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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

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• 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

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• 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

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• Page 24 of 147

• 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: [email protected]

  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)
  [email protected] (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)
  [email protected] (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: [email protected] 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: [email protected]

  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: [email protected]

  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: [email protected] 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: [email protected]

  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 [email protected]

  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.
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• 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.

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• 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.‖

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• 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