The Public Accounts Committee Inquiry into Department of Lands & Physical Planning

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    Report to the National Parliament on the Committee's long running investigation that concluded the Department was "incompetent and ineffective"

Document content

  • TABLE OF CONTENTS

    CONTENT PAGE

    INTRODUCTION 6

    EXECUTIVE SUMMARY 6

    CHRONOLOGY 9

    LIST OF ABBREVIATIONS 9

    COMPOSITION OF THE COMMITTEE 10

    JURISDICTION AND PURPOSE OF THE INQUIRY 12

    JURISDICTION 14

    The Constitution Of The Independent State Of Papua New Guinea 14

    The Public Finance (Management) Act 15

    Permanent Parliamentary Committees Act 16

    PURPOSE OF THE INQUIRY 16

    THE AUTHORITY TO REPORT 17

    THE AUTHORITY TO REFER 17

    METHOD OF INQUIRY 18

    PART ONE OF THE INQUIRY – REPORTS OF THE AUDITOR
    GENERAL 18

    PART TWO OF THE INQUIRY – BEFORE 2002 19

    PART THREE OF THE INQUIRY: 2002 – 2005 20

    PART FOUR OF THE INQUIRY – THE LAND BOARD 21

    PROGRESS OF THE INQUIRY 22

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    PRIVILEGES AND PROTECTION OF WITNESSES 24

    RELEVANT STATUTES 24

    Public Finances (Management) Act 1995 24

    Financial Instructions 25

    Land Act 1996 26

    Land Registration Act 41

    Organic Law on the Duties and Responsibilities
    of Leadership 41

    Audit Act 41

    Permanent Parliamentary Committees Act 1994 42

    Parliamentary Powers and Privileges Act 1964 42

    INDEFEASIBILITY 42

    FISCAL RESPONSIBILITIES OF THE GOVERNMENT 45

    RESPONSIBILITIES OF THE AUDITOR GENERAL 46

    THE DEPARTMENT OF LANDS AND PHYSICAL PLANNING 46

    PART ONE – EXAMINATION OF THE REPORTS OF THE
    AUDITOR GENERAL OF THE DEPARTMENT OF LANDS &
    PHYSICAL PLANNING FOR THE YEARS 2000 – 2004 48

    REVENUE AND DEBT COLLECTION BY THE DEPARTMENT OF
    LANDS & PHYSICAL PLANNING 48

    LAND RENTALS 54

    OBLIGATIONS OF THE DEPARTMENT OF LANDS & PHYSICAL
    PLANNING TOWARD THE PUBLIC ACCOUNTS COMMITTEE 55

    PART TWO – PERFORMANCE OF THE DEPARTMENT OF LANDS
    AND PHYSICAL PLANNING 1999 -2002 59

    PORTION 1597 MILINCH GRANVILLE, FOURMIL MORESBY
    AT PAGA HILL – GRANT TO PAGA HILL DEVELOPMENT COMPANY 59

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    Background 59

    The Land 61

    The Urban Development Lease 62

    The Business Lease 65

    Financial Loss to the State 69

    Failures by the Department 70

    Failures by the Secretary for Lands 72

    SECTION 122 HOHOLA 76

    The Grant and Subdivision 77

    Allotment 1 Section 122 Hohola 78

    Allotment 2 Section 122 Hohola 79

    Allotment 12 Section 122 Hohola 79

    Allotment 13 Section 122 Hohola 80

    Allotments 14, 15, 16 and 17 Section 122 Hohola 81

    The Legality of Dealings in Allotments at Section
    122 Hohola 82

    PORTIONS 109 AND 110 MADANG, MADANG PROVINCE,
    VOLUME 12 FOLIO 113 (PREVIOUSLY VOLUME 65 FOLIO 26) 85

    ALLOTMENTS 2 AND 3 (CONSOLIDATED) SECTION 111
    BOROKO STATE LEASE 27 FOLIO 202 87

    ALLOTMENT 69 SECTION 229 HOHOLA 88

    PART 3 – PERFORMANCE OF THE DEPARTMENT OF
    LANDS AND PHYSICAL PLANNING 2002 – MARCH 2006 91

    PORTION 1555 MILINCH GRANVILLE, FOURMIL MORESBY,
    NATIONAL CAPITAL DISTRICT 91

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    PORTION 2415 MILINCH GRANVILLE FOURMIL MORESBY, PORT
    MORESBY, NCD 93

    PORTION 2399 MILINCH GRANVILLE FOURMIL MORESBY, PORT
    MORESBY, NCD 93

    PORTION 2228 MILINCH GRANVILLE FOURMIL, PORT MORESBY 94

    PART 4 – ANALYSIS OF LAND BOARDS 1999 – 2000 96

    Papua New Guinea Land Board No. 2005 – (Items
    130, 131, 132, 133 and 134) 97

    Papua New Guinea Land Board No. 2006
    (Items 20, 101 and 102) 99

    Papua New Guinea Land Board 2014 102

    Papua New Guinea Land Board 2017 103

    Papua New Guinea Land Board 2026 104

    Papua New Guinea Land Board no. 2033 105

    SUMMARY 106

    FAILURE BY THE DEPARTMENT OF LANDS & PHYSICAL
    PLANNING TO CO-OPERATE WITH THE PUBLIC ACCOUNTS
    COMMITTEE – FINDINGS AND REFERRALS 109

    POTENTIAL LIABILITY OF THE STATE 111

    RELATIONSHIP BETWEEN THE BANKING AND FINANCE
    INDUSTRY AND THE DEPARTMENT OF LANDS & PHYSICAL
    PLANNING 112

    THE PERFORMANCE OF THE DEPARTMENT OF LANDS
    & PHYSICAL PLANNING AND NATIONAL ECONOMIC AND
    SOCIAL DEVELOPMENT 112

    RESOLUTIONS OF THE COMMITTEE 114

    FINDINGS 115

    REFERRALS 120

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    RECOMMENDATIONS 122

    CONCLUSIONS 124

    SCHEDULE ONE – LIST OF WITNESSES 125

    SCHEDULE TWO – LIST OF EXHIBITS AND DOCUMENTS
    BEFORE THE INQUIRY 126

    MISCELLANEOUS FILES 130

    RESPONSE BY SECRETARY FOR LANDS TO
    “SUMMONS TO A WITNESS 131

    INTERNAL AUDIT FILES 132

    SCHEDULE THREE – COPIES OF DIRECTIVES AND
    SUMMONSES ISSUED 133

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    THE PUBLIC ACCOUNTS COMMITTEE

    INQUIRY INTO DEPARTMENT OF LANDS & PHYSICAL PLANNING

    REPORT TO THE NATIONAL PARLIAMENT

    1. INTRODUCTION

    1.1. On the 28th day of February 2006 the Permanent Parliamentary Public
    Accounts Committee concluded a long running inquiry into the
    Department of Lands & Physical Planning.

    1.2. As a result of evidence taken in the Inquiry, the Public Accounts
    Committee made certain findings which were highly critical of
    performance of the Department of Lands & Physical Planning and, in
    particular, the performance and competence of the Head of Department
    and Senior Officers.

    1.3. As a result of evidence and documents tendered to the Inquiry, the Public
    Accounts Committee made certain referrals of the Secretary of the
    Department of Lands and Physical Planning for inquiry and possible
    prosecution for breaches of his statutory obligations.

    1.4. As a result of evidence and documents tendered to the inquiry, the Public
    Accounts Committee unanimously resolved to make a full and complete
    report of its Inquiry and findings to the National Parliament in accordance
    with Section 86 (1) (c) of the Public Finances (Management) Act 1994.

    1.5. The Public Accounts Committee now tables the report with its strongest
    recommendation that remedial action be immediately taken by the
    National Parliament in accordance with findings and resolutions of the
    Public Accounts Committee.

    2. EXECUTIVE SUMMARY

    2.1 The Department of Lands and Physical Planning is incompetent and
    ineffective in carrying out its statutory obligations to manage land and
    fails to protect and further the fiscal interests of the State.

    2.2 The Department of Lands and Physical Planning has failed to collect
    revenue in a timely manner or at all.

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    2.3 The Department of Lands and Physical Planning has failed to implement
    and maintain competent or adequate systems of accounting, control and
    accountability.

    2.4 The Department of Lands and Physical Planning over many years has
    conducted itself illegally in the allocation of and registering of State
    Lease, granting of licenses, giving of Ministerial exemptions, dealing with
    Customary land and in its fiscal obligations to the State.

    2.5 The Department of Lands and Physical Planning has, for many years,
    given priority to the interests of private enterprise and private speculators
    over the interests and lawful rights of the State.

    2.6 The Department of Lands and Physical Planning requires urgent
    restructuring.

    2.7 The Committee recommends the immediate removal of the Secretary and
    senior Management of the Department of Lands and Physical Planning
    and the recruitment by international advertisement of competent senior
    managers and executives to rebuild the Department.

    2.8 The system of Land Registration and performance of the Department of
    Lands and Physical Planning is poorly regarded by the private sector.
    There is a clear lack of confidence in the Department and its management.

    2.9 Illegalities and abuses by Management, Departmental Officers and certain
    members of the Land Board continue with immunity and impunity.

    2.10 There is no will or ability in the current Management of the Department of
    Lands and Physical Planning to effect any change.

    2.11 The Department of Lands and Physical Planning and, in particular, the
    Secretary and Deputy Secretary of that Department obstructed the Inquiry
    by the Public Accounts Committee by failing to produce documents when
    ordered to do so.

    2.12 The Department of Lands and Physical Planning has failed in its duty to
    protect and secure public documents and State records.

    2.13 The Department of Lands and Physical Planning has exposed the State to
    significant liability by reason of illegal practices, unlawful decisions and
    negligent actions of Departmental Officers.

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    2.14 The State has been deprived of very significant revenue by way of Land
    Rental and tender or reserve price which has either not been levied at all
    by the Department, or not collected.Levy

    2.15 The Department has, in the last decade, engaged in the planned and
    deliberate granting of Reserved Land, National Park, or Open Space land
    into private hands for little or no recompense to the State – and in many
    cases, quite unlawfully.

    2.16 The current Management of the Department of Lands and Physical
    Planning has taken no steps at all to rectify, or deal with abuses of past
    administrations, despite having detailed knowledge of those illegalities.

    2.17 The Department of Lands and Physical Planning is a real impediment to
    National development and economic growth. It is a Department which
    needs to be brought immediately under control.

    2.18 The Government must review the entire system of land allocation in Papua
    New Guinea. The current system requires a high degree of probity,
    honesty and competence – attributes lacking for a decade in the
    Department of Lands and Physical Planning and the Land Board.

    2.19 The Committee recommends that the Government immediately appoint a
    Commission of Inquiry to review every Lease Grant made in the last
    decade – with a view to establishing which State leases have been
    illegally or unlawfully issued and to recover same to the benefit of the
    State.

    2.20 That Commission of Inquiry should also be tasked with making
    recommendations for the rebuilding of the Department of Lands and
    Physical Planning and basic steps to be taken to restore confidence and
    credibility to the Department and the system of land registration and land
    security in Papua New Guinea.

    2.21 The Committee has referred the Secretary and Deputy Secretary of the
    Department of Lands and Physical Planning for investigation and
    prosecution.

    2.22 The Committee endorses and accepts the Reports of the Office of the
    Auditor General on the Department of Lands and Physical Planning for
    the years 2000 – 2004.

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    3. CHRONOLOGY

    3.1. The Public Accounts Committee commenced its Inquiry into the
    Department of Lands & Physical Planning in 2003 and continued on the
    1st September 2005, the 24th November 2005, 25th November 2005, the
    29th November 2005 and the 28th February 2006.

    3.2. The Inquiry was closed on the 28th February 2006.

    3.3. Directives to produce evidence and documents were given to the Secretary
    for the Department of Lands on the 5th September 2005, the 22nd
    November 2005, the 29th November 2005 and the 26th day of February
    2006.

    3.4. These Directives were complied with inadequately or not complied with at
    all.

    3.5. Referrals of the Secretary for the Department of Lands & Physical
    Planning for investigation and possible prosecution were made on the 24th
    November 2005, the 25th November 2005, the 29th November 2005 and
    the 28th day of February 2006.

    4. LIST OF ABBREVIATIONS

    4.1 UDL Urban Development Lease

    4.2 TSL Town Sub-Division Lease

    4.3 PF(M)A Public Finances Management Act

    4.4 PAC Public Accounts Committee.

    4.5 NCDC National Capital District Commission

    4.6 The Constitution The Constitution of the Independent State of Papua
    New Guinea

    4.7 The National Court The National Court of Justice of Papua New Guinea

    4.8 The Committee The Permanent Parliamentary Public Accounts
    Committee.

    4.9 The Secretary The Secretary of the Department of Lands and
    Physical Planning

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    4.10 The Department The Department of Lands and Physical Planning.

    5. COMPOSITION OF THE COMMITTEE

    5.1 The Public Accounts Committee which made inquiry into the Department
    of Lands & Physical Planning was constituted as follows:

    5.2 1st September 2005:

    Hon. John Hickey MP (Chairman)

    Hon. James Togel, MP (Member)

    Hon. Michael Maskal, MP (Member)

    Hon. David Anggo, MP (Member)

    Hon. John Vulupindi, MP (Member)

    Hon. Ekis Ropenu, MP (Member)

    Hon. Bob Danaya, MP (Member)

    5.3 24th November 2005:

    Hon. John Hickey (Chairman)

    Hon. Chris Haiveta, MP (Deputy Chairman)

    Hon. Timothy Tala, MP (Member)

    Hon. Sasa Zibe, MP (Member)

    Hon. Ekis Ropenu, MP (Member)

    Hon. Bob Danaya, MP (Member)

    Hon. James Togel, MP (Member)

    5.4 25th November 2005 .

    Hon. John Hickey, MP (Chairman)

    Hon. Bob Danaya, MP (Member)

    Hon. Michael Maskal, MP (Member)

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    Hon. Timothy Tala, MP (Member)

    Hon. Sasa Zibe, MP (Member)

    Hon. James Togel, MP (Member)

    Hon. Ekis Ropenu, MP (Member)

    5.5 29th November 2005:

    Hon. John Hickey, MP (Chairman)

    Hon. Bob Danaya, MP (Member)

    Hon. Michael Maskal, MP (Member)

    Hon. Timothy Tala, MP (Member)

    Hon. Sasa Zibe, MP (Member)

    Hon. James Togel, MP (Member)

    Hon. Ekis Ropenu, MP (Member)

    5.6 28th February 2006:

    Hon. John Hickey, MP (Chairman)

    Hon Sasa Zibe, MP (Member)

    Hon. Bob Danaya, MP (Member)

    Hon. Mal Smith-Kela, MP (Member)

    Hon. John Vulupindi MP (Member)

    Hon. Michael Maskal, MP (Member)

    5.7 The Chairman, Deputy Chairman and Members of the Committee were
    properly and lawfully appointed and empowered to sit as a Public
    Accounts Committee.

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    6. JURISDICTION AND PURPOSE OF THE INQUIRY

    INTRODUCTION

    6.1 The Department of Lands and Physical Planning is a central and crucial
    agency to the economic wellbeing and development of Papua New
    Guinea. It manages all State land in Papua New Guinea and land is the
    most important asset in the development of the society and the economy.

    6.2 The Department is responsible, inter alia, for the lawful and legitimate
    issue of State Leases, the consideration by the Papua New Guinea Land
    Board of tenders and applications for the grant of State Leases and, more
    particularly, is responsible for the protection of State property, assets and
    revenue.

    6.3 The Department of Lands and Physical Planning should be a major
    revenue collector for the Government of Papua New Guinea and is subject
    to the jurisdiction of the Office of the Auditor-General and the Public
    Accounts Committee.

    6.4 The Public Accounts Committee has conducted ongoing Inquiries into the
    Department of Lands and Physical Planning for at least a decade.

    6.5 Throughout this period the Committee has been concerned at the apparent
    failures by the Department of Lands and Physical Planning to carry out its
    functions with any degree of competence or success.

    6.6 The Committee has been concerned at the apparent inability of the
    Department of Lands and Physical Planning to protect and manage State
    land, State Leases and State revenue.

    6.7 The Committee became increasingly concerned at the clearly apparent
    difference between assurances given by Departmental Officers that the
    Departmental performance was improving every year while the Reports of
    the Auditor General and other indicators suggested that these assurances
    were not correct.

    6.8 During its Inquiries, the Public Accounts Committee has sought to effect
    change within the Department of Lands and Physical Planning by a
    process of Inquiry, directive, suggestion, encouragement and
    recommendation.

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    6.9 Throughout that period, the Committee has seen no improvement in the
    performance of the Department and its Officers. That performance can, in
    almost all respects, be described as extremely poor and, in many cases,
    totally non-existent.

    6.10 The Committee has entertained serious concerns as to the competence and
    honesty of Management of the Department of Lands and Physical
    Planning for some years.

    6.11 Continuous evidence of illegal dealings in land, failures to forfeit and
    reallocate land for breaches of Lease covenants, failure to collect huge
    arrears of Land Rental owed to the State, the alienation of Reserved or
    Open Space land to private hands, the failure of the Department to deal
    with these abuses and an increasingly obvious attitudinal problem within
    the Department and an increasing Departmental reputation for corruption
    and failure, has persuaded the Public Accounts Committee that a
    Parliamentary Report recommending urgent intervention is warranted, if
    any remedial steps are to occur.

    6.12 The Committee has concluded that corrupt practices and inept
    management of the National Estate continues with impunity and
    immunity. This is not acceptable.

    6.13 This conclusion was confirmed by the almost complete failure and / or
    refusal of the Departmental Officers to assist the Public Accounts
    Committee by complying with Directives and producing documents,
    records and files requested by the Committee.

    6.14 It was clearly apparent that the Department deliberately refused to
    produce any records at all in respect of patently illegal land dealings.

    6.15 This blatant failure was blithely explained away by the Secretary and
    Head of the Department of Lands and Physical Planning in the following
    sworn testimony to the Committee:

    Mr. Pepi Kimas

    “Let me inform the Committee that once the client receives their titles
    they get officers to remove and destroy the files and everything else”

    and further

    “What they do is that as soon as they get the title they pay off
    somebody who will destroy the file and remove it and that makes the
    task very difficult”

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    Evidence to the Committee 29th November 2005.

    6.16 In light of the attitude displayed in this evidence, and considering all the
    evidence in the Inquiry, the Committee concluded that the Department of
    Lands and Physical Planning had some very serious, deep and fundamental
    problems that will not be solved without Governmental coercion to do so.

    6.17 The Committee also resolved that the Report to the Parliament from the
    Committee, contain recommendations for reform of the Department of
    Lands and Physical Planning.

    6.18 At all times, the Committee has taken great care to enable witnesses to make
    full and complete representations and answers to any matter before the
    Committee – in particular those matters about which the Committee may
    make adverse findings against individuals or companies.

    6.19 The Public Accounts Committee has taken care to give careful consideration
    to all responses and evidence given before the Committee.

    6.20 All evidence was taken on oath and full and due inquiry was made of all
    relevant State Agencies where the Committee considered those inquiries to
    be necessary.

    7. JURISDICTION

    THE CONSTITUTION OF THE INDEPENDENT STATE OF PAPUA
    NEW GUINEA.

    7.1 The Committee finds its jurisdiction firstly, pursuant to Section 216 of the
    Constitution of the Independent State of Papua New Guinea. That
    Section reads:

    “216. Functions of the Committee

    (1) The primary function of the Public Accounts Committee is, in
    accordance with an Act of the Parliament, to examine and report
    to the Parliament on the public accounts of Papua New Guinea
    and on the control of and on transaction with or concerning, the
    public monies and property of Papua New Guinea”.

    (2) Sub-section (1) extends to any accounts, finances and property that
    are subject to inspection and audit by the Auditor General under
    Section 214 (2) … and to reports by the Auditor General under that
    Sub-section or Section 214 (3)…”.

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    7.2 The Committee has taken care to restrict its Inquiry to an examination of the
    control of and on transactions with or concerning the public monies and
    property of Papua New Guinea by the Department of Lands and Physical
    Planning and its officers.

    7.3 Land itself is a significant State asset and the Committee has jurisdiction to
    consider the standard of management and control exercised over that asset
    by the Department of Lands and Physical Planning, on behalf of the State.

    7.4 Whilst considering the relevant provisions of the Constitution, the
    Committee has had regard to the Final Report of the Constitutional
    Planning Committee 1974 and been guided by or applied the stated
    intentions of that Committee wherever necessary.

    7.5 The Public Accounts Committee has had due regard to reports by the
    Auditor General made pursuant to audit inspections of the Department of
    Lands and Physical Planning for the years 2000 – 2004, but has conducted
    an Inquiry into matters deemed by the Committee to be of National
    Importance or which arise naturally from primary lines of Inquiry and which
    are within the jurisdiction and function of the Committee as set forth in the
    Constitution.

    7.6 Whilst engaged in the Inquiry the Committee was guided by two definitions
    contained in the Constitution, which are directly relevant to Section 216 of
    the Constitution. They are:

    “Public Accounts of Papua New Guinea” includes all accounts, books
    and records of, or in the custody, possession or control of, the National
    Executive or of a public officer relating to public property or public
    moneys of Papua New Guinea;”

    and

    “Public moneys of Papua New Guinea” includes moneys held in trust by
    the National Executive or a public officer in his capacity as such,
    whether or not they are so held for particular persons;”

    Schedule 1.2 of the Constitution.

    8. THE PUBLIC FINANCES (MANAGEMENT) ACT.

    8.1. The Public Accounts Committee also finds its jurisdiction to Inquire into
    the Department of Lands and Physical Planning in Section 86 of the
    Public Finance (Management) Act. That Section empowers the
    Committee to examine accounts and receipts of collection and expenditure

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    of the Public Account and each statement in any Report of the Auditor
    General presented to the Parliament.

    8.2. The Committee has considered both accounts and receipts and as they
    have been made available by the Department of Lands and Physical
    Planning and such statements and reports of the Auditor General as may
    have been presented to Parliament.

    8.3. The Committee has further considered reports of the Auditor General
    which have not yet been presented to the Parliament, on the basis that that
    evidence was tendered by the Auditor General for the consideration of the
    Committee and on the basis that such material is within the purview of the
    Committee as a matter of national importance. (See Para. 9 infra).

    8.4. Power to refer matters for investigation and possible prosecution is
    granted to the Committee by Section 86A of the Public Finances
    (Management) Act.

    9. PERMANENT PARLIAMENTARY COMMITTEES ACT:

    9.1. The Committee received very serious allegations of misconduct,
    maladministration and corrupt dealing within and by Officers of the
    Department of Lands and Physical Planning.

    9.2. The Committee resolved that a full Inquiry into the Department of Lands
    and Physical Planning was a matter of National importance and found
    further jurisdiction for the inquiry in Section 17 of the Permanent
    Parliamentary Committees Act.

    9.3. That Section provides that the Public Accounts Committee can consider any
    matter to be of national importance. The Committee, as we have stated,
    considers the Department of Lands and Physical Planning to be such a
    matter.

    10. PURPOSE OF THE INQUIRY

    10.1. The purpose of the Inquiry conducted by the Public Accounts Committee
    was to make full and complete examination of the manner in which the
    Department of Lands and Physical Planning in all its aspects, and officers
    of that Department, controlled transactions with or concerning public
    monies and property, accounted for those monies and property, protected
    the position of the Independent State of Papua New Guinea, collected
    revenue, controlled and monitored expenditure and protected the position
    of the State and the security and integrity of property, assets and money of
    the State.

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    10.2. The purpose of the Inquiry was not to improperly pursue or criticize any
    person or company, but to make a constructive and informed Report to the
    Parliament on any changes which the Committee perceives to be necessary
    to any item or matter in the accounts, statements or reports or any
    circumstances connected with them, of the Department of Lands and
    Physical Planning and any matter considered by the Committee to be of
    national importance.

    10.3. Further, the intention of the Inquiry was to enable the Committee to report
    to the Parliament in a meaningful way on alterations that the Committee
    thinks desirable in the form of the public accounts as manifested in the
    Department of Lands and Physical Planning, in the method of keeping
    them, in the method of collection, receipt, expenditure or issue of public
    monies and/or for the receipt, custody, disposal, issue or use of stores and
    other property of the State by the Department of Lands and Physical
    Planning.

    11. THE AUTHORITY TO REPORT

    11.1. The Public Accounts Committee finds authority to make this Report in
    Section 17 of the Permanent Parliamentary Committees Act and Section
    86(1) (c) and (d) (i), (ii), (iii) and (iv) and (f) of the Public Finances
    (Management) Act 1995.

    12. THE AUTHORITY TO REFER

    12.1. Where satisfied that there is a prima facie case that a person may not have
    complied with the provisions of the Constitution of the Independent State
    of Papua New Guinea and / or the Public Finances (Management) Act in
    connection with the control and transaction with and concerning the
    accounts of a public body or the public moneys and the property of Papua
    New Guinea, it may make referrals of that person to the Office of the
    Public Prosecutor in accordance with Section 86A of the Public Finances
    (Management) Act.

    12.2. The Public Accounts Committee is not a true investigatory body capable
    of investigating and/or prosecuting persons for breaches of the law. The
    Committee is required to refer such matters to the appropriate authorities
    and may make such recommendations as it thinks fit in relation to any
    referral made pursuant to Section 86A.

    12.3. The Committee is also empowered to refer for prosecution, any witness
    who fails to comply with a Notice to Produce any document, paper or
    book and / or any person who fails to comply with a Summons issued and
    served by the Committee. See Section 23 Permanent Parliamentary
    Committees Act 1994.

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    12.4. Further, Section 20 of the Parliamentary Powers and Privileges Act
    permits the Committee to refer for prosecution any person who, inter alia,
    fails to comply with a Summons to produce books, papers or documents
    specified in the Summons.

    12.5. The Public Accounts Committee twice made referrals of the Secretary for
    Lands and Physical Planning, Mr. Pepi Kimas, during the course of this
    Inquiry, for investigation and prosecution for failure to comply with a
    Notice and a Summons to Produce Documents.

    12.6. Those referrals were made after anxious consideration of the evidence and
    explanations given by the Secretary. The Secretary was invited to make
    any response or show any reason why he should not be referred, but made
    no or no adequate response to the Committee in this regard.

    12.7. The Committee is cognisant that to make referrals, particularly of a senior
    public servant is a very serious matter which will adversely reflect on the
    individual concerned. These referrals are not made lightly but only after
    careful consideration of all the evidence and unanimous resolution by the
    Committee.

    13. METHOD OF INQUIRY

    13.1. The Inquiry by the Public Accounts Committee into the Department of
    Lands and Physical Planning was a public hearing at which sworn
    evidence was taken from a small number of witnesses.

    13.2. Assistance was obtained from representatives of the Salaries &
    Remuneration Commission, the Office of the Auditor General and from
    the Public Service Commission.

    13.3. The Committee made its Inquiry in four parts, each addressing a different
    area of Departmental operations. Those Parts are summarized in Paras. 14
    – 17 inclusive.

    14. PART ONE OF THE INQUIRY – REPORTS OF THE AUDITOR
    GENERAL.

    14.1. The Committee initially considered reports of the Auditor General and
    questioned officers of the Department of Lands and Physical Planning on
    the findings of the Auditor General. Certain findings and
    recommendations were made arising from the Reports of the Auditor
    General for the years 2000 – 2004.

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    14.2. The Committee identified a clear failure by the Department to collect
    Land Rental in a timely fashion and, as the Inquiry progressed, became
    concerned at the quality of the evidence given by Departmental Officers –
    particularly the Secretary of the Department, Mr. Pepi Kimas concerning
    those failures.

    14.3. Continuing failures in accounting and management systems were
    identified in every Audit – many were continually identified and not
    remedied.

    15. PART TWO OF THE INQUIRY – BEFORE 2002.

    15.1. The Committee was constantly assured by officers of the Department of
    Lands and Physical Planning that “new systems” were in place. The
    systems would, apparently, ensure that abuses which had occurred in the
    past within the Department of Lands and Physical Planning would no
    longer occur.

    15.2. The Secretary of the Department of Lands and Physical Planning assured
    the Committee that he had taken significant steps towards eradicating
    corrupt dealings and improving revenue collection and financial and
    accounting performance of the Department of Lands and Physical
    Planning.

    15.3. The relevant portions of his evidence were:

    HON. CHRIS HAIVETA MP (DEPUTY CHAIRMAN):

    “So what you are saying in the last three years, you have not attempted
    to make any change to the existing policy, rules and existing laws so
    that land that is taken illegally from the State can be given back to the
    State. You have not done anything up to now. You are still surrounded
    by the current inefficient policies. Is that correct?”

    MR. PEPI KIMAS :

    “That is not quite correct. From the 4th April 2002 and to date, the
    Lands Department has improved. Lands Department is different from
    what it used to be. We have tightened things through in-house
    procedures to ensure that none of the past experiences are repeated”.

    Evidence given to the Committee on the 29th November 2005.

    15.4. This evidence was not borne out by the Reports of the Auditor General.
    The Committee decided to test the assertion of improvement by Mr.
    Kimas.

