REPUBLIC OF VANUATU

OFFICE OF THE OMBUDSMAN

FINAL REPORT

ON

THE SALE OF MV YASUR

23 September 1996

TABLE OF CONTENTS

INTRODUCTION

1. BACKGROUND

2. JURISDICTION

3. scope of inquiry

4. METHOD OF INVESTIGATION

5. FINDINGS OF FACT

6. FINDINGS OF WRONG CONDUCT AND DEFECTIVE ADMINISTRATIVE PRACTICES

7. RECOMMENDATIONS

8. CONCLUSION

APPENDICES

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INTRODUCTION

Following a request received from Mr Amos Bangabiti, Minister of Transport in the previous coalition government, I carried out an investigation into the circumstances relating to the sale of the government fishing vessel M.V. Yasur in 1992.

My investigation revealed many cases of maladministration by public servants which demonstrated that the Government of Vanuatu appears to have a serious problem with the calibre of many of its permanent public servants.

It is of great concern to find that even senior heads of department either do not understand, or more usually have not even bothered to research the legal requirements that should regulate their actions and it is not always possible to see how this may change in order to prevent Vanuatu from continuing to be poorly served by many sections of the Bureaucracy for many years.

This very serious problem is compounded by the appointment to Ministries of Political Appointees obviously people who have no real technical knowledge to bring to their position on the basis of their political persuasion rather than their actual qualifications for the positions and cannot give any direction or assistance to the various departments under their control.

From my review of the actions of the Ministry of Agriculture and other Political Appointees involved in the sale of M.V. Yasur I have found many examples of breaches of the Leadership Code which indicate that political appointees are not concerned with their legal responsibilities as leaders under the Constitution. To allow this situation to go on will mean that the people of Vanuatu will continue to suffer from the actions of leaders who place themselves and their own interests ahead of the needs of the people whom they are either elected or appointed to serve.

A brief summary of my findings of wrongful conduct and defective administrative practices is as follows:

•	Maladministration by Mr Jack Hopa when he was Minister of Agriculture;

•	Various accounts of maladministration by the then Director of Fisheries, Mr Wycliffe Bakeo;

•	Breach of the Leadership Code by Mr Shem Rarua;

•	Ultra vires actions by Mr Onnyne Tahi as Minister of Agriculture;

•	Inadequate financial regulations in place from 1980 to 1993;

•	Breach of duty of general care and disclosure by Mr O Tahi and members of the tender board.

Responsibility for both the appointment of Political Appointees and the administration of the Public Service is held by the Prime Minister. I believe therefore that responsibility for problems of maladministration and breaches of the Leadership code must be accepted by the Prime Minister.

The Prime Minister must ensure that the bureaucracy is properly staffed with the best available people who are committed to serving the needs of the people of Vanuatu. From my investigations into the sale of M.V. YASUR this does not appear to be the case and the blame rests primarily with the Prime Minister of the time, Hon. Walter Lini.

Perhaps the saddest factor to emerge from the investigation into the fate of the fishing boat M.V. YASUR is the failure of politicians and government officers to appreciate the value of the free gift donated by the Japanese people to the people of Vanuatu - a value of more than 30 (thirty) millions vatu.

Instead of the politicians and officials safeguarding this asset and ensuring it was used for the benefit of Vanuatu, what has emerged is a catalogue of misbehaviour ranging from careless indifference, through to unethical behaviour and ultimately illegalities and breaches of the Leadership Code culminating in the sale of the boat under shameful circumstances at a price of 5.8 millions Vatu - far below what was achievable with wisdom and honesty.

The mismanagement of this asset follows a pattern which is emerging more and more as the Ombudsman investigates the disappearance or misappropriation of public assets and the neglect of duties committed to the trust of leaders who subsequently are shown to have little appreciation of the duties and responsibilities of their public office and seem instead to be pre-occupied with acquiring personal profit.

It is yet to be hoped that, as the results of these investigations became public, pressure will be brought to hear of those in authority to put duty before personal gain.

1.	BACKGROUND

[1.1]	On 02.11.94 the Ombudsman was requested by the Honourable Minister of Transport, Public Works, Civil Aviation, Ports & Marine and Urban Water Supply, Mr Amos Bangabiti, to investigate the procedures used for the sale of the Government vessel M.V. YASUR and to ascertain where the proceeds of the sale were paid at the time of the sale. (i.e. 9th June 1992.)

As the request appeared to be justified from an initial review, the Ombudsman decided to conduct an investigation.

