REPUBLIC OF VANUATU

OFFICE OF THE OMBUDSMAN

PUBLIC REPORT

ON THE 

CONDUCT OF
HON AMOS BANGABITI
HON MAXIME CARLOT KORMAN
MR IRENE BONGNAIM

ON THE GRANTING OF THE CONTRACT TO CLEAN THE
BAUERFIELD AIRPORT TO FX & BM CLEANING SERVICES

This report expresses the opinions, views and findings of fact and
recommendations of the Ombudsman pursuant to the Ombudsman Act
and the Constitution of the Republic of Vanuatu

25 October 1996

CONTENTS

CONTENTS
PREAMBLE
SUMMARY OF PUBLIC REPORT

FULL PUBLIC REPORT

2	Jurisdiction
3	Scope of investigation
4	Method of investigation
5	Reply comments to preliminary report

6	FINDINGS OF FACT AND OPINION

6.1 - 6.8	First approaches
6.9 - 6.10	First contract
6.11 - 6.17	Initial tender contract for VT 13,332,800
6.18 - 6.20	Tender irregularities
6.21 - 6.23	Report of Audit Office
6.24 - 6.33	Cancellation of First Contract
6.34 - 6.45	Second tender/contract - Air Vanuatu VT5, 700,000/year
6.46 - 6.49	Cancellation of Air Vanuatu contract by Mr Korman
6.50 - 6.56	Second contract with FX & BM VT11, 968, 00/year
6.57 - 6.60	Concluding view - a political favour

7	FINDINGS OF WRONG CONDUCT

8	REQUIRED ACTION AND RECOMMENDATIONS

REPLIES TO PRELIMINARY REPORT

APPENDIX

A	Reply of Mr Irene Bongnaim
B	Reply of Hon Amos Bangabiti
C	Reply of Mr Chani

FINAL REPORT

ON

BAUERFIELD TERMINALS CLEANING CONTRACT

PREAMBLE

"... For I know your manifold transgressions and your mighty sins; they afflict the just, they take a bribe, and they turn aside the poor from the right ..."
Amos 5 v 2.

A short summary of the events surrounding the Airport Cleaning Contract would be simply that a legitimate and cost effective service undertaken by the staff of the Department of Civil Aviation was terminated in favour of a suspect deal arranged by ministers and political appointees with a private cleaning company, FX and BM Cleaning Services (managing director Mr Francois Chani).

Briefly, the importance of this dubious transaction for the public at large is that the new contract to clean the Airport was five to six times higher than the previous costs to do the same job. It is therefore a needless and reckless misuse of the public's money.

In my opinion, the basic reason behind why ministers and political appointees acted badly in this matter is the money Mr Francois Chani gave to the UMP. In 1993 and 1994 Mr Chani gave the UMP a total of VT1.283.000. At the end of 1993 his company, FX and BM Cleaning, got a 5 year contract to clean the Airport. The contract was worth more than VT74, 000,000 or about VT14, 600,000 each year. The year before (1993) this contract, the cost to clean the Airport for a year was VT2, 700,000 - five times less! This contract was signed on behalf of the Government by Mr Amos Bangabiti.

Often politicians say that the rewarding of supporters is "Custom" tradition. Do the "Grassroots" agree that this is truly "Custom"? The prophet Amos, nearly three thousand years ago, shows clearly that such practices are not new but said they were a sin.

SUMMARY OF PUBLIC REPORT

OF BAUERFIELD TERMINALS CLEANING CONTRACT

1	SUMMARY

1.1	This is a summary of my public report into the contract signed between the Government of Vanuatu and a private company, FX & BM Cleaning Services, ("FX & BM") for the cleaning of Bauerfield Airport.

1.2	The purpose of my report was to enquire into the actions of the Ministers, Political Secretaries and other Government Officers gave the contract to FX & BM. I set out below a summary of the main points of my enquiry together with my opinions and recommendations.

Findings of fact

1.3	Up until 9th January 1994, the cleaning of both the International and Domestic terminals was done by the Department of Civil Aviation. The total annual cost of all staff and cleaning materials was approximately VT. 2.7 million.

1.4	On 31.12.93 the Minister of Transport, Public Works, Civil Aviation, Ports and Marine and Urban Water Supply, Mr Amos Bangabiti, and Mr François Xavier Chani of FX & BM, signed a contract agreement for FX & BM to carry out the cleaning of the two terminals. The signed Contract Agreement was for a period of 5 years for an agreed amount of VT.13.332.800 for the 1994 year increasing to VT. 15.006.184 per year by the end of the 5 year period.

1.5	This contract should never have been signed. The proper tender procedures were ignored by Minister Bangabiti and his First Secretary, Mr I Bongnaim. They ignored the proper procedures to ensure that FX & BM would be given the cleaning contract as a reward for large political donations to the U M P. (Refer to 6.28). The major breaches are as follows:

(a) No tender board was ever appointed;

(b) The Ministry of Transport deliberately specified an illegally short period for the receipt of tenders;

(c) The contract was not approved by the Attorney General;

(d) The contract was not approved by the Council of Ministers;

(e) The Dept. of Civil Aviation did not have enough money to pay for the contract.

1.6	During the first eighteen month term of this contract the Department of Civil Aviation paid VT. 20,207,976 to FX & BM for the cleaning of the airport terminals. This was VT16 Million more than it would have cost the Department to do it themselves during this period.

1.7	This contract was terminated on the 11th July 1995 following a letter by the Minister of Transport, Mr Bangabiti, giving three months notice to FX & BM. This termination was legal and followed demands made by the Ministry of Finance, the Department of Civil Aviation and the Department of Finance.

1.8	A new tender was called and Air Vanuatu was the lowest tenderer. The Council of Ministers gave the contract to Air Vanuatu for a trial period of three months but no contract was ever prepared for signing. It appears that Minister Bangabiti and Mr Bongnaim both tried to prevent the contract being given to Air Vanuatu.

1.9	Air Vanuatu were unable to commence cleaning without a contract, however neither the Ministry of Transport or the Department of Civil Aviation tried to prepare a contract that was acceptable to both Air Vanuatu and the Government. During this time the Dept. of Civil Aviation carried out the cleaning without any problems or complaints.

1.10	In April 1996, the then Prime Minister Korman advised the Minister of Civil Aviation that he had taken steps to terminate Air Vanuatu and award the contract to FX & BM. This was wrong for the following reasons:

(a) Mr Korman deliberately disadvantaged the business of Air Vanuatu, a 100% Government owned company, in favour a private business which was a strong UMP supporter.

(b) The tender by FX & BM was twice as expensive as Air Vanuatu and was the most expensive of all the other tenders received.

(c) Mr Korman was deliberately misleading when he said that there were no legal grounds for the termination of the original contract to FX & BM. There were and the Attorney General had told the Council Of Ministers (including Mr Korman) just this.

(d) Mr Korman was not the Minister for Civil Aviation. He had no authority to become involved in the tender of the Airport cleaning contract.

1.11	The Minister of Transport, Mr A Andeng, was the Minister responsible for Air Vanuatu. He deliberately stopped Air Vanuatu from taking up this contract. He did two bad and illegal things. 

(a) He deliberately hurt the business of Air Vanuatu because it lost the business of cleaning the Airport;

(b) He helped Mr Korman force the Government to pay nearly twice the price that Air Vanuatu tendered.

1.12	The people of Vanuatu have lost twice. Not only are they paying double the cost for no sensible reason, the money is going to a private company when it should have been going to a company owned by the Government or being done by Civil Aviation for less than five times the cost. All this indicates that Messrs Korman, Andeng and Bagabiti put the interests of UMP party supporters before the interests of the people of Vanuatu.

