October, 2012

    Mr. John Kali
    Chairman
    Government Office Accommodation Committee
    PO Box 519
    Waigani
    National Capital District

    Dear Chairman

    RE: Proposal by Naima Investment Limited for the Waigani Centre Development

    1. I refer to the special Government Office Accommodation Committee (‗GOAC‘) meeting on the
    3rd October, 2012 regarding the above subject.

    2. The purpose of the meeting was to brief the members of GOAC on the proposal by Naima
    Investment Limited (‗NIL‘) for the development of a 24 – storey building, to be purpose built for
    various State tenants. I note that this proposal is a BOT (build operate transfer) arrangement and
    that NIL will be responsible for the costs associated with the construction of the building as well
    as the fit-out works and that in terms of expenditure, the State will only be responsible for rentals
    and associated costs for leasing purposes.

    3. Given the forgoing, you have requested legal advice on how the State should proceed with this
    arrangement especially in terms of whether CSTB approval or NEC approval is required and
    also on whether the State can enter into a pre-lease arrangement to secure the office space for its
    tenants.

    4. Section 40 of the Public Finance Management Act („PFMA‟) provides for the requirement for
    public tenders to be invited for the purchase or disposal of properties or stores or for the supply
    of works and services which exceeds K300, 000.00. Subsection (5) of that Section provides that
    BOT contracts are subject to the tender requirement under Section 40. Even though the purpose
    of the PFMA is to regulate public expenditure and it may be argued that in this case there is no

    Chapter 2: Findings of Facts 23

  • Page 50 of 147

  • funds being expended by the State for the construction of the building and fit-out works, however,
    the rentals that will be expended under the leasing arrangement is part and parcel of the BOT
    arrangement and therefore cannot be separated as a separate component from the construction of
    the building.

    5. Furthermore, for purposes of the procurement process, the term ‗procurement‘ includes rentals
    and leases (Financial Instruction 11, para.7).

    6. Therefore, based on the leasing value of the proposal, the State will need to go through the tender
    process under Section 40 and depending on the value of the rentals for the period in which the
    State will lease the premises; it will have to go to NEC for approval.

    7. If GOAC approves the proposal, then the period of tender can be restricted to a week and NIL
    will have to put in their bid. Furthermore, a BOT contract will need to be drafted to capture the
    arrangement. With regard to pre-leasing, the same approach that was used for the Vulupindi
    Annexure Project with Waigani Asset Limited can also be done for NIL. As you recall, the
    arrangement with WAL was not a pre-lease arrangement. Instructions will also be needed for the
    drafting of the BOT contract if you require my Office to assist in this regard as well.

    8. As I had advised you in the meeting, the Public Private Partnership Bill is being finalized by my
    Office and will be introduced into Parliament in the November session. When it is passed, such
    arrangements as proposed by NIL will be regulated by that legislation depending on the value of
    that transaction.

    9. With regard to potential tenants, PNG Immigration and Citizenship Service have written to my
    Office expressing their interest to move into the building once it is built. I will be advising them to
    provide a submission to GOAC for its deliberation. However, given the fact that the next meeting
    will be on the 10th October, 2012 and that is when GOAC will be approving which State agencies
    will become tenants, I am bringing it to your attention.

    10. I also advise that before any commitment is made by the State to NIL; government agencies
    anticipated to be housed at the proposed building must be consulted so that when the discussion is
    made for them to move in, the process is not frustrated unnecessarily.

    11. Please feel free to call the action officer, Ms. Blanch Vitata on 301 2890 or myself if you have any
    questions or require any further information in relation to the contents of this letter.

    12. In any future correspondence with this office please include the file reference and the action
    officer‘s name as identified above.

    Yours sincerely

    [ Signed ]
    DANIEL ROLPAGAREA
    State Solicitor

    Comments

    In this advice, the State Solicitor outlined the requirements for public tender under Section 40
    of the Public Finances (Management) Act 1995 if the State enters into the pre-lease
    arrangement with Naima Investments Limited.

    The State Solicitor noted that the proposal by Naima Investments Limited is a BOT (build
    operate transfer) arrangement and that Naima Investments Limited will be responsible for the
    costs associated with the construction of the building, as well as the fit-out works, and that in
    terms of expenditure, the State will only be responsible for rentals and associated costs for
    leasing purposes.

    Chapter 2: Findings of Facts 24

  • Page 51 of 147

  • The State Solicitor advised Mr Kali in response to Mr Kali‘s request for legal advice, on how
    the State should proceed with this arrangement especially in terms of whether CSTB approval
    or NEC approval is required and also on whether the State can enter into a pre-lease
    arrangement to secure the office space for its tenants. In that advice, the State Solicitor
    emphasized that Section 40 of the Public Finances (Management) Act 1995 provides for the
    requirement for public tenders to be invited for the purchase or disposal of properties or stores
    or for the supply of works and services which exceeds K300, 000.00. Subsection (5) of that
    Section provides that BOT contracts are subject to the tender requirement under Section 40 of
    the Public Finances (Management) Act 1995. ―Even though the purpose of the Public
    Finances (Management) Act 1995 is to regulate public expenditure and it may be argued that
    in this case there is no funds being expended by the State for the construction of the building
    and fit-out works. However, the rentals that will be expended under the leasing arrangement is
    part and parcel of the BOT arrangement and therefore cannot be separated as a separate
    component from the construction of the building.‖

    The State Solicitor also highlighted the importance of the term ‗procurement‘ to include
    rentals and leases as per Financial Instruction 11, paragraph.7.

    [6] STATE SOLICITOR‘S FURTHER ADVICE TO THE CHAIRMAN OF THE
    GOAC ON NAIMA INVESTMENTS LIMITED‘S PROPOSAL FOR A 24
    STOREY BUILDING

    On 29 November 2012, the State Solicitor, Mr Daniel Rolpagarea wrote to the Secretary for
    DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, providing further advice
    regarding Naima Investments Limited‘s Proposal for the construction of the Multi-Storey
    Building. Below is the full extract of the letter:

    Your reference:
    Our reference: AGSS310/2012/3-8.36/14
    Action officer: B.K. Vitata

    29th November, 2012

    John Kali, OBE
    Chairman
    Government Office Accommodation Committee
    PO Box 519
    WAIGANI
    National Capital District

    Dear Chairman,

    Naima Investment Limited Proposal

    1. I refer to your verbal conversation with Mr David Manoka, Deputy State Solicitor of my office on
    the 19th October, 2012 regarding clarification on the process in dealing with the above subject
    matter. I sincerely apologize for the delay in responding.

    Background

    2. During the special GOAC meeting of 3rd October, 2012, you briefed the members, including
    myself, of the proposal by Naima Investment Limited (‗NIL‘) for the development of a 24-storey
    building, to be propose-built for various State tenants. The members were informed that the
    construction costs of the base building and the fit-out works will be borne by NIL. During that

    Chapter 2: Findings of Facts 25

  • Page 52 of 147

  • meeting the group was also informed that after the term of the lease, the title of the land and
    building will be transferred to the State.

    3. Given the forgoing you sought legal advice on how the State should proceed with this
    arrangement.

    Question and Short Answer

    4. The question/s and short answer/s is as follows:

    Q1: What is the law that governs the proposal made by NIL to the State?

    A1: Section 40 (5) of the Public Finance Management Act which requires a public tender.
    NIL should be seen as one of the possible parties who can satisfy the accommodation need of the
    State but not the only one. Public tender is required by law and is also an appropriate way to find
    who else can satisfy the accommodation needs of the State whether they will make a better offer.

    Q2: What is the structure of the transaction?

    A2: On my understanding of the Transaction the private entity will construct the building
    and undertake fit-out works and the State will lease the building for a specified term and
    then the title will be transferred to the State (this is subject to your confirmation). This is
    a form of public private partnership.

    Q3: What are the tender requirements?
    A3: The Request for Tender should focus on the current and future
    office accommodation needs of the State, include the proposed Transaction Documents
    and Design Brief. The tenderers should be asked to submit proposals including Concept
    Design, proposed rental and term of lease and any proposed divergences from the
    transaction documents.

    Q4: What are the documents needed for the Request for Tender (RFT)?

    A4: The proposed transaction documents Agreement to Lease and the State Standard Lease.
    The RFT document including the Design Brief (incorporating accommodation needs,
    timelines, design requirements, performance specifications and standards).

    Q5: What further instructions are needed by the State Solicitor?

    A5: The current and future accommodation needs of the State, the required dates for
    completion of construction, the desired term of the lease, the performance specification
    and quality of construction, details of the required fit-out works, and the status of the
    leases of those state agencies interested in moving into the new building once completed.

    Q6: Whether DPM needs to prepare a Cabinet submission pending the tender process?

    A6: Yes, pending the tender process at least an Information Paper to Cabinet to inform them.

    Reasons

    What is the law that governs the proposal made by NIL?

    5. Section 40 (5) of the Public Finance Management Act (‗PFMA‘) provides as follows:

    “In relation to contracts for the supply of works and services, the provisions of this section and of Section
    41 shall apply to –

    a) Turnkey contracts; and

    b) Build-operate transfer contracts; and

    Chapter 2: Findings of Facts 26

  • Page 53 of 147

  • c) Contracts which in substance are similar to turnkey contracts or build-operate transfer
    contracts; and

    d) Contracts involving the expenditure of public funds.”

    6. Section 40 of the PFMA provides for the requirement to comply with the tender process for the
    purchase, disposal or supply of property, stores, works or services where the prescribed amount
    is beyond K300, 000.00. NIL should be seen as one of the possible parties who can satisfy the
    accommodation needs of the State and whether they will make a better offer.

    7. I understand that the transaction is similar to a build-operate transfer contract and even though
    the construction cost and fit-out costs will be borne by NIL, the State will still end up paying for
    the construction costs, fit-out costs plus the returns on investment expected by NIL through rental
    payments. Indeed, this form of transaction is over the lifetime of the arrangement considerably
    more expensive than the State constructing the building itself in the first place.

    8. From past experience, when the State pre-commits itself to lease arrangements similar to the one
    proposed by NIL, the transaction was rarely properly captured under appropriate legal
    documents that protected the interest of the State and therefore the State usually experienced
    problems with such arrangements. As such, my advice to you with the Vulupindi Annexure was to
    have an MoU to facilitate the construction phase of the building and then a lease agreement
    would be entered into after the building was constructed and certain conditions were met by the
    developer.

    9. The proposal made by NIL is similar to the Vulupindi Annexure, however, given that the
    indication from the Minister for Public Service is that the way forward for the State is to go by
    Public Private Partnership (PPP) arrangements, my office is now developing a legal document
    that would govern such PPP arrangements for leasing of office accommodation. This document is
    an Agreement to Lease and will basically govern the construction phase up until the leasing of the
    premises once the building is completed.

    10. As I had advised you verbally, the Public Private Partnership Bill (PPP Bill) will govern this types
    of transactions where the value of the contract will be determined but it is likely that it will be
    based on the total value over the life of the contract which in this case will be the sum of all rental
    payable under the arrangement. The Bill is expected to be passed in the November sitting of
    Parliament, and when it comes into operation (on a date to be subsequently proclaimed), and
    depending on the value of the contract, the procedures under the Bill must be complied with. In
    absence of that Bill, Section 40 (5) of the PFMA currently provides the basis for these
    transactions.

    11. In addition to the requirement to tender the proposal. Please ensure that an Authority to Pre-
    Commit expenditure (‗APC‘) must also be obtained from Department of Finance pursuant to
    Section 47B of the PFMA.

    12. The APC will be for the rentals for the fixed term of the lease. The APC must first be obtained
    before the request is put for tender because the APC will show that there are funds available to
    cover the rentals under the proposal.

    13. Your Department will need to liaise with the Department of Finance and Treasury on the
    financial and budgetary implications of the proposal because the budget that was approved by
    Parliament is for a 5-year term.

    What is the structure of the transaction?

    14. From information provided to me by yourself and through my officers, the following is my
    understanding of how the proposed transaction is to be structured.

    15. Firstly the private entity will need to secure the title to the land on which the proposed
    development will take place and all relevant development and building approvals from relevant
    authorities.

    Chapter 2: Findings of Facts 27

  • Page 54 of 147

  • 16. The private entity will then construct the building and undertake the fit-out works in accordance
    with the agreed design documents and by a specified date.

    17. Once the building and fit-outs have been completed, the State will lease the building for a term
    and rent as specified in the lease agreement.

    18. The private entity will operate and maintain the base building in accordance with applicable
    performance specifications and once the term of the lease expires, the private entity will transfer
    the lease to the State.

    19. Please note that from my initial understanding of the transaction proposed by NIL, the title to the
    land and building is to be transferred to the State upon the expiration of the lease. My officers
    have more recently been advised that the title will not be transferred. This part of the structure of
    the transaction needs to be clarified.

    What are the tender requirements?

    20. Since this proposal will need to go through the tender process, the State will need to prepare
    something like a Design Brief to be included in the Request for Tender. It would need to specify
    what the project has to achieve, by what means and within what time frame.

    21. The Request for Tender would have to detail the State‘s office accommodation needs. It should
    specify how much office space is needed and when such an office space is needed together with
    any other requirements for that office space such as location, car parking and special facilities.
    The tender request should also outline the accommodation needs of the State over time and not
    just its current office needs. This is the place any project like the proposed one should start and it
    requires very carefully planning. It may for instance make more sense for the project to be in
    stages over the next 10 years with a series of smaller building rather than a single large building.

    22. The tender request must also specify the quality and standards of the accommodation needs and
    the performance specifications. Since the fit-outs will also be undertaken by the private entity, the
    fit-out requirements of the State must be specified clearly in the tender request.

    23. In their bid the tenderers should be asked to provide a detailed concept design for the base
    building and the fit-out works including performance standards and quality, proposed location of
    the building, propose rental and term of the lease and so forth. They should also be asked to detail
    any proposed deviation from the transaction documents.

    24. It is advisable for your department to seek the advice of relevant experts to advice you on the best
    form of transaction and tender to satisfy the office accommodation needs, especially regarding the
    structure of the transaction, the best way to approach the market, to prepare the Design Brief
    documents, especially in relation to the fit-out works. The Central Supply and Tenders Board can
    provide assistance in relation to how to structure the tender request and also with your input,
    what other relevant information to include in the request for tender.

    What are the documents needed for the RFT?

    25. The documents needed for the RFT are the following:

    a) Request for Tender document

    b) Design Brief (incorporating accommodation needs, timelines, design requirements for base
    building and fit-out works, performance specifications and standards)

    c) Agreement to Lease

    d) Lease

    26. My office can assist you in preparing the Agreement to Lease and the State Standard Lease
    Agreement can be used. It is my view that for the documents relating to the RFT, advice should
    be obtained from Central Supply and Tenders Board who can also advise on how to structure the

    Chapter 2: Findings of Facts 28

  • Page 55 of 147

  • tender request and also what other relevant information may be needed. However, the RFT
    documents should be settled by my office.

    27. With regard to putting together the Design Brief for the base building and fit-outs, expert
    assistance should be obtained. You may be able to get this assistance from the GOAC‘s technical
    team or it may be that an expert needs to be engaged to advise your Department on how to put
    together the Design Brief.

    Whether DPM needs to prepare a Cabinet submission pending the tender process?

    28. It is my considered view that an Information Paper at least be prepared by your Department to
    inform Cabinet of the proposal by Naima and also informing Cabinet that its approval will be
    sought via the tendering process after a recommendation is made by the Central Supply and
    Tenders Board.

    Further instructions needed:

    29. In order to assist me in finalizing the Agreement to Lease, the following instructions are needed:

    a) Details of the accommodation needs of the State (how much office space is needed currently
    and in the future and when is such office space required)

    b) Proposed term of the Lease

    c) Timing for completion for construction of base building and fit-out works

    d) Performance specifications and quality of construction of base building and fit-out works

    e) Whether after the term of the lease, the title to the Land and the building will be transferred
    to the State

    f) Details of the status of the leases of the potential tenants and how they will be finalized.

    g) Whether the fit-out works will be done by the private entity or will be done by the State.

    30. Please feel free to call the action officer/my deputy, Mr David Manoka on 301 2890 or myself if
    you have any questions or require any further information in relation to this advice.

    31. In any further correspondence with this office please include the file reference and the action
    officer‘s name as identified above.

    Yours sincerely

    [ Signed ]
    DANIEL ROLPAGAREA
    State Solicitor

    cc: Chief Secretary

    Secretary for Justice

    Comments

    The State Solicitor‘s advice to the Secretary for DPM and Chairman of the GOAC was very
    clear that Section 40(5) (Tenders for Property, Stores, Works and Services) of the Public
    Finances (Management) Act 1995 still applies with the proposal by Naima Investments
    Limited. The requirements and the need for public tender, the type of transaction and design
    should all be captured in the tender document and submitted to CSTB, and Naima
    Investments Limited should be seen as one of the bidders.

    Chapter 2: Findings of Facts 29

  • Page 56 of 147

  • The proposal by Naima Investments Limited, like any other bidders was required by law to go
    through public tender under Section 40(5) (Tenders for Property, Stores, Works and Services)
    of the Public Finances (Management) Act 1995.

    Section 40 of the Public Finances (Management) Act (1995) provides for the Tenders for
    property, stores, works and services, which states:-

    1. Subject to —
    (a) this section; and

    (b) Section 41, tenders shall be publicly invited and contracts let for the purchase or
    disposal of property or stores or the supply of works and services the estimated
    cost of which exceeds the prescribed amount.

    2. In relation to the purchase or disposal of property and stores and the supply of works and
    services the estimated cost of which does not exceed the prescribed amount, the provisions of
    the Financial Instructions shall apply.

    3. The preceding provisions of this section do not apply to the purchase or disposal of property
    or stores or the supply of works and services—

    (a) that are to be purchased from, disposed of to, or executed or performed by—

    (i) a public body or an authority or instrumentality of the State approved
    for the purpose by the Minister; or
    (ii) a Provincial Government; or
    (iii) a Local-level Government; or
    (iv) an approved overseas agency; or

    (b) in respect of which a Board certifies that the inviting of tenders is impracticable or
    inexpedient; or

    (c) where, in individual transactions involving amounts not exceeding K500,000.00,
    the Minister in his discretion considers that there is a natural disaster or it is not
    expedient or proper to call public tenders and, prior to the goods or services being
    provided, by certificate in writing narrates these circumstances and waives the
    provisions of this section;

    (d) where the terms of an agreement concluded, or proposed to be concluded, with any
    international organization under which the State is to receive moneys, make
    specific provision for the manner in which tenders will be invited for contracts to
    be performed in relation to the agreement.

    4. In Subsection (3)(a)(iv), “approved overseas agency” means the government, a government
    department, a government instrumentality or a statutory corporation of a country other
    than Papua New Guinea approved by the Minister by notice in the National Gazette.

    5. In relation to contracts for the supply of works and services, the provisions of this section
    and of Section 41 shall apply to—

    (a) turnkey contracts; and
    (b) build-operate transfer contracts; and
    (c) contracts which in substance are similar to turnkey contracts or build-operate
    transfer contracts; and
    (d) contracts involving the expenditure of public moneys.

    The State Solicitor also advised that an Information Paper has to be prepared by Department
    of Personnel Management to Cabinet to inform them of the proposal by Naima Investments
    Limited, and also informing Cabinet that its approval will be sought via the tendering process
    after a recommendation is made by the CSTB.

    Chapter 2: Findings of Facts 30

  • Page 57 of 147

  • Due to the fact that the State, usually experience problems when it pre-commits itself. A MoU
    is considered to facilitate the construction phase of a building and then a lease agreement
    would be entered, similar to the Vulupindi Annexure Project.

    [7] NEC POLICY SUBMISSION NO: 04/2013 AND NEC DECISION NO: 03/2013
    ON THE APPROVAL FOR NATIONAL GOVERNMENT TO ENTER PRE
    LEASING AGREEMENT WITH PRIVATE INVESTOR

    On 4 January 2013, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for Public
    Service, made a Policy Submission No: 04/2013 to the NEC, in regard to the approval for
    National Government, to enter pre- leasing agreement with a private investor. The purpose of
    the Policy Submission was:

    1. to inform NEC of acute shortage of office accommodation faced by Government
    Departments, Agencies and Authorities, particularly in Port Moresby;

    2. to seek NEC‘s approval for GOAC and CSTB to invite and enter into pre-lease
    agreement with a private investor under normal legal and transparent business
    transaction.

    On 9 January 2013, the NEC during its Special Meeting No: 01/2013, made its Decision No:
    03/2013 in regard to the approval of National Government to enter Pre Leasing agreement
    with a Private Investor. Below is the full extract of the NEC Decision:
    PAPUA NEW GUINEA GOVERNMENT

    NATIONAL EXECUTIVE COUNCIL

    Decision No: 03/2013 Special Meeting No: 01/2013

    Subject: APPROVAL FOR NATIONAL GOVERNMENT TO ENTER PRE LEASING
    AGREEMENT WITH PRIVATE INVESTOR

    On 09th January 2013, Council:

    1. noted the content of Policy Submission No. 04/2013;

    2. noted the submission is supportive of the recent decisions to refurbish Marea Haus;

    3. approved in principle the construction of a 24 storey office complex building by the Naima
    Investments Ltd under the ―BOT‖ arrangement and for the State to lease the new office complex
    next to Central Government Building at Waigani on State Land;

    4. directed the Secretary for Department of Personnel Management as Chairman of GOAC to
    relocate those approved Government Departments and Agencies to the new office complex
    consistent with its approved and established administrative guidelines;

    5. directed the Secretary for Department of Personnel Management, in consultation with the
    Chairman of CSTB, Secretary for Department of Finance, Secretary for the Department of
    Treasury, Secretary for the Department of National Planning & Monitoring and the Chief
    Secretary to Government to implement this decision; and

    Chapter 2: Findings of Facts 31

  • Page 58 of 147

  • 6. directed the Secretary for Department of Personnel Management/Finance/Treasury/National
    Planning & Monitoring and CSTB to report back to the Council on the progress made.

    [ Signed ]
    I Certify the above to be a correct record of the ___________________________
    Decisions reached by the National Executive Council PETER O‘NEILL, CMG Chairman

    [ Signed ]
    _______________________________________
    ILAGI VEALI, MPS Acting Secretary, NEC

    Date: 09th January 2013

    Distribution: PRIME MINISTER/DEPUTY PRIME MINISTER/ATTORNEY GENERAL &
    MINISTER FOR JUSTICE/MINISTER FOR PUBLIC SERVICE/PERSONNEL
    MANAGEMENT/TREASURY/FINANCE/NATIONAL PLANNING &
    MONITORING/CSTB/PM & NEC/JUSTICE & ATTORNEY GENERAL

    Comments

    In the Policy Submission No: 04/2013, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then
    Minister for Public Service, informed the NEC of acute shortage of office accommodation
    faced by Government Departments, Agencies and Authorities, particularly in Port Moresby,
    National Capital District. The then Public Service Minister also sought NEC‘s approval for
    GOAC and CSTB to invite and enter into pre-leasing agreement with a Private Investor.

    In Clause 3 of NEC Decision No: 03/2013, NEC approved in principle the construction of the
    Multi-Storey Building (24 Storey) by Naima Investments Limited under BOT arrangement.
    Hence, in this Decision, a 24 Storey building was approved to be built.

    In Clause 4 of the Decision, NEC directed the Secretary for DPM and Chairman of the GOAC
    to relocate all approved Government Departments and Agencies to the new office complex
    consistent with its approved and established administrative guidelines.

    NEC also directed the Secretary for DPM and Chairman of the GOAC, in consultation with
    the Chairman of CSTB, Secretary for Department of Finance, Secretary for the Department of
    Treasury, Secretary for the Department of National Planning and Monitoring and the Chief
    Secretary to Government to implement this decision; and report back to NEC on the progress
    made.

    [8] STATE SOLICITOR‘S ADVICE TO SECRETARY FOR DPM REGARDING
    NAIMA INVESTMENTS LIMITED‘S NEW PROPOSAL TO CONSTRUCT A
    29 STOREY BUILDING, CONVENTION CENTRE AND PODIUM FOR THE
    STATE TO LEASE

    On 3 April 2013, the State Solicitor wrote to Secretary for DPM and Chairman of the GOAC,
    Mr John M. Kali, CMG, OBE, advising on the new proposal by Naima Investments Limited
    for the construction of a 29 Storey Building. Below is the full extract of the letter:

    Our reference: AGSS310/2012/3-8.36/14
    Action Officer: B. Masamdu

    03rd April, 2013

    Chapter 2: Findings of Facts 32

  • Page 59 of 147

  • John Kali, OBE
    Chairman
    Government Office Accommodation Committee
    PO Box 519
    WAIGANI
    National Capital District

    Dear Chairman Kali,

    Naima Investment Limited new proposal to construct a 29 storey building, Convention Centre and
    Podium for the State to lease

    1. I refer to the above subject matter and my letter dated 29 November 2012.

    2. I have been briefed by my officer that during the meeting in Singapore, Naima has now diverged
    from their initial proposal of building a single 24-storey building and are now proposing to build
    a 29-storey building, including a 1-storey convention building and a 4-storey podium dedicated
    for the Prime Minister‘s office. This proposal was captured in an MoU that Naima
    representatives wanted to be signed between them and the State team that attended the meeting.

    3. I note that during the meeting there was agreement reached with the representatives of Naima
    that because the NEC Decision No. 03/2013 was for the 24 storey building, the new proposal by
    Naima will need a new approval from NEC. On that basis, the MoU was not signed.

    4. I note that you were also of the view that when NEC gave the approval for Naima to construct the
    initial proposal for a 24-storey building, there was no need to go through the tender process.

    5. In the last GOAC meeting held on the 8 March 2013, you informed the members that the Prime
    Minister was in agreement with the new proposal by Naima made in Singapore and that a new
    Cabinet submission was being prepared for Cabinet to endorse.

    6. The new Submission as I understand would rescind the earlier NEC Decision No. 03/2013 and will
    direct GOAC to negotiate the Commercial terms of the pre-lease agreement. You further advised
    that this was being done in accordance with the advice from me. However, as I recall, my advice
    to you dated 29 November 2012 was for your department to prepare an Information Paper to
    inform Cabinet of the initial proposal by Naima and I had further advised you that the tender
    process must be complied with regarding that proposal. My advice to you was not for you to seek
    Cabinet‘s approval because under the Public Finance (Management) Act (―PFMA‖), NEC will
    only act on the recommendation of the CSTB. Unfortunately this was not done for the initial
    proposal by Naima Investment Limited.

    7. A special GOAC Meeting was again held on the 21 March 2013, in which you informed
    Committee members that a delegation from Naima was coming to Port Moresby to meet with the
    Committee to discuss among other things, the pre-lease agreement. From this meeting, the
    Submission would be forwarded to NEC.

    Questions and Short Answers

    8. The question and short answer is as follows:

    Q1: Is the tender process under the Public Finance (Management) Act required to be followed
    for the new proposal by Naima Investment Limited?

    A1: Yes

    Reasons

    9. I refer to my earlier advice to you dated 29 November 2012 in which I advised in detail about the
    law governing BOT arrangements and the steps that your Department would need to take to
    facilitate such arrangements.

    Chapter 2: Findings of Facts 33

  • Page 60 of 147

  • 10. As I had advised you in that letter referred to in para.9 above, Section 40(5) of the PFMA is clear,
    such transactions are subject to the tender process and therefore the requirements of the PFMA
    must be complied with. To deviate from the process would result in a breach of that law and
    would invalidate the awarding of that contract to Naima Investment Limited. The National
    Courts have held in The State v. Barclay Bros (PNG) Ltd that a contract that does not comply
    with the tender requirements under s.40 (1) of PFMA is void. The Supreme Court has adopted
    and applied this principle in Fly River Provincial Government v. Pioneer Health Services Limited
    and thus this case is the authority that the tender process under the PFMA must be complied for
    before a Contract is awarded. Hence, the same applies to the Naima proposal for the new office
    complex under the BOT arrangement and requires compliance of the PFMA or else the Contract
    will be void.

    11. I therefore, advice that you should not continue discussions with Naima Investment Ltd on the
    essential terms of the Pre-lease agreement amongst other things until the procurement process
    has been complied with. Naima would believe that it has been awarded the Contract.

    12. Your Department will therefore need to prepare a Cabinet Submission to rescind the earlier NEC
    Decision and start facilitating the tender process with CSTB.

    13. As such, any meetings by GOAC to progress the Naima proposal would be contrary to my earlier
    advice to you dated 29 November 2012 and this advice and we may not attend the meetings.

    14. Please feel free to call the action officer/my deputy Mr David Manoka on 301 2890 or myself if
    you have any questions or require my further information in relation to this advice.

    15. In any further correspondence with this office, please include the file reference and the action
    officer‘s name as identified above.

    Yours sincerely,

    [ Signed ]
    Daniel Rolpagarea
    State Solicitor

    Comments

    This was the State Solicitor‘s advice on the new proposal by Naima Investments Limited to
    construct a 29-Storey Building rather than the initially proposed 24-storey. This was made
    known during the GOAC members meeting with Naima Investments Limited representatives
    in Singapore.

    The State Solicitor also noted that during the meeting there was an agreement reached with
    the representatives of Naima Investments Limited that because the NEC Decision No.
    03/2013 was for the 24 storey building, the new proposal by Naima Investments Limited will
    need a new approval from NEC. On that basis, the MoU was not signed.

