COMMISSION OF INQUIRY INTO SPECIAL AGRICULTURE AND BUSINESS LEASE (C.O.

I SABL)

REPORT

JUNE 2013

TABLE OF CONTENT S Pages FOREWORD 12-14 EXECUTIVE SUMMARY................................................................. 15-23 KEY FINDINGS AND RECOMMENDATIONS PART 1 BACKGROUND 24 1. Introduction25- 42 1.1. Establishment of the Commission of Inquiry 1.1.1 Establishment 1.1.2 Terms of Reference 1.1.3. List of SABLs inquired into by the C.O.I. 1.1.4 Appointmentsof the Commissioners and other Staff 1.2. 1.3. Scope of Interim Report........42 Methodologyof the Inquiry Adopted and Used by .42-46 the C.O.I.generally and in the inquiry of the Individual SABLs

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PART 2 2. Determination of Legal Authority for the Issuance of . Special Agricultural and Business Leases (SABLs) 2.1 The Land Act 1996(Power of State to LeaseCustomary....48-67 Land to Lease Back) 2.1.1 The Involvement of Custodian of Trust Land under The Land Act & Land Registration Act 2.1.2. Judicial Precedent 2.2 Application of the Land Registration Act 1981...67-71 (as amended by Land Registration (Amendment)Act 2009(No. 21 of 2009)) 2.3 PART 3 3 Administration of Special Agricultural & Business ....73 Leases(Determine Procedures for Issuance of SABLs if in Compliance with the Law 3.1. Administrative Procedures followed in the Acquisition......... 74-83 of Customary Land and Grant of SABLs under the Land Act 3.2 Registration of Titles (Registrar of Titles)83-87 Summary71 48

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3.3.

Administrative Procedures followed in the Registration.87-88 of Title and other Interests in SABLs under the Land Registration Act 1981(as amended)

3.4

DLPPProposed New Administrative Procedures in ..88-102 the Processing of SABLs.

3.5. 3.6.

Application of the Survey Act 1969(Chapter 95).....102-105 Administrative Procedures Followed In Respect of 105-108 Planningunder the Physical Planning Act 1989

3.7

Application of the Forestry Act 1991 (as amended) by.109-121 Forestry (Amendment) Act 2000 (No. 36 of 2000) AndForestry (Amendment) Act 2007 (No. 19 of 2007) 3.7.1. Forestry Law and SABL Processing 3.7.2. PNG Forest Authority Administration 3.7.2.1 3.7.2.2 Background Role Played By PNG Forest Authority in SABL (Sections 90A, 90B and 90C in the 2000 and 2007 Amendments) 3.7.3. FCA Issued So Far

3.8

Application of the Environment Act 2000121-135 3.8.1. Introduction 3.8.2 DECs Responsibility in the Processing Of Environmental Permits (EPs) 3.8.3 Role of DECin SABLs
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3.8.4 Table of Environmental Permits Pending and/or Granted to SABL Project Proponents. 3.8.5. Constraints Faced by DEC. 3.9. The Conservation Areas Act 1978..136-137

3.10. Responsibility of Department of Agriculture and 137-150 Livestock (DAL) in Agriculture Development of SABL 3.10.1 Introduction 3.10.2 Background 3.10.3 Legal Authority for DAL 3.10.4 Role Played by DAL in SABL 3.10.5 Approved Agricultural Projects 3.10.6 Constraints faced by DAL 3.10.6.1 DAL and its Lack of Control over Provincial Agriculture Officers 3.10.6.2. Lack of Resources 3.10.6.3 Lack of Coordination among Lead AgenciesResponsible for SABLs 3.10.7. Misunderstanding by DAL that Logging done to raisefunds for Agriculture Projects in SABL 3.11. Application of the Land Groups Incorporation Act.151-153 3.12. Application of the Investment Promotion Act 1992153-154 3.12.1 Extent of IPAs Role in SABLs 3.13. Administration of the Companies Act in SABLs...154-157

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3.14. Extrinsic Matters Affecting the Administration of .157-160 SABLsGenerally. 3.14.1. Introduction 3.14.2 Integrity of Officials of the Principal Agencies of the State Affecting SABLs 3.15 Summary..160 PART 4 4. Effectiveness or Otherwise of Existing Legislationand ..162 Policy Framework in respect of SABLs and Administrative Mechanisms for Administration of SABLs in the Improved Management of SABLs inFuture 4.1 4.2. Introduction162-163 Findings on Policy..163-170 Instances Highlighted by C.O.I. SABL Inquiry 4.2.1. SABL 4.2.2. Ownership of Natural Resources to be Primarily Recognized as Being Owned by Customary Landowners. 4.2.3 Workable Corporate Models For Customary Landowners to be involved in SABLs 4.3 Donigi Plan.170-172 Perspective
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4.4 The National Land Development Policy (NLDP)....172-174