My conclusions and recommendations

1.13	This enquiry has shown that too many Ministers and political appointees are willing to put their own interests and that of their strong supporters before the interests of the people of Vanuatu. I have therefore recommended as follows:

(a) The Government tries to make the politicians responsible pay for the losses that they have caused the Government and the people. They should not walk free if they have deliberately wasted government funds.

(b) Political donations must be disclosed so that the public knows of the potential for this to corrupt the process of government tenders.

(c) The full Leadership Code, already given to Parliament, be passed into Law. Without this those Leaders who ignore and break the law go unpunished and continue to cost the people of Vanuatu heavily in many ways.

FULL PUBLIC REPORT

2	JURISDICTION

2.1	The Ombudsman has been given the constitutional power to enquire into matters either:

(a) Upon receiving complaints from a person affected as a result of a particular conduct or action of another person, department, ministry or any officers of the government;

(b) At the request of a Minister, a member of Parliament, National Council of Chiefs, or a local Government Council; or

(c) Of her own initiative.

2.2	This enquiry was commenced on the basis of a complaint received on the 7th August 1995 from Mr Francois Chani, Managing Director of FX & BM, against the Ministry of Transport for the alleged improper termination and breach of the airport cleaning contract.

2.3	On 3/11/95 Mr Chani decided to withdraw his complaint, however due to the nature of the Ombudsman’s findings the enquiry was continued.

2.4	This enquiry investigated the procedures adopted in awarding a contract to this private company for cleaning the domestic and international air terminals at Bauerfield Airport and the alleged improper termination and breach of contract. This enquiry was conducted in accordance with Article 62 of the Constitution and Section 14 and 17 of the Ombudsman Act.

3	SCOPE OF INVESTIGATION

3.1	The objective of this enquiry was to find out:

(a) What procedures were used to give the cleaning contract of the airport terminals to FX & BM.;

(b) The reasons for privatising the cleaning of the terminals at Bauerfield Airport;

(c) If the FX & BM contract was legal;

(d) the reasons for terminating the contract and the validity of the termination;

(d) What was the reasonable cost compared to the annual cost the Civil Aviation Department was spending to clean two terminals.

4	METHOD OF INVESTIGATION

4.1	Under Article 62 (3) of the Constitution, the Ombudsman is empowered to request any person likely to assist her or furnish her with information and documents needed for her enquiry. Based on these powers, documents were obtained from departments and the Ministry responsible, and from other sources.

4.2	Under s17 (2) of the Ombudsman Act No. 14 of 1995 ("Act"), the Ombudsman can summon any person to appear before her and to furnish her with any information. The people involved in this affair have been summoned by the Ombudsman and appeared before her for questioning and provided information.

5	COMMENTS BY INDIVIDUALS OR ORGANISATIONS AFFECTED BY THIS REPORT

5.1	S16(4) of the Act states:

It shall not be necessary for the Ombudsman to hold any hearing and no person shall be entitled as of right to be heard by the Ombudsman except that:

(a)	where a report of the Ombudsman may affect any service, or body authority complained of, as the case may be, an opportunity to comment on the subject of the enquiry, either orally or in writing;

(b)	where a report of the Ombudsman may affect the person complained of, he shall grant to that person an opportunity to reply to the complaints made against him, either orally or in writing;

(c)	where the Ombudsman publishes an opinion that is adverse to or derogatory of any service, body, authority, person or leader, he shall, unless he has obtained the consent of the responsible person to do otherwise, include in the document published the substance of any statement the responsible person may have made in explanation of or opposition to the Ombudsman’s conclusions.

5.2	In compliance with this, a preliminary report was issued on the 20th August 1996 to all individuals and organisations affected by this report. All replies received are attached as an appendices to this report. I do not comment in detail on these replies apart from noting that the opinions of the key people in this affair conflict. It is difficult to believe their statements as all blame each other. I have therefore read the documents of the time to determine the most reasonable explanation for the awarding of the cleaning contract to FX & BM.

5.3	Please note that the numbering system in the replies (to the preliminary report) do not match the numbering system in this final report. However, the replies are clear in what allegations that they are answering.

5.4	The former Prime Minister Hon M Carlot Korman chose not to reply to the preliminary report.
 
6	FINDINGS OF FACT AND OPINION

First Approaches

6.1	On 20.01.93 the Managing Director of FX & BM, Mr François Xavier Chani, approached the Director of Civil Aviation Department, Mr Mel Dunn. He presented him with a quotation and plan to take over the cleaning of the international and domestic terminals at Bauerfield Airport. In the 10 page document he quoted that the proposed contract would be for 3 years at an annual contract cost of Vt.15,819,399. This is made up as follows:

i.e.

Domestic Terminal - VT. 5.994.200
International Terminal - VT. 9.825.199.

6.2	On 26.01.93 Mr Chani wrote to Mr Dunn. Mr Chani said that that he had consulted the Ministry of Public Works and spoke to the Second Secretary, Mr Irene Bongnaim a number of times and discussed the matter with him. He also say that he wanted to arrange an urgent meeting with Mr Dunn because the Government would like to privatise the cleaning of the Airport terminals as soon as possible. He assured Mr Dunn that the six former employees of the Department of Civil Aviation would not be sacked. He said that they would get more money. He stated that the state of cleanliness in the two buildings were "very, very poor".

6.3	On 29.01.93 the Manager of Technical Services of the Civil Aviation Department, Mr Gerard Willemsen, wrote to Mr Chani of FX & BM and told him that "I regret to state that at present the cost of having these premises professionally cleaned is outside our budget allocation". The letter was copied to Mr Amos Bangabiti, Minister for Civil Aviation and the Director of the Department, Mr Mel Dunn.

6.4	On 01.04.93 the General Manager of the National Tourism Office ("N.T.O"), Mr Gabriel Bani wrote to Mr Dunn informing him that Mr Peter Ellis (the then manager of FX & BM ) had talked Mr Bani about the possibilities of the use of their services at the domestic and international terminals at Bauerfield Airport. In this letter Mr Bani stated that the maintaining and cleaning of the terminal (international) has been done extremely well by Civil Aviation.

6.5	On 15.04.93 the Director of Civil Aviation, Mr Dunn, told the General Manager of N.T.O, Mr Bani, that he was approached by Mr Chani, the Managing Director of FX & BM back in January 1993. Mr Dunn said to Mr Bani that he had told Mr Chani then that the cost of his services was too much for his department.

6.6	On 06.08.93 the First Secretary in the Ministry of Transport, Mr William Tari informed the Director of Civil Aviation that the Ministry was taking steps to privatise the cleaning of both terminals to a private company on a best negotiated rate. In other words the tenderer with the lowest or one of the lowest price and best terms would get the contract. However, it is understood that the private company that the Government had in mind was FX & BM. They had submitted a quote of VT 15,819,399.

6.7	On 09.08.93 The Director of Civil Aviation, Mr Dunn, replied to Mr Tari, informing him that the annual cost of VT. 15.819.399 was nearly six (6) times the amount that the department was incurring. The annual salary for the six staff was VT. 1.5 million while cleaning materials and clothing was costing approximately VT. 1.2 million, thus making a total of VT. 2.7 million annually. The Director stated that due to his department’s budget constraints he could not bear the cost of the proposed contract.

6.8	On 19.08.93 Mr Chani wrote to Mr Tari and said that his Company really wanted to provide that service to the Civil Aviation Department. He further stated that he would offer a reduction of 35% on his previous proposal (VT. 15.819.199).

First Contract VT 4.500.000

6.9	On 02.11.93 FX & BM submitted a quotation of VT. 4.500.000 to the Civil Aviation Department for the initial cleaning of the domestic and international terminal for the Mini-South Pacific Games. In its meeting (No. 27) on 04.11.93 the Council of Ministers approved and awarded the Contract for the cleaning of both terminals to FX & BM. The costs were to be charged to the SPIC Fund (borrowed development funds).