    The State Solicitor, also noted Mr Kali‘s view that when NEC gave the approval for Naima
    Investment Limited to construct the initial proposal for a 24-storey building, there was no
    need to go through the tender process and in the last GOAC meeting held on the 8 March
    2013, Mr Kali informed the members that the Prime Minister was in agreement with the new
    proposal by Naima Investments Limited made in Singapore and that a new Cabinet
    submission was being prepared for Cabinet to endorse.

    However, the State Solicitor‘s advice to the Secretary for DPM and Chairman of the GOAC,
    Mr John M. Kali, CMG, OBE, dated 29 November, 2012, was for his Department to prepare
    an Information Paper, to inform Cabinet of the initial proposal by Naima Investments Limited
    and the State Solicitor had further advised him that the tender process must be complied with

    Chapter 2: Findings of Facts 34

  • Page 61 of 147

  • regarding that proposal. However, the NEC Policy Submission 04/2013 by the then Minister
    for Public Service, Hon. Sir Dr Puka Temu, KBE, CMG, MP, sought NEC approval to enter
    into a pre lease agreement with a Private Investor.

    The State Solicitor, still maintained that Section 40(5) (Tenders for Property, Stores, Works
    and Services) of the Public Finances (Management) Act 1995 is clear that such transactions
    are subject to the tender process, and therefore, the requirements of the Public Finances
    (Management) Act 1995 must be complied with. To deviate from the process would result in a
    breach of that law, and would invalidate the awarding of that contract to Naima Investments
    Limited. The State Solicitor, also highlighted the examples of cases where there was breach of
    that law and its effect on contracts awarded, for example, the National Courts have held in
    The State v. Barclay Bros (PNG) Ltd that a contract that does not comply with the tender
    requirements under s.40 (1) of Public Finance (Management) Act 1995 is void. The Supreme
    Court has adopted and applied this principle in Fly River Provincial Government v. Pioneer
    Health Services Limited and thus this case is the authority that the tender process under the
    Public Finances (Management) Act 1995 must be complied with, before a Contract is
    awarded. Hence, he advised that the same applies to the Naima Investments Limited proposal
    for the new office complex, under the BOT arrangement and requires compliance of the
    Public Finances (Management) Act 1995 or else the Contract will be void.

    The State Solicitor therefore, advised that the Secretary for DPM and Chairman of the GOAC
    should not continue discussions with Naima Investments Limited on the essential terms of the
    Pre-lease agreement amongst other things until the procurement process has been complied
    with. Otherwise, Naima Investments Limited would believe that it has been awarded the
    Contract.

    The State Solicitor‘s advice to the Secretary for DPM and Chairman of the GOAC, Mr John
    M. Kali, CMG, OBE, was not for him to seek Cabinet‘s approval, because under the Public
    Finances (Management) Act 1995, NEC will only act on the recommendation from the CSTB.
    Unfortunately this was not done on the initial proposal by Naima Investments Limited. This
    shows an abuse of process on the conduct of the Secretary for DPM and Chairman of the
    GOAC, Mr John M. Kali, CMG, OBE.

    [9] REQUEST FROM DPM SECRETARY TO CSTB CHAIRMAN FOR EOI ON A
    BOLT FOR THE CONSTRUCTION OF THE MULTI STOREY BUILDING

    On 25 April 2013, the Secretary for DPM, Mr John M. Kali, CMG, OBE, wrote to the CSTB
    Chairman, Mr Phillip Eludeme. The letter requested CSTB to advertise public tenders for EoI
    for the construction of the 29-Storey Building on a BOLT arrangement. Below is the full extract
    of the letter:

    DEPARTMEMT OF PERSONNEL MANAGEMENT

    Office of the Secretary

    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea
    Telephone: (675) 3276379/6442/6447 Facsimile: (675) 325 0502 Website: www.dpm.gov.pg

    Date: 25th April 2013
    Ref: No: OGAPSH/GOD/dhb

    Chapter 2: Findings of Facts 35

  • Page 62 of 147

  • PHILIP ELUDEME
    Chairman
    Central Supply & Tenders Board
    P O Box 6457
    BOROKO
    National Capital District

    My dear chairman,

    SUBJECT: REQUEST FOR EXPRESSION OF INTEREST (RFEOI) ON A BUILT OPERATE,
    LEASE AND TRANSFER (BOLT) FOR PROPOSED 29 STOREY OFFICE TOWER
    WITH A SEPARATE 4 SPECIALITY PODIUM, A SINGLE STOREY FUNCTION
    BUILDING AND A 4 STOREY PARKING BUILDING AT WAIGANI OFFICE
    PRECINCT, WAIGANI CENTRAL BUSINESS DISTRICT (CBD), NATIONAL
    CAPITAL DISTRICT

    I write to advise you of the NEC Decision: 03/2013, wherein NEC has approved in principle the construction
    of 24 storey office tower for the National Government to enter into Pre Leasing Agreement with Private
    Investor, Naima Investments Ltd under BOLT arrangement next to Central Government Building at
    Waigani CBD on State land.

    The Government now wants to construct the 24 storey to, a 29 storey office complex on State land under
    BOLT arrangement. My Director (OGAPSH) has already met with your Secretary on Thursday (04/04/13),
    regarding the above.

    I am requesting your Board to advertise public tenders for Request for Expression of Interest (RFEOI) on a
    BOLT arrangement, requesting proposals from potential interested developers, for the construction of a 29
    storey office complex.

    Even though the State is comfortable with the Naima Investments Ltd proposal; it is important that we
    invite public tenders to fulfill the Financial Management Act requirements, in a more transparent way, as
    recommended by the State Solicitor. Naima Investment Ltd will be required to submit tender proposal as
    with all other potential bidders.

    I wish to confirm that 19 Government departments and agencies as per the attached are to relocate to the
    new office tower upon completion.

    I should also inform you that many Government Departments in the National Capital are dislocated because
    of lack of available office accommodation which is impacting on the performance and productivity of the
    public service machinery.

    Vision 2050 highlights the need for public servants to be provided with the tools to perform effectively and
    improve service delivery to the public. One major impediment to improving service delivery is location of
    government offices and the standard of office accommodation.

    In order to fulfill the requirements of Vision 2050 and improve service delivery to the public, there is a need
    to radically change the way Government acquires office space and locates Departments and agencies. There
    is a clear need for Government to reduce least costs and co-locate Departments and agencies providing
    services to our people.

    In respect to the above, the Government, NEC in its Decision No. 171 & 174/2012 previously confirmed that
    Marea Haus was to be refurbished and a new contractor will be appointed. This will assist the demand of
    office accommodation by departments and agencies.

    Yours sincerely

    [ Signed ]
    John M. Kali, OBE
    Secretary

    Attachment: 1. A copy of NEC Decision 03/2013

    Chapter 2: Findings of Facts 36

  • Page 63 of 147

  • 2. A copy of NEC Decision 171 & 174/2012
    3. A copy of Brief
    4. Listing of confirmed govt. departments

    Comments

    This request by Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG,
    OBE, to CSTB to advertise EoI for the construction of the 29 Storey Building by Naima
    Investments Limited was following the State Solicitor‘s advice to Mr John M. Kali, in the
    letter dated 3 April 2013, which the Secretary complied with.

    Mr John M. Kali, CMG, OBE, made reference to NEC Decision No: 03/2013, wherein NEC
    has approved in principle the construction of 24 storey office tower for the National
    Government to enter into Pre Leasing Agreement with Private Investor, Naima Investments
    Limited under BOLT arrangement next to CGO at Waigani CBD on State land.

    Mr John M. Kali, CMG, OBE, advised that the Government now wants to construct the 24
    storey to a 29 storey office complex, on State land under BOLT arrangement. It is noted that the
    NEC Decision 03/2013 referred to by Mr Kali approved in principle the construction of a 24
    Storey Office Complex. There was no NEC Decision on construction of a 29 Storey Office
    Complex, and in that regard Mr Kali misled the CSTB.

    He stressed that even though the State is comfortable with the Naima Investments Limited‘s
    proposal; it is important to invite public tenders to fulfill the Public Finances (Management) Act
    1995 requirements, in a more transparent way, as recommended by the State Solicitor. Naima
    Investments Limited will be required to submit tender proposal, as with all other potential
    bidders.

    Emphasis was made on the Vision 2050, on improving service delivery to the public, where
    Government Departments need proper office accommodation and in a central location so that
    they can effectively deliver required services.

    [10] LEGAL OPINION FROM THE THEN DIRECTOR LEGAL AND
    INVESTIGATIONS OF DPM TO SECRETARY FOR DPM ON
    APPLICATION OF SECTION 40(5) OF THE PUBLIC FINANCES
    (MANAGEMENT) ACT 1995 TO NAIMA INVESTMENTS LIMITED‘S
    PROPOSAL

    On 8 May 2013, the then Director of Legal & Investigations Division of DPM, Mr Isikel
    Mesulam wrote to the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG,
    OBE, providing legal opinion on the application of Section 40(5) of Public Finances
    Management Act 1995 to Naima Investments Limited‘s Proposal. Below is the full extract of
    the Legal Opinion:

    DEPARTMENT OF PERSONNEL MANAGEMENT
    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea

    Chapter 2: Findings of Facts 37

  • Page 64 of 147

  • Telephone: (675) 3276379/6422/6447
    Facsimile: (675) 325 0520 Website: www.dpm.gov.pg

    LEGAL & INVESTIGATIONS DIVISION

    8th May, 2013

    LEGAL OPINION ON APPLICATION OF SECTION 40(5) TO NAIMA PROPOSAL

    This brief opinion is provided on request from Secretary for Department of Personnel Management in that
    capacity and also as Chairman of the Office Allocation Committee.

    The issue is whether or not the proposal by Naima Investment Limited to build a 24 storey at the Company‘s
    own expense to be later transferred to the State is, or should be subject to the tender process as required
    under Section 40 and in particular subsection (5) of that provision of the Public Finance (Management) 1995.

    In providing this opinion I have had the benefit of perusing only one document and that is an opinion by the
    State Solicitor dated 29 November 2012. In that regard, my views are dependent on and limited to the
    matters covered in the opinion. I begin by summarizing the position of the State Solicitor as contained in his
    opinion.

    1. The State Solicitor has provided his views on a series of question and answer format and has
    covered well a lot of important aspects regarding the proposal and what needs to be captured in a
    contractual arrangement which not only complies with law but is aimed at protecting the interest of
    the State in the long term.

    2. The State Solicitor also correctly points to the relevant law as regards government procurement and
    expenditure of public money, namely the Public Finance (Management) Act (PFMA).

    3. He then gives guidance on what needs to be done to satisfy the tendering process and recommends
    that the NEC be informed through a paper.

    4. It is noted that the State Solicitor does make mention of the Vulupindi Haus Annexure which is a
    case bearing some similarities and suggested an MoU to cover the building phase only as a way
    forward.

    5. The State Solicitor‘s overall advice rests on the adopted position that the proposal by Naima is
    subject to the tender process and argues that section 40(5) of the PFMA applies.

    Firstly, I am of the view that the State Solicitor has not fully appreciated the fact that this is a proposal or an
    offer rather than an invitation by the State to bid and how that aspect can be attributed to the intent and
    purpose of section 40(5). The offer is coming from Naima, which is different from the normal case where the
    State invites tenders. The law in its current state may not adequately cover this situation, especially in terms
    of its coverage over a Public Private Partnership (PPP) arrangement which the Public Service Minister
    would like to have. That is exactly why there is a need to have a Public Private Partnership law the Bill in
    respect of which is now going to Parliament. The State Solicitor suggests that in the absence of that Bill
    which is yet to become law, section 40 (5) automatically applies. This is where I consider the State Solicitor
    fails to explore other possible options. Options are an essential element in an advice and I will explain why it
    is important in the following paragraphs.

    Secondly, the State Solicitor does not specify and it not clear as to what type of contract as listed under this
    provision should the Naima proposal be categorized under. Yet he states that his office is developing a legal
    document to govern a PPP arrangement which is going to be an Agreement to Lease. This to me appears to
    be contradictory and needs further clarification.

    Thirdly, the distinction between what is a works contract for instance, a Roads Maintenance contract, and a
    contract to build an 24 storey building has not been adequately explored in order to advice on what options
    may be available. I consider that options are important in a project of this magnitude and more so where the
    funding is not coming from the State. The State may not be in a position to apply strict conditions and one
    has to be mindful of this and the potential risk of Naima being placed an uncomfortable situation which
    might force them to withdraw their proposal.

    Chapter 2: Findings of Facts 38

  • Page 65 of 147

  • In trying to determine whether or not there are options which the Naima proposal can be progressed without
    the strict application of law (which in itself may not be totally adequate), there are 2 avenues which in my
    view could be explored.

    First is the suggested option of looking at an MoU only at this initial stage to cover just the building phase.
    An MoU carries no financial commitment and therefore will not attract the application of the PFMA and in
    particular the requirement for tender. The substance and structure of the MoU will have to be dependent on
    what the parties agree upon.

    The second possible option which will require further opinion is to determine whether section 40 (5) of the
    PFMA is applicable. It should be ascertained whether or not section 40 (5) is intended to cover arrangements
    which are contractual but involve no immediate financial expenditure by the State. The question whether or
    not this provision covers a situation where there is yet no public moneys being committed must be asked and
    answered conclusively. This already brings to mind the consideration of an undertaking to commit State
    funds at some future occasion depending on the satisfaction of preconditions which may be agreed upon in
    an MoU for example. I do not think that Section 40 (5) is intended to or should be stretched to cover a
    situation where an offer is being made to build at private cost but which the State upon agreement would
    eventually acquire. This is where I believe the law in its current state is inadequate. Although section 40 (5)
    makes mention of turnkey and build operate transfer contracts, this has traditionally been more to do with
    the supply of works and services as requested by the State. The wording of the provision is such that the
    principal focus is on the supply of works and services to the State rather than what type of contract it is.
    Therefore, it can be argued for example that a turnkey contract is a separate matter on its own but that
    where it involves the supply of works and services then the procurement of such works and services would
    have to be subject to the tendering process. There would be no argument if the law provided emphatically
    that all turnkey contracts, build-operate and transfer contracts and other similar contracts involving the
    expenditure of public monies are to be subject to tender, period.

    In the present case, there is yet no expenditure of public moneys. The State has not requested for bids to
    build a 24 storey building at the cost budgeted for and committed by the State. It is a proposal or an offer
    from a private company being made to the State. Should this then be said to be a case of supply of works and
    services to the State as intended under Section 40 of the PFMA? Hence, if the State Solicitor‘s advice is to be
    accepted (and do not say it should not), what it simply means is that the proposal gets thrown out the
    window and the likelihood of Naima bidding should there be tenders called for is anyone‘s guess.

    In any event, the State can only call for bids if it is going to finance the construction. The question then is
    what is it that is to be constructed and what will the cost be? Whatever it is the State will always pay
    nevertheless, so what is important to look at is the ultimate benefit to the State as presented in the proposal.
    If accommodation is a big priority need, concerns on cost and other matters should not become the bottle-
    neck but rather that the opportunity presented be seized and that we find ways within the law to facilitate it.

    I would therefore recommend, if it is considered necessary, that a further legal opinion be sought on the
    intent of Section 40 (5) in so far as it is applicable to the particular and peculiar proposal by Naima.
    Furthermore, since the State Solicitor has taken the position that the proposal is subject to tender, perhaps
    he can assist further by pointing out whether the proposal is turnkey, a build-operate and transfer or a
    similar project and what that similar project might be known as.

    Section 40 (5) states;
    ―In relation to contracts for the supply of works and services, the provisions of this Section and Section 41
    shall apply to-
    (a) Turnkey contracts, and
    (b) Build-operate transfer contracts, and
    (c) Contracts which in substance are similar to turnkey contracts or build-operate transfer contracts,
    and
    (d) Contracts involving the expenditure of public money‖ (emphasis mine)

    I consider that unless all the elements of Section 40 (5) listed above are or can be adequately answered or
    satisfied so that application of Section 40 (5) becomes unavoidable, there should be some room to explore
    other possibilities to facilitate this worthwhile proposal without facing the risk of rigid compliance resulting
    in a withdrawal of the proposal by Naima.

    Chapter 2: Findings of Facts 39

  • Page 66 of 147

  • My own recommendation would be to not lump the whole proposal in one contract but to have various
    contracts for each phase to be effected under the umbrella of an MoU. It could be better managed that way
    and the State‘s interest would be monitored better. If I may be permitted to say, perhaps some lessons can be
    learnt from the failed Public Service Housing contract here. An MoU to cover the building phase seems to be
    favored by the State Solicitor. Perhaps this could be considered further along with my recommendation on
    phased contracts under an MoU umbrella. This would give both parties the flexibility to massage the
    relationship as the project is being progressed.

    [ Signed ]
    Isikel Mesulam
    Director

    Comments

    The then Director Legal & Investigations of DPM, Mr Isikel Mesulam‘s opinion to the
    Secretary for DPM and Chairman of the GOAC, was to consider the proposal by Naima
    Investments Limited, as an offer from a private investor and not an invitation by the State to
    bid.

    This was a Public Private Partnership arrangement and in its absence, Section 40(5) of the
    Public Finances (Management) Act 1995, automatically applies. Hence, Mr Mesulam requested
    the State Solicitor to specify which arrangement under Section 40(5) of Public Finances
    (Management) Act 1995; was it turnkey contracts, BOT contracts, contracts similar to turnkey
    and BOT or contracts involving the expenditure of public monies, which Mr Mesulam was
    emphasizing on.

    Mr Mesulam then recommended not to lump the whole proposal in one contract, but to have
    various contracts for each phase to be effected under the umbrella of a MoU, while the State
    Solicitor favored on a MoU just to cover the building phase of the project.

    [11] NAIMA INVESTMENTS LIMITED‘S PROPOSAL AND APPLICATION OF
    SECTION 40 (5) OF THE PUBLIC FINANCES (MANAGEMENT) ACT 1995

    On 13 May 2013, Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG,
    OBE, wrote to the State Solicitor, Mr Daniel Rolpagarea, responding to the State Solicitor‘s
    advice dated 29 November 2012, requesting for consideration of some options that may be
    available to the State, and also providing some arguments for and against Section 40 (5) of the
    Public Finances (Management) Act 1995, and the way forward. Below is the full extract of the
    letter:

    DEPARTMENT OF PERSONNEL MANAGEMENT
    Office of the Secretary
    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea

    Telephone: (675) 327 6379 / 6422 / 6447 Facsimile: (675) 325 0520

    13th May 2013

    Mr Daniel Rolpagarea
    State Solicitor
    Office of the State Solicitor
    Department of Justice & Attorney General
    P O Box 591
    WAIAGNI

    Chapter 2: Findings of Facts 40

  • Page 67 of 147

  • National Capital District

    Dear Sir,

    RE: NAIMA INVESTMENT LTD PROPOSAL AND APPLICATION OF SECTION 40 (5) OF THE
    PFMA

    I write in response to your letter of 29 November 2012 wherein you provided advice on what you consider
    should be the approach taken to proceed with the contractual agreement governing the subject proposal.
    Having considered your advice in light of the peculiarity of the proposal I write again to seek further
    clarification on some matters contained in your advice as well as request your consideration of some options
    that may be available to the State.

    I seek these especially in relation to the issue whether or not the proposal by Naima Investment Limited to
    build a 29 Storey building at the company‘s own expense to be later transferred to the State is, or should be
    subject to the tender process as required under Section 40 and in particular Subsection (5) of that provision
    of the Public Finance (Management) Act 1995.

    In my consideration of the advice provided by your office I understand and summarize your position as
    follows:

    1. By way of a series of question and answer format you have covered well a lot of important aspects
    regarding the proposal and what you consider needs to be captured in a contractual arrangement
    which not only complies with law but is aimed at protecting the interest of the State in the long term.

    2. You have directed me to the relevant law governing government procurement and the expenditure
    of public money, namely the Public Finance (Management) Act (PFMA).

    3. You then proceeded to provide guidance on what needs to be done to satisfy the tendering process
    and ventured to recommend on a Paper to inform the NEC on the proposal.

    4. You made reference to the Vulupindi Haus Annexure which is a case bearing some similarities and
    suggested an MoU to cover the building phase only as a way forward.

    5. Overall your advice rested on the position you have adopted that the proposal by Naima is subject
    to the tender process and argue that Section 40 (5) of the PFMA applies.

    Having noted your position I would now bring to your attention for further consideration and advice the
    following important aspects.
    Firstly, I am of the view that you are not fully appreciative of the fact that this is a proposal or an offer
    rather than an invitation by the State to bid. How this special circumstance can be attributed to the intent
    and purpose of Section 40 (5) has not been clearly explained. The offer is coming from Naima, which is
    different from the normal case where the State invites tenders. The law in its current state may not
    adequately cover this situation, especially in terms of its coverage over a Public Private Partnership (PPP)
    arrangement which is being intended in this project. That is exactly why there is a need to have a Public
    Private Partnership law the Bill in respect of which is now going to Parliament. You have suggested that in
    the absence of that Bill which is yet to become law, Section 40 (5) automatically applies. This is where I
    consider you have shut the door without any guidance on other possible options. Options are an essential
    element in an advice and I would have appreciated further guidance on same.

    Secondly, you do not specify and it is not clear as to what type of contract as listed under Section 40 (5)
    should the Naima proposal be categorized under. Nonetheless you advise that your office is already
    developing a legal document to govern a PPP arrangement which is going to be an Agreement to Lease. This
    to me appears to be contradictory and needs to be further clarified.

    Thirdly, the distinction between what is a works contract for instance, a Road Maintenance contract, and a
    contract to build a 29 storey building has not been adequately explored in order to advice on what options
    may be available. Options are important in a project of this magnitude and more so in view of the fact that
    the funding to build is not coming from the State. One can foresee that the State may not be in a position to
    apply strict conditions upfront in such a situation. Furthermore, we have to be mindful of the potential risk

    Chapter 2: Findings of Facts 41

  • Page 68 of 147

  • of Naima being placed in an uncomfortable situation which might force the company to withdraw its
    proposal.

    In trying to determine whether or not there are options which the Naima proposal can be progressed without
    the strict application of law (which in itself may not be totally adequate), I request your further views on the
    exploring of the following options.

    OPTION 1.

    You made reference to the Vulupindi Haus Annexure suggested an MoU only at this initial stage to cover
    just the building phase but provide no firm suggestion on this being an option. Will an MoU entail financial
    commitment and therefore attract the application of the PFMA and in particular the requirement for
    tender? What are the matters which parties can agree on that will form the substance and structure of an
    MoU?

    OPTION 2.

    In view of the fact that there is a proposal on the table rather than an invitation for bids are we precluded
    from further investigating whether Section 40 (5) of the PFMA is strictly applicable? It should be
    ascertained whether or not Section 40 (5) is intended to cover arrangements which are more in the business
    arrangement nature of Turnkey and involve no immediate financial expenditure by the State. The question
    whether or not this provision covers a situation where there is as yet no public moneys being committed
    must be asked and answered conclusively. Should an undertaking to commit State moneys at some future
    occasion depending on the satisfaction of preconditions which may be agreed upon in an MoU be strictly
    subject to tender?

    Should Section 40 (5) be interpreted to stretch its coverage of a situation where an offer is being made to
    build at private cost but which the State upon agreement would eventually acquire. In other words is the law
    in its current state totally adequate? Although Section 40 (5) makes mention of turnkey and build-operate
    transfer contracts, this has traditionally been more to do with the supply of works and services as requested
    by the State. The wording of the provision is such that the principal focus is on the supply of works and
    services to the State rather than what type of contract it is. Therefore, it can be argued for example that a
    turnkey contract is an isolated subject but that where it involves the supply of works and services then the
    procurement of such works and services would have to be subject to the tendering process. I am sure you
    would agree that there would be no argument if the law provided emphatically that all turnkey contracts,
    build-operate and transfer contracts and other similar contracts involving the expenditure of public moneys
    are to be subject to tender, period. Is this what Section 40 (5) actually says.

    I bring these issues to you in light of the special circumstances of this proposal. There is as yet no
    expenditure of public moneys. The State has not requested for bids to build a 29 storey building at the cost
    budgeted for and committed by the State. It is a proposal or an offer from a private company being made to
    the State. Should this then be said to be a case of supply of works and services to the State as intended under
    Section 40 of the PFMA?

    If your advice is to be accepted, will it not mean that the proposal gets thrown out the window? What is the
    guarantee that Naima would bid if the proposal is scrapped and tenders are called for?

    Is it not the case under Section 40 that the State can only call for bids if it wants works and services to be
    supplied at the State‘s cost in accordance with specific requirements? In this case the State is not going to
    finance the construction. The cost factor is appreciated but what of the ultimate benefit to the State as
    presented in the proposal. What is the long term savings on rental going to be for instance? If
    accommodation is a big priority need, concerns on cost and other matters should not become the bottle-neck
    but rather that the opportunity presented be seized and that we find ways within the law to facilitate it.

    I therefore request a further investigation on the legal position in light of the issues raised and the options
    presented. All the elements of Section 40 (5) should be adequately answered or satisfied so that where
    application of Section 40 (5) becomes unavoidable then, there should be some room to explore other
    possibilities to facilitate this worthwhile proposal without facing the risk of rigid compliance resulting in a
    withdrawal of the proposal by Naima.

    Whatever is to be the way forward there are 2 important things to bear in mind;

    Chapter 2: Findings of Facts 42

  • Page 69 of 147

  • 1. That the opportunity presented is not lost by reason of lack of competent advice,

    2. That matters that need not be pulled in to attract the application of the PFMA at this stage should
    not become overbearing, and

    3. Parties are provided the flexibility to massage the relationship as the project is being progressed.

    I look forward to receiving further advice from you soon.

    Yours sincerely.

    [ Signed ]
    John M. Kali, OBE
    Secretary

    Comments

    The Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, responded
    to the State Solicitor‘s advice dated 29 November 2012.

    He emphasized on the potential risk of Naima Investments Limited withdrawing its offer if the
    State Solicitor is concentrating on the application of Section 40(5) of the Public Finances
    (Management) Act 1995 and the PPP arrangement, without considering other possible options
    that can cater for the proposal by NIL as the potential developer.

    Although Section 40(5) of the Public Finances (Management) Act 1995 automatically applies,
    the State Solicitor did not specify which type of contract under Section 40(5) of Public
    Finances (Management) Act 1995 was immediately applicable.

    [12] CSTB‘S REJECTION OF THE REQUEST BY GOAC ON EoI FROM
    INVESTORS FOR THE CONSTRUCTION OF THE MULTI STOREY
    BUILDING

    On 21 May 2013, Mr Phillip Eludeme, Chairman of CSTB wrote to the Secretary for DPM and
    Chairman of the GOAC, Mr John M. Kali, CMG, OBE, advising on CSTB‘s rejection of the
    Government Office Allocation Committee‘s proposal in Mr Kali‘s letter dated 25 April 2013,
    for CSTB to call for EoI from Investors on a BOLT arrangement for the construction of the
    Multi-Storey Building. Below is the full extract of the letter:

    CENTRAL SUPPLY AND TENDERS BOARD

    Telephone: 311 3777 / 311 3779 P O Box 6457
    Facsimile: 311 3778 Boroko,
    Email: info@cstb,gov.pg National Capital District , 111

    Date: 21st May 2013 Ref: DPM/OGAPSH/GOD/dhb/ej

    Mr John Kali, OBE
    Secretary
    Department of Personnel Management
    Morauta Haus
    P.O Box 519
    WAIGANI
    National Capital District

    Chapter 2: Findings of Facts 43

  • Page 70 of 147

  • My dear Secretary

    SUBJECT: REQUEST FOR EXPRESSION OF INTEREST (RFEOI) ON A BUILT OPERATE,
    LEASE AND TRANSFER (BOLT) FOR PROPOSED 29 STOREY OFFICE TOWER
    WITH A SEPARATE 4 SPECIALITY PODIUM, A SINGLE STOREY FUNCTION
    BUILDING AND A 4 STOREY PARKING BUILDING AT WAIGANI OFFICE
    PRECINCT, WAIGANI CENTRAL BUSINESS DISTRICT (CBD), NATIONAL
    CAPITAL DISTRICT

    I refer to your letter dated 25 April 2013, in respect to your request for the captioned subject matter.

    The Board at its Meeting No. M-10/13 held on Wednesday, 15 May 2013, carefully considered your request
    including NEC Decision No. 03/2013, NG 174/2012 & NG 171/2012 and discussed in length the best solutions
    on how to deal with your request. The Board finally resolved to reject your request and instead invite Naima
    Investment just like any private company to build the office tower on its own private land and advertise for
    tenants to lease the building.

    The Board has noted that some of the proposed tenants such as the Departments of Finance and the
    Petroleum and Energy are already having their own office buildings erected. More so NEC Decision No. NG
    074/2012 for the Marea Haus has already been implemented meaning that the proposed tenants will be
    drastically reduced. Further, there are proposal for the Central Government Offices to be furbished.

    The prospect of the NAIMA Tower to be fully occupied is therefore not possible and the Board is cautious
    that the concept (BOLT) is not feasible and the State will end up with more liabilities than benefits.

    The Board also took into consideration that housing of key departments and officers into one building is
    quite risky in terms of riots and other natural disasters and therefore such proposal is considered not to be in
    the best interest of the State.

    The Board therefore considers it a risk to make such commitments and advise the NEC that it would be
    difficult to implement the decisions.

    Again, Naima Investment or any other company for that matter is most welcome to invest into real estate in
    this country using their own money. It can also advertise in public for prospective tenants to take up tenancy
    in their tower as a private concern.

    This Board is responsible for awarding of contracts using public funds. Since no public funds will be used in
    this transaction, the Board has no role in this instance.