4.5 Summary .174 4.6. Findings on the Effectiveness of Legislation in the175-179 Administration of SABLs(Absence of Regulations Providing for Processing of Acquisition under Section 11 and Grant of Lease under Section 102 of the Land Act) 4.7 Findings on the Effectiveness of Administrative 179-207 Procedures Followed in Accordance with the Legislation in Processing SABLs and Operations of SABLs 4.7.1 Initiation of Processing SABLs 4.7.2. Funding of Processing of SABLs. 4.7.3. Findings on the Effectiveness of the Administrative Procedures for the Processing of SABLs for Lease/Lease Back under Sections 11 and 102 of the Land Act. 4.7.4. Findings on the Effectiveness of the DLPP Proposed New Administrative Procedures in the Processing of SABLs. 4.7.5 Findings in Respect of the Administrative Procedures Followed in Respect of Physical Planning under the Physical Planning Act 1989. 4.7.6 Findings in Respect of the Administrative Procedures Followed in Respect of Agriculture. 4.7.7. Findings in Respect of the Administrative Procedures
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in Surveys of SABL Proposed Area under the Survey Act 1969 (Chapter 95). 4.7.8. Findings in Respect of the Legal and Administrative Procedures Followed in Respect of Forest Clearance Authorities Associated with SABLs. 4.7.9 Findings in Respect of the Procedures for the Issuance of Environmental Permits in accordance with the Environment Act 2000 and Conservation Areas Act 1978. 4.7.10 Findings in Respect of the Role of Investment Promotion Authority (IPA) in respect of SABLs under the Investment Promotion Act 1992. 4.7.11 Findings in Respect of the Role of the Registrar of Companies under the Companies Act, 1997. 4.7.12 Findings in Respect of Benefits Sharing from SABL Projects PART 5 CONCLUSION.209

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APPENDIX 1

New Ireland Province

Cassava Etagon Holdings Limited......213-244 Emirau Trust Limited..245-271 Tabut Limited272-317 Umbukul Limited...318-338 Central New Hanover Limted339-358 Rakubana Development Limited359-384

Western Province North East West Investment Limited..386-453 North East west Investment Limited454-473 Tosigiba Investment Limited...474-509 Tumu Timbers Development Limited.510-530 La Ali Investments Limited531-553 Mudau Investment Limited554-573 Godae Land Group Incorporated ..574-588 Haubawe Holdings Limited589-601 Foifoi Limited.602-615

Central Province

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Baina Agro Forests Limited616-640 Yumu Resources Limited641-660 Mekeo Hinterland Holdings Limited..661-681 Abeda Agro Forests Limited. 682-705

East Sepik Brilliant Investment Limited ..707-739 Nungawa Rainforest Management Alliance Limited..740-802 Mapsera Development Corporation Limited..803-821 Sepik Oil Palm Plantations Limited...822-865

Madang Province UrasirDevelopment Limited..867-899

MorobeProvince Zifazing Cattle Ranch Limited..901-917

APPENDIX II Statement of Case Terms of Reference Instrument s of Appointments

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FOREWORD The Commission of Inquiry (C.O.I.) into the Special Agriculture & Business Leases (SABL) was established by the then Acting Prime Minister Honourable Samuel Abal MP, by virtue of powers conferred upon him under Section 2 of the Commission of Inquiry Act (Chapter 31) on the 21st day July, 2011 with instruction to inquire into seventy-five (75) specific SABLs issued especially in regard to the period March 2003 to April 2011. There were two (2) existing SABLs that was brought to our attention during our inquiry bringing the total number of SABLs to seventy-seven (77).

The SABL including the processes involved in the application, processing, registration and granting of the leases have become a growing concern in recent times attracting a lot of public debate especially over the manner in which customary land was acquired for SABLs under the lease/lease back scheme pursuant to Sections 11 and 102 of the Land Act, 1996.

It is estimated that a total of 5.2 million hectares of customary land throughout the country have been alienated from customary landowners through the acquisition of the seventy-seven (77) SABLs which are only a part of over 400 SABLs issued since the early 1980s. This represents a huge chunk of customary land that has been alienated for SABLs under the lease/lease-back scheme.

On 9th September 2011, the Commission of Inquiry into SABL exercised its powers under Section 14 of the Commission of Inquiry Act authorizing me to preside as a single Commissioner to conduct and make inquiries into twenty- 12 -

five (25) individual SABLs that was located in seven (7) provinces of the country.

The conduct of my inquiry was to assess and evaluate the effectiveness of the for SABL grants, and its impact on the majority of the rural people who in their limited understanding and at the most ignorance of the process view it as a means to advance their livelihoods through resultant infrastructure developments including accessibility to health and education services, (social services) and economic services. Fundamental to the notion of development is the price landowners will have to bear, the huge burden of suspension of their inherited rights over the land when customary land registration and mobilization process are abused. The plight of the landowners and their sense of helplessness was openly expressed because of a sheer neglect of duty by public officials in particular and self-serving landowners and Developers who manipulated the process to benefit from providing that assurance to the landowner that their inheritance the land will be protected under the existing legislative regime.

The C.O.I.acknowledge the attendance, support and co-operation of the Agencies of government both at the National and Provincial levels that principally deal with SABLs including the Department of Lands & Physical Planning (DLPP), Department of Agriculture & Livestock (DAL), PNG Forest Authority (PNGFA), Department of Environment &Conservation (DEC), Department of Provincial & Local Level Government (DPLLG) and Investment Promotion Authority (IPA).

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The C.O.I. also acknowledges the support and co-operation of the SABL title holders, persons of interests, landowner groups and other entities including nongovernmental organizations such as CELCO during the course of our Inquiry.

Further, the C.O.I. acknowledges the hundreds of witnesses who appeared before the inquiry to give evidence, either voluntarily or in response to summons.

Dated at Waigani this 24th day of July 2013

NICHOLAS MIROU COMMISSIONER

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EXECUTIVE SUMMARY

KEY FINDINGS

1.

The Findings by the C.O.I into SABLs as set out in pages 175 to 207 inclusive and under sub-parts 4.6 to 4.7.11 is hereby adopted. The key agencies DLPP, DAL, PNG Forest Authority and DEC are not collaborating and exchanging information that is related to the administration of SABL under their respective functions.

2.

