REPUBLIC OF VANUATU

OFFICE OF THE OMBUDSMAN

PUBLIC REPORT

ON THE

APPOINTMENT OF THE DEPUTY GENERAL MANAGER

OF THE

VANUATU NATIONAL PROVIDENT FUND

15th November 1996

TABLE OF CONTENTS

PREAMBLE

1.	INTRODUCTION

2.	BACKGROUND

3.	JURISDICTION

4.	SCOPE OF INVESTIGATION

5.	METHOD OF INVESTIGATION

6.	FINDINGS OF FACTS

7.	FINDING OF WRONG CONDUCTS AND DEFECTIVE ADMINISTRATION PRACTICES

8.	RECOMMENDATIONS

9.	CONCLUSION

Appendix "A"
Letter of recommendation of I. Joy by the Director of Cabinet - PM’s Office

Appendix "B"
Letter of recommendation of S. Toara by Minister Willie Jimmy

Appendix "C"
Letter of recommendation of T.B. Faratia by Minister Willie Jimmy

Appendix "D"
Reply comments by the Board Members of VNPF.

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PREAMBLE

". . . For grievous wolves shall enter among you, not sparing the flock; also of your selves shall men arise, speaking perverse things to draw away disciples after them . . ."
Acts 20 v 29 & 30.

This report presents to the people of Vanuatu yet another example of dishonesty and misuse of power among those who have presented themselves as leaders and examples.

Public money, levied from working members of the public as an insurance against the hardships of old age, is misdirected into the pockets of those who all too easily abandon principle and any sense of responsibility to those whom they should be protecting.

It should also serve as another warning to the people of Vanuatu to think very seriously of the destructive effects of the tradition of "wantok" in the public services, where promotions are offered and rewards given to those with no qualifications for their jobs other than some kind of "connection" with the leaders. This kind of favouritism - known throughout the world as "cronyism" - usually takes the form of offering posts and money to relatives, or friends or political "cronies", and thereby ensuring three tragic results. 

Firstly, inexperienced and incompetent and untrained people are placed in positions of authority, with no knowledge of how they should operate. 

Secondly, younger people who have undergone the discipline and sacrifice of prolonged education and training are frustrated by the lack of opportunities open to them on the grounds of their ability, and become discouraged. 

Thirdly, Vanuatu’s hopes of effective development as a modern country with a sound future are diminished as its resources are wasted in extravagant and unwise decisions. 

It is hoped that these public reports, arising from the complaints of the public, will increasingly serve to made the public aware of what the demands of "democracy" are for those who wish to have truly effective government representatives, rather than a money-making scheme for people who are ambitious to become rich and powerful at the expense of their fellow citizens. 

It is increasingly obvious that serious consideration must be given to the establishment of a more permanent Civil Service based on ability and experience, rather than a constant "hiring and firing" of favourites every time political power changes hands. 

1	INTRODUCTION

1.1	This investigation concerns the wrongful appointment of Mr Thomas Brothy Faratia as the Deputy General Manager of the Vanuatu National Provident Fund (VNPF), the Retirement Fund for all the workers of Vanuatu.

1.2	In December 1995 the VNPF advertised the position of Deputy General Manager which had been vacant since 1994.

1.3	The Members of the Board decided to ignore the applicants they considered to be the most qualified and instead chose to appoint a former politician recommended by the then Minister of Finance, Mr Willie Jimmy, because they felt they could not resist the political pressure and were in fact afraid of the "big man".

1.4	The investigation unveiled that Mr Faratia’s experience and qualifications failed to fall within the requirements of the advertised profile of the position. Mr Faratia was the former foreman of the Public Works Department and a former member of Parliament, and a former Minister.

The position required a person with tertiary qualification specialising in finance, commerce or business administration and with more than 3 years experience in a commercial environment with knowledge of investment appraisals.