    Your rejected submission is returned herewith.

    Yours faithfully

    [ Signed ]
    Phillip Eludeme
    Chairman

    Comments

    On 15 May 2013, the CSTB at the Board Meeting No. M-10/2013, discussed the above issue at
    length and finally resolved to reject it, because the Board was only responsible for awarding of
    contracts using public funds and in this instance there would not be any expenditure of public
    funds.

    The CSTB maintained that the proposal by the GOAC was not viable, risking the state and also
    procedurally wrong.

    Chapter 2: Findings of Facts 44

  • Page 71 of 147

  • [13] SECOND LEGAL OPINION FROM THE THEN DIRECTOR LEGAL AND
    INVESTIGATIONS OF DPM TO SECRETARY FOR DPM ON NAIMA
    INVESTMENTS LIMITED‘S PROPOSAL

    On 23 May 2013, the then Director Legal and Investigations of DPM, Mr Isikel Mesulam,
    wrote to the Secretary for DPM, Mr John M. Kali, CMG, OBE, providing a Second Legal
    Opinion on the Naima Investments Limited‘s Proposal. Below is the full extract of the opinion:

    DEPARTMENT OF PERSONNEL MANAGEMENT
    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea

    Telephone: (675) 3276379/6422/6447
    Facsimile: (675) 325 0520 Website: www.dpm.gov.pg

    LEGAL & INVESTIGATIONS DIVISION

    23rd May, 2013

    OPINION

    NAIMA INVESTMENTS PROPOSAL

    This second opinion is provided on the above matter in view of further information made available to the
    writer which was not available at the time the previous opinion was given.

    Documents which have now been sighted are;

    1. Documents from OGAPSH relating to Kitpeng Haus provided for comparative analysis.

    2. Documents from OGAPSH relating to Vulupindi Haus Annexure for comparative analysis.

    3. Documents from OGAPSH on the Kimas Centre for comparative analysis.

    4. Letter from State Solicitor to John Kali dated 3 April 2013.

    5. Copy of Memo from Minister for Public Service Sir Puka Temu to John Kali dated 5 September
    2012 directing the latter to work on the proposal by Naima Investments Ltd (NIL).

    6. Copy of MoU between Naima Investments Ltd and Government Office Allocation Committee
    signed on 25 September 2012.

    The background of this matter has already been covered in the advice from the State Solicitor as referred to
    in my previous opinion on the matter dated 8 May 2013. In light of the advice by the State Solicitor, the
    objective of this second opinion is to provide views on alternative or options which may be considered in
    trying to find a way forward on what is importantly a proposal and not an offer made in response to an
    invitation to bid in a tender process.

    The State Solicitor advises that the Public Finances (Management) Act (PFMA) applies and relies
    specifically on the application of Section 40 (5) of the subject Act. I beg to differ on two fronts. Firstly, as
    stated above this is a proposal. To subject it to the tender process will mean the withdrawal of the proposal
    and the risk of losing out on a potential opportunity to cater for the need to house government departments
    in one place and possibly save cost in the long term.

    Secondly, I am not totally convinced that Section 40 (5) applies. Section 40 deals with two major activities of
    financial bearing namely;

    a) The purchase and disposal of property, and
    b) The supply of works and services.

    Chapter 2: Findings of Facts 45

  • Page 72 of 147

  • A deal to build would not come under either of the above. Rental of property will come under supply of
    services. However the provision will apply in relation to the making of the transaction itself as and when the
    transaction is being made. The question that naturally arises in this case is; Is the State entering into a lease
    now? If the answer is yes then we look at what the actual intention is and how we might be able to
    accommodate that intention. Again I reiterate here that for the State Solicitor to treat it as a matter that has
    to go back for tender ignores the peculiar nature of this proposal and the risks posed by such an approach.
    The risk is that the proposal may be withdrawn and the opportunity to house 19 government departments at
    the one location and at universal cost would be lost.

    From the documents I now have I take particular note of a copy of a Memorandum of Understanding (MoU)
    dated 25 September 2012 signed between NIL and the Government Office Allocation Committee (GOAC) in
    relation to the building of what is to be known as the Naima Centre. Clause B of the Recitals states;
    ―Whereas, in consideration thereto, the Parties agree to execute this MoU to establish the process leading to
    the Lease between the Parties‖

    This clearly speaks about an intention to enter into a formal Lease arrangement in the future. In terms of
    what it seeks to achieve without any compelling necessity to apply the provisions of the PFMA at this stage,
    this MoU would be ordinarily be sufficient.

    A memorandum of understanding (MoU) is a legal document describing a bilateral or multi-lateral
    agreement between two or more parties. It expresses a convergence of will between the parties, indicating an
    intended common line of action. (The Free Encyclopedia).

    It is a more formal alternative to a gentleman‘s agreement, but lacks the binding power of a contract.

    Hence with the signing of the MoU referred to above the intention of NIL and GOAC can be said to have
    been captured. By signing NIL indicates what its intention which can be reasonably assumed that it does not
    wish to be subjected to any tender process in the proposal it has put to the State. The MoU does not cover the
    change from 24 to 29 storey building including a 1 storey convention building plus a 4 storey podium so these
    will have to be approved and catered for in the similar way.

    In a proposal such as the one put forward by NIL the following type of arrangements would be considered;

    a) BOT (build-operate-transfer)
    b) BOOT (build-own-operate-transfer)
    c) BOO (build –own-operate)
    d) BLT (build-lease-transfer)
    e) DBFO (design-build-finance-operate)
    f) DBOT (design-build-operate-transfer)
    g) DCMF (design-construct-manage-finance)

    A BLT would appear to be very appropriate. Under BLT a private entity builds a complete project and
    leases it to the government. In this way the control over the project is transferred from the project owner to
    the lessee. In other words ownership remains with the shareholders but operation purposes are leased. At
    the end of the lease period the ownership of the asset and the operational responsibility are transferred to the
    government at a previously agreed price. For a foreign investor such as NIL when taking into account
    country risks such as a change of government, BLT provides good conditions because NIL maintains the
    property rights while avoiding operational risks. However, all the above forms of arrangements are
    normally contracts and this will obviously pose some difficulty in terms of the application of the PFMA.

    There is also what is called a Memorandum of Agreement. A memorandum of agreement (MoA) or
    cooperative agreement is a document written between parties to cooperatively work together on an agreed
    upon project or meet an agreed upon objective. The purpose of a MoA is to have a written understanding of
    the agreement between parties. (The Free Encyclopedia).

    It can be a legal document that is binding and hold the parties responsible to their commitment or just a
    partnership agreement. It is used also as a written document resulting from dispute resolution such as the
    industrial disputes between the Public Service and the Public Employees Association of PNG.

    This form of agreement falls short of an actual contract such as a turnkey contract or a build-operate-
    transfer contract. A turnkey project is a type of project that is constructed so that it could be sold to any
    buyer as a completed product. It is a contract whereby the essential design emanates from, or is supplied by

    Chapter 2: Findings of Facts 46

  • Page 73 of 147

  • the contractor. Turnkey refers to something that is ready for immediate use, generally used in the sale or
    supply of goods and services. It is often used to describe a home built on the developer‘s land with the
    developer‘s financing ready for the customer to move in. If a contractor builds a ―turnkey home‖ they frame
    the structure and finish the interior. Everything is completed down to the cabinets and carpet. I note in this
    case that the MoU signed as referred to above already pronounces at Clause B of the Recitals that the NIL
    proposal is to be recognized as turnkey and not BOT.

    Build-operate-transfer is a form of project financing, wherein a private entity receives a concession from the
    private or public sector to finance, design, construct and operate a facility stated in the concession contract.
    This enables the project proponent to recover its investment, operating and maintenance expenses in the
    project. On this point, the State Solicitor in his advice under paragraph 7 raises concerns on the ultimate
    cost to the State in that, as he states; ―….the State will still end up paying for the construction costs, fit-out
    costs plus returns on investment expected by NIL through rental payments.‖

    His concerns stems from the fact that by nature BOTs are long term arrangements and fees are usually
    raised during the concession period. The rate of increase is often tied to a combination of internal and
    external variables which in NIL‘s case, will allow for it to reach a satisfactory internal rate of return for its
    investment. All I say to that is that this is the nature of the beast. If this proposal was subject to the PFMA
    under a BOT arrangement then the State will be obliged to pay nevertheless. In any case however, his
    concern fades into irrelevance when he was already adopted the position that the PFMA applies.

    The PFMA as the State Solicitor pointed out, does make mention of this two types of contracts being subject
    to the provisions of the Act, in particular Section 40 (5). In my view this provision is ambiguous. The
    ambiguity is created in the construction and the interpretation of the intent and purpose of Section 40 (5) of
    the Act as I explained my previous opinion in that the focus is on the supply of works and services and not so
    much on the type of project. There would be no ambiguity if the provision specifically says all turnkey, BOT
    and other related contracts shall be subject to tender.

    To avoid fruitless legal argument on the application of this one ambiguous provision I propose the following
    options for consideration on the way forward:

    1. To investigate and confirm the type of commitment to lease as expressed in the MoU already signed
    and adopt the same course to accommodate for the change from 24 to 29 storey building and others.
    In that regard where there is an issue in relation to land the Minister for Lands can utilize his
    powers under Section 69 (2) (d) to exempt land from advertisement for application or tender in
    favor of NIL.

    2. To explore the possibility of an Option Agreement. A previous Option Agreement done under the
    MRDC Pty Ltd (Privatization) Act is exempted from the Part VII according to Section 38A of the
    PFMA. An Option Agreement is a contract that you enter into now that gives you the power to
    exercise some right at some point in the future.

    3. To consider the possibility of having a commercial entity owned by the State to undertake the
    project on behalf of the State.

    I would recommend that these options be put to the State Solicitor for consideration and further advice
    particularly on what these options entail.

    In the course of writing this opinion it was informed that the government‘s latest instructions communicated
    through the Minister for Public Service is for a Pre-Lease Agreement to be entered into with NIL. Pre-Lease
    Agreements are not defined specifically in the Land Act. There is no provision authorizing the making of
    what is now being called ―Pre-Lease‖. The arrangements discussed above cater for what is intended by Pre-
    Lease arrangement. It is therefore advisable not to use a term which does not exist in law.

    MoUs have been used on more than one occasion already for Vulupindi Haus, Kimas Centre and Kitpeng
    House according to GOAC and unless there are compelling reasons why we should not employ that same
    course. Monies for rental should not be an issue as I understand this is always catered for in all budget
    appropriations. The long term benefit of the project should dictate its pursuit and not risk losing the
    opportunity presented.

    [ Signed ]

    Chapter 2: Findings of Facts 47

  • Page 74 of 147

  • Isikel Mesulam
    Director

    Comments

    This is the second legal opinion provided by the then Director Legal and Investigations of
    DPM, Mr Isikel Mesulam to the Secretary for DPM and Chairman of the GOAC, Mr John M.
    Kali, CMG, OBE, regarding the proposal by Naima Investments Limited.

    In this second opinion, Mr Isikel Mesulam, provided his views on alternative, or options, which
    may be considered in trying to find a way forward, on what is importantly a proposal and not an
    offer made in response, to an invitation to bid in a tender process.

    Mr Isikel Mesulam‘s legal opinion was that if Naima Investment Limited‘s proposal was to go
    through the tender process will mean that Naima Investments Limited might withdraw its
    proposal and the risk of losing out on a potential opportunity to cater for the need to house
    Government Departments in one place, and possibly save costs in the long term.

    Mr Isikel Mesulam was more concerned about the risk of Naima Investments Limited
    withdrawing its proposal. However, the State should not be concentrating too much about
    Naima Investments Limited, whether it withdraws its proposal or not, there are other potential
    bidders like Naima Investments Limited out there. Hence, everything must go through the
    tender process subject to the Public Finances (Management) Act 1995 as advised by the State
    Solicitor in his earlier advices.

    [14] LETTER FROM THE SECRETARY FOR DPM TO THE STATE SOLICITOR
    REGARDING NAIMA INVESTMENTS LIMITED‘S PROPOSAL AND
    APPLICATION OF SECTION 40(5) OF THE PUBLIC FINANCES
    (MANAGEMENT) ACT 1995

    On 24 May 2013, Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG,
    OBE, wrote to the State Solicitor, Mr Daniel Rolpagarea, regarding Naima Investments
    Limited‘s Proposal and the Application of Section 40 (5) of the Public Finances (Management)
    Act 1995. Below is the full extract of the letter:

    DEPARTMENT OF PERSONNEL MANAGEMENT
    Office of the Secretary
    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea

    Telephone: (675) 327 6379 / 6422 / 6447 Facsimile: (675) 325 0520

    24th May 2013

    Mr Daniel Rolpagarea
    State Solicitor
    Office of the State Solicitor
    Department of Justice & Attorney General
    P O Box 591
    WAIGANI
    National Capital District

    Dear Sir,

    Chapter 2: Findings of Facts 48

  • Page 75 of 147

  • RE: NAIMA INVESTMENT LTD PROPOSAL AND APPLICATION OF SECTION 40(5) OF THE PFMA

    I write in respect of the above matter and in particular to a copy of an unsigned letter purportedly from you
    to me as Chairman of the Government Office Allocation Committee dated 29 November 2012. I have not
    received any signed copy of that letter up to now. I also refer to a second letter from you dated 3 April 2013
    in respect of the same matter wherein you reiterated your earlier advice that the proposal by Naima
    Investments Ltd should be subjected to the tender process under the Public Finances (Management) Act.

    As you can appreciate the effect of your advice places the State in a very difficult situation on a proposal
    which already has the support of government. Your letter provides no other option which may be considered
    by the government and so we have sought further advice just to explore other possibilities that may be
    available. You did make brief mention of an MoU as a way forward but without any firm suggestion on this
    being an option so we have deliberately proceeded to explore this option and sought additional advice on
    this.

    Additional advice received suggests that there may be other options available and therefore I am writing to
    request that your office consider the options provided and any others you may recommend in order to
    facilitate this important proposal. The options are as contained in the opinion attached to this letter.

    Please note that at the time of writing this letter to you instructions from the government communicated
    through Minister for Public Service is for the proposal to go ahead and that I have to facilitate a pre-lease
    arrangement. The advice I have is that there is no guidance on pre-lease arrangements because it has not
    been specifically provided for by law but that what it seeks to achieve can be accommodated through other
    arrangements such as an MoU.

    I accordingly write to you to request that you explore the options contained in the advice provided and make
    your recommendations on what you consider should be the way forward. I note you indicated that your
    office may be working on a document already. If that is so then perhaps you can kindly advice what form of
    arrangement that document will come under.

    I attach a copy of the advice referred to for your purposes and look forward to hear from you in the not too
    distant future.

    Yours sincerely.

    [ signed ]
    John M. Kali, OBE
    Secretary

    Cc: Sir Dr. Puka Temu
    Minister for Public Service

    Comments

    The Secretary for DPM and Chairman of the GOAC urged the State Solicitor to explore the
    options provided in Mr Isikel Mesulam‘s legal opinions and not to only stick with the Public
    Finances (Management) Act 1995 as the proposal from Naima Investments Limited already has
    the support from the Government, whereas the State Solicitor‘s advices places the State in a
    very difficult situation.

    The Secretary for DPM and Chairman of the GOAC also indicated in the above letter that at the
    time of writing that letter to the State Solicitor, instructions from the Government
    communicated through the then Minister for Public Service was for the proposal to go ahead
    and that he had to facilitate a pre-lease arrangement. There was no NEC Decision in support of
    this.

    This raised the question of how and why could the proposal go ahead when CSTB in its
    recommendation rejected the proposal in the letter dated 21 May 2013. NEC only acted on the
    recommendations from CSTB.

    Chapter 2: Findings of Facts 49

  • Page 76 of 147

  • This was clearly an indication of bypassing and abusing of process and conflict of interest on
    the part of the then Minister for Public Service, Hon. Sir Dr Puka Temu, KBE, CMG, MP and
    the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE.

    [15] EXPRESSION OF INTEREST FROM THE THEN ACTING SECRETARY
    FOR DPM TO CSTB FOR THE CONSTRUCTION OF THE MULT-STOREY
    OFFICE COMPLEX

    On 18 June 2013, the then Acting Secretary for DPM, Mr Chris Kabauru wrote to CSTB,
    regarding expression of interest for the construction of the Multi Storey Office Complex. Below
    is the full extract of the letter:

    DEPARTMENT OF PERSONNEL MANAGEMENT

    Office of the Secretary

    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea
    Telephone: (675) 3276302 / 305 Facsimile: (675) 3250789 Website: www.dpm.pg

    Date: 18th June, 2013

    Mr. Philip Eludeme
    Chairman
    CENTRAL SUPPLY AND TENDERS BOARD
    P.O Box 6457,
    BOROKO, NCD

    My dear Chairman,

    EXPRESSION OF INTEREST FOR CONSTRUCTION OF MULTI STOREY OFFICE COMPLEX

    Thank you for your letter dated 21 May 2013 on the above subject matter.

    Consistent with advice from the State Solicitor the GOAC submitted a proposal requesting the CSTB to call
    for public tenders for the construction of a multi-storey office complex on State land. It now seems obvious
    that the CSTB agrees that there was really no need to call for public tenders for the construction of the high
    rise office complex because no government funding would be involved.

    Regardless of your position, the Committee considers it necessary to call for Expressions of Interest anyway,
    as this is also compliant with directives from the Prime Minister through the Minister for Public Service.
    Consequently, as Secretary for Personnel Management and in my capacity as Chairman of GOAC I will
    proceed with the Expressions of Interest to commence as soon as possible.

    Yours sincerely

    [Signed ]
    CHRIS KABAURU
    Acting Secretary

    Comments

    The then Acting Secretary for DPM, advised that regardless of CSTB Chairman‘s position on
    Naima Investments Limited‘s proposal not subject to public tender, because there would not be
    any expenditure of public funds in that arrangement, the Committee considered it necessary to
    call for Expressions of Interest anyway, as this was also compliant with directives from the
    Prime Minister through the then Minister for Public Service. Consequently, as Secretary, for

    Chapter 2: Findings of Facts 50

  • Page 77 of 147

  • DPM and in his capacity as Chairman of the GOAC, Mr Chris Kabauru, would proceed with
    the EoIs to commence as soon as possible.

    The CSTB had already rejected the proposal by Naima Investments Limited based on the
    various reasons outlined in their letter of advice to the Secretary for DPM and Chairman of the
    GOAC, dated 21 May 2013 and obvious reason being there would not be any expenditure of
    public funds in that arrangement.

    Hence, if Naima Investments Limited wanted to continue with its proposal, then CSTB advised
    that it be left to build its own building like any private company and then lease to interested
    tenants, such interested tenants may include certain State Agencies.

    [16] FURTHER ADVICE FROM THE STATE SOLICITOR TO SECRETARY FOR
    DPM REGARDING THE APPLICATION OF SECTION 40(5) OF PUBLIC
    FINANCES (MANAGEMENT) ACT 1995 TO THE NAIMA INVESTMENTS
    LIMITED‘S PROPOSAL

    On 20 June 2013, the State Solicitor, Mr Daniel Rolpagarea wrote to the Secretary for DPM and
    Chairman of the GOAC, Mr John M. Kali, CMG, OBE, advising on the Application of Section
    40 (5) of the Public Finances (Management) Act 1995 and its application relative to options
    raised by the Secretary for DPM on letter dated; 24 May 2013. Below is the full extract of the
    advice:

    OFFICE OF THE STATE SOLICITOR
    DEPARTMENT OF JUSTICE & ATTORNEY GENERAL
    COMMON LAW SECTION

    TELEPHONE: (675) 301 2882/890 P. O BOX 591, WAIGANI
    FACSIMILE: (675) 323 3661 National Capital District
    EMAIL: statesol@justice.gov.pg PAPUA NEW GUINEA

    Your reference:
    Our reference: AGSS310/2012/3-8.36/14
    Action Officer: B.K. Vitata

    20th June, 2013
    Mr. John Kali, OBE
    Secretary
    Office of the Secretary
    Department of Personnel Management
    PO Box 519
    WAIGANI
    National Capital District

    Dear Secretary Kali,

    Application of Section 40(5) of the Public Finance (Management) Act to the Naima Investment Limited
    Proposal

    1. I refer to your letter of 24 May, 2013 regarding the above subject and in which you attached a legal
    opinion (‗the Opinion‘) provided by your Director for Legal, Mr Isikel Mesulam.

    Application of Section 40(5) of the Public Finance (Management) Act

    Chapter 2: Findings of Facts 51

  • Page 78 of 147

  • 2. I have carefully considered the Opinion and advice that I still maintain my position expressed in my
    earlier letters to you that the requirements for tender under Section 40 of the Public Finance
    (Management) Act (‗PFMA‘) apply to this type of transaction.

    3. I have noted the different forms of a Build Operate Transfer (‗BOT‘) referred to in that Opinion. I
    have also noted that the explanations on those various transactions were taken straight from the
    internet encyclopedia Wikipedia. I appreciate the depth of research the Opinion is based on but I
    beg to differ on most arguments put therein.

    4. In essence and based on instructions received earlier, the proposed transaction involves Naima
    committing to build a particular building in exchange for the State committing to lease that
    building. The commitment by the state is a commitment of public moneys and it is consideration for
    Naima undertaking the building works. Any legally binding commitment of this nature is a contract
    for works and services within the meaning of Section 40 of the PFMA and this requires public
    tender.

    5. To avoid any confusion about the application of Section 40 of the PFMA, subsection 40(5) makes
    clear that Section 40 applies to: contracts which in substance are similar to turnkey or BOT
    contracts; and also any contracts involving the expenditure of public moneys. There is no doubt that
    this will be a contract involving the expenditure of public money. This is sufficient however I am
    also firm in my opinion that it is in substance similar to a BOT.

    6. The Opinion attempts to make an argument based on the fact that the arrangement was proposed
    by Naima. The law does not make this distinction. It does not matter whether the supplier first
    approaches the State or the State first requests tenders after properly determining its procurement
    need. All contracts for supply of works and services (over the prescribed amount) must be
    publically tendered (s.40(1) of the PFMA) and any contract which is not is void (see State v Barclay
    Brothers (PNG) Ltd [2001] PGNC 134).

    7. To avoid any confusion, for the purposes of the threshold the costs are calculated based on the total
    commitment of public moneys under the contract being the rental for the term of the lease being
    committed.

    Options raised for my consideration in the Opinion

    Apply exemption of land from advertisement for application or tender when granting a State Lease

    8. With regard to your first option to have land exempted from advertisement under Section 69 of the
    Lands Act, please note that this would only relate to the granting of a State lease and does not in any
    way exempt this arrangement from the tender requirements to be complied with under the PFMA

    Option Agreement

    9. With regard to option 2 in the Opinion, this is not applicable to the present circumstances and is
    only applicable to MRDC Pty Ltd (Privatization) Act has been repealed some 10 years ago.

    Project undertaken on behalf of State by Commercial Entity

    10. In relation to option 3 in the Opinion, this will still require the commitment of public moneys and
    therefore will still require the application of Section 40 of the PFMA.

    Additional Issues to Note

    11. Please note that within the Waigani City Centre Development Control Policy, the highest building
    allowed is 12 storeys and cannot be beyond that. The different zones within the city have specific
    building requirements and for the areas that the proposed building is intended to be built on would
    not allow for a 30-storey building.

    Conclusion

    Chapter 2: Findings of Facts 52

  • Page 79 of 147

  • 12. I have noted that the CSTB has rejected the proposal by Naima. It would be advisable therefore
    that Naima be left to build its own building and then lease to interested tenants, such interested
    tenants may include certain State tenants.

    13. I have been advised by the Office of the Chief Secretary that the Prime Minister has decided that
    there will be no pre-leasing arrangement as proposed by Naima until it is endorsed by Cabinet.

    14. In conclusion, the tender requirements apply to the proposal by Naima; moreover, given the advice
    from the Chief Secretary‘s Office or from the NEC before you undertake further action on this
    matter.

    Yours sincerely,

    [ Signed ]
    DANIEL ROLPAGAREA
    State Solicitor

    Comments

    The State Solicitor had noted that the CSTB had rejected the proposal by Naima Investments
    Limited and advised therefore that Naima Investments Limited be left to build its own building
    and then lease to certain interested State tenants.

    The State Solicitor had also been advised by the Office of the Chief Secretary that the Prime
    Minister had decided that there would be no pre-leasing arrangement as proposed by Naima
    Investments Limited until it is endorsed by Cabinet. This was contrary to Secretary Kali‘s letter
    to the State Solicitor on 24 May 2013 where he advised that ― instructions from Government
    communicated through the then Minister for Public Service is for the proposal to go ahead and
    that he had to facilitate the pre-lease arrangement‖.

    The State Solicitor concluded that the tender requirements apply to the proposal by Naima
    Investments Limited; moreover, advice must be granted from the Chief Secretary‘s Office or
    from the NEC before the GOAC undertake further action on this matter.

    Based on the above advice from the State Solicitor, and also from previous advices, the State
    Solicitor, still maintained his position that the proposal by Naima Investments Limited was still
    subject to public tender under Section 40 of Public Finances (Management) Act 1995.
    The State Solicitor also advised that within the Waigani City Centre Development Control
    Policy, the highest building allowed is 12 storeys and cannot be beyond that. The different
    zones within the city have specific building requirements and for the areas that the proposed
    building is intended to be built on would not allow for a 30-storey building.

    Naima Investments Limited‘s initial proposal was to build a 24 Storey Office Complex which
    was later changed to a 29 Storey Building which was in breach of the Waigani City Centre
    Development Control Policy yet the Minister for Public Service and the Secretary for DPM and
    Chairman of the GOAC supported such proposal and facilitated this for NEC approval.

    [17] EXPRESSION OF INTEREST FROM THE THEN MINISTER FOR PUBLIC
    SERVICE TO PRIME MINISTER FOR THE CONSTRUCTION OF THE
    MULTI STOREY OFFICE COMPLEX

    On 1 July 2013, the then Public Service Minister, Hon. Sir Dr Puka Temu, KBE, CMG, MP,
    wrote to the Prime Minister, Hon. Peter O‘Neill, CMG, MP, regarding the Expressions of

    Chapter 2: Findings of Facts 53

  • Page 80 of 147

  • Interest (EoI) for the construction of Multi Storey Central Government Office Accommodation
    in Waigani. Below is the full extract of the letter:

    MINISTER FOR PUBLIC SERVICE

    Level 2, Morauta Haus, Waigani,
    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea
    Telephone: (675) 3276418/6365 Facsimile: (675) 3250835 Website: www.dpm.pg

    Date: 1st July 2013

    HON. PETER O‘NEILL, CMG, MP
    PRIME MINISTER
    Office of the Prime Minister
    Post Office, Parliament
    WAIGANI, NCD

    My dear Prime Minister,

    SUBJECT: EXPRESSION OF INTEREST FOR THE CONSTRUCTION OF MULTI STOREY
    OFFICE COMPLEX

    You will recall that Cabinet in its decision No. 03/2013 approved in principle the construction of an office
    complex on BOT arrangement. Following this principle approval, my Ministry was advised by the State
    Solicitor to go through a tender process in order to engage a developer/investor to construct the new office
    complex to accommodate all the key Government Departments and agencies who are dislocated and
    scattered throughout Port Moresby city. My Ministry and the Department of Personnel Management had
    been of the view that there was no need to go for public tender as the State would not be funding the
    construction of the new office complex.

    However, in view of the State Solicitor‘s advice, my Department Secretary, who is also the Chairman of the
    Government Office Accommodation Committee (GOAC), submitted a proposal to the Central Supply and
    Tenders Board (CSTB) to help with the procurement process. In response to this request for open tender,
    the CSTB stated there was no need for a public tender process because the State would not be forking out
    public funds for the construction of the new office complex.

    During discussions with you on this matter you instructed for an open and transparent process in the
    engagement of a developer/investor for the construction of the new office complex. Therefore, regardless of
    the response from the CSTB and in compliance with your directions I have directed the Secretary for
    Personnel Management in his capacity as the Chairman of the Government Office Accommodation
    Committee to call for Expressions of Interest commencing on Wednesday, 3 July 2013 for a period of one
    month.

    The multi storey office complex will be constructed where the old Central Government Office Complex now
    stands on State land, known as Allotment 1, Section 354, Hohola (Waigani). The new multi complex office
    building is likely to comprise a total 100,000 square metres to cater for over twenty public service
    departments and agencies and will be constructed under the Build, Operate, Lease and Transfer (B.O.L.T)
    concept.

    Thank you for your support in this important project which will go a long way in improving the confidence
    and performance of the Government and its public service machinery.

    Yours sincerely,

    [ Signed ]
    HON. SIR DR PUKA TEMU, KBE, CMG, MP
    Minister for Public Service

    Comments

    Chapter 2: Findings of Facts 54

  • Page 81 of 147

  • From the above request and advice from the then Minister for Public Service, Hon. Sir Dr. Puka
    Temu, KBE, CMG, MP to the Prime Minister, Hon. Peter O‘Neill, CMG, MP, the GOAC
    through its Chairman was then directed to take the lead in calling for EoIs from potential
    developers.

    Hon. Sir Dr Puka Temu, KBE, CMG, MP, also indicated that his Ministry and the Department
    of Personnel Management had been of the view that there was no need to go for public tender as
    the State would not be funding the construction of the new office complex.

    CSTB was left out in the calling for EoIs, as it still maintained its position that the project would
    not go through public tender because public funds would not be expended in that arrangement.
    The Multi-Storey office complex would be constructed under the BOLT concept.