The law as it is currently applied to SABL per se does not provide for nor does it compel an all-embracing collaborative and consultative effort to be undertaken by all relevant government agencies and Departments including DLPP, DAL, PNGFA, DEC and IPA that deal with consideration, approval and processing of SABLs

3.

The Land Investigation process was technically abused by those responsible in the management, land mobilisation and the conduct of land investigation in number of instances. Customary Lands Officers were so negligent in completing the all details necessary for majority consent, grant and issuance of SABL title.

4.

Almost all the Provincial Lands Officer was not fully aware of their role in the conduct of the field investigation and was not competent to

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complete the process amicably. This was evident in the Provinces of East Sepik, Central, Western and Madang.

5.

Land mobilisation and investigations were fully funded by the proposed Developers of the project as was the case with four (4) SABLs located in New Ireland, four (4) at Western Province and one (1) in the Madang Province. This is a typical scenario that has become endemic and systemic within the public service for Public Servants to derive extra benefits by way of allowances and other incidental to be able to conduct the LIR. The independence and integrity of the SABL process is compromised with the result very much favouring the proposed Developer and Sub lessee of an Agriculture Sub-lease.

6.

In the majority of SABLs reservation for customary rights was not recommended for whatever reasons the Provincial Administrator or District Administrator considered at the time the LIR files were submitted.

7.

The Provincial Administrators are required to undertake due diligence of the Land Investigation Report, but the normal trend was that the Officers involved in the project was experienced and competent was enough to ignore the vetting process. This is fatal due to the fact that if a lease is for a period of 99 years then the three to four generations will have not exercise their rights to hunting, fishing, burial and sacred sites. This was evident in all the twenty-five SABLs inquired thus far.

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8.

Two PNG registered companies with majority shareholding in the hands of foreigners are issued as owners of SABL title. This is the result of DLPPs ignorance of due diligence to check with IPA on the shareholding structure of the company. (Brilliant Limited and Sepik Oil Palm Plantations Limited)

9.

In almost all the twenty-five SABLs not one of the SABLs was processed by the Custodian of Trust Land pursuant to the Land Registration Act for the Certificate of Alienability to be issued. The Certificate allows for Direct Grant under section 11, Registration under Section 102 of the Act and issuance of the Title. The Department of Lands evidently decided to forgo this process and ultimately issued titles without the Custodian of Customary Land Certification.

10.

Mr Miskus Maraleu was involved in four (4) of the SABLs on New Ireland. At that time he was the Secretary of the Tabut Limited and Umbukul Limited both companies involved in SABL on New Hanover. He was also the employed Corporate Lawyer of Tutuman and played a very integral part in the mobilization of landowners through the ILG process and directed the lands Officer with the Land Investigation Process.

11.

In Western Province, the beneficiary of the Gre Drimgas Trans Papuan Highway Project was also instrumental through its employed Surveyor to undertake the Land Investigation including organising Landowner Executives of Companies to mobilize ILG registration. On issuance of the
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title, the company secured full of the custody titles in four (4) SABLs and the ILG Certificates. This was also the case at Madang.

12.

In relation to the five SABLs located in New Ireland, one in ESP the Recommendation for Alienability was not signed by the Provincial Administrator and the lease-lease back agreement was found to not have been signed by the Minister or the Delegate, but the SABL lease was issued.This trend was the norm for the failure to undertake due diligence by the DLPP in the process and rendered the SABL null and void.

13.

The mobilisation of the ILG and the LIR on Emirau was organised well despite the objection of a family that resides in Kavieng. The issue of majority consent requirement endorsed by the decision in Musa and the Emirau case reflects that a minority assent cannot be a reason to justify cancellation when majority wants to be involved in development and selfsustenance.

14.

The Office of the State Solicitor is completely out of touch with some of the major contracts that have been found to be unfair and completely imposes conditions on the major agencies of the State such as DLPP, DEC, PNG Forest Authority, IPA, DAL to forgo their statutory and regulatory powers to fulfil the project initiative. This was evident in the Projects Agreements executed between the State (Governor General) on advice of the NEC and the Developer Company ultimately cleared by the Office of the State Solicitor in respect of the Gre-Drimgas Trans Papuan Highway Project (Western), and Nungwaia Bongos Project Agreement
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(ESP). Those contracts were prepared outside of the Department of Attorney General and Justice and literally not vetted but cleared for execution by the Head of State.

15.

All Sub-lease Agriculture Agreement was executed between landowners and companies registered with IPA are involved in forestry related activities. The companies are Brilliant Investment Limited, Sepik Oil Palm Plantation Investment Limited (East Sepik Province), Independent Timbers & Stevedoring Limited (Western Province), Tutuman Development Limited (New Ireland Province), Albright Limited (2 SABLs at Central Province), SPZ Enterprises Limited (ESP), Goldworld Resources Limited (ESP), Sovereign Hill Limited (South Fly District) and Continental Venture Limited (Madang). The involvement of these companies is an indictment of the continued abuse of harvesting logs without any implementation of agricultural project as evidenced by the DAL approval for FCA to be issued by PNG Forest Authority.

16.

There was one incident of a foreign worker employed as Operations Manager at Danfu Extension whose work and entry permit had expired but he remained in the country. A renewal of his work permit and entry visa was approved. In the normal situation, it is a migration requirement that the foreigners leave the country to await renewal. The C.O.I was unable to conduct any further inquiry into TOR (g)(i)(ii) and (iii) due to time constraints.

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17.

In the case of Abeda Agro-Forest Limited and Mekeo Hinterland Holdings Limited, Albright Limited the developer of the Central Province SABL project proceeded to apply for Environmental Permit prior to DAL approval for certification of agriculture investment and FCA approval. Similar behaviour of the part of the Developer was also evident on the Urasir Agriculture Project and the Nungwaia Bongos Project. This is a complete disregard for the process of allowing DAL to satisfy itself on an application of a request for FCA grant under section 90A of the Forestry Act. This process has continued unabated due to lack of consultation between DAL, PNG Forest Authority and DEC.