6.10	No tenders were called for this contract despite the specific requirements of Regulation 361(3) of the Financial Regulations which require full tender procedures for any expenditure over VT. 1.000.000. FX and BM were paid VT. 4.5 Million in January 1994 for this one off contract.

Initial Tender Contract for VT 13.332.800 Per Annum

6.11	On 05.11.93 the Civil Aviation Department submitted to the Ministry of Civil Aviation a sample tender notice. This was to invite tenders for the cleaning contract of the two terminals at Bauerfield Airport. On receipt, the Acting First Secretary, Mr Irene Bongnaim, advised the Director of Civil Aviation to allow only one week for tenders to be submitted to the Civil Aviation Department (instead of 2 weeks as required by the Financial Regulations). Mr Bongnaim’s involvement with Mr Chani appears to be dominated by Mr Chani’s political donations to the UMP. These are discussed further below. however their personal relationship goes back to when Chani was a pupil at the Lycée and Bongnaim was a Boarding Master. Mr Bongnaim was the UMP Port Vila Regional President.

6.12	The Tender Notice was published in the Vanuatu Weekly issue No. 468 of Saturday 20.11.93. The specification documents were available from the Department of Civil Aviation as from 22.11.93. The closing date was 30.11.93 at 11.30 a.m. This tender notice failed to comply with Regulation 363(1) of the Financial Regulations of the Republic of Vanuatu, which requires at least two weeks notice of invitation to tender. The instruction by Mr I Bongnaim was clearly illegal.

6.13	On 25.11.93 FX & BM submitted its tender of Vt.13.332.800 for the contract to the Civil Aviation Department

Domestic terminal VT. 3.785.600
International terminal VT. 9.547.200.

6.14	On 03.12.93 the Acting Manager (Corporate Services) of Civil Aviation, Mr A. Carlot submitted the FX & BM bid to the Second Secretary, Mr Irene Bongnaim. He also said that no other contractor had tendered for the job.

6.15	The Minister of Public Works and Civil Aviation was informed by the Director of Civil Aviation on 06.12.93 of the following:

(a) The tender notice was published in the Vanuatu Weekly paper (Issue No. 468) of 20.11.93;

(b) Only one application was received, this was from FX & BM;

(c) The quotation was for VT. 13.332.800 for 1994 rising to 15.006.184 over the period of the 5 year contract proposed (to cover 3% inflation rate);

(d) The current cost to the Civil Aviation Department for cleaning both terminals, i.e. six (6) staff plus cleaning materials totals around VT. 2.7 million;

(e) The Civil Aviation Department had not budgeted for this cleaning outlay; and

(f) The Civil Aviation Department would meet the monthly payments out of its 1994 recurrent budget and would need supplementary funds in March 1994.

6.16	On 30.12.93 the Manager of Corporate Services (Mr Joseph Kasten) wrote to the six employees of the Civil Aviation Department: Each one was advised that a new company would be taking over the cleaning of the terminals as from 10.01.94. As a result they would be paid their severance and any leave due before they left.

6.17	On 31.12.93 a Contract Agreement was signed by the Minister of Transport and Civil Aviation, Mr Amos Bangabiti on behalf of the Government and Mr François Chani of FX & BM Cleaning Services. The term of contract was for 5 years as from 10.01.94.

Tender Irregularities

6.18	The signing of this contract was a gross breach of the Financial Regulations by the Minister of Transport, Mr Amos Bangabiti, for the following reasons:

(a) No tender board was ever appointed as per Regulation 365;

(b) The contract was not approved by the Attorney General as required by Regulation 367(2);

(c) The contract was not approved by the Council of Ministers as required by Regulation 368(2).

6.19	Minister Bangabiti therefore entered into an illegal contract that committed the Government of Vanuatu to spend in excess of VT. 70.000.000.

6.20	In its meeting (No. 1) of 09.02.95 the Council of Ministers approved supplementary funds of VT. 13.332.780 to the Ministry of Civil Aviation for the cleaning services at Bauerfield. This was made known to Mr Bangabiti in a letter dated 13.02.95 from the Secretary General of the Prime Minister, Mr Charlot Salwai.

Report of Audit Office

6.21	In a report issued by the National Audit Office dated 21.11.94 to the Minister of Transport, the Audit Office made the point that the tender procedures were inadequate. This was because Government purchasing procedures as set out in the Financial Instructions were not followed in giving the contract to FX & BM. Furthermore the cost was four (4) times greater than when the cleaning was conducted by the staff of the Civil Aviation Department.

6.22	In a memorandum dated 11.01.95 from the Acting Director of Civil Aviation (Mr Joseph Kasten) to the Auditor General, Mr Kasten stated that the audit report spoke for itself and he would not elaborate further on the report. Mr Kasten noted that the Civil Aviation Department was not allocated money in 1995 to pay for the cleaning services. Mr Kasten also said that he had requested the Minister of Transport and Civil Aviation, Mr Bangabiti, to reconsider the future of the cleaning services of the terminals.

6.23	In his reply dated 28.03.95 to the Auditor General, Mr Bangabiti said:

(a) There was nothing wrong in the process of the tendering period;

(b) The Council of Ministers approved and awarded the contract because the company had experience and good standard cleaning equipment; and

(c) It was not the price that matters but the services provided must suit international and domestic standards of terminals around the world.

Cancellation of First Contract

6.24	On 21.03.95 the Minister of Finance, Hon Willie Jimmy wrote to the Minister of Public Works. Mr Jimmy said that the procedures required under the Finance Regulation must be accepted. Mr Jimmy said that these were correct procedures and should have been complied with to avoid unnecessary expenditure. Mr Jimmy noted that this was as pointed out by the Auditor General. 

6.25	Mr Jimmy went on to say that the Government should give three (3) months notice as per clause 5 of the Agreement, because it could not maintain a tender contract agreement of VT. 13 million per annum over a five year period. Mr Jimmy also enclosed a draft three (3) months termination notice for the Minister of Transport to consider and execute. Mr Jimmy is to be praised for his good leadership.

6.26	On 31.03.95 the Acting Director General of Finance, Miss Julian Ann Rovo wrote to the Minister of Transport and Public Works to express concern that the procedures in the Financial Regulations on Tenders and Awarding of Contracts were not followed. She recommended that the contract be withdrawn and that it be re-advertised. She also said that the awarding of a new contract should be made in a proper and legal manner.

6.28	On 17.03.95 the Regional President of UMP Party in Port Vila, Mr Irene Bongnaim wrote to Mr Jimmy and told him that the Manager of FX & BM (Mr Chani) went to see him concerning his contract payment. Although the Council of Ministers had approved supplementary funds for the contract, the Company had not received its payment. Mr Bongain said he was also concerned because the Managing Director and his staff were strong supporters of the UMP. He pointed out that Mr Chani had been financially supporting the UMP Party. The following were listed as assistance given by the Managing Director, (Mr Chani), to the party:

(a) 500.000 VT .- Motalava Congress Charters of the ship Cap de Pins (1993);

(b) 100.000 VT. - Ambae/Maewo Local Government Election Campaign, received by the Honourable Minister of Transport, Mr Bangabiti (date of elections: 25/10/93);

(c) 100.000 VT. - Tafea Local Government Election Campaign, received by Mr Bob Kuao, Second Secretary in the Ministry of Home Affairs (date of elections: 02/02/94);

(d) 200.000 VT. - Provincial Election Campaign on Ambrym, received by Mr Irene Bongnaim and given to North Ambrym UMP Area Committee (date of elections: 15/11/94);

(e)350.000 VT. - Pentecost Provincial Election Campaign, received by Mr Norbert Sumsum. (date of elections: 15/11/94);

(f)10.000 VT. - UMP Port Vila Mini Congress in 1994; and

(g)23.000 VT. - UMP membership card for Pentecost statistics

______________

1.283.000 VT. - TOTAL.

He went on to ask Mr Jimmy to approve the payment to the Company before 23.03.95 because it has not yet been paid for four (4) complete months.

