State v Tiensten  PGNC 234; N5422 (22 November 2013)
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State v Tiensten  PGNC 234; N5422 (22 November 2013)
PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE
CR 402 of 2012 & CR 403 of 2012
Waigani: Salika, DCJ
2013: 10, 11,12,17,18 & 25 September
CRIMINAL LAW – accused charged with conspiracy to defraud – whether accused conspired with
others to defraud – whether actions of accused amount to conspiracy to defraud.
CRIMINAL LAW – charges of dishonestly applying to use of another – whether accused dishonestly
applied K10 million for use of another – whether actions of accused amount to dishonesty.
The State v Gabriel Ramoi (1993) PNGLR 390
The State v Francis Natuwohala Laumadava (1994) PNGL 291
Page 2 of 19
Mr A Kupmain, for the State
Mr A Amet Jr, for the Accused
22. November, 2013
1. SALIKA DCJ: Background: The accused is charged with one count of conspiring with one, Eremas
Wartoto, William Sent and Ruby Zarriga to defraud the Independent State of Papua New Guinea by
fraudulently causing it to pay K10 million to Travel Air.
2. He is also charged with one count of dishonestly applying to the use of another namely Travel Air K10
million the property of the State.
3. The accused was arraigned on the following facts:
The State alleged that the accused is alleged to have conspired with Eremas Wartoto, William Sent and
Ruby Zarriga between 1 May 2010 and 31 March 2011 to defraud the State of K10 million. It alleged that
the accused and his co-conspirators with the level of knowledge and skills knew that a K10 million was
budgeted for Air Freight subsidy for existing Third Level Airlines operating in PNG.
4. The K10 million air freight subsidy was in the custody of the Department of National Planning and
Monitoring and was parked there under the Public Investment Program (PIP). The State alleges that the
accused and his co-conspirators then caused the payment of the K10 million to be paid to Travel Air, a
new private airline company which was not entitled to receive the K10 million.
5. The State alleged that the K10 million was paid not as an airfreight subsidy but as seed capital to start
up a new Airline Company called Travel Air. In that regard therefore the State says the accused
dishonestly applied to the use of Travel Air the K10 million.
On arraignment the accused denied the charges.
6. The accused at the time the alleged offences were committed was a Member of Parliament for the
Pomio Open Seat and was then the Minister of National Planning and Monitoring. He is still a Member
of Parliament for the same seat having won the seat again in the 2012 National Elections.
Page 3 of 19
7. The State evidence consisted of witness statements tendered into evidence by consent from the
following witnesses: Ekip Kop, Joseph Lelang, Jacob Mera, Paul Daggun, Daniel Rolpagarea, Wilson
Sagati, Joseph Kintau, Manly Ua, William Vate, Babaga Naime, Sialis Taman, Monica Lopyul, Juliana
Kubak, Imelda Mivana, Reuben Baloiloi and Agatha Poga.
The State also called oral evidence from Ekip Kop, Joseph Lelang, Jacob Mera Paul Daggun and Julianna
8. The ﬁrst oral evidence was from witness Ekip Kop, a senior auditor with the Ofﬁce of the Auditor
General. He said his ﬁndings were all detailed in an audit report from the Ofﬁce of the Auditor General
dated 27th September 2011 which is an exhibit in this court.
The essence of Kop’s evidence was that the ﬁrst proposal for funding which was undated, was received in
around October 2010 before the second proposal which was accompanied by a letter dated 27 May 2010
but was received in around March 2011. His report also touches on the processes involved in an
application for funding under PIP and also on the project appraisal processes and also on procedures
under the Public Finance Management Act.
Kop suggests in his evidence that Exhibit H (which is the minute written by William Sent) was written
after the ﬁrst proposal and that this amounted to a conspiracy between the accused, Ruby Zarriga,
William Sent and Eremas Wartoto.
9. Joseph Lelang, the former Secretary for the Department of National Planning and Monitoring (DNPM)
relied on his statement. He said that on 28th June 2011, Korowi Lawyers presented to the Secretary of
DNPM a report entitled “Investigative Report into Department of National Planning and Monitoring”. He
also said that included in that report is the DNPM’s report on the Public Investment Program (PIP) for the
period ending 7th June 2011. He further says that a cheque for K10 million was printed on 31st March
2011 for collection by Mr Wartoto.
10. In his statement, Mr Lelang outlines the procedures involved in granting subsidies to private entities
and said in support of the Investigation Report by Eki Kop that the Report is correct in questioning this
payment because Travel Air is a private company and private companies do not receive automatic
National Government subsidies but that it requires a lot of discussion with Treasury Department,
Department of Transport and Civil Aviation Authority before a submission is made to the National
Executive Council (NEC) for its consideration and approval. In this case he said this was not done. He
said the decision to approve K10 million to Travel Air should have been made by the NEC and not the
Acting Secretary. The witness also says that the accused lacked the authority to approve or direct the
release of the K10 million to Travel Air.