18.

Executives of Landowner Company have neglected their fiduciary obligations and duties to the shareholder who are the Landgroup or ILGs by entering into contractual agreements with the Developers without any resolution from the majority shareholders creating serious contentions, disagreements and often times violence as experienced in the Western Province, East Sepik Province, Madang Province and New Ireland Province. The provinces referred to have been controversial in terms of the publicity it has received both internationally and domestically.

19.

Controversial objections raised by disgruntled landowners prior to ILG registration and SABL investigation was disregarded by DLPP before the grant, registration and issuance of the SABL title. This was obvious in Emirau Trust Limited (NIP), Mekeo Hinterland Holdings Limited, Abeda Agro Forest Limited (Central Province) and Cassava Etagon Holdings Limited (NIP). It was incumbent on DLPP to suspend the SABL investigation and allow the issues affecting the landowners to be resolved
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by mediation. There was no evidence of the process of mediation encouraged and for the investigation to be suspended pending resolution of the dispute,

20.

In almost most of the SABLs there was a common trend on the conversion of former TRP and FMA concession areas into SABLs for the purpose of acquiring FCA rights to harvest and export logs and also to comply with FCA requirements to undertake commercial agriculture crops such oil palm, cocoa or coconut and rubber. This was the normal process since the operation of Section90A came into operation. The former TRP and FMA areas of Nungwaia Bongos, Danfu FMA Extension, Mamirum TRP, Umbukul TRP, Central New Hanover TRP, South Fly TRP to Rimbunan Hijau. These examples are evidence of the conversion of the surveyed TRP and FMA areas into blanket SABL acquisition, allowing full unrestricted access to prime forest areas.

Recommendations

Based on the foregoing key findings and considering that those findings are essentially problem areas identified and isolated as affecting SABL, I hereby make the following recommendation to address and take corrective measures

1.

That new and specific legislation be enacted and introduced to govern all aspects of SABL in an all-embracing manner.

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Propose that a legislative framework be established defining and setting the scope and the extend of the responsibilities of DAL in so far as SABLs are concerned with a view to ensuring that the DAL must play a prominent role (if not leading) in so far as the consideration, approval and processing of SABL is concerned.

3.

Sections 11 and 102 of the Land Act 1996 in relation to registration of customary land must harmonise with the Land Registration (Amendment) Act 2009 (No 21 of 2009)

4.

SABLs created under Sections 11 and 102 of the Land Act must harmonise with Customary Lands registered under Amendment No 21 of 2009.

5.

Propose amendments to the Companies Act to strictly make provisions for landowner companies more particularly with the view to addressing and resolving all issues adversely affecting the establishment, incorporation and registration, and management.

6.

Existing Survey Plans and Land Investigation Report relating to particular resource development projects such as logging or harvesting merchantable timber on customary land under a TRP or FMA should not be used to convert that area into SABL. In other words new and fresh LIR and land boundary survey must be conducted to gauge a certain and secure informed consent of the landowners.
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7.

To introduce and develop training modules for Officers involved in Customary Land Registration at three levels of government. This is to enhance their capacity and understanding of the latest process, procedures and legislation dealing with Customary land Registration.

8.

Establish an Institute of Customary Land Registration to facilitate land development program in PNG.

9.

Where an SABL is situated on the coast or inland but along a major waterway, for instance a river connecting the SABL project area to the sea, strict compliance of existing laws governing the construction and operation of jetties, wharves including other requirements must be adhered to.

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PART 1
THE BACKGROUND TO THE ADMINISTRATION OF THE

COMMISSION OF INQUIRY INTO SPECIAL AGRICULTURE AND BUSINESS LEASES (C.O.I SABL)

Landowners protesting - Wewak, ESP

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PART 1 BACKGROUND For the backgroundto the establishment of the C.O.I., see the Statement of Case appended to this Report. 1. INTRODUCTION 1.1 Establishment of the Commission of Inquiry

1.1.1 Establishment The Commission of Inquiry (C.O.I.) into the Special Agriculture and Business Leases (SABL) was established by the then Acting Prime Minister Honourable Samuel Abal, MP by virtue of his powers conferred under Section 2 of the Commission of Inquiry Act (Chapter 31),pursuant to National Executive Council Decision number 19/2011 dated 29th June 2011which was published in the National Gazette No. G128 of 22 July 2011. The C.O.I. was given three (3) months commencing on and from the date of the signature of the Instrument of Establishment and Appointment. As the initial three (3) months term of the C.O.I. was both insufficient and practically impossible due to the large number of SABLs involved and the fact that they were spread out across the length and breadth of the country. The Prime Minister Honourable
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Peter ONeill extended the term of the C.O.I. for a further term of five months by notice published in the National Gazette No. G.292 on 18th October 2011. All instruments including their Gazettal Notices are appended to this Report. 1.1.2.Terms of Reference (TOR) The TORfor the Inquiry are:(a) determine the legal authority for the issuance of SABL; and determine the procedure for the issuance of SABL in accordance with the legal authority if any; and inquire into and confirm the number of SABL issued to date and the particulars of each including:

(b)

(c)

(i) (ii)

location; and customary ownership whether there are any disputes regarding SABL; and prior consent and approval by customary landowners for the issue of SABL over the particular customary land the subject of each SABL; and in whose name the title to the SABL is held; and if not in the customary landowners name then in whose name is the particular SABL title held; and if not in the customary landowners name then by what authority and whether lawful for the title to be held by a non-customary landowner of the land the subject of the particular SABL; and
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(iii)