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    15.5. The Committee chose at random, a number of grants of State Leases prior
    to 2002 and examined those grants to ascertain whether the Department
    was protecting the position of the State in these dealings and whether the
    Department was lawfully and fully collecting revenue on behalf of the
    State.

    15.6. The object of this phase of this Inquiry was to establish whether certain
    allegations received by the Committee of malpractice, corruption and
    consequent loss to and liability of the State in the period prior to 2002,
    were true.

    15.7. The second part of the Inquiry was directed to examining these randomly
    chosen dealings in the period before the appointment of Mr. Pepi Kimas as
    Secretary of the Department of Lands and Physical Planning, with a view
    to establishing if and how the current Secretary and his management team
    had dealt with and remedied past abuses.

    15.8. The Committee also considered the liability of the State for these past
    abuses and the quality of protection given by the Department of Lands and
    Physical Planning to public land, reserved Open Space Land and National
    Parks. In other words, if and how the Department of Lands and Physical
    Planning was protecting the national asset and land reserved for the use of
    citizens, in the period from 2002 until 2005.

    15.9. To the very great concern of the Committee, it became quickly apparent
    that the Department had failed to carry out its basic statutory obligations
    adequately or at all, had failed to protect State assets, had failed to protect
    the legal liability of the State, had opened the State to considerable
    liability by Departmental failures, had connived with and assisted illegal
    dealings and exhibited serious management failures and incompetence.

    15.10. Of equal concern was the apparent failure of the Department to take any
    steps to remedy or reverse the abuses of the past after 2002, despite
    making those abuses public and being well aware of those failures.

    15.11. Findings and resolutions were made by the Committee in respect of these
    matters.

    16. PART THREE OF THE INQUIRY – 2002 – 2006.

    16.1. The Public Accounts Committee made a further random choice of certain
    land transactions since 2002 to examine and assess the performance of the
    Department of Lands and Physical Planning and the management of that
    Department during the period 2002-2006 – with particular emphasis on the
    Departmental protection of State revenue and property.

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    16.2. In doing so, the Committee tested the assertion of the Secretary of the
    Department of Lands and Physical Planning that, under his stewardship,
    the Department had eradicated corruption and had dealt with instances of
    corrupt dealings known to the Department.

    16.3. Further, the Committee intended to test the assertion that the management,
    accounting for and transactions by the Department of Lands and Physical
    Planning with State property assets and money had improved under the
    control of the current Secretary and whether the position of the State was
    now fully protected.

    16.4. The Public Accounts Committee considered a number of land transactions
    and decisions made by the Department and the Papua New Guinea Land
    Board during the period 2002-2006. It quickly became apparent to the
    Committee that corrupt, incompetent and unlawful dealings persist and
    that the Management of the Department has not improved at all – at least
    in this regard.

    16.5. Also apparent was the fact that Departmental officers seem to have no idea
    of their roles, no appreciation of the vital importance of the Department
    and no interest in carrying out their tasks in a lawful and professional
    manner.

    16.6. What also became apparent was the contempt and suspicion in which the
    Department is held by members of the public and persons legitimately
    involved in land dealings and investment.

    16.7. It also became rapidly apparent that no attempt whatsoever had been made
    by the current Management to deal with known instances of corrupt,
    fraudulent and criminal dealing with land prior to 2002.

    16.8. In one instance, the Secretary had actually issued Press Releases declaring
    certain dealings to be corrupt, but had taken absolutely no steps to fulfill
    his statutory obligations to rectify those problems.

    17. PART FOUR OF THE INQUIRY – THE LAND BOARD.

    17.1. The Committee had received a number of serious allegations concerning
    the corrupt and incompetent conduct of the Papua New Guinea Land
    Board over many years.

    17.2. The Committee considered the performance of the Land Board during the
    period 1993 – 2005 and concluded that the performance has declined and
    remains poor and that illegal decisions and conduct still pervade the Land
    Board.

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    17.3. The Committee made certain findings and recommendations in this regard.
    These matters are addressed later in this Report.

    18. PROGRESS OF THE INQUIRY:

    18.1. The Committee met on the 1st day of September 2005 and questioned the
    Secretary of the Department of Lands and Physical Planning, Mr. Pepi
    Kimas as to his understanding of his duties and obligations as Secretary
    and Head of a Government Department.

    18.2. The Committee heard sworn evidence from Mr. Kimas. He assured the
    Committee that he was aware of and implemented all the requirements of
    the Public Finances (Management) Act (particularly Section 5), the
    Financial Instructions and all Statutes which it was the duty of his
    Department to administer.

    18.3. The Committee then adjourned the Inquiry.

    18.4. On the 5th day of September 2005 a Notice for the Production of
    Documents and other evidence was given to the Secretary for the
    Department of Lands and Physical Planning.

    18.5. The Secretary had nearly three months to comply with this Notice. The
    Notice was initially given pursuant to Section 23 (1) (b) of the Permanent
    Parliamentary Committees Act 1994.

    18.6. The Secretary of the Department failed to comply adequately with many
    of the Directives, and failed to comply at all with a large number of them.

    18.7. Accordingly, on the 24th day of November 2005 the Secretary of the
    Department of Lands and Physical Planning was referred to the Office of
    the Public Prosecutor and to the Police for prosecution arising from his
    failure to provide documents to the Public Accounts Committee in
    accordance with the Notice to Produce.

    18.8. On that day, the Public Accounts Committee issued a Summons to the
    Secretary for the Department of Lands and Physical Planning pursuant to
    Section 89 of the Public Finances (Management) Act requiring the
    production of those documents not yet produced by the Secretary.

    18.9. The Secretary for Lands and Physical Planning managed to produce a few
    more documents, but failed to comply with large portions of the
    Summons.

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    18.10. Accordingly, on the 25th day of November 2005, the Public Accounts
    Committee again referred the Secretary for Lands and Physical Planning
    to the Public Prosecutor and the Police for further investigation and
    prosecution, on this occasion for failure to comply with a Summons to
    Produce documents.

    18.11. These referrals are more fully addressed in this Report (infra).

    18.12. The Committee reconvened on the 29th day of November 2005 and heard
    sworn evidence from the Secretary for Lands and Physical Planning.

    18.13. It became quickly apparent to the Public Accounts Committee that prior to
    2002 every randomly chosen land transaction was either unlawful, corrupt
    or incompetently or corruptly handled by the Department and had exposed
    the State to both considerable revenue loss and loss of assets.

    18.14. More concerning was the fact that the evidence clearly revealed that
    Public Land and National Parks had unlawfully been alienated by the
    Department of Lands and Physical Planning with complete disregard of
    the relevant law and statutory duty imposed on the Department and its
    officers.

    18.15. The Committee adjourned the Inquiry and reconvened on the 28th day of
    February 2006.

    18.16. On the 22nd February 2006, a further Notice to Produce Documents and
    information was served on the Secretary.

    18.17. On the 28th February 2006, further evidence was taken and the Inquiry
    closed after the Committee delivered its findings and recommendations.

    18.18. The Committee first considered the issue of Land Rental collection and
    further comments are made on this issue later in this Report.

    18.19. The Committee considered certain randomly chosen land transactions
    during the period 2002 – 2005.

    18.20. It quickly became apparent to the Public Accounts Committee that after
    2002, every one of those randomly chosen transactions was either
    unlawful, corrupt or incompetently or corruptly handled by the
    Department and had exposed the State to considerable loss of revenue and
    assets.

    18.21. The Department of Lands and Physical Planning has failed in its role as
    the administering arm of the State over Land matters and, it seems to this
    Committee, has become an arm of private enterprise responsible for

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    allocating Leases regardless of the Law and to the very considerable cost
    of the State and the citizens of Papua New Guinea.

    18.22. In short, the Committee concluded the Inquiry with profound and deep
    concerns that the Independent State of Papua New Guinea had suffered
    significant financial losses, lost considerable amounts of very valuable
    property and has been open to very significant liability as a result of the
    incompetence, deceit and mismanagement by Departmental Officers at all
    levels (but particularly Senior Management) of the Department of Lands
    and Physical Planning.

    18.23. For these reasons the Committee resolved to make this Report as soon as
    possible.

    19. PRIVILEGES AND PROTECTION OF WITNESSES

    19.1. The Public Accounts Committee has taken care to recognise and extend to
    all witnesses the statutory privileges and protection extended by the Public
    Finances (Management) Act 1995 and the Permanent Parliamentary
    Committees Act 1994 and the Parliamentary Powers and Privileges Act
    1964.

    20. RELEVANT STATUTES

    20.1. The Committee was required to consider the following Statutes during the
    course of the Inquiry:

    21. PUBLIC FINANCES (MANAGEMENT) ACT 1995.

    21.1. The Public Finances (Management) Act prescribes the method and
    standard of the Administration of and accounting for public monies, public
    properties and assets by State entities in Papua New Guinea.

    21.2. Further, the Act imposes certain obligations on Public Servants for
    collection of State revenue and controls the expenditure of State or public
    monies.

    21.3. Relevant sections of the Act which were considered by the Public
    Accounts Committee during the course of the Inquiry into the Department
    of Lands & Physical Planning are:

    (i) Section 5 – Responsibilities of Heads of Department

    This Section prescribes the duties, powers and obligations of Head of
    Department.

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    (ii) Section 3 – Responsibilities of the Minister

    This Section prescribes the obligations and duties of relevant
    Ministers of State.

    (iii) Part X – The Public Accounts Committee

    This Part empowers and imposes functions and obligations on the
    Public Accounts Committee. In particular, the Committee was
    required to consider Section 86 (A) – power to refer officers of the
    Department to the Office of the Public Prosecutor for investigation
    and possible prosecution relating to breaches of the Public Finances
    (Management) Act 1995 and/or the Constitution.

    (iv) Part XI – Surcharge

    This Section prescribes personal liability for certain public servants
    who fail in their obligations to collect and protect certain public
    monies.

    (v) Section 112 – Offences

    This Section prescribes disciplinary action which may be taken
    against certain public servants or accountable officers who fail to
    comply with the terms of the Public Finances (Management) Act
    1995.

    22. FINANCIAL INSTRUCTIONS

    22.1. Section 117 of the Public Finances (Management) Act enables the
    promulgation of certain Financial Instructions which establish detailed
    procedures for the handling, collection, expenditure, disposal and
    accounting for public monies, property and stores.

    22.2. The Public Accounts Committee had regard to these Financial Instructions
    or Directives when considering the performance of the Department of
    Lands & Physical Planning and its relevant responsible Officers.

    22.3. In particular, the Committee had regard to Part 6 Division 1 Para. 2.1–
    Accountable Officers. That paragraph reads, in part:

    “…..the Departmental Head is liable under the doctrine of personal
    accountability to make good any sum which the Public Accounts
    Committee recommends should be “disallowed”.

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    23. LAND ACT 1996

    23.1. The Land Act 1996 is an Act of Parliament which vests all alienated land
    in the State, controls all dealings with and management of the National
    Estate and prescribes the procedures for and the manner in which land
    may be granted by State Lease.

    23.2. In particular, the Land Act prescribes the powers of the Minister for
    Lands and the powers, duties and obligations of the Department of Lands
    and Physical Planning in respect of the management of State land and
    imposes strict obligations on the Department in the allocation of State
    Leases, collection of revenue and protection of the public moneys of
    Papua New Guinea by enforcing the terms of the Land Act against
    defaulting Lessees.

    23.3. Further, the Land Act creates the Land Board which is vested with power
    to, inter alia, consider tenders for and grants of State Leases. The Land
    Act prescribes strict procedural steps attending sittings of the Land Board.

    23.4. The Committee had cause to examine several parts of the Land Act in the
    course of the Inquiry.

    23.5. In order to understand the findings and recommendations of the
    Committee, it is necessary to appreciate the relevant terms of the Land
    Act and the obligations imposed on the Department of Lands and Physical
    Planning thereby.

    23.6. The relevant Sections of the Land Act are:

    SECTION 4. NATIONAL TITLE TO LAND

    (1) All land in the country other than customary land is the property of
    the State, subject to any estates, rights, titles or interests in force
    under any law.

    (2) All estate, right, title and interest other than customary rights in
    land at any time held by a person are held under the State.

    23.7. The appropriate entity which administers the law relating to those estates,
    rights, titles and interests is the Department of Lands and Physical
    Planning.

    23.8. The crucial nature of the Department of Lands and Physical Planning in
    protecting and developing the National Estate, is clear from this Section.

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    23.9. The Committee have concluded that, as a result of this Section, the
    Department of Lands and Physical Planning performs an important role in
    the development of the Nation and the National economy, by reason of its
    role as the custodian of State land.

    23.10. The Committee considers that a high standard of probity and competence
    is required of Officers and Management of the Department of Lands and
    Physical Planning if the National Estate and the economic welfare of the
    State and its citizens are to be protected.

    23.11. The Committee also concluded that land is the single most significant
    issue in the social welfare and economic development of Papua New
    Guinea. Judicious and proper management of land matters will mean a
    healthy economy and a developing nation with improved living standards
    for its citizens.

    PART D II. THE LAND BOARD

    SECTION 55 ESTABLISHMENT OF THE LAND BOARD

    (1) A Land Board is hereby established;

    (2) ………………..

    and

    SECTION 57 FUNCTIONS OF THE LAND BOARD

    (1) In addition to such other functions as are conferred on it by this
    Act, the Land Board shall consider and make a recommendation
    on any matter referred to it by the Minister or by the Department.

    (2) Except where the Minister is empowered by this or any other Act to
    make a direct grant of a State Lease, the Land Board shall
    consider all applications for grant of lease which have been
    investigated and referred to it by the Department and all other
    matters are remitted to it by the Minister for its consideration.

    and

    SECTION 58 MEETINGS OF THE LAND BOARD, REPORTS, ETC

    (1) At least seven days before a meeting of Land Board, the
    Chairman shall publish in the National Gazette a list of:

    (a) The applications and other matters to be considered; and

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    (b) Lands to be dealt with

    by the Board at the meeting.

    (2) ………………..

    (3) The meeting of the Land Board shall be held not less than 7 days
    and no more than 42 days after the publication of the List
    referred to in Subsection (1), and the Board shall deal with the
    applications and matters, hear any objections and report on the
    applications or matters within 14 days to the Minister.

    (4) The Chairman shall cause meetings of the Land Board to be held
    as he thinks necessary.

    (5) ……………………….

    (6) ……………………….

    (7) Where the Land Board –

    (a) takes evidence at a meeting from which members of the
    public have been excluded;

    (b) …………………….

    (c) …………………….

    it shall report on it within 14 days to the Minister.

    (8) In respect of each application the Land Board shall recommend

    (a) the applicant to whom, in the opinion of the Land Board,
    the State Lease should be granted; and

    (b) …………………………

    (c) …………………………

    (9) The Chairman shall forward notice of the Land Boards
    recommendations, other than a recommendation to which
    subsection (8) applies, to every person who, in his opinion, is
    interested in an application or matter dealt with by the Board.

    (10) ……………………..

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    23.12. The Committee considers that an assessment of the functioning and
    efficiency of the Land Board would provide a good indication as to the
    corporate health of the Department of Lands and Physical Planning.

    23.13. The Committee considered the state of compliance by the Land Board
    with the procedural requirements of the Land Act. In many areas the
    Board had failed to comply at all – thus rendering its decisions unlawful.

    23.14. Further, the revenue of the State and the protection and allocation of State
    Land is largely decided by the Land Board. The Committee considers that
    a high degree of competence and honesty is necessary if the Land Board is
    to work efficiently and properly.

    PART VIII – APPEALS AND REPORTS

    SECTION 62 APPEALS

    (1) A person aggrieved by a decision of the Land Board may, not
    later than 28 days after notices are forwarded under Section
    58(10) forward a Notice of Appeal to the Minister.

    (2) ……………………..

    23.15. The Committee proceeded upon the basis that no recommendation of the
    Land Board could be actioned until the expiry of the 28 days after the
    forwarding of a Notice to all interested persons, if there was no Appeal.

    23.16. The Committee proceeded on the basis that strict compliance with the
    procedural matters attending meetings of the Land Board was necessary in
    the interests of the public and of the State.

    23.17. It is these procedures which ensure transparency and a fair open
    competitive tender process for the allocation of State Lands and thereby
    maximizes the return to the State

    SECTION 64 ALIENATION OF GOVERNMENT LAND

    (1) Government land shall not be alienated otherwise than under this
    Act or another law.

    (2) Land which is the property of the State solely by virtue of the
    operation of Section 4(1) shall not be alienated or otherwise dealt
    with by the State under this Act unless the provisions of Section 5
    have been complied with in respect of that land.

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    23.18. The Committee finds that the Land Act is the sole authority for the
    alienation of State Land and the Department of Lands and Physical
    Planning is, thereby, the entity which is responsible for this vital function.

    23.19. Moreover, the Department maintains the responsibility for ongoing
    management of development, revenue collection, Lease issue and all other
    aspects of land management for and on behalf of the Independent State of
    Papua New Guinea.

    23.20. The Committee again proceeded upon the basis that a high standard of
    strict probity and competence was required of the Department of Lands
    and Physical Planning and its Officers – not least in the areas of protection
    of State Land, security and protection of documents and records and
    accountability for effecting revenue collection in a timely manner.

    PART X – STATE LEASES

    DIVISION 1 – STATE LEASES GENERALLY

    SECTION 65 GRANT OF STATE LEASES

    The Minister may grant State Leases of Government Land as
    provided by this Act.

    SECTION 66 ……………………..

    SECTION 67 STATE LEASES NOT TO BE INCONSISTENT WITH
    ZONING, PHYSICAL PLANNING ETC

    A State Lease shall not be granted for a purpose that would be in
    contravention of zoning requirements under the Physical
    Planning Act 1989, and any other law relating to Physical
    Planning, or any law relating to the use, construction or
    occupation of buildings or land.

    23.21. The Committee proceeded upon the basis that the Department of Lands
    and Physical Planning in the course of administering the National Estate
    should maintain a comprehensive and complete knowledge of the Physical
    Planning Act 1989 and zoning and planning decisions affecting any piece
    of land, the subject of a lease or application for lease.

    23.22. The Committee considers that the Department of Lands and Physical
    Planning could not alienate any State Land in any way inconsistent with
    zoning or planning laws, which themselves are the responsibility of the
    Department Lands and Physical Planning.

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    23.23. Further, the Committee proceeded upon the basis that the Papua New
    Guinea Land Board must retain a working knowledge of all relevant
    zoning and planning decisions or restrictions applying to any particular
    parcel of land the subject of a State Lease or application for State Lease.

    SECTION 68 ADVERTISEMENTS OF LANDS AVAILABLE FOR
    LEASING

    (1) Except where land has been exempted from advertisement under
    Section 69, the Departmental Head shall give notice by
    advertisement in the National Gazette, of all lands available for
    leasing under this Act.

    (2() An advertisement under Sub-section 1 shall contain the following
    information:

    (a) the type of lease available to be granted;

    (b) the purpose of the lease;

    (c) the length of the lease

    (d) a description of the land to be leased;

    (e) the amount of rent (if any) payable for the first period of
    the lease;

    (f) in the case of a special purpose lease – any royalties that
    are payable;

    (g) the terms and conditions of the lease;

    (h) the reserve price;

    (i) such other information as the Departmental Head thinks
    fit or the Minister directs

    SECTION 69 DUTY TO ADVERTISE STATE LEASES

    (1) A State Lease shall not be granted without first being advertised
    in accordance with Section 68 unless the land has been exempted
    from advertisement under Sub-section (2).

    (2) The Minister may exempt land from advertisement for application
    or tender –

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    (a) Where the lease is granted to a Governmental body for a
    public purpose or;

    (b) Where it is necessary to relocate persons displaced as a
    result of a disaster as defined in the Disaster Management
    Act (Chapter 403); or

    (c) Where a lessee applies for a further lease; or

    (d) Where the State has agreed to provide land for the
    establishment or expansion of a business, project, or
    other undertakings; or

    (e) Where the land applied for adjoins land owned by the
    applicant and is required to bring the holding up to a
    more workable unit …

    (f) ………………….

    (g) ………………….

    (h) Where the applicant has funded the acquisition of
    land from customary landowners in order to acquire a
    State Lease over it; or

    (i) Where a lease is to be granted under Section 99 or
    102; or

    (j) Where a new lease is granted under Section 110, 130
    or Section 131.

    23.24. The Committee finds that these two Sections of the Land Act impose a
    duty on the Department of Lands and Physical Planning and the Papua
    New Guinea Land Board, when considering applications or tenders for the
    grant of State Leases over any land the subject of the Sections, to ensure
    strict compliance with the terms of the Sections.

    23.25. The Committee finds that these Section import transparency, confidence
    and commercial competitiveness into the process of allocating State
    Leases. Any deviation from the terms of these Sections will inevitably
    result in a less than competitive tender to the cost of the State and a
    consequent reduction in revenue flow to the State from the Department of
    Lands and Physical Planning.

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    23.26. The Committee was concerned to establish the precise number of
    Ministerial exemptions given in respect of land which otherwise would
    have been the subject of an open competitive tender before the Papua New
    Guinea Land Board.

    23.27. The power to grant Ministerial exemption is bound with strict conditions.
    The Committee noted at the outset of the Inquiry, that the power to exempt
    had been delegated to certain Departmental officers and the Committee
    determined to investigate the use of that delegated power and its effect (if
    any) on the protection of the National Estate and the consequent flow of
    revenue to the State from land dealings.

    SECTION 70 HOW APPLICATIONS FOR STATE LEASES ARE TO
    BE MADE

    An application for a State Lease shall –

    (a) be made in the approved form; and

    (b) be accompanied by the prescribed fee for the registration of the
    application

    SECTION 73 DEALING WITH TENDERS

    (1) Where the land is required to be offered for lease by tender, a
    Tender Notice shall

    a. contain the particulars specified in Section 68; and

    b. specify the reserve price for the land

    (2) A tender for an amount less than the reserved price specified under
    Sub-section (1) (b) is invalid and shall not be considered.

    (3) ……………………..

    (4) The successful tenderer shall pay to the State the amount of his
    tender;

    (5) The successful tenderer is entitled to a State Lease of the land the
    subject of the tender in accordance with the tender notice.

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    SECTION 74 PUBLICATIONS OF NAMES OF SUCCESSFUL
    APPLICANTS, ETC, IN THE NATIONAL GAZETTE

    The Departmental Head shall publish in the National Gazette-

    (a) the name of the successful applicant for each State Lease, together
    with particulars of the land to be leased to him; and

    (b) in respect of that State Lease and those lands –

    i. the name of applicant considered the second choice successful
    applicant; and

    ii. the name of the applicant considered the third choice successful
    applicant, to whom a Letter of Grant may be forwarded in
    accordance with Section 75 and 79.

    23.28. The Land Act exclusively prescribes the method by which the Papua New
    Guinea Land Board and thereby the Department of Lands and Physical
    Planning must deal with the advertisement of lands available for leasing
    and applications and tenders made for those lands.

    23.29. The Committee accepted that in all but the most unusual cases, open
    commercially competitive tenders are prescribed for the grant of all State
    Land by the Land Act. That open, competitive transparent process
    ensures that the State will maximize the financial return from any
    particular land grant and that the tenderer most capable of developing the
    land will be chosen.

    23.30. The statutory duties of the Papua New Guinea Land Board and the
    Department of Lands and Physical Planning are clear. The process is not
    complex or difficult for either the Department or prospective applicants or
    tenderers, to comply with.

    23.31. In respect of all the statutory requirements thus far outlined in this Report,
    the Committee has repeatedly found a failure to comply with even the
    most basic statutory requirements – most notably in the alienation of
    Reserved Land, Public Space land and National Parks, into private hands.

    23.32. The Committee will report a Finding of incompetence, mismanagement,
    fraud, dereliction of duty and blatant misrepresentation by both the
    Department of Lands and Physical Planning and the Land Board during
    the period 1999 – 2006.

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    SECTION 81 COMMENCEMENT OF STATE LEASES

    The term of a State Lease and the time within which improvement
    conditions are to be fulfilled and rent and fees paid shall be calculated
    from

    (a) the date of publication of the relevant Notice under Section 74;
    or

    (b) Such later date as the Minister, after considering a Report of the
    Land Board, determines.

    23.33. This is an important Section. The calculation and collection of revenue
    and the supervision of compliance with Improvement Covenants can be
    calculated exactly – to the benefit of the State.

    23.34. The Committee examined several transactions and found that the actual
    issued State Lease document exhibited an incorrect commencement date
    and other and further incorrect information.

    SECTION 83 RENT

    The rent on a State Lease is as is prescribed.

    23.35. Land Rental is a fundamental revenue flow to the State for the grant of
    land by way of State Lease.

    23.36. Every Lessee must pay rental to the State on an annual basis. The method
    of calculation is simple.

    23.37. It is the duty of the Department of Lands and Physical Planning to
    correctly calculate and collect this Land Rent.

    23.38. The Committee resolved to examine several State Leases and grants of
    land to private hands with a view to establishing whether rental was
    properly fixed by the Department of Lands and Physical Planning and
    whether the rent has actually been collected.

    SECTION 104 THE URBAN DEVELOPMENT LEASES TO BE
    GRANTED OVER LAND IN PHYSICAL PLANNING AREAS
    SUITABLE FOR SUB-DIVISION.

    (1) Subject to Section 69, where there is Government land within a
    Physical Planning area that is suitable for sub-division in
    accordance with this Division, the land shall, in the first instance,
    be offered for lease by tender.

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    (2) A tender document shall contain the following:-

    (a) the particulars specified in Section 68;

    (b) …………………..

    (c) ………………….

    (d) the reserve price for the land.

    SECTION 105 – CONDITIONS PRECEDENT TO LAND BEING
    ADVERTISED FOR SUB-DIVISION

    Before land is offered for lease under this division, the Chief Physical
    Planner or his delegate shall-

    (a) certify –

    (i) that the land is –

    (A) within a Physical Planning area; and

    (B) properly zoned; and

    (C) suitable for subdivision; and

    (D) suitable for release; and

    (ii) after consultation with the relevant authorities, that the State
    will not incur undue expense in the provision of electricity,
    water and other services to the proposed subdivision; and

    (b) provide –

    (i) a plan showing the location of the land;

    (ii) an assessment of the subdivision potential of the land; and

    (c) specify –

    (i) the development conditions that will apply to the lease; and

    (ii) the conditions that will apply in respect of the infrastructure and
    zoning when part or the whole of the land subject to the lease is
    subsequently surrounded/

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    SECTION 108 TERMS AND CONDITIONS OF URBAN
    DEVELOPMENT LEASES

    An Urban Development Lease –

    (a) shall –

    (i) be for a term not exceeding five years; and

    (ii) contain –

    (A) A covenant that within one year … the lessee will submit for
    the approval of the Physical Planning Board an application
    for full planning permission for subdivision and zoning, and
    a final proposal for subdivision, together with survey plans;
    and

    (B) A covenant that a lessee will conform with a determination of
    the Physical Planning Board under Section 108(3);

    (C) A covenant that after the Physical Planning Board has given
    its approval under Clause (a) (ii )(A), the lessee will submit a
    cadastral survey plan on the subdivision to the Surveyor
    General …; and

    (D) Such other covenants and conditions including restrictions
    on disposal prescribed by Section70, as the Land Board
    thinks proper or as are prescribed; and

    (b) may contain a requirement for the surrender … of areas of land the
    subject of the lease that are not and will not, under the final proposal
    for subdivision, be required for business or residence purposes; and

    (c) may contain covenants that are to be inserted in the new leases
    granted on the surrender of developed parts of the subdivision.

    23.39. These Sections have been quoted at length because they are mandatory
    requirements for the issue of an Urban Development Lease. These
    Sections were examined by the Committee when considering at least one
    grant of a National Park to private hands by way of an Urban
    Development Lease.

    23.40. An Urban Development Lease is a pre-cursor to an application for a 99
    year State Lease, to enable development to occur. No Urban Development

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    Lease can be issued which conflicts with any Physical Plan or Zoning of
    that land.

    23.41. An Urban Development Lease contains onerous covenants and is
    generally only given for large scale developments to investors with very
    significant capacity to carry out their obligations.

    23.42. The Committee accepts that in administering the Grants of Urban
    Development Leases, a high degree of probity, competence and measured
    judgment as to the future needs of the citizens of Papua New Guinea and
    planned economic development, is required from both the Department and
    the Grantee

    23.43. During its inquiry, the Committee considered a National Park which had
    been granted to private hands by way of Urban Development Lease. The
    Committee has concluded that every aspect of the process was
    incompetent and/or unlawful.

    23.44. The State and the public of Papua New Guinea have lost an immensely
    valuable tract of land to a Lessee which cannot afford to pay the Land
    Rent – much less invest K 300 million to develop the land as required.

    23.45. The necessary good faith and honest and transparent dealing required in
    such transactions is lacking in this and other similar dealings considered
    by the Committee.

    23.46. More importantly, the Department of Lands and Physical Planning has
    done nothing to rectify the situation – although it has known of that
    situation for many years – nor does it intend to do so.

