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Purchase, Repair, Management, Operation and Sale of Prince II [1998] VUOM 23; 1998.23 (2 December 1998)

REPUBLIC OF VANUATU

OFFICE OF THE OMBUDSMAN

FINAL REPORT

ON THE

PURCHASE, REPAIR, MANAGEMENT,
OPERATION AND SALE OF PRINCE II

2 December 1998

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PREAMBLE

'Gather the people together men and women and children and the stranger that is within thy gates, that they may hear and that they may learn, and fear the Lord your God, and observe to do all the words of this law.'

Deuteronomy 31 v 12

The country of Vanuatu adopted in 1980 as a motto for their independence, the unusual words 'Long God Yumi Stanap'. As the 20th year of independence approaches in 2000, and the new millenniums begins, it would be appropriate to ask just how closely 'yumi stanap long God' in terms of our country’s decisions and standards and actions. Is our moral compass keeping us in a good direction? Is our 'ship of state' in good repair?

The accompanying report is only one of many that sadly has become part of the duties of the Ombudsman’s Office to investigate. It shows what so many of the reports have shown - not only the lack of experience and maturity that might be expected in new and untested candidates, but a disregard of those principles of honesty and justice which are vital if this country is to be led to prosperity and happiness.

It has been depressing for the Ombudsman’s Office to see repeated again and again the selfish and greedy actions of those who put personal gain before public service with such regularity that it is with heavy hearts that the growing pile of complaints is surveyed. Cause for sadness, too, in that those charged with offences have chosen not to follow the path of confession and potential forgiveness but of denial or silence.

Constant attacks are made on the Ombudsman and endless parliamentary time taken to seek ways to reduce the power of the office to investigate and make public these offences against the public good. There is much talk about openness, accountability and responsibility while at the same time ways are sought to preserve secrecy and inappropriate power.

Therefore once again, as the Ombudsman’s contract draws to a close, we appeal to the public to be vigilant over what is happening to take a stand against corruption to realise that some 'men love darkness rather than light because their deeds are evil'.

If we are to 'stanap long God' we had better insure that we have 'fought a good fight with the power of wrong-doers, and battled for something more commendable than covetousness and envy. The future for our young people is at stake and it is our duty not only to learn those wise commandments, but to do them.

However desirable and welcome the work of visiting advisers and experts is, the factor that will determine the health and prosperity of our country is obedience to existing laws and observance of moral standards which alone will have a hope of keeping us on the right lines. If these laws are broken without consequences to the offenders, we can only expect disaster in the long run.

SUMMARY

This report looks into the purchase in 1993 of a ship Prince II in total breach of all the existing financial procedures and tender rules. The report outlines also all the questionable actions of the people involved in arranging loans and investing funds in a project destined from the outset to be loss-making.

This operation caused the loss for the Government and the people of Vanuatu of a total sum of Vt172 million vatu (USD 145.000) divided as follows amongst the government agencies for the purchase costs, the major repairs and the running costs.

Original purchase price: Vt67 million (paid by the Vanuatu Government)

Vanuatu Commodities Marketing Board (VCMB): Vt65 million

Vanuatu Cooperative Federation: Vt15 million

Development Bank of Vanuatu: Vt25 million

This amount represents 9 times the budget of Public Prosecution Office and 3 times the budget of the Judiciary.

This purchase was initiated and led by Mr Serge Vohor, former Minister for Economic Affairs, his 1st Secretary, Mr Alfred Maliu who was also Vice Chairman of the Board of the Development Bank, the former Director of the Cooperatives Department, Mr Robert Figa, the former manager of VCMB, Mr Franklin Kere, and the Executive Board of the Development Bank of Vanuatu, namely Mr Petre Malsungai, Mr Amos Andeng, Mr Alfred Maliu.

Prince II ceased operating in late ‘95 and she has been laid up and deteriorating and rusting in Port Vila’s harbour since then. Recently in Parliament, a Minister suggested sinking it to make a dive site. All the Vt 172 million appear to have been totally lost and unrecoverable.

The ship in fact only operated for 14 months on and off and only a total of 1060 tonnes of goods were shipped. This represents 6 full trips made by Prince II since it arrived in 1993.

In around 1991 or 1992, Mr Serge Vohor met with a New Caledonian, ship broker, Mr Franck Gallo who was also an old personal friend, and asked him to find a ship to service the islands of Vanuatu. Prince II was found in Singapore. It was just over 43.6 metres in length and had a gross tonnage of 385 tonnes with a net tonnage of 170 tonnes. It was very much bigger than any locally owned vessel. In August 1993, Mr Vohor addressed the Council of Ministers about purchasing this ship. While the purchase agreement which was signed by Mr Vohor, he informed the Council of Ministers that the price was 560,000 USD (67.2 million vatu).

At the same meeting, although he was provided with information by the Cooperatives Department that the shipping project would be making a loss of Vt35 million each year, Mr Vohor deceived the Council of Ministers by indicating that the ship would be generating a total income of Vt20 million annually.

Prince II was sold to the Government of Vanuatu for VT 82 million. Mr Gallo had purchased it for USD 370.000 and resold it to the Republic of Vanuatu for USD 670.000. The Government paid VT67 million from its budget in October 1993, while the balance of Vt15 million was borrowed from the Development Bank and paid in February 1994. The balance was part of a loan of Vt17 million; the other Vt2 million was used to set up a company, the Melanesian Shipping Line (MSL), to operate the ship. MSL was to be managed by Vanuatu Commodities Marketing Board.