The National, Thursday 20th September, 2012
PNG Ports Corporation Ltd (PNGPCL) is still suffering from the negative effects of poor governance over the years, according to the Asian Development Bank (ADB).
The ADB, in its Finding Balance: Benchmarking the Performance of State-Owned Enterprises in Papua New Guinea report, said past Independent Public Business Corporation (IPBC) management appeared to have had little interest in PNGPCL, leaving it to go astray.
The ADB made reference to a failed US$7.7 million dollar investment in Lehman Brothers, the fourth largest investment bank in the US, which declared bankruptcy in September 2008.
“In PNG, the owner of the port company, the IPBC, appears to have had little interest in the performance of its SOE subsidiaries for a number of years, including PNGPCL,” the report said.
“It is telling that the auditor general was unable to give an audit opinion for PNGPCL’s accounts for the 2007 and 2008 financial years due to a number of factors, including a US$7.7 million investment in Lehman Brothers, made just prior to the firm’s bankruptcy.”
The ADB did not mention this in the report.
However, PNGPCL – and all other SOEs for that matter – have been the cause of bad blood between former Minister for Public Enterprises Sir Mekere Morauta and his immediate predecessor Arthur Somare.
Sir Mekere has constantly accused Somare and former IPBC managing director Glen Blake of “milking” IPBC and its SOEs such as PNGPCL.
“The former IPBC management invested K31 million in the failed US financial services firm Lehman Bros without approval and without due diligence while Somare was minister responsible,” he said last December.
“Mr Somare and Mr Blake allowed Ports PNG to undertake a similar exercise to the value of K25 million, with the same disastrous consequences.”
Last January, the National Executive Council ordered an investigation into allegations of misconduct and impropriety against former PNGPCL chief executive officer Brian Riches.
The NEC was told that PNG Ports invested K25 million in the Australian-based Metal Storms, between 2007 and 2008, which had gone bad while another K25 million invested in BSP capital was another loss because Lehman Brothers was declared bankrupt.
The independent investigator was also tasked to probe into the operational cost blowout between 2009 and 2011, which ran into millions of kina and the procurement of the rubber tyred gantry cranes.
The cranes, bought at a cost of K45 million, were sitting idle in Port Moresby and Lae ports because they were not suitable for use in PNG.
The probe is to determine whether proper tendering and procurement procedures were followed.
The investigator was also tasked to probe into all tendering and awarding of contracts worth more than K1 million, alongside the contracts of Riches to determine all process and procedures were followed.