6.30	It would appear that Mr Chani and/or FX and BM had ulterior motives behind these ‘free’ donations. 

6.31	In my opinion these "donations" were made on the understanding that Mr Chani and his company were trying to obtain further favourable contracts or were repaying a favour after the signing of the main contract at the end of 1993. (On 04/11/93, the Council of Ministers granted Mr Chani a 4.5 million vatu short term cleaning contract and on 31/12/93 a contract was signed in favour of the company for an amount approximately of 70 million vatu. This occurred a few months after the VT. 500,000 donation for the Motalava congress).

6.32	As can be seen from the list, the Minister of Transport (Mr Amos Bangabiti) received VT. 100.000 for the Ambae/Maewo Local Government Election Campaign. Mr Irene Bongnaim received VT. 200.000 for the Provincial Election Campaign on Ambrym. Both officers were involved as the most senior political appointees in the negotiation and tendering process for the contract. This is a clear breach of the provisions of the Leadership Code.

6.33	On 15.03.95 Mr Bangabiti wrote to Mr François Chani and gave three (3) months’ notice of the Government’s intention to terminate the contract. This notice was served in compliance with clause 5 of the signed agreement and was not illegal or improper in any way. The Minister assured Mr Chani that all outstanding payments due to his Company would be paid. The termination would not restrict the Company in re-applying for any future contract.

Second Tender/ Contract awarded to Air Vanuatu. VT5.700.000 Per Annum

6.34	A new Tender Notice was published in Vanuatu Weekly issue No. 453 of 6th May 1995 inviting tenders for the cleaning contract of both terminals at Bauerfield Airport. The closing date being 22.05.95 at 11.30 a.m.

6.35	The Tender Board met on 27.07.95 and opened the tender submissions. The tenders received were:

FX & BM Cleaning Services	VT. 11.968.000	
Toso Maso Tours	VT. 9.000.000	
Ito Jose	VT. 11.050.250	
Air Vanuatu	VT. 5.700.000	

The members present were:

-	Director General of Finance
-	Director of Civil Aviation
-	Acting Manager Corp. Services - Civil Aviation
-	Adviser to the Director of Finance.

6.36	Because Air Vanuatu submitted the lowest bid it was decided that the Director of Civil Aviation would carry out his own investigation and should satisfy himself that Air Vanuatu could do the job.

6.37	On 01.08.95 the Tender Board met again. It agreed that the contract would be awarded to Air Vanuatu.

6.38	On 18.08.95 the Acting Director of Civil Aviation Department, Mr Joseph Kasten informed Air Vanuatu of their successful bid for cleaning the terminals at Bauerfield Airport. A copy of his letter was also sent to the Minister of Transport and Civil Aviation.

6.39	On 02.11.95 Work Paper No. WP/47/95/TPWCAPMUS was tabled by the Mr Bangabiti at the Council of Ministers meeting on the Airport Cleaning at Bauerfield. The Minister made his recommendations on the four tenderers following the submission to him by the Tender Board:

(a) He recommended that the contract be awarded to FX & BM for an annual sum of VT. 10 million;

(b) Mr Bangabiti did not disclose to the Council of Ministers that his recommendation was contrary to the recommendation of the tender board. He acted dishonestly.

6.40	Despite Minister Bangabiti’s recommendation, the Council of Ministers awarded the contract to Air Vanuatu.

6.41	On 06.11.95 the Secretary General of the Council of Ministers wrote to Mr Bangabiti and told him that in its meeting on 02.11.95 the Council of Ministers awarded the cleaning contract of Bauerfield, Domestic & International Air terminals to Air Vanuatu on a trial basis for three (3) months.

6.42	By letter dated 13.11.95 the Director of Civil Aviation, Mr Dunn, told Air Vanuatu of the decision of the Council of Ministers 

6.43	Air Vanuatu told the Department of Civil Aviation that they were unable to accept a three month contract, without an adjustment in contract price, as their tender was based on a minimum twelve month contract.

6.44	I consider that it was commercially realistic for Air Vanuatu to require a minimum contract period of 12 months. I cannot understand why the Council of Ministers specified a three month contract given their previous willingness to approve a 5 year contract for FX & BM at more than double the cost of Air Vanuatu.

6.45	No attempt was ever made by either the Ministry of Transport or the Department of Civil Aviation to resolve the problem raised by Air Vanuatu. The Department of Civil Aviation commenced cleaning the terminals using its own staff and no problems were ever reported regarding the quality of their work. This shows that this was the best option overall.

Cancellation of Air Vanuatu contract by the then Prime Minister Korman

6.46	On 9/4/96 the then Prime Minister, Mr Korman wrote to the Minister of Civil Aviation, Albert Ravutia, to advise him of the Prime Minister’s instruction to the Minister of Transport to terminate the contract to Air Vanuatu and to award it back to FX and BM. I set out below the text of the Prime Minister’s letter:

"PM/903/6/321/MCK/lr/96

9th April, 1996.

Hon. Albert Ravutia,
Minister of Civil Aviation,
Ministry of Civil Aviation.
Government of Vanuatu.
PORT VILA.

Dear Minister,

In regards to the cleaning of the International and Domestic Airports, there seems to be no progress about the cleaning of the Airport.

The cleaning of the Airport was officially awarded to FX & BM Cleaning Services by contractual means in 1993 for a period of 5 years. After 16 months, the Minister of Transport revoked the contract for some unknown no reasons and resubmitted it for tender.

The contract was then awarded to "AIR VANUATU" in mid 1995.

Please be aware that valid legal action by FX & B.M. cleaning has been taken against the Government of Vanuatu as there were no legal grounds for the Termination of the original contract.

However, in the presence of respect for the Government and decency, they have offered for termination of their legal action.

Due to complete failure of "Air Vanuatu" to commence the cleaning of the Airport terminals for unknown reason, I request the Minister of Transport and Public Works to prepare immediately to the Council of Minister’s Meeting the termination of the contract with Air Vanuatu and award it back to FX & B.M. Cleaning Services in compliance with his last offer.

Thank you for your understanding and cooperation."

"MAXIME CARLOT KORMAN
Hon. Prime Minister

c.c.	-	Minister of Transport, Public Works & Urban Water Supply
-	Director of Finance
-	Director of Civil Aviation
-	Attorney General
-	Director, Air Vanuatu
-	Minister of Finance" 

6.47	On 16.04.96 the First Secretary of the Ministry of Finance, Mr George Borugu, wrote to the Prime Minister stating, "It is recommended that Air Vanuatu be awarded the contract with a minimum of one year with a right of renewal for a further contract, provided their work is satisfactory."

6.48	On 24.04.96 the Minister of Transport, Amos Andeng, prepared a Council of Ministers’ Paper regarding the termination of the Air Vanuatu Contract and a request to award the contract to FX & BM stating wrongly: "there was no legal grounds for the termination of the original contract". 

6.49	As mentioned above, the Ministry of Transport no longer had any responsibility for Civil Aviation, therefore this action by Amos Andeng to prepare this paper would appear to be a serious breach of ministerial responsibility.

Second contract signed with FX & BM. VT11.968.000 Per Annum.

6.50	On 06.05.96 the Council of Ministers decided to terminate the service with Air Vanuatu and give the contract to FX & BM for two years.

6.51	On 21.05.96 Mr Gideon Jacques, First Secretary with the Ministry of Public Works telephoned the Ombudsman requesting a copy of the former cleaning contract dated 31/12/93 as the Ministry did not have any record of it.