[1.2]	In 1985 the Japanese Government donated to the Vanuatu Government, under its Overseas Fishery Co-operation Foundation (OFCF) scheme, an 18 metre vessel, the M.V. Yasur, to be used by the Fisheries Department. It arrived in March 1985 and was based in Santo. Under the scheme, the vessel was to be used in the waters around Santo to carry out fishing trials on various fishing methods.

The original value of the vessel as confirmed by the Japanese Embassy in Suva, was Y30 Million when it was first handed over to the Vanuatu Government. The value would approximately be Vt 34 million vatu at today’s exchange rate.

After several unsuccessful attempts by the Department of Fisheries to utilise M.V. Yasur effectively within the department (and following a very unsatisfactory leasing agreement with a local fishing company during 1990), the Department of Fisheries applied to the Ministry of Finance in October 1991 for permission to sell M.V. Yasur by tender.

Following a recommendation by the Board of Survey, the Ministry of Finance approved the sale by tender and the M.V. Yasur was subsequently advertised for sale during January 1992. 

After an unsuccessful first round of tenders the M.V. Yasur was re tendered on 2/04/92, following the instructions of the Ministry of Agriculture, and ultimately sold on 27/05/92 at a value well below that estimated by the Department of Ports and Marine.

[1.3]	During the course of the investigation, the Ombudsman discovered a number of apparent irregularities not only in the sale by tender process, but also relating to the charter of M.V. Yasur to a local fishing company and has found it necessary to include in this report these findings.

2.	JURISDICTION

This enquiry was conducted in accordance with Article 62 of the Constitution and Section 14 of the Ombudsman Act No. 14 of 1995. The Ombudsman has the authority to enquire into matters either on his own initiative or upon receiving complaints from a person affected as a result of a particular conduct or action from any Department, Ministry or Public Authority.

In addition the Ombudsman can start an enquiry at the request of a Minister, Member of Parliament, Member of the Council of Chiefs, or member of a Local Government.
This enquiry was to investigate the sale of the Fisheries vessel, MV M.V. Yasur, following a request by the then Minister of Transport.

3.	SCOPE OF INVESTIGATION

The aim and purpose of this particular enquiry was:

1)	To determine whether the methods and procedures used in selling and disposing of M.V. Yasur complied with the Government’s standard procedures as outlined in the Financial Regulations and the Public Finance Act.

2)	To discover whether the Government obtained the best value for its asset, and;

3)	To determine when and where the proceeds of sale were receipted.

4.	METHOD OF INVESTIGATION

Documents were obtained from the relevant departments, the ministry responsible and other different sources pursuant to powers vested in the Ombudsman under Article 62 (3) of the Constitution and Section 17 of the Ombudsman Act. This entitles the Ombudsman to obtain evidence and information by informal request from those responsible or involved. The methods used and applied by those responsible were compared to the Government’s set procedures and rules, namely the Financial Regulations.

5.	FINDINGS OF FACTS

[5.1]	In this section the Ombudsman states the findings of fact on which she has based her findings of wrong conduct. Firstly the issues arising from the actual tender process will be detailed followed by the findings relating to the charter of M.V. Yasur to a local fishing company.

[5.2]	SALE BY TENDER

[5.2.1]	The Government has had no formal system or written regulations in place for tender procedures since Independence in 1980. Tender Boards were set up on an ad hoc basis only. The Interim Financial Instructions which were issued in 1985 never included any regulations covering tendering procedures.

[5.2.2]	No formal valuation of M.V. Yasur was undertaken by the Board of Survey to determine a realistic value for the boat.

An estimated value was provided by the Principal Marine Engineer (Mr John Humble) from the Department of Ports and Marine, however this estimation had a variation of Vt. 10 Million between its upper and lower limits.

[5.2.3]	The issue about the tender of the M.V. Yasur should have not been raised in the staff weekly meeting on 18.05.92. Although I have received confirmation that it was not a Tender Board, the people present should have not discussed the M.V. Yasur. The people present in this weekly meeting were as follows:

O. Tahi 	Minister of Agriculture		
A. Leodoro	First Secretary 	Ministry of Agriculture	
G. Bogiri	Second Secretary	"	
T. Kalorib	"	"	
C. Aru	Third Secretary	"	
P. Dovo	Director of Agriculture		
L. Bule	Director of Forestry		
W. Bakeo	Director of Fisheries.		

The Board should have included the same members, or their representatives, that met on 16.03.92. The members of this board were as follows:

W Bakeo	Director of Fisheries	
M Amos	Fisheries Research Officer	
R H Lindley	Fisheries Extension Adviser	
P Morgan	Internal Auditor (Dept. of Finance).	