11. In cross examination Mr Lelang agreed that when he was Secretary Department of National Planning
& Monitoring (“DNPM”) he had received the ﬁrst proposal from Travel Air (Exh F), after it was marked
down from the Accused. Mr Lelang agreed that he received this proposal which contained the Accused’s
footnote (which appears at the top of the proposal), in or around October 2010.
Page 4 of 19
12. Mr Lelang contended that this amounted to a direction which he was compelled to implement. He
contended that if he did not implement the Accused’s directives, he would have been disciplined and
charged for insubordination.
13. Mr Lelang contended that as there was no funding available for seed capital to be allocated to Travel
Air in accordance with the Accused’s direction, he implemented the Accused’s direction by allocating
some funding in the 2011 Development Budget under the category of Airfreight Subsidy.
14. Mr Lelang contended further that the allocation of the airfreight subsidy was an existing programme
to subsidise freight costs incurred by airlines, and offered the example of the “Green Revolution”. He
went further to contend that under the airfreight subsidy, existing third level airlines would have to
submit expressions of interest in order to be considered for funding.
15. In cross examination he was asked why the sum of K10 million was not parked in the different
sectors such as Agriculture or Transport (since it was an existing program). Mr Lelang said that he had
allocated the money for the economic corridor programme. Even though the money had been allocated
for the economic corridor, proper process needed to be followed to secure the release of the money to a
16. In cross examination Mr Lelang agreed that under the Public Finance Management Act the
Departmental Head for the Department of National Planning had the power under s.32, to approve
requisitions for expenditure. He was not asked how much he had authority to approve as a departmental
17. When shown the Memorandum of Understanding ( “MOU”) Exhibit 1 dated 6 May 2011, Lelang
stated that the correct procedure was that the State Solicitor should give advice on such agreements
before they were executed. He agreed that he had not seen the MOU previously as he was not in ofﬁce at
the material time.
18. Jacob Mera, Deputy Secretary – PIP at DNPM, said that during his tenure as the Acting Deputy
Secretary, PIP in 2010, he was responsible for the formulation of the 2011 Development Budget and the
Controller and a member of the Budget Screening Committee. The witness also stated that during the
formulation of the Development Budget, the DNPM did not receive a project proposal/submission from
19. Mera agreed that under s.32 of the Public Finance Management Act, the Department Head of DNPM
had the power to approve requisitions for expenditure and that was where the ﬁnal authority was vested.
However he was not asked how much the Departmental Head could approve or whether the Departmental
Head had powers to approve unlimited amounts.
Page 5 of 19
20. Paul Daggun, the Assistant Secretary – Development Budget gave evidence as to the procedural
aspects of budgeting within DNPM. The witness points out that the K10 million was paid out to a private
company despite the set procedures. The witness also said Ruby Zarigga signed and approved the
payment on 28 March 2011 and the cheque was raised on 31st March 2011 and made payable to Travel
21. In cross examination Daggun said he had signed the Finance Form 3 (FF3) after he was directed by
the then acting Deputy Secretary (PIP) Takale Tuna. When asked by the court as to what directions he
was given he stated that he was told verbally by Mr Tuna that the Accused wanted the requisitions raised
immediately. He also agreed that he had drafted the minute dated 21 March 2011, which was signed by
Mr William Sent as his immediate boss. The minute dated 21 March 2011 signed by Mr Sent is now Mr
Sent’s document, regardless of the fact that it was drafted by Paul Daggun.
22. Daggun also said in cross examination that although the standard ceiling for expenditure by the
Secretary for National Planning and Monitoring was K3 million, he had previously signed requisitions
for amounts which exceeded K3 million.
23. Julianna Kubak gave evidence that at the material time she was acting Deputy Secretary Policy,
DNPM. This witness also stated the process and procedure to be followed in the expenditure of public
funds such as the K10 million.
24. Ms. Kubak agreed in cross examination that she had signed as a witness to the MOU on 6 May 2011
and she agreed that the cheque of K10 million was presented to Travel Air on 6 May 2011 after the MOU
had been signed.
25. The Accused gave sworn evidence on his own behalf.
He gave evidence relating to the policies of the Government of PNG (GoPNG) which he said gave rise to
the allocation of the K10 million in the 2011 Development Budget.
The Accused relied on the Papua New Guinea Development Strategic Plan 2010-2030 (PNGDSP) and
the Medium Term Development Plan 2011-2015 (“MTDP”) in support of the project proposal from
The Accused explained the policies of GoPNG which spelt out GoPNG’s ultimate development agenda
and intimated that the proposal by Travel Air met the government’s development agenda.