6.52	On 24.05.96, the Ombudsman wrote to Mr Gideon questioning their involvement in the contract as "the cleaning contract of Bauerfield Airport is a matter for the Ministry of Civil Aviation"

6.53	On 06.06.96 Mr Gideon Jacques, wrote to the Attorney General complaining about delays in preparing a contract for FX & BM. This pressure is in complete contrast to the lack of action in preparing a contract for Air Vanuatu. A serious concern with this letter was the instruction that the contract was to include back dated payments. This would appear to be an illegal instruction.

6.54	On 20.06.96 the First Secretary of the Ministry of Civil Aviation, Mr Jacob Thyna, wrote to the Minister of Finance to request supplementary funding for the Department of Civil Aviation to pay for the contract with FX & BM. Clearly at the time of awarding the contract the Ministry were aware that there was insufficient funds to pay for the cleaning contract.

6.55	On 01.07.96 a two year contract was signed by the Minister of Civil Aviation, Mr Albert Ravutia, and Mr F Chani based on an annual cost of VT. 10.000.000.

6.56	At an interview with the Ombudsman on 11.07.96 the First Secretary of the Ministry of Civil Aviation, Mr Jacob Thyna, advised as follows:

•	The Ministry of Civil Aviation was created late in February 1996.

•	The Ministry had no problem at all with the cleaning work performed by the staff of the Department of Civil Aviation.

•	The Ministry only moved to review the cleaning following direct interference by the Prime Minister by way of his letter dated 9 April 1996.

•	The Ministry was not aware of any problem with Air Vanuatu.

•	The excessive cost quoted by FX & BM was never discussed by the Council of Ministers when they voted to withdraw the decision in favour of Air Vanuatu and to enter into a contract with FX & BM.

•	The Ministry relied totally on the decision of the Council of Ministers. (Note that this decision was based on the submission made by the Minister of Transport, not the Minister of Civil Aviation.)

Concluding View - A Political Favour

6.57	In an interview with the Minister of Transport, Public Works, Civil Aviation and Ports and Marine on 08.12.95, Mr Amos Bangabiti alleged that it was a Government general policy to privatise. However, Mr Andeng was unable to show any documents to support what he said.

6.58	However during his interview with the Ombudsman the former First Secretary in the Ministry of Public Works, Mr Tari that the Ministry of Transport, Public Works and Civil Aviation had no intention at all to privatise the cleaning of the air terminals at Bauerfield Airport. He stated that Mr Chani took the matter up directly with the then Prime Minister, Mr Korman. Mr Korman then wrote to the Ministry of Transport, Public Works and Civil Aviation and told it to privatise the cleaning services of the air terminals.

6.59	Mr Tari also said that there was no prior proposal submitted to the Council of Ministers by the Ministry to privatise the cleaning services of the air terminals. 

6.60	In my view, considering all the information received and statements made, Mr Korman was basically repaying money paid to the UMP party with the granting of the cleaning contracts at the Airport to Mr Chani’s company FX & BM. There can be no other explanation for the illegal and unethical conduct that has cost the country a lot of money.

7	FINDINGS OF WRONG CONDUCT & DEFECTIVE ADMINISTRATION PRACTICES

A)	CONTRACT FOR THE CLEANING OF THE AIRPORT TERMINALS PRIOR TO THE 1993 SOUTH PACIFIC MINI GAMES.

7.1	FINDING NO. 1

THE COUNCIL OF MINISTERS IN 1993 BREACHED REGULATION 361(3) OF THE FINANCIAL REGULATIONS BY AWARDING A CONTRACT IN EXCESS OF VT. 1.000.000 WITHOUT FOLLOWING THE REQUIRED TENDERING PROCEDURES.

The awarding of the contract to FX and BM by the Government for the initial cleaning of the terminals in preparation for the South Pacific Mini Games in 1993 for VT. 4.5 million did not follow the Government Tender Procedures rules as set out in Chapter 22 of the Financial Regulations. Regulation 361(3) of this Chapter states that:

Where the cost of a specific work or service exceeds one (1) million vatu, at least three (3) written tenders must be obtained. These tenders must be submitted to the Central Tender Board for its evaluation and for the awarding of the contract.

The Council of Ministers are subject to the Laws of the Republic of Vanuatu as passed by Parliament. However, in this case they have shown themselves to be either grossly ignorant or contemptuous of the requirements of the Finance Act and the Finance Regulations.

7.2	FINDING NO. 2

THE MINISTER OF TRANSPORT (MR AMOS BANGABITI) HAS ALSO BREACHED REGULATION 361(3) OF THE FINANCIAL REGULATIONS.

The Minister tabled in the Council of Ministers, the contract for cleaning the airport terminals for the Mini Games when he was fully aware that written tenders had never been obtained and that a tender board was never appointed to evaluate and award the contract.

Despite being aware of these breaches of the Financial Regulations the Minister strongly recommended that the Council of Ministers approve the contract for FX and BM Cleaning Services.

B)	CONTRACT FOR THE LONG TERM CLEANING OF THE AIRPORT TERMINALS.

7.3	FINDING NO. 3

THE MINISTER OF TRANSPORT, MR AMOS BANGABITI, WAS RESPONSIBLE FOR SIGNING, ON BEHALF OF THE GOVERNMENT OF VANUATU, AN ILLEGAL CONTRACT FOR THE CLEANING OF THE AIRPORT TERMINALS.

The contract was signed by Mr Bangabiti in full knowledge that the following Finance Regulations were breached:

•	No tender board was set up as required by Regulations 361(3) and 365.

•	The Tender Notice that was published in Vanuatu Weekly, No. 468 of 20.11.93, breached the requirements of Regulation 363 (1) and (3) in that it only allowed eight (8) days for tenders to be submitted.

•	The contract was never approved by the Attorney General as required by Regulation 367(2).

•	The contract was never approved by the Council of Ministers as required by Regulation 368(2).

The signing of this contract by the Minister represents a clear case of maladministration at the highest level, particularly given the significant acknowledged breaches of the above finance regulations.

I am unable to determine any benefits to Vanuatu that may have motivated the Minister to sign the contract, therefore I am forced to consider the possibility that the Minister was either motivated by personal gain or he was unduly influenced by the political donations made by Mr Chani.

There is no doubt that the UMP received substantial benefits from its association with Mr Chani however the People of Vanuatu represented by their Government appear to have borne the ultimate cost of this association through the excessive cost of the cleaning contract.

7.4	FINDING NO. 4

THE SECOND SECRETARY OF THE MINISTRY OF TRANSPORT, MR IRENE BONGNAIM, HAS DELIBERATELY BREACHED REGULATION 363(1) OF THE FINANCIAL REGULATIONS.

This regulation requires at least two weeks notice of the closing date of tenders.

It is clear that the non compliance with this regulation was a direct result of the hand written instruction given to the Director of Civil Aviation (Mr J. Kasten) by the Second Secretary in the Ministry of Transport, Public Works and Civil Aviation (Mr Irene Bongnaim) on 05.11.93. It states:

"Mr Joseph Kasten, plis chenisim olgeta date mo kivim wan week nomo blong tender bifo closing date mo opening blong ol application long Ministry blong Transport wetem Honourable Minister".

According to the reply received from Mr Bongnaim, he issued this illegal order on the express instructions of Minister Bangabiti. I wish to state that this is not an acceptable reason for breaking the laws of Vanuatu. No Minister has the authority to instruct a government officer, either permanent public servant or political appointee, to perform an illegal act. If a government officer acts on such an instruction then they must accept personal responsibility for their actions.

7.5	FINDING NO. 5.

THE SECOND SECRETARY OF THE MINISTRY OF TRANSPORT, MR IRENE BONGNAIM, HAS BREACHED THE PROVISIONS OF SECTION 66 (1) AND (2) OF THE CONSTITUTION, (THE LEADERSHIP CODE) IN THAT HE HAS SOUGHT TO ACTIVELY INTERFERE IN AN ADMINISTRATIVE DECISION TO BENEFIT A PRIVATE INDIVIDUAL FROM WHOM HE HAS RECEIVED POLITICAL DONATIONS.