I have received no rational explanation as to why the issue about the sale of the M.V. Yasur was raised in the weekly meeting with the Minister and his political secretaries, except that the Minister wanted to be involved in any matter at all at department levels.

I have however received explanations that the meeting on 18.05.92 was a normal weekly meeting with the Minister of Agriculture which is held about every Mondays (Appendix A).

I have been informed also that the Ministry of Agriculture wanted to be involved in every decisions on anything in the department levels under the Ministry and because of that reason, the Director of Fisheries had to brief the Minister on the tenders of the M.V. Yasur at that meeting (Appendix B).

During that weekly meeting they have never discussed any tender matters. The Director of Fisheries Department only briefed the Minister and his secretaries on the tenders of the M.V. Yasur.

Because of the absence of written tendering procedures, the only legislation applicable to the disposal of Government assets are Sections 21 and 22 of the Public Finance Act (CAP 117). which gives the Minister of Finance the discretionary power to write-off losses and public monies, stores, other public assets and other movable property belonging to or provided for the Government. The validity of any tender board that failed to include a representative of the Minister of Finance must therefore be questioned.

[5.2.4]	There are no appropriate minutes relating to their discussion on 18.05.92.

[5.2.5]	In his letter the Director of Fisheries stated that the decision on the M.V. Yasur had to be deferred to give the Ministry the opportunity to talk to the tenderers.

It is uncertain why the Ministry of Agriculture, Mr Onneyn Tahi, deferred the matter pending a meeting with the final two tenderers. Once again there are no minutes of these meetings.

It is not normal practice of a Tender Board to allow a member of the Tender Board or any person in that matter to meet with the tenderers. A Tender Board should make an independent decision based on the tenders it receives.

[5.2.6]	Michel Furet’s original submission was for Vt 5.6 million. The reason for the change of tender from Vt 5.6 million to Vt 5.8 million as per Minister Tahi’s, letter to Mr Michel Furet dated 21.05.92 in which he advised him of his successful tender is not clear.

[5.2.7]	Mr Furet purchased M.V. Yasur for Vt 5.8 million during June 1992 and the payment was receipted to the general revenue head of the Department of Fisheries.

[5.3]	CHARTER OF YASUR

[5.3.1.]	The Government of Vanuatu (Vangov) entered into a Bareboat Charter Agreement with the Sevan Fishing Co. (SFC) during 1990. The date of the signing of the Charter Agreement between Vangov and SFC remains unknown. There was no date on the signed agreement.

[5.3.2.]	The Minister’s official stamp was not affixed on the signed agreement.

I have been informed however that the Minister acted in good faith based on the technical briefing, advice and recommendations that he had received from the Director of Fisheries Department.
The reasons for excluding the date in the Agreement cannot be remembered (Appendix C).

However, the Director of Fisheries had informed me that despite his advice to the Minister of Agriculture at the time not to conclude the Agreement, the agreement was signed when he (Director) was on an overseas meeting.

[5.3.3]	At all times Mr Shem Rarua acted as spokesperson and principal of SFC. He conducted all negotiations with the Department of Fisheries and all other government bodies, however at the same time he was also the Secretary General of the Council of Ministers.

[5.3.4]	The transfer of Mr Andrew Firiam ( a permanent public servant) from the Fisheries Department to a private company did not follow the set Public Services rules. The Director of Fisheries did not seek the Public Service Commission’s approval for the transfer. There was no approval from the Public Service Commission. The Public Service Commission is the only body responsible for the transfer of public officers as per Section 10 of the Public Service Act (CAP 129).

[5.3.5]	The directive given on 30.11.90 by Mr Shem Rarua, the Secretary General of the Council of Ministers, to the Director of Fisheries Department to release Mr Andrew Firiam and Mr Karie Kalo from their normal duties as public servants to take turns to assist in a Private Company is not proper. Only the Public Service Commission has the power, under section 10 of the Public Service Commission Act (CAP 129), to transfer any officer from one office or position to another office or position in the Public Service. According to the Public Service Commission Act (CAP 129) the definition of the "Public Service" means the service of the Republic in any capacity other than as a judge, or member of the armed forces, police or teaching services. The instruction was made on the Government letterhead of Mr Rarua’s official position as Secretary General of the Council of Ministers.

[5.3.6]	SFC failed to pay the monthly hire charges of Vt.150.000 for M.V. Yasur as per Section 3 (k) of the Signed Agreement despite continued requests by Fisheries.