Page 6 of 19
26. The accused admitted in his evidence that he had marked down the ﬁrst proposal to then Secretary
Lelang on 20 October 2010. He said that he had been informed verbally by Mr Lelang prior to the
delivery of the 2010 PIP/Development Budget that K10 million parked under the Budget as Airfreight
Subsidy was meant for Travel Air.
27. The Accused said that Air Freight subsidy was not an existing programme. He maintained that if it
was an existing programme, it would have been catered for in previous budgets and that if it was an
ongoing programme, the money would have been parked in the different sectors which needed the
subsidy – sectors such as Transport or Agriculture. The Accused said instead that the Air Freight subsidy
was a pilot programme or an intervention by the Somare Government to pilot the delivery of subsidized
air services to uneconomical routes in the South Coast Economic Corridor (in East and West New
Britain) and that it was on this basis that when the second proposal came in from Travel Air, he
recommended facilitation of the K10 million because it had been his understanding all along that
the K10 million was meant for Travel Air and no other airline – simply because the Airfreight
Subsidy was a “pilot project” or an “intervention.”
28. The Accused gave evidence that his role as Minister was to mark submissions to Secretary, DNPM
for appraisal against the proposed programmes and other appropriated items under the Development
He also gave evidence that it was not his role as Minister to oversee the appraisal process. The Accused
gave evidence that it was not his role as Minister to approve such proposals for funding as that was the
function of the Secretary, DNPM.
29. Simon Erinuka gave sworn evidence and corroborated the date and time when the ﬁrst and second
proposals were marked down by the Accused. He said that he was the ﬁrst point of communication
between the Minister and DNPM and as such, said he delivered both proposals in October 2010 and
March 2011 respectively to the Minister.
30. He said that he witnessed the MOU and that the cheque of K10 million was released and presented to
Travel Air by DNPM on 6 May 2011. He said that the process of appraisal, up to the presentation of the
cheque to Travel Air was undertaken by DNPM and he was only informed of the approval of the
submission by Travel Air when he was advised to inform the Accused that the cheque of K10 million was
ready to be presented to Travel Air.
31. William Sent gave evidence that proposals which pass through him are then forwarded to Paul
Daggun for appraisal. He conﬁrmed that he took the proposal to Daggun for appraisal. Sent said he
received the minute dated 21 March 2011 which was prepared by Daggun and signed it.
32. He said that a grey area exists in the Public Finance Management Act which allowed the Secretary
DNPM to have unlimited powers to approve expenditure of funds parked under the Development Budget.
He however did not state which part of the Public Finance Management Act had grey areas.
Page 7 of 19
Sent said that the cheque of K10 million was released to Travel Air on 6 May 2011 – the same day the
MOU was signed.
33. He said that the delay in delivery of the cheque to Travel Air was necessary because DNPM did not
have a policy framework to administer funds disbursed under the Public Private Partnership programme
and so it was necessary for the MOU to be drawn up and executed to establish the mechanism under
which the implementation of the Air Freight subsidy could be monitored. He also gave evidence of a
similar partnership agreement under the Public Private Partnership policy signed between the churches
34. Shaha Tofayel is the General Manager of Travel Air. His evidence is that by the time the cheque of
K10 million had been received by Travel Air, Travel Air had already received approval for registration of
4 aircrafts but that Travel Air had no aircraft on the ground in PNG at the material time.
35. He said Travel Air could not comply with its undertakings under the MOU unless the National
Airports Corporation had ﬁrst fulﬁlled its obligation under the MOU to ensure that the smaller airstrips
were technically certiﬁed to be serviced by Travel Air or other airline operators. To me, however, this
excuse is a lame one because they ought to have considered the serviceability of those airstrips ﬁrst
before embarking on such a project or proposal and before requesting for funding.
36. The issues raised in this case are:
(a) whether the accused conspired with Eremas Wartoto, William Sent and Ruby Zariga to defraud the
State of its K10,000,000; and
(b) Whether the accused dishonestly applied to the use of Travel Air K10,000,000.00 the property of the
Did the accused conspire with Eremas Wartoto, William Sent and Ruby Zarriga to defraud the
State of its K10 million.
37. Firstly, it is not disputed that K10 million was paid to Travel Air in the form of a cheque No 000158
by the Department of National Planning and Monitoring. 38. The question that arises is how is it that
Travel Air is the only company that put in a bid or a proposal for the K10 million? Were public tenders
called for? Were other airline operators aware of the K10 million air freight subsidy available for them to
seek and apply for.
39. Evidence before the Court is that no other third level airline operators already operating in PNG
lodged a bid for the K10 million Air Freight subsidy to assist them to service rural PNG. Airline
Operators like Airlines PNG, Missionary Aviation Fellowship (MAF), Tropic Air etc already operating in
Page 8 of 19
PNG were never invited to put in their bids for the airfreight subsidy funding that was parked with the
40. How was it that Travel Air was able to submit a bid? It is noted that the ﬁrst proposal was addressed
to the Minister for National Planning Mr Paul Tienstein, LLM, MP. The ﬁrst proposal was signed by
Eremas Wartoto, Managing Director, SWT Group of Companies.