In writing to the Minister of Finance regarding the list of donations made by Mr Chani to the UMP it is clear that Mr Bongnaim wanted to ensure that the illegal cleaning contract given to FX & BM was not terminated.

This is a clear breach of the Leadership Code particularly given that Mr Bongnaim was personally given VT. 200.000 by way of a political donation by Mr Chani.

Mr Bongnaim has therefore breached subsection (1) a), b), and c) and subsection (2)of the Leadership Code:

•	He has placed himself in a position of a conflict of interest;

•	He has demeaned his position;

•	He has allowed his integrity to be called into question;

•	He has used his office for personal gain.

In addition to his position as First Secretary of The Ministry of Transport, Mr Bongnaim was the UMP President of the Port Vila region. He therefore had a strong personal interest in the political donations made by Mr Chani to the UMP.

7.6	FINDING NO. 6.

THE MINISTER OF TRANSPORT, MR AMOS BANGABITI HAS BREACHED THE PROVISIONS OF THE LEADERSHIP CODE BY SIGNING A CONTRACT IN FAVOUR OF AN INDIVIDUAL FROM WHOM HE HAD RECEIVED POLITICAL DONATIONS.

On 31.12.93 the Minister, Mr Amos Bangabiti signed a five year cleaning agreement with the FX and BM.

In a list published by Mr Bongnaim he listed names of individuals working in the Government who received various amounts from Mr Chani by way of political donations. The total amount having being donated by Mr Chani to the UMP party came to VT. 1.283.000.

Amongst the names listed was the Minister of Transport, Public Works and Civil Aviation, Mr Amos Bangabiti who received VT. 100.000.

During an interview on 12.12.95 with the Ombudsman on the issue of this cleaning contract, Mr Amos Bangabiti advised that he had not received the above amount.

Following this interview Mr Amos Bangabiti called into the Office of the Ombudsman and spoke with the Senior Investigator and the Ombudsman’s Adviser on the matter. He confirmed that he did receive VT. 100.000 from Mr Chani according to his note book. He stated that the money was handed to the Ambae/Maewo UMP Campaigning Committee at a date which he could not remember.

The Minister explained that there was no appointment made at the time. He explained that it just happened that Mr Irene Bongnaim called into the Minister’s Office with Mr Chani and told the Minister that he wanted to introduce Mr Chani to him. At that time Mr Bongnaim said Mr Chani wished to assist the election campaign on Ambae/Maewo. Mr Chani then handed VT. 100.000 cash to him.

From the above events it is clear that the company was trying to secure the cleaning contract by dealing directly with the Minister of Transport and his Second Secretary. The acceptance by the Minister of the financial assistance offered by the Mr Chani appears to have had a direct influence on the Minister in respect of his future actions in dealing with the cleaning contract.

7.7	FINDING NO. 7.

THE MINISTER OF TRANSPORT, MR AMOS BANGABITI, WAS GUILTY OF GROSS MALADMINISTRATION BY SIGNING A FIVE YEAR CONTRACT WITH A PRIVATE COMPANY WHICH COMMITTED THE GOVERNMENT TO PAY IN EXCESS OF VT. 70.000.000 OVER THE LIFE OF THE CONTRACT. AT THE TIME OF SIGNING THE CONTRACT THE MINISTER WAS AWARE THAT THE EXISTING COST FOR THIS SERVICE WAS APPROXIMATELY VT. 2.700.000 A YEAR AND THAT THERE WAS INSUFFICIENT BUDGET FUNDS TO PAY THE HIGHER AMOUNT.

The Minister has failed to ensure that funds which he manages on behalf of the citizens of Vanuatu were spent wisely and in an economical manner. During the early stage of negotiations between the Director of Civil Aviation and FX and BM, the Director of Civil Aviation made it clear to the First Secretary in the Ministry that the annual contract quoted at the time of VT. 15.819.399 was nearly six times the amount the of VT2.7 Million that the Department of Civil Aviation was incurring per annum to clean the terminals.

In an interview with the former First Secretary in that Ministry on 28.12.95, Mr William Tari stated that he had verbally advised his Minister in relation to the cost involved, however he added that this proved very difficult because the Minister had some direct link with the Managing Director of the company. Not long after this, Mr Tari was dismissed as First Secretary.

I find it impossible to accept that there can be any rational explanation for the Minister approving a contract that would result in a loss of approximately VT. 56.500.000 for the Government of Vanuatu. Once again I am forced by the complete lack of logic in the Ministers actions to conclude that personal gain (either financial or political) being a strong motive behind his actions.

7.8	FINDING NO. 8.

THE MINISTER OF TRANSPORT, MR AMOS BANGABITI, HAS BREACHED THE REQUIREMENTS OF FINANCIAL REGULATION 146 WHICH REQUIRES ALL GOVERNMENT OFFICERS TO ENSURE THAT EXPENDITURE IS PROVIDED IN THE MOST ECONOMIC WAY.

The preface of the Financial Regulations which was issued in July 1993 by the Minister of Finance states:

Financial Regulations are a code of instructions on accounting matters applicable to all officers, including permanent officers, temporary officers, advisers and political appointees working for the Vanuatu Government. They cover all monies, assets and liabilities of the Vanuatu Government and govern all monies raised and expended by the Government"

The responsibilities of all accounting officers in the Government are set out in Regulation 146 (1) of the Financial Regulations which state:

a) To exercise proper control over and maintain proper records of such expenditure; and

b) To ensure that any expenditure is essential to the public service and is being provided in the most economic, efficient and effective manner.

The Ministry of Transport, Public Works and Civil Aviation was in breach of the Financial Regulations in that the contract cost the public nearly five (5) times more than when the cleaning was under the direct control of the Civil Aviation Department.

The National Audit Office report on the cleaning contract made the point that the cost of VT. 13.332.800 was very excessive when compared to the cost that the Department of Civil Aviation was incurring in maintaining both terminals.

7.9	FINDING NO. 9.

THE MINISTER OF TRANSPORT, MR AMOS BANGABITI, WAS RESPONSIBLE FOR AN ACT OF GROSS MALADMINISTRATION IN THAT HE RECOMMENDED THAT THE COUNCIL OF MINISTERS ACCEPT THE TENDER FROM FX & BM CLEANING SERVICES FOR VT. 13.332.800 WHEN A PROPERLY CONSTITUTED TENDER BOARD HAD RECOMMENDED THE ACCEPTANCE OF A DIFFERENT TENDER WITH AN ANNUAL COST OF VT. 5.700.000.

I can find no logical reason for the action of the Minister in rejecting the recommendations of the tender board. I am forced to conclude that Mr Chani was successful in his efforts to influence the tender process by means of political donations and pressure through personal contacts.

The fact that the Minister attempted to overturn the recommendation of a properly constituted tender Board is evidence that he might have been subject to corruption. Whether the Minister was motivated by financial gain or political gain, the fact remains that he clearly attempted to force the acceptance of a contract that placed the financial interests of a political supporter of the UMP above those of the Government of Vanuatu acting on behalf of the people of Vanuatu.

7.10	FINDING NO. 10.

FINDING OF MALADMINISTRATION BY THE PREVIOUS MINISTER OF TRANSPORT, MR A BANGABITI.

The Ministry failed to properly implement the Council of Ministers’ decision to award the cleaning contract to Air Vanuatu in that:

•	They failed to prepare a formal contract for signing that would have allowed Air Vanuatu to commence the cleaning.

•	No attempt was ever made to contact Air Vanuatu to discuss the terms of any contract.

•	No effort was made to determine the reason for the delay in Air Vanuatu commencing the cleaning contract.

•	The failure to properly deal with Air Vanuatu was in direct contrast to their excessive efforts in support of FX & BM.

