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• 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.

• Page 112 of 148

• 112

  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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• 113

  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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• 120

  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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• 121

  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

• Page 127 of 148

• 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

• Page 128 of 148

• 128

  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

• Page 129 of 148

• 129

  43 Nil

  44 Nil

  45 Nil

  46 Nil

  47 Nil

  53 Nil

  53
  1 – 15

  58 Nil

  Nil

  59

• Page 130 of 148

• 130

  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

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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:[email protected]
  _______________________________________________________________________________________

  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

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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:[email protected]
  _______________________________________________________________________________________

  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.

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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:[email protected]
  _______________________________________________________________________________________

  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:[email protected]
  _______________________________________________________________________________________

  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:

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