The cover letter of the proposal reads:
Airline Subsidy Proposal for Papua New Guinea Development Strategic Plan 2010 – 2030.
RE: THE ECONOMIC CORRIDORS SOUT H COAST CORRIDOR (EAST NEW BRITAIN AND WEST
The proposal was received by the Minister National Planning and Monitoring, Paul Tienstein on 20
41. The proposal reads in the ﬁrst paragraph:
Please allow me to introduce “Travel Air”. Travel Air is a 100% owned and operated airline that has
been set up to cater for areas of Papua New Guinea that are not currently catered for by other Airlines
currently operating within Papua New Guinea or have restricted or unreliable services in the areas”.
42. Travel Air was registered as a Business with the Registrar of Companies on 8 September 2010 and
business started on 1 October 2010. However the company name Travel Air Ltd was incorporated on 15
June 2011 and registered on the same day 15 June 2011.
43. When the ﬁrst proposal was submitted Travel Air was not operating as a company. It was registered
as a business only. Travel Air had no aircrafts and only had a brand new business. Travel Air Ltd as a
company was not registered as a company yet. Yet Mr Wartoto was able to say that it was a “100%
owned and operated airline”. For him to suggest that it was already operating was not true. There were no
aircrafts on the ground in PNG at the relevant time. Simply put evidence is that Travel Air was not
Page 9 of 19
44. Mr Tiensten after receiving the letter wrote the following note to his Department Secretary.
“Allocate K9.8 million seed capital as per this proposal for the implementation of South Coast Economic
Corridor for both East and West Britain in 2011 PIP Budget.”
45. This note was made on 20 October 2010 by the accused and with respect was a direction to the then
Secretary of DNPM. The accused gave evidence that the purpose of the note was to get the then Secretary
of the Department of National Planning and Monitoring to include this submission by Travel Air in the
Department Budget proposals for funding.
Parliament in its wisdom and understandably so did not appropriate any funds for Travel Air as such but
appropriated K10 million as Airfreight Subsidy. How that K10 million was to be used there were no
guidelines as to its disbursement.
There is a suggestion that the K10 million was earmarked for Travel Air. There is no budget document to
conﬁrm this. The process is that the Department would invite tenders and airline operators would apply.
In this case the Department never sent out any invitation to tender. Travel Airs’ proposals were received
without any invitation to tender.
46. A similar proposal was again sent to the accused by Mr Eremas Wartoto. Upon receipt of the second
proposal the accused marked the proposal to the Acting Secretary, Department of National Planning and
Monitoring and wrote in handwriting the following:
“Acting Secretary – Ms Zarriga,
Please facilitate the release of K10 million under the 2011 Budget for this very important …
(unreadable)… For the Corridor Development targeting the rural PNG.”
47. The Acting Secretary in turn marked the accused’s note to her Acting Deputy Secretary (PIP). She
wrote in her own handwriting this:
“A/DepSec – PIP
Please appraise and advise”
Her note is dated 23 March 2011.”
Page 10 of 19
48. On 21st April, 2011 Mr William Sent sent a minute to Mr Takale Tuna, Acting Deputy Secretary –
PIP and to Ruby Zarriga, the Acting Secretary saying the following:
To: Takale Tuna
Acting Deputy Secretary – PIP
: Ruby Zarriga
As per the endorsed submission received from the Minister’s Ofﬁce dated 23rd March, 2011, in regard to
the above, a requisition form is now attached.
The funding is earmarked for subsidizing the activities of Travel Air, a new Airlie company servicing the
remote areas of the country in particular, the remote areas of Kandrian, Bialla and Palmalmal will be the
focus of the subsidy funding support.
The three (3) areas are classiﬁed as “heavy losses areas’ due to the routes being low capacity, and are
within the South Coast corridor. The corridor is set out in the strategic Plan 2010 – 2030 as one of the
areas in need of development.
The funding is subsidizing the cost of travelling and transporting cargoes from these areas to the major
towns and cities.
The Airline operates two (2) DASH 8/100 aircrafts and will operate under the Civil Aviation Rule Part
121 (Large Aircraft).
Funding is directed to the company hence, the completed requisition forms (FF3 & FF4) are attached
seeking your concurrence.
The detailed Business Plan is also attached as well for ease of reference.
Please sign the requisition forms if you concur.
Page 11 of 19
Acting First Assistant Secretary
Infrastructure and Economic Division.