1.5	My investigation showed that there had been many breaches of procedures, of the Law and the Constitution including breaches of the Leadership Code by the members of the Board of the VNPF and by the then Minister of Finance, Mr Willie Jimmy:

1.5.1	It appeared from my investigation that many leaders in this country have great difficulty to distinguish between what are their political roles, their legal roles and administrative roles.

1.5.2	One of the most serious findings concerned the breach of their duties as trustees by the members of the board as they succumbed to political pressure and chose the wrong applicant admitting in their minutes that the best applicants were 2 other qualified persons.

1.5.3	The members decided to appoint the candidate proposed by the Minister even though:

•		his qualifications were not as requested in the advertisement 

•		there was no quorum during the meeting which appointed Mr Faratia

•		the consultation with the Minister was not required by law

•		Mr Faratia’s application arrived later than the closure date.

The members who accepted to follow the Willie Jimmy’s recommendation to appoint Thomas Faratia acted against the best interests of the people of Vanuatu, the contributors to the fund.

1.6	One more of the findings of this enquiry concerns the appointment of the members of the Board and confirms a practice that has come out in other enquiries:

Persons nominated by a Minister to be on the Board of Directors are appointed on political bases rather than on merit My investigations reveal that more and more decisions are based on political influence rather than on independent decisions. This leads to bad decisions based on nothing more than political reference for appointments of unqualified, inexperienced and incompetent persons to high positions in the Government and its statutory bodies. Such appointments lead to maladministration and ignorance of the established procedures and rules of law. 

The overall result is that Vanuatu as a whole is suffering from maladministration for the obvious reason that the members of the Board of Directors are appointed on political bases so that they can be easily politically persuaded and will bow down to the desires of politicians rather than making a thorough analysis of ideas and projects which are put before them for their decision.

In this case most of the members on the Board were UMP members and were following instructions from their superior in the party.

The members present during the meeting of the appointment were:

Petre Malsungai (Chairman of the UMP)

André Manamuri (UMP representative Mataso Community in Vila)

Charlot Salwai (UMP/General Secretary of the Council of Ministers)

Alexander Palavi (no affiliation)

1.7	A preliminary report was published and circulated on 30.09.96 as a confidential report to the persons who may be affected by this my final report. Annexure D to this report is collective response from the VNPF Board members (except Mr Malsungai who did not answer).

Minister Willie Jimmy did not answer any of the allegations.

1.8	We understand that on 11.11.96 Mr Faratia received his letter of dismissal from the new chairman of the VNPF Board, Mr Dinh Van Tan on the basis that his appointment was irregular as it was a political appointment. The letter of dismissal stated that

"Your recruitment into the Fund has been solely on political grounds and it cannot be justified".

2	BACKGROUND

2.1	The Ombudsman on her own initiative investigated the manner in which the appointment of the Deputy General Manager of VNPF was conducted as it appeared the appointment was improperly made.

2.2	In 1994, the position of the Deputy General Manager was left vacant. Mr Josias Moli who was in that position had been appointed the General Manager. In late 1995 the vacancy was advertised in the local papers. Eleven applications were received for this position.

2.3	On 02/02/96 the Board of Directors met to consider these applications. Apart from applications from individuals interested in the position, the Board also received 3 letters, one from Mr Korman, the former Prime Minister and 2 from Mr Willie Jimmy, former Minister of Finance. These letters Annexures A, B, and C were letters from politicians recommending to the Board to appoint certain persons who had applied including the present Deputy General Manager.

2.4	During the course of the investigation by the Ombudsman, the Ombudsman discovered a number of irregularities namely breaches of the VNPF Act, breach of the fiduciary duty of trustees, inappropriate political influence on the Board and abuse of power by leaders, and breaches of the Constitution including breaches of the Leadership Code by the Leaders involved.

Findings of these irregularities are included in this report.