(iv) (v)

(vi)

(vii) if all of the matters in the preceding Sub-paragraphs (i) to (vi) involved duly granted approvals and permits from the Departments of Agriculture and Livestock; Environment and Conservation; Lands and Physical Planning; and the Papua New Guinea Forest Authority; and (d) inquire into and determine if the requisite or subsequent approvals determined under proceeding Sub-paragraph 3(i) to (vii) were lawfully and duly obtained; and (e) inquire into and determine if Forest Clearance Authority (or FCA) in respect of each SABL complied with the proportionate agriculture development input; and (f) inquire into and determine if FCA in respect of each SABL complied with the Environmental Permit terms and conditions; and (g) inquire into and determine if any official or individuals, both citizens and foreigners have engaged in unethical and/or criminal conduct in the course of the operation of each SABL including: (i) (ii) employment of illegal Immigrants; and engagement in illicit or illegal trade including sale and consumption of drugs; prostitution; fire-arms; and pornography; and unethical conduct in the disregard for the customs and traditions of the local area, and sacred grounds; and unlawful and unethical mistreatment of the local people in undermining their dignity and respect; and

(iii)

(h) inquire into and assess the effectiveness of existing legal and policy framework in the improved management of

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SABL in future including facilitating the applications from legitimate applicants, and (i) inquire into and determine if all of the seventy-two (72) SABLincluding any other SABL discovered in the course of the inquiry1 covering approximately 5.2 million hectares of customary land in PNG had complied with the existing legal and policy frameworks, in incorporation of Land Groups Act 1974, the Land Act 1996, the Forestry Act 1991, and the Environment Act 2000; and (j) to take all steps and to exercise all powers under all enabling legislations, inter alia, the Commission of Inquiry Act to complete this Inquiry and to Report to the Prime Minister for tabling in the National Parliament including all Recommendations, as well as to refer to appropriate law enforcement authorities any incidences of criminal conducts this Commission of Inquiry may become aware of in the course of this Inquiry; and (k) to make recommendations arising from the Inquiry; and (l) to make such referral for prosecution as the Commission deems appropriate;

The TORs in (m) to (p) include the following directions in dealing with TORs (a) to (l): (m) AND I FURTHER direct the Inquiry be held in Port Moresby or as such other place or places in Papua New Guinea; and (n) AND I FURTHER direct the Inquiry be held in public, but I approve that you may permit it to be given in private, any evidence that in the course of inquiry you, in your absolute
1

The insertion was made pursuant to the Amendment to the Commission of Inquiry into Special Purpose th Agriculture and Business Lease and gazetted in the National Gazette No. G292 dated 18 October, 2011.

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discretion, consider needs to be given in private in accordance with Section 12 of the Commission of Inquiry Act (Chapter 315); and (o) AND I FURTHER direct that you commence the inquiry without delay and proceed therein with all dispatch and render to me your final reports within three (3) months from the date of commencement of the inquiry; and (p) AND I FURTHER direct that this Instrument relating to the Terms of Reference of Commission of Inquiry into Special Agricultural and Business Leases (sic) supersede any previous Instruments issued under my hand(sic) Henceforth the list of SABLs to be inquired into is set out in Table A below

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Table A
GRANTEE No 1 2 VAILALA OIL PALM LTD TRUKAKE LIMITED Term (Years) 99 99 Area (Hectares) 11,800.00 120.70 Portion 377C 46 Land Description Project Developer Oil Palm Vailala Oil Palm Ltd Plantation Nakumal Redistribution Plantations Scheme Limited (Plantation Acquisition Scheme) Plantation Barava Limited Redistribution Scheme (Plantation Acquisition Scheme) Mini Oil Palm New Britain Estate Palm Oil Ltd Baina Agroforestry Idumava MultiPurpose Marine Facility Nasyl 98 Dynasty Real Estate (RH Subsidiary) Province GULF ENBP Comments In process Existing Plantation

BARAVA LIMITED

99

244.7/00

307

ENBP

Existing Plantation

LOLOKORU ESTATES LTD BAINA AGRO FOREST LTD ROSELAW LTD

45

1750.00

1C

WNBP

5 6

40 99

42,100.00 25.118

29C 2541C

CENTRAL PROVINCE NCD

Joint Venture between Lolokoru and NBPOL Approved Linked to LNG Project

PULIE ANU PLANTATION LTD VANIMO JAYA LTD & ONE UNI DEVELOPMENT CORPORATION ZIFASING CATTLE RANCH LTD PERPETUAL SHIPPING LTD CASSAVA ETAGON HOLDINGS LTD EMIRAU TRUST (LIMITED) CHANGHAE TAPIOKA (PNG) LIMITED CHANGHAE TAPIOKA (PNG) LIMITED CHANGHAE TAPIOKA (PNG) LIMITED

99

42,233.00

396C

99 50

47,626.00 8,374.23

248C 79

Pulie Oil Palm Project (Refer to SABL # 3940 below) West Aitape (Port 248C) Agroforestry Project Cattle Breeding Program and Sale Boat Building Yard and Slipway Cassava Bio Fuel Project Free Trade Zone Cassava BioFuel Project

Same as SABL # 39-40 below One-Uni Development Corporation Zifasing Cattle Ranch Limited (Landowner Company) Perpetual Shipping Ltd Tutuman Development Ltd Emirau Trust Limited

WNBP

No record

SANDAUN

Approved Existing Cattle Ranch No agriculture activity noted Nil Project or activity on SABL site In discussion with RH on project Not FCA/Approved Not FCA/Approved Not FCA/Approved