49. It is obvious in this minute by Mr Sent dated 21 March 2011 that what he stated are not true. Let me
break down the minute. The second paragraph says the funding is earmarked for subsidizing the activities
of Travel Air. This is not a true representation by Mr Sent. The funding was earmarked for Air freight
subsidy for existing third level airlines. Another misrepresentation is where Mr Sent says “a new airline
company servicing the remote areas of the country”. Travel air was not operational then and was not
servicing the remote areas of the country then and now. That statement was a lie.
50. Mr Sent said Kandrian, Bialla and Palmalmal would be the areas of focus with this funding, however
there is no evidence that those areas were and are serviced by Travel Air and so that representation was
not true. In fact that was a total misrepresentation and a blatant lie.
51. Mr Sent also said Travel Air “operates two (2) Dash 8/100 aircrafts”. Again this was a total lie and
misrepresentation. Moreover, funding was not directed for the sole use of Travel Air. Travel Air was at
the time non operational. Up to now Travel Air has never operated Dash 8 aircrafts in any shape and form
in Papua New Guinea. Even if the funding was directed for the purpose of allocation to Travel Air, the
proper process of having the funds allocated or released to Travel Air were not followed. The proper
process being that the DNPM would have discussions with the Departments of Treasury, Transport and
Civil Aviation Authority. After this a submission would be made to the National Executive Council for its
consideration and approval. The NEC approval was required for such an expenditure to be released. This
was not done in this case.
52. The point about Mr Sent’s minute to Mr Takale Tuna and Ms Ruby Zarriga is that both these very
senior ofﬁcers ought to have known that what Mr Sent had stated in his minute were not true and
accurate, yet they went ahead and approved the request for the requisitions to be signed. This allowed
Paul Daggun to sign as the authorized requisitioning ofﬁcer and for Ruby Zarriga to approve the
Requisition for Expenditure form (FF3) for the amount of K10 million which she had no authority to
53. Another point to note about the Requisition for Expenditure form (FF3) is that it must be
accompanied by other supporting documents after proper approval by the NEC. In this case, the form
would or should have been accompanied by NEC approval notes. In this case there is no evidence that
this was done.
54. The question then is – do all these actions by the accused and the named Department Ofﬁcers amount
to conspiracy to defraud the State. The accused at the time was a Member of the then ruling National
Alliance Party of which Sir Michael Somare was the Prime Minister while the accused was the Minister
for National Planning and Monitoring in the Somare cabinet. Mr Eremas Wartoto was a member of the
National Alliance Party and Mr Tiensten described him as a party man.
Page 12 of 19
55. While there is no direct evidence of any relationship or communication between Mr Wartoto and Paul
Tiensten about the proposal it is clear to me that Mr Wartotos two letters were written directly to Hon
Paul Tiensten as Minister for National Planning and Monitoring. They were not addressed to the
Secretary, Department of National Planning and Monitoring as they then ought to have been.
In relation to the ﬁrst letter Mr Tiensten had directed Mr Lelang to allocate K9.8 million as seed capital
for Travel Air to start operations in the South Coast Economic Corridor in the East and West New Britain
In relation to the second letter Mr Tiensten directed Ms Ruby Zarriga to facilitate the release of K10
million to Travel Air.
56. The K10 million was indeed released and paid to Mr Eremas Wartoto on behalf of Travel Air without
going through the proper process. Mr Tiensten knew or ought to have known that the Pomio (Palmalmal)
airstrip which is in his electorate was unserviceable and closed. Mr Wartoto being from that part of the
country ought to have known that fact as well and being a party man would have been privy to the
government policies at the time. In my opinion the proposal of Travel Air for the South Coast Economic
Development Corridor Freight Subsidy was a “front”. This is because an airline company cannot have a
freight subsidy unless it is already ﬂying to those areas earmarked. In this case Travel Air was not yet
operating and ﬂying anywhere in PNG. To get the K10 million some convincing plan had to be devised
and the airfreight subsidy scheme plan was a good cover to request for the K10 million to start an airline.
57. There is no direct evidence of a conspiracy between the accused, Mr Wartoto, Ms Ruby Zarriga and
Mr Sent to defraud the State of its K10 million. However, is the evidence that has been discussed and
alluded to above sufﬁcient to conclude or infer there was conspiracy between the accused and the named
senior ofﬁcers of the Department of National Planning and Monitoring and Mr Wartoto?
58. The Oxford Advanced Learners dictionary deﬁnes the Word conspire as:
“made secrets plans (with others) especially to do wrong against some.”
Conspiracy comes from the word conspire. Conspiracy is deﬁned as:
” – Act of conspiracy, especially joint planning of a crime.
– Plan made by conspiring”
Page 13 of 19
There is no direct evidence of any secret plans to wrongfully use K10 million in favour of Travel Air
between the accused, Ms Zarriga, William Sent, Takale Tuna, Paul Daggun and Mr Wartoto. There is also
no direct evidence of any plans between those mentioned to give K10 million to Travel Air.