    [18] TENDER NOTICE REQUESTING FOR EXPRESSIONS OF INTEREST FOR
    DESIGN AND CONSTRUCTION OF MULTI STOREY OFFICE COMPLEX

    On 3 July 2013, there was a tender notice put out by the Secretary for DPM and Chairman of
    the GOAC, Mr John M. Kali, CMG, OBE, calling for EoI for the design and construction of
    Multi Storey Office Complex. Below is the full extract of the Tender Notice:

    Papua New Guinea

    DEPRTMENT OF PERSONNEL MANAGEMENT
    WAIGANI, PORT MORESBY

    REQUEST FOR EXPRESSIONS OF INTEREST (EOI) FOR DESIGN AND CONSTRUCTION OF
    MULTI STOREY OFFICE COMPLEX

    The Department of Personnel Management and the Government Office Accommodation Committee on
    behalf of the Government of Papua New Guinea, hereby request Expression of Interest from interested
    parties for the Construction of a multi storey Government Office Complex, within the Waigani Office
    Precinct under a Build, Operate, Lease and Transfer (B.O.L.T) concept. This is not a Government Funded
    project.

    The Waigani Office precinct within the Waigani Central Business (CBD) will become the centre of
    Government of Papua New Guinea public service activity in Port Moresby and will utilize the Old Central
    Government office land, legally known as Section 354 Allotment 1 Hohola (Waigani) and other vacant state
    land in the Waigani area. It is anticipated that a minimum of 100,000 square metres of office space, will be
    required to cater for a little over twenty public service government departments and agencies.

    The Request/Expression of interest should include the following:

    • The identity of the company or consortium and appropriate contact details
    • Current Company Compliance Certificate
    • Company profile including financial statement for 2011, 2012, 2013. Including financial turnover
    within the last 3 years
    • A capability statement highlighting past large scale development experience, pertinent Build,
    Operate Lease and Transfer (B.O.L.T) experiences (at least 3 examples) and requisite
    staff/profession/Technical capacity and expertise.
    • Company partnership arrangements
    • Proposed program phase or timelines.
    • Capability to deliver on schedule giving examples of past performances

    DESCRIPTION OF REQUIREMENTS

    Chapter 2: Findings of Facts 55

  • Page 82 of 147

  • 1. The DPM and the GOAC is seeking Expression of Interest (EOI) from Building
    Construction/Architectural Engineering firms with the required expertise and experience in the
    construction of multi Storey building

    2. Demolition of existing (old central government office) building structure

    3. The new Multi Storey Government Office Complex will be located at Section 354 Allotment 1
    Hohola, Waigani where the old Central Government Office still stands

    4. The Multi Storey Office Complex would be comprised of:
    a) A total of 100,000 Square metres
    b) Separate office to accommodate the Prime Minister of Papua New Guinea
    c) 1 Storey annexure for conferences and functions
    d) Adequate Car Parking Bays

    5. Please note that this request does not constitute a solicitation. The DPM and GOAC reserve the
    right to change or cancel this request at any time. It should be noted that by submitting a response
    to this EOI does not automatically guarantee or obligate the DPM to invite any particular company
    to participate in the subsequent bidding process. Only those prospective companies that are deemed
    qualified by DPM upon completion of an objective evaluation of their submission to the EOI will be
    invited to participate in any subsequent tender exercise.

    It is expected that a shortlist of respondents will be selected from the Request for Expressions of Interest
    rectified and that they will be invited to present in detail their proposal. In this respect respondents should
    contact the following for briefing;

    Director, Office of Government Accommodation and Public Service Housing on Tel: (675) 327 6303 or (675)
    327 6302 and email: chris_kabauru@dpm.gov.pg

    Request Expression of Interest should be submitted, not later than 30 July 2013, to the following address and
    title: EXPRESSION OF INTEREST TO CONSTRUCT MULTI STOREY OFFICE COMPLEX:

    SECRETARY
    Chairman of Government Office Accommodation Committee
    Department of Personnel Management
    Post Office Box 519
    WAIGANI, 181
    National Capital District

    Comments

    The Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, had
    advertised for public tenders following the direction from the then Minister for Public Service
    after advising the Prime Minister in a letter dated 1 July 2013.

    In the request for EoI, the new Multi Storey Government Office Complex was initially said to
    be located at Section 354 Allotment 1 Hohola, Waigani where the old Central Government
    Office still stands.

    [19] ADVICE FROM THE PRIME MINISTER TO THE MINISTER FOR PUBLIC
    SERVICE REGARDING EXPRESSION OF INTEREST FOR THE
    CONSTRUCTION OF MULTI – STOREY BUILDING

    On 10 July 2013, the Prime Minister, Hon. Peter O‘Neill CMG MP, wrote to the then Minister
    for Public Service, Hon. Sir Dr. Puka Temu, KBE, CMG MP, regarding the EoI for the
    Construction of Multi-Storey Building. Below is the full extract of the letter:

    Chapter 2: Findings of Facts 56

  • Page 83 of 147

  • 10th July, 2013

    Hon. Sir Dr Puka Temu, KBE, CMG, MP
    Minister for Public Service
    P.O Box 639
    WAIGANI
    NCD

    My Dear Minister,

    RE: EXPRESSION OF INTEREST FOR CONSTRUCTION OF MULTI-STOREY BUILDING

    Thank you for your letter of 1st July, 2013 regarding the above captioned matter and I wish to commend
    your Ministry for ensuring that the procurement of a financier under the BOT for the project is publicly
    tendered. This is very much consistent with the Financial Management Act, which require where public
    monies are to be used for payment for services, it must be done in compliance with the procurement
    processes as specified in the above legislation.

    Consistent with these processes, the Central Supply & Tenders Board, (CSTB) must be involved in the
    evaluation of the Bids after the technical evaluation is done. This process must be strictly complied even if
    the project will be sourced under BOT because at the end of the day public monies will be used to pay the
    contractor as the building will be transferred to the State after its completion.

    On the issue of the location, I would prefer a new location around the Waigani precinct rather that
    Allotment 1, Section 354, Hohola, where current Central Government Office (CGO) is located. This is
    because the CGO is a historical building and we should therefore maintain it. This building will be restored
    through renovation and refurbishment, which will be used to house other Government Agencies. A local
    Architect Firm has been engaged to carry out technical and scoping studies. When this is completed it will be
    tendered for the restoration exercise.

    I would like to recommend that you discuss with your colleague Minister for Lands and Physical Planning
    for allocation of a suitable land within the Waigani precinct for the new building.

    Thank you for your understanding and ensuring the project financing is procured in compliance with the
    prescribed process under the Financial Management Act.

    Yours sincerely,

    [ Signed ]
    HON. PETER O‘NEILL, CMG, MP
    Prime Minister

    Cc: Minister for Lands and Physical Planning
    Cc: Minister for Treasury
    Cc: Minister for Finance
    Cc: State Solicitor
    Cc: Chairman, CSTB
    Cc: Chief Secretary

    Comments

    The Prime Minister, Hon. Peter O‘Neill, CMG, MP, commended the then Public Service
    Minister, Hon. Sir Dr. Puka Temu, KBE, CMG, MP, and Secretary for DPM and Chairman of
    the GOAC for the EoIs from potential developers and said it was in compliance with the public
    procurement process under the Public Finances (Management) Act 1995, and at the same time
    advised the CSTB to be involved in the screening of the bids, because at the end of the day
    public monies will be used to pay the contractor as the building will be transferred to the State
    after its completion.

    Chapter 2: Findings of Facts 57

  • Page 84 of 147

  • The Prime Minister preferred a new location around the Waigani precinct, rather than Allotment
    1, Section 354, Hohola, where current Central Government Office is located. This is because
    the Central Government Office is a historical building and should be maintained. The building
    would be restored through renovation and refurbishment, which will be used to house other
    Government Agencies.

    The Prime Minister also recommended that the then Public Service Minister discusses with the
    then Minister for Lands and Physical Planning, for allocation of a suitable land within the
    Waigani precinct for the new building.

    [20] LETTER FROM THE SECRETARY FOR DPM TO THE THEN CHIEF
    SECRETARY TO GOVERNMENT REGARDING REQUEST FOR
    EXPRESSION OF INTEREST FOR THE DESIGN AND CONSTRUCTION OF
    THE MULTI-STOREY OFFICE COMPLEX

    On 1 August 2013, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the then Chief Secretary to Government, Sir Manasupe Zurenuoc, Kt,
    OBE, informing the then Chief Secretary on the REoI for design and construction of the Multi
    Storey Office Complex at Waigani in the National Capital District. Below is the full extract of
    the letter:

    DEPARTMENT OF PERSONNEL MANAGEMENT

    Office of the Secretary

    P.O Box 519, WAIGANI, 131, NCD, Papua New Guinea
    Telephone: (675) 327 6379 / 6442 / 6447 Facsimile: (675) 325 0520 Website: www.dpm.gov.pg

    Date: 1 August 2013 Ref No: OGAPSH/GOD/dhb

    Chief Secretary Sir Manasupe Zurenuoc, Kt, OBE
    Acting Secretary
    Department of Finance
    P O Box 710,
    WAIGANI
    National Capital District

    My dear Secretary,

    SUBJECT: REQUEST FOR EXPRESSION OF INTEREST (REoI) FOR DESIGN AND
    CONSTRUCTION OF MULTI STOREY OFFICE COMPLEX, WAIGANI, NATIONAL CAPITAL
    DISTRICT.

    I am referring to the Request for Expression of Interest (REoI) for the design and construction of the multi-
    storey office complex which was closed on 31 July 2013.

    NEC has approved for the design and construction of the multi-storey office. The Waigani Office Precinct
    within Waigani Central Business District (CBD) will become the Centre of Government of Papua New
    Guinea public service activity in Port Moresby and utilize the existing National Mapping Bureau land,
    legally known as Section 391 Allotment 01 Hohola (Waigani) and or other vacant state land in Waigani area.

    Chapter 2: Findings of Facts 58

  • Page 85 of 147

  • I am requesting your office assistance to coordinate the assessment of the REOI for the above on Tuesday 6
    August 2013 with Department of Treasury, Department of Works, and Department of Lands and Physical
    Planning and Department of Personnel Management upon delivery of REOI by Department of Personnel
    Management, Director of Government Office Accommodation & Public Service Housing. For further
    information please contact Director OGAPSH – Chris Kabauru on telephone on telephone 327 6303/6302 or
    email: chris_kabauru@dpm.gov.pg

    Yours sincerely,

    [ Signed ]
    JOHN M. Kali, OBE
    Secretary

    Comments

    The Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, advised the
    then Chief Secretary that NEC has approved for the design and construction of the multi-storey
    office. The Waigani Office Precinct within Waigani Central Business District (CBD) will
    become the Centre of GoPNG public service activity in Port Moresby, and utilize the existing
    National Mapping Bureau (NMB) land, legally known as Section 391 Allotment 01 Hohola
    (Waigani) or other vacant state land in Waigani area.

    The new location requested for the construction of the Multi-Storey building was Section 391,
    Allotment 1, where the NMB is currently located.

    The Secretary for DPM and Chairman of the GOAC also requested the then Chief Secretary to
    Government to help coordinate the assessment of the REoIs with Department of Treasury,
    Department of Works, Department of Lands and Physical Planning and DPM.

    [21] NEC POLICY SUBMISSION NO: 215/2013 AND NEC DECISION NO:
    282/2013 ON THE DESIGN AND CONSTRUCTION OF NATIONAL
    GOVERNMENT‘S MULTI STOREY OFFICE COMPLEX

    On 12 August 2013, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for Public
    Service made a Policy Submission to the Members of the NEC, in regard to the design and
    construction of National Government‘s multi storey office complex. The purpose of the
    Policy Submission was to seek Cabinet approval:

    1. to enhance its earlier Decision No: 3/2013 of 9 January 2013 for the construction of a
    Multi Storey office complex under ―BOLT‖ arrangement;

    2. to select a major developer from amongst the bids presented here;

    3. for development of a lease arrangement for all government departments/agencies to be
    accommodated in the proposed Multi Storey office complex; and

    4. to direct the relevant Government departments to implement this decision.

    In that Submission, the then Public Service Minister recommended that the NEC:

    1. take note of the contents of that submission;

    Chapter 2: Findings of Facts 59

  • Page 86 of 147

  • 2. approve to enhance NEC Decision No. 3/2013 of 9 January 2013 with particular
    reference to the construction of a Multi Storey Office Complex;

    3. approve the design and construction of a Multi Storey Office Complex together with
    separate office to accommodate the Office of the Prime Minister of Papua New
    Guinea and a 1 storey annexure for conference and functions, and a separate facility
    for car parking;

    4. approve in principle the financier and developer from the recommended short listing in
    the following order of preference:

    (1) Central Land Limited
    (2) Leightons PNG & Hassel
    (3) CoDA PNG Limited

    5. direct the Secretary and the Minister for Lands to facilitate the transfer of Allotment 1,
    Section 391, Hohola, and any vacant undeveloped adjoining State land including
    Allotment 2, Section 391, Hohola to the Department of Personnel Management;

    6. direct the Secretary for Personnel Management, in consultation with the Secretaries for
    Finance, Treasury, National Planning & Monitoring, Lands & Physical Planning and
    the Chief Secretary to Government to implement this decision; and

    7. direct the Secretary for Department of Personnel Management in his capacity as
    Chairman of the GOAC to negotiate fundamental lease terms and conditions with the
    selected developer;

    8. direct the Minister for Lands to delegate his powers with respect to execution of lease
    agreements to the Secretary for Personnel Management in his capacity as Chairman of
    GOAC to fast tract the execution of that lease agreement and in all other outstanding
    lease agreements.

    On 14 August, 2013, the NEC during its Special Meeting No: 23/2013, made its Decision No:
    282/2013 in regard to the Design and Construction of National Government‘s Multi Storey
    Office Complex. Below is the full extract of the NEC Decision:

    PAPUA NEW GUINEA GOVERNMENT

    NATIONAL EXECUTIVE COUNCIL

    Decision No: 282/2013 Special Meeting No: 23/2013

    Subject: DESIGN AND CONSTRUCTION OF NATIONAL GOVERNMENT‘S MULTI
    STOREY OFFICE COMPLEX

    On 14th August 2013, Council:

    1. noted the content of Policy Submission Paper No. 215/2013;

    2. approved to enhance NEC Decision No. 03/2013 of 9 January 2013 with particular reference to
    the construction of a Multi Storey Office Complex;

    Chapter 2: Findings of Facts 60

  • Page 87 of 147

  • 3. taking into consideration the views of the Members of the Council with regard to the lack of
    detailed information on the three recommended financiers/developers provided, agreed not to
    approve Recommendations 3 to 8 of the submission, instead;

    4. directed that a State Negotiating Team, comprising the Chief Secretary to Government as
    Chairman, Secretary for personnel Management, Secretary for Treasury and the State Solicitor,
    is appointed to negotiate the terms and conditions of the project with the three recommended
    financiers/developers for consideration by the NEC.

    [ Signed ]
    I Certify the above to be a correct record of the ____________________________
    Decisions reached by the National Executive Council PETER O‘NEILL, CMG Chairman

    [ Signed ]
    ____________________________________
    ILAGI VEALI, MPS Acting Secretary, NEC

    Date: 21st August 2013

    Distribution: PRIME MINISTER/DEPUTY PRIME MINISTER/MINISTER FOR JUSTICE &
    ATTORNEY GENERAL/MINISTER FOR PUBLIC SERVICES/PERSONNEL
    MANAGEMENT/PMNEC/TREASURY/FINANCE/NATIONAL PLANNING &
    MONITORING/STATE SOLICITOR/JUSTICE & ATTORNEY GENERAL

    Comments

    In that Policy Submission, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for
    Public Service sought Cabinet approval, to enhance its earlier Decision No: 3/2013, of 9
    January 2013 for the construction of a Multi Storey office complex under ―BOLT‖
    arrangement. Also, amongst the many bids presented, a major developer has to be selected
    and for the development of a lease arrangement for all Government Departments and
    Agencies to be accommodated in the proposed Multi Storey office complex. The Public
    Service Minister also sought Cabinet endorsement to direct the relevant Government
    departments to implement this decision. Hon. Sir Dr Puka Temu, KBE, CMG, MP, also
    recommended that the NEC approve in principle the financier and developer from the
    recommended short listing in the following order of preference:

    (1) Central Land Limited
    (2) Leightons PNG & Hassel
    (3) CoDA PNG Limited

    In that Decision, NEC had approved to enhance its earlier Decision No. 03/2013 of 9 January,
    2013, with particular reference to the construction of a Multi Storey Office Complex. The
    NEC Members had concerns with regard to the lack of detailed information on the three (3)
    recommended financiers or developers and agreed not to approve recommendations (3) to (8)
    of the Submission. NEC also directed that a State Negotiating Team, comprising the Chief
    Secretary to Government as Chairman, Secretary for Department of Personnel Management,
    Secretary for Department of Treasury and the State Solicitor, be appointed to negotiate the
    terms and conditions of the project, with the three recommended financiers and developers for
    consideration by the NEC.

    It is noted that the initial proposer of the Project Proposal of a Multi Storey Complex, Naima
    Investments Limited does not feature in this NEC Submission and is replaced by Central Land
    Limited.

    Chapter 2: Findings of Facts 61

  • Page 88 of 147

  • [22] NEC POLICY SUBMISSION NO: 229/2013 AND NEC DECISION NO:
    300/2013 ON THE DESIGN AND CONSTRUCTION OF NATIONAL
    GOVERNMENT‘S MULTI STOREY OFFICE COMPLEX

    On 20 August 2013, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for Public
    Service made another Policy Submission to the Members of the NEC, in regard to the design
    and construction of National Government‘s multi storey office complex. The purpose of the
    Policy Submission was to seek Cabinet approval:

    1. to enhance its earlier Decision No: 3/2013 of 9 January 2013 for the construction of a
    Multi Storey office complex under ―BOLT‖ arrangement;

    2. to select a major developer from amongst the bids that were presented;

    3. for development of a lease arrangement for all government departments/agencies to be
    accommodated in the proposed Multi Storey office complex; and

    4. to direct the relevant Government departments to implement this decision.
    On 28 August 2013, the NEC during its Special Meeting No: 25/2013, made its Decision No:
    300/2013 in regard to the Design and Construction of National Government‘s Multi Storey
    Office Complex. Below is the full extract of the NEC Decision:

    PAPUA NEW GUINEA GOVERNMENT

    NATIONAL EXECUTIVE COUNCIL

    Decision No: 300/2013 Special Meeting No: 25/2013

    Subject: DESIGN AND CONSTRUCTION OF NATIONAL GOVERNMENT‘S MULTI
    STOREY OFFICE COMPLEX

    On 28th August 2013, Council:

    1. noted the content of Policy Submission No. 229/2013;

    2. approved to enhance the NEC Decision No. 03/2013 of 9 January 2013, in particular reference to the
    construction of a Multi Storey Office Complex;

    3. noted that the Office of the Prime Minister and the Department of the Prime Minister and NEC will
    be located at the Marea Haus which is currently under renovation and approved that the Multi Storey
    Office Complex will be to accommodate various key Government Departments and Agencies;

    4. approved in principle, Central Land Limited to be the financier/developer of this project;

    5. noted the issues raised with regard to the leasing period and land and directed the State Negotiating
    Team appointed in NEC Decision No. 282/2013 and Government Office Accommodation Committee
    (GOAC) to negotiate the leasing agreement with Central Land Limited for endorsement by the NEC;
    and

    6. in view of clause 5 above, did not approve Recommendations 5 to 8 of the submission.

    [ Signed ]
    I Certify the above to be a correct record of the ___________________________
    Decisions reached by the National Executive Council PETER O‘NEILL, CMG Chairman

    Chapter 2: Findings of Facts 62

  • Page 89 of 147

  • [ Signed ]
    _______________________________________
    ILAGI VEALI, MPS Acting Secretary, NEC

    Date: 30th August 2013

    Distribution: PRIME MINISTER/DEPUTY PRIME MINISTER/MINISTER FOR JUSTICE &
    ATTORNEY GENERAL/MINISTER FOR PUBLIC SERVICE/PERSONNEL
    MANAGEMENT/TREASURY/FINANCE/NATIONAL PLANNING &
    MONITORING/CSTB/STATE SOLICITOR/PMNEC/JUSTICE & ATTORNEY
    GENERAL/LANDS & PHYSICAL PLANNING

    Comments

    The contents of Policy Submission No: 229/2013 was exactly the same as the previous NEC
    Policy Submission No: 215/2013 regarding the same issue on the design and construction of
    National Government‘s Multi Storey Office Complex. The Submission was made about a
    week after NEC had made its decision on Policy Submission No: 215/2013.

    NEC noted that the Office of the Prime Minister and the Department of Prime Minister and
    NEC will be located at the Marea Haus, which is currently under renovation and approved
    that the Multi Storey Office Complex, will be to accommodate various key Government
    Departments and Agencies.

    NEC approved in principle, Central Land Limited to be the financier and developer of Multi
    Storey Office Complex.

    NEC had noted the issues raised with regard to the leasing period and land and directed the
    State Negotiating Team appointed in NEC Decision No. 282/2013 and the Government Office
    Allocation Committee to negotiate the leasing agreement with Central Land Limited for
    endorsement by the NEC.

    It was in this NEC Decision that the developer and financier company for the construction of
    the Multi Storey Office Complex changed from Naima Investments Limited to Central Land
    Limited; however the Managing Director is the same person by the name of Mr Lai Weng Hoo.

    There was no clear indication as to how and why Central Land Limited took over from Naima
    Investments Limited for the construction of the Multi Storey Office Complex.

    The initial proposal by Naima Investments Limited under the initial MoU signed on 25
    September 2012 with DPM Secretary Kali, witnessed by PNG‘s High Commissioner to
    Indonesia (Retrd. Commodore Peter Ilau, DMS) was to develop a building on the land owned
    by the company on Section 38, Lot 21, 22 and 23 at Waigani, NCD. This proposal changed to
    Government making State land available to Central Land Limited to build, operate, lease and
    transfer (BOLT).

    [23] CENTRAL LAND LIMITED – PROFILE

    The following is the full company extract of Central Land Limited which was obtained from
    the Investment Promotion Authority (IPA):

    Chapter 2: Findings of Facts 63

  • Page 90 of 147

  • INDEPENDENT STATE OF
    PAPUA NEW GUINEA

    Companies Act 1997

    Company Extract

    As at 26 June 2015

    CENTRAL LAND LIMITED
    1-29195

    General Details

    Company Type: Local

    Company Status: Registered

    Incorporation Date: 29 January 1998

    Cessation Date:

    Business Activity: Other

    Annual Return Filing Month: February

    Own Constitution?: No

    Previous Names

    Previous Name

    Name: BAIBUA NO. 1 LIMITED

    From Date: 2 September 1998

    To Date: 21 May 2013

    Previous Name

    Name: BAIBUA NO. 1 PTY LIMITED

    From Date: 29 January 1998

    To Date: 1 September 1998

    Addresses

    Registered Office Address: Section 387, Allotment 11, HOHOLA, National Capital District,
    Papua New Guinea

    Address for Service: Section 387, Allotment 11, HOHOLA, National Capital District,
    Papua New Guinea

    Postal Address: P.O Box 1899, BOROKO, National Capital District, Papua New
    Guinea
    Directors

    Director

    Individual Name: Erica Fiona GAERLAN

    Chapter 2: Findings of Facts 64

  • Page 91 of 147

  • Nationality: Papua New Guinea

    Residential Address: Section 14, Allotment 25, Granville, Port Moresby, National
    Capital District, Papua New Guinea

    Postal Address: P.O Box 1899, Boroko, National Capital District, Papua New
    Guinea

    Appointment Date: 30 April 2013

    Director

    Individual Name: Filbert Richard GAERLAN

    Nationality: Papua New Guinea

    Residential Address: Section 14, Allotment 25, Granville, Port Moresby, National
    Capital District, Papua New Guinea
    Postal Address: P.O Box 1899, Boroko, National Capital District, Papua New
    Guinea

    Appointment Date: 30 April 2013

    Secretaries

    Shareholding

    Total Shares: 200

    Extensive Shareholding?: No

    Share Bundles and Shareholders

    Share Bundle

    Number of Shares: 6

    Shareholder

    Individual Name: Erica Fiona GAERLAN

    Nationality: Papua New Guinea

    Residential Address: Section 14, Allotment 25, Granville, Port Moresby, National
    Capital District, Papua New Guinea

    Postal Address: Not Supplied… National Capital District, Papua New Guinea

    Appointed Date: 30 May 2013

    Share Bundle

    Number of Shares: 4

    Shareholder

    Individual Name: Filbert Richard GAERLAN

    Nationality: Papua New Guinea

    Chapter 2: Findings of Facts 65

  • Page 92 of 147

  • Residential Address: Section 14, Allotment 25, Granville, Port Moresby, National
    Capital District, Papua New Guinea

    Postal Address: Not Supplied,…, National Capital District, Papua New Guinea

    Appointed Date: 30 May 2013

    Share Bundle

    Number of Shares: 190

    Shareholder

    Full Legal Name: PACIFIC PROPERTY INVESTMENTS LIMITED (1913868)

    Residential or Registered Office: Not Supplied…, National Capital District, Papua
    Address New Guinea
    Postal Address: Not Supplied…, National Capital District, Papua New Guinea

    Appointed Date: 1 November 2013

    Last Annual Return Lodged

    Financial Year Start Date:

    1 March 2012

    End Date:

    Annual Meeting Date: 28 February 2013

    Return Made Up To Date: 11 March 2013

    13 March 2013

    — END OF EXTRACT —

    Comments

    Central Land Limited was registered as a local company, which was incorporated on 29
    January 1998. Its previous name from 29 January 1998 to 1 September 1998 was Baibua No.1
    Pty Limited and currently it is known as Central Land Limited. It does not have its own
    Constitution. One of the shareholders of Naima Investments Limited, Erica Fiona Gaerlan
    was also Director and Shareholder of Central Land Limited.

    Central Land Limited‘s Registered Office and Service Address is Section 387, Allotment 11,
    HOHOLA, National Capital District, Papua New Guinea, while the Postal Address is P.O
    Box 1899, BOROKO, National Capital District, Papua New Guinea. The Registered Office
    and Service Address are the same as for Naima Investments Limited. Its Postal Address is the
    same as for one of the Directors of Naima Investments Limited (Eleana Tjandranegara).

    [24] LETTER FROM THE SECRETARY FOR DPM TO THE CHIEF
    SECRETARY TO GOVERNMENT REGARDING AN URGENT MoU ON
    THE DESIGN AND CONTRUCTION OF MULTI STOREY OFFICE
    COMPLEX

    Chapter 2: Findings of Facts 66

  • Page 93 of 147

  • On 3 September 2013, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the then Chief Secretary to Government, Sir Manasupe Zurenuoc, Kt,
    OBE, highlighting the need for an urgent MOU (for Public Service Minister to report back to
    Cabinet) on the Design and Construction of Multi-Storey Office Complex. Below is the full
    extract of the letter:

    DEPARTMENT OF PERSONNEL MANAGEMENT
    Office of the Secretary
    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea

    Telephone: (675) 327 6379 / 327 6442 Facsimile: (675) 325 0520 Website: www.dpm.gov.pg
    3rd September 2013

    Sir Manasupe Zurenuoc, Kt, OBE
    Chief Secretary to Government
    Department of PM & NEC
    P O Box 639
    WAIGANI

    My dear Chief Secretary,

    RE: DESIGN AND CONSTRUCTION OF MULTI-STOREY OFFICE COMPLEX

    I refer to directives contained in NEC decisions 282/2013 and 300/2013 made on 14 August 2013 and 28
    August 2013 respectively.

    Cabinet has approved in principle, Central Land Ltd to be the financier/developer of this project. In the
    same decisions, Cabinet appointed a State Negotiating Team comprising yourself as the Chairman,
    Secretary for Personnel Management, Secretary for Treasury, State Solicitor and the Government Office
    Committee (of which I am Chairman) to negotiate the leasing agreement with Central Land Ltd for
    endorsement by Cabinet.

    In view of the great demand for office accommodation by Government Departments and Agencies and the
    urgent need for the commencement and completion of the new office complex, the Minister for Public
    Service has directed me to urgently liaise with you to fast track the following;

    1. An urgent Memorandum of Understanding (MoU) be entered into with Central Land Ltd to cater
    for the following;

    Prepare the old CGO car park as operational base for Central Land Ltd (CLL), which
    would mean that CLL would require our assistance to clear the car park
    DPM to relocate all containers stationed at the old CGO car park to an alternative site;
    The Government Office Accommodation Committee (GOAC) to temporarily relocate the
    National Mapping Bureau;
    The Secretary for Lands to finalize all matters relating to the State land on which the new
    complex is to be constructed including adjacent state lands;
    Soil testing for all the State lands to be affected by the new construction site.

    The Minister for Public Service is under directions to return to Cabinet in two weeks with an MoU covering
    the above and a proposed lease agreement for Cabinet consideration, having been properly negotiated by
    our State Team with Central Land Ltd.

    The Minister also proposes for the ground breaking ceremony to take place at the end of this month.

    Chapter 2: Findings of Facts 67

  • Page 94 of 147

  • I am proposing that our State Team meet as early as Wednesday, 4 September 2013 to discuss our
    Government‘s position before we meet with Central Land Ltd, mindful of the urgency expressed by the
    Minister for Public Service.