MOROBE

10 11 12 13 14 15

50 99 99 40 40 40

283.29 20,000.00 3,384.38 16,56.00 74.87 66.77

19C 884C 53C-58C 519C 444C 446C

GULF NIP NIP CENTRAL CENTRAL CENTRAL

Changhae Tapioka (PNG) Ltd Cassava Biofuel Changhae Project Tapioka (PNG) Ltd Cassava Biofuel Changhae Project Tapioka (PNG) Ltd

32

16 17 18 19 20

CHANGHAE TAPIOKA (PNG) LIMITED CHANGHAE TAPIOKA (PNG) LIMITED CHANGHAE TAPIOKA (PNG) LIMITED CHANGHAE TAPIOKA (PNG) BRILLIANT INVESTMENT LIMITED OKENA GOTO KARATO DEVELOPMENT CORPORATION LTD YUMU RESOURCES LTD KOARU RESOURCE OWNERS COMPANY LIMITED

40 40 40 40 99

2,514.00 3,573.00 2,514.00 2,514.00 25,600.00

517C 518C 521C 520C 146C

Cassava Biofuel Changhae Project Tapioka (PNG) Ltd Cassava Biofuel Changhae Project Tapioka (PNG) Ltd Cassava Biofuel Changhae Project Tapioka (PNG) Ltd Cassava Biofuel Changhae Project Tapioka (PNG Angoram Integrated Cocoa Project (Marienberg) Tufi Wanigela Agroforestry Project Brilliant Investment Ltd Victory Plantation Ltd

CENTRAL CENTRAL CENTRAL CENTRAL ESP

Not FCA/Approved Not FCA/Approved Not FCA/Approved Not FCA/Approved Approved

21

99

28,100.00

146C

ORO

Approved

22 23

99 99

115,000.00 59,460.00

30C 323C

Yumu AgroAramia Forestry Project Plantation Ltd Kerema AgroPacific Forestry Palm International Oil Project Resources (Pinewood, (PNG) Ltd Plantation & any other agricultural crop development)

CENTRAL GULF

Approved Approved

33

24 25 26 27 28

RAKUBANA DEVELOPMENT LTD TABUT LIMITED UMBUKUL LIMITED CENTRAL NEW HANOVER LIMITED MEKEO HINTERLANDS HOLDINGS LTD WOWOBO OIL PALM LIMITED AKAMI OIL PALM ESTATE LIMITED AKAMI OIL PALM LIMITED POMATA INVESTMENT LIMITED

99 99 99 99 99

24,581.00 11,864.00 25108.00 56592.00 116,400.00

871C 885C 886C 887C 45C

29 30

99 99

23,180.00 231.20

4C 104C

Danfu Extension Cocoa Project New Hanover Oil Palm Project New HanoverOil Palm Project New Hanover Oil Palm Project Mekeo Hinterland Oil Palm Project (including Rice Project) Wowobo Oil Palm Plantations Roka Mini Oil Palm Estate Roka Mini Oil Palm Estate Sigite Mukus Integrated Development Project
34

Tutuman Development Ltd Tutuman Development Ltd Tutuman Development Ltd Tutuman Development Limited Albright Limited

NIP NIP NIP NIP CENTRAL

Approved Approved Approved Approved Approved

Reko (PNG) Ltd Expection Hicks Construction Ltd Expectation Hicks Construction Ltd Gilfford Ltd

GULF WNBP

Approved Approved

31

99

345.75

2628C

WNBP

No record

32

99

15,000.00

196C

WNBP

No record

33

NAKIURA INVESTMENT LIMITED RALOPAL INVESTMENT LIMITED BEWANI PALM OIL DEVELOPMENT LTD SEPIK OIL PALM PLANTATION LTD

99

16,100.00

198C

34

99

11,300.00

197C

35 36

99 99

139,909.00 116,840.00

160C 144C

Sigite Mukus Integrated Development Project Sigite Mukus Integrated Development Project Oil Palm Wewak-Turubu Large Scale Integrated Agriculture Project (Oil Palm) Mukas Melkoi Integrated Agriculture Project Abeda Integrated Agro-forestry Project (Rice Project) Pulie Anu Oil Palm Project Pulie Anu Oil Palm Project

Gilfford Ltd

ENBP

No record

Gilfford Ltd

ENBP

No record

Bewani Oil Palm Plantation Ltd Wewak Agriculture Development Ltd DD Lumber Ltd

SANDAUN ESP

Refer to SABL #72 Ossima Approved

37

RERA HOLDINGS LIMITED ABEDA AGRO FOREST LIMITED

99

68,300.00

2C

WNBP

No Record

38

99

11,700.00

409C

Albright Limited

CENTRAL

Approved

39 40

AKIVRU LIMITED IVAGA OUROUINOMUSENAMTA

99 99

6,111.00 10,741.00

398 397

Monarch Investments Limited Monarch Investments Limited

WNBP WNBP

No record No record

35

41 42 43 44

POLOPO LIMITED KAVUN LIMITED GORORANTO LIMITED MUSIDA HOLDINGS LIMITED (Court Revoked) EAST WAII OIL PALM LIMITED AIOWA OIL PALM LIMITED NUKU RESOURCES LIMITED TUMU TIMBERS DEVELOPMENT LTD LA-ALI INVESTMENTS LIMITED

99 99 99 99

8,328.00 7,161.00 8,893.00 211,600.00

35 34 33 16C

Pulie Anu Oil Palm Project Pulie Anu Oil Palm Project Pulie Anu Oil Palm Project Agro Forest Project