59. There is no evidence of any secret plans between the accused, Eremas Wartoto, Ruby Zarriga and her
department ofﬁcers involved in the releasing of the K10 million. However, it is apparent to me that the
accused assumed the role of the Secretary for the DNPM when he marked down the proposals to Lelang
and Zarriga respectively. This is because he had no authority to direct or recommend any funding
released, as that responsibility belonged to the Secretary of the Department only.
60. However the actions of Ruby Zarriga, Takale Tuna, William Sent and Paul Daggun seem to suggest to
me that they went along with the direction of the Minister and agreed to facilitate the release of the K10
million to Travel Air. The evidence of Paul Daggun also seems to suggest too that Takale Tuna may have
spoken to the Accused because Paul Daggun said Takale Tuna told him (Paul Daggun) that the accused
wanted the requisitions raised immediately.
60. This leads me back to the accuseds note to Ms Zarriga:
“Please facilitate the release of K10 million under the 2011 Budget for this very important …………. For
the Corridor Development targeting the rural PNG.”
What do those words amount to? Is it a direction or is it a request to Ms Zarriga?
61. The defence argued that the words amount to a request or a recommendation to Ms Zarriga while the
State argued that the words amount to a direction. To my mind I conclude that the words amount to a
direction. This is because Ms Zarriga had no choice but to facilitate the release of the K10 million. Ms
Zarriga in turn facilitated the release of the K10 million by directing the Deputy Secretary to appraise the
proposal by Travel Air and advise. The appraisal was done by Paul Daggun and is reﬂected in the minute
from William Sent.
62. Had Ms Zarriga not facilitated the release of the K10 million, I wonder what might have been. I can
only guess and speculate. Mr Joseph Lelang alluded to this in his evidence when he was giving his
evidence about the accused marking down the ﬁrst proposal to him when he wrote “Allocate 9.8
million…..” that, if he refused a ministerial direction such as that he would be charged with
insubordination and his job will be on the line. However, in this case I am ﬁrm in my own mind that the
words: “Please facilitate the release of K10 million…………” amounts to a direction. I am also ﬁrm in my
own mind that “Approve K9.8 million……….” Was a direction as well to Joseph Lelang.
63. The accused did not in his note to Ms Zarriga say something like “Please appraise the proposal by
Travel Air and advise as to its suitability for government funding”. Instead the note is direct to the
Page 14 of 19
facilitation of the release of the K10 million.
64. It seems to me the Senior Ofﬁcers of the Department appear to be performing their duties to ensure
the K10 million was released to Travel Air. They did so with respect to please their “political master,”
with the hope to gaining in turn favour from him in that Ms Zarriga was an Acting Secretary while Mr
Takale Tuna as Acting Deputy Secretary (PIP). With respect I know there is no direct evidence of this but
the court is entitled to draw such inferences from all the evidence surrounding the circumstances of the
release of the K10 million. The minute by Mr Sent appears to be the appraisal which was directed by Ms
Zarriga and Mr Tuna. The appraisal contained lies and was misleading and calculated to legitimize the
appraisal process. Ms Zarriga and Mr Tuna may have hoped in return to get substantive appointments.
That is in my view a reasonable inference to draw from all the circumstances of the case, if they could
pull this one through and they did. However, it was not to be because as it became public information.
65. There is evidence before the court that the Secretary for National Planning and Monitoring had
authority to approve payments of any amounts whether it be K3 million, K5 million, K10 million, K70
million or K100 million. The question this raises is how was it done? How did the Secretary get around
the Public Finance Management Act? I am bafﬂed by this because all other departments and State
agencies were and are all trying to comply with the Public Finance Management Act, the National
Planning and Monitoring Department was blatantly disregarding the law relating to the State ﬁnances.
66. It appears to me from the evidence that every ofﬁcer in that Department including the Minister and
the Secretary knew the Secretary for National Planning and Monitoring had unlimited authority to
approve unlimited ﬁnancial expenditure of any amount.
67. Again the issue arises: Did this amount to conspiracy? It appears to me that the direction by the
accused as the relevant Minister and the appraisal process by the Senior Department Ofﬁcers in
facilitating the release of the K10 million were improper, there is no direct evidence that there was any
conspiracy. Rather this was a case where the Minister had issued a direction to facilitate the release of
K10 million and the direction had to be complied with and a failure to comply would have its own
consequences. Accordingly I ﬁnd that the conspiracy charge against the accused have not been made out.
I therefore ﬁnd him not guilty of that charge.
68. This now leads me to address the next charge laid against the accused. The facts have been
sufﬁciently canvassed when dealing with the ﬁrst charge so I will not repeat them here. It is clear to me
that K10 million was approved and that a cheque for that amount was indeed made out to Travel Air and
was collected by Mr Eremas Wartoto.