    Yours sincerely

    [Signed ]
    JOHN M. KALI, OBE
    Secretary and Chairman of Government Office Accommodation Committee

    Cc: Minister for Public Service
    Cc: Secretary for Treasury
    Cc: State Solicitor

    Comments
    The Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, advised the
    then Chief Secretary to Government that an urgent MoU be entered into with Central Land
    Limited to cater for the preparation as well as the proposed lease agreement for Cabinet
    consideration, having been properly negotiated by the State Negotiating Team with Central
    Land Limited for the construction of the Multi Storey Office Complex.

    Mr John M. Kali, CMG, OBE, was also proposing that the State Negotiating Team meet to
    discuss the Government‘s position before meeting with Central Land Limited, taking into
    consideration the urgency expressed by the then Minister for Public Service.

    [25] RESPONSE FROM THE THEN CHIEF SECRETARY TO GOVERNMENT TO
    THE SECRETARY FOR DPM REGARDING THE DESIGN AND
    CONTRUCTION OF MULTI – STOREY OFFICE COMPLEX

    On 5 September 2013, the then Chief Secretary, Sir Manasupe Zurenuoc, Kt, OBE, wrote to the
    Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, delegating the
    Chairmanship of the State Negotiating Team (SNT) to Mr John M. Kali, CMG, OBE and
    appointed Mr Trevor Meauri from Department of Prime Minister & NEC to negotiate the MoU
    on the Design and Construction of the Multi-Storey Office Complex. Below is the full extract of
    the letter:

    Chief Secretary to Government

    5 September 2013

    Mr John Kali OBE
    Secretary
    Department of Personnel Management
    PO Box 519
    WAIGANI
    National Capital District

    Dear Secretary,

    RE: DESIGN AND CONSTRUCTION OF MULTI-STOREY OFFICE COMPLEX

    As we agreed in our meeting on 5 September 2013, in order to ensure that NEC decisions 282/2013 and
    300/2013 are implemented in a timely fashion, I wish to delegate my Chairmanship of the State Negotiating
    Team to yourself and appoint Mr Trevor Meauri the representative from the Department of Prime Minister
    and NEC.

    Chapter 2: Findings of Facts 68

  • Page 95 of 147

  • Regrettably I have a number of other high priority matters requiring my attention and I will not be in a
    position to properly lead the State Negotiating Team. I trust that you will be able to ensure that the
    Memorandum of Understanding is negotiated between the State team and Central Land Ltd for
    consideration by NEC in two weeks.

    Thank you for your assistance.

    Yours sincerely,

    [ Signed ]
    Sir Manasupe Zurenuoc Kt, OBE

    Comments
    The then Chief Secretary to Government delegated the Chairmanship of the State Negotiating
    Team to the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE,
    and appointed Mr Trevor Meauri as the representative from the Department of Prime Minister
    & NEC to work on the MoU between the State Negotiating Team and Central Land Limited for
    consideration by NEC in two weeks because the then Chief Secretary had other high priority
    matters to attend to and so would not be in a position to properly lead the State Negotiating
    Team.

    [26] LETTER FROM THE SECRETARY FOR DPM TO THE THEN CHIEF
    SECRETARY TO GOVERNMENT REGARDING THE STATE
    NEGOTIATING TEAM MEETING WITH CENTRAL LAND LIMITED

    On 9 September, 2013, Mr John M. Kali, CMG, OBE, wrote to Sir Manasupe Zurenuoc, Kt,
    OBE, informing him on the meeting between the State Negotiating Team and Central Land
    Limited, on the design and construction of Multi-Storey Office Complex, as per NEC Decision
    282/2013 and 300/2013. Below is the full extract of the letter:

    DEPARTMENT OF PERSONNEL MANAGEMENT
    Office of the Secretary
    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea

    Telephone: (675) 327 6379 / 327 6442 Facsimile: (675) 325 0520 Website: www.dpm.gov.pg

    9th September 2013

    Sir Manasupe Zurenuoc, Kt, OBE
    Chief Secretary to Government
    Department of Prime Minister & NEC
    P O Box 639
    WAIGANI

    My dear Chief Secretary,

    SUBJECT: STATE NEGOTIATING TEAM MEETING WITH CENTRAL LANDS LTD

    I refer to my letters to you dated 3 and 5 September 2013, respectively on the Design and Construction of
    Multi Storey Office Complex, and as per NEC Decisions 282/2013 and 300/2013. It is my pleasure to inform
    you that the Central Land Limited team will be arriving in Port Moresby today to meet the State
    Negotiating Team, tomorrow Tuesday 10 September 2013.

    With that, it is appropriate or the State Negotiating Team which is comprised of;

    Chapter 2: Findings of Facts 69

  • Page 96 of 147

  • Chief Secretary
    DPM Secretary
    Treasury Secretary; and
    State Solicitor

    to have an immediate meeting this afternoon at 4:00pm in my office to establish and confirm issues relative
    to the MoU or the pre-lease arrangements and matters relative to the Construction of the Multi Storey
    Complex building.

    We are making arrangements to have this important meeting with Central Lands Ltd tomorrow at 10:00 am
    at our Main Conference Room, 2nd Floor, Morauta Building.

    Yours sincerely,

    [ Signed ]
    JOHN M. KALI, OBE
    Secretary

    cc: Treasury Secretary
    cc: State Solicitor

    [27] LEGAL ADVICE FROM THE STATE SOLICITOR TO THE SECRETARY
    FOR DPM ON THE CONSTRUCTION OF MULTI-STOREY BUILDING BY
    CENTRAL LAND LIMITED

    On 12 September 2013, the State Solicitor, Mr Daniel Rolpagarea, wrote to the Secretary for
    DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, providing legal advice on the
    Construction of Multi-Storey Building by Central Land Limited. Below is the full extract of the
    letter:

    OFFICE OF THE STATE SOLICITOR
    DEPARTMENT OF JUSTICE & ATTORNEY GENERAL

    TELEPHONE: (675) 301 2882 P. O BOX 591, WAIGANI
    FACSIMILE: (675) 301 2965 National Capital District
    EMAIL: statesol@justice.gov.pg PAPUA NEW
    GUINEA

    Your reference:
    Our reference: AGSS790/2013
    Action Officer: B. Vitata – PLO (PA)

    12th September, 2013

    Mr. John Kali, OBE
    Secretary
    Office of the Secretary
    Department of Personnel Management
    PO Box 519
    WAIGANI
    National Capital District

    Dear Secretary Kali,

    Chapter 2: Findings of Facts 70

  • Page 97 of 147

  • Construction of multi-purpose storey building by Central Land Limited

    1. I refer to the above subject and to a meeting on the 10th September, 2013 in which you chaired and
    in attendance were Mr. David Manoka and Ms. Blanche Vitata of my office, a representative from
    Department of Treasury and Mr. Chris Kabauru of your Department.

    Background

    2. Most of the background facts that follow are taken from the Policy Submission that was provided
    by your Department dated 20 August, 2013 and which was signed by the Minister for Public
    Service, Sir Puka Temu
    3. It was stated in that Policy Submission that based on advice from the State Solicitor‘s Office, the
    Government Office Accommodation Committee (GOAC) requested the Central Supply and
    Tenders Board (CSTB) to advertise for public tenders for Expressions of Interests on a Build
    Operate Lease Transfer (BOLT) arrangement from potential developers. In response in his letter
    dated 21st May, 2013, the Chairman of CSTB explained that the Board had rejected the GOAC
    proposal for the involvement of CSTB because the Board was only responsible for awarding of
    contracts using public funds and in this instance his view was that there would not be any
    expenditure of public funds.

    4. The Prime Minister was then advised by the Minister for Public Service of the CSTB Chairman‘s
    response and sought directions from the Prime Minister for GOAC to directly call for Expressions
    of Interests (EOI) from investors. Advertisements were therefore run into the two daily newspapers
    calling for EOIs for the design and construction of a multi storey office complex (the Building) and
    the closing date was the 31st July, 2013.

    5. The alternative site that was settled on for the multi storey building to be built on was the land
    which the National Mapping Bureau (NMB) is currently located on.

    6. From the advertisements for EoIs, 10 applications were received from potential developers and
    GOAC‘s technical team comprising the Departments of Personnel Management, Works, Lands,
    Treasury and Finance met and deliberated on those applications against set criteria as contained in
    para. 11 of the Policy Submission.

    7. The following three companies were then selected that in order of preference after the assessment
    by the Technical Team: 1. Central Land Limited; 2. Leighton‟s PNG Hassel; 3. CoDA PNG Limited.

    8. In considering an earlier Policy Submission on the 14th August, 2013, Cabinet directed for more
    information to be provided on each of the companies, so additional information was sought from the
    3 companies on the Commercial Lease Terms and Conditions. Furthermore, interviews were also
    conducted with the three short listed companies.

    9. The Policy Submission also outlined how important it was for the Secretary for Lands to
    immediately transfer all vacant pastoral land/leases to DPM to identify the most suitable State Land
    on which to construct the new building and others to follow.

    10. Below are relevant recommendations contained in the Policy Submission:

    “4. Approved in principle the financier/developer from the recommended short listing in this order of
    preference: 1. Central Land Limited (CLL); 2. Leighton‟s PNG Hassel; 3. CoDA PNG Ltd;

    5.Direct the Secretary for Lands to facilitate the transfer of Allotment 1, Section 391 Hohola, and any
    vacant undeveloped adjoining land including Allotment 2 Section 391 Hohola to the Department of
    Personnel Management;

    6.Direct the Secretary for Department of Personnel Management in consultation with the Department
    Secretaries for Finance, Treasury, National Planning & Monitoring, Lands & Physical Planning and
    the Chief Secretary to Government to implement this decision; and

    7.Direct the Secretary for Department of Personnel Management as the Chairman of GOAC to
    negotiate fundamental lease terms and conditions with the selected developer;

    Chapter 2: Findings of Facts 71

  • Page 98 of 147

  • 8.Direct the Minister for Lands to delegate with respect to execution of lease agreements to the
    Secretary for Personnel Management is his capacity as chairman to GOAC to fast track the execution
    of this lease agreement and all other outstanding lease agreements.”

    11. In considering the above recommendations Cabinet made the following decisions in NEC Decision
    No. 300/2013 dated 30th August, 2013:

    “4. Approved in principle, Central Land Limited to be the financier/developer of this project;

    5. Noted the issues with regard to the leasing period and land and directed the State Negotiating Team
    appointed in NEC Decision No.282/2013 and Government Office Accommodation Committee to
    negotiate the leasing agreement with Central Land Limited for endorsement by the NEC;

    6. In view of clause 5, did not approve Recommendations 5-8 of the Submission.”

    12. In your letter of 3rd September, 2013 to the Chief Secretary to Government, you outlined that
    certain undertakings be covered in a Memorandum of Understanding (MoU) to be executed by the
    State and CLL as follows:

    “a. Prepare CGO office as the operational base for CLL, which would mean that CLL would require
    the assistance of the State to clear the car park;

    b. DPM to relocate all containers stationed at the old CGO car park to an alternative site;

    c. The Government Office Accommodation Committee to temporarily relocate the National Mapping
    Bureau;

    d. The Secretary for Lands to finalize all matters relating to the State land on which the new complex is
    to be constructed including adjacent State lands;

    e. Soil testing for all the State lands to be affected by the new construction site.”

    13. An MoU was prepared by the office based on those instructions and submitted for consideration by
    the State Negotiating Team members. In the meeting held on the 10th September, 2013 mentioned in
    para.1 of this letter, I have noted that you have instructed that the description of the land be
    clarified and other relevant insertions be made to the MoU.

    Issues

    14. Q.1. What did the NEC Decide in NEC Decision No.300/2013

    15. A.1. Refer to para. 18

    16. Q.2. Was the process undertaken by your Department in selecting CLL in accordance with the
    law?

    17. A.2. No

    Reasons

    What did the NEC Decision approve?

    18. In comparing the recommendations in the Policy Submission and the decisions that Cabinet reached
    in NEC Decision No. 300/2013, I conclude as follows:

    Based on the EoI and recommendations of the Technical Team, NEC approved in principle for
    CLL to be the financier/developer of a multi storey building to address the need for office
    accommodation for government agencies (para.4 of NEC Decision);

    There is no mention in the recommendations of the Policy Submission for the CGO car park to
    be used as the operation base for CLL and therefore NEC has not expressly decided on this;

    Chapter 2: Findings of Facts 72

  • Page 99 of 147

  • NEC did not approve to direct the Secretary for Lands to facilitate the transfer to DPM the
    land (Sect.391, Lot. 1 Hohola) on which the NMB is located on (para. 6 of NEC Decision);

    NEC did not approve to direct the Secretary for Department of Personnel Management in
    consultation with the Secretaries for Finance, Treasury, National Planning & Monitoring,
    Lands & Physical Planning and the Chief Secretary to Government to implement this
    Decision;
    NEC did not approve to direct the Secretary for Department of Personnel Management as the
    Chairman of the GOAC to negotiate fundamental lease terms and conditions with the selected
    developer;

    Instead NEC directed, after considering the issues with regard to the leasing period and land,
    that the State Negotiating Team and GOAC negotiate the leasing agreement with CLL for
    endorsement by NEC (para.5 of NEC Decision).

    19. It was necessary for my office to carefully consider the NEC Decision so as to properly draft the
    terms of the MoU to give effect to those specific directives outlined in the NEC Decision

    20. Given the foregoing, I have redrafted the MoU accordingly and have attached same for your
    consideration and comments.

    Was the process undertaken by DPM in selecting CLL in accordance with law?

    21. This arrangement with CLL is in the nature of a Build Operate Transfer (BOT) arrangement. As I
    have advised you in my earlier advice to you dated 29th November, 2012, the BOLT arrangements
    are similar to Build Operate Transfer (BOT) arrangements and are therefore subject to the Tender
    process under the Public Finance Management Act (PFMA). I had also advised in that letter that
    under this BOT or BOLT arrangements, public funds will be expended. This is in accordance with
    Section 40 (5) of the PFMA which states:

    “40. TENDERS FOR PROPERTY, STORES, WORKS AND SERVICES

    …(5) In relation to the contracts for the supply of works and services, the provision of this section and
    Section 41 shall apply to –

    (a) Turnkey contracts; and
    (b) Build operate transfer contracts;
    (c) Contracts which in substance are similar to turnkey contracts or build operate transfer contracts;
    and
    (d) Contracts involving the expenditure of public monies.”

    22. Section 40 (5) therefore applies to this BOLT arrangement being proposed with CLL because it is a
    form of a BOT transaction and also the expenditure of public funds is unavoidable. In my letter of
    advice to you dated 29th November, 2012, I had stated that:

    “…even though the construction of the cost and fit-out costs will be borne by NIL, the State will end
    up paying for the construction cost, fit-out costs plus the returns on investment expected by NIL
    through rental payments.”

    23. Legal documents known as Agreements to Lease (pre-lease agreements) are used to capture these
    types of transactions and this document basically covers the construction phase up until the
    leasing of the premises once the building is completed. This is a pre-commitment of public funds
    on the part of the State when this document is executed.

    24. The tender requirements of the PFMA are therefore applicable for the construction of the
    building. From the Policy Submission and which I have mentioned in para.4 – 11 of the
    Background above, your Department had called for EOIs in which the two daily newspapers had
    convened a Technical Team to assess the applications and had short listed, in order of preference,
    three companies and recommended those to NEC to approve and from this process, NEC
    approved in principle, CLL to be the developer.

    Chapter 2: Findings of Facts 73

  • Page 100 of 147

  • 25. The above process is not in compliance with the requirements of the tender process under the
    PFMA. Depending on the financial threshold of a contract, the inviting of public tenders is a
    mandatory requirement under s.40 of the PFMA and this is also judicially recognized in the case
    of Robmos v. Punangi N332 (2008).

    26. Part 13 Div. 2 para.3 & 4.a. of the Financial Instructions provide that the inviting of public tenders
    involves widespread advertising and does not include selective tenders or EOIs. It provides that
    the “Expressions of interests may be used to provide market research, but are not an acceptable
    procurement process in themselves, and must be followed up with one of the available procurement
    processes (e.g. public tender). Contractors cannot be shortlisted through the use of EOIs.”
    (emphasis mine).

    27. The Financial Instructions get their basis from Section 117 of the PFMA and the case of Robmos v.
    Punangi has recognized that the PFMA includes the Regulations, Rules and Financial instructions.
    Financial Instructions therefore have the same binding effect as the PFMA itself as it is made under
    it.

    28. Given the foregoing it would appear that the process that led to the awarding of the contract to CLL
    has not complied with the requirements under the PFMA in terms of the tender requirements.
    CSTB is the legally mandated body to procure and should have been the body that publicly invited
    the tenders as opposed to inviting EOIs as was done in this instance. Furthermore, depending on the
    financial threshold of the contract, CSTB would have been required by the law to make a
    recommendation to NEC to award the contract accordingly.

    29. The failure to comply with the requirements of the PFMA lives the State exposed to potential suits
    (Judicial Review proceedings), by those applicants who were unsuccessful, for non-compliance with
    the requirements of the PFMA if the project continues with CLL as the developer. Furthermore, a
    contract entered into without complying with the process will be deemed void and unenforceable
    (State v Barclay Brothers (PNG) Ltd N2090).

    30. On the issue of height restrictions, to provide clarification on this, recently my officers were given a
    policy document titled Waigani City Centre Development Control Policy (the Policy). My officers have
    yet to meet the relevant authorities on this issue however; from perusal of the Policy it appears that
    there is a height restriction of 10-12 storeys for a Government office building within the Waigani
    area.

    31. However, we have noted also that a proposed building which exceeds the 10 storey height will be
    treated on merit by the NCD Physical Planning Board. This would appear therefore that it is
    possible to construct buildings beyond the height restrictions within the Waigani area but this is
    subject to the assessment of the NCD Physical Planning Board. The draft pre-lease agreement by
    CLL proposes a building of 32 storeys which clearly exceeds the 10 storey height restriction by 22
    storeys and would therefore have to be subject to the assessment of the relevant authorities.

    32. Once my officers have clarified this issue with the relevant authorities a confirmed advice relating to
    the height restrictions will be provided to you as soon as possible.

    Recommendation

    33. Given the discussions above, especially in relation to the tender requirements of the PFMA not being
    complied, I would propose that the State Negotiating Team meet to discuss the following
    recommendation:

    a. Consider the possibility of re-tendering the contract in accordance with the
    requirements of the PFMA;

    b. Informing the Prime Minister and Cabinet of option .a. above;

    c. Consider halting any further talks and entering into any understanding or
    agreements with CLL until clear directions have been received from Cabinet or
    the Prime Minister on how to proceed.

    Chapter 2: Findings of Facts 74

  • Page 101 of 147

  • 34. In my view I would advise that options (a) to (c) be carefully considered and actioned because even
    though the project is one that may greatly benefit the State, the law must always be complied with
    and it is my duty to ensure that I advise you accordingly.

    35. Please find enclosed with this letter is the amended MoU for your comments before I can finalize and
    give my legal clearance. CLL will need to give their address for Notices. I have also enclosed my
    earlier advice to you dated 29th November, 2012.

    36. In any further correspondence with this office please include the file reference and the action
    officer‘s name as identified above.

    Yours sincerely,

    [ Signed ]
    DANIEL ROLPAGAREA
    State Solicitor

    Attach.

    Cc: Sir Manasupe Zurenuoc, Kt, OBE
    Chief Secretary to Government

    [28] MoU PREPARED BY THE OFFICE OF THE STATE SOLICITOR
    REGARDING THE CONTRUCTION OF THE MULTI STOREY BUILDING
    BY CENTRAL LAND LIMITED

    On the same date and with the above letter, the State Solicitor attached a draft MoU, which
    was forwarded to the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, for deliberation and consideration. Below is the full extract of the MoU:

    Office of the State Solicitor

    MEMORANDUM OF UNDERSTANDING
    MEMORANDUM OF UNDERSTANDING IN RELATION TO THE MULTI – STOREY OFFICE
    COMPLEX

    Office of the State Solicitor
    Level 8
    Sir Buri Kidu Haus
    Post Office Box 591
    Independence Drive
    WAIGANI
    NCD
    Papua New Guinea
    Contact: State Solicitor
    T: 301 2882 F: 301 2965
    E: statesol@justice.gov.pg

    File reference: AGSS

    CONTENTS

    1. Interpretation 1
    1.1 Definitions 1

    Chapter 2: Findings of Facts 75

  • Page 102 of 147

  • 1.2 Guidance on construction of MoU 2
    1.3 Commencement 2
    1.4 Term of MoU 2

    2. Undertakings of the Parties 2
    2.1 State undertakings 2
    2.2 CLL undertakings 2

    3. Notices 3
    3.1 Format, addressing and delivery 3
    3.2 When effective 3

    4. General provisions 3
    4.1 Relationship of parties 3
    4.2 Variation 4
    4.3 Dispute Resolution 4
    4.4 Compliance with Law 4
    The Schedule – MoU Details 5

    MEMORANDUM OF UNDERSTANDING

    Date

    This Memorandum of Understanding is made on………day of……………………2013

    Parties

    This Memorandum of Understanding is made between the following parties:

    1. The Independent State of Papua New Guinea (as represented by the Department of Personnel
    Management (‗DPM‘)) (the State)

    2. Central Land Limited
    (CLL)

    Context

    This MoU is made in the following context:

    A. The State is the owner of the Land and is in need of Government office accommodation and has
    approved in principle CLL to design and construct the Building as per the National Executive
    Council (‗NEC‘) Decision No. 300 of 2013.

    B. CLL is the financier and the developer to construct the Building for the State.

    Operative Provisions

    1. Interpretation

    1.1 Definitions

    1.1.1 In this contract, unless the context indicates otherwise:

    Agency includes any department, agency or authority of the State which
    is from time to time responsible for administering this MoU;

    Chapter 2: Findings of Facts 76

  • Page 103 of 147

  • Attachment means a document attached to the MoU or incorporated by
    reference in the Schedule, and includes the Attachment as
    amended or replaced from time to time by agreement in writing
    between the parties;

    Building means the Multi-storey Office Complex to be constructed on the
    Land;

    Business Day means a weekday other than Saturdays, Sundays or a public
    holiday in the place specified in Papua New Guinea;

    Business Hours means the official working hours between 7:45am and 4:06pm on
    a Business Day;

    Commencement Date means the date on which this MoU is executed, unless otherwise
    specified in Item 1;

    Land means the land which is identified by the State where the
    Building will be constructed on;

    MoU means the Memorandum of Understanding;

    Parties mean the Independent State of Papua New Guinea (‗State‘) and
    Central Land Limited (‗CLL‘);

    Schedule means the schedule to this MoU entitled ‗MoU Details‘, and
    includes the Schedule as amended or replaced from time to time
    by agreement in writing between the parties;

    State includes any department, agency or authority of the Independent
    State of Papua New Guinea

    1.2 Guidance on construction of MoU

    1.2.1 This MoU records the general understanding between the Parties in relation to its subject matter
    and is not binding on the parties.

    1.3 Commencement

    1.3.1 The terms of this MoU apply on and from the Commencement Date

    1.4 Term of MoU

    1.4.1 This MoU commences on the Commencement Date and expires when the Parties undertakings in
    clause 2 cease or in accordance with clause 4.3.2.

    2. Undertakings of the Parties

    2.1. State undertakings

    Subject to compliance with the laws of the independent State of Papua New Guinea, the State is
    desirous of:

    a. Negotiating the leasing agreement with CLL per NEC Decision No. 300/2013;

    b. Reporting to NEC after negotiations have been completed.

    2.2 CLL undertakings

    2.2.1 Subject to compliance with the laws of the Independent State of Papua New Guinea, CLL is
    desirous of:

    Chapter 2: Findings of Facts 77

  • Page 104 of 147

  • a. negotiating the leasing agreement with the State.

    3. Notices

    3.1 Format, addressing and delivery

    3.1.1 A notice under this MoU is only effective if it is in writing, and dealt with as follows:

    a. if given by CLL to the State – addressed to the Officer at the address specified in Item 2 or
    as otherwise notified by the State; or

    b. if given by the State to CLL – given by the Officer (or any superior officer to the Officer)
    and addressed (and marked for attention) as specified in Item 3 or as otherwise notified by
    CLL.

    3.1.2 A notice is to be:

    a. signed by or on behalf of the party giving the notice and delivered by hand;
    or

    b. signed by or on behalf of the party the person giving the notice and sent by pre-paid post;
    or

    c. transmitted electronically by the person or on behalf of the party giving the notice by
    electronic mail or facsimile transmission.

    3.2. When effective
    3.2.1 A notice is deemed to be effected:

    a. if delivered by hand – upon delivery to the relevant address;

    b. if sent by post – upon delivery to the relevant address;

    c. if transmitted electronically – upon actual receipt by the addressee.

    3.2.2 A notice received after 4.06 pm, or on a day that is not a Business Day in the place of receipt, is
    deemed to be effected on the next Business Day in that place.

    4. General provisions

    4.1. Relationship of parties

    4.1.1 CLL is not by virtue of this MoU an officer, employee, partner or agent of the state, nor does CLL
    have any power or authority to bind or represent the State.

    4.1.2. CLL agrees:

    a. not to misrepresent its relationship with the State; and

    b. not to engage in any misleading or deceptive conduct in relation to the Services.

    4.2 Variation

    4.2.1. A variation of this MoU by either party is to be agreed in writing and signed by the Parties.

    4.3 Dispute Resolution

    4.3.1 In the event of a dispute arising between the Parties, they may endeavor to resolve the dispute
    amicably amongst themselves.

    4.3.2 In the event that a dispute is not resolved, then either Party may give Notice to terminate this MoU.

    Chapter 2: Findings of Facts 78

  • Page 105 of 147

  • 4.4 Compliance with Law

    4.4.1 The Parties agree to comply with the laws of the Independent State of Papua New Guinea applicable
    to the performance of this MoU.

    THE SCHEDULE – MoU DETAILS

    1. Commencement
    (see clause 1.3)

    Commencement Date: ________ day of ___________________ 2013

    2. State‘s Address for Notices
    (see clause 3.1.1.a)

    Officer John M. Kali

    Physical address Level 2, Morauta Haus, Independence Drive, Waigani,
    NCD

    Postal address P.O Box 519, WAIGANI, NCD

    Email john_kali@dpm.gov.pg

    Telephone (675) 327 6379/ 327 6422

    Facsimile (675) 325 0520

    3. CLL‘s Address for Notices
    (see clause 3.2.1.b3.1.1.a)

    Officer

    Physical Address

    Postal address

    Email

    Telephone

    Facsimile

    Signatures

    SIGNED for and on behalf of the )
    Independent State of Papua New )
    Guinea by:

    _____________________________ _______________________________

    ^Name of Signatory^ Signature

    In the presence of:

    _____________________________ _______________________________

    ^Name of witness^ Signature

    ______________________________ _____________________________

    Chapter 2: Findings of Facts 79

  • Page 106 of 147

  • SIGNED for and on behalf of by: )

    )

    __________________________________ ) _______________________________
    ^Name of signatory^ Signature

    In the presence of:

    ____________________________ _____________________________

    ^Name of witness^ Signature of witness

    Comments

    This MoU was drafted by the State Solicitor. However, it was not signed/approved and
    executed by the Parties.

    According to the MoU, Central Land Limited is not by virtue of the MoU an officer, employee,
    partner or agent of the State, nor does Central Land Limited have any power or authority to bind
    or represent the State.

    Central Land Limited agrees not to misrepresent its relationship with the State and not to
    engage in any misleading or deceptive conduct in relation to the Services.

    The Parties agree to comply with the laws of the Independent State of Papua New Guinea
    applicable to the performance of this MoU.

    [29] MoU BETWEEN THE GoPNG (ACTING THROUGH THE GOAC) AND
    CENTRAL LAND LIMITED FOR CO-OPERATION RELATING TO
    BUILDING OF OFFICE SPACE ACCOMMODATION FOR GOVERNMENT
    DEPARTMENTS AND OTHER STATE AGENCIES AT WAIGANI, NCD

    On 12 September 2013, a MoU was made and signed by Mr John M. Kali, CMG, OBE,
    Secretary for DPM and Chairman of the GOAC on behalf of the Government of Papua New
    Guinea, and Mr Lai Weng Hoo, Managing Director, for and on behalf of Central Land
    Limited. Below is the full extract of the MoU:
    MEMORANDUM OF UNDERSTANDING

    BETWEEN THE GOVERNMENT OF PAPUA NEW GUINEA

    (ACTING THROUGH THE GOVERNMENT OFFICE ALLOCATION COMMITTEE)

    AND

    Chapter 2: Findings of Facts 80

  • Page 107 of 147

  • CENTRAL LAND LTD

    FOR

    COORPERATION RELATING TO BUILDING OF OFFICE SPACE ACCOMMODATION FOR
    GOVERNMENT DEPARTMENTS AND OTHER STATE AGENCIES AT WAIGANI

    THE GOVERNMENT OF PAPUA NEW GUINEA pursuant to an NEC Decision (Decision No. 300/2013
    at a Special Meeting of the National Executive Council (Special Meeting No. 25/2013) reaffirmed its
    commitment to the construction of a Multi Storey Office Complex to accommodate various key
    government departments and Agencies at Waigani in the National Capital District;

    Approved in principle, that CENTRAL LAND LTD will be the Financier/Developer of this project.

    Pursuant thereto the GOVERNMENT OF PAPUA NEW GUINEA AND CENTRAL LAND LTD
    (hereinafter referred to as ―the Parties‖), hereby agree to enter into this Memorandum of Understanding
    and;

    Have Agreed as Follows;

    Article 1

    The government will make available land and Central Land Ltd will build at its own cost a Multi Storey
    Office Accommodation Complex to house government departments and other State Agencies.