7.11	FINDING NO. 11.

THE FORMER PRIME MINISTER, MAXIME CARLOT KORMAN, ACTED IMPROPERLY WHEN HE INSTRUCTED THE MINISTRY OF TRANSPORT TO BECOME INVOLVED IN THE TERMINATION OF THE PROPOSED CONTRACT FOR AIR VANUATU.

Responsibility for all matters relating to Civil Aviation passed to the control of the Minister of Civil Aviation during February 1996. It was improper for the Prime Minister to instruct another Minister to interfere in the affairs of Civil Aviation.

If Mr Korman considered that the Minister of Civil Aviation was incompetent or incapable of properly undertaking his duties then he had the power to change the Minister.

If there was any logic to the transfer of Civil Aviation Ministry out of Transport Cabinet in the first place, the Prime Minister should not arbitrarily allocate ministerial duties relating to Civil Aviation back to the Ministry of Transport.

It appears that the Minister of Civil Aviation was not a UMP Minister but a FMP (Friend Melanesian Party) which could explain why Minister Ravutia was kept out of this negotiation even though he was the Minister responsible for it. Minister Amos Andeng is a UMP member which would make the working relationship easier between the two Ministers belonging to the same party.

I have not found any reason for the improper handling of this contract by the Minister of Public Works except that it appears that the only party apart from Mr Chani to benefit from these numerous breaches of procedure and laws is the UMP Party and its members including the former Prime Minister, Mr Carlot Korman.

7.12	FINDING NO. 12.

THE FORMER PRIME MINISTER, M CARLOT KORMAN MISLED THE MINISTER OF CIVIL AVIATION IN HIS LETTER OF 9TH APRIL 1996 (SEE TEXT ON PAGE 14).

•	The Prime Minister states that the Minister of Transport revoked the original contract to FX and BM " for some unknown no reasons (sic)". As a member of the Council of Ministers that discussed fully the termination of the original contract and the approval of a new contract to Air Vanuatu Mr Korman must have been aware that the original contract was properly terminated when three months’ notice was given to FX and BM under clause 5 of that contract. This also followed a report from the Audit Office outlining the illegal tender procedure applied to this cleaning contract. The validity of this contract termination was confirmed to the Council of Ministers by the Attorney General.

•	Mr Korman’s statement that the "complete failure of Air Vanuatu to commence the cleaning of the airport terminals" was "for unknown reasons...." is completely untrue. Air Vanuatu clearly stated their problems with the proposed term of a three month contract. The only unknown reasons are those underlying the former Prime Minister’s insistence on awarding the contract to FX and BM Cleaning Services.

•	Despite the Council of Ministers decision on 6th November 1995 (not mid 1995 as stated by the Prime Minister) to award the cleaning contract to Air Vanuatu, no contract was ever prepared by the Attorney General. Without a contract it was not possible for Air Vanuatu to commence cleaning.

•	As the responsibility for the airports lies with the Ministry of Civil Aviation, the Mr Korman’s action in instructing the Minister of Transport to prepare a submission for the Council of Ministers is unusual to say the least.

7.13	FINDING NO. 13.

THE MINISTER OF CIVIL AVIATION, MR ALBERT RAVUTIA, FAILED TO PROPERLY PERFORM HIS DUTIES AS A MINISTER.

By blindly accepting the instruction by the former Prime Minister to cancel the cleaning contract that was awarded to Air Vanuatu the Minister has not only failed in his duty to protect the interests of the departments that fall under his area of ministerial responsibility. He also failed to protect the interests of the people of Vanuatu.

The Minister failed to independently review the contract with FX & BM. as a result the government has contracted to pay a private company an excessive annual amount to provide a service no better than that provided by the Department of Civil Aviation at a third of the cost.

7.14	FINDING NO. 14.

THE CURRENT MINISTER OF TRANSPORT, MR AMOS ANDENG, FAILED TO PROPERLY CARRY OUT HIS DUTIES AS MINISTER.

The Minister of Transport has ministerial responsibility for Air Vanuatu not Civil Aviation.

It is therefore incredible to find that he has deliberately interfered in a matter concerning Civil Aviation. His interference had the direct result of adversely affecting the commercial interests of Air Vanuatu, a company which the Minister has a responsibility to support and assist.

If the Minister deliberately chose not to support Air Vanuatu, he should have treated it on the same basis as Mr Chani’s company. Instead Air Vanuatu was discriminated against by its own Minister.

I can only conclude that the Minister has corruptly placed the interest of a private individual (who was a strong UMP financial supporter) ahead of the interests of both a 100% government owned company and ultimately the people of Vanuatu who he is elected to represent.

8	REQUIRED ACTION

Consideration of Legal Action to recover losses.

8.1	I recommend that the Attorney General review the relevant laws of Vanuatu to determine if legal action be commenced by the Government of Vanuatu to recover the losses of VT6.268.000 per year incurred as a direct result of the negligent, unlawful and unethical actions of the following former Ministers;

•	Maxime Carlot Korman

•	Amos Andeng

•	Albert Ravutia

Urgent need for Leadership Code

8.2	The blatant and deliberate breaches by many of the Leaders and Political Appointees involved in this inquiry has once again demonstrated the need for the urgent introduction of the full Leadership Code.

8.3	Until such a code is in place, it seems that our leaders will continue to breach and ignore the laws of Vanuatu with impunity.

Disclosure of Political Donations

8.4	There is need for disclosure of all political donations received by all political parties. The issue of the airport cleaning contract appears to be a blatant case of rewarding a company for past political donations.

8.5	It is entirely probable that FX & BM Airport cleaning contact is not an isolated deal. However, without full disclosure of political donations the public will never be aware of the corruption that exists in the granting of Government contracts.

8.6	Accordingly, I recommend that the Attorney General’s Office draft legislation regulating political donations. Such law must 

(a) Place a limit on the amount that can be donated; and

(b) Require full and open disclosure by political parties and politicians of who has donated and how much.

PASA TOSUSU (DIRECTOR OF INVESTIGATIONS)
(For and on behalf of, under delegated authority)

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

-------------------------------------

APPENDIX A

REPLY BY MR IRENE BONGNAIM

Mr I. Bongnaim
PORT VILA
Vanuatu

To: Ombudsman Office
P.O. Box 126
PORT VILA
Vanuatu

Folem Preliminary Report concernem cleaning contract blong Bauerfield Terminals.

Mi wandem mekem sam comments folem ol section ia:

-	Section 7.4:	Finding No. 4
-	Section 7.5:	Finding No. 5
-	Section 7.6:	Finding No. 6 paragraph No. 7

Section 1.4 Finding No. 4

Long 05.11.93 mi stap redi blong livim office blong tekem annual leave blong mi taem Hon. Minister blong Transport Mr Amos Bangabiti I kolem long office blong hem mo instractem mi blong advaesem duiktaem Director blong Civil Aviation bifo mi ko long leave se tender blong cleaning blong Bauerfield Terminals I mas tekem wan week nomo mo opening blong ol application I mas tekem place long office blong hem wetem hem.

Therefore mi bin mekem wan smol note (hand writing) kuiktaem I ko long Directa blong Civil Aviation. Mi nomo save wanem I hapen afta from mi bin ko long leave wetem famili blong mi long aelan.

Mi bin save afta nomo se Minister I saenem finis cleaning contract blong bauerfield Terminals wetem FX &BM cleaning service. And mi bin save afta tu se Minister I bin dismissim First Secretary Mr William Tari from emi bin opposem saening blong contract ia.

Section 7.5 Finding No. 5

Olketa donations emi bin ko towords ol politikol activity blong UMP pati and Regional Executiv blong pati long Port Vila I bin registrem ol donations ia. Therefore mi bin listem ol amount long wan leta we mi bin sendem long Hon. Minister blong Finances mo semtaem informem hem olsem Hon. MP blong Port Vila mo National Tresora blong UMP Pati.