3	JURISDICTION

3.1	This inquiry was conducted in accordance with art 62 of the Constitution and s14 of the Ombudsman Act No. 14 of 1995. The Ombudsman has the authority to enquire into matters either on her 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.

3.2	The Ombudsman can also start an inquiry at the request of a member of Parliament, member of the Council of Chiefs or member of a Local Government Council.

3.3	This enquiry was to investigate the appointment of Deputy General Manager of VNPF and was on the Ombudsman’s own initiative.

4	SCOPE OF INVESTIGATION

4.1	The main objective of the inquiry was to establish:

(a)	if the proper procedures were followed when appointing the Deputy General Manager of VNPF;

(b)	if there was political interference on that appointment;

(c)	if that appointment was on merit;

(d)	if there was abuse of power by the Minister of Finance;

(e)	if the VNPF Act was breached;

(f)	whether members of the Board fulfilled their duties of trustees of the fund;

(g)	the validity of the appointment of the Deputy General Manager.

5	METHOD OF INVESTIGATION

5.1	Document was obtained from the relevant Departments, the Ministries responsible, the VNPF Head Office and from other different sources according to the powers given to the Ombudsman under art 62(3) of the Constitution and s17 of the Ombudsman Act. These provisions entitle the Ombudsman to obtain evidence and information by informal request from anyone who holds any relevant information. The methods used and applied to those responsible were compared to the applicable procedures and rules set by the Government.

6	FINDINGS OF FACTS

6.1	In this section the Ombudsman states her findings of facts on which she based her findings of wrong conduct. The issues surrounding the appointment of the Deputy General Manager will be highlighted followed by the findings of facts to support the individual issues.

6.1.1	In 1986, the Government set up the VNPF which came into operation in January 1987. It is a statutory body headed by a General Manager who is appointed by the Minister responsible for Finance. Other officers of the Board are appointed by the Board of Directors, managing body of VNPF.

6.1.2	In 1994 Mr Josias Moli who was the Deputy General Manager was appointed the General Manager leaving his position vacant. After the vacancy was advertised in the local papers eleven applications were received. The Board then sat in early February 1996 to appoint from all the applicants the Deputy General Manager.

6.2	VACANCY AND ADVERTISEMENT

6.2.1	The position had been vacant in 1994. There was need for the vacancy to be filled and advertisement for the post was published in the local papers.

The position required a person who needed:

•	minimum supervision, 

•	must be Ni-Vanuatu 

•	with tertiary qualification specialised in finance, commerce or business administration 

•	and must have had more than 3 years experience in a commercial environment with a knowledge of investment appraisals.

The closing date of applications was 24/12/95.

6.2.2	A total of eleven applications were received. However only nine applications were receipted by 24/12/95. Two others were dated beyond the closing date. They were from: Andrew Joy whose letter was dated 08/01/96, and Thomas Brothy Faratia whose letter was dated 29/01/96.

6.2.3	The Board of Directors of VNPF ignored the date chosen as closing date and accepted to consider these two applications. The acceptance of these applications was not even put to vote.

6.2.4	The Chairman’s statement in the minutes of 02/02/96 that the "has to consult the Minister prior to any appointment letter" was erroneous. According to the V.N.P.F. Act (section 9), it is the Board’s duty as Director and Trustee to proceed with the appointment of staff without the consultation of the Minister.

6.3	POLITICAL INTERFERENCE AND INFLUENCE

6.3.1	The Board of Directors of VNPF is an independent body. The Board which considered these applications for the vacancy is supposed to be an independent body making decisions without influence or interference. However this was not the case in this appointment.

6.3.2	It is in fact the duty of the Board to make their choice based on their agreed estimate of the qualities of the candidates. Otherwise there would be no need for the Board to function at all, if it was simply the prerogative of the Minister to wield personal influence on the basis of other considerations

6.3.3	The two best candidates for the position who corresponded to the requirements as outlined in the advertisement were Mrs Ietonga Aiong and Mr Hannington Alatoa.

