SABL Commission of Inquiry Report 2: Pages 390 – 530

There were “serious defects in the process that we observe are fraudulent and corruptible” [p505]

On the increase in the forest clearance corridor from 40m to 10,000m: ”The C.O.I finds this to be erroneous, misleading and mischievous.. [it also] contradicts the statutory requirements” [p397]

It was “illegal or fraudulent” [p405]

“IT&SL manipulated the landowners companies… to acquire customary land under the SABL process, a hallmark tainted with corruption involving DLPP, Department of Western Province and the executives of the umbrella landowner companies…” [p429]

“… the technical Working Group endorsed by the NEC was only a smokescreen for the engagement of IT&SL… proper tender process was not followed” [p392/3]

A Project Agreement was executed despite an “absence of proper negotiations of the Agreement by the relevant State Agencies” [p395]

“The is evidence that all the executives of the landowner company expressed concern that they did not know what they were signing and that no copy of the agreement was provided” [p396]

“We recommend further investigation…of Messrs [Paul] Japhlom, [Neville] Harsely, [John] Malcachy to establish if an international racketeering over land acquisition has been committed by the company(s)” [p402/3]

“Mr [Michael] Titus must be referred to the PNG Law Society for his involvement with the landowner companies whilst been [sic] paid by IT&SL”  [p436]

Simon Malu, “failed in his duties as the Director – Customary Leases [DLPP] to conduct proper due diligence on the LIR we find contained gross defects and anomalies [p450]

IT&SL was “directly manipulating the SABL lease back process” this was “absolutely encouraged by the agencies of the State whose responsibilities border on gross negligence” [p402]

“The decision of the Commission [is] to revoke the SABL” [p403]

“The PNG Forest Authority should cancel the FCA” [p509]

This case study covers the four Special Agriculture and Business Leases linked to the proposed construction of the Trans Papuan Highway through Western Province.

The SABLs cover Portion 27C Awin Pari, 1C Awin Pari, 14C and 1C Aibolo – a total of 2 million hectares [p402]

The developer is International Timber and Stevedoring Limited (IT&SL). IT&SL is a foreign company registered in the USA. It has a PNG registered branch office. The current Directors are two Australian citizens, Neville Harsely and Clifford Frazer.

The company has no real presence in Kiunga and no heavy machinery or office infrastructure to carry out the project [p421 & 429] It has not complied with the terms of its IPA certificate and “may be liable for prosecution” [p421]

The proposed road is supported by the people of Awin Pari, Nomad and Wawoi Falls and the North Fly Provincial and National governments. It would link the township of Kiunga, Tabubil, Nomad, Wawoi Falls through Gulf and Central Province to Port Moresby.

Phase One of the project is the Aiambak-Kiunga-Gre-Drimgas road. The second phase connects Drimgas-Nomad-Wawoi Falls.

The idea for the road was first raised in 2002 with logs harvested along a 2km corridor to pay for the construction costs. At this stage there was no intention to create SABLs, it was simply a road project to be paid for through logging. The idea of an SABL was only raised when changes to the Forestry Act limited the length of any roadline Forest Clearance Authority to 12.5km [p413]

In March 2002 the National Executive Council (NEC) approved in principle the construction of Stage Two with Department of Works (DoW) as the lead State agency.

“… for a national project concerning a national road, proper tender process was not followed in the engagement of IT&SL” [p392]

“… the technical Working Group endorsed by the NEC was only a smokescreen for the engagement of IT&SL” [p393]

In 2008 NEC directed the Minister for Commerce and Industry to obtain the necessary Forest Clearance Authority from the PNG Forest Authority. This was “not within the ambit of that ministry” which should have been DoW.

In March 2011 NEC advised the Governor General to execute a Project Agreement between the State, IT&SL and Western Province.

The agreement was executed in May 2011, despite an “absence of proper negotiations of the Agreement by the relevant State Agencies” [p395] and “the absence of the most important stakeholders” [p398]

“The is evidence that all the executives of the landowner company expressed concern that they did not know what they were signing and that no copy of the agreement was provided” [p396]

“The Commission finds [the Project Agreement] contravenes Sections of the Fairness of Transactions Act” [p396]

The signed Project Agreement allows for the harvesting of timber for a distance of 5,000 metros on either side of the road while the draft Agreement prepared by the State Solicitor only allowed a 40m road corridor.

“The C.O.I finds this to be erroneous, misleading and mischievous” and contradicts the Forestry Act [p397}

The period of the agreement for twenty-five years "is questionable" as to "whether it takes twenty-five years to construct a 600km redline" [p397]

“The project agreement.. is not binding and enforceable because it fails to meet necessary statutory requirements” [p404]

The Land Investigation Report signed by Mr Imen Ita Papa as the Provincial Lands Officer was not done by him. Instead the LIR was complied by IT&SL [p392 & 415]

A number of existing State Leases including ones for the Runginae Rural Hospital and five rural health centers and other aid posts and mission stations were not excised from the SABL area.

The application for the SABL over Portion 27C was submitted after the title had already been issued

“This indicates the fraudulent nature by which IT&SL colluded with DLPP to fraudulently acquire the said SABLs” [p431]

THE LIR was collated by IT&SL and then given to the officers in the Department of Western Province to sign. They signed “knowing it to be false”. They signed in Port Moresby but the LIR says it was signed in Kiunga “which was false” [p431]

The Recommendation for Alienability was signed in Port Moresby but the place of signing indicates Kiunga “which is totally false and misleading” [p432]

People appointed as agents for one land group were also found to be agents in two or three other groups. This is “improper and fraudulent” [p432]

“Mr [Michael] Titus must be referred to the PNG Law Society for his involvement with the landowner companies whilst been [sic] paid by IT&SL constituting serious ethical questions over the conduct of his legal services tp competing interests” [p436]

The twenty six separate LIR contained no recommendations for reservations to be made for customary use thus extinguishing all customary rights for 99 years.

There was no evidence of a Certificate of Alienability having been issued over Portion 27C [p444]

Landowners consent to the building of the road “was manipulated by IT&SLto obtain access to all the hectares of prime pristine forest which is suspicious and fraudulent” [p448]

Simon Malu Director Land Acquisition DLPP, “failed in his duties as the Director – Customary Leases to conduct proper due diligence on the LIR we find contained gross defects and anomalies… No due diligence was conducted and it is evident that he was merely been [sic] directed by IT&SL… he had already compromised his position when he was paid allowances [by] IT&SL over the said project” [p450]

“Mr Malo should be disciplined for not doing his job and the result of that neglect of duty has led to the lack of integrity in the SABL process” [p451]

The FCA issued by the PNGFA was for a 40 metro wide corridor. [p452] IT&SL “deliberately increased” this to 5000m either side of the road in its Project Agreement with the State.

The SABL for Portion 14C was granted to Toigba Investment Limited. Tosigba is not incorporated as a company in PNG and does not exist.

In relation to the SABL over Portion 14C “There is a glaring contradiction between the term as set out in the notice of Direct Grant and the term set out in the lease entered into between the State and the landowners. In the lease, landowners are willing to give away their land for only 25 years, whilst in the Notice of Direct Grant, 99 years” [p506]