    PART XV FORFEITURE OF STATE LEASE AND FINES

    DIVISION 1 – FORFEITURE OF STATE LEASE

    SECTION 122 FORFEITURE OF STATE LEASE

    (1) The Minister may, by Notice in the National Gazette, forfeit a State
    Lease –

    (a) if rent on the lease remains due and unpaid for a period of six
    months; or

    (b) if fees are not paid in accordance with this Act; or

    (c) if the amount payable in respect of improvement is not paid in
    accordance with this Act; or

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    (d) if –

    (i) a covenant or condition of the lease; or

    (ii) a provision of this Act relating to the lease; or

    (iii) …………………………

    is not complied with; or

    (e) if the granting of the Lease has been obtained, in the opinion
    of the Minister, wholly or partly as a result of Statements that
    were, to the knowledge of the lessee, false or misleading.
    (Committees’ emphasis)

    (2) Before forfeiting a State Lease under Sub-section (1), the Minister

    (a) shall serve Notice on lessee calling on him to show cause, within
    a period specified in the Notice why the lease should not be
    forfeited on the ground or grounds specified in the Notice; and

    (b) may, whether or not cause has been shown in accordance with a
    Notice under Paragraph (a), serve on the lessee a Notice
    requiring him within a period specified in the Notice, to comply
    with the covenants or conditions on the lease or the provisions of
    this Act.

    (3) …………………

    (4) …………………

    (5) No acceptance of rent by the State waives a right to forfeit a lease
    under this Act.

    (6) For the purposes of this Section the grant of an application for a
    State Lease shall be deemed to be the grant of the lease.

    23.47. The Committee resolved to examine the enforcement of the forfeiture
    provisions for want of both payment of Land Rent to the State and failure
    to comply with Covenants within a lease – notably land Rental and
    Improvement Covenants.

    23.48. The Committee considers that the Statutory Scheme for forfeiture of leases
    is designed to protect the State from loss of revenue and to encourage

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    development and thereby economic advancement for Papua New Guinea
    and its people.

    23.49. The Committee considered that these forfeiture provisions would provide
    a ready measure of the competence and effectiveness of the Department of
    Lands and Physical Planning in fulfilling its statutory obligations.

    23.50. The Committee examined several land parcels known to be significantly in
    rental arrears to the State and on which no development has occurred in
    accordance with an Improvement Covenant in the Lease – often for years.
    In other words, State Leases which should be forfeited by and to the State.

    23.51. Consistently, the Committee found that the Department of Lands and
    Physical Planning had failed to effect or even commence forfeiture (or
    cancellation where appropriate) proceedings. Huge arrears of Land Rental
    have accrued over the last five years with no apparent attempt to reclaim
    land to the State or to collect that Rent.

    PART XVI – LICENSES

    DIVISION 1 – LICENSES GENERALLY

    SECTION 125 GRANT OF LICENSE

    (1) Subject to Subsection (2) the Minister or his delegate may grant a
    licence in the approved form to a person to enter on Government
    land for one or more of the following purposes:-

    (a) to graze stock or a specified kind of stock; or

    (b) to strip, dig and take away any valuable material or
    substance; or

    (c) for fisherman’s residences and drying ground; or

    (d) for any other temporary purpose approved by the Minister.

    (2) A licence shall not be granted for a purpose that would be in
    contravention of zoning requirements under the Physical Planning
    Act 1989, any other law relating to Physical Planning or any law
    relating to use, construction, or occupation of buildings or land.

    (3) ……………………….

    (4) A licence under this Section continues in force for a period, not
    exceeding one year, specified in the licence;

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    (5) …………………………

    (6) …………………………

    23.52. The Committee proceeded upon the basis that no Licence can be granted
    over land which is Customarily owned.

    23.53. The Committee was in receipt of information concerning the issue of
    licences over Customary land.

    23.54. The Committee resolved to inquire into two of these transactions with a
    view to establishing whether the land was, truly, Customarily owned or, if
    it was a Government land, whether the Licences had been issued as a
    result of a competitive and openly transparent procedure, to the benefit of
    the State.

    23.55. Further, in the course of the Inquiry the Committee considered whether
    the Department of Lands and Physical Planning had given adequate and
    proper protection to Customary land – which the Committee considers to
    be part of the assets of the weal.

    LAND REGISTRATION ACT – PART III DIVISION 5 AND PART IV

    23.56. Those portions of the Act deal with the effect of registration. The Law of
    Indefeasibility of Title was considered by the Committee in the course of
    the Inquiry and this topic is more fully developed – See Para 18.

    ORGANIC LAW ON THE DUTIES AND RESPONSIBILITIES OF
    LEADERSHIP

    23.57. The Public Accounts Committee has had regard to this Organic Law in the
    course of the inquiry into the Department of Lands & Physical Planning.
    Certain Referrals and resolutions were considered within the terms of this
    Organic law and are more fully developed (infra).

    AUDIT ACT

    23.58. The Audit Act establishes and empowers the office of the Auditor General
    to carry out its work of overseeing and supervising the handling of public
    monies, stores and property by all arms of the National Government. The
    Public Accounts Committee had regard to the terms of this Act during the
    course of the Inquiry into the Department of Lands & Physical Planning

    23.59. The Committee received considerable assistance from the Office of the
    Auditor General in the course of this Inquiry.

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    PERMANENT PARLIAMENTARY COMMITTEES ACT 1994.

    23.60. The Committee has had regard to Sections 17, 22, 23, 25, 27, and 33 of the
    Permanent Parliamentary Committees Act during the course of the
    Inquiry into the Department of Lands & Physical Planning.
    .
    PARLIAMENTARY POWERS AND PRIVILEGES ACT 1964

    23.61. The Parliamentary Powers and Privileges Act 1964 sets forth those
    privileges and powers extending to Members of Parliament, Committees
    of Parliament and Officers or Parliamentary Staff.

    23.62. In the course of this Inquiry, the Committee had cause to examine and
    apply Sections 19 and 20 (1) (d) of that Act.

    23.63. The Secretary of the Department of Lands and Physical Planning failed
    to comply with a Summons requiring the production of documents and
    certain resolutions and referrals were made in this respect. This matter is
    developed more fully in this Report (infra).

    24. INDEFEASIBILITY

    24.1. As a result of sworn evidence received from the Secretary for the
    Department of Lands and Physical Planning, the Committee was required
    to consider the law of Indefeasibility as it applies to land in Papua New
    Guinea which has been granted by way of State Lease either unlawfully,
    fraudulently or by reason of misrepresentation or malpractice within the
    Department of Lands and Physical Planning – or elsewhere.

    24.2. The Secretary of the Department of Lands and Physical Planning, by his
    own sworn admission, failed to take any action at all to reclaim to the
    State land which had been freely given to private hands in a manner which
    was unlawful. This failure has extended for three years.

    24.3. The Secretary justified this inaction on the basis that the issued title was
    indefeasible as soon as the State Lease was registered. The Secretary also
    proffered other excuses which will be dealt with in this Report (infra), but
    he was clearly of the view that once registration of a State Lease occurred,
    the State lost all power over both the land and the Lessee by reason of the
    Law of Indefeasibility.

    24.4. The relevant evidence was:

    Mr Pepi Kimas:

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    “The process of rectification is not as easy as it may sound”

    and;

    “What I have maintained is that as and when a title is registered by hook
    or by crook that title remains indefeasible until and unless it is
    challenged”

    and

    “I can cancel the title upon issuance……….but as and when the title is
    given it is indefeasible……and that is the power that neither I nor the
    Minister has to cancel those titles”.

    Evidence to the Committee on the 29th November 2005.

    24.5. This assertion was also partly relied on by the Secretary for his failure to
    forfeit land for non-payment of Land Rental and / or breach of covenants
    in a State Lease.

    24.6. The Secretary has, in fact, relied on this conclusion to excuse his inaction
    to protect the position of the State for the last three years and in respect of
    transactions which occurred before his appointment as Secretary, but
    which were his responsibility to rectify.

    24.7. The following is a succinct statement of the law of Indefeasibility of Title
    in such circumstances. The Committee proceeded upon the basis that this
    summation is an accurate statement of the current law – albeit that the area
    is a developing one.

    24.8. The Committee had regard to the way in which the question of
    Indefeasibility of fraudulently or unlawfully issued State Leases has been
    dealt with by the National Court and the Supreme Court in the last ten
    years.

    24.9. This matter has come before the Courts with increasing frequency and
    almost always involving allegations of incompetent or illegal actions by
    officers of the Department of Lands and Physical Planning.

    24.10. It is clear that the English or Australian cases on the topic, dealt almost
    exclusively with malpractice by a party to a transaction, rather than by
    State public servants. The need for the Courts to consider Indefeasibility
    of Title as a result of Departmental or State misconduct seems to be a
    matter peculiar to Papua New Guinea – and says a great deal about the
    management of the Department of Lands and Physical Planning over the
    last decade.

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    24.11. The Committee concludes that, in the last ten years, both the National and
    Supreme Courts have been increasingly required to consider instances
    where Departmental Officers have fraudulently or unlawfully issued State
    Leases over State Land – and in particular, over Reserved or Open Space
    land.

    24.12. Clearly, the earlier cases such as Mudge v Secretary for Lands (1985)
    PNGLR 387, applied the full rigor of the Torrens system principle of
    Indefeasibility.

    24.13. However, over the succeeding 20 years, the Courts were increasingly
    asked to deal with instances where fraud, constructive or actual, or illegal
    practices by the Department of Lands and Physical Planning and its
    officers, resulted in the issue of State Leases.

    24.14. One principal difference between jurisdictions is the fact that the
    Australian cases deal with freehold title – where the opportunities for
    malpractice by state officers is small. The malpractice alleged is almost
    exclusively that of one party to a transaction rather than the State or its
    employees or agents.

    24.15. In Papua New Guinea, the central administration of State Leases over
    State land offers greater opportunity for abuse by the Department, acting
    as it does on behalf of the State, with complete power to either issue or
    forfeit the Lease.

    24.16. The National and Supreme Courts have struck down fraudulently or
    unlawfully issued State Leases where such conduct has occurred. In other
    words, a registered Lease obtained or issued in breach of the Statutory
    requirements, does not confer indefeasible title.

    24.17. In this sense, the Courts have increasingly become the guardians of last
    resort of the National Estate against the incompetent and/or unlawful
    conduct of its own Department.

    24.18. The Committee considers that this was precisely what the former Chief
    Justice Sir Arnold Amet meant when he said:

    “I do not believe that the ….(Torrens)…..system is necessarily
    appropriate in circumstances such as this, where an individual land
    holder is deprived of his title to land by irregular procedures by officials
    and a department of State, to the advantage of a private individual.

    I do not accept that quite clear irregularities and breaches of the….
    (Land Act)…. provisions should remain indefeasible.

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    I believe that, although those irregularities and illegalities might not
    amount strictly to fraud, they should, nevertheless, still be good grounds
    for invalidating subsequent registration, which should not be allowed to
    stand.

    I have concluded that the doctrine of indefeasibility under the Torrens
    system of land registration is one that does not necessarily apply, nor is
    it necessarily appropriate in circumstances such as this that will
    continue to be experienced by ordinary Papua New Guineans against
    the might of the State and private corporations.

    Emas Estate Development Pty. Ltd. v. John Mea (1993) PNGLR 215

    24.19. The effect of this and other Judgements is to deprive the Department of
    Lands and Physical Planning of the ability to hide or excuse its conduct
    and failures to act, behind the cloak of indefeasibility.

    24.20. Accordingly, the Committee does not accept the excuses for inaction
    given by Mr. Pepi Kimas – in particular the ludicrous assertion that any
    attempt by him to cancel or forfeit unlawful or corruptly issued State
    Leases would undermine confidence in the integrity of the Land
    Registration in Papua New Guinea.

    24.21. The Committee made findings and recommendations in this regard in this
    Report (infra).

    25. FISCAL RESPONSIBILITIES OF THE GOVERNMENT

    25.1. The Government of Papua New Guinea is obliged to adequately fund and
    resource the Department of Lands and Physical Planning. The Public
    Accounts Committee made no inquiry into the adequacy of that funding,
    but notes sworn testimony of the Secretary for the Department of Lands
    and Physical Planning to the effect that staffing, and in particular,
    competent staffing was a continuing problem in his efforts to collect
    unpaid Land Rental and effect cancellation or forfeiture of fraudulently
    issued Titles.

    25.2. The Committee does not wholly accept these excuses for Departmental
    failures, but will make certain recommendations in respect of an
    assessment of the adequacy of funding and resourcing of the Department
    of Lands and Physical Planning.

    26. RESPONSIBILITES OF THE AUDITOR GENERAL

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    26.1. The Auditor General is a Constitutional Office Holder and the duties and
    responsibilities of that Office are contained in the Audit Act 1989.

    26.2. The standard of the Reports of the Auditor General into the Department of
    Lands and Physical Planning were, on the whole, competent and adequate.

    26.3. However, the Committee finds that the Reports of the Auditor General
    into the Department of Lands and Physical Planning were not up to date
    and have not been tabled or presented to the Parliament, for many years.

    26.4. The Committee fully understands the severe staffing constraints attending
    the Office of the Auditor General but will make recommendations in
    respect of the funding and resourcing of that Office by the Government of
    Papua New Guinea, to enable it to carry out its statutory duty in a
    competent and timely manner.

    27. THE DEPARTMENT OF LANDS AND PHYSICAL PLANNING

    27.1. The Department of Lands and Physical Planning has the following
    responsibilities:

    1. Promote the best use of all land in Papua New Guinea in the interests
    of all citizens and the economic advancement of the country.

    2. The acquisition, transfer, resumption and disposal of land.

    3. To provide appropriate survey and mapping services.

    4. To provide necessary services in relation to calculation of land.

    5. To formulate policies and proposals for planning urban resettlement.

    6. To maintain Lands Titles Registration.

    7. To formulate and oversee the implementation of policies in the
    following areas:

    i. Land use planning and subdivision urban cost recovery; and

    ii. Physical infrastructure needs for urban and rural population
    urbanization;

    8. To supervise and prepare physical plans and exercise planning
    control; and

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    9. To administer the provisions of the Physical Planning Legislation;
    and

    10. To provide services to the Land Board, Valuers Registration Board,
    Physical Planning Board and standing or ad hoc committees relating
    to the functions of the Department.

    11. To expeditiously collect Land Rent.

    12. To enforce Lease covenants.

    13. To make available land for development on commercially realistic
    terms.

    27.2. The Committee accepts that the Department of Lands and Physical
    Planning manages and is responsible for the operations of at least:

    1. The Papua New Guinea Land Board; and

    2. The Papua New Guinea Valuers Registration Board; and

    3. The National Physical Planning Board

    27.3. The Department of Lands and Physical Planning is responsible for
    administration in whole or in part of a number of important statutes. These
    are, at least the:

    1. Land Act 1996.

    2. Land Groups Incorporation Act (Ch. 147);

    3. Land (Ownership of Freeholds) Act; and

    4. Land Registration Act (Ch.191); and

    5. Local Government Act – S. 91 (Ch. 57); and

    6. Physical Planning Act 1989; and

    7. Street Closing Act (Ch. 201); and

    8. Survey Act – except S. 11 (Ch.95); and

    9. Town Boundaries Act (Ch 8); and

    10. Valuation Act – except S. 113 (Ch. 327).

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    27.4. The Department of Lands and Physical Planning has not enjoyed a
    reputation for transparency or efficiency over the last ten years.

    27.5. The State has suffered huge losses due to the non collection of Land Rents
    and the Department has not maintained contact with commercial reality
    and market place imperatives in its dealings with the allocation of land.

    27.6. The Inquiry by the Public Accounts Committee seeks to examine the
    handling of, accounting for and protection of State property, assets and
    public monies by the Department of Lands and Physical Planning.

    28. PART ONE – EXAMINATION OF THE REPORTS OF THE AUDITOR
    GENERAL OF THE DEPARTMENT OF LANDS & PHYSICAL PLANNING
    FOR THE YEARS 2000 – 2004

    28.1. The Public Accounts Committee considered reports of the Auditor
    General on the Department of Lands and Physical Planning for the years
    2000 – 2004.

    28.2. The Committee must report serious concerns at some parts of those
    Reports – in particular the performance of the Department in revenue
    collection for the State

    29. REVENUE AND DEBT COLLECTION BY THE DEPARTMENT OF
    LANDS & PHYSICAL PLANNING.

    29.1. The Department of Lands and Physical Planning is responsible for the
    assessment, levying and collection of Tender prices, reserve prices and
    Land Rentals for all State Leases in Papua New Guinea.

    29.2. This revenue is a significant portion of the National economy.

    29.3. During the period 2000 – 2004, the following revenue was collected by
    the Department.

    2000.

    Land Rental K. 16, 093,407

    Licence Fees and Royalty payments K. 20,650

    Sale of Allotments K. 12,680

    Survey fees K. 21,861

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    Surveyors Registration Fees K. 4,075

    Valuation Fees K. 254,843

    Valuers Registration Fees K. 13,000

    Objection Fees K. nil

    Sales of Maps etc. K. 255

    Surplus earnings and rentals K. nil

    Lodgement Fees K. 38,805

    Recovery from materials etc. K. 87,762

    Physical Planning Fees K. 9,122

    Sundry receipts K. 1, 303, 343

    29.4. However, the Auditor General noted a shortfall in the total collection
    estimated for the year against the annual revenue budget of K21,144,500
    by K2,124,197.

    29.5. The Report of the Auditor General dated 15th May 2001 identified a
    number of weaknesses and failures within the Department of Lands and
    Physical Planning.

    29.6. They were:

    An unexplained shortfall in respect of various heads of revenue;

    • 3,468 lessee rental payees outstanding to a value of K7,853,342 did
    not have the correct address for billing purposes;

    • Potential revenue to the State was lost as a result of 206 rental
    records with outstanding rents amounting to K92,507 were without a
    client. This indicates that land which was supposed to have been
    leased out to clients was not leased and remained unoccupied or
    under dispute.

    • The Auditor General noted consistent failures in updating the list of
    the land rentals and significant uncollected accumulated Land
    Rentals totaling K54,912,718.49. This Committee further examines
    unpaid land rental (infra).

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    • Valuation fees were outstanding for the year ending the 31st
    December 2000 for properties charged on debit notes in a sum of
    K138,831. K91,303 of this amount was outstanding since 1986.
    The Department had failed to make any follow up on valuations.

    • The Auditor General finds “negligence of duty and lack of co-
    operation between line divisions concerned” which resulted in
    records maintained by the Revenue Division being unreliable and the
    State missing out on substantial amounts of revenue.

    • Outstanding cheques in a sum of K 905,508.81 – K 893,470.18 of
    which were current to the year 2000 with no evidence to suggest
    follow up action – especially for the years 1998 and 1999.

    • Significant problems in respect of budgetary controls and payment of
    accounts were identified.

    • The Land Acquisition Trust Account maintained two sets of cash
    books – manual and computerized cash books – which did not
    reconcile. Cancelled cheques to a value of K311,150 were not
    entered in the manual cash book.

    • There were omissions in the Asset Register, no evidence of a
    physical stocktake during the year 2000 and the Register was not
    maintained properly, was incomplete and therefore could not be
    relied upon.

    29.7. The Office of the Auditor General summarized its findings for the year
    2001. The Office of the Auditor General identified:

    • Deficiencies in revenue collections;

    • Weaknesses in the collection of Land Lease Rentals;

    • Shortcomings in the preparation of Drawing Account Bank
    Reconciliation;

    • Weaknesses and irregularities in budgetary control procedures;

    • Non-compliance with procurement and payment procedures;

    • Shortcomings in the purchase of motor vehicles;

    • Weaknesses in acquittal of advances;

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    • Irregularity in the payment of motor vehicle allowances;

    • Weaknesses in operation of trust accounts;

    • Weaknesses in maintenance of lost records; and

    • Weaknesses in internal controls.

    29.8. The Auditor General also noted outstanding matters from previous audit
    reports as follows:

    • From 1999, there remained a non-compliance to procurement and
    payment procedures;

    • Inadequate control over payment and acquittal of advances;

    • Lapses in commitment control;

    • Weaknesses in Drawing Account Reconciliation; and

    • Lack of maintenance of the Trust Accounts.

    29.9. Revenue for the year 2001 was recorded as:

    Land Lease Rentals K 16,315,072

    Licence Fees and Royalty payments K 25, 845

    Sale of Allotments K 621,075

    Survey fees K 23,362

    Lodgement Fees K 26,291

    Recovery from Material & Services K 33,556

    Physical Planning Regulations K 8,604

    TOTAL K 17,053, 805

    29.10. The Budget of Revenue Statement from the Department of Finance total
    K23,015,000. The Auditor General finds a shortfall of K5,961,195.

    2002

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    29.11. In 2002 the Auditor General reported the following findings:

    • Deficiency in revenue collections;

    • Deficiencies and weaknesses in the collection of land lease rentals;

    • Shortcomings in the preparation of Drawing Account Bank
    Reconciliation;

    • Weaknesses and irregularities in budgetary and expenditure control
    procedures;

    • Non-compliance with procurement and payment procedures;

    • Irregularities in payment of professional and consultancy fees;

    • Weaknesses in control over Assets;

    • Weaknesses in control of motor vehicle fleet;

    • Irregularities highlighted in Internal Audit Report; and

    • Shortcomings in compliance to Public Accounts Committee
    Directives.

    29.12. The following matters are outstanding from 2001 Audit:

    • Non-compliance with procurement and payment procedures;

    • Deficiencies in collection of Land Lease Rentals; and

    • Weaknesses in Drawing Account Reconciliation.

    29.13. More concerning to the Committee were the Internal Audit findings that
    no action had been taken by the Department for recovery of a fraudulent
    payment of K18,599.00 to a stationery company and payment of an
    entertainment allowance and no action had been taken in respect of an
    incomplete Asset Register in accordance with both the internal and
    external audit findings and recommendations.

    29.14. Further, the Committee finds that its own directives had not been
    complied with by the Secretary for the Department of Lands and Physical
    Planning in that:

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    • An amount of K 465,507 for Land Lease Rental payments from a
    private company held in Maladinas Lawyers Trust Account was not
    remitted to the Department and remained to be recovered.

    • A payment of K 18,559 to a private stationary supplier had not been
    recovered. The Auditor General further identified an advance payment
    of K504, 300 to a private surveying firm to carry out surveying and
    town planning work at 8 and 9 Mile in the National Capital District.

    • The follow up audit for the years 2001 – 2002 revealed no evidence
    available to vouch for the services paid for and value for money
    received by the Department.

    29.15. The budgeted revenue collection was K25,010,000. The actual collection
    was K17,551,000 – yielding a shortfall of K7,459,000. This represented
    29.82% as opposed to 22.02% in 2001.

    29.16. The 2003 revenue figures are:

    Lease Rentals K 16,914,840

    Licence Fees and Royalties K 21,612

    Sale of Allotments K 64,130

    Survey Fees K 18,834

    Surveyor’s registration Fees K 3,660

    Valuation Fees K 13,782

    Valuers Registration K 680

    Objection Fees K Nil

    Sale of Maps K Nil

    Surplus earnings on rentals K Nil

    Lodgement Fees K 39,635

    Recovery from materials and Services K. 212,674

    Physical Planning Fees K 1,035

    Sundry receipts K 1,034, 408

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    TOTAL K 18,325,290

    29.17. The net shortfall in revenue collection for 2003 totalled K4,919,423.

    29.18. There was a further problem with revenue. The Auditor General
    compared the total revenue collected as shown by the Department ledgers
    against the Department of Finance – Public Accounts – Statement “J”.
    This revealed a net difference of K650,787.00. This meant that the total
    revenue of the Department was understated by K650,787.00 in the
    Departmental ledgers. The Auditor General concludes that:

    “Prudent management practices called for reconciling of records
    between two different entities, bodies etc, for purposes of ensuring
    correctness of balances reported and to avoid duplication of payments,
    receipts etc.,

    The Department should ensure that its accounting records and data are
    accurate and reconciliation is one of the management tools to ensure
    correctness and completeness.”

    30. LAND RENTALS

    30.1. The Committee finds that the Department of Lands and Physical Planning
    has, for many years, failed to collect or enforce the payment of Land
    Rental to any acceptable standard.

    30.2. The Committee finds that, as a result of that failure, the Department and
    the Head of Department are in breach of the requirements of the Public
    Finances (Management) Act and will make certain referrals in this
    respect later in this Report.

    30.3. The Committee finds that during the period 2000 – 2005, huge amounts of
    Land Rentals have not been collected by the Department, to the
    considerable detriment of the State.

    30.4. From the Departments own documents and records, the Committee
    concludes that the following aggregated or accumulated amounts of Land
    Rental remain outstanding:

    2000 K. 54, 912, 718 . 49

    2001 K. 57, 692, 508 . 37

    2002 K. 63, 765, 757 . 39

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    2003 K. 65, 835, 960 . 58

    2004 K. 73, 505, 636 . 99

    2005 K. 77, 445, 204 . 11

    30.5. By any measure this is a significant loss to the State. It is unacceptable.

    30.6. The Committee notes that this total does not include Land Rental owed by
    Statutory Corporations which was waived by the NEC.

    30.7. The Auditor General calculates even more Land Rental to be outstanding
    but no ageing of these debts is possible due to poor record keeping by the
    Department.

    30.8. The Committee sought an explanation for this failure to collect and / or to
    forfeit, from the Secretary of the Department, Mr. Pepi Kimas.

    30.9. The Secretary blamed the lack of resources, lack of funding, lack of
    records, lack of staff and lack of cooperation by the Offices of the
    Solicitor General and the Attorney General and his own staff. The
    Committee does not accept these excuses.

    30.10. To some extent, the Department has manpower problems, but the
    Statutory mechanism to forfeit Leases for non payment is simple and a
    readily available coercive device, which has not been used by the
    Department, adequately or at all – to the considerable detriment of the
    State.

    30.11. The Committee considers that the failure by the Department of Lands and
    Physical Planning to collect Land Rental in a timely manner – or at all – is
    a failure of Management over many years and a breach by past and present
    Departmental Secretaries of their responsibilities under the Public
    Finances (Management) Act, in respect of which this Committee will
    make referrals for investigation and prosecution.

    30.12. Further, the Committee will recommend that Government take urgent
    action to address this failure.

    31. OBLIGATIONS OF THE DEPARTMENT OF LANDS & PHYSICAL
    PLANNING TOWARD THE PUBLIC ACCOUNTS COMMITTEE

    31.1. The Departmental Head and Secretary of the Department of Lands and
    Physical Planning is charged, by Section 5 of the Public Finances
    (Management) Act, with the responsibility to ensure that information

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    required by the Public Accounts Committee is submitted to that
    Committee accurately and promptly – (Section 5 (1) (j) ).

    31.2. The responsibility of that Departmental Head is not derogated from or
    reduced by reason of any delegation of functions by him to another
    person.

    31.3. The Committee concludes that the Secretary and Departmental Head of
    the Department of Lands and Physical Planning, Mr. Pepi Kimas, is the
    Officer responsible for attending, liaising and co-coordinating the
    attendance and co-operation of his Department with this Inquiry by the
    Public Accounts Committee.

    31.4. At this point, the Committee states that the obligations imposed on a
    Departmental Head are onerous. He takes, in some cases, personal
    responsibility for the failures of either himself or his Officers and a
    Departmental Head may be responsible for a very large and varied
    Department. For instance, the Department of Labour and Industrial
    Relations administers no less than 18 Acts of Parliament with all the
    attendant staff, accounting complexities and lines of command and control
    upon which the Head of Department must be entitled to rely, but for which
    he is also responsible.

    31.5. It is the Committee’s opinion that the duties of the Department of Lands
    and Physical Planning are clearly set forth in the Land Act and other Acts
    which it administers. Senior Officers of that Department are long-serving
    and could be expected to know their duties and to be placed to train their
    staff to ensure that those obligations are efficiently and effectively carried
    out.

    31.6. Moreover, the Secretary of the Department of Lands and Physical
    Planning gave sworn evidence to the effect that he understood the
    statutory obligations imposed on him by the Public Finances
    (Management) Act – which include cooperation and compliance with the
    Public Accounts Committee.

    31.7. In his role of responsible Head of Department, the Secretary for the
    Department of Lands and Physical Planning has the power to obtain full
    and free access at all times to all accounts and records of accountable
    officers that relate directly or indirectly to the collection, receipt,
    expenditure or issue of public money and the receipt, custody, disposal,
    issue of stores or other property of the State.

    31.8. Furthermore, he is empowered to inspect and inquire into and call for all
    information arising from those accounts and records at any time.

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    31.9. On the 5th day of September 2005, the Public Accounts Committee issued
    and served on the Secretary for Lands and Physical Planning, a Notice
    pursuant to Section 23 (1) (b) of the Permanent Parliamentary
    Committees Act 1994.

    31.10. That Notice required the production of a large number of documents, files
    and records relevant to the Inquiry. A copy of that Notice appears in
    Schedule 3 to this Report.

    31.11. The Committee reports that the Secretary of the Department of Lands and
    Physical Planning failed to produce to the Public Accounts Committee
    when directed to do so, a significant number of documents, records and
    files.
    31.12. In this regard the Secretary breached his statutory duty and was referred to
    the Office of the Public Prosecutor for investigation, pursuant to Section
    23 (3) (b) (iii) of the Permanent Parliamentary Committees Act 1994.