6.3.4	It appeared from reading the documents from the Board that the decision the members reached in the first instance in favour of either of the two candidates, Mrs Aiong or Mr Alatoa, was based on fair assessment of the candidates ’actual employment background and not on political considerations. That decision appeared consistent with the standards of wisdom and integrity expected and required of those who hold senior positions as Trustees of the assets of the public of Vanuatu.

6.3.5	It would appear that they were correct in assessing that Mr Alatoa was the most obvious choice among the applicants and his appointment would have avoided the charge of political favouritism which is being raised. 

6.3.6	But due to the political interference of the Minister of Finance, Mr Willie Jimmy on the Board, the Board decided not to follow their original choice but to appoint Mr Faratia, a politically nominated person.

6.3.7	The interference came by way of a letter written by former Minister of Finance, Mr Willie Jimmy, to the Chairman of the Board recommending Mr Faratia to be appointed. Annexure C of this report is that letter of recommendation.

6.3.8	In this case, the criteria described by the Minister in alleging Mr Faratia’s suitability are not those listed in the notice of applications sought, which should have disqualified him from the very beginning. 

6.3.9	While the Minister may have felt that it was "courteous to think about former honourable national leaders" after they lose their political positions, that sentiment is not likely to prove the best guideline for the abilities and experience necessary for the Deputy General Manager’s responsibilities in a large financial institution, requiring clear professional understanding of financial processes. 

6.3.10	Furthermore Mr Faratia was not re-elected by his constituents because they did not want him to represent them as Member of Parliament and as Minister. Our recent report on the investment in internet technology shows clearly that that type of assessment is lacking in the VNPF.

6.3.11	It is therefore difficult to see what asset this person was for the Fund, especially in an institution where high financial skills are so badly needed to assess the management of the retirement monies of the people. The VNPF should not have been considered as a retirement place for former politicians.

6.4	ABUSE OF POWER BY THE MINISTER OF FINANCE

6.4.1	The law namely the VNPF Act specially outlines what are the powers of the Minister of Finance in relation to VNPF. One of the powers is for the Minister to appoint the General Manager of the Fund.

6.4.2	In this particular case Mr Willie Jimmy misused his powers by recommending to the Board to appoint Mr Faratia. His letter to the Board was written and receipted even before Mr Faratia submitted his application.

6.5	EXPERIENCE AND QUALIFICATIONS OF MR FARATIA FAILED TO FALL WITHIN THE QUALIFICATION REQUIREMENTS PRESCRIBED IN THE VACANCY ADVERTISEMENT

6.5.1	Mr Thomas Brothy Faratia in his application stated his 6 years experience in the field of administration and management as foreman of the Public Works and later as member of Parliament and Minister of Agriculture, Livestock, Forestry and Fisheries, should qualify him for the post of Deputy General Manager.

6.5.2	Qualification requirement as appeared in the advertisement needed the following qualities:

(a)	needed minimum supervision;

(b)	Ni-Vanuatu;

(c)	must have had tertiary qualification specialised in financing, commerce and business administration;

(d)	must have experience in commercial environment for more than 3 years;

(e)	must have knowledge in investment appraisals.

6.5.3	The letter of recommendation by Mr Willie Jimmy gave the following reasons for his recommendation for Mr Faratia:

(a)	courteous to think about some former honourable national leaders who lost their position during last November election;

(b)	they are competent with experience they had in running of the ministry;

(c)	They represent some assets that can be useful for other public institutions.

6.5.4	In this case, the criteria described by the Minister in alleging Mr Faratia’s suitability are not those listed in the notice of applications sought, which should have disqualified him from the very beginning.

6.5.5	Since his appointment it appears that when the Acting General Manager is away, Mr Faratia is not fulfilling his duties as deputy but instead the Accountant is chosen.