[5.3.7]	In 07.02.92 the Honourable Minister of Agriculture, Forestry and Fisheries, Mr Onneyn Tahi, wrote to the Director of Fisheries with this comment:

"Mr Shem Rarua had been to see my First Secretary regarding the outstanding hire charges for M.V. Yasur from December 1990 to March 1991, which amounts to Vt. 600.000. During discussions it was made known to my First Secretary that Mr Rarua did not actually use the boat during those four months, due to the standard of the boat. Therefore I have finally decided that the Vt. 600.000 be written-off and the lease agreement cancelled".

[5.3.8]	It does not appear to be true that Mr Rarua had not used the boat as alleged to have been stated by himself and the Minister of Agriculture, Forestry and Fisheries.

I received on 04.01.96 from the Fisheries Department the SFC record catch for the months of October and December 1990 when the boat was on charter to the company.

i.e.

	Date:	Total Catch:
	
(A)
	12 - 15 October 1990	556.2 kg (fish)	
		38.6 kg (sharks)	
			
(B)	10 - 17 December 1990	559.4 kg (fish)	

These records were made available only when the catch were being sold to Natai Fish Market. The Department of Fisheries had no records of catches that were sold to other fish markets.

[5.3.9]	There is nothing on record showing that the SFC was not happy with the standard of the boat or had informed the Director of Fisheries of problems.

It is difficult to understand why it took Mr Rarua about 12 months to finally approach the Ministry complaining about ‘the standard of the boat’. One would have expected that that this should have been reported earlier to the Director of Fisheries when an invoice was sent to him plus other reminders for the outstanding debt, or when he discovered that the standard of the boat was not what he wanted.

The condition of M.V. Yasur was adequately set out in the two reports on the vessel in May and August 1990. The charter agreement required the charterer to maintain M.V. Yasur in the same condition as at the commencement of the charter, therefore problems with the standard of the M.V. Yasur that occurred months after the commencement of the charter would be the responsibility of the Charterer not the Department of Fisheries.

[5.3.10]	Section 5 of the Signed Agreement reads:

"This charter may be relinquished by either party on one months notice in writing to the other".

Under this section Mr Rarua of Sevan Fishing Company could have cancelled the charter at any time by giving a month notice to the owner - the Government. He never did.

6.	FINDINGS OF WRONG CONDUCT & DEFECTIVE ADMINISTRATIVE PRACTICES

6.1	FINDING No. 1

MALADMINISTRATION BY MR JACK HOPA, WHEN HE WAS MINISTER OF AGRICULTURE

The Minister of Agriculture (Mr Jack Hopa) failed to ensure that the assets of the Government of Vanuatu were protected when he allowed M.V. Yasur to be released to a private firm before a charter agreement was properly finalised and signed.

The Minister of Agriculture, Honourable Jack Hopa, failed to take precautions in the signing of the Charter Agreement. In normal circumstances one would expect that the Minister should affix his official stamp on the Agreement and ensure that the Agreement had other important details such as the date the agreement was signed. This was not the case in this particular Agreement. As a Minister of the Government, he was representing the people of Vanuatu, whose asset was being chartered out to a private company. The date of the agreement forms an important part of the transaction. The Government would be in a very embarrassing position if there was a dispute between the Government and the Charterer of the Vessel.
Failure by a minister to ensure completeness of documentation is an unacceptable example of defective administrative practice.

[6.2]	FINDING No. 2

FIRST ACCOUNT OF MALADMINISTRATION BY MR WYCLIFFE BAKEO AS DIRECTOR OF FISHERIES

The Director of Fisheries ( Wycliffe Bakeo) failed to ensure that the proper administrative procedures were followed relating to the secondment of a permanent government officer to a private company.

Under Article 58 (2) of the Constitution the Prime Minister is empowered to transfer Senior Public Servants in Ministries to other posts of equivalent rank within the Public Service.

The Public Service Commission has also the authority under section 10 of the Public Service Act (CAP 129) to transfer any official from one office or position to another office or position in the Public Service of equivalent rank, whether or not the transfer involves a change of location. The transfer of Mr Andrew Firiam and Karie Kalo to a private company was totally irregular. The Finance and Administration Officer of the Fisheries Department only informed the Public Service on 22 October 1992 that Mr Firiam commenced on 25.09.92 and was to finish with the company on 16.10.92.

The Director of Fisheries did not seek the approval of the Public Service Commission on this arrangement nor did the Commission give any approval on that matter. In any event he should have rejected the request in the first place.

[6.3]	FINDING No. 3

SECOND ACCOUNT OF MALADMINISTRATION BY MR WYCLIFFE BAKEO AS DIRECTOR OF FISHERIES

There was an unacceptable and unexplained delay in the collection by Fisheries of outstanding charter fees due from SFC to the Government of Vanuatu.