Monarch Investments Limited Monarch Investments Limited Monarch Investments Limited Musida Holdings Ltd

WNBP WNBP WNBP ORO

No record No record No record SABL Revoked on 22/01/10 by National Court now part of Portion 17C No record No record Approved

45 46 47

99 99 99

21,108.00 12,341.00 239,810.00

5C 6C 26C

48

99

790,800.00

1C

49

70

7,170.00

5C

East Waii Oil Palm Ltd Oil Palm REKO (PNG) Ltd Nuku (Port 26C Skywalker Integrated Global Agro-Forestry Resources Project (PNG) LTD Proposed Trans Independent Papuan Timbers & Highway Stevedoring Ltd Project Wawoi Guavi Negotiations Oil Palm with current Project TRP holder Rimbunan Hijau

Oil Palm

GULF GULF SANDAUN

WESTERN

No record

WESTERN

In progress and Pending

36

50

MUDAU INVESTMENT LIMITED GODAE LAND GROUP INC

70

10,450.00

6C

Wawoi Guavi Oil Palm Project Wawoi Guavi Oil Palm Project Wawoi Guavi Oil Palm Project Wawoi Guavi Oil Palm Project Sigite Mukus Integrated Development Project Konekaru Holdings Konekaru Holdings

51

70

15,153.00

7C

52

HAUBAWE HOLDINGS LIMITED

70

11,110.00

8C

53

FOIFOI LIMITED

70

33,900.00

9C

54

UNUNG SIGITE LIMITED KONEKARU HOLDINGS LTD KONEKARU HOLDINGS LTD

99

13,000.00

27C

Negotiations with current TRP holder Rimbunan Hijau Negotiations with current TRP holder Rimbunan Hijau Negotiations with current TRP holder Rimbunan Hijau Negotiations with current TRP holder Rimbunan Hijau Gilford Limited

WESTERN

In progress and Pending

WESTERN

In progress and Pending

WESTERN

In progress and Pending

WESTERN

In progress and Pending

ENBP

Approved

55

99

457.00

2465C

56

99

98.00

2466C

Activities under PNG LNGLeighton (PNG) Ltd Activities under PNG LNGLeighton (PNG) Ltd

CENTRAL

No record

CENTRAL

No record

37

57 58 59

TORIU TIMBERS LIMITED TORIU TIMBERS LIMITED MAPSERA DEVELOPMENT CORPORATION LTD WEST MAIMAI INVESTMENTS LTD &YANGKOK RESOURCES LIMITED. PALAI RESOURCES LTD (JOINT TENANTS) POROM COFFEE LIMITED VEADI HOLDINGS LIMITED KEMEND KELBAKEI INVESTMENT LTD TOSIGIBA INVESTMENT

99 99 99

11,240.00 42,240.00 54,384.00

904C 903C 54C

No Record No Record Nungawa Sengo Integrated Agro Forest Project Proposed Integrated Agro Forest Project and not Agricultural Land Development Plan Existing Coffee Plantation LNG linked projects Existing Coffee Plantation Proposed Trans Papuan Highway Project
38

No Records No records Gold Water Resources (PNG) Limited Gold Water Resources (PNG) Limited

ENBP ENBP ESP

Approved Approved In Process

60

99

149,000.00

594C

SANDAUN

Approved Yangkok Resources Ltd not a legal entity but a SABL Grantee Landowner operated plantation Linked to LNG Gas Project Landowner operated plantation No activity undertaken to date

61 62

99 99

24.10 1057.45

302C 2485C

Porom Coffee Ltd Activities under PNG LNGLeighton (PNG) Ltd KEMEND KELBAKEI INVESTMENT LTD Independent Timbers and Stevedoring Limited

WHP CENTRAL

63

99

41.30.00

155C

WHP

64

99

632,538.00

14C

WESTERN

65

NORTH EAST WEST INVESTMENTS LTD (NEWIL) NORTH EAST WEST INVESTMENTS LTD (NEWIL) MUSA VALLEY MANAGEMENT COMPANY LIMITED WAMMY LIMITED

99

470,642.00

1C

66

99

149,117.00

27C

67

99

320,060.00

17C

Proposed Trans Papuan Highway Project Proposed Trans Papuan Highway Project Oil Palm and Cattle Ainbai-Elis Integrated Rural Development Project Ainbai-Elis Integrated Rural Development Project SHP LNG Project Business Spin off Integrated Agro Forest Limited in mining, gas and oil palm project Oil Palm

Independent Timbers and Stevedoring Limited Independent Timbers and Stevedoring Limited Musa Century Limited Global Elite Limited Star Link Limited Hewai Investment Ltd PDA Incorporation

WESTERN

No activity undertaken to date No activity undertaken to date ApprovedExtension of now revoked SABL Portion 17C Approved

WESTERN

ORO

68

99

105,200.00

27C

SANDAUN

69

AINBAI-ELIS HOLDINGS LIMITED HEWAI INVESTMENT LTD PURARI DEVELOPMENT ASSOCIATION INC OSSIMA RESOURCES LIMITED

99

22,850.00

40C

SANDAUN

In process

70

99

358.00

351C

SHP

No record

71

99

656,034.00

8C (GP)

GULF

No record

72

99

31,430.00

163C

Bewani Palm Oil DevLtd

SANDAUN

In process

39

73 74

VAILALA OIL PALM LIMITED URASIR RESOURCES LIMITED NUNGAWA RAINFOREST MANAGEMENT ALLIANCE LIMITED

99 99

11,800.00 112,400.00

377C 16C

Oil Palm Urasirk Rural Development Project-Middle Ramu District. Nungawa Bongos Integrated Large Scale Agricultural Project (Oil Palm/Rubber) ProposedHousi ng Estate

Vailala oil Palm Ltd Continental Venture Ltd (CVL) SPZ Enterprises (PNG) limited

GULF Madang

SABL Surrendered and refer to SABL#1 In process

75

99

109,580

55C

ESP

Approved

76

DOGURA (DERE KONE/DEGUBEGA

99

Not Stated

2370C

One Uni-Ltd.