6.5.6	Shortly after being appointed, disciplinary problems started with Mr Faratia because he apparently abused his position by being late and misusing the VNPF vehicle. A letter was written to him on 03/05/96 by the Chairman of the Board giving him an official warning asking him to respect the Staff Manual including attendance, punctuality and misuse of vehicles outside working hours. The new Minister of Finance, Mr Barak Sope, even had to seize his vehicle to stop the abuse.

6.6	MANNER OF APPOINTMENT OF DEPUTY GENERAL MANAGER AS ONE OF THE OFFICERS OF VNPF

6.6.1	Members of the Board of Directors who made the appointment were:

(a)	Mr Petre Malsungai;

(b)	Mr Andre Manamuri;

(c)	Mr Charlot Salwai; and

(d)	Mr Alexander Palavi.

6.6.2	The Deputy General Manager is an officer of the Fund. Being an officer of the Fund he was supposed to be appointed according to section 9 of the Act. The main element of this section is that the Board appoints officers independently without influence or interference from any other person, not even the Minister of Finance or any other political person.

6.6.3	The Board in appointing Mr Faratia ignored its independent status by allowing itself to be influenced by the Minister of Finance. The Board members appointed without discussion Mr Faratia because he was recommended by the Minister, ignoring the best candidates as acknowledged by themselves.

6.6.4	The Board had improperly appointed the Deputy General Manager following the procedure prescribed under section 8 of the Act which only applies to the appointment of General Manager.

6.6.5	Only for the appointment of General Manager should the Board consult with the Minister of Finance who officially appoints the General Manager. All other officers are appointed by the Board.

6.7	MINUTES OF THE BOARD APPOINTING THE DEPUTY GENERAL MANAGER

"VANUATU NATIONAL PROVIDENT FUND

BOARD MEETING

DATE:	2nd February 1996
VENUE: VNPF Board Room
TIME:	8.35 am - 9.55 am

DIRECTORS PRESENT:

Messrs	Petre MALSUNGAI (Chairman)
Alexander PALAVI
Andre MANAMURI
Charlot SALWAI
Mrs Ietonga AIONG (Acting General Manager as well as secretary to the Board).

As there was a quorum present, the Chairman declared the meeting open with a prayer from Director Manamuri.

POSITION OF DEPUTY GENERAL MANAGER

Eleven applications were submitted to the Board. The Board after screening the applications, the two possible candidates were Mrs Ietonga Aiong and Mr Hannington Alatoa, however, the recommendation made by the Minister of Finance is Mr Thomas Faratia.

The National United Party has also proposed to nominate the Deputy General Manager, therefore, the Chairman has to consult the Minister of Finance prior to any appointment letter. If there is a negative response from the Minister of NUP’s proposal then Mr Faratia is to be appointed Deputy General Manager.

No further comments made, the Chairman thanked Mrs Ietonga Aiong, Acting General Manager during Mr Moli’s absence for making the meeting possible and having prepared all documents for the Board Meeting.

The Chairman declared the meeting closed with a prayer from Mr Manamuri at 9.55 am.

CERTIFY AS TRUE RECORD

________________________" 
CHAIRMAN.

6.8	QUORUM OF THE BOARD MEETINGS OF 02/02/96

6.8.1	The quorum of any meeting is the chairman or in his absence his deputy and four other members.

6.8.2	Board members present during the meeting on 02/02/96 were the Chairman and only 3 other members, not 4 as legally required.

6.8.3	The Acting General Manager was not present at the meeting because she was one of the applicants for the post. The only item for meeting was appointment of Deputy General Manager.

6.9	DUTIES OF TRUSTEES OF THE FUND

6.9.1	Board members as trustees of the fund have to execute independent judgement. Trustees cannot be influenced by politicians or anything else that has nothing to do with trustees responsibility of protecting the fund.

6.9.2	The Board members were not acting as independent trustees of the fund. The Board allowed itself to be influenced by a "big man" a Minister, Mr Willie Jimmy.