The responsibility of a head of a department in respect to budgetary and financial matters was specified in Chapter 2.6 of the Interim Financial Instructions of September 1985, which were applicable at the time.

Chapter 2.6 (3) (c) states:

"To ensure the prompt and efficient collection, safeguarding and deposit of all revenue due to the department, and to maintain a constant review of the charges for the various goods or services supplied".

On 06.03.91 and 09.04.91 the Director of Fisheries had written to SFC (attention of Mr Shem Rarua) and issued him with an invoice for Vt 450.000 for the hiring of the M.V. Yasur. The First Secretary in the Ministry of Agriculture, Forestry & Fisheries, Mr Daniel B. Aaron had also reminded Mr Rarua of the outstanding fees in a letter dated 26.06.91 which had by then accumulated to Vt. 600.000.

The Director General of Finance (formerly called the Accountant General) exercises on behalf of the Minister of Finance the general management and supervision of the accounting operations of Government. Chapter 2.4.2. of the Interim Financial Instructions stated the fundamental duties of the Director General of Finance. One of these was:

"to exercise supervision over the receipts of public revenue and as far as possible to ensure that punctual collection is carried out by departments & ministries".

On 30.05.91 the Director General of Finance (Mr D Lewis) wrote to the Director of Fisheries suggesting that he take immediate steps to recover the debt of Vt.600.000 from SFC. He further suggested that the Director of Fisheries contact the Attorney General on the matter. There is no evidence that the matter was referred to the Attorney General for decision or advice or possible legal action against SFC.

Despite the above actions, the outstanding hiring charges were only collected in June 1992 by the action of the Director General of Finance (Mr D Lewis) who deducted the outstanding amount from the termination gratuity paid to Shem Rarua.

[6.4]	FINDING No. 4

BREACH OF THE SECTION 66(2) LEADERSHIP CODE OF THE CONSTITUTION BY MR SHEM RARUA AS SECRETARY GENERAL OF THE COUNCIL OF MINISTERS

The Secretary General of the Council of Ministers (Mr Shem Rarua) was responsible for the blatant abuse of his position by giving a direction to the Director of the Department of Fisheries in respect of a matter in which he had a clear conflict of interest. He has used his office for personal gain in clear breach of the Leadership Code.

The Secretary General to the Council of Ministers under the Prime Minister’s Office, Mr Shem Rarua, was also playing an important management role in setting up the private charter company SFC.

He was an active partner in the firm. This is shown in the undated signed agreement, where he has been mentioned as "trading in partnership under the name of Sevan Fishing Company". Also other correspondence was addressed to him in regard to the charter of the vessel.

Mr Rarua used his position to instruct the Director of Fisheries Department to release permanent government officers to help out in a private company in which he was a partner.

In addition he instructed that the cost of wages for the two staff involved was to be paid by the Government of Vanuatu and not SFC.

A head of department is responsible for the administration and management of his department and staff (Public Service Staff Manual Chapter 9.18 and 19). The staff of a department are subject to the direction of their head of department only. A political appointee has no authority to direct a head of department in the deployment of his staff. A political appointee is nothing more than an adviser to his Minister (Article 58 (1) of the Constitution).

The instruction to the Director of Fisheries to release two fisheries officers to work in a private company in which the Secretary General had a financial interest is a serious breach of Section 66 (2) of the Leadership Code.

[6.5]	FINDING No. 5

ULTRA VIRES ACTION BY MR O TAHI AS MINISTER OF AGRICULTURE 

The order Mr O. Tahi to write off the outstanding charter fees of Vt. 600.000 owed by Mr Shem Rarua was illegal.

The Public Finance Act of 1980 is the main law dealing with the financial administration of the Government. It gives the Minister of Finance the responsibility to supervise the financial administration of public funds of the Government. Section 21 (1) of the Public Finance Act reads:

"Parliament may by resolution authorise the Minister, in his discretion to the extent specified in such resolution to abandon and remit any claims by or on behalf of the Government or any service thereof and to write-off losses of public monies, stores, or other movable property belonging to or provided for the Government".

Under this section of the Act, only the Minister of Finance has the power to write-off public monies, stores and other movable Government properties.

The action taken by the Minister of Agriculture, Mr Onneyn Tahi to write-off the uncollected debt of Vt. 600.000 is in breach of the Public Finance Act. He had no authority to write-off public monies or any public asset.