    Article 2

    The government through the Department of Lands will facilitate Ministerial approvals for exemptions
    under the Land Act and for a State Lease to be granted in favor Central Land Ltd in respect of the land
    on which the Multi Storey Complex is to be built.

    Article 3

    The government will permit soil testing to be carried out on the proposed building site and other adjacent
    surroundings to determine the best site for construction.

    Article 4

    The government will through its Government Office Allocation Committee temporarily relocate the
    National Mapping Bureau Office which is currently located on the proposed building site.

    Article 5

    The Government will make available the old Central Government Office back car park and Central Land
    Ltd will use it as operational base. The government through Department of Personnel Management will
    relocate all containers currently located on the car park to an alternative site. This means the car park
    must be cleared and made ready for Central Land Ltd as and when Central Land Ltd is ready to move
    onto the premises to commence operations.

    Article 6

    At commencement of operations and throughout the construction phase the parties will engage in
    negotiations through appointed negotiating teams to monitor progress and address all issues relating to
    the construction phase as well as fit out and other associated lease tenancy arrangements.

    Article 7

    This MoU shall enter in force upon signature by both Parties and remains in force for the duration of the
    construction phase subject to any variations as may be mutually agreed upon by the Parties, unless
    terminated earlier by either Party upon the giving of reasonable notice in writing to the other Party.

    Article 8

    Chapter 2: Findings of Facts 81

  • Page 108 of 147

  • The termination this MoU shall not affect the validity or duration of actions under this MoU that are
    affected prior to such termination.

    IN WITNESS WHEREOF, the undersigned being duly authorized by the respective Parties, have signed
    this MoU.

    Done at Waigani, NCD PNG, in triplicate on the 12 th day of September 2013, in the English language.

    [ Signed ] [ Signed ]
    ………………………………………… ………………………………..
    JOHN M. KALI, OBE LAI WENG HOO
    CHAIRMAN (GOAC), ON BEHALF FOR AND ON BEHALF OF
    OF THE GOVERNMENT OF CENTRAL LAND LTD
    PAPUA NEW GUINEA

    Comments

    According to the MoU, the Government will make available land and Central Land Limited
    will build at its own cost a Multi Storey Office Complex to house Government Departments
    and other State Agencies. The Department of Lands and Physical Planning will facilitate
    Ministerial approvals for exemptions, under the Land Act and for a State Lease to be granted
    in favor of Central Land Limited in respect of the land on which the Multi Storey Office
    Complex is to be built.

    The Government will also permit soil testing to be carried out on the proposed building site
    and other adjacent surroundings to determine the best site for construction and the
    Government Office Allocation Committee will temporarily relocate the National Mapping
    Bureau Office, which is currently located on the proposed building site as well as make
    available the old Central Government Office back car park and Central Land Limited will use
    it as operational base. The Government through Department of Personnel Management will
    relocate all containers currently located on the car park to an alternative site. This means the
    car park must be cleared and made ready for Central Land Limited as and when Central Land
    Limited is ready to move onto the premises to commence operations.

    At commencement of operations and throughout the construction phase the parties will
    engage in negotiations through appointed negotiating teams to monitor progress and address
    all issues relating to the construction phase as well as fit out and other associated lease
    tenancy arrangements.

    The MoU shall enter in force upon signature by both Parties and remains in force for the
    duration of the construction phase subject to any variations as may be mutually agreed upon
    by the Parties, unless terminated earlier by either Party upon the giving of reasonable notice in
    writing to the other Party.

    [30] LETTER FROM THE SECRETARY FOR DPM TO THE THEN CHIEF
    SECRETARY TO GOVERNMENT REGARDING PROPOSED PRE-LEASE
    AGREEMENT FROM CENTRAL LAND LIMITED

    On 19 September 2013, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the then Chief Secretary to Government, Sir Manasupe Zurenuoc, Kt,
    OBE, regarding proposed Pre-Lease Agreement from Central Land Limited. In this letter,

    Chapter 2: Findings of Facts 82

  • Page 109 of 147

  • Secretary Kali advised that he had signed a MoU between the GOAC and Central Land Limited
    to start minor preparatory work and requested a meeting with all members of the State
    Negotiating Team. Also in this letter, Secretary Kali attached a letter from Central Land Limited
    dated 11 September 2013 with Central Land Limited‘s proposed Pre-Lease Agreement for the
    State Negotiating Team to finalize. Below is the full extract of the letter:

    DEPARTMENT OF PERSONNEL MANAGEMENT
    Office of the Secretary
    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea

    Telephone: (675) 327 6379 / 327 6442 Facsimile: (675) 325 0520 Website: www.dpm.gov.pg

    19th September 2013

    Sir Manasupe Zurenuoc, Kt, OBE
    Chief Secretary to Government
    Department of Prime Minister & NEC
    P O Box 639
    WAIGANI

    My dear Chief Secretary

    RE: PROPOSED PRE-LEASE AGREEMENT FROM CENTRAL LAND LTD

    I am referring to you for consideration and comments a proposed pre-lease agreement from the Cabinet
    approved financier and developer, Central Land Ltd on the design, construction and occupancy of the new
    multi-storey office complex as per directives contained in NEC decisions 282/2013 and 300/2013 made on 14th
    August 2013 and 28th August 2013 respectively. Copy attached.

    I would like to propose a meeting of the State Negotiating Team to be convened urgently in order for us to
    firm up on our position before we meet with CLL. Minister for Public Service, Sir Dr Puka Temu made it
    very clear that he wishes to return to Cabinet for endorsement of the pre-lease agreement before the end of
    the month and for a ground breaking ceremony to follow thereafter.

    I am also happy to advise that following the directions given at the lunch hour meeting between Minister
    Temu and the State Negotiating Team, I have now executed a Memorandum of Understanding between the
    Government Office Accommodation Committee and CLL for minor preparatory work to commence. A copy
    is attached.

    Yours sincerely

    [ Signed ]
    JOHN M. KALI, OBE
    Secretary and Chairman, Government Office Accommodation Committee
    Cc: Minister for Public Service
    Cc: Secretary for Treasury
    Cc: State Solicitor

    Comments

    The MoU mentioned above that was signed was not the one that was drafted by the State
    Solicitor‘s Office, incorporating the Pre-lease Agreement and attached to his letter of 12
    September 2013.

    [31] LETTER FROM THE SECRETARY FOR DPM TO THE THEN SECRETARY
    FOR DEPARTMENT OF LANDS AND PHYSICAL PLANNING

    Chapter 2: Findings of Facts 83

  • Page 110 of 147

  • REQUESTING FOR THE GRANTING OF ACCESS TO DEVELOPER TO
    CARRY OUT SOIL TESTING – NATIONAL MAPPING BUREAU SITE,
    WAIGANI

    On 1 October 2013, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the then Secretary for Department of Lands and Physical Planning, Mr
    Romily Kila Pat, requesting him to transfer the Certificate Authorizing Occupancy over the land
    which National Mapping Bureau is situated to DPM for the construction of the new Multi-
    Storey Office Complex. This undertaking is consistent with the MoU dated 12 September 2013
    executed between the GOAC and Central Land Limited and to allow immediate access to the
    developer and financier namely, Central Land Limited to go ahead with soil testing exercise on
    the propose building site. Below is the full extract of the letter:

    DEPARTMENT OF PERSONNEL MANAGEMENT

    Office of the Secretary

    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea
    Telephone: (675) 327 6302 / 305 Facsimile: (675) 325 0789 Website: www.dpm.gov.pg

    Date: 01st October, 2013

    Mr Romilly Kila Pat
    Secretary
    DEPARTMENT OF LANDS & PHYSICAL PLANNING
    PO BOX 5665,
    BOROKO, NCD

    My dear brother Colleague,

    ACCESS TO DEVELOPER TO CARRY OUT SOIL TESTING – NMB SITE, WAIGANI

    At a meeting of the State Negotiating Team on Wednesday 25th September 2013, you undertook to transfer
    the CAO on which the National Mapping Bureau is situated to the Department of Personnel Management
    for purposes of the construction of the new multi storey office complex by Friday 27th September 2013. These
    undertakings were consistent with Articles 2 and 3 of a Memorandum of Understanding (MoU) dated 12th
    September, 2013 executed between the Government Office Accommodation Committee and Central Land
    Ltd.

    It was also agreed for your Department to facilitate Ministerial approvals for exemptions under the Land
    Act and for a State Lease to be granted in favor of Central Land Limited in respect of the land on which the
    Multi Storey Complex is to be built.

    While we are waiting for you to facilitate these arrangements, it would be in order for you to direct staff of
    the National Mapping Bureau to allow immediate access to the developer/financier namely, Central Lands
    Limited to go ahead with soil testing exercise on the proposed building site (NMB site) and other adjacent
    surrounding to determine the best base site for construction.

    Yours sincerely

    [ Signed ]
    JOHN M. KALI, OBE
    Secretary

    Chapter 2: Findings of Facts 84

  • Page 111 of 147

  • [32] NOTICE OF RESERVATION UNDER SECTION 49 (RESERVATION FOR
    LEASE OR FURTHER LEASE) OF THE LAND ACT 1996

    On 16 October 2013, there was a Notice of Reservation under Section 49 (Reservation from
    Lease or Further Lease) of the Land Act 1996, from the then Secretary for Lands and Physical
    Planning, Mr Romilly Kila Pat, outlining the Certification of Reservation to reserve the right of
    occupancy to Department of Personnel Management, over the Land known as Allotment 1
    Section 391, Hohola, Waigani. Below is the full extract of the notice:

    INDEPENDENT STATE OF PAPUA NEW GUINEA

    LAND ACT 1996

    NOTICE OF RESERVATION UNDER SECTION 49

    I, Romilly Kila Pat, a Delegate of the Minister for Lands and Physical Planning by virtue of the power
    conferred in me by Section 49 of the Land Act 1996 and all other powers me enabling hereby ―RESERVE‖
    the right of Occupancy to;

    DEPARTMENT OF PERSONNEL MANAGEMENT
    P O BOX 519
    WAIGANI
    NATIONAL CAPITAL DISTRICT

    Over the land described in the Schedule:

    SCHEDULE

    All that land known as: ALLOTMENT 1 SECTION 391 HOHOLA, NATIONAL CAPITAL DISTRICT

    Containing a total area of 2.36 hectares more or less shown on the Survey Plan Cat Number 49/2019 in the
    Department of Lands & Physical Planning File: DC/391/001. Certificate of Reservation of Occupancy
    Number: 06/2013 SR

    Dated this: 16th Day of October, 2013

    [ Signed ]
    ROMILLY KILA PAT
    A Delegate of the Minister for Lands & Physical Planning

    [33] LETTER FROM THE SECRETARY FOR DPM TO THE MANAGING
    DIRECTOR OF CENTRAL LAND LIMITED GIVING APPROVAL FOR
    TEMPORARY OCCUPANCY OF THE OLD GOVERNMENT OFFICE
    BUILDING

    On 21 October 2013, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the Managing Director for Central Land Limited, Mr Lai Weng Hoo,
    advising him of the Temporary Occupancy of the old Central Government Office Building by
    Central Land Limited as per the approval from the GOAC, following the direction from the
    Prime Minister. Central Land Limited to occupy the ground and the second floors as operation
    base for the duration of the construction of the new office. Below is the full extract of the letter:

    DEPARTMENT OF PERSONNEL MANAGEMENT

    Office of the Secretary

    Chapter 2: Findings of Facts 85

  • Page 112 of 147

  • PO Box 519, WAIGANI, 131, NCD, Papua New Guinea
    Telephone: (675) 327 6302 / 305 Facsimile: (675) 325 0789 Website: www.dpm.gov.pg

    Date: 21st October 2013
    Ref: OGAPSH/Dir.

    Managing Director
    CENTRAL LAND LIMITED
    PO Box 1899
    BOROKO
    NCD, PNG

    Dear Sir

    Subject: Temporary Occupancy of the old Central Government Office Building

    I refer to NEC Decision No.300/2013 with respect to the construction of the Multi Storey office complex and
    Cabinet‘s approval for Central Land Limited to be the financier/developer of this project.

    I am happy to inform you that following a direction from the Prime Minister, the Government Office
    Accommodation Committee today approved for the Central Land Limited to temporarily move into the old
    Central Government Building premises legally known as Allotment 1, Section 354 Hohola. The purpose of
    this is to allow you to use two floors (ground and first floor in the middle section of the CGO) as your
    operations base for the construction of the new office complex.

    Temporary occupancy is for construction activity and will be for the duration of the construction work only.
    It will be at cost to CLL and especially in the refurbishment of required floor space, partitioning and fit-out
    works to meet your requirements.

    Furthermore, in preparation for the construction phase it is important that your company cooperate with
    the Director for OGAPSH in relocating the numerous containers sitting idle in the old CGO car park.

    Yours sincerely,

    [ Signed ]
    JOHN M. KALI, OBE
    Secretary

    Cc: Chief Secretary to Government

    [34] ACKNOWLEDGEMENT FROM THE SECRETARY FOR DPM TO THE
    THEN SECRETARY FOR DEPARTMENT OF LANDS AND PHYSICAL
    PLANNING REGARDING RESERVATION UNDER SECTION 49
    (RESERVATION FROM LEASE OR FURTHER LEASE) OF LAND ACT 1996
    AND THE RELOCATION OF NATIONAL MAPPING BUREAU

    On 21 October 2013, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the then Secretary for Department of Lands and Physical Planning, Mr
    Romilly Kila Pat, acknowledging the reservation right of occupancy to DPM over Section 391,
    Allotment 1 and also advising him of the Government Office Allocation Committee‘s approval
    for the relocation of the National Mapping Bureau to Infinite Haus (Unagi Oval Gordons).
    Below is the full extract of the letter:

    DEPARTMENT OF PERSONNEL MANAGEMENT

    Chapter 2: Findings of Facts 86

  • Page 113 of 147

  • Office of the Secretary

    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea
    Telephone: (675) 327 6302 / 305 Facsimile: (675) 325 0789 Website: www.dpm.gov.pg

    Date: 21st October 2013
    Ref: OGAPSH/Dir.

    Mr Romilly Kila Pat
    Secretary
    Department of Lands & Physical Planning
    Post Office Box 5665,
    BOROKO, NCD, PNG

    My dear Secretary,

    Subject: Reservation Under Section 49 of Land Act 1996 and Relocation of NMB

    Thank you for your understanding and undertaking towards the reservation of the right of Occupancy to
    the Department of Personnel Management, over the land described as; Allotment 1 Section 391 Hohola,
    National Capital District. As you know the described land is for the construction of the Multi Storey
    Government Office Complex.

    I am pleased to inform you that the Government Office Accommodation Committee has secured alternative
    office accommodation for National Mapping Bureau (NMB) at Infinite Haus (next to Unagi Oval Gordons).
    I therefore urge your administration to immediately plan the relocation of the NMB with the assistance of
    the OGAPSH effective from today.

    Please have your Manager Administration (F. Morove) to liaise with DPMs John Gohuse- Manager, Office
    Accommodation for assistance.

    Yours sincerely,

    [ Signed ]
    John M. Kali, OBE
    Secretary

    [35] LETTER FROM THE SECRETARY FOR DPM TO THE THEN SECRETARY
    FOR DEPARTMENT OF LANDS AND PHYSICAL PLANNING
    REQUESTING FOR THE ISSUANCE OF TITLE – ALLOTMENT 1 SECTION
    391 HOHOLA (WAIGANI), NCD

    On 25 October 2013, the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali,
    CMG, OBE, wrote to the then Secretary for Department of Lands and Physical Planning, Mr
    Romilly Kila Pat, requesting for his assistance in the issuance and granting of a 99 year lease
    title over Section 391, Allotment 1, Hohola (Waigani), NCD. Attached with the letter was a
    receipt for the payment of K100.00 for Lease Application. Below is the full extract of the letter:
    DEPARTMENT OF PERSONNEL MANAGEMENT

    Office of the Secretary

    PO Box 519, WAIGANI, 131, NCD, Papua New Guinea
    Telephone: (675) 327 6302 / 305 Facsimile: (675) 325 0789 Website: www.dpm.gov.pg

    Date: 25th October, 2013
    Ref: Dir. OGAPSH

    Chapter 2: Findings of Facts 87

  • Page 114 of 147

  • The Secretary
    Department of Lands & Physical Planning
    PO Box 5665
    BOROKO
    National Capital District

    Attn: Director – Alienated Land

    SUBJECT: ISSUANCE OF TITLE – ALLOTMENT 1 SECTION 391 HOHOLA, NCD

    In view of our (Chris/Tiri) discussion today dated 25th October, 2013 on subject. We would appreciate
    assistance in the issuance and granting of a 99 year lease title over Allotment 1 Section 391, Hohola, National
    Capital District.

    As you are aware we have been issued a Certificate being Notice of Reservation Under Section 49, reserving
    the right of Occupancy to:

    Department of Personnel Management
    PO Box 519
    WAIGANI
    Port Moresby

    Find attached is K100.00 for subject Lease Application and eligibility for Land Board deliberation this year.

    Thank you.

    [ Signed ]
    John M. Kali, OBE
    Secretary DPM

    [36] STATUTORY BUSINESS PAPER NO: 17/2014 AND NEC DECISION NO:
    49/2014 ON THE APPROVAL OF LEASE ARRANGEMENTS FOR THE
    MULTI STOREY GOVERNMENT OFFICE COMPLEX

    On 6 February 2014, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for Public
    Service submitted a Statutory Business Paper No: 17/2014 to the NEC, in regard to the
    approval of lease arrangements for the Multi Storey Government Office Complex. The
    purpose of the submission was:

    1. to seek NEC‘s approval for the Leasing Arrangement for the Multi Storey Government
    Office Complex, as established in Cabinet Decision No: 03/2013, Decision No:
    282/2013 of 14 August 2013, and Decision No: 300/2013 of 28 August 2013.

    2. to direct the relevant Government Departments to implement this decision.

    In the Submission, the Public Service Minister also advised NEC that the State Negotiating
    Team had concluded its negotiations with Central Land Limited on the following terms and
    conditions to be entered into a Lease Agreement:

    Land: Allotment 1, Section 391 Hohola, NCD for which a Certificate
    of Reservation of Occupancy has been issued to the Department
    of Personnel Management by the Department of Lands &
    Physical Planning.

    Chapter 2: Findings of Facts 88

  • Page 115 of 147

  • Lease Term: 10 years with an option for the State to purchase the property
    within the lease period.

    Lease Commencement
    Date On and from the date the lessor first hands over the leased
    premises in the building to the lessee pursuant to the lease
    agreement.

    Base Rental
    (Before GST) PGK 1, 300-per square meter per year payable quarterly in
    advance. Rate is fixed for the first 3 years of the Lease Term
    with options for review.

    Fit-Out Charge PGK350-per square meter per year for all office fit-outs.

    Target Time for Building
    Completion 18-months after the Lessor‘s ground breaking for the
    construction subject to force majeure.

    On 17 February 2014, the NEC during its Special Meeting No: 05/2014, made its Decision
    No: 49/2014 in regard to the Approval of Lease Arrangements for the Multi Storey
    Government Office Complex. Below is the full extract of the NEC Decision:
    PAPUA NEW GUINEA GOVERNMENT

    NATIONAL EXECUTIVE COUNCIL

    Decision No: 49/2014 Special Meeting No: 05/2014

    Subject: APPROVAL OF LEASE ARRANGEMENTS FOR THE MULTI STOREY
    GOVERNMENT OFFICE COMPLEX
    On 17th February 2014, Council:

    1. noted the content of Statutory Business Paper No. 17/2014;

    2. approved the Lease Terms and Conditions as outlined in the attached schedule; and

    3. directed the State Solicitor to finalize a lease agreement for execution by the Chairman of the
    Government Office Accommodation Committee and Central Land Limited before 28 th February
    2014.

    SCHEDULE

    FUNDAMENTAL LEASE TERMS AND CONDITIONS

    To be entered into a Lease Agreement between the Chairman of the Government Office Accommodation
    Committee and Central Land Ltd

    Land:

    Allotment 1, Section 391 Hohola, NCD for which a Certificate of Reservation of
    Occupancy has been issued to the Department of Personnel Management by the
    Department of Lands & Physical Planning.

    Lease Term:

    Chapter 2: Findings of Facts 89

  • Page 116 of 147

  • 10 years with an option for the State to purchase the property within the lease
    period.

    Lease Commencement
    Date

    On and from the date the lessor first hands over the leased premises in the building
    to the lessee pursuant to the lease agreement.

    Base Rental
    (Before GST)

    PGK 1, 300-per square meter per year payable quarterly in advance. Rate is fixed
    for the first 3 years of the Lease Term with options for review.

    Fit-Out Charge
    PGK350-per square meter per year for all office fit-outs.

    Target Time for Building
    Completion

    18-months after the Lessor‘s ground breaking for the construction subject to force
    majeure.

    Comments

    The then Minister for Public Service, Hon. Sir Dr Puka Temu, KBE, CMG, MP, sought
    NEC‘s approval for the Leasing Arrangement for the Multi Storey Government Office
    Complex, as established in Cabinet Decision No: 03/2013, Decision No: 282/2013 of 14
    August 2013, and Decision No: 300/2013 of 28 August 2013. The then Minister for Public
    Service also requested NEC to direct the relevant Government Departments to implement this
    decision. The State Negotiating Team had also concluded its negotiations with Central Land
    Limited on the terms and conditions to be entered into a Lease Agreement with the State. The
    Fundamental Lease Terms and Conditions for the construction of the Government Office
    Complex, was concluded by the State Negotiating Team in negotiation with Central Land
    Limited and was included in the Statutory Business Paper No: 17/2014 dated 6 February 2014
    and submitted to NEC for approval. The NEC Decision directed the State Solicitor to finalize
    a Lease Agreement for execution by the Chairman of GOAC and Central Land Limited.

    In terms of financial analysis of the project as per the proposed Lease Agreement, it is noted
    that:

    Conversion

    Lease Term = 10 Years
    Base Rental (Before GST) = K1,300 per square meter
    Fit-out Charge = K350 per square meter per year for all office fit-outs
    Total Area of Occupancy of the proposed building = 2.36 ha = 23,600 m2
    Total Storeys of the proposed Building = 32 Floors

    Calculation

    Base Rental: K1300 x 23,600 x 32 = K981,760,000 (one year rental cost of the
    building)

    Chapter 2: Findings of Facts 90

  • Page 117 of 147

  • K981, 760,000 x 10 = K9, 817,600,000 (rental cost of the property over the 10 years
    lease period)
    Office Fit-out Charge: K350 x 23,600 = K8,260,000 (depending on the type of
    architectural design)

    Total = K9, 825,860,000 (K9, 817,600,000 + K8, 260,000)

    In another term, the proposed 32 Floor Office Complex would occupy a total area of 2.36
    hectares which is equivalent to 23, 600 square metres. The Base Rental rate (before GST) was
    proposed at K1, 300 per square meter. Therefore, if we multiply K1, 300 by 23,600 by 32, it
    would cost the State K981, 760,000 for one year. The Lease Term is 10 years; hence if we
    multiply K981, 760,000 by 10, the State would be spending a total of about K9, 817,600,000
    over the 10 year period.

    For Office Fit-outs, it was proposed at K350 per square meter for all office fit-outs. Therefore,
    if we multiply K350 by 23,600, it would cost the State K8, 260,000 on office fit-outs alone
    for the 32 Floor Office Complex.

    The overall total cost of the proposed 32 Floor Office Complex over the 10 years lease period
    would be the addition of total Base Rental and the total Office Fit-out charges. Therefore, if
    we add K9, 817,600,000 and K8, 260,000, it would cost the tax payers through the State an
    overall total rental cost of K9, 825,860,000. Therefore, if CLL was to construct the building
    and lease it to the State through a BOLT arrangement over the 10 years lease period, the State
    is looking at spending well over K9 billion tax payers money before the State actually owns
    the property.

    Chapter 2: Findings of Facts 91

  • Page 118 of 147

  • 3. INTERVIEWS WITH WITNESSES

    This Section contains the evidences provided by Key Witnesses during interviews conducted
    by the Commission at Deloitte Tower, Port Moresby. The interviews were conducted with
    these persons after the Commission issued Summonses under Section 18(3) (Evidence) of the
    Organic Law on the Ombudsman Commission.

    [3.1] EVIDENCE GIVEN BY MR CHRIS KABAURU, DIRECTOR OF THE
    OFFICE OF GOVERNMENT ACCOMMODATION AND PUBLIC SERVICE
    HOUSING WITH DPM

    On 15 August 2014, Mr Chris Kabauru, was interviewed at the Commission Office at Deloitte
    Tower in Port Moresby, National Capital District, during which he stated the following.
    Below is the full extract of the recorded interview transcript:

    ―The process in which, especially the Government Office Allocation Committee (GOAC)
    deals with facilitation of government accommodation is that, it is only through the
    request by Government Agencies, when they request for movements or for new
    accommodation, maybe in terms of the office accommodation that they are in is not
    conducive to the work environment and they need to move, or maybe of the fact that their
    capacity has increased and they need to move to bigger accommodation. Hence, we
    normally look at their request at the same time, we have requirements that they are
    required to provide to us in order for us to identify whether the agencies are government
    institutions or not.

    There are requirements with regard to office space. Such as, will they have the money or
    not? You know all these things, are required from Agencies, before we can actually look
    at that.

    You know, I look at a lot of these issues, in terms of, looking at the rentals, also
    negotiations of rentals, and then, generally looking at valuation, rental valuations to do
    with you know according to the market, what the properties of office accommodation is
    fetching out there, I mean comparing like Down Town office accommodation, to Boroko
    or to Gordons.

    We do analysis on that area in terms of valuation and we negotiate you know rental
    because this days you know we look at the market. I mean the market here is quite small.
    I think both of you are aware that you know the demand for accommodation from
    institutions now government agencies is really high.

    Like, we facilitate all the requirements that I have already mentioned. When all of these
    is compiled we submit all our findings, whatsoever to the Government Office Allocation
    Committee. This committee is represented by the Secretary for Department of Personnel
    Management as the Chairman, Secretary for Finance, Secretary for Treasury, Secretary
    for Works, Secretary for Lands and Physical Planning and the State Solicitor. These are
    the people that have to look and they approve, or, if they have questions, they question
    us, and you know we answer questions, these are technical issues that they can refer back
    to us.

    Chapter 3: Interviews with Witnesses 92

  • Page 119 of 147

  • But once the approval is given that is again forwarded back to us, and we facilitate the
    lease agreements and all of this. One thing in terms of lease agreements, we now have a
    standard agreement, which was again developed by our State Solicitor‘s Office.

    In the past, we usually use the agreements done by the Landlord, which they sort of force
    upon us to look at and agree on, but we find some issues that we need to maybe assist the
    government on our side, and maybe coming up with a win, win situation.

    That is why the State Solicitor came up with this agreement, which again, if you really
    look at it, if you study it again it is a win, win situation for the government, and also for
    the Landlord.

    So that is the one that we are using now, and we only look at and issue the lease terms
    and the rental information, who the Landlord is and all this information. Again when this
    information is inserted in the agreement, it is again sent back to the State Solicitor for
    legal clearance.

    We all wait for their legal clearance. When it is cleared, then the normal process that you
    know we inform the Landlord and the tenants, like if it is Ombudsman Commission, we
    inform them and they can move into those facilities or premises.

    But it does not happen that overnight. It is a process that takes some time, some weeks,
    months or even years before, actually moving into the accommodation. That is on the part
    of the, you know the lease agreements, those lease agreements for Government Agencies
    throughout the country, is done through this process. My Office, facilitates that through
    our research team and through our negotiation process, but like I said over already, the
    approval is given by the Government Office Allocation Committee. They are the main
    body that always look into, confirm and approve lease or the renting of office
    accommodation for or by Government Agencies.

    I have a Unit in my Division, which is the Lease Management Unit, which takes care of
    the management of leases, negotiations and all these things, at the same time under my
    responsibility. We have the Public Service Housing again, it is to do with housing for
    public servants throughout the country.

    To be honest in this case, this is a Government initiative that was maybe I would say
    given to us to maybe look and facilitate that direction from the government. To be honest
    with you people, if this was given to us to actually look at, you know we would go into
    the process or processes that we follow.

    We normally go through the normal tender process, tender then bidders, when interest
    parties come in and we look at the Tenders, we vet the bidders and from that it is sent
    back to CSTB.

    We sort of work side by side with CSTB, before CSTB can actually look at the final
    details, and submit that to NEC, for NEC to approve and also contracts come under our
    area.

    In terms of legal advice, we work with the State Solicitor, Mr Daniel Rolpagarea and his
    mobs. I mean in most of the maybe all of the issues, the State Solicitor is always briefed
    on it and he provides information then.

    Chapter 3: Interviews with Witnesses 93

  • Page 120 of 147

  • With regard to CSTB, we have been having talks with CSTB, on issues, the network is
    there because you know, we all work for the government, and we all are trying to make
    sure that we are doing the right thing and we are following the process, or not, the issue of
    this particular building, although we in fact call our expression of interest, I mean
    everything is in here and I got one or two.

    It is good that I made two copies for you to see, everything is in there. It is all the
    documents that is from day one, right up to when we received direction from OC to stop,
    everything is here.