6.9.3	It is important that the trustees members of the board follow the Law in order to fulfil their duties of Director and Trustee. They are entirely responsible for their actions and not the Minister. If there are accusations of maladministration as there is in this case, the only people who will be held personally responsible are the members of the board and the Minister’s advice is likely to be considered as a recommendation and not as the final decision.

6.9.4	While it is possible to make a long list of the qualities which are likely to make a sound and reliable Trustee or Director. One is particularly vital - that is, there must be courageous independence of mind, willingness to act from conviction and principle in order to safeguard the matters committed to their trust.

7	FINDING OF WRONG CONDUCTS AND DEFECTIVE ADMINISTRATIVE PRACTICES

FINDING NO. 1

7.1	BREACH OF SECTION 9 OF THE VNPF ACT BY THE MEMBERS OF THE BOARD:

a)	Mr Petre Malsungai

b)	Mr André Manamuri

c)	Mr Charlot Salwai

d)	Mr Alexander Palavi

7.1.1	The members of the Board have not complied with Section 9 of the Act when appointing Mr Faratia as Deputy General Manager. They have the power to appoint any officer or employee as they think fit in accordance with section 9 of the Act

7.1.2	The Deputy General Manager, as an officer of the VNPF, is to be appointed under Section 9 of the VNPF Act and the law does not require the Board to consult with the Minister or anyone else.

7.1.3	 Instead the Board totally ignored this Section and improperly appointed the Deputy General Manager under Section 8 which covers only the appointment of General Manager by consulting the Minister of Finance.

7.1.4	They should have made the decision themselves independently from influence by the then Minister of Finance, Willie Jimmy but instead they acted in accordance with Mr Jimmy’s opinion as if it was an instruction against their own good sense and their own best decision. They knew that the person recommended by the Minister of Finance was not the best person for the job, however they appointed him.

7.2	Further the Board does not appear to have approved a resolution to appoint Thomas Faratia after the meeting of 02.02.96.

FINDING NO. 2

7.3	IMPROPER APPLICATION OF SECTION 8 OF VNPF ACT.

7.3.1	The Board had improperly appointed the Deputy General Manager by following the procedure prescribed under Section 8 which is only applicable for the appointment of General Manager, by requesting and following the advice of the Minister of Finance.

FINDING NO. 3

7.4	ABUSE OF POWERS OF THE MINISTER, WILLIE JIMMY SPECIFIED IN THE VNPF ACT.

7.4.1	The Minister acted beyond the powers given to him under the Act by asking the Board to officially arrange for the appointment of Mr Faratia whom he had recommended to the Board. His recommendation was made even before Mr Faratia submitted his application. This was the Minister’s second request. The first one was for Samson Toara, a former mechanic that he recommended to be appointed in the first place before he knew that Mr Faratia had not been re-elected as Member of Parliament. The Minister’s action contravenes Section 9 of the VNPF Act under which the Deputy General Manager is to be appointed i.e. appointment of other officers of the Fund.

The Minister meant to influence the decision of the Board.

FINDING NO. 4

7.5	POLITICAL INTERFERENCE AND INFLUENCE ON THE BOARD MEMBERS BY MINISTER WILLIE JIMMY.

7.5.1	It appears that members of the Board were in fear of the Minister when they made the decision to appoint Mr Faratia. The decision made by the Board was to please the Minister. Had no requests been given by the Minister each Board member in his own independent mind would have appointed another applicant different from the 2 applicants recommended by the Minister of Finance, and from the candidate recommended by the Prime Minister.

FINDING NO. 5

7.6	EXPERIENCE AND QUALITIES OF MR FARATIA FAILED TO FALL WITHIN THE QUALIFICATION REQUIREMENTS PRESCRIBED IN THE ADVERTISEMENT OF THE VACANCY.