69. Evidence has been adduced from the accused that the K10 million was earmarked for the South Coast
Economic Corridor of the East and West New Britain provinces. The State’s version is that the K10
million was set aside as Air Freight subsidy for Existing Airlines to tender for such funding.
70. It is clear from the evidence that the K10 million was not used for the purpose for which it was given.
If it was earmarked for South Coast Economic Corridor, the money was not used to beneﬁt the economic
corridor of the South Coast of East and West New Britain Provinces. Similarly if it was allocated as an
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Air Freight Subsidy to subsidise third level airline operators and Travel Air was given that money for that
purpose it was not used for that purpose by Travel Air.
71. The accused’s contention is that the K10 million was properly given according to the government
policies and guidelines and that it was earmarked for that particular economic corridor but how Travel
Air used that money is not his business or that how Travel Air used that money, he has or had no control
over it. He said that was a matter for Travel Air.
72. That statement by the accused does not correctly state or reﬂect the Government’s position. The
money belonged to the State or to the people of PNG. The Government and the Departments position
according to its PIP Guidelines is that there must be no wastage of public money. It is also the position of
the Department of National Planning and Monitoring that all approved projects will be monitored and
evaluated on a periodic basis. In this case that responsibility fell on the Department of National Planning
and Monitoring of which the accused was the political head. For the accused to make such a statement in
his evidence is irresponsible and shows no care attitude. This project was also subject to the monitoring
and evaluation process. It is a fallacy for a State Minister or a Member of Parliament and a leader for that
matter to make such a statement.
73. The second charge is that the accused between 1st day of May 2010 and 31 March 2011 dishonestly
applied to the use of Travel Air K10 million the property of the State of Papua New Guinea. It is the
State’s duty to prove beyond reasonable doubt that the accused at the material time dishonestly applied
the K10 million to the use of Travel Air.
74. It is not disputed the K10 million was applied to the use of Travel Air. Who facilitated the application
of the K10 million to Travel Air? The process of facilitation and application of the K10 million started
with the receipt of the ﬁrst proposal by Travel Air by the Accused. The accused directed the then
Secretary Lelang to allocate K9.8 million “as seed capital as per the proposal for the implementation of
South Coast Economic Corridor for both East and West New Britain in 2011 PIP Budget”.
75. This was followed up on 23 March 2011 by the accused when he directed the then acting Secretary to
“Please facilitate the release of K10 million under the 2011 Budget for this very important ……
development targeting the rural PNG.”
76. From this evidence it is clear to me that the accused played a key and an important role in the
facilitation and application of the K10 million to Travel Air.
Did the Accused dishonestly apply K10 million to Travel Air?
77. The next serious issue that needs the courts close scrutiny is whether the facilitation and application
of the K10 million to Travel Air by the accused and the Departments senior ofﬁcers Ms Zarriga, Mr
Takale Tuna, Mr William Sent and Mr Paul Daggun were dishonest.
78. The K10 million was “parked” under the auspices of the Public Investment Programme (PIP) Budget
aid to have it released. There were guidelines to be followed. Those guidelines are in evidence and the
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accused and the Departments senior ofﬁcers involved in this case were aware of the guidelines and the
proper procedures to be followed in facilitating the release of the K10 million. The agency charged with
administering the PIP is the Department of National Planning and Monitoring. The Executive summary
to the PIP guidelines says:
“The functional roles of the PIP Guidelines are to articulate clear development program/project
proposals that will offer multiple beneﬁts, to streamline and harmonize external development assistance
and to strengthen public expenditure management. The Guidelines have been developed to provide
guidance to planners and managers and features the followings:
* the planning, programming and approval of projects and programs under the Public Investment
Program must be developed through the Government’s planning system. Figure 2 depicts a simple
process that, when followed will enhance coherence and consistency in Government plans and programs,
beginning from the Districts and Provinces right up to sectoral and national levels;
* the Government’s decision-making process for the approval of projects and programs is a fair process
and involves a lot of stakeholders. The Project Approval Process and the Budget Cycle Process (Figure
1) work hand in hand thereby enabling decisions made on programs and projects to be considered fairly.
* The PIP clearly articulates the MTDS and the Sector Investments Plans in terms of programming and
planning. These enable the development of projects to be coherent to Government development interests
and are consistent over the mid term.
79. The guiding principles of PIP are that it placed emphasis on funding public goods and services to
stimulate economic growth and living standards and improve service delivery.
The accused in his evidence said that was how Travel Air proposal was treated and that is why it was
given the K10 million.
80. However, under the Department’s own PIP Guidelines which is in evidence Clause 7 says the
development proposals should be in the Project formulation Document supported by supporting letters
from relevant stakeholders and feasibility studies, detailing the scopes of work and technical assessment
Such proposals should also be supported or endorsed by the Joint District Planning and Budgets Priority
Committee or if it was a Provincial project, the joint Provincial Planning and Budget Priority Committee.
