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K8million query
THE inquiry into the Finance Department may
look into an K8 million claim Prime Minister Sir Michael Somare had
apparently encouraged the Attorney-General to pay out in 2004, even
though lawyers representing the State had described this claim as null
and void and had gone to court to fight it.
The inquiry headed by retired Judge Maurice Sheehan last week received
evidence that between January 2000 and July 2006, the Department of
Finance paid out more than K3.8 billion for 2,677 individual claims
exceeding K300,000.
The inquiry was told that while many of these claims were proper, others
were fraudulent, illegal or improper.
The claim the Prime Minister appeared sympathetic towards, was lodged
against the State by Manorburn Ltd, a company engaged to do road
construction in Oro province between 1996 and 1998. The company claimed
the State failed to honour the contract, and sued for breach of contract
in March 2000.
The State failed to defend this contract, and a default judgment was
obtained. In 2002, acting Solicitor-General Zachery Gelu offered to
settle for K8.6 million, and a Deed of Settlement was signed and
executed and sent to the Finance Department for payment.
But a private law firm engaged by the State described the Deed of
Settlement as a sham executed under suspicious circumstances, and
opposed this payment in court.
While court actions regarding this matter were pending in the Supreme
Court, the Finance Department paid out K2 million to the company.
Court documents show that in December 2003, the Supreme Court ruled that
the Solicitor-General did not have the power to act to settle claims
against the State without the authority of the Attorney-General. In July
of that same year, the NEC made a policy decision directing that the
Solicitor-General in consultation with the Attorney-General could settle
claims up to K1 million, but any claims above that were to be sent to
the NEC for approval.
The NEC also directed the Attorney-General to review any claims or out
of court settlement worth over K500,000 which were questionable.
Manorburn director Timothy Titipu sought political support for his
claim, and on Oct 18, 2004, a letter purporting to be from Sir Michael
was sent to the Attorney-General saying that because the payment was
outstanding for a long time, “you are asked to settle the amount of K6.6
million in accordance with the court order”.
The Ombudsman Commission intervened in July 2005, issuing directions to
Finance and Treasury Minister Bart Philemon, his departmental heads,
Central Bank governor Wilson Kamit and then Justice Minister Mark
Maipakai not to facilitate the payment of this claim pending the
completion of their own investigations.
Sir Michael’s letter to the then Attorney-General remains on court
records and is likely to be scrutinised by the current Commission of
Inquiry into the Department of Finance.
The Manorburn case started in the National Court with a mere K400,000
claim against the State in proceedings 282 of 2000 for breach of
contract and loss of income.
Former Finance secretary Thaddeus Kambanei, former acting
Solicitor-General Francis Kuvi and Gelu and a number of private law
firms may be called to testify in the commission of inquiry regarding
this claim.
 
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