7.6.1	The two candidates could have qualified for the job: Mr Hannington Alatoa and Mrs Ietonga Aiong. Petre Malsungai, André Manamuri and Alexander Palavi have mentioned these two names and the Board Minutes confirm this. Mr Malsungai and Mr Manamuri personally opted for Mrs Aiong but expressly stated that Mr Faratia was appointed because of the Minister’s recommendation to the Board. Mr Willie Jimmy by influencing the Board was in breach of Leadership Code. He was intending to recompense a former political colleague and ally.

FINDING NO. 6

7.7	IRREGULARITY OF APPLICATION FOLLOWING CONDITIONS SPECIFIED IN THE ADVERTISED VACANCY.

7.7.1	The closing date of the applications was 24.12.96. Nine applications were receipted by this date. This included Mr Samson Toara who instead of applying to the General Manager, had applied directly to the Minister. The Minister later wrote to the Board of Directors stating his approval of Samson Toara’s application and requested the Board to proceed with the necessary requirements to have him employed.

7.7.2	Thomas Brothy Faratia’s name was recommended even before he applied and his application was dated after the closing date, and therefore should not have been considered.

7.7.3	Another applicant was Andrew Joy whose application was dated 09.01.96. There was a recommendation from the Prime Minister. A letter from the First Secretary of the Prime Minister confirms this.

FINDING NO. 7

7.8	BREACH OF SECTION 7(4) OF THE VNPF ACT. THE BOARD MEETING WAS INVALID.

7.8.1	This Section talks about the quorum of any meeting of the VNPF board of Directors.

7.8.2	The quorum is the Chairman or in his absence the Deputy Chairman and four other members.

7.8.3	Members present during the meeting on 02.02.96 were the Chairman and 3 other members. The Acting General Manager was not present at the meeting because she was one of the applicants. The only item for discussion was the appointment of the Deputy General Manager. Accordingly the Board did not have a quorum to make this decision legally.

FINDING NO. 8

7.9	BREACH OF THEIR DUTIES BY THE BOARD OF TRUSTEES

7.9.1	Breach of their duties by the Board of the VNPF. The members who accepted to follow the Willie Jimmy’s recommendation, to appoint Thomas Faratia, acted against the best interests of the people of Vanuatu, contributors of the fund.

7.9.2	A Board member of a body corporate and a trustee has to execute independent judgement. Such a person cannot be influenced by politicians or anything else that has nothing to do with Board’s job of protecting the fund as trustees of the fund. A trustee is responsible for money that does not belong to him and he has a duty to act in the best way for the interest of the people they represent, and not to follow politicians’ instructions or advice.

7.9.3	In this case I wish to include and underline again the total contradictions of the Chairman, Petre Malsungai who on one hand admitted the necessity of independence of the Board Members and on the other hand did not enforce it and the danger represented by political influence on such an institution as the retirement funds of all the people of Vanuatu.

FINDING NO. 9

APPLICATIONS AFTER CLOSING DATE

7.10	The applications received after the closing date set by the Board of the VNPF should not have been considered at all i.e.: Thomas Faratia, and Andrew Joy.

FINDING NO. 10

7.11	BREACH OF THE LEADERSHIP CODE CHAPTER 10 OF THE CONSTITUTION BY MINISTER WILLIE JIMMY.

7.11.1	He breached section 66 (1) of the Constitution because "the fair exercise of his public or official duties was compromised" when he recommended a former political ally as he knew that Mr Faratia did not fulfil the requirements of the position. He was not acting for the best interest of the people of Vanuatu Minister Willie’s recommendation was only for the advantage of Mr Faratia, because being a former politician was not a requirement or a recommendation for the position.

7.11.2	He breached section 66.1 d as he "endangered and diminished respect for and confidence in the integrity of the Government of the Republic of Vanuatu".

7.11.3	The Government is responsible through his Minister of Finance for the management of the VNPF and by taking the wrong decision for the wrong reason, Minister Willie diminished the respect for the VNPF and for the Government represented by himself.