    31.13. On the 24th November 2005, the Public Accounts Committee issued and
    served a Summons to Produce Documents on the Secretary of the
    Department of Lands and Physical Planning, pursuant to Section 89 of the
    Public Finances (Management) Act.

    31.14. That Summons required the production of all missing documents, files and
    records. A copy of that Summons appears in Schedule 3 to this Report.

    31.15. The Secretary produced some of those materials, but all production was
    inadequate and, in many instances, non-existent. The Secretary proffered
    no acceptable explanation for this failure.

    31.16. It is notable that no documentary material at all was produced which was
    relevant to any land transaction which was unlawful, corrupt or otherwise
    tainted by Departmental misconduct.

    31.17. It is also notable that no records at all were produced in respect of any
    Land Board which was either incompetently convened or did not sit at all
    – despite the fact that State Leases were issued by the Department of
    Lands and Physical Planning from those non- existent Boards.

    31.18. The Committee again referred the Secretary for prosecution for this failure
    pursuant to Section 23 of the Parliamentary Powers and Privileges Act.

    31.19. The Committee sees no excuse at all for the failure of the Secretary for the
    Department of Lands and Physical Planning and his Management Team to
    produce even basic records, documents and files to the Public Accounts
    Committee.

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    31.20. This Committee can only conclude that the Department, its Secretary and
    Senior Managers refused or failed to comply with a Notice and a
    Summons of the Public Accounts Committee in a calculated and
    contemptuous manner, wherever they perceived that the refusal would
    assisted their witnesses and Departmental Officers or where the contents
    of documents would reflect unfavorably on the Department or individuals
    within the Department.

    31.21. The Committee also concludes that the Secretary for the Department of
    Lands and Physical Planning has no or no adequate control over his staff
    or their activities and that either the Secretary actively shields corrupt and
    /or incompetent staff or is directed by his staff – rather than the other way
    around.

    31.22. The Committee concludes that the Secretary is aware that documents are
    destroyed or removed within his Department, but refuses or fails to rectify
    the situation.

    31.23. We have previously referred to the frank sworn admission made to the
    Committee by Mr. Pepi Kimas, to the effect that his staff are paid to
    destroy documents and records. See Para 6.15 of this Report.

    31.24. A more candid admission of criminal conduct cannot be imagined.

    31.25. The Public Accounts Committee concludes that the Department of Lands
    and Physical Planning and its senior officers – in particular Mr. Pepi
    Kimas – have failed to cooperate and assist the Public Accounts
    Committee and failed to give frank and full evidence before the
    Committee – in particular concerning certain unlawful land transactions
    and illegal grants of State Leases for no or no adequate benefit to the
    State.

    31.26. Further, the Department and its officers have failed to comply with a
    Notice to Produce Documents and a Summons to Produce Documents,
    when it was in their power to so comply.

    31.27. This amounted to a defiance of the Directives of a Parliamentary
    Committee and a breach of the basic principles of accountability of the
    Department.

    31.28. Finally, the Committee concludes that the failure by the Secretary and
    Managers of the Department of Lands and Physical Planning to co-operate
    with the Public Accounts Committee when taken with other failures and
    mismanagement, reveals a management team that should be removed and
    replaced and a Department devoid of viable and competent lines of control
    and command – and thereby accountability and responsibility.

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    32. PART TWO – PERFORMANCE OF THE DEPARTMENT OF
    LANDS AND PHYSICAL PLANNING 1999 – 2002.

    32.1. The Committee chose, at random, five portions of alienated State Land
    which were granted into private hands prior to 2002.

    32.2. Of these five parcels of land, four were previously unallocated Reserved
    Land, National Park or public land and one parcel was the subject of an
    Agricultural Lease.

    32.3. The first purpose of this phase of the Inquiry was to ascertain if this land
    was lawfully granted into private hands.

    32.4. The second and principal purpose was to assess such issues as revenue
    collection, whether the Department carried out its duties to apply the law
    when granting and registering the Leases, the state of Rental arrears,
    tender prices collected, compliance by Leaseholders with Lease covenants,
    the protection of State assets and documentation, the keeping of accounts
    and action taken by the Department and its officers to protect the State and
    preserve national assets at any time since 1999.

    32.5. The third purpose of this phase of the Inquiry was to consider what steps,
    if any, the current Management Team of the Department had taken to
    recover illegally issued land or land in respect of which Land Rental was
    outstanding or other Lease Covenants had been breached.

    32.6. The Committee now reports in respect of each of those grants of State
    Lease:

    33. PORTION 1597 MILINCH GRANVILLE, FOURMIL MORESBY AT
    PAGA HILL – GRANT TO PAGA HILL DEVELOPMENT COMPANY
    LTD.

    BACKGROUND:

    33.1. On the 18th December 1997 Paga Hill Land Holding Company (PNG)
    Pty. Ltd. was granted an Urban Development Lease (“UDL”) over
    Portion 1597 Granville Port Moresby. This land comprises 13.7 hectares
    of Paga Hill in Port Moresby – virtually all the hill. This Committee
    concludes that the Grantee was Paga Hill Development Co. (PNG) Ltd.

    33.2. A large number of onerous conditions attached to the UDL – none of
    which, the Committee concludes, have been complied with by the Lessee.

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    33.3. This land was a Gazetted National Park and could not be granted away to
    private hands.

    33.4. The Committee finds that this land was of great National importance and a
    prime piece of recreational land for the residents of Port Moresby.

    33.5. How the land came to be given to private speculators is a good illustration
    of the failings and corrupt conduct of the Department of Lands and
    Physical Planning.

    33.6. The continuing refusal of the Department to recover the land for the State
    well illustrates the continued acquiescence of the Department in corrupt
    dealings and clearly shows the extent to which private interests control the
    Department at the expense of the State and the citizens of Papua New
    Guinea.

    33.7. This Inquiry was seriously impeded by the Departmental failure to
    produce any records or documents at all concerning the issue of the
    original UDL or a subsequent Lease – despite a Notice and Summons to
    do so.

    33.8. The Committee concludes that there should have been many pages of
    feasibility reports, assessments, surveys and plans produced to and
    maintained by the Department before the UDL could be converted to
    another form of State Lease. The Secretary for Lands produced only nine
    pages of material – much of which was irrelevant.

    33.9. In light of the evident illegality which attended the grant of this Lease, the
    Committee concludes that the Department of Lands and Physical Planning
    deliberately refused to comply with legitimate directives and a Summons
    from this Committee to protect either or both the recipients of the Lease
    Grant and/or Departmental Officers involved in the grant process.

    33.10. The only excuse proffered by the Secretary for this failure, was a
    suggestion that the files “may possibly” be with the Ombudsman
    Commission. The Committee questioned the Secretary on this suggestion,
    but neither the Secretary nor other Departmental officers had any interest
    in establishing the true whereabouts of the relevant files and documents.

    33.11. The Committee concludes that Mr. Kimas would rather be prosecuted for
    failure to produce documents, than reveal that the documents either never
    existed or be prosecuted as a result of their contents becoming known.

    33.12. The Committee treats this failure as a very serious breach of the Law.

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    33.13. The following analysis of how this National Park came to be in private
    hands is therefore made with no assistance at all from the Department or
    its officers.

    34. THE LAND

    34.1. Portion 1597 Milinch Granville, Fourmil Moresby comprising two parts
    containing a total area of 13.1198 hectares was reserved from Lease by a
    Declaration in the National Gazette G59 dated the 10th September 1987 for
    the purposes of “Open Space” to be managed by the National Parks Board.
    In other words the land was preserved for future generations as a National
    Park.

    34.2. There were good reasons for this to occur. The Land is of considerable
    historical importance to the nation, containing as it does, Wartime
    Bunkers, Gun Emplacements, tunnels and, apparently, significant pre-
    historical sites.

    34.3. Further, the situation of the land in the centre of a growing city offers
    superior recreational facilities to the occupants of Port Moresby. It is now
    and will increasingly be a vital recreational area for central Port Moresby.

    34.4. Part of the land was occupied by a Police Mess Hall and Police Hall
    apparently owned and operated for the benefit of Police Legacy. In
    recognition of this, the Police were granted a “Certificate Authorising
    Occupancy of Land” over part of the land – issued on the 11th September
    1987.

    34.5. There is no apparent Gazettal of Revocation of the Reservation of Lease or
    the Certificate Authorising Occupancy of Land until the National Capital
    District Physical Planning Board by Meeting 2a/2000 rezoned the land
    from Open Space to Commercial, Part Residential, Part Public
    Institutional and Part Utilities by Gazette Notice dated 22nd May 2000.

    34.6. Precisely how, why and at whose request this was done remains totally
    unclear in the absence of documents or records from the Department.

    34.7. The Committee cannot conclude on the reasoning behind the Revocation
    of the Land as a National Park.

    34.8. In or about 1995, the National Parks Board ceased to exist. There was no
    management of the Park and it is fair to assume that speculators saw the
    land as ripe for acquisition.

    34.9. The State, in general, and the Department of Lands and Physical Planning
    in particular allowed and co-operated in the taking of this National Park

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    from the citizens of Papua New Guinea by profiteers who, subsequent
    events showed, had no capacity to develop the land at all.

    35. THE URBAN DEVELOPPMENT LEASE.

    35.1. Four applications for grant of this Land were referred to Papua New
    Guinea Land Board No. 1991 (Item 2) each seeking a grant of a Business
    (Commercial) Lease over the land – one of which was Paga Hill Land
    Holding (PNG) (sic). The Land was still a National Park.

    35.2. The Committee can establish that Land Board No.1991 purported to
    convene on Friday 22nd August 1997. The Board was chaired by Mr.
    Ralph Guise.

    35.3. The Land Board apparently completely ignored the fact that the land was a
    National Park and could not be the subject of such tenders or of a Grant of
    Lease.

    35.4. Police Legacy advised the Land Board in writing of its interest in and
    development plans for part of the land. Representatives of Police Legacy
    apparently attended the Land Board.

    35.5. It seems that the Land Board No 1991 recommended that “Paga Hill
    Land Holding PNG” (sic) be granted a Lease over Portion 1597 Milinch
    Granville Fourmil Moresby – with an orally imposed condition that the
    land area the subject of Police Legacy’s interest was to be excised from
    Portion 1597 by the “Developer” and that Police Legacy would be
    granted appropriate title thereafter.

    35.6. Thus far, the only record of such a condition is a hand written memo or
    record apparently signed by the Chairman of the Land Board Mr. Ralph
    Guise. That memo records:

    “Recommendations:

    Of Papua New Guinea Land Board go in favour of Paga Hill Land
    Holding Co. Ltd. to develop and improve portion 1597 Granville over
    (sic) five year period to a value of K M 300.

    Foot Note:

    Company appears to have access to sufficient funds to fulfill
    requirements.

    1. Annexation of Police Mess to be undertaken by developer in favour
    of RPNGC

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    2. Dept. and developer maintain a close liaison to accommodate
    requirements as highlighted by Department.”

    35.7. There would appear to be no real protection at all for the property of
    Police Legacy. The Committee concludes that this charitable Police asset–
    and therefore State or public asset – has simply disappeared with no
    protection given by the Department.

    35.8. An Improvement Covenant is clearly set out in that UDL. It requires
    improvements to a value of K 300 million to be undertaken in the first five
    years of occupation.

    35.9. Such a covenant would be onerous to a large well resourced company. As
    of March 2006, there is no development on the land at all. How the Land
    Board concluded that the Grantee could meet the Improvement Covenant,
    is unknown in the absence of any documentation.

    35.10. That Lease contained strict covenants requiring detailed reports on all
    aspects of the proposed development before the UDL could be surrendered
    and a Business Lease issued – none of which have apparently been met by
    the Lessee. If they have been met, the Department has failed or refused to
    produce any documents at all which show this compliance.

    35.11. The Committee concludes that, in order to comply with the UDL
    Covenants, at least the following documents had to exist:

    • Records of Land Board meeting No. 1991

    • Minutes of Land Board No. 1991

    • Recommendations of Land Board 1991

    • Advertisement or call for tenders or

    • Exemption from advertisement

    • Applications for Grant of Lease

    • Supporting documents to those applications

    • Internal working papers relating to the issue of the UDL

    • Approvals for the Grant of UDL by Departmental Officers

    • Ministerial paperwork on the issue of the UDL

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    • Copies of the UDL

    • Land Rent records

    • Records of improvement expenditure by the Lessee

    • Records of Planning or Surveying

    • Any Gazette Notices at all

    • Instructions to the Government Printer

    • Submissions or proposals for Capital expenditure on Public Open
    Space

    • Submissions or proposals for upgrading or rehabilitation of war
    Relics or plans therefore

    • Compliance with any one of the Covenants in the UDL

    • Records of arrangement, discussion or payment to the National
    Housing Corporation in respect of National Infrastructure

    • Proposals or actual steps taken to protect Police Legacy

    • Revocation as Open Space in 2000

    • Records of legal advice and action taken in respect thereof

    • Reserve of tender price levied or paid

    • Proof of Land Rental paid

    • Any submissions of reports, Plans, Zoning Reports, development
    plans, infrastructural and utility service details, cadastral boundary
    survey plans, area survey for conservation purpose, demarcated
    areas for NCDC Parks and Open Space and waterfront
    development details to your Office for approval

    • Approvals by Physical Planning Board, Eda Ranu, NCDC
    engineers, Surveyor General, Department of the Environment,
    Harbours Board, IPA and Tourism Promotion Authority

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    • Proof of compliance with Improvement Covenant or capacity to do
    so.

    This list is not exhaustive.

    35.12. Not a single sheet of paper was produced in respect of any of these matters
    and no explanation as to that failure was made.

    35.13. Further, due to the non-production of documents, this Committee cannot
    know the identity of the other supposed applicants for State Lease or the
    nature of the successful tender and can make no findings on the legality
    and transparency of the tender process.

    35.14. The failure to comply with the UDL covenants, particularly the
    Improvement Covenant, should have resulted in the Department forfeiting
    the Lease – or at the least, not issuing a Business Lease.

    35.15. More properly, the Department of Lands should have cancelled the Lease
    years ago on the basis that it was unlawfully issued.

    35.16. The Committee finds that the grant of the UDL was and is now unlawful
    for a number of reasons. They are at least:

    i) There was no quorum at the original Land Board. The Solicitor
    General advised the Department of Lands that the Grant of the Lease
    was illegal for this reason, but the Department ignored the advice.

    ii) The Land Board could not have been reasonably satisfied that the
    applicant could raise K.300 million in five years. Indeed, the
    Committee finds that the Lessee cannot pay the Land Rental and has
    sought relief from that obligation, much less fund a development of
    the magnitude required.

    iii) The land was a National Park zoned Open Space. The land should
    have been zoned as sub-divisional land in order that a UDL could
    issue, but was not and could not have been so zoned.

    35.17. The Committee finds a complete and inexplicable failure of the
    Department to ensure that even the most basic legal requirements were
    either imposed or met and this resulted in a total failure to protect State
    Land and public assets.

    36. THE BUSINESS LEASE

    36.1. In 2000, a company called Paga Hill Development Co. (PNG) Ltd was
    formed.

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    36.2. On the 01/09/2000, a Business Lease over Portion 1597 Granville was
    granted to Paga Hill Development (PNG) Ltd. This Lease was registered
    as State Volume No. 24 Folio 159. How and why this new Company,
    rather than the original Grantee, was able to obtain this Lease is unknown.

    36.3. The Lease should have been issued to the same company that held the
    Urban Development Lease.

    36.4. This Business Lease issued out of the UDL granted to Paga Hill Land
    Holding Company (PNG) Ltd. in 1997. It should have been issued to
    that company.

    36.5. The Department itself states that the UDL has not been surrendered – so
    two Leases appear to exist over the same land. In a memo to the Secretary
    for Lands, dated the 18th March 2003, the issue of the Business Lease is
    described as “dubious”.

    36.6. Further, the Business Lease related to the entire area and assumed that all
    the land was zoned “Commercial”. This was not the case. There were
    varied zonings and the Lease was illegally issued.

    36.7. This Lease contained only very basic covenants requiring payment of
    Land Rent and an Improvement Covenant requiring improvements to a
    minimum of K 10 million within five years of issue of the Lease – on the
    1/09/2000. Neither covenant has been complied with. No attempt has been
    made to forfeit the Lease by the Department for this failure.

    36.8. This Business Lease could not have lawfully issued. The reasons are at
    least:

    i) The UDL was unlawfully granted and issued (see above Para 25.16).

    ii) None of the stringent conditions in the UDL had been met. In
    particular the Department has produced no evidence that:

    a) the 10% dedicated as Open Space has been excised; or

    b) the historical relics have been returned to the Department of
    Heritage; or

    c) the Lessee could or did meet the capital cost of establishing Open
    Space and renovation of the heritage sites or that they have been
    handed back to the respective authorities; or

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    d) any arrangement with National Housing Corporation for
    compensation by the Lessee for demolishing government
    Institutional improvements; or

    e) the Lessee submitted a Master Plan to the Secretary for Lands
    within 12 months of the grant or that the Master Plan contained
    any of the matters prescribed; or

    f) that any Master Plan had approval of the Physical Planning Board,
    Eda Ranu, NCDC Engineers, Surveyor General, Dept. of
    Environment and the Tourism Promotion Authority or the
    Harbours Board; or

    g) that the Secretary for Lands approved (or even saw) any Master
    Plan (if it ever existed).

    h) the improvement covenant in the UDL had not been met in whole
    or in part; and

    i) rent was in arrears and remains in arrears; and

    j) The Lessee had failed to meet all conditions and clearly had no
    capacity to do so; and

    k) The works proposed and covenanted for in the UDL must be
    approved by the Physical Planning Board – there is no evidence
    that this ever occurred.

    l) The Lease contravenes Section 67 of the Land Act as it contradicts
    the multi Zoning of the Land

    36.9. The unimproved value of the Land was assessed at K 5,000,000 in which
    case the correct Land Rental, at 5% of that value, should be K 250,000 p.a.
    This is the Rental appropriate to a Business Lease.

    36.10. On the 24/05/ 2001, the Lease was changed by handwritten notation which
    reduced the Land Rent from K 250,000 per annum to K 50,000.

    36.11. The Committee finds that there is no power to correct the record in this
    fashion.

    36.12. When questioned as to the identity of the Officer who changed the amount
    and the legal basis so to do, both the Secretary and Deputy Secretary of
    the Department could not tell the Committee.

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    36.13. There is no explanation for this reduction. This means that with the active
    collusion of the Department, the State has lost a minimum of
    approximately K 900,000 from 2000 until 2005.

    36.14. Further, the Committee finds that the amended Land Rent of K 50,000 is
    1% of the unimproved value – this is the Rent applicable to an Urban
    Development Lease which, apparently, was surrendered in 2000.

    36.15. The Committee was advised that the Lessee could not pay even this
    reduced amount. A Departmental Officer then agreed to allow the Lessee
    to pay the Land Rent over a period. This Officer had no power to do so.
    Why then was the Department prepared to unlawfully allow such a Lessee
    time to pay?

    36.16. The Committee sought to identify the Officer who entered the
    arrangement.

    36.17. The transcript shows the following exchange:

    HON. JOHN HICKEY MP:

    “Mr Kila Pat did you make some arrangements with the Leaseholder to
    allow payment of Land Rent over a period?

    MR. ROMMILLY KILA PAT (Deputy Secretary of the Department of
    Lands and Physical Planning)

    “Chairman I think I have done that in writing”.

    And later

    MR. KILA PAT;

    “Considering the fact that if …..any other Lessee if they have any
    difficulties in paying one up payment in front they can come to the
    Department to arrange for payments over a period of time within which
    they should be able to settle all or whatever the outstanding fees are”

    HON JOHN HICKEY MP:

    “That is quite difficult for us to accept when there are clearly stated
    ………..covenants you know, the covenant on the land for development
    was K 300 million in five years and here you have a Lessee who said
    they had K 300 million to spend on developing the land and they come
    along and say we cannot pay the K 250,000 rents per year which is
    nothing compared to K 300 million.

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    Who allowed this Leaseholder to pay less Rent…..Did you make
    arrangements with the Leaseholder?

    MR. ROMILLY KILA PAT:

    “The arrangements were basically based on the figures that were
    outstanding at the time, but in terms of paying out rental I do not have
    the authority to say you don’t pay this much”.

    36.18. The reduction in rent was made by Mr. Pat, as was a time payment
    arrangement for the benefit of the Lessee. This was quite unlawful – as
    Mr. Pat acknowledged. The Committee was prevented from following this
    line of Inquiry as Mr. Pat departed Papua New Guinea for a study course
    in Australia whilst under Summons to this Committee – with no
    notification to the Committee.

    36.19. Even at the reduced amount, Land Rent owing to the State was K 237,000
    in arrears as at 28th February 2006. The Committee notes that as of the
    28th February 2006, the last payment of Land Rental was made on the 30th
    March 2005.

    36.20. As if these illegalities were not enough, on the 21st October 2002, the then
    Minister for Lands agreed to a request from the principal of Paga Hill
    Development Company limited, to waive all past and future rentals until
    January 2006.

    36.21. The reason for the request by the Lessee was that the Land Rental could be
    better used in sourcing international investors to develop the land – a
    contention with which the Minister agreed.

    36.22. The Minister further agreed to extend the Improvement Covenant from
    five to ten years – a decision made with no legal basis at all.

    36.23. The Committee concludes that, for once in this transaction, the
    Department acted quite correctly in refusing to accept the Ministerial
    waiver of Land Rental.

    37. FINANCIAL LOSS TO THE STATE

    37.1. The Committee concludes that the State has been deprived of Rental
    payments by the illegal expedient of retrospectively changing the Lease
    condition and by the failure of the Department to recover the land either
    by forfeiture or by cancellation of the Lease.

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    37.2. In the absence of any evidence to the contrary from the Secretary for
    Lands and Physical Planning or his Officers, the Committee concludes
    that no Tender or Reserved Price has been applied.

    37.3. This failure has cost the State at least K 3,000,000.00 – representing 60%
    of the unimproved value. The Department appears to have taken no steps
    at all to protect the position of the State in this regard.

    37.4. Why the Lease has not been forfeited is unknown. Land Rent is in arrears
    and no development at all has taken place. Non-compliance with the
    Leasehold improvement covenant and/or non-payment of land rent for six
    months constitutes grounds for forfeiture.

    37.5. Why the lease has not been cancelled for want of lawful issue is unknown.
    Moreover, the Lessee has attempted to sell shares in the Lessee Company
    with no apparent attempt to even start the development of the site. In
    2005, 50% of the shares in the Company Paga Hill Development
    Company Ltd were offered to a Western Province Landowner Company
    for K 27 ,000,000.00.

    37.6. If this is a true valuation of the Company (the only asset of which seems to
    be the Paga Hill Land) the loss to the State by under-calculated Land
    Rental and tender and Reserve Price is huge.

    37.7. Further, the Committee concludes that Paga Hill Development Company
    Ltd. has done nothing to protect the interest of Police Legacy at all.
    Neither has the Department of Lands and Physical Planning. Both entities
    are in breach of their obligations in this regard and the State through
    Police Legacy has lost a significant asset.

    37.8. Examination of the few documents produced to this Committee and the
    evidence given by witnesses show clearly that prime land and a National
    Park, has been illegally given to a private, foreign speculator with no
    ability to even pay the Land Rental, much less build anything on the site.

    38. FAILURES BY THE DEPARTMENT

    38.1. In this transaction, the Committee concludes that the Department of Lands
    and Physical Planning has failed in its obligation to ensure that:

    i) the offering of land for tender was lawfully carried out; and

    ii) the land exposed to public tender was lawfully available; and

    iii) the Papua New Guinea Land Board understood the basic legal
    requirements for the offering of land for tender; and

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    iv) the Land Board and the Department understood and complied with
    Land Zoning and Reservation; and

    v) the Papua New Guinea Land Board understood the law under
    which it operates and the procedural requirements for its meetings;
    and

    vi) the Papua New Guinea Land Board be properly advised in its
    deliberations; and

    vii) any defects in the grant of Leases be identified and rectified, before
    Leases issued or that the Lease not issue at all; and

    viii) legal advice received be acted upon; and

    ix) Departmental officers understand the relevant law and act upon
    legal advice received; and

    x) Departmental officers understand their obligations to obey the law
    and their role and function in protecting the interests of the State
    over those of private enterprise; and

    xi) the forfeiture provisions of the Land Act be acted upon for
    breaches of covenants or legal obligations; and

    xii) the Lease was cancelled for illegal issue; and

    xiii) Departmental Officers not proceed in any transaction unless and
    until all legal obligations, conditions or covenants whatever are
    complied with by applicants; and

    xiv) Departmental Officers understand and obey their duty to properly
    calculate and collect monies owed to the State; and

    xv) the Departmental Officers understand and fulfil their statutory
    obligations in all respects – in particular that the Department
    competently and lawfully manage land, collect and account for
    monies owed to the State and that all Managers and Officers of his
    Department obey directions and implement legal requirements; and

    xvi) the Departmental Secretary promptly reply to letters from
    interested parties and not delay or ignore obviously relevant
    matters; and

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    xvii) no person or company be given preferential or favoured treatment
    – particularly where that person or company is in breach of lawful
    obligations and in particular where the unlawful alienation of State
    Land is sought; and

    xviii) interests of the State and the citizens of Papua New Guinea prevail
    over those of a private foreign company; and

    xix) it protected the State and State assets from misappropriation or
    misuse.

    xx) the terms of the Land Act be applied; and

    xxi) transparency and honesty prevail in the processes of tender for and
    grant of State Leases.

    39. FAILURES BY THE SECRETARY FOR LANDS

    39.1. This Grant was made before the current Secretary for Lands, Mr. Pepi
    Kimas was appointed, but the Committee considered what, if any, steps
    the past or current Secretaries had taken to rectify this matter.

    39.2. In the opinion it would have been proper for this Lease to have been
    cancelled or forfeited at any time.

    39.3. Despite the fact that the Secretary for Lands and Physical Planning failed
    to produce relevant documents and files to the Public Accounts
    Committee, it is clear to the Committee that the Secretary is well aware of
    this transaction and of the illegalities attending the issue of the Lease over
    Paga Hill.

    39.4. The Committee finds that Mr. Kimas has done nothing. He and his
    management team have failed to protect the position of the State, and he
    has thereby breached his statutory duties as Departmental Secretary and
    Head of Department.

    39.5. The Committee questioned Mr. Kimas on this failure. The Committee also
    questioned Mr. Kimas on similar failures in respect of other State Leases
    illegally given into private hands.

    39.6. The explanations proffered to the Committee for these failures were
    contradictory and without any force.

    39.7. The Committee notes that on the 29th day of November 2005, the
    Secretary for Lands undertook to the Committee, while on oath, to serve
    Notices to Show Cause on the Lessee of the Paga Hill Land, as a precursor

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    to a forfeit of the land. He undertook to do so within 48 hours. The
    evidence was:

    HON JOHN HICKEY MP

    “There are a whole lot of illegalities attached to it (Paga Hil). Illegalities
    caused by greed. And if we do not do anything about it, it is in the hands
    of two foreigners who do not live in our country. ………As we speak this
    land is falling into the of two foreigners. Secretary please you and your
    officers’ action this immediately – get this land back to us before the
    February hearing.

    MR PEPI KIMAS

    “Chairman, I’ll give the copies of the Notice to Show Cause to the
    lawyers within 48 hours from now.”

    Evidence given to the Committee 29/11/2005.

    39.8. So far as the Committee can ascertain, despite this undertaking, nothing
    has been done.

    39.9. Nowhere is the cavalier and contemptuous attitude of the Secretary toward
    a Parliamentary Committee better illustrated than by this hollow
    undertaking.

    39.10. The Committee concludes that the Secretary for Lands completely failed
    in respect of this transaction alone:

    a) to produce any records at all relating to the cancellation of the UDL
    and grant of a Business Lease to Paga Hill Development Company
    (PNG) Ltd.. The Committee therefore concludes that the documents
    do not exist.

    b) that the proper legal requirements for grant of a Lease were not met
    – and that the Secretary knows this, but has done nothing to rectify
    the situation; and

    c) to meet his obligations imposed by the Public Finances
    (Management) Act, in that he has failed to levy and collect State
    revenue in accordance with Law despite giving sworn evidence that
    he knew and understood those duties; and

    d) to enforce the provisions of the Land Act and other statutory
    requirements; and

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    e) to properly and adequately control his Department and officers; and

    f) to act in a prudent and competent manner to ensure that State assets
    and property are protected as soon as illegality or abuses became
    known to him; and

    g) to meet his obligations and duty under the Public Finances
    (Management) Act and in particular to obey Section 5 (a), (b), (c),
    (e), (g), (h), (i), (j) and (k) – and is thereby open to surcharge,
    penalty and disciplinary action for these failures – See Section 5 (3)
    Public Finances (Management) Act 1995.

    h) to exercise his powers as Departmental Head to obtain full and free
    access to all accounts and records relating to collection, receipt
    disposal or custody of property or monies of the State.

    i) to exercise disciplinary powers over his staff; and

    j) to act in a professional, competent and lawful manner in the
    exercise of his duties and responsibilities; and

    k) understand the importance of his role in controlling or reversing this
    transaction and ensuring that the law is enforced; and

    l) to obey Section 112 of the Public Finances (Management) Act
    1995 and thereby committed an offence by failing to produce
    documents under his control when required to do so.

    m) to give candid and frank evidence to the Public Accounts
    Committee; and

    n) To take any or any adequate steps to serve the interests of the State
    over those of the Lessee.