Mi neva kat private Individual benefit long ol donations ia or personnal gain olsem we ripot emi akiusim long hem.

Olketa donations ia ol difren UMP leders mo ol Regional Executiv blong pati oli bin resivim blong ranem ol campaign blong ol lokol Gavman election mo other pati activity.

Section 7.6 Finding No. 6 (paragraph No. 7)

Minister Amos Bangabiti I bin haskem long mi blong faenem sam sponsa blong sponsarem campaingn blong lokol gavman election long constituency blong hem (Ambae/Maewo). First mo third secretary tufala I bin stap blong wetnisim taem em haskem long mi.

Mi bin toktok wetem Mr François CHANI concernem riquest blong Minister and emi bin talem long mi se emi wandem luk Minister hemself.

Mi bin introduisum hem long Minister mo annoncem se Mr CHANI I wandem sponsorem compaign blong Ambae/Maewo lokol Gavman Election. Afta we Mr Chani I kamaot long office blong Minister emi kam stret long office blong mi mo infomem mi se emi Kivim 100.000VT long Minister blong asistem campaigh blong Ambae/Maewo Election.

Thankiu tumas long attention blong yu.

Yours faithfully,

MR Iréné BONGNAIM

APPENDIX B

REPLY BY FORMER MINISTER AMOS BANGABITI

MOFAI/3/23/155/AB:mt/96

28th August 1996

Mrs. Marie Noelle F. PATTERSON
Ombudsman of the Republic of
Vanuatu

ANSWER TO ALLEGATION

The award contract of 4.500.000 Vatu to Mr Francois Chani was the Government decision, specially for the South Pacific Mini Games in Port Vila.

It was cleared that both Secretaries were behind this issues during period as Minister of Transport and Civil Aviation. They have involved in preparation of a contract.

I am not even part of negotiating team, all was handled by Secretaries and Mr Chani's private Lawyer.

I am not at all acknowledge the strategic of personal gain in relation to signing the contract. Honestly, swearing by God Almighty, I have no intention to benefit out from this contract.

A donation of 100.000 Vatu for political Campaign was arranged by Mr Bongnaim and Mr Chani and during the handing over of above amount, he said that this is free contribution towards party UMP.

Mr Bongnaim often pressurized the Minister over Mr Francois Chani's contract, one good example, change recommendation from Air Vanuatu to FX & BM Company which appears now for his beneficiary.

Beside pinpointing me as Maladminister, I have courage before consulting the Finance Minister, refuse to take any further advise from my Secretary, terminate the contract by giving (3) three months notice as stated in clause 5 of the Agreement.

Bear in mind that after the termination notice published the Second Secretary walked into my Office very angry and argued over what was done.

He tried every best and even advised Mr Francois Chani to sue the Minister before the Court.

Honestly speaking, Mr. I. Bongnaim, the key person behind this issues by way of directing the Minister advise given was to himself legally compliance with Regulations.

Mr Francois Chani lived in Australia with his family since 1980's. Mr Francois Chani came to Vanuatu during Change of new Government from 1991 General Election. Mr Francois Chani, a close friend to Mr I. Bongnaim for some years. Mr Francois Chani is 100% new to Hon Bangabiti and Hon Bangabiti has no direct link with him as quoted by William Tari.

Lastly, I have not signed the contract document for personal gain or to be corrupted. I swear by God Almighty that this is not my intention. Because of misleading procedures directed by political Secretaries, signing was made.

Personally, I do thank your High Office in providing this findings which is great understanding for procedures to be respected and now adjust myself for the future challenges to come in such a way like this.

Hon. Amos BANGABITI
Minister of Foreign Affairs & Immigration

APPENDIX C

REPLY BY MR FRANÇOIS CHANI

Mr Chani François-Xavier 
B.P. 1402
PORT VILA

Le 08.09.96

To: Office of the Ombudsman
PORT VILA
Vanuatu

Dear Ombudsman,

I would like to answer and correct allegations made against me. Reading the Report. The language used is bias and suggestive. I am happy for the people of Vanuatu to know the truth but not speculations or unjustified comments.

As a Ni-Vanuatu I would like the report to be publish in Bislama for the people of Vanuatu to read, encourages by your office.

Point 6.1	Mr Mel Dunn was presented with the project then he requested me for a quotation to be submitted to him. Authorisation has been given to me to inspect the terminals.

Point 6.2	Initially I approach the Ministry of Civil Aviation and talk about the project. They advised me to talk to the Director of Civil Aviation. You are implying that I approach Mr Mel Dunn then presented him with a quotation that he did not know about.

Point 6.10.1	Please explains your speculations that Mr Bongnaim’s involvement is dominated by the donation?

Firstly	Mr Bongnaim works in the Ministry that look after the Civil Aviation. I approach the 2nd Secretary and it could be of been anyone in that position.

Secondly	Our association does go back to the Lycée. And so what! As Vila is such a small place, you will find that all indigenous Ni-Vanuatu in the working community know each other from school.

Thirdly	My association with the party stems back to the rebellion day in Santo as a student. It appears that being a new comer to my country you do not seem to understand the fight for our independence has associated Ni-Vanuatu with political affiliation in some shape or form.

Fourthly	Despite all of your implication, my proposal for the Cleaning for the airport was welcome by Ministry and Department of Civil Aviation.

Fifthly	As you seem unaware of some of the Government ideology, the Government is trying to encourage Ni-Vanuatu to participate in the business sector. The fact is that the Government has call on Ni-Vanuatu that if there is a project that they interested in, they could approach the Government.

Point 6.3	All political parties REQUEST donations from people, sometime in person, sometime by letter. On the occasion of my donation to Pentecost Provincial election, a donation was REQUESTED of my and given to Mr Norbert Sumsum. Mr Charlot Salwai was in no way present when the donation was presented.

Your implication that my donations were presented without request is insulting and extremely misleading.

6.23.1	As your office has stated to me on Friday the 5th at 11.00 am, your opinion should be based on fact. I find those section to be fact free. Please explain "free donation" as stated by you. This comment is slanderous and false. How do you know whether my donation were requested or not requested from me?

6.41	In your haste to find me guilty of wrong doing, you seem to have over looked contradiction from witnesses in your own report. e.g. in the page 6.41 you stated that upon interviewing the former 1st Secretary of Civil Aviation, Mr W. Tari, he stated that his Ministry has no intention at all to privatise the cleaning of the Airport Terminals, however, in Point 6.6 he states that his "ministry was taking step to privatised the cleaning in the Airport. Whether you witnesses are lying or you are misconstruing their answers remains unclear. The underlying however I must question the reasoning and underlying ill feeling towards me in the report.

6.42.2	Wrong again! A quotation was given upon request.

"Plan to take over the cleaning services". Strong terminology and very suggestive. Your negative toward me is shining through again and again.

6.42.7	It is evident in this point that whether by choice or not, you have eliminated most of the story as to how the contract was awarded. In the interest of knowledge let me factualised for you.

1.	Request of quotation;

2.	Meeting which I was advise to lower my price;

3.	Presentation for 35% reduction on the price;

4.	Rejection of the second quotation;

5.	I was advised that the Government will put the tender out to the public for better price (as my quotation had now been rejected by the 1st Secretary of Civil Aviation, my correspondence with the ministry was finish);

6.	Tender was put in the paper;

7.	I tended my new quotation of 13.332.780 VT.;

8.	The contract was awarded to me;

9.	A. G. did draw up the contract;

10.	Signature of that contract

Due to the tone and obvious bias of the preliminary report, I am very dubious of your final report.

The final report will be scrutinized by my Lawyer and any opinion or statement made against me not based on fact will be considered as slander and legal action shall be taken against you.

As one of the party, I would like the final report to be in bislama the national indigenous language.

Yours faithfully,

CHANI FRANÇOIS-XAVIER

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