    Anyway, we went through the expression of interest, which is again basically to find out,
    if there are people around, who are interested. Interested in coming up with this concept.
    You know them coming up with their own money, and building this place up and then
    maybe the government can recoup the money in later years, not for them to cheat us, but
    let us come up with some sort of arrangement that we are better off. Why? Because of the
    fact that we are having difficulties with accommodation. And just to take you both to
    another issue. If you look at the Lands Department Building (the Hedatano Haus), and
    also the new Treasury Building.

    These, I believe did not go through the CSTB, this were arrangements that came up
    within the MOU or MOA, agreement where Nambawan Super, was willing to fork
    money out to build with Lamana, and they build it up and now Lands moved in, and
    again you will see there is some sort of prelease arrangement being done, and maybe the
    concept is the same with Skyscraper.

    At the same time, there are information here that we actually advised the Secretary that
    we need for those issues, like this, we need to go through CSTB, but the fact of the matter
    here is we went through CSTB. CSTB turned around, and advised us that no, because the
    government is not forking any money out, it is nothing to do with us.

    So that was the time that I believe was the turning point, when CSTB advised that, the
    DPM Secretary, then thought maybe we should continue on with doing it, the way just
    like Lands Department Building and the Treasury Building that is how I see it. If the
    CSTB has allowed and said ok, although it is not going to be the Government, who is
    going to be forking out money to build. If they had advised to provide these details to
    them, I think by now, we shouldn‘t be having this problem, that is how I see it, that is my
    personal opinion, professional opinion.

    Built Operation Leasing Transfer (BOLT), like I have always said Department of
    Personnel Management cannot be seeking expressions of interest for the construction of
    this building.

    The BOLT, is like, if I have the money as an Investor, I have interest to build something,
    I come in with all my money and I construct the building up.

    It must be according with the compliance with PNG requirements. All this things, must
    be in place, and then after it is been leased and transferred and then from there the
    builder, or the contractor, or the investor has to recoup the money through leasing, maybe
    by leasing back to us the Government, who are moving into the building to lease at a
    reasonable rental.

    Chapter 3: Interviews with Witnesses 94

  • Page 121 of 147

  • Again it should come through a negotiation for leasing, and then once their money is
    recouped that particular building is transferred to the Government and now it belongs to
    the Government. The government can only be paying rental, maybe to save a lot of
    money.

    But the process is, you are coming up with your own, as a private investor, you build the
    place up, construct and then you lease the place, recoup the money from that and the
    place is transferred to whoever, maybe the Government.

    The copy or copies of leasing agreement, that I will tell you that we do not have a
    Leasing Agreement. We do not have a lease agreement with the company, although the
    State Solicitor prepared something, but you will see a copy in here, it is not signed, so it
    is not an agreement that is being agreed on, it is just an agreement that was prepared by
    State Solicitor but not signed.

    Copy or copies of legal advice, legal clearance from the State Solicitor, these are also in
    there, anything to do with legal advice from the State Solicitor on this, but you will also
    in your investigation, find that there are conflicting issues with the CSTB, nothing to do
    with us.‖

    [3.2] EVIDENCE GIVEN BY MR ISIKEL MESULAM, THE THEN DIRECTOR
    LEGAL AND INVESTIGATIONS, DPM

    On 20 August 2014, Mr Isikel Mesulam was interviewed at the Commission Office at
    Deloitte Tower in Port Moresby, National Capital District, during which he stated the
    following. Below is the full extract of the recorded interview transcript:

    ―My job is to look after the legal duties of the Department specifically now the Office of
    Government Accommodation and Public Service Housing responsibility comes under; we
    call it the Government Office Allocation Committee (GOAC).

    Because it is a State wide responsibility, the Lawyers that normally assist this Division is
    the State Solicitor‘s Office. They only come to me, when they need a second opinion, or
    when they need clarification on certain issues, but I don‘t usually serve them on a daily
    basis, because of the fact that they deal with matters that have to do with all other State
    Departments and so on.

    I make it my business to be aware of what they are involved in, so I am very familiar with
    the Central Land Limited.

    And when they need further clarification on anything, then they liaise with me, but in fact
    after an amendment of the Attorney General Act 1989, now anything that is to be cleared,
    any agreement, contracts has to be cleared by the State Solicitor, but I do not clear
    anything. I provide advice, but I have no authority to clear any instrument, or any
    document binding on the State, except of course, those that are responsibility of the
    Secretary, or Head of Departments, regarding Contracts of Employment or anything.
    But anything to do with housing, whether it is a Lease Agreement, or in relation to that, it
    is the State Solicitor, who normally advices and clears.

    Chapter 3: Interviews with Witnesses 95

  • Page 122 of 147

  • I cannot say for certain, I can only assume that from my knowledge, there is a working
    committee that was formed to negotiate the leasing arrangement and that includes our
    Department, State Solicitor‘s Office, Treasury and Finance.

    From what I know, their job is to negotiate the leasing arrangements on this building that
    is supposed to be built; some say it is 32 Floor, some say it is 29 Floor and all that.

    In the normal process, it goes to the Tenders Board. Tenders Board would be the right
    people, but in this case, because it is not something that was administered by the Tenders
    Board, however by the Office of Government Accommodation and Public Service
    Housing Division in the Department. As to who approved that I cannot say, because I am
    not aware.

    As you were made aware of this, but I found out later that somewhere there was an
    expression of interest put out for people to bid.

    But when I found that out, I remembered mentioning it to the Director of that Division. It
    was out of the normal process, like it was not based on any legislation, because normally
    all the engagement will be under Public Finances (Management) Act 1995, going through
    the Tenders Board but this one was outside of it.

    I did not even see the purpose of that, but I think from what I know, there was a Political
    direction, but I had no part in that.

    In the normal cause, normal tendering for supplying goods and services, where contracts
    are involved that would have to go through the Central Supply & Tenders Board. The
    thing is; this happens, when the State is putting up the money to engage people.

    The peculiar thing with this arrangement is that the State is not putting up the money.
    What happened was, well at the top, the old arrangement was that somebody with the
    money will come and build this building. Then some kind of arrangement will have to be
    made, whereby, which can allow for this people to come and build, and then rent back to
    the State using their own money.

    So the idea is for the State to then rent from them, and then eventually, when this people
    recover their money, then the State will eventually buy off that building.

    So, let me state facts from the beginning, so we are not talking contracts. There is no
    contract, no contract has been signed. What has happened, was that an MoU has been
    signed for this people to start negotiating, what will become a possible leasing
    arrangement.

    So the committee that I mentioned, their job is to sit down, and work out the details on
    how, this kind of arrangement is going to be, because as I said, we are not proceeding
    with this one under Public Finances (Management) Act 1995 by going through the
    Tenders Board.

    The problem here is that there is no law in place to cater for this kind of arrangement,
    from what I understand from an advice, I saw from the State Solicitor‘s Office that there
    is a law that is being proposed on this Public Private Partnership, that would cater for this
    kind of arrangement, but at the moment there is really no law to guide us on how, we can

    Chapter 3: Interviews with Witnesses 96

  • Page 123 of 147

  • bring somebody in with his own money to build something for the State and then the
    State gets to buy it off later on.

    Although we have some projects of this kind under Public Finances (Management) Act
    1995. This one is very similar to that, except the main thing is that we do not have the
    money and the State does not have the money.

    The State is not putting up the money that is why the Tenders Board decided not to deal
    with it. But in the normal cause State money, is given to the Tenders Board and Tenders
    Board puts out the tender, and invite people to express their interest to do the job for that
    kind of money, but in this case the State is not putting up the money.

    So it is a case of trying to find out the best possible way around this to cater for the
    political intention.

    So like in the Department we are basically acting on instructions, look this is what we
    want, can you find out where. The State Solicitor provided some advice and that is when
    I became involved, they also asked me, what is the best way to deal with this. Politicians
    want us to do it this way.

    State Solicitor is saying we cannot go through the CSTB, if we go through the Tenders
    Board, we may not go ahead with the project for these reasons according to law.

    Like I said there was no contract. I never saw a contract. What we have in place is a MoU
    between the State and these people, a general Agreement, and we agreed that these
    people can come and do some studies, and then we will know exactly where we will build
    this building, for us, using their own money and, that all depends on what is going to be
    in the proper lease agreement this committee is going to decide on that.

    So, in terms of the committee‘s work, I do not know because I am not part of it, I am not
    part of that committee, and I am not privy to what they have discussed to date.

    It is now called Government Office Allocation Committee. In the past, it was just an
    Office Allocation Committee, part of the responsibility of the Department of Personnel
    Management, and they deal with the allocation of office space.

    All the office requirement for the Government Departments, and other State Agencies,
    this committee is responsible for making decision on this kind of thing, so they look for
    office space, they do up all the leasing arrangement, and they pay all the rent.

    The trouble was, when this Housing Scheme came into being, it became the Government
    Office Accommodation and Public Service Housing. When exactly it was set up and by,
    whom I do not really know.

    All I know is that this is already part of the Department‘s responsibility to look after
    rental accommodation for officers, Departments and it all became prominent, after the
    Central Government Office was burnt down and Pineapple Building, and a lot of
    Departments had to be housed as well. So they do not look for private owned office
    accommodation, and rent it, to house all the Government Department and right now all
    the Departments are all over the place.

    Chapter 3: Interviews with Witnesses 97

  • Page 124 of 147

  • So from my understanding, one of the reasons, why they are embarking on this project,
    this 32 or 29 Storey Building, is to try to have all these Departments come back,
    centralized in one building, and then pay a certain grant, because right now the rent
    depends on who the landlord is, they are charging all kinds of amounts and the State has
    to pay millions just on rental.

    I think one of the reasons for this, is to try and mainly save costs. Somebody will come
    and build the building, we will rent and then buy off the building and we will save costs
    on rental.

    That is one of the reasons, why some of us, like personally from my point of view, it was
    a good thing, except that how it is to happen must be properly done.

    But clearly they have pushed it from the top. I mean I can say that without that they were
    normal NEC decisions that were being made, and we have to implement as bureaucrats.
    That is why we have to find a way forward, but where we are at is the MoU only. If there
    is a contract I can, tell you gentlemen I am not aware of that.

    There is a MoU, I am aware of that because State Solicitor‘s Office drafted one, a draft
    MoU, and that was when I became involved, because I was asked to also provide one, a
    draft of a MoU so that this people can look at and which one was agreeable, they will
    have it signed and I think mine was accepted and signed, but I do not have a copy of the
    signed document.

    But like I said that is the MoU. In terms of the contract or whatever agreement, whatever
    else, I know of no other agreement signed as yet.

    I do not have custody of, I have gone through the document registered, but I do not have
    copies of it. They are kept by the Director, Office of Government Accommodation and
    Public Service Housing.

    I am only involved when they come to me. So lots of things they may have done, I would
    not be involved, any other documents, or any other agreements, they may have signed I
    do not know.‖

    [3.3] EVIDENCE GIVEN BY MR JOHN M. KALI, CMG, OBE, SECRETARY FOR
    DPM AND CHAIRMAN OF THE GOAC

    On 21 August 2014, Mr John M. Kali, CMG, OBE was interviewed at the Commission Office
    at Deloitte Tower in Port Moresby, National Capital District, during which he stated the
    following. Below is the full extract of the recorded interview transcript:

    ―Can I say up front, that there is no contract, there is no contract with Central Land
    Limited. We were in the process of finalizing the arrangements not so much the contract,
    but to have a Lease Agreement, when Ombudsman Commission intervened with its
    investigations.
    But, let me just explain the process, which I also explained a little bit earlier, when I first
    appeared before the Ombudsman Commission. Cabinet for almost eighteen (18) years
    now, since the Marea Haus (Pineapple Building) became caput, and then followed by
    declaration of the unfit condition of the Central Government Office (CGO), two buildings
    there, Pineapple Building and the CGO.
    Chapter 3: Interviews with Witnesses 98

  • Page 125 of 147

  • All the Government Departments were dislocated. They all shifted out of Pineapple
    Building and the CGO, which were accommodating all the Central Government
    Departments and some of the line Departments in those two Buildings. So they got
    scattered throughout the length and breadth of Port Moresby, some went to Somare
    Foundation, some went to Fincorp, some went to Sambra Haus, some went to other
    places in Boroko, some moved into expensive offices here.

    So starting 1986, the Government started thinking about finding alternative office
    accommodation, to accommodate all these public servants who were or Public Service
    Departments which were dislocated throughout.

    So we recorded a chronological event of all the Cabinet Decisions, ever being made ever
    since 1986, relating to the construction of new office space, new Government Buildings,
    the concern the government had for lack of productivity in the public service, lack of
    coordination, lack of communication between Government Departments, which was
    impacting on the performance of the public service and the desire for a Waigani City
    Office, where all the Government Departments will be centralized again, back to the
    Central Government Office at Waigani so that everyone will come back.

    So they thought of renovating the Marea Haus, and renovating the CGO. Since that time
    the public service also grew and a number of other offices, have been created since that
    time, and so with the growing public service and with the demand of service delivery
    ever present. There was a need to create a new government office and so the government
    decided in 2010 or 2011 to construct a new office building, but they did not have the
    money.

    The Government did not have the money to go into the venture to construct its own
    Office Complex. So it was then the Prime Minister and the Ministers, came up with the
    idea that we should ask the private sector through the PPP, to engage with the Public
    Service in construction of a new office complex and so the Cabinet made the decision to
    construct, started with a twenty-four (24) storey office complex.

    They agreed for a 24 storey complex, and then directed the Government Office
    Allocation Committee, which is, myself as the Chairman, to start looking for investors.
    The Government Office Allocation Committee comprises of the Secretary for
    Department of Personnel Management as the Chairman, Secretary for Finance, Secretary
    for Treasury, Secretary for Lands, Secretary for Works and the Sate Solicitor.

    So all those are the Members of the Government Office Allocation committee, so based
    on that we filled it with some interest but before that it was the State Solicitor‘s advice, to
    go through Central Supply & Tenders Board, to secure expression of interests, so we did
    complied with the State Solicitor‘s advice and then went to CSTB.

    CSTB came back and said sorry, we cannot entertain this, because we do not see any
    public funds been involved in the construction of this office. You know CSTB is made up
    of relevant Government Departments similar to Government Office Allocation
    Committee, and the State Solicitor is also a member.

    So when it came back to us, the Government Office Allocation Committee, we were
    stuck, because CSTB would not tender for us. There was still the government that
    requires a Government Office Allocation Committee, because public service Departments

    Chapter 3: Interviews with Witnesses 99

  • Page 126 of 147

  • were all throughout the NCDC, and they were all demanding office space, and the total
    office space, being demanded was in the tune of about ninety thousand square meters,
    and some of the Government Departments were accommodated, and I think you can
    testify this to yourself.

    We are accommodating office spaces that were unbearable, completely unbearable, some
    of them did not have toilets some of them did not have conference rooms and it was
    seriously affecting and impacting on the performance of the Public Service.

    So there was a great demand from the Ministers, who were responsible for those
    Government Departments, Public Servants and Departmental Heads, great demand for
    new office space, so based on that, the Government then decided ok, call for expressions
    of interest, and so I think it was last year or the year before last that we called for
    expression of interest under then Government Office Allocation Committee, which is
    responsible for allocating office space to all the Government Departments including the
    Ombudsman Commission has come to us requested for office space, so we also give them
    office space. For example in Lae, and with that amount of demand and with the
    Government not having any money to construct its office space, and with the CSTB
    refusing to tender for that the Ministers in the Cabinet then directed for the Government
    Office Allocation Committee to tender for Expression of Interest.

    So based on that we set up a criteria of about 10 or 11, from which we received about 9
    applicants from the expressions of interest for the construction of the new office complex.
    And all those 9 applications were addressed by the Technical Evaluation Committee
    (TEC) and based on that the TEC submitted its recommendations to the GOAC and then
    the GOAC submit that to the NEC.

    NEC, on the first time went through that and felt that they needed some more
    information. So we carried out some more interviews with the Cabinet naming 3 of the
    Companies that each interview furthers these 3 companies. So we further interview these
    3 companies and then provided some more information, back to Cabinet. Then Cabinet
    then agreed, because the Central Land Limited was an International Company and had
    strong funding base, and had a lot of experience in construction and all that. The Cabinet
    then agreed to conduct further negotiations with this company.

    So they set up a State Negotiating Team comprising the Chief Secretary, Secretary for
    Treasury, myself Secretary for Department of Personnel Management and the State
    Solicitor. So the four (4) of us were appointed by Cabinet to conduct further negotiations
    with Central Land Limited, in order to come up with fundamental listing and conditions
    which would be used, as the basis for the Lease Agreement, and which we are to take
    back to Cabinet for final endorsement. So after further negotiations with Central Land
    Limited, we agreed on about 10 issues.

    On the list 10 rental rates, on option for buy back, the whole documentation have been
    given to you, so you can check all those anyway, so Cabinet directed us to negotiate with
    Central Land Limited and Treasury on those things. Once Central Land Limited gave us
    those views we gave it to Treasury to assess the economic implications of the proposal by
    Central Land Limited.

    And based on that it was taken back to Cabinet. Then Cabinet approved the Fundamental
    list Terms & Conditions, under which a lease agreement was to be signed up, and they
    directed the State Solicitor to draw up a lease agreement to be executed between the State

    Chapter 3: Interviews with Witnesses 100

  • Page 127 of 147

  • and Central Land Limited. So we were in the process of doing that when the Ombudsman
    Commission came in. So that is why I said there is no contract as yet.

    Public Private Partnership Policy, was already adopted by Cabinet way back in 2002, but
    the State Solicitor was trying to come up with the new law. I think they are still in the
    process of drafting the law on the PPP, but the collar was already there.

    I have no idea of that. I have no information to be quite honest, because as to how Naima
    Investments Limited started and what became of them. You will have to ask the owners
    of the Company. Probably you will have to ask Investment Promotion Authority.

    The Cabinet Directive, if you look at the Fundamental liaison terms & conditions, and
    when Cabinet approved the location to where the new office complex was to be
    constructed, they agreed on the Section and Allotment number in the Cabinet decision.

    And the Section and Lot number, the Cabinet directed for the building to be constructed
    happens to be where the National Mapping Bureau is, so we then put it to Secretary for
    Department of Lands and Physical Planning. We put it to him, because he is the member
    of the GOAC, we put it to him that the place where the Cabinet wants the building
    constructed is where the National Mapping Bureau is currently located.

    So I said ok let us get the agreement of the National Mapping Bureau (NMB) to shift
    elsewhere, and for the building to be constructed on top of where NMB is and NMB be
    given first right to occupancy in the new office complex.

    So he negotiated that with NMB as the Secretary for Lands, got the agreement and that
    was the way that we then gave them the alternative office space at somewhere at 6 mile
    or somewhere and all those are in records of the GOAC meetings.

    The Government decision to construct the Office Space was there. The land was already
    appropriated, already determined by Cabinet, on where the new office complex was to be
    constructed so that was non-negotiable because cabinet had already decided on it.

    The other thing that we were required to negotiate were the financial terms on the leasing
    arrangements, on the first square meter of the rental of space, and so on and so forth,
    which are listed in the Cabinet Decision, but the arrangement was an administrative one
    to re-locate the NMB by the Secretary for Lands, it was an administrative matter not for
    us to negotiate with anyone on that one.

    The only thing that we are going to negotiate with the Central Land Limited, the
    appointed company was the leasing terms & conditions. State was putting up the land,
    State agreed to put up the land and based on that, we said, we will negotiate some
    agreeable rates on which you can construct the building. So those were the only terms &
    conditions that were being negotiated, not the issue of land.
    Like I explained, and based on what you have been hearing from me now, there is no
    contract and there is no lease agreement, but there was an MoU signed between Central
    Land Limited and the State, represented by me as the Chairman of the GOAC for Central
    Land Limited to be given temporary occupancy of the ground floor and the first floor of
    the Central Government Office (CGO), so that they could use that as the basis from
    which to use, as an office to commence the construction and direct the construction of the
    new office complex and that was supposed to be their operations base and that agreement
    was cleared.

    Chapter 3: Interviews with Witnesses 101

  • Page 128 of 147

  • The MoU was cleared by the State Negotiating Team, and was drafted and was to be
    drafted by the State Solicitor but because the State Solicitor, was in Kavieng and the
    Minister wanted the MoU to be executed quickly, so we got my Lawyer, former State
    Solicitor, to draft the MoU and was cleared by the Chief Secretary and myself, then I
    executed that MoU.

    Purely an administrative arrangement to give access to Central Land Limited to occupy
    ground floor and first floor, so that they could use to pilot/test the soil, soil testing,
    achieve some of their plan here in anticipation of us executing a lease agreement for them
    to commence work and construction but all that has been stopped.

    So you have got all those documents there, I think they have been presented to you. So let
    me emphasis there is no contract and there is no lease agreement yet, and the only thing
    that we have executed between the parties was an MoU to enable work to commence in
    the much needed new office complex, so that we can bring all the Government
    Departments back.

    I think I have explained that, where we call for expressions of interest. I think only 9 or
    10 companies. There was a search criteria which also containing the Cabinet submission
    all those Companies, were assessed on the basis of the criteria and based on the Technical
    Evaluation Committee came up with the 3 best Companies.

    Otherwise, all those information was given to NEC. And NEC came back and like I said
    earlier directed the State Negotiating Team to negotiate further with the selected, the
    most successful bidder which was Central Land Limited on the possibility of coming up
    with the lease agreement. So it is still in the process of being finalized.

    Well, Government formed the Government Office Allocation Committee firstly, the
    committee is provided for in the General Orders and its responsibility is to allocate Office
    Space to all the Government Departments. And recently, when I became the Secretary I
    changed some of the criteria on which, office is to allocated, once, we got to base it on
    staff establishment, because Office Space is to be determined by the number of staff that
    you have in your organization.

    What I found out was, Government Departments, who were given one whole floor and
    they have only about 10 people for example, and we were just wasting money on space
    which is unoccupied.

    So, we decided to strictly provide guidelines under which offices to be allocated, one is
    Conference Rooms, based on the office space for the Minister, Departmental head,
    Deputy Secretary, FASs and specific guidelines provided by the General Orders and how
    much office space is required for one officer, one FAS, one Deputy Secretary and the
    Minister and the Departmental Head.

    On the base of the total establishment of an organization, we then allocate, say 2500
    square meters for example, and we measure that, well our staff go out and look at the
    office space and say yes that is 2500 square meters available here. The Department of
    Environment & Conservation, can go in there and then that leaves terms & conditions
    agreed to by the Office Allocation Committee. Say yes the rental for that office space can
    be K900.00 per square meter, K1000.00 per square meter and then the lease agreement
    would then be executed between the State and the Proprietor.

    Chapter 3: Interviews with Witnesses 102

  • Page 129 of 147

  • That was what we are moving into now, it is to come up with the important lease
    agreements, so that we manage those very carefully. For the new Office Complex, there
    is no lease agreement. In fact we had negotiated the fundamental leasing terms &
    conditions and then cabinet approved those fundamental list terms & conditions to be
    entered into the lease agreement. So the State Solicitor was in the process of drawing up a
    post list agreement to be executed between the Central Land Limited and the State, when
    Ombudsman Commission intervened, so everything is now being put to a stop.

    CSTB rejected it, which is also made up of the State Solicitor as well. When we came
    back, we complied with his advice to go to CSTB. So we went to CSTB. And CSTB
    rejected us, so we raised that with the NEC with the Minister, and the Prime Minister.
    They said well go and tell the GOAC for expression of interest, if CSTB cannot do it
    because we need the office space.

    It is all in the records there. So why is the State Solicitor giving us this advice, when he
    was on the CSTB that rejected the government from the CSTB calling for expressions of
    interest?

    So that is why we went and called for expression of interests. Our Legal Officer‘s opinion
    is also there as well, that it was not the project that could be covered by the tendering
    process. You can also read our Legal Officer‘s opinion. You keep saying something like
    this, am I saying something wrong?

    We did, we discussed this at length with the Treasury Department and it has been going
    on for many years for the Government to put aside a lot of money in millions of kina, so
    that we can call for tenders in order that Private Companies can come in and express
    interest and then be awarded the contract to construct this Office Space. So Treasury has
    been asked year after year, to allocate the money, but that has not been done.

    So we have not been given any money given to the Department nor the Government for
    that matter, to be able to construct its own Buildings. So the first thing that CSTB asked
    was do you have an APC? We said no. That is Authority to Pre-commit, because if they
    can have that then they will go ahead and tender for the contract. But the government did
    not have that sort of money.‖

    Chapter 3: Interviews with Witnesses 103

  • Page 130 of 147

  • 4. FINDINGS OF WRONG CONDUCT

    [4.1] FINDING NO. 1

    In the opinion of the Ombudsman Commission, the actions of the GOAC were wrong
    and improper when it:
    (a) obtained NEC endorsement of CLL (by way of EOI) which was outside of the
    procurement process provided in the PFMA and Part 13, Division 2, Paragraphs 3
    & 4a of the Financial Manual;
    (b) did not inform NEC to re-tender CLL‘s proposal in line with the PFMA;
    (c) proceeded to sign a MoU with CLL;
    (d) facilitated the engagement of Central Land Limited on the construction of the
    Multi-Storey (32 Floor) Central Government Office Complex, though that should
    have been done by the CSTB.
    (e) proceeded with the signing of MoU and negotiated pre-lease arrangements with
    CLL to construct a 32 Floor Central Government Office Complex, which was
    exceeding 12 storeys and in breach of the Waigani City Centre Development Control
    Policy.

    Reason(s):

    On 12 September 2013, the State Solicitor, Mr Daniel Rolpagarea, wrote to the
    Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE,
    providing legal advice on the Construction of the 32 Floor Central Government Office
    Complex by Central Land Limited. In the same letter, the State Solicitor attached a
    draft MoU which was forwarded to Mr John M. Kali, CMG, OBE, for deliberation and
    consideration. On the same day (12 September 2013), a MoU was made and signed by
    the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, on
    behalf of the Government of Papua New Guinea, and Mr Lai Weng Hoo, Managing
    Director, for and on behalf of Central Land Limited.

    Following the NEC endorsement of CLL, the State Solicitor, advised the GOAC that the
    proposal by CLL fell within the category of Section 40(5) of the PFMA therefore, the
    process GOAC followed in obtaining NEC endorsement of CLL (by way of EOI) was
    outside of the procurement process provided in the PFMA and the Finance Manual in
    particular Part 13, Division 2, Paragraphs 3 & 4a. He then advised GOAC to refrain
    from entering into a MOU or Pre-Leasing Agreement with CLL until the procurement
    process is followed. He also advised GOAC to inform NEC to re-tender in line with the
    PFMA. However GOAC proceeded to sign a MOU with CLL. GOAC and SNT also
    proceeded to finalise the lease terms and conditions in consultation with CLL which was
    endorsed by NEC through a submission by Minister Temu. The NEC then directed the
    State Solicitor to finalise the lease agreement to be executed by GOAC and CLL. This
    lease agreement is yet to be signed perhaps because of this investigation.

    On 20 June 2013, the State Solicitor, Mr Daniel Rolpagarea wrote to the Secretary for
    DPM and Chairman of the GOAC, Mr John M. Kali, CMG, OBE, advising on the
    Application of Section 40 (5) of the Public Finances (Management) Act 1995 and its
    application relative to options raised by the Secretary for DPM on letter dated; 24 May

    Chapter 4: Findings of Wrong Conduct 104

  • Page 131 of 147

  • 2013. The State Solicitor also advised that within the Waigani City Centre Development
    Control Policy, the highest building allowed is 12 storeys and cannot be beyond that.
    The different zones within the city have specific building requirements and for the areas
    that the proposed building is intended to be built on would not allow for a 30-storey
    building or 32-storey building for that matter.

    Reference(s):

    The facts relevant to this opinion are set out in Chapter 2; Pages 52 – 93.

    [4.2] FINDING NO. 2

    In the opinion of the Ombudsman Commission, the action of the GOAC was wrong and
    improper when it called for EOI which was outside of the PFMA and not following the legal
    advice of the State Solicitor to re-tender CLL‘s proposal under PFMA for the construction of
    the 32 Floor Central Government Office Complex building project and service through
    CSTB.

    Reason(s):

    On 16 October, 2012, the State Solicitor, Mr Daniel Rolpagarea, wrote a letter of
    advice to the Secretary for DPM and Chairman of the GOAC, Mr John M. Kali, CMG,
    OBE, advising as a result of a Special GOAC Meeting held on 3 October 2012, where
    legal issues were raised and the Office of the State Solicitor was requested verbally, to
    provide an advice on the process, in which to facilitate the proposal from Naima
    Investments Limited.

    In this advice, the State Solicitor advised that even though the purpose of the Public
    Finances (Management) Act 1995 is to regulate public expenditure and it may be
    argued that in this case there are no funds being expended by the State for the
    construction of the building and fit-out works. However, the rentals that will be
    expended under the leasing arrangement are part and parcel of the BOLT arrangement
    and therefore cannot be separated as a separate component from the construction of
    the building.

    On 3 July 2013, there was a tender notice put out by the Secretary for DPM and
    Chairman of the GOAC, Mr John M. Kali, CMG, OBE, calling for EOI for the design
    and construction of Multi Storey Office Complex.

    The EOI process is not captured in the PFMA, hence it is only proper to re-tender
    CLL‘s proposal under PFMA through CSTB because the rental cost for this BOLT
    project and service that the State will be paying involves millions of kina.

    Reference(s):

    The facts relevant to this opinion are set out in Chapter 2; Pages 6 – 94.