[6.6]	FINDING No. 6 

INADEQUATE FINANCIAL REGULATIONS IN PLACE FROM 1980 TO 1993

The Ministry of Finance was defective in administrative practice in that during the years 1980 to July 1993 there were inadequate financial regulations in place to ensure the proper control over all monies, assets and liabilities of the Government.

[6.6.1]	An Interim Financial Instruction (Part I) was introduced in September 1985 setting out the various duties and responsibilities of heads of departments and accounting officers. Part I had five chapters in it, namely:

Chapter		
1	Introduction	
2	Financial Responsibilities	
4	Categories of Accounting Officers and their duties	
10	Revenue	
14	Losses of Public Funds.	

It was the intention at the time that Part II would be completed at a later stage. Tendering procedures would have been included in Chapter 8 in Part II. Unfortunately this did not take place.

[6.6.2.]	In July 1993 the new Financial Regulations were introduced by the Minister of Finance which covered all areas of financial management within the Government, including tender procedures.

[6.6.3.]	It is quite evident that the Government did not take sufficient action until 1993 to put into place proper financial procedures to safeguard tendering procedures for the sale of public assets and other tender procedures.

[6.7]	FINDING No. 7

BREACH OF DUTY OF GENERAL CARE AND DISCLOSURE BY MINISTER O. TAHI

Despite the lack of written tender procedures, the Minister of Agriculture failed to adequately document his and his Ministry’s involvement in the tender process for the sale of M.V. Yasur.

Minister Onnyne Tahi chose to become involved in the process of the tender when during the staff weekly briefing it was stated that the decision be deferred until the Ministry had the chance of talking to both tenderers.

Once the Minister became involved, there was a failure to maintain adequate documentation in that meetings were held verbally and negotiations went ahead outside of a formal tender board structure.

For example Minister O. Tahi negotiated directly with Mr Furet but there is no trace or documentation to explain what exactly went on and how they reached an agreement.

As a result it is difficult to undertake an independent review and given this, questions arise as to why the tender was finalised in this way, and about the integrity of the whole procedure.

[6.8]	FINDING No. 8

BREACH OF THE GENERALLY ACCEPTED TENDER PROCEDURES STANDARD WITHIN THE GOVERNMENT.

In particular, the people listed below were wrong in allowing a member of that group (Minister Tahi) to deal with a tender matter.

Mr Onnyne Tahi	Minister of ALFF	
Mr Albert Leodoro	1st Secretary Ministry of ALFF	
Mr George Bogiri	2nd Secretary Ministry of ALFF	
Mr Tom Kalorib	2nd Secretary Ministry of ALFF	
Mr Philip Dovo	Director of Agriculture Horticulture	
Mr Leonard Bule	Director of Forestry	
Mr Wycliffe Bakeo	Director of Fisheries	

Due to the fact that the original tenders received offered less than the minimum value, the boat was re-advertised. Only two offers were received in this second round of tenders. Mr Michel Furet’s offer was for Vt 5.6 million while Mr J.K. Hong, Hong Shell Products Co (Vanuatu) offered Vt 5.2 million.

There is no documentation regarding the late change to M Furet’s tender.

However the issue about the tender of the M.V. Yasur should not have been raised in the meeting. By raising the matter and discussing it outside a formal tender board meeting is a breach of the generally accepted standard procedures within the Government.

 A Tender Board when appointed must make its own decisions based on written offers that it has received. At the time of the weekly meeting with the Minister, the people present should have not discussed the M.V. Yasur, nor should they allow the Ministry to talk to the tenderers. This is not a normal practice within the Government. There are no records of the discussions between the Ministry and the two tenderers.

The boat was advertised only locally. No publicity of the sale was made overseas.

7.	RECOMMENDATIONS

In view of the nature of her findings and the responses received from those concerned, the Ombudsman hereby make the following recommendations.

[7.1]	Since the new Government Financial Regulations have been issued in July 1993, the procedures set out in these Regulations regarding the Tender Board should be strictly followed in future (Chapter 22 of Financial Regulation). Due to the passage of time it would not be prudent to overturn its sale. However since the boat has been sold at a value far below the recommended average sale price value, it is important that the sale of such high value assets should be more carefully and thoroughly considered in future.

[7.1.1]	As the new Financial Regulations have been in place since July 1993 there can be no excuse for any breaches of these regulations. Any person guilty of breaching these regulations subsequent to this time should be prosecuted to the maximum extent allowable. The penalties under these Regulations are inadequate and are in need of review.