    39.11. The PAC has sound jurisdiction to inquire into this grant. That jurisdiction
    lies at least under Section 86 (1) (d) (iv) and (f) of the Public Finances
    (Management) Act 1995 and Section 17 of the Permanent Parliamentary
    Committees Act 1994 because:

    i) The State and the public has been deprived of a valuable asset; and

    ii) the UDL was apparently unlawfully granted; and

    iii) the subsequent State Lease has been unlawfully granted for a number
    of reasons; and

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    iv) the true reserve price was possibly as much as K 3,000,000. The
    State has received nothing; and

    v) the true Land Rent is possibly as much as K 250,000 per annum not
    the K 50,000 now applying – which is significantly in arrears – the
    State has lost revenue thereby; and

    vi) the Royal Papua New Guinea Constabulary Legacy fund has lost a
    valuable asset which is a public asset and subject to the Public
    Finances (Management) Act 1995; and

    vii) the Grantee has failed to comply with any undertaking or covenant in
    the UDL and the Department failed to enforce those covenants; and

    viii) detailed protection of a National historical assets on the land
    comprised in the UDL has completely disappeared in the State
    issued Business Lease. The State and public interest in preserving
    the considerable historical sites on the land (which was a major
    reason that the land was Gazetted a National Park) has been given
    away; and

    ix) the State and public interest in preserving the recreational value of
    the land ( which no doubt was one reason for Gazetting the land as a
    National Park) has disappeared; and

    x) the means by which the land ceased to be a National Park (if it ever
    did cease) is entirely unclear. The State appears to have been
    deprived of the asset for no good reason; and

    xi) the Lessee had and has no ability to fulfil the Improvement
    Covenant, hence the State has lost revenue thereby; and

    xii) the Grantee has failed to pay rent, rates or comply with improvement
    covenants. The Department has failed to do anything to collect or
    forfeit the Lease; and

    xiii) the Grantee is clearly only intending to make profit at the expense of
    the State and the citizens of Papua New Guinea; and

    xiv) even if the land had been lawfully allocated into private hands,
    absolutely no development has occurred at all. Very significant
    development covenants have been ignored and/or not enforced by
    the Department. The State may be said to have lost revenue thereby;
    and

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    xv) The original grant was invalid for want of a quorum at the Land
    Board and despite advice from the State Solicitor, no action to forfeit
    or cancel the Lease has occurred. The Department has failed to act in
    a lawful manner and has clearly chosen to ignore the Law in favour
    of the interests of the Grantee – at the expense of the State; and

    xvi) not only has the Department of Lands and Physical Planning failed
    to impose and collect appropriate rent, an Officer of the Department
    has apparently agreed to accept a reduced amount as land Rent
    payment – with no power so to do. The State has lost revenue
    thereby; and

    xvii) an Officer of the Department has, unlawfully, permitted the Lessee
    to pay Land Rent over a period – which agreement the Lessee has
    breached, with no action from the Department: and

    xviii) knowing some or all of these deficiencies, the Department and the
    Secretary in particular have failed to do anything to reverse the grant
    or to protect the interest of the State over that of individuals.

    39.12. The Committee makes further recommendations and referrals later in this
    Report.

    40. SECTION 122 HOHOLA.

    40.1. This is a complicated matter, but well illustrates both inept decision
    making by the Land Board in the period 1999 – 2002 and the influence
    that certain entities have exercised over that Board.

    40.2. The Land Board has Granted and the Department has issued, State Leases
    over land that was, and still is, zoned as Reserved open Space Land for the
    benefit of the public.

    40.3. Consideration of the facts shows a clear pattern of conscious illegality in
    the Lands Board and (at best) cooperation by the Department of Lands and
    Physical Planning.

    40.4. The dealings also well demonstrate the paralysis of action that attends the
    Department of Lands, even when the illegalities of Lease issue are known
    to the Department and have been publicly acknowledged by it.

    40.5. The history of this parcel is complex. A précis is presented below, but the
    grants and issues of private title over all of Section 122 Hohola are
    unlawful and require immediate action from the National Government to
    rectify the defects and/or reinstate this valuable public asset – if indeed it
    is not too late to do so.

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    40.6. The Committee directed the Secretary of the Department of Lands and
    Physical Planning to produce documents and records by Paras. 6, 7, 8, 27,
    28, 29 and 30 of the Notice to Produce Documents dated the 5th September
    2005 – See Schedule 3 to this Report.

    40.7. The Secretary produced records of payment which were generally
    adequate and responsive, but all other documentation was inadequate.
    There have been no documents produced at all to show the decision
    making process leading to the issue of Leases and no records of the
    relevant Land Board meetings.

    41. THE GRANT AND SUBDIVISION:

    41.1. This large tract of land lies opposite the SP Brewery and extends to the
    Gordons Police Station. It was zoned as “Reserved Land” and is used as
    public recreational land. The land has been subdivided and been
    unlawfully granted to private ownership.

    41.2. The Committee finds that there are five sequential Survey Plans for this
    land which have variously subdivided the area into Allotments. With each
    Plan the designation of the Allotments has changed. These Plans are:

    Survey Plan Date of Registration Comment.

    49/901 1969 Section 122 Hohola.

    49/1507 23/11/1982 Lots 1 – 7 Section
    122 Hohola –
    supersedes Plan
    49/901.

    49/1867 10/07/1990 Lots 6 – 10 Section 122
    Hohola, formerly Lots 8 and
    9, formerly part Allotment 1
    Section 122 Hohola.
    This Plan partly supersedes
    Plan 49/1507 and is
    concurrent with 49/1887.

    49/1887 10/07/1990 Allotment 11 Section 122
    Hohola formerly Allotments
    1,2, 3 and 4 Section 122

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    Hohola, part 15 metre road
    and 3 metre and variable
    width reserve on Plan
    49/1507; this Plan partly
    supersedes Plan 49/1507 and
    is concurrent with Plan
    49/1867

    49/2276 17/03/1997 Allotments 12 and 13 Section
    122 Hohola plus Freeway
    widening ; this Plan
    supersedes Plans 49/1507
    and 49/1887 and cancels
    Allotment 11 Section 122
    Hohola.

    41.3. This means that on and from the 17/03/1997, Lots 1, 2, 3, 4, 5 and 11
    Section 122 Hohola were cancelled – they ceased to exist. This
    progressive Sub-divisional change was presumably done with the
    cooperation of the NCDC.

    41.4. There now follows a descriptive tracing of subsequent dealings with
    Allotments 1, 2, 12 and 13 by the Land Boards and the Department of
    Lands and Physical Planning – despite the fact that they were either
    cancelled or reserved as “Open Space”. Although dealings with other
    Allotments are equally legally doubtful, these selected Allotments are the
    easiest to understand.

    41.5. From this examination, the Committee concludes that the State has been
    deprived unlawfully, of a large and valuable tract of land for no or no
    adequate recompense, that the State has been exposed to liability by
    Departmental actions and failures and that the public have been deprived,
    quite illegally, of prime recreational land.

    42. ALLOTMENT 1 SECTION 122 HOHOLA:

    42.1. Allotment 1 Section 122 was “Reserved from Lease” for the purposes of
    “Public Recreation” at page 1085 of the National Gazette dated the 28th
    November 1985 and thereby was the subject of a trusteeship vested in the
    NCD Interim Commission by Gazettal at Page 334 of the National Gazette
    G17 dated the 26th March 1987.

    42.2. Allotment 1 Section 122 was cancelled by Survey Plan No. 49/1887
    registered on 10 July 1990.

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    42.3. Despite the cancellation and the overall reservation as Public Space, Land
    Board No. 2006 Item 101, heard an application from the NCDC and
    granted a Special Purpose (Park Reserve) Lease over Allotment 1
    Section 122 Hohola and this recommended grant was formalized by
    Gazettal Notice on the 17th June 1999.

    42.4. The Lease may not have actually issued – quite correctly given that the
    Lot had been cancelled – but the fact of issue illustrates the inept quality
    of Land Board decision making.

    43. ALLOTMENT 2 SECTION 122 HOHOLA.

    43.1. This Allotment also ceased to exist on the 10th July 1990.

    43.2. Despite this, Land Board 2006 Item 102, heard and granted an application
    from the NCDC for the grant of a Special Purposes (Park Reserve)
    Lease over Allotment 2, and this recommended grant was formalized by
    Gazettal Notice on the 17 June 1999.

    43.3. Clearly such a grant cannot issue as the Allotment ceased to exist.

    44. ALLOTMENT 12 SECTION 122 HOHOLA.

    44.1. Papua New Guinea Land Board No. 2017 did not convene as scheduled
    on either the 24th November 1999 or the 10th December 1999. No meeting
    was ever held.

    44.2. However, the Chairman of the Land Board, Mr. Ralph Guise, unlawfully
    and improperly signed a typeset Notices of Grant purporting to derive
    from that Land Board. The Chairman had no power to do so.

    44.3. State Lease Volume 23 Folio 182 comprising a Business (Commercial)
    Lease over Allotment 12 Section 122 Hohola (apparently zoned “Public
    Institutional”) did issue in favour of Mr. Andrew Mald – although this title
    was cancelled by the Registrar of Titles on the 10th August 2000, as it
    should have been.

    44.4. The title was reinstated by the National Court upon application by Mr.
    Mald – apparently lawyers representing the State did not oppose the
    application – and so far as the Committee can ascertain, may not have
    attended the court at all.

    44.5. In early 2006, this land was sold and transferred as unimproved land. This
    transfer was made by the Department of Lands regardless of a
    Departmental prohibition on such transfers.

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    44.6. The sale price was K 1.3 million for land which was illegally granted and
    subsequently illegally transferred. The Department thereby lost the one
    opportunity it had to recover this land for the State.

    45. ALLOTMENT 13 SECTION 122 HOHOLA.

    45.1. Allotment 13 (previously Allotments 1, 2, 3 and thence Allotment 11)
    Section 122 Hohola was and still is zoned “Open Space”.

    45.2. Section 67 of the Land Act states that a Lease cannot be granted :

    “ ….in contravention of the zoning of the subject land.”

    45.3. Despite these facts, this 6.49 ha. of prime land was the subject of an
    application by Virgo No.65 Ltd for the grant of a Business (Commercial)
    Lease. This Application was listed before Land Board No. 2006 (Item 20).

    45.4. Furthermore, this land was exempted from advertisement – presumably in
    accordance with one of the grounds in Section 69 (2) of the Land Act
    1996, although none of the provisions in that Section seems to apply. The
    Department of Lands have attributed this exemption to persons within the
    Office of the then Minister for Lands.

    45.5. There was at least one other Application that pre-dated this dubious
    exemption and, considering that an exemption relates to land and not to a
    particular applicant, all applications received before the exemption should
    have gone to the Land Board – although here no application should have
    been sent to the Land Board at all as neither Application complied with
    the “Open Space” zoning.

    45.6. Although not directly relevant, it is notable that PNG Land Board 2006
    also heard and granted another application by Virgo No.65 Ltd for a
    Business (Commercial) Lease over two allotments in Mount Hagen –
    despite the fact that this land is zoned “Open Space” – as was Allotment
    13 Section 122 Hohola. Two Business (Commercial) Leases have issued
    to Virgo No. 65 Ltd for the land in Mount Hagen.

    45.7. It is an inexplicable fact that the same Land Board hearing this application
    (which stated that Allotment 13 previously comprised Allotments 2 and 3
    Section 122) also considered and recommended the grant to NCDC of a
    Special Purposes (Park Reserve) Lease over Allotments 1 and 2 Section
    122 Hohola – which no longer existed.

    45.8. The Land Board therefore managed to deal with the same land in two
    different forms – one existing and the other not – for two different

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    applicants, notwithstanding that the land was zoned “Open Space” and
    could not be dealt with at all. One grant to Virgo No.65 Ltd and the other
    (over Lot 2 – actually Lot 13) to NCDC.

    45.9. The Grant was subsequently cancelled by Gazettal for want of compliance
    with Section 67 of the Land Act 1996. This is to the credit of the
    Department. However, the National Court, in the absence of opposition
    from the State, ordered the title to issue – an Order that the Minister for
    Lands obeyed.

    45.10. This Committee concludes that the NCDC and the public had lost zoned
    Reserved Land, the State had received no payment and the whole
    transaction was totally unlawful. More worrying is the failure of the
    Department to protect this asset in the first place.

    45.11. The dealings with Section 122 Hohola well illustrate the shortcomings of
    the Land Board system and these transactions are by no means isolated.
    The dealings are not consistent with mere incompetence.

    46. ALLOTMENTS 14, 15, 16 AND 17 SECTION 122 HOHOLA.

    46.1. These Allotments are zoned “Open Space”. They are not the subject of
    any cadastral survey and therefore still probably form part of Allotment 13
    Section 122 Hohola.

    46.2. Three applications, each seeking the grant of a “Business and Special
    Purposes Lease” (note it should be a Business or Special Purposes
    Lease) were made for this Land by Rohn No.3 Ltd, Pohn Ltd and Itu
    Development Ltd. and were listed before PNG Land Board 2005 (Items
    132, 133 and 134) – one day before the Land Board was due to sit. This
    contravened Section 58 (3) Land Act 1996.

    46.3. Nevertheless, each of the three “recommended grants” were Gazetted in
    National Gazette G39 on the 17/03/1999.

    46.4. As with other Allotments on this Section, title is probably void due to the
    fact that Allotment 13 Section 122 Hohola does not exist – given that it
    derived from Allotment 1 Section 122 Hohola – which was “Reserved
    from Lease” and never revoked.

    46.5. Once again, the State and the public have been deprived of reserved land
    quite illegally.

    46.6. The Department of Lands, despite knowing of this illegality, has done
    nothing to rectify the situation.

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    47. THE LEGALITY OF DEALINGS IN ALLOTMENTS AT SECTION 122
    HOHOLA:

    47.1. A summary of the defects in the Land Board deliberations over this parcel
    of land follows:

    i) “Open Space” land has unlawfully passed into private hands with no
    apparent concern for the legal status as public land.

    ii) Researches have not revealed any evidence that the “Reservation
    from Lease” was ever revoked. If this is correct, this will mean that,
    at least;

    a) Subsequent Survey Plans are invalid and / or should be
    cancelled; and

    b) All dealings in the land deriving from the subsequent
    subdivision of Allotment 1 Section 122 Hohola are equally
    unlawful; and

    c) The State may be liable to Leaseholders or successors in title –
    see below.

    iii) Allotment 13 Section 122 arguably did not exist at the time it was
    granted by Land Board 2006 due to the deliberations of Land Board
    2005, and could not therefore have been lawfully dealt with.

    iv) The NCD also applied for the Allotments 1 and 2 (which became Lot
    13) as Park Reserve Lease. That conflict between private and
    public use meant that the Land Board should be immediately
    adjourned.

    v) The Land Board managed to grant Leases to NCDC and Virgo over
    the same parcel of land.

    vi) At least one Land Board did not sit at all and the typeset notices
    giving rise to the Leases were forgeries.

    47.2. The Committee concludes that, if the Reservation of this land was never
    revoked, the State has an exposure to all holders or past holders of title in
    any land on Section 122 that derived from the subdivision of Allotment 1
    Section 122, upon the basis that the title issued is defective due to the
    unlawful conduct of the Land Board and the Department as well as the
    failure of the State and its legal advisers to protect public assets.

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    47.3. Peremptory searches suggest that the State may be exposed to at least the
    following claims:

    Allotment Section Comment

    8 122 The Filipino Association had been
    granted a lease over Allotments 6
    and 7 (Consolidated) Section 122
    Hohola. Despite this, the DOL
    advertised a Special Purposes Lease
    over Allotments 7 and 8 Section 122
    Hohola for Tender. A subsequent
    grant to Land Bank Holdings Ltd.
    deprived the Filipino Association of
    Allotment 7. There seem no lawful
    grounds for this to occur.

    9 122 Granted to the PNG Family Planning
    Association but title never issued.

    13 122 See extended review (supra).

    14, 15, 16 and 17 122 See review (supra).
    (Consolidated)

    47.4. The Secretary for Lands and Physical Planning produced to the
    Committee, sparse documentation concerning this Land, but the
    Department clearly has not understood the zoning or considered the
    legalities of issuing State Leases for this Land – which was and is reserved
    as Open Space i.e. for public recreation.

    47.5. The Committee concludes that the Secretary has failed in his duty to
    produce documents and records to this Committee. The Department has
    produced some Rent records, a few old zoning plans (out of date) and one
    Survey Plan (out of date), but there are clearly huge gaps in the
    Departments understanding and records of these crucial matters. In these
    circumstances it is not surprising that the Department was and remains
    ineffectual.

    47.6. The whole saga is very complicated and should be the subject of a deeper
    Inquiry, however the important fact for this Committee is that the State
    has again been deprived of an asset for no realistic payment, exposed to
    litigation by the incompetence of the Department and the Land Board, has
    not received Land Rent and its interest has not been protected by the
    Department.

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    47.7. More concerning to the Committee is the fact that gross breaches of law
    appear not to have been detected by the Department or, if they were
    detected, were ignored. Some of these defects are:

    (1) That private title to public land has been given in suspect and/or
    illegal circumstances by the Department for no fee and with
    significant Rental losses to the State.

    (2) Allotment 1 Section 122 Hohola – this Allotment was apparently
    cancelled in 1990. Yet Land Board 2006 granted the NCDC a
    Special Purpose Lease in 1999 – over a Lot that apparently did not
    exist.

    (3) Allotment 2 Section 122 Hohola – This Allotment apparently ceased
    to exist on 10th July 1990. Yet the Land Board granted a Special
    Purpose Lease over the land in 1999.

    (4) Leases over Allotments 2 and 3 Section 122 Hohola was granted for
    no fee, but Land Rent is now in arrears in a sum of approximately K
    34,000. There has been no apparent action by the Department.

    (5) Allotment 7 appears to have been given to two different applicants at
    the same time – this requires an inquiry and review by the
    Department, but none has occurred.

    (6) Allotment 12 Section 122 – Land Board 2017 did not convene at all.
    Yet a State Lease issued from that Board over Allotment 12 –
    apparently from a typeset, but not published, Gazette Notice. This is
    either gross negligence or a corrupt dealing. There has been no
    compliance with an Improvement Covenant and Land Rental was in
    arrears. The Department has done nothing in respect of these
    matters.

    (7) Allotment 13 Section 122 Hohola – in the absence of any
    documentation from the Department the Committee believes that this
    Allotment was and still is zoned Open Space. Despite this, it came
    before Land Board 2006, having been exempted from advertisement
    for no apparently lawful reason. That Land Board granted a Lease to
    Virgo No. 65 Ltd for no ascertainable tender or reserve price and
    contrary to Section 67 of the Land Act.

    The Committee also finds that Virgo No. 65 Ltd owes arrears of
    Land Rent for this land in a sum of approximately K 13,000. The
    Department appears to have done nothing to forfeit the land.

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    It seems that the same Land Board at the same sitting also gave this
    same Open Space land to the NCDC – the same blocks of Public
    Land were granted to different Lessees – for no price.

    (8) Allotments 14, 15, 16 and 17 Section 122 Hohola – Land Board
    2005 considered three applications for grant of a Lease over these
    Allotments – despite the fact that each application appears to have
    breached Section 58 (3) of the Land Act, that the Allotments
    probably do not exist at all, that the land was “Reserved From
    Lease”, that no tender price was received, that the land was and still
    is zoned “Open Space” and in breach of Section 67 of the Land Act.

    Shortly before the printing of this Report, the Committee became
    aware of a further State Lease issued to Virgo No. 65 Ltd over
    Allotment 14 Section 122 Hohola.

    47.8. At least in relation to the Leases issued to Mr. Andrew Mald and Virgo
    No. 65 Ltd, there is good reason to conclude that there has been
    interference in or by the Department – at best the Department has failed to
    carry out its duty to ensure that the Law attending the issue of State Leases
    was obeyed.

    47.9. In summary, the Committee finds an almost total failure by the
    Department to control the illegal dealings with this Open Space land, both
    at the time of the original unlawful grants and subsequently.

    48. PORTIONS 109 AND 110 MADANG, MADANG PROVINCE VOLUME 12
    FOLIO 113 (PREVIOUSLY VOLUME 65 FOLIO 26)

    48.1. This land was owned by the Evangelical Lutheran Church of Papua New
    Guinea, which held an Agricultural Lease issued in 1924 for a period of
    99 years – plus an extra five years to take account of the period of the
    Second World War.

    48.2. Rents were up to date, all covenants had been complied with and the Lease
    was still current until at least 2027.

    48.3. The net area of the land is 83.989 hectares – of which 2.627 hectares are
    reserved for roading.

    48.4. The land sits astride the area identified as the site of the township serving
    the Ramu Nickel project.

    48.5. In 2005, the Church discovered that its title had apparently been cancelled
    and an Agriculture Lease issued to the Ganglau Landowner Company
    Limited.

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    48.6. It is now apparent that the land had been compulsorily acquired –
    unknown to the Church and by some means reissued to the current
    Leaseholder by a Land Board decision. The original owner had no
    knowledge of this and has received no compensation.

    48.7. The matter is now before the National Lands Title Commission, but
    seemingly this very valuable land was neither advertised, not exempted
    and the true owner has been deprived quite unlawfully of its asset.

    48.8. The Department was directed to produce certain documents and records by
    Paras. 31, 32, 33, 34 and 35 of the Directives dated the 5th September
    2005. See Schedule 3 to this Report.

    48.9. These documents were finally produced after the Committee issued a
    Summons to the Secretary. The Department is apparently addressing the
    matter, but failed to do so before or immediately after the problem arose.
    Matters do not appear in the Land Board without Departmental approval
    and listing. Clearly the Department failed in its duty to protect the lawful
    titleholder.

    48.10. The Committee cannot understand how this situation was allowed to
    occur. It seems that the Department of Lands has no control over its
    Officers, maintains no effective oversight of dealings or is an active party
    to these illegal dealings.

    48.11. Whatever the situation, the fact that this Committee can, with no
    difficulty, find examples of blatantly illegal dealings and decisions within
    the Department of Lands and Physical Planning suggests that there is a
    very significant problem.

    48.12. The Committee is further concerned that the State may have been exposed
    to potential litigation as a result of the failures by the Department
    regarding this particular parcel of land and has certainly been deprived of
    revenue.

    48.13. We are further concerned that a year has passed with little action from the
    Department to rectify the matter.

    48.14. The Committee finds that the Department of Lands has failed to co-
    operate with this Committee or to assist in the Inquiry into Portions 109
    and 110 Madang.

    48.15. The Committee makes certain further findings and recommendations in
    respect of this matter (infra).

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    49. ALLOTMENTS 2 AND 3 (CONSOLIDATED) SECTION 111 BOROKO:
    STATE LEASE 27 FOLIO 202

    49.1. This is a parcel of prime land in the heart of the Boroko business district.
    It is 0.220 hectares in size.

    49.2. Land Board 2006 of 1999, granted a Business Lease over the land to
    Bluehaven No.7. Ltd.

    49.3. The Business Lease sets the Land Rent at K 19,825.00 per annum and an
    improvement Covenant to a value of K 200,000 within the first three
    years.

    49.4. As of the 8th February 2006, the Land Rent arrears was K129,704.38 and
    no improvement at all had taken place. The land remains vacant and
    undeveloped.

    49.5. The Committee concludes that the Lessee is therefore in breach of the
    Lease conditions, but no effective attempt has been made by the
    Department to forfeit the land.

    49.6. More significantly, there was no tender price at all. The land was given
    away. Land Rent is 5% of the unimproved value. Using the assessed Land
    Rent, the unimproved value of the land was K. 396,500.

    49.7. The Reserve or Tender price should have been K. 237,900. The State has
    lost this amount together with the Land Rent arrears – a total to date of K
    367,604.38.

    49.8. The Secretary of the Department was directed by the Committee to
    produce records and documents concerning this transaction by Paras. 36,
    37 and 38 of the Directives dated the 5th September 2005. See Schedule 3
    to this Report.

    49.9. No files or records relating to the grant of the Lease were produced at all.

    49.10. Only in response to a Summons did the Secretary for Lands produce three
    pages of Land Rental and Tender Price record.

    49.11. This Committee has once again been impeded in its Inquiry by
    Departmental failure or refusal to produce documents showing the history
    of this matter. In the absence of any explanation by the Secretary for
    Lands, the Committee concludes that the Department does not want the
    Committee to know what has occurred and therefore the documents have
    been hidden or destroyed.

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    49.12. On the 13/05/2003, Mr. Daniel Katakumb, the Director Land Management
    Division of the Department of Lands and Physical Planning, wrote to the
    Government Printer enclosing Notices of Forfeiture of the subject land in
    1999. The failure to advertise these notices at that time was excused as an
    administrative oversight.

    49.13. For once, the Department of Lands and Physical Planning actually
    commenced a forfeiture proceeding for non-payment of Land Rental, but
    failed to proceed with it. The Committee cannot ascertain why the Lease
    should continue when the Leaseholder is in breach of its obligations. Even
    at this late stage, the Department was more intent on protecting the
    interests of the Grantee rather than the State.

    49.14. The Committee is also concerned that this land has remained undeveloped
    and unimproved for six years. The Department has failed totally to enforce
    Lease covenants as it is required to do by the Land Act.

    49.15. In respect of this particular Grant and issue of Lease, the Committee finds
    that the Secretary for Lands and Head of the Department of Lands and
    Physical Planning, both past and current has:

    • Breached his obligations to ensure the timely and full collection of
    State revenue under the Public Finances (Management) Act.

    • Breached his duty to provide documents to this Committee under the
    Public (Finances) Management Act.

    • Committed an Offence under Section 112 (b) of the Public Finances
    (Management) Act by willfully neglecting to produce books,
    accounts or other documents when required to do so.

    • Prima facie, breached Section 5 (a), (b), (c), (g), (h) and (i) of the
    Public Finances (Management) Act.

    • Failed to apply properly or at all the Land Act and to ensure that all
    legal steps were taken to protect the State.

    49.16. The Committee makes recommendations and referrals concerning this
    matter, later in this Report.

    50. ALLOTMENT 69 SECTION 229 HOHOLA.

    50.1. This Grant of a State Lease well illustrates both the arrogant disregard of
    Departmental Officers for decisions of the Land Board and the Law and
    the failure of past and present Departmental Management to control or
    reverse or even acknowledge illegal dealings.

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    50.2. A Special Purpose Lease was granted to the Sisters of Charity in 1999 by
    Land Board 2014, for the purpose of building a hospice for the dying and,
    in particular, for HIV AIDS sufferers on this land. The Grant was Gazetted
    on the 23rd December 1999.

    50.3. However, Willing Pacific (PNG) Pty. Ltd., applied for a Town
    Subdivision Lease (“TSL”) in 1991.

    50.4. A TSL can only be granted for five years. The Registrar ultimately gave
    Willing Pacific (PNG) Pty. Ltd. a Residential Lease over the land in
    1999, despite the grant to the Sisters of Charity by the Land Board.

    50.5. This Lease was for a 99 year period, despite the fact that the applicant had
    only applied for a five year Lease and that the land had been granted to the
    Sisters of Charity.

    50.6. In doing so, the Committee concludes that the Registrar has completely
    ignored the Land Board recommendation and has acted unlawfully.

    50.7. In the absence of documentary records, how this State Lease came to be
    issued is not known but the Committee concludes that the issue was
    unlawful as the land was Granted to the Sisters of Charity.

    50.8. The TSL could and should not have issued in the absence of a Sub-
    divisional Plan and the actual provision of infrastructure on the land. Only
    when those services are established can such a Lease issue.

    50.9. Once again, the State has lost land to private hands for no benefit, a Lease
    has been issued illegally, the Department has failed to take any steps to
    rectify the situation, the Land Rental is in arrears with no attempt to forfeit
    the Lease, the Improvement Covenant has not been complied with and the
    Department of Lands has done nothing to fulfil its statutory duties.

    50.10. In short, the Department has allowed the Lessee to control the dealing
    instead of the Department controlling it.

    50.11. An Improvement Covenant applied. It required the erection of buildings to
    a value of K 20,000 “…from the date of registration of the transfer of
    the lease from Willing Pacific (PNG) Ltd to Department of Foreign
    Affairs and Trade…….”. This curious and meaningless covenant
    requires the Lessee to do nothing, but enables him to sit on undeveloped
    land for 99 years.

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    50.12. The Committee directed the Secretary to produce documents and records
    in respect of this Lease issue by Paras. 39, 40 and 41 of the Directive
    dated the 5th September 2005. See Schedule 3 to this Report.

    50.13. The Land Rent records are reasonably complete but the records of the
    issue of the Lease and the proceedings of Land Board 2014 are incomplete
    and inadequate. In the view of the Committee the Department of Lands
    and Physical Planning has again deliberately refused to assist the
    Committee in its Inquiry.