In this case the project was for the South Coast Economic Corridor in two provinces – East New Britain
and West New Britain Provinces. There is no evidence that authorities in the two provinces were aware of
such proposals or plans.
81. Without going further as to whether the PIP guidelines were adhered to, it is clear to me that, this
project proposal never went through the processes and procedure under the department’s own guidelines.
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82. Moreover, the appraisal process under the same guidelines was never adhered to. In fact as evidence
shows, the appraisal process was short circuited and done there and then by the Department’s senior
ofﬁcers to “facilitate the release of K10 million”. From evidence there was no serious and genuine efforts
to properly appraise the project proposal and to check if the proper process and procedure had been
83. The Investigation Report compiled by Ekip Kop sets out the budget process on Development Budget.
His report on the process also shows that, that process was also bypassed completely.
84. Was there adherence to the Public Finance Management Act? The Public Finance Management Act
provides for the management of public ﬁnances. This court heard evidence of huge sums of public
ﬁnances held by the Department of National Planning and Monitoring. The court also heard that the
Secretary for the Department of National Planning and Monitoring was at liberty or had unlimited powers
to approve unlimited requisitions for expenditure from those public monies held by the Department. I do
not believe this to be true or correct because every department has a ceiling in terms of how much he or
she as departmental head can approve. Beyond that ceiling the matter then goes to the Minister who also
has a limit. If the amount is higher than the Ministers ceiling the matter then goes to the NEC for
85. I have searched the Public Finance Management Act to ﬁnd such a scheme but I cannot ﬁnd it and I
stand to be corrected on that. If I am correct, I then conclude that the Public Finance Management Act
was not adhered to.
86. Thus the question is asked again as to whether the application of the K10 million held by the
Department under its PIP Budget was dishonest?
87. In order to consider the guilt or otherwise of an accused person charged under s.383A (j)(a) of the
Criminal Code the State has the duty to prove beyond reasonable doubt that the accused:
b) applied to his own use or to the use of another
c) property belonging to another
In this case there is no dispute that K10 million was applied to the use of Travel Air by the accused and
that the K10 million belonged to the State.
88. The only disputed element of the charge under s.383A(1)(a) of the Criminal Code is the element of
“dishonesty.” The question then is – Did the accused dishonestly apply the K10 million to the use of
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Travel Air? The question is an objective one. In the case of the State v Gabriel Ramoi  PNGLR
390 at 392 I said:
“The word ‘dishonestly’ in s.383A of the Criminal Code relates only to the state of the mind of the person
who does the act which amounts to misappropriation. The state of mind when a person applies is a
question of fact for the trial judge to determine on all the facts presented before hm. And when the judge
considers the facts on how the property was applied, he uses the ‘ordinary standards of reasonable and
honest people’ test to determine whether or not the property so applied was dishonestly applied.
‘Dishonest’ is deﬁned in the Oxford Advance learners dictionary of Current English as ‘intended to cheat,
deceive or mislead’”.
In the case of The State v Francis Natuwohala Laumadava  PNGLR 291 at 293 Injia AJ (as he
then was) said:
“At the same time, it is also a subjective one. The court must look into the mind of the accused and
determine whether, given his intelligence and experience, he would have appreciated, as right-minded
people would have done, that what he was doing was dishonest.”
89. In this case the accused knew or ought to have known that his direction or directive to the Acting
Secretary to facilitate release of K10 million was wrong for the reasons that he had no authority to give
such a direction to the Acting Secretary and also for the reason that approval for release of such funds
must come from the National Executive Council. Moreover he knew that he was wielding his political
muscle over an Acting Secretary and her ofﬁcers.
90. Given the accused’s level of education, his intelligence, skills and experience in the Public Service
and in Politics, I have no doubt in my mind that he appreciated and knew that what he was doing was
wrong and that it was dishonest; that is directing the Acting Secretary to facilitate the release of K10
million was improper and dishonest. He effectively caused the Department ofﬁcers to break rules.
91. Evidence shows that the accused was involved in the application of the money to Travel Air. He
facilitated the release of the K10 million by his direction. Without his directive, the K10 million would
not have been released. He commenced the process of the release of the money through his direction or
directive. He presented the cheque to Eremas Wartoto to complete the facilitation and application. Was
that application dishonest? The direction from him and causing the department ofﬁcers to bypass the
proper appraisal process under the guidelines and by bypassing the Public Finance Management Act and
the deliberate lies in the way appraisal process and the speed in which the facilitation of the release of the
funds were orchestrated, I conclude that the accused and his ofﬁcers in the department dishonestly
applied K10 million to the use of Travel Air thereby contravening s.383A(1)(a) of the Criminal Code.
92. Accordingly I ﬁnd him guilty of the Second Count.
Public Prosecutor: Lawyer for the State
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Amet Lawyers: Lawyer for the Accused