    Chapter 4: Findings of Wrong Conduct 105

  • Page 132 of 147

  • [4.3] FINDING NO. 3

    In the opinion of the Ombudsman Commission, the action of GOAC was wrong and improper
    when it did not fully and properly inform NEC on the technical and economical advice for the
    32 Floor Central Government Office Complex building project and service that will cost the
    State millions of kina.

    Reason(s):

    If only the NEC was informed properly with the technical and economical advices on
    this whole BOLT project and service from the submissions and proposals made to
    them, then they should be well guided to make certain decisions on the 32 Floor
    Central Government Office Complex building project/service.

    Reference(s):

    The facts relevant to this opinion are set out in Chapter 2; Pages 6 – 94.

    [4.4] FINDING NO. 4

    In the opinion of the Ombudsman Commission, the action of GOAC was wrong and improper
    when it withheld vital clause in the MOU, Pre-Lease Agreements and Lease arrangements
    regarding the cost of the BOLT arrangement on the 32 Floor Central Government Office
    Complex building project and service which will cost the State approximately K981, 760,000
    in one year which is much more higher than the National Government‘s annual budget for
    accommodation/rental which is at K230, 000,000. This particular information did not reach
    NEC.

    Reason(s):

    On 12 September 2013, a MoU was made and signed by Mr John M. Kali, CMG,
    OBE, Secretary for DPM and Chairman of the GOAC on behalf of the Government of
    Papua New Guinea, and Mr Lai Weng Hoo, Managing Director, for and on behalf of
    Central Land Limited.

    On 6 February 2014, Hon. Sir Dr Puka Temu, KBE, CMG, MP, the then Minister for
    Public Service submitted a Statutory Business Paper No: 17/2014 to the NEC, in
    regard to the approval of lease arrangements for the Multi Storey Government Office
    Complex.

    The actual figure on the rentals that will cost the State in one year and over the 10
    years lease period was not provided in the pre-lease or lease agreement submitted to
    NEC in the Statutory Business Paper No: 17/2014 that was approved by NEC.

    Reference(s):

    The facts relevant to this opinion are set out in Chapter 2; Pages 83 – 94.

    Chapter 4: Findings of Wrong Conduct 106

  • Page 133 of 147

  • 5. RECOMMENDATIONS

    [5.1] CONSTITUTIONAL FRAMEWORK FOR MAKING RECOMMENDATIONS

    As indicated in Chapter 1, the general purpose of this investigation is to determine whether
    any of the conduct under investigation was wrong, or whether any laws or administrative
    practices were defective.

    The Commission is expressly authorized to form such opinions by Section 22(2) of the
    Organic Law on the Ombudsman Commission.

    If, after making its investigation, the Commission comes to the conclusion that some of the
    conduct was wrong or that any law or administrative practice was defective, it is authorized to
    make recommendations. Such recommendations are made under Section 22(2) of the
    Organic Law on the Ombudsman Commission.
    Section 22(2) OLOC:

    If in any case to which this section applies the Commission is of the opinion that any service,
    body, person or other appropriate authority should –

    (a) consider the matter further; or
    (b) take certain specific action; or
    (c) modify or cancel any administrative act; or
    (d) alter any regulation or ruling; or
    (e) explain more fully any administrative act; or
    (f) do any other thing,

    the Commission shall report its opinion and the reasons for its opinion, to the Minister
    responsible for the relevant service, body or person and to the Permanent Head or statutory head
    responsible for the service, body or person, and may refer the matter to the Public Prosecutor if
    action by him is warranted and may make such recommendations as it thinks fit.

    In this chapter, recommendations are made based on the findings of wrong conduct and
    defective administration referred to earlier in the report.

    Each recommendation is set out as follows:

    o The recipients (i.e. the persons to whom the recommendations are directed) are
    identified.

    o The main reason for making the recommendation, are stated.

    [5.2] RECOMMENDATIONS CONCERNING PARTICULAR INDIVIDUALS

    We recommend that some individuals have their continuing public employment carefully
    reviewed. The Ombudsman Commission is of the opinion that holders of public offices must
    continue at all times to be accountable for their actions, even if they have left the position in
    which they were found to have committed the wrong conduct and are occupying new
    positions.

    Chapter 5: Recommendations 107

  • Page 134 of 147

  • [5.3] RECIPIENTS OF RECOMMENDATIONS

    When we make recommendations we are obliged by Section 22(2) of the Organic Law on the
    Ombudsman Commission to identify the service, body, person or other appropriate authority
    who has to carry them out.

    We are also obliged by Section 22(2) of the Organic Law on the Ombudsman Commission to
    report our recommendations to both the Minister and, if appropriate, the permanent or
    statutory head responsible for the service, body or person who has to carry out the
    recommendations.

    In relation to each recommendation made in this Chapter, recipients of the recommendations
    are listed as follows:

    first, the service, body or person we are asking to do things is identified;

    secondly, the Minister responsible for that service, body or person is identified;

    thirdly, if appropriate, the permanent or statutory head responsible for that service,
    body or person is identified.

    [5.4] RESPONSIBLE MINISTERS

    Section 148 of the Constitution provides that each department, section, branch or function of
    government must be the political responsibility of a Minister. The Prime Minister has the
    power to determine the titles, portfolios and responsibilities of the Ministers.

    At the time of the preparation of this report, the service, body or persons to whom specific
    recommendations are being directed were the responsibility of the Ministers set out in the
    table below.

    [5.5] MINISTERS RESPONSIBLE FOR FOLLOWING UP IMPLEMENTATION
    OF RECOMMENDATIONS

    Prime Minister
    Minister for Public Service

    In the event that the title or responsibilities of the Minister changes after the date of this
    report, the responsibility for notifying the Ombudsman Commission of the steps being taken
    to give effect to its recommendations will pass to the Minister who, from time to time, has
    political responsibility for the services, bodies or persons who received our recommendations.

    [5.6] DUTIES OF RECIPIENTS OF RECOMMENDATIONS

    The fact that our opinions on things to be done are expressed in the form of
    ―recommendations‖ does not mean that recipients are entitled to ignore them.

    Each recipient is required under Section 22(3) of the Organic Law on the Ombudsman
    Commission to notify the Ombudsman Commission in writing within 30 days after the day of
    the service of the report, of the steps proposed to be taken to give effect to our
    recommendations.

    Section 22(3) states:
    Chapter 5: Recommendations 108

  • Page 135 of 147

  • If the Commission so requests, the responsible Minister, Permanent Head or statutory head as the case
    may be, shall, within such period as is specified by the Commission, notify the Commission as to the steps
    (if any) that he proposes to take to give effect to its recommendations.

    Accordingly, there is a duty placed on each recipient of a recommendation to notify the
    Commission; and if it is proposed not to implement any recommendation, there is a further
    duty to give cogent and convincing reasons why the recommendations cannot or should not be
    implemented. These duties arise due to the combined effect of the Constitution and the
    Organic Law on the Ombudsman Commission.

    A failure to comply with these duties may result in the Ombudsman Commission
    commencing enforcement proceedings in the National Court pursuant to Section 23 of the
    Constitution.

    [5.7] RECOMMENDATIONS

    Recommendation No. 1

    The Ombudsman Commission recommends that, the GOAC through the then Minister for
    Public Service, Hon. Sir Dr Puka Temu, KBE, CMG, MP:

    (a) inform NEC of State Solicitor‘s advice for Waigani Multi-Storey (32 Floor) Central
    Government Office Complex (CLL Proposal) to be procured by CSTB in accordance
    with the PFMA;

    (b) inform NEC that no lease agreement has been executed between the State (DPM) and
    CLL as yet;

    (c) recommend for NEC to revoke its earlier decision for State Solicitor to finalize leasing
    agreement to be signed by DPM and CLL;

    (d) seek NEC approval for the Waigani 32 Floor Central Government Office Complex
    Project (CLL Proposal) to be procured through CSTB.

    (e) inform NEC that according to the Waigani City Centre Development Control Policy, the
    highest building allowed is 12 storeys and cannot be beyond that. The different zones
    within the city have specific building requirements and for the areas that the proposed
    building is intended to be built on would not allow for a 32-storey building.

    Recipient(s):

    Prime Minister
    Chief Secretary to the Government
    Secretary for NEC

    Reason(s):

    The EOI process which GOAC followed in the engagement CLL was outside of the
    procurement process provided in the PFMA and Part 13, Division 2, Paragraphs 3 &
    4a of the Financial Management Manual.

    Chapter 5: Recommendations 109

  • Page 136 of 147

  • GOAC went ahead and signed a MoU with CLL, despite Solicitor‘s advice to refrain
    from entering into a MoU until the procurement process is followed.

    GOAC did not inform NEC to re-tender CLL‘s proposal in line with the PFMA.

    Section 39 of the PFMA establishes the CSTB to control and regulate the supply of
    works and services, in which it may invite a tender for any amount.

    Section 40 of the PFMA provides for tenders for property, stores, works and services,
    which states that tenders shall be publicly invited.

    Section 40(5) of the PFMA states that in relation to contracts for the supply of works
    and services, the provisions of this section and of Section 41 shall apply to – (a)
    turnkey contracts; and (b) build-operate transfer contracts; and (c) contracts which in
    substance are similar to turnkey contracts or build-operate transfer contracts; and (d)
    contracts involving the expenditure of public moneys.

    According to the Waigani City Centre Development Control Policy, the zone within
    which the proposed building was to be built is restricted to 12 storeys and not more
    than that.

    Recommendation No. 2

    The Ombudsman Commission recommends that the State Solicitor as delegated by the
    Attorney General and mandated by the Attorney General Act (Amended) 2013, is the only
    Principal Legal Advisor of the government in terms of clearance on MoUs and agreements,
    hence in future, projects and services of such nature must fully comply with the advice of the
    State Solicitor.

    Recipient(s):

    Prime Minister
    Chief Secretary to the Government
    Secretary for NEC

    Reason(s):

    The State Solicitor had advised that still the BOLT arrangement on this project or
    service will cost the State millions of kina on rental payments, hence CLL‘s proposal
    on the construction of the 32 Floor Central Government Office Complex has to go
    through CSTB in compliance with the PFMA and not by way of EOI which is outside
    of the normal national government procurement process.

    Recommendation No. 3

    The Ombudsman Commission recommends that in future, NEC must be fully and properly
    informed with the technical and economical advice so that NEC is properly guided to make
    informed and proper decisions on projects and services that will cost the State millions of
    kina.

    Chapter 5: Recommendations 110

  • Page 137 of 147

  • Recipient(s):

    Prime Minister
    Chief Secretary to the Government
    Secretary for NEC

    Reason(s):

    NEC must always be informed with the technical and economical advices on projects
    and services of such magnitude that will cost the State millions of kina so that NEC is
    well guided to make its decisions.

    Recommendation No. 4

    The Ombudsman Commission recommends that CSTB is the only mandated procuring
    authority of the national government, hence in future; projects and services of such magnitude
    that will cost the State millions of kina must be procured through CSTB.

    Recipient(s):

    Prime Minister
    Chief Secretary to the Government
    Secretary for NEC

    Reason(s):

    State agencies and organizations must strictly comply with public procurement
    processes and laws in dealing with projects of such nature to avoid huge costs for the
    State and the people of Papua New Guinea.

    Recommendation No. 5

    The Ombudsman Commission recommends that the BOLT arrangement under PFMA on
    projects and services is done away with. Although it has good intentions, the provision can be
    abused.

    Recipient(s):

    Prime Minister
    Chief Secretary to the Government
    Secretary for NEC

    Reason(s):

    BOLT provision is also captured under the PFMA. The intention is good when state
    does not have sufficient funds for the supply of works and projects and provide goods
    and services. However, the provision can be abused by certain State institutions and
    organizations in the drive for development.

    Chapter 5: Recommendations 111

  • Page 138 of 147

  • 6. CONCLUSION

    Good and desirable governance of public institutions as well as the nation is dependent upon
    good and sound management and decisions being made by those placed in responsible
    positions. Good public officials and managers understand their roles and responsibilities and
    perform their duties within the realm of the law that governs their conduct. Public officials
    who are empowered by law to make decisions on the procurement and tender of public goods
    and services must ensure that they carry out their duties in good faith and in compliance with
    the laws, especially the Public Finances (Management) Act 1995.

    Public officials must exercise due diligence, honesty, transparency, fairness and dedication in
    the work they are entrusted with. Inconsistency in decision making or non-compliance with
    relevant laws creates doubt in the minds of the public that the decision maker has been
    influenced by outside sources and forces not conducive to good governance and
    accountability. Professional negligence by public officials must be dealt with seriously.

    Some characteristics of good governance necessary to eliminate bad administrative practices
    include honesty, diligence, fairness, accountability, transparency, consistency, competency,
    compliance with established laws and procedures, and standing up to political interference.

    This report highlights some irregularities in the process followed by the GOAC in the
    engagement of Central Land Limited as the developer to build a 32 Floor Central Government
    Office Complex at Waigani in NCD. The report also highlighted the GOAC‘s conduct in the
    entire process leading to the call for EoIs, facilitation of CLL‘s proposal and signing of MoU
    between GOAC and CLL on the construction of the Multi-Storey Government Office
    Complex by CLL. It is also important that in future, the State agencies must strictly comply
    with public procurement processes and laws in dealing with projects of such nature to avoid
    huge costs for the State and the people of Papua New Guinea.

    The Ombudsman Commission considered the circumstances of this case and requests through
    this Report that, respective persons to whom recommendations have been directed at, to
    carefully consider our recommendations and implement them without delay.

    Chapter 6: Conclusion 112

  • Page 139 of 147

  • 7. RELEVANT LAWS

    The following laws are relevant to this particular case. They were consulted when putting this
    report together:

    Constitution
    Organic Law on the Ombudsman Commission
    Organic Law on the Duties and Responsibilities of Leadership
    Public Services General Order 4th Edition (2012)
    Public Services (Management) Act 1995
    Public Finances (Management) Act 1995

    [7.1] CONSTITUTION OF THE INDEPENDENT STATE OF PAPUA NEW
    GUINEA

    26. Application of Division 2 – Leadership Code

    1. The provisions of this Division apply to and in relation to – (a) the Prime Minister, the
    Deputy Prime Minister and the other Ministers; and
    (f) all heads of Departments of the National Public Service.

    27. Responsibilities of Office

    (1) A person to whom this Division applies has a duty to conduct himself in such a way,
    both in his public or official life and his private life, and in his associations with other
    persons, as not–
    (a) to place himself in a position in which he has or could have a conflict
    of interests or might be compromised when discharging his public
    or official duties; or

    (b) to demean his office or position; or

    (c) to allow his public or official integrity, or his personal integrity, to be
    called into question; or

    (d) to endanger or diminish respect for and confidence in the integrity
    of government in Papua New Guinea.

    (2) In particular, a person to whom this Division applies shall not use his office for
    personal gain or enter into any transaction or engage in any enterprise or activity that
    might be expected to give rise to doubt in the public mind as to whether he is carrying
    out or has carried out the duty imposed by Subsection (1).

    (3) It is the further duty of a person to whom this Division applies–
    (a) to ensure, as far as is within his lawful power, that his spouse and
    children and any other persons for whom he is responsible (whether morally,
    legally or by usage), including nominees, trustees and agents, do not conduct

    Chapter 7: Relevant Laws 113

  • Page 140 of 147

  • themselves in a way that might be expected to give rise to doubt in the public
    mind as to his complying with his duties under this section; and

    (b) if necessary, to publicly disassociate himself from any activity or enterprise of
    any of his associates, or of a person referred to in paragraph (a), that might be
    expected to give rise to such a doubt.

    (4) The Ombudsman Commission or other authority prescribed for the purpose under
    Section 28 (further provisions) may, subject to this Division and to any Organic Law
    made for the purposes of this Division, give directions, either generally or in a
    particular case, to ensure the attainment of the objects of this section.

    (5) A person to whom this Division applies who–
    (a) is convicted of an offence in respect of his office or position or in relation to
    the performance of his functions or duties; or

    (b) fails to comply with a direction under Subsection (4) or otherwise fails
    to carry out the obligations imposed by Subsections (1), (2) and (3),

    is guilty of misconduct in office.

    Schedule 1.2 of the Constitution
    1. The Government Office Allocation Committee (GOAC) is a government
    body/authority under the meaning of Schedule 1.2 of the Constitution which states:

    “governmental body” means –

    a. the National Government; or

    b. a provincial government; or

    c. an arm, department, agency or instrumentality of the National Government or a
    provincial government; or

    a. a body set up by statute or administrative act for governmental
    or official purposes;

    2. The Secretary for DPM & Chairman of GOAC, Mr John M. Kali, OBE is a public
    office holder which is also described under Schedule 1.2 of the Constitution which
    states:

    “public office-holder” means –

    (a) a member of any of the State Services or of a provincial service; or

    (b) any other constitutional office-holder; or

    (c) the holder of any office or position established by statute for administrative or
    governmental purposes; or

    (d) the holder of any other office or position declared by a statute to be a public
    office.
    Chapter 7: Relevant Laws 114

  • Page 141 of 147

  • 217. The Ombudsman Commission

    (1) There shall be an Ombudsman Commission, consisting of a Chief Ombudsman and
    two Ombudsmen.

    (5) In the performance of its functions under Section 219 (functions of the Commission)
    the Commission is not subject to direction or control by any person or authority.

    (6) The proceedings of the Commission are not subject to review in any way, except by
    the supreme Court or the National Court on the ground that it has exceeded its
    jurisdiction.

    (7) An Organic Law shall make further provision in respect of the appointment, powers,
    procedures and immunity of the Commission.

    (8) In this section “conduct” includes—

    (a) any action or inaction relating to a matter of administration; and

    (b) any alleged action or inaction relating to a matter of administration.

    218. Purposes of the Commission

    The purposes of the establishment of the Ombudsman Commission are—

    (a) to ensure that all governmental bodies are responsive to the needs and
    aspirations of the People; and

    (b) to help in the improvement of the work of governmental bodies and the
    elimination of unfairness and discrimination by them; and

    (c) to help in the elimination of unfair or otherwise defective legislation and
    practices affecting or administered by governmental bodies.

    219. Functions of the Commission

    (1) Subject to this section and to any Organic Law made for the purposes of Subsection
    (7), the functions of the Ombudsman Commission are –

    (a) to investigate, on its own initiative or on complaint by a person affected, any
    conduct on the part of –

    (i) any State Service or provincial service, or a member of any such
    service; or

    (ii) any other governmental body, or an officer or employee of
    a governmental body; or

    (iii) any local government body or an officer or employee of
    any such body; or

    (iv) any other body set up by statute–
    Chapter 7: Relevant Laws 115

  • Page 142 of 147

  • (A) that is wholly or mainly supported out of public
    moneys of Papua New Guinea; or

    (B) all of, or the majority of, the members of the
    controlling authority of which are appointed by
    the National Executive,

    or an officer or employee of any such body; and

    (v) any member of the personal staff of the Governor-General, a
    Minister or the Leader or Deputy Leader of the Opposition; or

    (vi) any other body or person prescribed for the purpose by
    an Act of the Parliament, specified by or under an Organic Law
    in the exercise of a power or function vested in it or him by law
    in cases where the conduct is or may be wrong, taking into
    account, amongst other things, the National Goals and Directive
    Principles, the Basic Rights and the Basic Social Obligations,
    and

    (b) to investigate any defects in any law or administrative practice appearing from
    any such investigation; and

    (c) to investigate, either on its own initiative or on complaint by a
    person affected, any case of an alleged or suspected discriminatory practice
    within the meaning of a law prohibiting such practices; and

    (d) any functions conferred on it under Division III.2 (leadership code); and

    (e) any other functions conferred upon it by or under an Organic Law.

    (2) Subject to Subsections (3), (4) and (5), and without otherwise limiting the generality
    of the expression, for the purposes of Subsection (1)(a) conduct is wrong if it is–
    (a) contrary to law; or

    (b) unreasonable, unjust, oppressive or improperly discriminatory, whether
    or not it is in accordance with law or practice; or

    (c) based wholly or partly on improper motives, irrelevant grounds or
    irrelevant considerations; or

    (d) based wholly or partly on a mistake of law or of fact; or

    (e) conduct for which reasons should be given but were not,

    whether or not the act was supposed to be done in the exercise of deliberate judgement
    within the meaning of Section 62 (decisions in ―deliberate judgement‖).

    (3) The Commission shall not inquire into the justifiability of a policy of the National
    Government or a Minister or a provincial government or a member of a provincial
    executive, except insofar as the policy may be contrary to law or to the National Goals
    and Directive Principles, the Basic Rights or the Basic Social Obligations, or of any
    act of the Parliament.
    Chapter 7: Relevant Laws 116

  • Page 143 of 147

  • (4) The Commission shall not inquire into the exercise of a rule-making power by a local
    government body.

    (5) The Commission shall not inquire into a decision by a court, except insofar as the
    decision may show an apparent defect in law or administrative practice to which
    Subsection (1)(b) would apply.

    (6) Except as provided by or under Division III.2 (leadership code), the Commission‘s
    powers of enforcement are limited to publicity for its proceedings, reports and
    recommendations, to the making of reports and recommendations to the Parliament
    and other appropriate authorities as provided by an Organic Law, and to the giving of
    advice.

    (7) An Organic Law shall make provision in respect of the powers and procedures of the
    Commission, and in particular –
    (a) shall, subject to paragraph (b), make provision for the Commission to have
    access to all available relevant information; and

    (b) may impose reasonable restrictions on the availability of information; and

    (c) shall make provision to ensure the secrecy or confidentiality of secret
    or confidential information made available to the Commission or to a member
    of the Commission or of its staff; and

    (d) may limit or restrict to a reasonable extent and in a reasonable manner
    the jurisdiction of the Commission in relation to any matters or class of
    matters, and in particular in relation to national security; and

    (e) shall make provision for and in respect of publicity for the
    proceedings, reports and recommendations of the Commission.

    (8) In this section, ―conduct‖ includes–
    (a) any action or inaction relating to a matter of administration; and

    (b) any alleged action or inaction relating to a matter of administration.

    [7.2] ORGANIC LAW ON THE OMBUDSMAN COMMISSION

    13. Functions of the Commission

    For the purposes of Section 219(1)(a) (functions of the Commission) of the Constitution the
    functions of the Commission, in addition to the functions specified in Section 219(1)(b), (c),
    (d) and (e) (functions of the Commission) of the Constitution, are to investigate, on its own
    initiative or on complaint by a person affected, any conduct on the part of—

    (a) any State Service or a member of any State Service; or

    (b) any governmental body, or an officer or employee of a governmental body; or

    (c) any other service or body referred to in Section 219(a)(functions of the
    Commission) of the Constitution that the Head of State, acting with, and in
    Chapter 7: Relevant Laws 117

  • Page 144 of 147

  • accordance with, the advice of the National Executive Council, by notice in the
    National Gazette, declares to be a service or body for the purposes of this
    section.

    17. Proceedings of the Commission

    (1) Before investigating any matter within its jurisdiction, the Commission shall inform
    the responsible person of its intention to make the investigation.

    (2) Every investigation by the Commission under this Law shall be conducted in private.

    (3) The Commission may hear or obtain information from any person who the
    Commission considers can assist and may make whatever inquiries it thinks fit.

    (4) Nothing in this Law compels the Commission to hold any hearing and no person is
    entitled as of right to be heard by the Commission except that—

    (a) where a report of the Commission may affect a State Service, provincial
    government body or statutory body, the Commission shall provide reasonable
    opportunity for the Permanent Head of that service or the statutory head of that
    body, as the case may be, to comment on the subject of the investigation; and

    (b) the Commission shall not make any comment in its report that is adverse to or
    derogatory of any person without—

    (i) providing him with reasonable opportunity of being heard; and

    (ii) fairly setting out his defence in its report.

    18. Evidence

    (1) Subject to the provisions of this section and of Section 20, the Commission may from
    time to time require any person who in its opinion is able to give any information
    relating to any matter that is being investigated by the Commission to furnish to it that
    information and to produce any documents, papers or things that, in the opinion of the
    Commission, relate to any matter being investigated by it and that may be in the
    possession or control of that person.

    (3) The Commission may, by instrument in writing, summon any person who in its
    opinion is able to give any information relating to any matter that is being investigated
    by the Commission, to attend the Commission at a time and place specified in the
    summons for examination by it on oath or affirmation.

    21. Preservation of Secrecy

    (1) The Commission may direct that any evidence given before it, or any document, paper
    or thing produced to it, be not published.

    [7.3] PUBLIC SERVICES GENERAL ORDER 4TH EDITION (2012)

    The General Order 19 provides for the establishment of Government Office Allocation
    Committee (GOAC) which states:
    Chapter 7: Relevant Laws 118

  • Page 145 of 147

  • 19.1 The office accommodation function is provided for by the Public Finances
    (Management) Act and has been allocated to the Department of Personnel
    Management by a policy decision of the National Executive Council. An Office
    Allocation Committee has been established as the authority for that purpose.

    19.2 The role and function of the Office Allocation Committee is to secure suitable office
    accommodation to meet the establishment and operational needs of all Government
    agencies throughout the Country.

    19.3 The Office Allocation Committee determines the standards relating to office space per
    public servant and the rental price to be charged based upon market considerations and
    budgetary implications.

    19.4 The Office Allocation Committee ensures that the welfare of public servants is taken
    into account and that the offices comply with basic building and occupational
    standards set by the various Government authorities with responsibility for the
    occupational safety, health and welfare of the work force.

    The Office Allocation Committee

    19.5 The Members of the Office Allocation Committee are as follows:
    Secretary, Department of Personnel Management, Chairman
    Secretary, Department of Treasury
    Secretary, Department of Finance
    Secretary, Department of Works
    Secretary, Department of Justice & Attorney General
    Secretary Department of Lands & Physical Planning

    19.6 The Secretary, Department of Personnel Management is responsible for approval
    for:
    (a) allocation of office space in State-owned office buildings according to
    organisation and establishment size;

    (b) leasing of office space from other agents and monitoring and regulating
    rental charges within approved ceilings;

    (c) administering lease payments, office layout and fit outs ensuring that
    proper tendering procedures have been followed including least cost
    solutions;

    (d) determining office layouts and requirements according to operations
    and size of the budgeted establishment;

    (e) examining and approving technical drawings for work to be
    undertaken, and ensuring proper approvals have been obtained from
    lawful authorities;

    (f) ensuring that tenants are aware of their responsibility for compliance
    with various regulations governing safety, health and welfare; and

    (g) resolving disputes between owners/landlords of offices and
    Government tenants.
    Chapter 7: Relevant Laws 119

  • Page 146 of 147

  • Office Allocation Committee Terms of Reference

    19.7 The terms of reference for the Office Allocation Authority are:

    (a) to examine and approve all new leases and to review all existing leases
    from time to time to ensure currency and pricing and efficiency of
    allocation according to establishment size from time to time;

    (b) to acquire land and build Government owned accommodation and
    refurbish existing Government office accommodation with a view to
    reducing the cost to Government of leased accommodation;

    (c) to examine building and cost proposals for new office development and
    recommend approval in principle for new leases;

    (d) to approve the movements of Departments/Agencies in taking up the
    office space allocated to them and to utilize the office space in the most
    efficient manner;

    (e) to examine and approve the purchase of properties for all Government
    Offices within funds appropriated; and

    (f) to co-ordinate and examine all submissions for Minor New Works
    regarding the up grading and air-conditioning of existing office
    accommodation.

    [7.4] PUBLIC SERVICES (MANAGEMENT) ACT 1995

    The Government Office Allocation Committee (GOAC) was also created/established under
    the Public Services (Management) Act 1995 as specified as follows:

    PART VII. – CREATION OF OFFICES.

    33. Creation and abolition of offices.

    (2) The Departmental Head of the Department of Personnel Management may, in
    relation to a Department –

    (b) create an office and specify the qualifications for, and the duties of, the
    office; or

    (c) abolish an office; or

    (d) alter the designation of an office; or

    (e) raise the classification of an office; or

    (f) lower the classification of an office; or

    (g) alter the qualifications for, or the duties of, an office; or

    (h) transfer an office from one Department to another Department.
    Chapter 7: Relevant Laws 120

  • Page 147 of 147

  • [7.5] PUBLIC FINANCES (MANAGEMENT) ACT 1995

    PART VII.—STATE TENDERS AND CONTRACTS.

    39. Central Supply and Tenders Board.

    (1) The Central Supply and Tenders Board is hereby established to control and
    regulate –

    (a) the purchase and disposal of property and stores; and

    (b) the supply of works and services, other than those in relation to which
    specialized Supply and Tenders Boards have been established under
    Section 39A, for and on behalf of the State.

    (2) In the exercise of its powers under Subsection (1), the Central Supply and
    Tenders Board may –

    (a) invite a tender for any amount; and

    (b) enter into a contract for any amount up to K10, 000,000.00, for and on
    behalf of the State.

    40. Tenders for property, stores, works and services.

    (1) Subject to –

    (a) this section; and

    (b) Section 41,

    Tenders shall be publicly invited and contracts let for the purchase or
    disposal of property or stores or the supply of works and services the
    estimated cost of which exceeds the prescribed amount.

    (2) In relation to the purchase or disposal of property and stores and the supply of
    works and services the estimated cost of which does not exceed the prescribed
    amount, the provisions of the Financial Instructions shall apply.

    (3) In relation to contracts for the supply of works and services, the provisions of
    this section and of Section 41 shall apply to –

    (a) turnkey contracts; and
    (b) build-operate transfer contracts; and
    (c) contracts which in substance are similar to turnkey contracts or build-
    operate transfer contracts; and
    (d) contracts involving the expenditure of public moneys.

    Chapter 7: Relevant Laws 121