    50.14. The Committee concludes that the Lease issued to Willing Pacific (PNG)
    Ltd. was given with no reserve price paid to the State, with Land Rent
    assessed at K 450.00 per annum for the first ten years – which means the
    unimproved value of the land was K 45,000.00 – an extremely low figure.
    Even on this valuation, the reserve price should have been K 27,000.00.

    50.15. The Committee finds that the issue of this Lease was not transparent and is
    attended by illegality. The Lease was not advertised or tendered, but
    simply issued in defiance of the Grant by the Land Board.

    50.16. During the course of the Inquiry into the Department of Lands and
    Physical Planning by the Public Accounts Committee, the Committee
    received many reports of gross delay by the Department in answering
    correspondence or dealing with the public – particularly in dealing with
    matters of complaint or where illegal or suspect transactions were
    involved.

    50.17. The Sisters of Mercy have been writing to the Department seeking
    rectification of their Grant for five years and, until recently, received no
    response at all.

    50.18. A letter was finally received from Mr. Daniel Katakumb on the 27th June
    2005, advising that Willing Pacific (PNG) Ltd had indefeasible title and
    that the Sisters should buy the land from that company. This statement is
    wrong in law. Clearly the Department is not intending to rectify the grant
    according to law, but are content to act as a sale agent for the Leaseholder.

    50.19. The Department has failed to action the Land Board Grant in any way. No
    letter or publication of the Grant has been made. No attempt to forfeit the
    land has been made and the legal obligations on the Department have been
    ignored in favour of an unlawful Lessee.

    50.20. Why this should be the case is a matter for conjecture, but the Committee
    considers that the Departmental failures are consistent with either gross
    incompetence or corrupt dealings – or both. Whatever the truth, the
    situation is unacceptable and the Committee detects no will in the

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    Department to change the culture of indolence and apathy – unless forced
    to do so.

    50.21. The Committee makes further recommendations and referrals in respect of
    this matter later in this Report.

    51. PART 3 – PERFORMANCE OF THE DEPARTMENT OF LANDS
    AND PHYSICAL PLANNING 2002 – MARCH 2006.

    51.1. The Committee next examined randomly chosen Grants of State Leases
    made during the period 2002 – March 2006 inclusive, to establish the
    truth of assertions made to the Committee by the Secretary for Lands and
    Physical Planning, that the Department had improved its governance and
    systems to eradicate illegal practices.

    51.2. The Committee cannot detect any improvement in the performance of the
    Department in the control of illegal dealings or protection of the State and
    its interests.

    52. PORTION 1555 MILINCH GRANVILLE, FOURMIL MORESBY,
    NATIONAL CAPITAL DISTRICT.

    52.1. The issue of this State Lease shows that the malpractices of the past still
    exist with no attempt by the Department to stop them.

    52.2. This is a large and particularly valuable block of land at the end of
    Chesterfield Street, Ela Beach.

    52.3. By Gazettal Notice G17 of the 18th November 1999, a company called
    Kembis Holdings Ltd. was granted an Urban Development Lease
    (“UDL”) over the land by Land Board 2012.

    52.4. The UDL expired after five years – in 2004.

    52.5. By Gazette Notice G137 dated the 15th September 2005, Kembis
    Holdings Ltd. was granted a renewal of the UDL. This Notice records the
    decision to renew as being made by Land Board Meeting 3/2004, Item 23.

    52.6. Land Board Meeting 3/2004 was a Morobe Land Board, held in Lae. Item
    23 is a call for Tender for a Business (Commercial) Lease over Allotment
    72 Section 336 (Tentsiti Settlement) City of Lae, Morobe Province,
    Tender No. 25/2003.

    52.7. It was not Portion 1555 Granville.

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    52.8. Legitimate Grants from this Land Board were Gazetted on the 16th
    September 2004.

    52.9. The Committee notes that the Gazettal Notice granting the renewal of the
    UDL to Kembis Holdings Ltd. was actually published a year later – in
    2005.

    52.10. The Committee cannot locate any Land Board that decided any such
    renewal.

    52.11. There was apparently no call for Tender, no tender, no sitting of a Land
    Board, no power to renew, no tender price, no reserve price and no
    compliance with the original UDL.

    52.12. The State has been again deprived of a valuable tract of land with no
    advertisement, no tender, no transparency and no basis in law.

    52.13. The State has received no revenue, no Land Rental and no development
    has taken place at all on this land.

    52.14. The Committee notes that the Chairman of the Land Board, Mr. Francis
    Tanga, apparently signed the Gazettal Notice in 2005. He has no power to
    do so.

    52.15. This is an unlawful Gazettal, an unlawful Grant and an unlawful issue of a
    State Lease.

    52.16. The Committee concludes that if the Chairman of the Land Board did sign
    the Notice, he must have known that the matter was never before the Land
    Board and no decision had been made.

    52.17. This illegal issue was sanctioned by the Department with no or no
    adequate inquiry into the legality of the purported Grant.

    52.18. The Department of Lands and Physical Planning have taken no steps to
    reverse or remedy this illegal issue and appear not to have detected the
    illegality at all.

    52.19. Clearly, the vested interests of a speculator have been favoured over that
    of the State and the citizens of Papua New Guinea.

    52.20. The Committee concludes that, despite the assurances of the Secretary for
    Lands to the effect that the Department of Lands and Physical Planning
    had eradicated fraud and maladministration since 2002, abuses continue to
    the detriment of the State and citizens of Papua New Guinea.

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    52.21. The Committee makes findings and referrals in respect of this matter later
    in this Report, but does consider that every officer of the Department
    involved in this illegal issue of Lease and the Chairman of the Land Board
    should be removed from the positions they hold.

    53. PORTION 2415 MILINCH GRANVILLE FOURMIL MORESBY, PORT
    MORESBY, NCD.

    53.1. This land is located on the top of Burns Peak.

    53.2. By decision of the Native Land Commission the land was and still is
    customarily owned.

    53.3. On the 08th September 2005, the Department of Lands and Physical
    Planning issued a Licence Numbered 006/2005 SR to a company called
    Global Transfers Ltd to occupy the land and perform “feasibility
    studies”. The Licence was issued under the hand of Mr. Romilly Kila Pat.

    53.4. A Licence can only issue in limited circumstances – and not over
    Customary Land. We understand that the licensee has taken an application
    to the Physical Planning Board to obtain Town Planning Approval –
    Customary Land cannot be so considered.

    53.5. This issue of the Licence is unlawful and has been made during the tenure
    of the current Secretary for Lands. Appeals from the putative Landowners
    to the Department resulted in an agreement to review the Licence, but no
    apparent action has occurred since the Appeal was lodged in 2005.

    53.6. Again, the Committee does not accept that change has occurred in the
    Department of Lands since 2002 and that there are still deep problems of
    incompetence, illegality and negligence within the Department.

    54. PORTION 2399 MILINCH GRANVILLE FOURMIL MORESBY, PORT
    MORESBY, NCD

    54.1. This land is predominately or substantially Customary Land situate at the
    top of Burns Peak.

    54.2. By Gazette Notice G121 dated the 18/08/2005, entitled “Notice under
    Section 69 (2) (d) Exemption from Advertisement” the Lands
    Department preceded a Grant to Garamut Enterprises Ltd.

    54.3. This land was somehow rezoned to “Subdivision Zone” – which is
    impossible given that it is still Customary Land. Further, the exemption
    meant no competitive tender and no revenue to the State.

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    54.4. Moreover, in the rush to exempt the land, the Department Gazettal notice
    actually preceded the Zoning Gazettal, ignored the three month appeal
    period and was incorrect in that it related to all Portion 2399 – not just the
    southern part which was the subject of the application for rezoning.

    54.5. Once again it seems that Customary Land has been given away by a
    Department apparently unable to read Plans and Survey maps. This is not
    acceptable.

    54.6. The Landowners have referred this matter to the Secretary in August 2005
    but have received no response.

    54.7. The Department does not respond to letters or petitions and the State and
    its citizens continue to suffer loss as a result of this attitude.

    54.8. The Committee has examined Departmental performance on a number of
    occasions since 2002 and we have been told of plans and strategies to
    improve the Department and how effective the current stewardship has
    been in eliminating abuses.

    54.9. The Committee does not agree.

    54.10. We see no change. We see no improvement in performance and, we
    suspect, no lessening in unlawful allocations of Leases and land. We see
    no improvement in revenue collection. We see no change in the
    Departmental failure to protect the State or its assets.

    54.11. The Committee does not consider that further questioning or Directives
    will change anything – because the current management cannot and will
    not do what is required. Significant action is needed from the Parliament
    to force change on the Department.

    55. PORTION 2228 MILINCH GRANVILLE FOURMIL PORT MORESBY:

    55.1. This particular transaction is addressed later in this Report, but came
    before the Department in 2005 in suspicious circumstances.

    55.2. This land was reserved for the development of a Fire Station. It was taken
    from the State and given for no payment to the State by the Lands Board
    and the Department of Lands.

    55.3. The Committee finds that the agenda for Land Board 2005 listed 134
    matters. That Land Board sat on the 21st and 22nd January 1999.

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    55.4. On the 29th October 1999 the Grant of a Business (Light Industrial)
    Lease by that Land Board to Tomonga Holdings Ltd. was gazetted as
    Land Board Item 135 – an Item which never existed.

    55.5. Moreover this was State Reserved Land. Any grant of the land would
    conflict with a Certificate Authorising Occupancy of Land No 2033,
    granted in 1992, whereby this Portion was handed to the Office of the
    Prime Minister to establish a Fire Station.

    55.6. On the 20 May 2005 (during the tenure of Mr. Kimas as Secretary) the
    Department of Lands and Physical Planning issued a State Lease in
    respect of Portion 2228 Milinch Granville Fourmil Port Moresby. –
    thereby confirming the unlawful Grant made six years before, not by a
    Land Board but by a forged and fraudulent Gazettal Notice.

    55.7. To compound the Departmental failure, the Committee finds that the
    Department had a clear understanding that this Gazettal Notice was
    fraudulent well before the actual issue of the State Lease in 2005.

    55.8. Moreover, the Lease issued by the Department shows the Lease as
    commencing on the 03/08/1999 but there was no Gazette of that day. The
    Lease is false and breaches Section 81 Land Act.

    55.9. Not only did the Department take no steps to protect the position of the
    State, but actively connived and abetted the illegal issue of the State Lease
    some six years later.

    55.10. The Committee finds that this transaction is an excellent example of both
    the incompetence of Departmental management to control its own staff
    and the impunity and immunity with which the Departmental officers
    engage in corrupt activity.

    55.11. The Committee finds that the much vaunted “new systems and traps” cited
    by the Secretary for Lands are either imaginary or ineffective – or
    probably both.

    55.12. By co-incidence, on the day of the Inquiry by the Committee into this
    transaction, this same unimproved block of land was advertised for sale in
    the daily National newspaper for K 2.5 million. No development has
    taken place in six years; the State has lost a very valuable block of land
    and has received no revenue at all from the process.

    55.13. Further, the interests of a private speculator have again been given
    precedence over the legal rights of the State – by the States own Officers.

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    55.14. The Committee concludes that every Officer involved in this transaction
    up to and including the Secretary of the Department should be removed
    and referred to the Royal Papua New Guinea Fraud and Anti-Corruption
    Squad for investigation.

    55.15. Regrettably the Committee must report that this incident is not an isolated
    one.

    55.16. The Committee makes further findings and resolutions in respect of this
    incident later in this Report (infra).

    56. PART 4 – ANALYSIS OF LAND BOARDS 1999 – 2005.

    56.1. The Papua New Guinea Land Board is a statutory Board constituted under
    the Land Act.

    56.2. It is arguably one of the most powerful Statutory entities in Papua New
    Guinea.

    56.3. The Board is responsible for the allocation of Land and the consideration
    and granting of tenders for State Leases.

    56.4. As land has become more scarce, so the power and the importance of the
    Land Board has increased.

    56.5. However, at the same time, the quality and transparency of decision
    making and performance by the Land Board has decreased.

    56.6. The performance of the Land Board is integral to the operations of the
    Department of Lands and Physical Planning. Almost everything that goes
    to or comes from the Department is considered by the Land Board.

    56.7. Equally, matters going to or coming from the Land Board are considered
    and approved or actioned by the Department.

    56.8. The Committee considers that incompetent or illegal practices cannot exist
    in one of those entities without the co-operation or connivance of the
    other.

    56.9. The Board plays a vital role in the economic development of the country.
    Membership of the Land Board requires high standards of probity,
    efficiency, experience and accountability.

    56.10. The Committee concludes that, in the last decade, the performance of the
    Land Board and certain of its Members have failed to meet these
    standards.

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    56.11. The Committee concludes that many of the problems manifested in the
    Department of Lands and Physical Planning can be traced to the decline in
    the performance of the Land Board in the period 1995 – 2003.

    56.12. In its turn, much of this decline in performance and honesty was directly
    caused by political interference in and pressure on the composition and
    workings of the Land Board.

    56.13. The Committee chose certain Land Board meetings at random, to consider
    the quality of performance of the Land Board over the last ten years.

    56.14. The Committee concludes that, while the statistics show a small
    improvement in 2004 – 2005, the Land Board is not performing
    adequately, is subject to external influences, is directly responsible for
    illegal dealings and unlawful decision making in respect of Grants of
    Lease, fails to understand its role or the law that it is required to
    administer, fails to comply with procedural requirements and seems
    unaccountable to and uncontrolled by the Department.

    56.15. The Committee detected a clear pattern of illegal conduct by certain
    Members – particularly Chairmen – of the Land Board over a long period
    and continuing to the present day.

    56.16. The Secretary of the Department of Lands and Physical Planning in his
    evidence before the Committee, agreed with this finding.

    56.17. The Committee is concerned that the Land Board Members are not
    adequately trained or experienced to competently carry out their function
    and overwhelmingly owe their appointments to political patronage rather
    than merit.

    56.18. The Committee received into evidence a Handbook for the use of the Land
    Board. This is apparently the only training or reference manual available
    to the Board. It is the opinion of the Committee that the material is
    inadequate and outdated.

    56.19. The Committee will make further findings and recommendations in
    respect of the Land Board (infra).

    56.20. The Committee considered the following randomly chosen Land Board
    meetings:

    57. PAPUA NEW GUINEA LAND BOARD NO. 2005 – ITEMS 130, 131, 132, 133
    AND 134.

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    57.1. This meeting is a good example of the incompetent and careless approach
    taken by Land Boards to the procedural requirements for its meetings.

    57.2. It also clearly shows Departmental failures to control Land Board excesses
    by refusing to implement Grants which were unlawfully made or, if
    implemented, to cancel or forfeit subsequently issued Leases.

    57.3. These five items were added to the Land Board agenda by Gazette Notice
    dated the 20th January 1999 – and the Land Board convened on the 21st
    and 22nd January 1999.

    57.4. The Committee finds that Section 58 (3) of the Land Act was therefore not
    complied with and that these five items were unlawfully considered. This
    Section requires the Land Board to meet not less than seven days and not
    more than 42 days after the publication of the agenda for a particular
    meeting.

    57.5. The purpose of Section 58 (3) is to give members of the public knowledge
    of and the opportunity to participate in the hearing of any Item and thereby
    assures transparency and a maximized return to the State from a Grantee
    best able to develop the land – not mere speculators.

    57.6. The Grant of Items 132, 133 and 134 were formalized by Gazettal at Page
    4 of the National Gazette G39 dated the 17th March 1999 and three
    Business (Commercial) Leases were issued despite the fact that:

    i) The Agenda items were not lawfully before the Land Board; and

    ii) The land was and still is zoned “Open Space” at the time, meaning
    that the land was public land and had not been revoked – this
    contravenes Section 67 of the Land Act 1996; and

    iii) Allotments 14, 15, 16 and 17 Section 122 Hohola were not then and
    are not now the subject of a registered Plan of Survey and could not
    have been Granted.

    57.7. Further, Land Board 2005 (which convened on the 21st and 22nd January
    1999) was later the subject of a one page Gazette on the 29th October 1999
    which belatedly:

    i) Corrected the description of the land the subject of Item 131, the
    incorrect Grant of which had been Gazetted on the 17th March 1999;
    and

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    ii) Gazetting the Grant of a Business (Light Industrial) Lease over
    Portion 2228 Milinch Granville, Fourmil Moresby to Tomonga
    Limited, citing Item 135 of the Land Board No. 2005.

    57.8. The Committee finds that the corrigendum Gazetted unlawfully one day
    before the Land Board 2005 convened, added just five items to the agenda
    – there was never an Item 135.

    57.9. This grant was unlawful either because of fraud and/or because it
    conflicts with Certificate Authorising Occupancy of Land No. 2033 (S/R)
    issued on the 23rd November 1993, whereby portion 2228 was handed
    over to the Department of Prime Minister and National Executive Council
    (PNG Civil Fire Service) for a new fire station.

    57.10. The State has lost this land by the incompetence or corruption of the
    Department of Lands and Physical Planning.

    57.11. As already stated by the Committee, the Departmental Secretary, Mr. Pepi
    Kimas, despite knowing of these illegalities, has done nothing to protect
    the position of the State, but rather permitted the issue of a State Lease to
    Tomonga Ltd in May 2005 – See Para. 34.42 et seq.

    58. PAPUA NEW GUINEA LAND BOARD NO. 2006, (ITEMS 20, 101 AND
    102).

    58.1. The unlawful Grant of Leases over Allotments at Section 122 Hohola has
    been considered earlier in this Report (supra).

    58.2. The Committee now considers the actions of the Land Board which
    purported to make these Grants of State Lease.

    58.3. This Land Board granted a Business (Commercial) Lease over
    Allotments 2 and 3 (now known as Allotment 13 Section 122 Hohola.).

    58.4. Allotment 13 Section 122 Hohola was zoned “Open Space” and the grant
    contravened the zoning of the land and Section 67 Land Act 1996. That
    Section requires State Leases to be consistent with zoning and physical
    planning decisions.

    58.5. Further, the State and the public have been deprived of land reserved for
    public recreation.

    58.6. Moreover, Allotments 14, 15, 16 and 17 were granted by Land Board
    2005. It can be strongly argued that Allotment 13 Section 122 Hohola
    ceased to exist with the aforementioned Grants even though there is no

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    Plan of Survey of these four allotments – despite which, three Leases have
    been issued.

    58.7. The Board then considered Items 101 and 102. It managed to allocate or
    grant the same land to two different applicants – this land is also Open
    Space land and should never have been before the Board at all.

    58.8. Items 101 and 102 comprised applications by the NCDC seeking the grant
    of two Special Purpose (Park Reserve) Leases over Allotments 1 and 2
    Section 122 Hohola.

    58.9. These allotments ceased to exist with the registration of Survey Plans Cat
    Nos. 49/1867 and 49/1887 on the 10th July 1990.

    58.10. Further, another applicant, Virgo No.65 Ltd also applied for a Grant of the
    land. In such circumstances, the respective applications should have been
    deferred.

    58.11. Instead, Virgo No 65. Ltd. was granted a Business (Commercial) Lease
    over Allotments 2 and 3 now known as Allotment 13 Section 122 Hohola
    and the NCDC was granted two Special Purpose (Park Reserve) Leases
    over Allotments 1 and 2 Section 122 Hohola. Therefore, the grant to Virgo
    No. 65 Ltd and the NCDC conflict, as both have been given different
    grants over Allotment 2.

    58.12. The Registrar has actioned and Gazetted a Grant of Lease to Virgo No.65
    Ltd when:

    i) The land was Open Space incapable of being granted at all unless the
    Open Space classification was revoked – which it was not; and

    ii) The grant conflicts with the grant to the NCDC and zoning as Open
    Space; and

    iii) The State has been wrongfully deprived of land; and

    iv) Section 67 of the Land Act has been breached.

    58.13. 150 matters were Gazetted for consideration by Land Board 2006.
    Nevertheless, by Gazettal notice dated the 23rd September 1999, a
    corrigendum numbered 151 to Land Board 2006 was published. This
    Grant was for relaxation of the Improvement Covenant over Allotment 2
    Section 429 Hohola.

    58.14. The corrigendum adding Item 151, was Gazetted on the 22nd October 1999
    – seven months after the Land Board convened in March 1999 and one

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    month after the Grant in favour of Waim No. 92 Ltd. purporting to derive
    from Land Board 2006 (Item 151) had been Gazetted. The Committee
    have established that this was the portion of land which featured so
    prominently in the NPF Inquiry.

    58.15. The Committees Inquiry into this Land Board has been significantly
    impeded by an almost total lack of any relevant records, files or
    documents.

    58.16. The Committee directed the Secretary to produce all records, files and
    Gazettal Notices relating to the deliberations and decisions of PNG Land
    Board 2006 by Directive 2 of the 5th September 2005. See Schedule 3 to
    this Report.

    58.17. The Secretary failed to produce anything.

    58.18. This Land Board considered 150 matters. It was the biggest Land Board
    ever, yet not a single piece of paper can be found in the Department.

    58.19. The Committee is concerned at a handwritten note produced by the
    Department, which reads

    “Land Board 2006 withdrawn and was not convened / held at all, when
    and how did these items (items 20, 101 and 102) were deliberated (sic)”

    58.20. The Committee considers that this comment well illustrates the depths to
    which the Land Board had sunk by 1999. Illegality and incompetence
    attended the Land Board decision making processes to the detriment of the
    State and all citizens of Papua New Guinea.

    58.21. These excesses were either not noticed by the Department or were
    ignored. That situation still prevails.

    58.22. The Secretary for Lands, Mr. Pepi Kimas, caused a notice to be published
    in the local media in 2002, stating that 12 illegal Leases had been issued
    by the Land Board and the Department. Yet he has failed to do anything at
    all to rectify the situation. When questioned by the Committee on this
    failure, the Secretary proffered no acceptable explanation at all for his
    inaction.

    58.23. In the opinion of the Committee, the Department should be rid of officers
    that cannot or will not understand or attend to their duties. The Committee
    makes further referrals and recommendations later in this Report.

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    59. PAPUA NEW GUINEA LAND BOARD 2014.

    59.1. Sections 58 (1) and (3) Land Act clearly prescribe that the Agenda for a
    Land Board must be Gazetted not less that seven days before the sitting
    date of a Land Board.

    59.2. This Land Board convened on the 1st October 1999, however the Agenda
    for this Board was Gazetted on the 28th September 1999 – and was
    followed by a corrigendum advising an additional 10 matters.

    59.3. This corrigendum was Gazetted on the 30th September 1999.

    59.4. The agendas were unlawfully Gazetted and the Land Board should have
    been deferred.

    59.5. Further, Sections 58 (10) and 62 (1) Land Act prescribe a statutory appeal
    period of 28 days commencing from the date of notification. The
    notifications were issued on the 29th October 1999 – the appeal period
    expiring on the 26th November 1999.

    59.6. Notwithstanding these requirements of law, the Grants from Land Board
    2014 were Gazetted on the 8th November 1999. This was unlawful.

    59.7. The Department of Lands and Physical Planning reassessed the grants
    from Land Board 2014 and a total of 27 Grants were Gazetted on the 23rd
    December 1999.

    59.8. However the agenda for Land Board 2014 totalled 49 items – a total of 32
    grants were improperly Gazetted on the 8th November 1999, of which 19
    were included in the subsequent Gazettal on the 23rd December 1999.

    59.9. Thirteen Grants were excluded and the status of those Grants is uncertain
    because they were Gazetted in the 28 day appeal period – but due to the
    failure to comply with Section 58, all Grants are invalid.

    59.10. These unlawful Grants and issues of Leases open the State to liability from
    Leaseholders or purchasers. This meeting clearly shows that the Land
    Board had no ability to understand the terms of the Land Act or intention
    to obey the law.

    59.11. The Department of Lands and Physical Planning failed to appreciate the
    invalidity of the Grants and has failed to take any steps to rectify the
    situation in the last six years.

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    59.12. The Committee reiterates its comments made in respect of Land Board
    2006. It makes referrals and recommendations later in this Report.

    60. PAPUA NEW GUINEA LAND BOARD NO. 2017

    60.1. The Committee finds that this Land Board meeting is the most blatant
    example of fraud and criminal activity by the Land Board and certain of
    its Members.

    60.2. The Committee also finds that the Department of Lands and Physical
    Planning has known of this illegal issue of Leases for six years, but has
    failed to take any remedial steps at all.

    60.3. An agenda of 20 items were Gazetted on the 11th November 1999 and the
    15th November 1999, for a Land Board meeting on the 24th November
    1999.

    60.4. The meeting was stopped by Mr. Morris Alalaku – then Departmental
    Secretary.

    60.5. A further 17 items were added by Gazettal on the 2nd December 1999 and
    an attempt to reconvene this Land Board meeting was stopped again by
    Mr. Alalaku.

    60.6. Despite the fact that the Land Board had not met, a grant purporting to
    derive therefrom was Gazetted on the 6th December 1999, by which Waim
    Ltd. was granted a relaxation of a Improvement .Covenant over Allotment
    2 Section 429 Hohola. This Gazettal was utterly unlawful. This was the
    “NPF land” that featured so prominently in the NPF Inquiry.

    60.7. Further, the Chairman Mr. Ralph Guise (dec’d), prepared a “Schedule” of
    Grants purporting to derive from Land Board 2017 for referral to the
    Government Printers Office over his own name when he was neither the
    Minister nor the Delegate of the Minister.

    60.8. That “Schedule” was typeset for publication however, due to Lands
    Department intervention, the publication was stopped.

    60.9. Despite the fact that the Land Board did not meet and that the bogus
    “Schedule” was not printed, the Department of Lands and Physical
    Planning subsequently issued at least two titles from this Land Board.
    They are:

    State Lease Volume 23 Folio 182.

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    60.10. This was a Business (Commercial) Lease issued over Allotment 12
    Section 122 Hohola (then “Open Space”) in favour of Mr. Andrew Mald.
    Despite the illegality of this issue, it was signed off by the Ministers
    Delegate and the Registrar of Titles. To the credit of the Department it was
    subsequently cancelled.

    60.11. However, a National Court decision restored the title to Mr. Mald after the
    Solicitor General failed to oppose the grant. Costs were ordered against
    the State together with a compensation award against the State.

    60.12. The Committee cannot understand how this result could possibly have
    been obtained.

    State Lease Volume 23 Folio 132.

    60.13. This was a Business (Commercial) Lease over Allotment 5 Section 59
    Town of Alotau in favour of PNG Deep Sea Fishing Ltd. Once again this
    was signed off by the Ministerial delegate and the Registrar of Titles.

    60.14. Despite the fact that PNG Land Board 2017 did not meet, that the Gazettal
    of the Grants supposedly issuing from that Land Board did not occur, that
    the “Schedule” (although not printed) wrongly identified the land and that
    the Gazettal was stopped by Departmental intervention, State Lease
    Volume 23 Folio 132 comprising a Business (Commercial) Lease over
    Allotment 5 Section 59 Town of Alotau, did issue.

    60.15. Given Jimmy Maladinas involvement in the company PNG Deep Sea
    Fisheries Ltd, NPF have lodged a caveat over the property. However, the
    value of a caveat over an unlawfully issued title is moot.

    60.16. The Committee finds that certain Departmental Officers attempted to
    intervene and stop the Land Board and to prevent the illegal Gazettal and
    issue of State Leases.

    60.17. However, more powerful Officers were intent on achieving a result for the
    Grantees utterly irrespective of the Law.

    60.18. Once again, no attempt has been made to recover these lands for the State
    in the last six years, despite the fact that the current Secretary knew of the
    illegal issue and actually publicized it in the media.

    60.19. The Committee will make further referrals and recommendations later in
    this Report.

    61. PAPUA NEW GUINEA LAND BOARD 2026

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    61.1. The agenda for this Land Board (convened on the 25th May 2001)
    included a total of 31 items Gazetted on the 8th May 2001 and a further 14
    items Gazetted on the 17th May 2001. A total of 24 grants were ultimately
    Gazetted.

    61.2. Page 4 of the National Gazette G160 dated the 13th December 2001
    Gazetted the Grant of a Business (Light Industrial/Hotels) Lease over
    Allotment 44 (previously Allotments 9,10,11 and 12 Section 7 Granville
    in favour of Kakbuk Investments Ltd. and advised that this grant related to
    Item 43 of PNG Land Board 2026 – when there were only 31 items.

    61.3. The Committee cannot find any evidence that a Land Board ever
    considered this matter at all.

    61.4. The Committee can find no evidence that the Department of Lands
    detected this Gazettal or did anything about it.

    61.5. The Committee reiterates its comments made in respect of Land Board
    2006 (supra). The Department has failed to take any steps to recover this
    land. It failed to take any steps to prevent the unlawful issue of the Lease –
    in fact it actually issued and registered it.

    61.6. The Committee makes recommendations and referrals in respect of this
    purported Grant later in this Report.

    62. PAPUA NEW GUINEA LAND BOARD NO. 2033.

    62.1. This Land Board considered 14 items lawfully Gazetted.

    62.2. Item 14 was an application seeking a Business (Light Industrial) Lease
    over Allotment 16 Section 35 Boroko, the title of which had been forfeited
    by Gazettal dated the 25th January 2002.