[7.2]	Where the Government is selling unique or ‘one off’ assets it must ensure that a proper valuation is undertaken by a reputable valuer. A professional independent valuation would both assist the Tender Board in ensuring that the Government received fair value for the assets, as well as providing a professional document that could be used in marketing the asset. (After removal of the final valuation figure.)
In addition, it may be necessary to advertise certain assets outside Vanuatu, in regional magazines for example, as often there is not enough demand within Vanuatu to ensure the Government receives the best possible price.

[7.3]	The general conduct expected of Public Servants is outlined in chapter 9 of the Public Service Staff Manual. One of these rules is that public officers are not allowed to conduct private business during official time, or use public assets for their private affairs.

An officer who has any outside business interest, including a wife’s business interest, is obliged to declare such interests to the Director of the Public Service. It is a serious disciplinary offence not to declare such outside interest.

Public officers on permanent terms are obliged to observe this rule. As far as Political Appointees are concerned, they are generally bound by the Public Service Staff Manual rules. There appears to be a definite need for Political Appointees to be educated as to the various regulations governing their appointment.

[7.4]	The Prime Minister’s Office must at all times accept responsibility for the conduct of all Ministers and Political Appointees as they are appointed directly by the Prime Minister.

The Prime Minister’s Office must ensure that all Ministers and Political Appointees are fully aware of their responsibilities and duties at the time of their appointment. It is unacceptable to have Ministers and Political Secretaries acting illegally by giving direction in matters over which they have no jurisdiction.

8.	CONCLUSION

Perhaps the saddest factor to emerge from the investigation into the fate of the fishing boat M.V. YASUR is the failure of politician and officials to appreciate the value of the free gift donated by the Japanese people to the people of Vanuatu - a value of more than 30 (thirty) million vatu.

Instead of the politicians and officials safeguarding this asset and ensuring it was used for the benefit of Vanuatu citizens, and their positions and duties required, what has emerged is a catalogue of misbehaviour ranging from careless indifferences through unethical behaviour and ultimately illegalities culminating in the sale of the boat under shameful circumstances at a price of 5.8 million vatu - far below what was achievable with wisdom and honesty.

This mismanagement of this asset follows a pattern which is emerging more and more as the Ombudsman investigates the disappearance or misappropriation or neglect of duties committed to the trust of leaders who subsequently are shown to have little appreciation of the duty and responsibility of their public office and seem instead to be pre-occupied with acquiring personal profit.

It is yet to be hoped that, as the results of these investigations became public, pressure will be brought to bear on those in authority to put duty before personal interests and to earn the public’s respect.

MARIE-NOËLLE FERRIEUX PATTERSON
OMBUDSMAN OF THE REPUBLIC OF VANUATU.

APPENDIX A

REPLY FROM PHILIP DOVO CONCERNING THE M.V. YASUR

In his reply to my Preliminary Findings, the former Director of Agriculture, Mr Philip Dovo made the following comments:

The then Minister of Agriculture, Mr Onnyne Tahi holds department meetings with all Heads of Departments under his portfolio every Monday. The purpose of these meetings are for briefing the Minister of Departmental activities only. I attended these meetings to brief him only as Director of Agriculture.

I am not aware of a Tender Board nor am I a member of one that considered the second round of tenders on 18.05.93 as indicated in Section 6.2.3.

The person responsible for the sale of the M.V. Yasur rests with the then Minister, Mr Onnyen Tahi, his political secretaries and the Director of Fisheries Department as these discussions were done outside the Heads of Department meetings all of which I am not aware of.

Comments:

It appeared that the sale of the M.V. Yasur was handled by the then Minister, his political secretaries and the Director of Fisheries. As it was a weekly meeting with the Minister, the M.V. Yasur issue should not have been discussed, it was a tender board matter.

APPENDIX B

REPLY COMMENTS FROM THE FORMER DIRECTOR OF FISHERIES DEPARTMENT, MR WYCLIFF BAKEO

Reply from former Director of Fisheries Department Mr Wycliff Bakeo

In his reply to the Preliminary findings of the Ombudsman, the former Director of Fisheries Department (Mr Wycliff Bakeo) made the following comments: (My comments follow each relevant point where necessary)

Section 1.2.

The Yasur was brought in specifically to test fishing methods in Vanuatu that target pelagic fishes. Results showed that the utilization of such a type and size vessel (Yasur) for pelagics scheme fishing was not suitable and required further investigations. It continued to make use of the Yasur until the department received its 6 x 10 metres extension vessels under the phase 11 Village Fishing Programme funded again by the Japanese Government. These vessels proved comparatively more economical and practical for Vanuatu waters than the Yasur. Because of this the running of the Yasur became a burden to the Department of Fisheries. It therefore decided to sell the vessel.