FINDING NO. 11 

7.12	BREACH OF THE LEADERSHIP CODE CHAPTER 10 OF THE CONSTITUTION BY THE MEMBERS OF THE BOARD.

7.12.1	According to article 14 of the Ombudsman Act, all members of the VNPF Board are Leaders.

7.12.2	As such they committed similar offences as the Minister by:

Compromising the fair exercise of their public or official duties as they knew that the decision they were taking was not fair and just.

Allowing their integrity to be called into question. To maintain their integrity, they should have maintained their original choice of the appropriate applicants as stated by themselves and not allowed themselves to be influenced by the Minister.

8	RECOMMENDATIONS

In view of the findings and the fact that response only from the Board Members were received by the Ombudsman, the following recommendations are made:

8.1	assessment of personal liability of the members of the fund

The Attorney General should look into the case in order to asses the liability of the members of the Board in a case where they admitted to take the wrong decision for the wrong reasons.

8.2	Enactment of a Trustee Act

This recommendation was already given in our public report on the investment of the VNPF Board in Cybank as the same problems arose.

There should be a legislation to provide for the proper administration of trust funds which specifies the duties of trustees towards trust funds including a prohibition of the payment of secret commissions and payments of any kind and stressing the requirements of independence of the members of the Board. This legislation should take into account the Melanesian culture in order to safeguard the interest of communities who entrust the management of their interest to Leaders and trustees.

In such legislation the personal liability of members or directors or individual should be expressly stated to warn people against the consequences of their actions and wrongdoings.

8.3	That Honourable Willie Jimmy be reprimanded by the Honourable Prime Minister and that he be advised to not again interfere in the proper processes of independent boards or instrumentalities.

8.4	That the former Members of the Board of VNPF, namely Petre Malsungai, André Manamuri, Charlot Salwai and Alexander Palavi not be again considered for appointment by the Government to any board or instrumentality as they have shown themselves to be open to political pressure and have failed to act independently when required to do so.

This should apply especially the Chairman Mr Petre Malsungai who carried more responsibility than the other members.

8.5	That the appointment of Mr. Faratia be declared a nullity due to the maladministration, the fact that the meeting that purported to appoint him was not properly held as it had no quorum, the fact that he applied after the closing date for applications and that he does not have the skills, training or expertise required for the position.

Apparently this was done on 11.11.96 by the new Chairman of the VNPF Board.

8.6	That the Position Be Re-Advertised and filled according to law.

8.7	In future jobs that are given in Government, Semi-Government and Statutory Boards and Corporations especially the VNPF only be given on merit and not on the wantok system. If jobs are given on the basis of merit then skilled people will increase the efficiency of all aspects of Vanuatu Government.

Funds contributed to the Fund come from people from all political persuasion and indeed from no political persuasion. These funds are not for political parties, the monies represent the retirement funds of the workers of Vanuatu.

8.8	That the Board of VNPF be restructured so as to provide for the appointment of qualified people who are:

(a)	independent;

(b)	knowledgeable in the area of finance;

(c)	qualified in business or have managerial experience; and

(d)	prepared to seek expert advice.

8.7	Appointments should be for a fixed term so as to reduce the likelihood of political pressure being placed upon members. Under no circumstances should any person working as a political appointee in a Ministry or elsewhere be appointed on the Board of the VNPF.

9	CONCLUSION

9.1	In accordance with art 63(1) of the Constitution and s22 of the Ombudsman Act No. 14 of 1995, the Ombudsman requests the Board of the members of the VNPF, the Minister of Finance, the Ministers and the Attorney General to put the above recommendations into effect.

9.2	The above persons are required to notify this Office within 21 days of the date of receipt of this report and recommendations outlining what steps have been taken.

Dated this 15th day of November 1996.

MARIE-NOËLLE FERRIEUX PATTERSON
OMBUDSMAN OF THE REPUBLIC OF VANUATU

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