    62.3. This land was exempted from advertisement by Gazettal dated the 31st
    January 2002 and thence added to the agenda for the Land Board by
    Gazettal on the 18th February 2002 i.e. all within the 28 day period for
    appeal from a decision to forfeit a title.

    62.4. The Land Board recommended that a Business (Light Industrial) Lease
    be granted over Allotment 16 Section 35 Boroko despite the fact that the
    land is zoned “Residential” in which case the Grant contravenes Section
    67 of the Land Act and despite the fact that the property accommodates a
    total of 33 houses.

    62.5. Again, the Land Board has failed to apply the procedural requirements of
    the Land Act and has delivered a Grant which was unlawful.

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    62.6. This is one of the few instances where the Department appears to have
    intervened and stopped the Grant – at the request of the original
    Leaseholder.

    62.7. The Committee cannot understand why the Department could not do the
    same thing in other instances on behalf of the State.

    63. SUMMARY

    63.1. A comparative précis of Land Board performance during the period from
    1993 – 2005 follows:

    YEAR NO. OF NO. OF ITEMS MEETINGS ITEMS PER
    MEETINGS CONSIDERED PER MONTH MEETING

    1993 23/26 1267/1283 1.92/2.17 55/49
    1994 16 900 1.34 56
    1995 31 1160 2.59 37
    1996 19 723 1.59 38
    1997 13 457/ 462 1.09 35/35
    1998 6 370 0.50 62
    1999 12 1070 1.00 89
    2000 5 239 0.42 48
    2001 6 335 0.50 56
    2002 7 262 0.50 37
    2003 9 365 0.75 40
    2004 8 309 0.60 38
    2005 11 490 0.90 45

    63.2. The performance of the Land Board from 1999 to 2004 was poor.

    63.3. In 19 months from August 2000 until April 2002, only 16 Land Board
    sittings were scheduled. The downward slide in performance continued
    until 2005, when slight improvement is noted in the first eight months of
    the year.

    63.4. One sitting was a Special Land Board, five were Provincial Lands Boards
    of which one was deferred and another did not take place and two more –
    Meetings 2024 and 2027 – simply disappeared.

    63.5. The Land Board convened eight times and considered 282 items – a poor
    performance.

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    63.6. The Board chaired by Mr. Ralph Guise (dec’d.) became notorious for the
    constant unlawful Grants of Land made by it. The Committee considers
    this reputation to be justified.

    63.7. Political interference in the composition of the Land Board has crippled
    the Board in recent years. For example, on the 14th May 2004 a new Land
    Board was appointed and Gazetted on the 3rd June 2004 – G59 page 3.
    That Board lasted five days.

    63.8. On the 8th June 2004, that Board was removed and another panel of
    Members appointed – National Gazette G64, Page 1. That Board lasted 37
    days. On the 29th July 2004 another Board was appointed in National
    Gazette G87 page 2.

    63.9. The net result of this instability was a Land Board that met only four times
    in 2004 and did not meet at all for eight months.

    63.10. Although the Government has the right to make such appointments, the
    constant renewal process requires the new Board to re-learn the
    appropriate processes. During this period, productivity drops and the
    quality of decision making is poor.

    63.11. Finally, during research for this Inquiry, it became evident that the Land
    Board in 2005 was dealing with many very old matters. The huge delay in
    bringing matters before the Lands Board inhibits development and
    commercial sales. In 2005, the Land Board considered 94 applications
    which were five years older or more. The oldest dated back to 1991!

    63.12. However, the Committee does conclude that the Land Board is catching
    up on the backlog of tenders waiting for determination.

    63.13. Also apparent to the Committee were very considerable delays in getting
    matters before the Physical Planning Boards. Some outstanding matters
    are years old. How can development occur if Zoning Applications and title
    applications or tenders are undecided?

    63.14. The Committee concludes that at least the following matters must be
    addressed if the Land Board is to work effectively:

    i) Matters been delayed for years before coming to the Land Board.
    This needs to be addressed immediately; and

    ii) there seems to be no induction, training or resource material for new
    members of the Land Board; and

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    iii) there is no or no adequate Handbook, Standing Orders or
    Instructional Manual for members of the Land Board. How are
    members to learn or understand their roles and duties?

    The Secretary for Lands was asked to produce all handbooks and
    guidelines for the Land Board. The Committee received one slim
    volume that in our view would be of limited value to any new
    member; and

    iv) the Secretary and the Department failed to produce virtually any
    Land Board records at all. There appears to be no system of
    preservation or protection of records and it became clear to the
    Committee that neither the Department nor its officers placed any
    value or priority on record keeping. This is a matter of national
    importance and should be immediately attended to; and

    v) systems to ensure timely and accurate and informed decision making
    by the Land Board must be implemented; and

    vi) this Inquiry has shown a failure by the Department of Lands and
    Physical Planning to ensure either that Land Board decisions are
    implemented at all, to ensure that titles are issued strictly in accord
    with Land Board decisions or not issued where the Land Board acts
    unlawfully. Further, Leases were issued by the Department when the
    Land Boards had not sat at all. A system of checks and some form of
    remedial intervention by the Department must be implemented; and

    vii) the Committee notes that in 2004 political interference in the Land
    Board appointments resulted in the appointment of three Land
    Boards in three months and no Land Board sittings for eight months.
    This should not occur; and

    viii) the Department should have a greater ability to advise on or approve
    candidates for appointment to the Land Board; and

    ix) members should be chosen for their merit, experience, training and
    qualification; and

    x) despite the fact that Departmental officers were wrongly issuing
    titles on the basis of non-existent Land Board decisions and despite
    the fact that those officers are still employed in the Department, we
    see nothing in the material before this Committee that suggests any
    action against these persons at all. Disciplinary and criminal
    prosecutions should be immediately and forcefully applied to these
    Officers; and

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    xi) it is clear to the Committee that Chairmen of the Land Board have
    exceeded their powers and abused their office. The Department
    appears to have ignored these excesses or not to have known about
    them. Constant scrutiny and checking (particularly of the National
    Gazette) should occur in the Department and systems of report and
    intervention to stop these illegal practices should be implemented;
    and

    xii) the Committee concludes that the Land Board has failed to
    understand or to comply with Zoning decisions, Planning decisions
    or the terms of the Land Act and other Statutes relevant to its
    functioning. This lack of resource, training and knowledge must be
    addressed.

    63.15. The Committee accepts that the Department has referred several officers
    for disciplinary action for minor theft, misrepresentation and breaches of
    procedural practices. For this we congratulate the Department but we find
    nothing to suggest that it has tackled the huge fraud and corruption
    problems in the Department.

    63.16. Despite appearing before this Committee now for years we see no
    improvement at all. What the Committee has heard is every excuse
    imaginable to avoid doing the very task that the Department exists to
    perform i.e. manage and advance the National Estate and fiscal position by
    controlling Land dealings and acquisition to the benefit of the State and its
    citizens.

    63.17. The Committee also concludes that there is no apparent accountability at
    all for that failure. We do propose to make recommendations for
    significant change later in this Report.

    63.18. Finally, the Committee gave Notice to Produce documents, files and
    records pertaining to these Land Board meetings. The Secretary for Lands
    produced two files only and claimed to have no records of other Land
    Board meetings. The Committee does not accept this.

    63.19. The Committee finds that the Department of Lands and Physical Planning
    has failed to preserve and store records and files and, by the admission of
    the Secretary, has allowed Departmental Officers to corruptly destroy files
    and records of suspect dealings.

    64. FAILURE BY THE DEPARTMENT OF LANDS & PHYSICAL PLANNING
    TO CO-OPERATE WITH THE PUBLIC ACCOUNTS COMMITTEE.

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    64.1. Throughout this Report, the Committee has recorded consistent failures by
    the Secretary of the Department of Lands and his staff to either produce in
    part or at all documents, files and records when ordered to do so.

    64.2. The Secretary did produce some scant records in response to a Notice to
    Produce. A record of that response is annexed to this Report in Schedule
    2.

    64.3. The Committee extracted a few more documents after referring the
    Secretary for prosecution for failure to comply and issuing a Summons to
    Produce, but these were incomplete, where they were produced.

    64.4. The Committee then referred the Secretary for prosecution for failure to
    comply with a Summons to Produce and a few more documents were
    delivered to the Committee on the last day of Inquiry. These were also
    scant and inadequate.

    64.5. That a Parliamentary Committee should need to refer a Head of
    Department for prosecution before co-operation is forthcoming (and then
    only grudging and partial co-operation) is not acceptable.

    64.6. The duties of a Head of Department toward the Public Accounts
    Committee are clearly set out in the Public Finances (Management) Act
    and the Secretary acknowledged that he was aware of those obligations.

    64.7. The Committee has made three conclusions from these failures. They are:

    i) That the Head of Department has no control over his staff and cannot
    or would not compel them to produce documents or assist the
    Committee; and

    ii) the Department has failed to preserve, store or protect files,
    documents and records and has allowed records to be removed or
    destroyed; and

    iii) as addressed earlier in this Report, the Department deliberately and
    intentionally failed to co-operate with the Public Accounts
    Committee Inquiry.

    64.8. The classes of documents sought by the Committee are fundamental and
    irreplaceable records of the management of State Land, State Leases,
    proceedings of the Land Board, Zoning decisions, Planning decisions and
    other documents of similar type. They should be readily available and
    securely stored.

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    64.9. The Committee concludes that urgent attention must be given to this
    problem by Government and makes certain relevant recommendations in
    this Report (infra).

    65. POTENTIAL LIABILITY OF THE STATE

    65.1. Throughout this Inquiry and Report the Committee considered the
    potential liability of the State for the failures of the Department of Lands
    and Physical Planning.

    65.2. The Committee concludes that the incompetence and outright corruption
    which has existed in the Department for years has exposed the State to
    liability.

    65.3. That liability may arise in a number of ways, but the Committee has
    identified at least the following areas of risk:

    i) The Government must identify and deal with illegally issued State
    Leases if credibility is to be restored to the Land Registration system
    in Papua New Guinea. In the event that unlawful State Leases are
    cancelled or revoked by forfeiture, successors in title, original
    Leaseholders and the finance industry may look to the State for their
    remedy.

    The Committee concludes that there may be many such State Leases
    and while the possible extent of State liability is unknown, it is likely
    to be considerable. Section 122 Hohola is an example of this
    category.

    ii) Where State Leases have been issued inconsistently with Zoning or
    Planning decisions, Leaseholders or successors in title have no valid
    Lease at all. Moreover, they have a State Lease document that may
    not allow them to do anything with the Land.

    These Leases should never have been issued in the first place and the
    State may have a liability to Leaseholders and their successors in
    Title for initial outlay and failed expectation. Again Section 122
    Hohola and Portion 1597 Paga Hill are examples of this category.

    iii) Banks or other lenders may, in the event that the State ever cancels
    or forfeits illegal grants of State Leases, be deprived of their Security
    for no reason of their making.

    This situation did arise in Emas Estate Development Pty. Ltd. v. The
    Secretary for Lands and Physical Planning (1993) PNGLR 215. The
    State should seek advice from its legal advisers in this regard.

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    65.4. In respect of the potential liability of the State arising from actions and
    decisions of the Department of Lands and Physical Planning, the
    Committee makes certain recommendations later in this Report (infra).

    66. RELATIONSHIP BETWEEN THE BANKING AND FINANCE INDUSTRY
    AND THE DEPARTMENT OF LANDS & PHYSICAL PLANNING.

    66.1. The Committee, having considered the performance of the Department of
    Lands and Physical Planning over many years, expressed its concern that
    little confidence could be had by the banking and finance industry in the
    integrity of the Land Registration System in Papua New Guinea, nor in the
    value of State Leases as security – given the failures of the Department to
    lawfully issue State Leases or ensure that issued State Leases are lawful.

    66.2. The Committee questioned the Secretary on this topic. The Secretary
    showed little understanding of the importance of his Department in this
    regard and seemed unable to appreciate that unlawful titles may not give
    any security at all for loans.

    66.3. The Committee had before it evidence that Banks are reluctant to release
    original titles to the Department because the Department loses documents
    and that Legal firms employ full time clerks to deal with the Department
    because the level of Departmental performance and response to the public
    is poor.

    66.4. The Committee concludes that a deeper Inquiry is needed into this matter.
    The Register should be cleansed of illegal or unlawfully issued State
    Leases by a process of forfeiture or cancellation.

    66.5. This will restore confidence in the system and reassure lenders as to the
    quality of their security.

    66.6. The Department needs to address urgently its standards of service, security
    and competence.

    67. THE PERFORMANCE OF THE DEPARTMENT OF LANDS & PHYSICAL
    PLANNING AND NATIONAL ECONOMIC AND SOCIAL
    DEVELOPMENT

    67.1. The Department of Lands and Physical Planning manages the most
    important asset in the country – land.

    67.2. While the Department only oversees approximately 3% of the land mass
    of the country, that land is the basis of all economic and social
    development in Papua New Guinea.

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    67.3. The Committee cannot find that the Department is capable of competent
    management of even this tiny portion of the country. State land is stolen
    from or given away by the Department for no return to the State. The
    Department of Lands is incompetent in nearly all its areas of operation –
    particularly in its failure to control its own Officers.

    67.4. The Committee considers that the Department of Lands is the most crucial
    agency in the planned and progressive building of the national economy
    and social development. If land acquisition and development is properly
    controlled, the development of wealth, employment and therefore
    improvement in all social indicators will follow.

    67.5. The Committee considers that the Department and all its officers should
    be aware of this vital role and be imbued with the task of competently
    managing their statutory tasks.

    67.6. The Committee concludes that Officers at all levels in the Department of
    Lands and Physical Planning lack this understanding and neither know nor
    care about the important national role that they should play.

    67.7. Further, the Committee finds that Departmental Officers do not understand
    that they control land dealings – land dealings and dealers do not control
    the Department. It is not their purpose to do the bidding of private
    speculators at the expense of the State.

    67.8. Neither is the Department a Real Estate Agent for the unplanned or
    random allocation of State Land for no benefit to the State, either social,
    fiscal or developmental.

    67.9. The Department has declined over the last ten years to a point where it
    cannot manage even simple statutory functions – such as collecting Land
    Rent. The Department is held in low esteem and it is clear to the
    Committee that corruption and criminal collusion by senior managers is an
    accepted incident of the Departments functioning.

    67.10. How then can other employees be expected to perform to any better
    standard in the absence of real Leadership?

    67.11. The Committee considers that this Departmental disintegration is a matter
    of National importance in that economic progress and improvement is
    retarded by the Department.

    67.12. The State must take immediate action to force change in the Department
    and this Committee makes further recommendations in this regard in this
    Report (infra).

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    68. RESOLUTIONS OF THE COMMITTEE

    68.1. The following Resolutions were made unanimously by the Public
    Accounts Committee:

    1. The Committee will make a Report to Parliament under Section 86
    (1) (c ) and (d) Public Finances (Management) Act 1995 with
    findings and recommendations concerning the Department of Lands
    and Physical Planning.

    2. The Committee concludes that the Department of Lands and
    Physical Planning is not functioning to any acceptable standard and
    its Management is ineffective. The Department has failed to carry
    out its duties and has failed to protect the interests of the State and
    the citizens of Papua New Guinea.

    3. The Committee concludes that there is an urgent need to restaff and
    restructure the Department of Lands and Physical Planning and the
    Management of that Department. This is a matter of National
    importance.

    4. The Committee recommends to the Government that assistance be
    sought from foreign aid donors to recruit and retain expert managers,
    trainers and administrators to assist the Department to become
    functional and effective.

    5. That the Government review relevant statutes and, if appropriate,
    amend them to assist the restructuring of the Department and to
    restore confidence to the Papua New Guinea Land Registration and
    administration system.

    6. That the Government immediately commission a Report addressing
    potential exposure of the State to claims arising from Departmental
    actions or inactivity, into revenue losses and methods of collection,
    into the recovery of State Land wrongly alienated into private hands,
    into customary land wrongly alienated and preservation of such
    lands in the interim.

    7. That the Government immediately commence the process of
    reviewing all State Leases granted by the Land Board and issued and
    registered by the Department of Lands and Physical Planning in the
    period 1996 – 2006 with the intention of identifying those State
    Leases that were unlawfully issued.

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    8. That the Government immediately cancel all State Leases identified
    as unlawfully Granted.

    9. That the Government immediately commence the process of
    forfeiting all those State Leases, the Lessees of which are in breach
    of any Lease Covenant.

    10. That the Government immediately commence recovery of all Land
    Rentals outstanding for more than 90 days.

    11. That the Government take immediate action to recover Portion 1597
    Paga Hill and declare and preserve that land as National Park.

    12. That the Committee accepts the findings of the Office of the Auditor
    General for the years 2000 – 2004, and will report to Parliament on
    necessary changes to those matters set down in Section 86 (1) (d) (i –
    iv) of the Public Finances (Management) Act 1995.

    13. To endorse and accept the findings set forth in Para. 69 herein.

    14. To accept and endorse the referrals set forth in Para. 70 herein

    15. That the Chairman brief the Minister for Lands on the findings and
    resolutions of this Committee.

    69. FINDINGS:

    69.1. As to the performance of the Department of Lands and Physical Planning,
    the Committee makes the following findings:

    1. The Committee, on all the evidence before it, finds that the
    Department of Lands and Physical Planning has:

    a) failed to protect the State against loss of revenue through
    failure to collect land Rental in a timely manner (or at all). The
    losses to the State are very significant ; and

    b) failed to forfeit land for unpaid Land Rental or other breach of
    covenant, thereby contributing to loss by the State; and

    c) failed to forfeit or cancel titles to land which the Department
    knew or should have known were fraudulently or corruptly
    issued; and

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    d) failed to correct Gazettal notices of issue of titles which the
    Department knew or ought to have known were fraudulent,
    forged or otherwise illegal; and

    e) failed to take any or any adequate steps to protect the State and
    its land from fraudulent dealings; and

    f) failed to maintain adequate internal controls and systems to
    ensure timely collection of revenue; and

    g) failed to action in a timely fashion or at all, recommendations
    or directions of the Auditor General, to the detriment of the
    State; and

    h) failed to action adequately or at all, directives or
    recommendations of the Public Accounts Committee, to the
    detriment of the State; and

    i) failed to perform its Statutory duties under the Land Act
    adequately or at all; and

    j) failed to perform its statutory duties under the Public Finances
    (Management) Act adequately or at all; and

    k) failed to protect the State against claims for loss and damage or
    compensation for losses arising from the fraudulent issue of
    land titles; and

    l) failed to take any or any adequate steps to protect the interest
    of the State or to protect the State against liability arising from
    illegal dealings by Departmental Officers of which the
    Department was or should have been aware; and

    m) failed to control lawfully or at all, the agendas of Land Boards
    to ensure that only properly and lawfully available land tenders
    were considered by the Land Board; and

    n) failed, when the Department knew of illegal decisions or
    dealings by the Land Board, to prevent Gazettal of illegal
    grants or registration of illegally issued Leases; and

    o) promoted private interests over those of the State and its
    citizens; and

    p) actively tolerated collusion and corrupt practices by its own
    staff; and

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    q) exposed the State to claims for loss, damage or compensation
    arising from land titles fraudulently or unlawfully issued ; and

    r) failed to take any or any reasonable action to rectify the issue
    of fraudulent titles; and

    s) failed to store, keep or protect documents, records, files and
    correspondence properly, adequately or at all; and

    t) failed to produce documents, records and files when ordered to
    do so by the Public Accounts Committee; and

    u) failed to cooperate with the Public Accounts Committee; and

    v) failed to comply with or to apply the requirements of the Land
    Act and other Statutes, the administration of which is the duty
    of the Department; and

    w) permitted staff members corruptly to destroy or remove files,
    records and documents; and

    x) negligently and unlawfully allowed the transfer of State and
    Reserved Land to private ownership; and

    y) failed to manage properly or at all land allocation, payments,
    forfeiture and all other aspects of land management; and

    z) caused loss to the State by failing to levy accurately or at all,
    tender or reserve prices for land allocation; and

    aa) caused loss to the State by failing to levy accurately or at all,
    Land Rental payments to favoured Grantees and Leaseholders;
    and

    bb) failed to defend adequately or at all litigation arising from
    Departmental mismanagement, illegality or negligence; and

    cc) failed to establish and maintain a competent system of
    management and accountability; and

    dd) failed to properly and adequately account for public funds and
    revenue; and

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    ee) failed to implement systems to comply with the terms of the
    Public Finance (Management) Act – particularly Section 5
    thereof; and

    ff) issued Urban Development Leases over Reserved Land with
    out requiring compliance with any Lease or Licence covenants;
    and

    gg) tolerated revocation of certain lands with no legal basis, to the
    detriment of the State; and

    hh) failed to read or understand Zoning and Land Use restrictions
    before issuing Leases; and

    ii) failed to maintain Zoning records or Land Use records and
    failed to produce same to the Public Accounts Committee; and

    jj) issued Leases to more than one recipient over the same land;
    and

    kk) gave Public land to speculators at no or no proper cost or price,
    thereby depriving the State of money and assets; and

    ll) failed to carry out Land Board recommendations; and

    mm) illegally issued Leases where no Land Board had either sat,
    deliberated or decided the matter; and

    nn) ignored Land Board decisions completely; and

    oo) generally become a distrusted, disorganized and chaotic
    Department incapable and disinterested in performing its
    function.

    pp) failed to respond in a timely manner, or at all, to complaints or
    requests for intervention by citizens – particularly in cases of
    fraudulent issue of titles; and

    qq) that the Secretary and his senior management have failed to
    correct abuses which they knew were occurring ( e.g. the
    Secretary made a clear sworn admission that his staff were paid
    by unnamed parties to destroy documents and records and was
    clearly aware of at least twelve illegal dealings in land); and

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    rr) that the Secretary and his Management allowed abuses and
    corrupt dealings to continue with no apparent attempt to stop
    them; and

    ss) that the Department deliberately obstructed the work of the
    Committee by failing to produce documents and records when
    ordered to do so. At best, this failure clearly demonstrated that
    the Secretary has no control over his staff;

    2. That these failures (or any of them) have an immediate and
    deleterious effect on the economic development of the country. The
    Department of Lands in its quality of management of the National
    Estate is the most important arm of Government insofar as economic
    and social development is concerned.

    3. That the failure of the Department to guarantee sound titles means
    that the finance and Banking Industries can have no confidence in
    land as security and investors can have no confidence that they have
    good title at all.

    4. That the State cannot manage competently even 3% of the
    landmass which has been alienated. This does not bode well for the
    further mobilization of Customary Land.

    5. That the Department has little credibility in the business sector.
    Banks will not send titles to the Department because they never get
    them back. Missing files and slovenly performance by the
    Department is a daily occurrence. This must be unacceptable to a
    Government which professes policies of economic development and
    investor confidence.

    6. That the Department has, quite unlawfully, issued titles to State
    Reserved Land and National Parks. Moreover two such parcels of
    land examined by the Committee showed that the recipients of the
    titles had no ability to satisfy Improvement Covenants, pay Land
    Rental or do anything but sell the land for huge profits. The land was
    given away to speculators for no benefit to the State and to the
    detriment of the public who are deprived of the use of this land.

    7. That, as a result of mismanagement and malpractice by the
    Department, the State has been deprived of revenue and assets.
    Failure to collect Land Rentals, failure to levy appropriate prices for
    land and the failure to prevent fraudulent dealings have so deprived
    the State for many years.

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    8. That the State has been exposed to significant losses by way of
    claims for damages and compensation by persons and companies
    deprived of titles, granted defeasible titles or who were otherwise the
    victims of fraud or malpractice in the Department.

    9. That the Committee has only discovered a very small part of the
    corrupt and negligent practices within the Department. The
    Committee concludes that a much deeper Inquiry is warranted with a
    view to a complete restructure of the Department and replacement of
    the current management

    10. That political interference in the Land Board has seriously impeded
    the work and the effectiveness of that Board.

    11. That the Land Board performance in the period 1999 – 2005 has
    been poor, but that there has been a slight improvement in 2005.

    12. That the Land Board requires immediate restructuring with an
    emphasis on controlling the actions of Chairmen and on making the
    Board transparent and accountable.

    13. That training and resourcing of the Land Board is poor and needs
    urgent improvement.

    14. That membership of the Land Board should be made strictly on merit
    and qualification – not political patronage.

    15. The Committee concludes that the Department of Lands and
    Physical Planning and its Management are in such a state of failure,
    that a recommendation should move to the Public Service
    Commission and the Parliament to suspend the Secretary ans senior
    management pending a further Inquiry and their replacement with
    competent senior management or a senior management team charged
    with beginning the process of rebuilding the Department.

    16. That the current Government has inherited a Department which is
    incompetent and disloyal to the State and its citizens. It is the
    product of a decade of political and criminal influence on
    Departmental officers and exists to serve the interests of a few.
    Honest or competent Officers , seemingly, have little or no influence
    in the workings of the Department

    70. REFERRALS

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    70.1. The Committee resolves that the Secretary of the Department of Lands
    and Physical Planning, Mr. Pepi Kimas, is referred to the Office of the
    Public Prosecutor, the Royal Papua New Guinea Constabulary and the
    Office of the Ombudsman for investigation and possible prosecution for
    the following breaches of the Public Finances (Management) Act, in that
    he:

    i) failed to comply with Section 5 (1) (a) in that he has not complied with
    nor ensured that his Department has complied with the terms of the
    Public Finances (Management) Act; and

    i) failed to comply with Section 5 (1) (b) in that he did not ensure that all
    records and accounts relating to the functions of the Department are
    properly maintained; and

    ii) failed to comply with Section 5 (1) (g) in that he failed to safeguard
    property of the State; and

    iii) failed to comply with Section 5 (1) (h) in that fees, taxes or charges for
    which the Department is responsible were not collected promptly and to
    the fullest extent. This includes Land Rental, reserve price and tender
    prices; and

    iv) failed to comply with Section 5 (1) (i) in that fees, charges or taxes for
    which the Department was responsible were not reviewed at least once
    in every year; and

    v) failed to comply with Section 5 (1) (j) in that he failed to submit
    information to the Public Accounts Committee when directed by Notice
    and Summons so to do.

    70.2. The Departmental Secretary is also referred for disciplinary action under
    the Public Service General Orders for breaches of the Public Finances
    (Management) Act and failure to comply with Notices and Summonses
    from the Public Accounts Committee, for which he has already been
    referred.

    70.3. The Committee refers the Departmental Secretary to the Office of the
    Public Prosecutor for investigation and possible prosecution for breach of
    Section 112 (1) (b) Public Finances (Management) Act in that both
    persons refused or willfully neglected to produce documents when
    required to do so by the Public Accounts Committee.

    70.4. The Committee refers the Secretary to the Public Service Commission for
    consideration of the imposition of a surcharge under Section 102 (d), (e)
    and/or (g) Public Finances (Management) Act – particularly in relation to

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    the continuing failure to collect Land Rentals and to protect State assets,
    thereby constituting a deficiency in public monies and State property.

    70.5. The Committee refers the Secretary to the Public Service Commission and
    the Department of Personal Management for investigation and possible
    disciplinary action under the Public Service (Management) Act 1995 and
    General Orders made thereunder for failure to assist the Public Accounts
    Committee and failure to comply with the terms of the Public Finances
    (Management) Act– See Section 113 Public Finances (Management)
    Act.

    70.6. The Committee concludes that certain land transactions made by the
    Department of Lands and Physical Planning be referred to the Offices of
    the Solicitor General and the Attorney General for appropriate action to
    protect the interests of the State. The Paga Hill land, the twelve illegal
    titles identified by the Secretary as fraudulently issued, those titles issued
    on the authority of a non-existent Land Board etc are examples. At the
    very least the Solicitor General may consider caveating titles, pending
    further action.

    71. RECOMMENDATIONS;

    71.1. The findings and resolutions of the Committee, to be effective, need to be
    actioned by the Government, without delay.

    71.2. Replacement of incompetent Departmental management, implementation
    of competent accounting and control systems, establishment of the precise
    number of unlawful Leases issued, establishment of likely State Liability,
    rectification of the Land Register, return to the State of all land either
    wrongly allocated or liable to forfeit and+ collection of outstanding Land
    Rentals are matters which must be attended to immediately.

    71.3. The Committee considers that the Government should institute an further
    deeper Inquiry into past land allocations by the Department of Lands and
    Physical Planning over the last decade with a view to establishing the
    extent and numbers of corruptly or illegally issued State Leases and the
    exact number of State Leases that should be either cancelled or forfeited
    for either illegality or breaches of Lease covenants.

    71.4. That Inquiry should be properly resourced and given wide terms of
    reference. The Committee considers that such an Inquiry will require only
    a matter of months to complete its work if it receives assistance from the
    Department of Lands staff – which should be enforced by Government.

    71.5. Shortage of land for development has significantly contributed to the
    disintegration of the Department. As land has become more valuable, so

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    the temptation to acquire it by any means has resulted in the blatant
    malpractices that this Report records.

    71.6. This motivation, coupled with a nil chance of detection or interference by
    the Department has brought the system of land allocation and, more
    importantly, security, into contempt.