Comments:

It appeared that the Yasur was acquired from the Japanese Government without having carried out a proper feasibility study by the Vanuatu Government at the first place to determine the type of vessels suitable to carry out the fisheries scheme.

Section 6.2.

The VT 5.8 million may seem very low for the vessel, it was the highest bid with an extended notice. Only two bids were received, although an number of local business people arrived to inspect the vessel.

Comments:

The highest bid was VT 5.6 million from Mr Furret. There is no record available to show the change from the original submission from VT. 5.6 Million to VT. 5.8 Million.

As regard to advertising overseas, I have verbally informed my counterparts within the region with little positive response. There was a some feeling that the Yasur was unsuitable for fishing. In any case selling the Yasur overseas to my reasoning, does not benefit Vanuatu. A loss of vessel to the Government of Vanuatu does not mean a loss to Vanuatu, as the vessel may be utilized usefully in Vanuatu.

Comments:

An attempt should have been made by the Fisheries Department and advertised in the region rather than by verbal information only. The point that the Ombudsman is making is not to do with the loss of the vessel to the Government, but the best possible way for the Government to get the best return for the sale of the asset.

The second tender board was really a cabinet meeting inclusion of the Directors under that Ministry. Though agreements were by consciences, there was always political skewing in the important decisions.

Comments:

A Minister and political secretaries should not involved themselves in tender matters. Only the tender board can decide on the method of disposal of an asset as clearly set out in the Financial Regulations. It is the board that decides which tender to accept, Ministers and political secretaries should not be involved at all.

Section 6.3.

The negotiation for the matter was started by me though I was excluded in its conclusion, when it become obvious that I did not give in easy to political pressures. The principal negotiator of Sevan Fishing Company (SFC) Shem Rarua excluded me from the rest of the negotiations and dealt with the Ministry of Agriculture. Even the agreement was executed when I was on overseas mission to the IATTC meeting in Costa Ricca. This took place despite the fact that I specifically requested Minister Hopa not to conclude the Agreement until I was back in Port Vila. The signing went ahead.

Comments:

The political appointee was using his position to satisfy his own interests. Because the head of the Department was making sure that things were done the proper way, the political appointee was by-passing the director and dealing with the matter at the Ministry's level.

The proposal secondment of Messrs A. Firiam and K. Kalo was actually intended as trainers or advisors to assist Seven Fishing Company in the initial stages of operation. During the "negotiation" Mr Rarua instructed me to have the officers worked for SFC and paid by Fisheries Department. It was an instruction rather than seeking advice or trying to negotiate. During this period the PM's office was virtually directing the show instead of the Ministry of Agriculture.

Comments:

A political appointee is nothing more than an advisor to his Minister (Article 58 of the Constitution). A head of department should not be directed by a political appointee. In this case however the Director of Fisheries Department should have referred the matter (transfer) to the Public Service Commission who has the power under the Public Service Commission Act. (CAP 129).

Section 7.3.

As far as the lease fee payment and collection, I really did my best, giving notices and reminders and notifying my supervisors (Ministry) and Finance. The SFC spokesman just can't be approached by me, He preferred to deal with the Ministry and therefore there was communication break down.

Comments:

The Director of Fisheries had done what he could however the person responsible. Mr Shem Rarua just did not bother to settle the fees. It shows that this senior officer in the office of the PM was using his political position for personal gains and his own interest.

APPENDIX C

REPLY COMMENTS FROM MR JACK HOPA
CONCERNING M.V. YASUR

In replying to the Preliminary findings of the Ombudsman of the Yasur, Mr Jack Hopa made these comments:

Section 6.3

In good faith and believing that the technical briefing, advice and recommendations received from the Director of Fisheries Department was normally legal, correct and proper, I as Minister responsible for Fisheries Development entered into a lease agreement with the local company, Seven fishing Company so as to allow MV Yasur to be utilised following the expiratory period of Fishing Trials Agreement. The reason why the date was not stated in the signing document I could not recall.

Comments:

As Mr Jack Hopa was Minister responsible at the time, had failed to ensure that the documents he was signing was properly drawn up and dated. Although he had agreed on the utilisation of the Yasur by Seven Fishing Company, he failed to ensure that one of the most important part of the agreement was put in. Had there been or dispute over the charter, the Government would have been in an embarrassing situation. As a Minister he should ensure that the document is correct and proper before putting his signature in this Agreement. He should have bear in mind that he is signing the Agreement on behalf of the people of Vanuatu.

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