    71.7. The Committee also suggests that the system of land release and allocation
    be reviewed by persons expert in assessing future needs and the role
    played by such matters in overall National development.

    71.8. We recommend that the Land Board and every facet of the operations of
    the Department of Lands Department be given urgent attention by
    Government in order that the National Estate is protected from further
    depredations and that the State recovers both its assets and revenue owed
    to it.

    71.9. More specifically, the Committee concludes that the present system of
    land management requires high standards of honesty and competence –
    attributes that the Department lacks. We commend a review of this system
    with a view of developing systems of checks and balances that cannot be
    circumvented, to ensure that the Department and the Land Board carry out
    their tasks with honesty, competence and pride.

    71.10. The Committee has found a large number of Ministerial exemptions
    granted by Departmental officers in very suspicious circumstances. Such
    exemptions should be granted only in exceptional circumstances – and
    then strictly in accordance with the terms of the Land Act.

    71.11. The exemption given in respect of Lot 10 Section 23 Granville Paga Hill
    is a good example. This prime land was removed from the Department of
    Justice, exempted from advertisement and given to a Company with no
    apparent assets or ability to develop the block, for no fee and in a closed
    tender. This land, if it was lawfully offered at all, was capable of a
    substantial return to the State and there is no legitimate reason for
    exempting it from open tender.

    71.12. Pending further Inquiry or action, we recommend that Ministerial
    Delegation be removed from the Department entirely. The few instances
    where such exemptions are legitimately made can easily be met by the
    Minister himself.

    71.13. The Committee recommends that all the allocations of State Land
    examined by the Committee in this Inquiry, be immediately referred to the
    Solicitor General for urgent action to prevent any further alienation or
    dealing in that land, pending further recovery action by the Government.

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    71.14. Finally, the Committee states that it only examined a small portion of
    those transactions referred to it by before and during this Inquiry.
    However, all transactions reported to the Committee will be referred to the
    appropriate agencies for action as soon as possible.

    72. CONCLUSIONS

    72.1. The Committee has been deeply concerned by the revelations made
    during and as a result of this Inquiry.

    72.2. That such a vital Government Department could have reached such levels
    of incompetence and be so riddled by illegality, should be a matter of
    profound National concern.

    72.3. The Department and its officers show every intention of continuing as
    they have for the last decade and clearly have neither the capacity nor the
    ability to change.

    72.4. Therefore we conclude that the State must intervene without any delay to
    force reform, in the national interest.

    72.5. This Committee hopes that this may be the beginning of positive change
    for this Department and that our system of land administration becomes a
    model of its type for developing nations and we will urge the Parliament
    to act quickly and decisively in this regard.

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    SCHEDULE ONE

    LIST OF WITNESSES
    30th April 2003

    Names of Witnesses Comments
    Mr. Pepi Kimas Secretary, Department of Lands & Physical
    Planning
    Mr. Romilly Kila Pat Deputy Secretary – Corporate &
    Regulatory Division
    Mr. Ian Kundin Senior Legal Officer and Acting Human
    Resources Manager
    Mr Tony Luben Acting Deputy Secretary – Lands Services

    1st September 2005

    Names of Witnesses Comments
    Mr. Pepi Kimas Secretary, Department of Lands & Physical
    Planning
    Mr. Francis Tanga Chairman, PNG Land Board
    Dr. Tonges Zanggo Deputy Chairman, PNG Land Board
    Kutt Paonga Member, PNG Land Board
    Ian Kundin Manager, Legal Services, DLPP
    Gabriel Donump Co-ordinator, Manam resettlement
    Darcy Tamia Chief Internal Audit, DLPP
    Romilly Kila Pat Deputy Secretary, Operations and
    Ministerial Delegate
    Gideon Simeon Manager, Finance
    George Oli Director, Corporate Services
    Frend Morove Acting Executive Officer

    24th November 2005

    Names of Witnesses Comments
    Mr Pepi Kimas Secretary, Department of Lands & Physical
    Planning

    25th November 2005

    Names of Witnesses Comments of Witnesses
    Mr Pepi Kimas Secretary, Department of Lands & Physical
    Planning

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    29th November 2005

    Names of Witnesses Comments
    Mr Pepi Kimas Secretary, Department of Lands & Physical
    Planning

    28th February 2005

    Names of Witnesses Comments
    Mr Pepi Kimas Secretary, Department of Lands & Physical
    Planning

    SCHEDULE TWO

    LIST OF EXHIBITS AND DOCUMENTS BEFORE THE INQUIRY

    Directive Number Number of Pages

    1 Nil
    1-3

    2 4–6
    3–5

    3 1–6

    1–2

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  • 127

    1 – 146

    4
    Nil
    1-5
    1 – 61
    1 – 64

    5 1 – 12

    6 1-4
    6 – 12
    1-7

    7 Nil

    8 Nil
    Nil

    9 Nil

    10 Nil

    Nil

    11 Nil

    12 Nil

    13 Nil

    6 – 46

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    16 Nil

    17
    Nil
    18
    Nil

    18 Nil

    19 Nil

    20 Nil

    Nil
    21

    22 Nil

    23 Nil

    27 Nil

    28 Nil

    29 Nil

    34 Nil

    37 Nil

    39 Nil

    40 Nil

    41 Nil

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    43 Nil

    44 Nil

    45 Nil

    46 Nil

    47 Nil

    53 Nil

    53
    1 – 15

    58 Nil

    Nil

    59

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    Miscellaneous Files

    No. of files Titles of the files

    1. Allotment 1, Section 122, Hohola – NCD

    2. Allotment 2, Section 122, Hohola – NCD

    3. Allotment 6, Section 122, Hohola – NCD

    4. Allotment 7, Section 122, Hohola – NCD

    5. Allotment 8, Section 122, Hohola – NCD

    6. Allotment 9, Section 122, Hohola – NCD

    7. Allotment 10, Section 122, Hohola – NCD

    8. Allotment 13, Section 122, Hohola – NCD DC/122/013

    9. Allotment 13, Section 122, Hohola – NCD: – Virgo No. 65 Ltd

    10. Allotment 14, Section 122, Hohola – NCD

    11. Allotment 15, Section 122, Hohola – NCD

  • Page 131 of 148

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    Response by Secretary for Lands to “Summons to a Witness”

    NO. OF APPENDICES DETAILS
    FILE
    1 Appendices File Files, records and information relating to the
    National Court ruling regarding Portion 08C, M/L
    Wasus, F/M Markham Morobe Province cancelling
    the State Lease Granted to Piu Land Group
    Incorporated and others.

    2 “01” All files, Directives, and records relating to a
    decision to exemption from advertisement
    Allotment 16, Section 35, Boroko, Gazetted on
    31/01/2002

    3 “02” All files, directives, and records relating to and in
    respect of Portion 1597, M/L Granville (Paga Hill)
    as well as grant of an “Urban development Lease”
    and subsequently Business Lease over Portion 1597
    M/L Granville

    4 “04” All documents and records relating to the
    “06” A detail statement of reasons for the cancellation of
    a Lease held by the Lutheran church of Papua New
    Guinea and the issue of a State Lease to the Ganglau
    Landowner company over Portion 109 and 110 M/L
    Pommern, F/M Madang

    “07”
    All files, records and documents showing how the
    Ganglau Landowner Company Ltd. obtained a State
    Lease over Portion 109 and 110, M/L Pommern and
    F/M Madang

    5 “10” A report on all matters referred investigated by the
    Governance and compliance unit and the result of
    each inquiry.

    6 “11” A list of all matters referred by the Governance and
    Compliance Unit to the Ombudsman or the Police
    and the outcome of each referral or complaint.

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    INTERNAL AUDIT FILES
    NO. OF FILE TITLES OF FILES
    1 Brief on unauthorised trip to Manus by Lease Coordinator,
    Islands Regions.
    2 Brief on Section 32, Lot 27 Granville
    3 Brief on changes to PNG National Land Board & National
    Physical Planning Board
    4 Report on fraudulent Loan application to Vini Finance Co. Ltd
    5 Report on fraudulent Loan application to Muruk Finance Ltd
    6 Report on fraudulent payment of K2,475.00
    7 Report on payment of entertainment allowance to former
    Secretary Guad Zurenuoc, OBE
    8 Report on theft K 2,880.00
    9 Report on theft of blank cheques
    10 Report on abuse of power & position by current Director
    Corporate Services (photocopied from my running file)
    11 Report on Land Board Members – Albert Varina & others claim
    for O/S Land Board entitlements.
    12 Report on Section 03, Allotment 20 Hohola
    13 Report on Section 38, Allotment 14 Hohola
    14 Report on discrepancy of office stationery and furniture.
    15 Brief /report on misuse of hired vehicle hired for Wewak storm
    water project
    16 Brief / report on State Owned Plantations of Asuramba, Mangen,
    Malagen & Posdam, Madang.
    17 Brief / report into State Owned Plantations in Madang
    18 Directives for investigations into Land dealings as per PAC
    Directives
    19 Statement in responses to PAC Directives

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    SCHEDULE THREE

    COPIES OF DIRECTIVES AND SUMMONSES ISSUED.

    PERMANENT PARLIAMENTARY COMMITTEE ON PUBLIC ACCOUNTS
    Telephone: (675) 327-7783 Parliament House
    Facsimile: (675) 327-7474 WAIGANI,
    NCD
    Papua New Guinea
    e-mail:pacparliament@daltron.com.pg
    _______________________________________________________________________________________

    5th September 2005

    Mr. Pepi Kimas
    Secretary
    Department of Lands & Physical Planning
    PO Box 5665
    BOROKO, NCD

    Fax: 301 3105

    Dear Mr. Kimas,

    I refer to the Public Accounts Committee inquiry into the Department of Lands &
    Physical Planning held on the 1st of September 2005 at the Parliament House.

    Having reviewed the Auditor-Generals Report and considering the responses you
    verbally gave for a series of questions put to you at the inquiry, the Committee
    has unanimously resolved to issue the following directives to be implemented
    before the expiration of thirty (30) working days from the date of these
    directives;

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    1) The Departmental Secretary will produce all records, files and Gazettal
    notices relating to the deliberations and decisions of Papua New Guinea
    Land Board No. 2005 in respect of Items 130, 131, 132, 133 and 134
    before that Board.

    2) The Departmental Secretary will produce all records, files and Gazettal
    notices relating to the deliberations and decisions of Papua New Guinea
    Land Board No. 2006 in respect of Items 20, 101 and 102 before that
    Board.

    3) The Departmental Secretary will produce all records, files and Gazettal
    notices relating to the sittings and deliberations and decisions of Papua
    New Guinea Land Board No. 2013 with particular emphasis on the time,
    days and locations at which the Land Board convened.

    4) The Departmental Secretary will produce all records, files and Gazettal
    notices relating to the sittings and deliberations and decisions of Papua
    New Guinea Land Board No. 2014.

    5) The Departmental Secretary will produce all records, files, minutes or
    transcripts and gazettal notices relating to the sittings and deliberations
    and decisions of Papua New Guinea Land Board No. 2017 with particular
    emphasis on the time, days and locations at which this Land Board
    convened.

    6) The Departmental Secretary will produce all files, records and other
    documents including Gazettal Notices relating to the issue of a Business
    (Commercial) Lease over Allotment 12 Section 122 Hohola to Mr. Andrew
    Mald.

    7) The Departmental Secretary will produce Land Rent records to the date of
    this directive for Allotment 12 Section 122 Hohola including and in
    particular, records of all arrears of Land Rent.

    8) The Departmental Secretary will produce records of the reserve or tender
    price paid by Mr. Andrew Mald for Allotment 12 Section 122.

    9) The Departmental Secretary will produce all files, records and other
    documents relating to the issue of a Business (Commercial) Lease over
    Allotment 5 Section 59 Town of Alotau to PNG Deep Sea Fishing Ltd.

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    10) The Departmental Secretary will produce all records of reserve or tender
    price paid by PNG Deep Sea Fishing Ltd in respect of Allotment 5 Section
    59 Town of Alotau.

    11) The Departmental Secretary will produce all records of land Rent applied
    to Allotment 5 Section 59 Town of Alotau.

    12) The Departmental Secretary will produce the final and actual agenda for
    PNG Land Board No. 2026.

    13) The Departmental Secretary will produce all Gazettal Notices of grants
    made by PNG Land Board No. 2026.

    14) The Departmental Secretary will produce Land Rent records current to the
    date of the directive for Allotments 9, 10, 11 and 12 Section 7 Granville.

    15) The Departmental Secretary will produce all records of reserved or tender
    price paid by KakbuK Investments Ltd in respect of Allotments 9, 10, and
    12 Granville

    16) The Departmental Secretary will produce all documents, files, Gazettal
    Notices and records of PNG Land Board No. 2033.

    17) The Departmental Secretary will produce all files, directives, decisions and
    other records relating to the exemption from advertisement of Allotment
    16 Section 35 Boroko, Gazetted on the 31st January 2002.

    18) The Departmental Secretary will produce records showing the zoning of
    Allotment 16 Section 35 Boroko on and from the 27th February 2002 until
    the date of this directive.

    19) The Departmental Secretary will produce a record of all litigation in the
    National Court of Justice or the Supreme Court either completed or
    current arising from or concerning the deliberations and decisions of the
    Papua New Guinea Land Board during the period 1997 until the date of
    this directive, to which the Department of Lands and Physical Planning,
    the Papua New Guinea Land Board, the Secretary for Lands and Physical
    Planning or the State is a party.

    20) The Departmental Secretary will produce a list of all damages awards or
    Judgments given against the State (however described) arising from
    deliberations or decisions of the Papua New Guinea Land Board during the
    period from 1997 until the date of this directive.

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    21) The Departmental Secretary will produce records of the Members of each
    Land Board from 1991 until the date of this directive with copies of
    relevant Gazettal Notices of appointment and revocation.

    22) The Departmental Secretary will produce all records all records showing
    zoning of Portion 1597 Milinch Granville from the 22nd August 1997 until
    the date of this directive.

    23) The Departmental Secretary will produce all records files, minutes and
    other documents relating to the hearing and determination of Papua New
    Guinea and Board No. 1911 Item 2.

    24) The Departmental Secretary will produce all records of any reserved or
    tender price paid by Paga Hill Development Co. Ltd or Paga Hill Land
    Holding (PNG) or any other person or entity in respect of Portion 1597 at
    any time from August 1997 until the date of this directive.

    25) The Departmental Secretary will produce all records of Land Rental
    applied and paid or outstanding in respect of Portion 1597 at any time
    from August 1997 until the date of this directive.

    26) The Departmental Secretary will provide a detailed report on all steps
    taken to excise or otherwise protect and preserve the interest of Police
    Legacy in Portion 1597.

    27) The Departmental Secretary will produce all records of zoning of Section
    122 Hohola and in particular Allotment 1 Section 122 Hohola as described
    in Survey Plan 49/901 showing revocation and change in that zoning from
    1969 until the date of this Directive.

    28) The Departmental Secretary will produce all records of Land Rental
    applied and/or outstanding for Allotments numbered 1, 2, 3, 4, 5, 6, 7, 8,
    9, 10, 11, 12 and 13 Section 122 Hohola.

    29) The Departmental Secretary will produce all records, documents and
    accounts of any reserve or tender price paid in respect of Allotments 1, 2,
    3, 4, 5, 6, 7, 8, 9, 10, 11, 12 and 13 Section 122 Hohola.

    30) The Departmental Secretary will produce a statement of any and all
    litigation issued, finalized or current concerning in any way any part of
    Section 122 Hohola and to which the Department or the State is a party.

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    31) The Departmental Secretary will produce a detailed statement of reasons
    for the cancellation of the Lease held by the Evangelical Lutheran Church
    of Papua New Guinea.

    32) The Departmental Secretary will produce a detailed statement or reasons
    for the issue of a State Lease to the Ganglau Landowner Company Ltd
    over Portions 109 and 110 Madang, Madang Province.

    33) The Departmental Secretary will produce to the Committee all files,
    documents, records, minutes or notes whatsoever whether in hard or
    printed form or in any electronic media relating to or recording the
    process by which the Ganglau Landowner Company Ltd obtained a State
    Lease over Portions 109 and 110 Madang, Madang Province.

    34) The Departmental Secretary will produce all Land Rent records for
    Portions 109 and 110 Madang, Madang Province for the period 1997 to
    the date of this directive.

    35) The Departmental Secretary will produce evidence of any reserve or
    tender price paid by the Ganglau Landowner Company Ltd.

    36) The Departmental Secretary will produce all records, files and other
    documents relating to the application for and issue of a State Lease over
    Allotments 2 and 3 Section 111 Boroko to Bluehaven No. 7 Ltd.

    37) The Departmental Secretary will produce all records of Land Rent and
    Land Rent outstanding in relation to Allotments 2 and 3 Section 111
    Boroko for the period 1997 to the date of this directive.

    38) The Departmental Secretary will produce all records, accounts, files and
    other documents recording the reserve or tender price fixed and/or paid
    by Bluehaven No. 7. Ltd in respect of Allotments 2 and 3 Section 111
    Boroko.

    39) The Departmental Secretary will produce all files, documents, minutes and
    other records relating to or recording the proceedings and decision of
    Papua New Guinea Land Board 2014 in relation to an application by the
    Sisters of Charity for the grant of a State Lease over Allotment 69 Section
    229 Hohola.

    40) The Departmental Secretary will produce all documents, records and files
    relating to the grant and issue to Willing Pacific (PNG) Ltd of a State Lease
    over Allotment 69 Section 229, Hohola.

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    41) The Departmental Secretary will produce all Land Rent records showing
    land Rent paid or owed in respect of Allotment 69 Section 229 Hohola
    during the period 1991 to the date of this directive.

    42) The Departmental Secretary will produce all files and records of
    correspondence received by or sent to the Department of Lands and
    Physical Planning during the period from 1991 until the date of this
    directive.

    43) The Departmental Secretary will produce all Departmental files (including
    Land Board files) and Gazettal Notices relating to the grant and issue of a
    Business (Commercial) Lease to PNG Deep Sea Fishing Ltd over Allotment
    5 Section 132 Town of Alotau.

    44) The Departmental Secretary will produce Land Rental statements and
    records for this land.

    45) The Departmental Secretary will produce all records of the reserved or
    tender price paid to the State by PNG Deep Sea Fishing Ltd.

    46) The Departmental Secretary will produce all valuation reports and/or Land
    Rental assessment records for Allotment 5 Section 132, Town of Alotau for
    the period 1917 until the date of this directive.

    47) The Departmental Secretary will produce minutes and records of Meeting
    No. 08/98 National Physical Planning Board.

    48) Provide to the Committee a confidential report setting out all officers
    suspended or terminated from the service of the Department 1997 –
    2005, including reasons for that action.

    49) Produce to the Committee the approval from the Department of Finance
    for all bank accounts maintained by the Department of Lands and Physical
    Planning.

    50) Produce to the Committee the approval by the Department of Finance to
    the appointment of Mrs. Lavu Matau as Collector of Public monies.

    51) Produce to the Committee a full and complete list of all advisers,
    consultants or contractors appointed or retained by the Department of
    Lands and Physical Planning in the last in the period 1999 – 2005.

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    52) Produce to the Committee all applications or tenders made to the
    Department for the supply of services, all records of deliberations and
    awards of contracts for services made by the Department in the period
    1999 – 2005.

    53) Produce to the Committee copies of any written guidelines for the Papua
    New Guinea Land Board.

    54) Produce to the Committee any and all correspondence to the office of the
    Attorney General or any other Office seeking authority to issue collection
    proceedings of outstanding debts.

    55) Produce to the Committee a confidential report showing instances of
    threats made to officers of the governance and compliance unit of the
    Department of Lands and Physical Planning including the identity of the
    person making the threat, the nature of the threat and action taken in
    respect of that threat.

    56) Produce to the Committee a report on all matters referred to or
    investigated by the governance and compliance unit and the result of
    each inquiry.

    57) Produce to the Committee a record of all matters or allegations referred
    by the governance and compliance unit to the Ombudsman or the Police
    and the outcome of each matter or referral or complaint.

    58) Produce to the Committee a list of all State Land which, in your opinion,
    has been illegally or improperly passed into private hands giving brief
    reasons for your conclusions, full title references and details of the
    recipient(s) and current owners.

    58) Within ten days, from the date of these directives, the Department of
    Lands and Physical Planning will respond in writing to all queries,
    allegations or matters of inquiry by the Auditor General contained in Audit
    Reports dated the 21st March 2005. That response will be delivered to the
    Office of the Auditor General and to the Secretary of the Committee.

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    You are to implement the above directives within the given time and also you
    may contact the Committee Secretariat to clarify any matters that may arise
    relating to the directives.

    Yours sincerely,

    HON. JOHN TONGRI HICKEY, MP
    Chairman

  • Page 141 of 148

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    PERMANENT PARLIAMENTARY COMMITTEE ON PUBLIC ACCOUNTS
    Telephone: (675) 327-7783 Parliament House
    Facsimile: (675) 327-7474 WAIGANI,
    NCD
    Papua New Guinea
    e-mail:pacparliament@daltron.com.pg
    _______________________________________________________________________________________

    22 September 2005
    Mr. Pepi Kimas
    Secretary
    Department of Lands & Physical Planning
    PO Box 5665
    BOROKO, NCD

    Fax: 301 3105

    Dear Mr. Kimas,

    I refer to the PAC directives issued to you dated 5 September 2005.

    There was an inadvertent error which affected directives number 43 and 46.

    Please amend directives 43 and 46 to read as “Allotment 5 Section 59 Town of Alotau”

    A further additional directive is now being issued to be implemented together with the
    previous directives.

    59) The Departmental Secretary will produce a list of all Ministerial exemptions
    from public advertisement and competitive tender, made pursuant to Section
    69 (2) of the Land Act during the period 2003, 2004 and 2005 identifying the
    subject land and the reasons for each exemption.

    Yours sincerely,
    HON. JOHN HICKEY, MP
    Chairman.

  • Page 142 of 148

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    PERMANENT PARLIAMENTARY COMMITTEE ON PUBLIC ACCOUNTS
    Telephone: (675) 327-7783 Parliament House
    Facsimile: (675) 327-7474 WAIGANI,
    NCD
    Papua New Guinea
    e-mail:pacparliament@daltron.com.pg
    _______________________________________________________________________________________

    INDEPENDENT STATE OF PAPUA NEW GUINEA
    Public Finances (Management) Act 1995

    Act, Sec.89(1)
    SUMMONS TO A WITNESS

    To: Mr Pepi Kimas
    Secretary
    Department of Lands & Physical Planning
    P O Box 5665
    BOROKO NCD

    You are summoned to produce to the Committee or the Secretary of the Committee by
    2:00pm today the 24th of November 2005 the following books, papers, documents and
    articles:-

    1. All files, directives, decisions and other records relating to a decision to exempt
    from advertisement Allotment 16 Section 35 Boroko, Gazetted on the 31st January
    2002.

    2. All records of any reserve or tender price paid by Paga Hill Development Co. Ltd.
    or Paga Hill Land Holding (PNG) Ltd or any other person or entity in respect of
    Portion 1597 Milinch Granville at any time from August 1997 until the date of
    this Summons.

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    3. All records of Land Rent applied and paid or outstanding in respect of Portion
    1597 Milinch Granville at any time from August 1997 until the date of this
    Summons.

    4. All documents and records relating to the grant of an Urban Development Lease
    and subsequently Business Lease over Portion 1597 Milinch Granville.

    5. A statement of any and all litigation issued, finalized or current concerned in any
    way any part of Section 122 Hohola and to which the Department of Lands and
    Physical Planning is a party.

    6. A detailed statement of reasons for the cancellation of a Lease held by the
    Lutheran Church of Papua New Guinea and the issue of a State Lease to the
    Ganglau Landowner Company Limited over Portions 109 and 110 Milinch of
    Pommern, Fourmil of Madang, Madang Province – Vol. 12 Folio 113 (previous
    Volume 65 Folio 26).
    7. All files, records and documents showing how the Ganglau Landowner
    Landowner Company Ltd. obtained a State Lease over Portions 109 and 110
    Milinch of Pommern, Fourmil of Madang, Madang Province – Vol. 12 Folio 113
    (previously Vol. 65 Folio 26) and evidence of any reserve or tender price paid by
    the Ganglau Landowner Company Ltd. for that land.

    8. All records, files and other documents relating to the application for and grant of a
    State Lease to Bluehaven No.7 Ltd., payment of land rent and reserve or tender
    price by Bluehaven No.7 Ltd, over Allotments 2 and 3 Section 111 Boroko.
    And/or Allotment 6 Section 111 Fourmil Boroko – Vol. 27 Folio 202.

    9. All correspondence from the Department of Lands and Physical Planning to the
    Office of the Attorney General or any other office seeking authority to issue
    collection proceedings for outstanding debts.

    10. A report on all matters referred to or investigated by the governance and
    compliance unit and the result of each inquiry.

    11. A list of all matters referred by the governance and compliance unit to the
    Ombudsman or the Police and the outcome of each referral or complaint.

    12. A list of all State Lands which in your opinion has been illegally or improperly
    passed into private hands giving brief reasons for your conclusions, full title
    references and details of the recipients and current owners.

    You are required to continue in attendance as directed by the Committee or the Chairman
    of the Committee until your attendance is no longer required.

    Dated: 24th November 2005

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    PERMANENT PARLIAMENTARY COMMITTEE ON PUBLIC ACCOUNTS
    Telephone: (675) 327-7783 Parliament House
    Facsimile: (675) 327-7474 WAIGANI,
    NCD
    Papua New Guinea
    e-mail:pacparliament@daltron.com.pg
    _______________________________________________________________________________________

    22 February 2006
    Mr. Pepi Kimas
    Secretary
    Department of Lands & Physical Planning
    PO Box 5665
    BOROKO NCD

    Fax: 301 3105

    Dear Mr. Kimas,

    You are to deliver to the Public Accounts Committee Secretariat on or before the 24th
    February 2006, the followings;

    1. Confirmation that a Ministerial exemption was given in respect of Allotment 10
    Section 23 Granville Paga Hill and if so in whose favour was the exemption
    granted?

    2. A written description of all action taken by you to cancel/forfeit or otherwise
    return Portion 1597 Paga Hill to the State since the 29th November 2005 and in
    particular provide a copy of the Notice to Show Cause which you undertook to
    serve within 48 hours of the 29th November 2005 and a statement of the results of
    those actions.

    3. All letters sent by you or your Department to the Office of the Solicitor General
    or the State Solicitor seeking assistance or permission to commence collection
    proceedings for unpaid Land Rental.

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    4. A written description of all action taken by you since the 29th November 2005, to
    cancel/forfeit or otherwise return the 12 blocks of land identified by you as being
    unlawfully issued in a press release dated the 19th December 2002, and a
    description of the results of those actions.

    5. Name the person or persons who may place “the security of my officers in
    jeopardy” in respect of cancellation / forfeiture of the Lease over Portion 1597
    Paga Hill as stated in your sworn evidence on the 29 November 2005.

    6. A statement showing why you have not produced documents relating to Land
    Board 1991 as directed on the 29th November 2005?

    7. A statement identifying who manually changed the rental payable in respect of
    Portion 1597 on the face of the Business Lease? Why did you not provide this
    information within five days as directed on the 29th November 2005?

    8. A statement as to why your Department failed to preserve and produce to this
    Committee any documents, records, files or reports regarding the issue of the
    Business Lease over Portion 1597?

    9. A statement clarifying how detailed covenants in the Urban Development Lease
    disappeared when the Business Lease was issued.

    10. A statement as to how a Business Lease issued at all when the applicant had failed
    to comply with any of the covenants in the Urban Development Lease.

    11. A statement setting out the reasons why you took no action to forfeit /cancel the
    Lease issued over Portion 1597 for breach of covenant or unpaid Land Rental?

    12. A statement as to why you have not cancelled / forfeited the Lease over Portion
    1597 in light of the advice of the Solicitor General to the effect that the initial
    grant was unlawful?

    13. A statement as to what steps you have taken to protect the interests of Police
    Legacy in portion 1597 since the 29th November 2005?

    14. A copy of the report of Mr. Pius Koriawagan into Portion 1597.

    15. A copy of the written arrangement made between the Lessee of Portion 1597 and
    Mr. Romilly Kila Pat regarding payment of land Rental for that Portion. You are
    to contact Mr. Pat and obtain a faxed statement as to the arrangement.

    16. A statement of the legal basis to allow payment of reduced or periodic Land
    Rental payments.

    17. The agenda for PNG Land Board 3/2004.

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    18. A list of all grants made by Land Board 4/2004.

    19. Copy of all Ministerial exemptions made in respect of Portion 1555 Milinch
    Granville.

    20. A statement of all Land Rental outstanding for the years 2000, 2001, 2002, 2003,
    2004 and 2005.

    Yours sincerely,

    HON. JOHN HICKEY, MP
    Chairman

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    THE NATIONAL PARLIAMENT
    OF PAPUA NEW GUINEA

    PUBLIC ACCOUNTS COMMITTEE REPORT

    TO PARLIAMENT ON THE INQUIRY

    INTO THE DEPARTMENT OF LANDS

    AND PHYSICAL PLANNING

    PRESENTED ON:

  • Page 148 of 148

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