CENTRAL&N CD

77

KAIRAK/BAINING

Not stated

23,073

908C & 909C

Oil Palm Plantation

Documents submitted with evidence taken from LOs, Provincial Administration & MP for Gazelle.

ENBP

Customary Land purportedly sold to one Fu Tsai Wu as alleged by Enehako Land Group Inc (ILG 7993), the legitimate LOs. Objections on the issuance of SABL to Kairak Development Corporation

40

1.1.4 Appointments of the Commissioners and other Staff In the earlier National Gazette G128 of 22 July 2011 Mr John Numapowas appointed as Chief Commissioner along with Messrs AloisJerewai and Nicholas Mirou as Commissioners. By separate instruments the following Counsel and Technical Advisors were appointed to assist the C.O.I.: - Mr Simon Ketan - Mr Paul Tusais - Mr Mark Pupaka - Counsel Assisting - Senior Counsel Assisting - Technical Advisor

- Ms MayamboPeipul -Technical Advisor - Mr Matthew Yuangu - Secretary to the C.O.I. The C.O.I. then engaged the following Lawyers. - Mr Jimmy Bokomi - Mr WeminBoi 1.2. Scope of Interim Report This Interim Report will coverTORs (a), (b) and (h) which are set out below: - Assisting Counsel - Assisting Counsel

- Ms AviaKoisen - Assisting Counsel

41

(a) determine the legal authority for the issuance of SABL, (b) determine the procedure for the issuance of SABL in accordance with the legal authority (if any) (h) inquire into and assess the effectiveness of legal and policy framework in theimproved management of SABL in future including facilitating the applications from legitimate applicants The balance of the TORs that is, TORs(c) to(g) and(i)to (p)will form the main body of the Final Report. 1.3 Methodology of the Inquiry adopted and used by the C.O.I. Generally and in the Inquiry of the Individual SABLs For the purposes of gathering and compiling evidence during the inquiry, the C.O.I.used the following methods or means of obtaining evidence, bearing in mind the fact that by law it was not subject to strict rules of evidence: (1) issuance of summonses to witnesses compelling their appearances at C.O.I. hearings and conducting hearings both generally and specificallyover aspects of the SABLs within the scope of its TORs at Waigani, NCD, and in respective Provinces wherethe seventyseven (77) SABLs are located;

42

(2)

admission and consideration of written submissions from witnesses summonsed, and other interested persons;

(3)

acceptance, admission and consideration of written communications and correspondences on particular SABLs;

(4)

in certain instances, site visits to particular SABLs were made by the C.O.I.either prior to, during or after the hearings were conducted and photographs and videos of the locality of the SABLs project site were taken; and

(5)

meetings with landowners on particular SABL sites with the view to ascertaining and or confirming whether the landowners had prior knowledge of the SABL and that they had given their approval and consent for their customary land to be acquired and used for SABL purposes. Considering the enormity of the task of inquiring into and the spread of all the seventy-seven (77) SABLs in the context of and strictly within the parameters of the TORs, the C.O.I.earlier on the 9th September, 2011, resolved unanimously pursuant to Section 14 of the Commission of Inquiry Act, Chapter 30 to hold combined hearings of the three (3) Commissioners here at Waigani, and then for each of them to sit
43

singularly or individually as the C.O.I in each Province throughout the country exercising all C.O.I powers accordingly. [This authorization was made by the C.O.I on 9th September, 2011 Refer to Transcript of Proceedings SABL 09/09/11.] All proceedings of the C.O.I have been recorded, transcribed and reproduced verbatim and accordingly compiled and collated according to chronological order, and location of each individual SABL inquired into.These recordings are held at the C.O.I offices at Waigani and any interested persons can obtaincopies thereof following proper representation with the Secretary of the Secretariat to the Commission of Inquiry and Investigations Branch of the Department of Prime Minister and the National Executive Council, Level 1, Muruk Haus, above Government Printing Office, Waigani, National Capital District. TORs (c), (d), (e), (f), (g), (i), (j),(k)and(l)cover the C.O.IInquiry into all the seventy-five (75) individual SABLs located in the provinces. The Inquiry commenced with the opening of individual files with respect to the seventy five (75) SABLs, we then receivedfiles and information from the leading agencies, the main one being the Department of Lands and Physical Planning (DLPP) followed by the Department of Agriculture and Livestock (DAL), Papua New Guinea Forest Authority
44

(PNGFA) and the Department of Environment and Conservation (DEC). The second phase involved preliminary hearings in Waigani where evidence was receivedfrom the top management and officers of the key government agencies involved in the administration of SABLs, such as Mr Romilly Kila-Pat the Acting Secretary of the DLPP, the former immediate past Secretary of the DLPP Mr Pepi Kimas and other linemanagers and directors. We had the immediate past Secretary of DAL Mr Anton Benjamin, Deputy Secretaries for DAL Mr Francis Daink and Mr Kagena, Mr Kanawi Pouru the Managing Director of the PNGFA, Dr Wari Iamo the Secretary of the DEC and Director for Environment, Mr Michael Wau, and the Managing Director of the Investment Promotion Authority (IPA), Mr Ivan Pomaleu. We also received evidence from the Custodian of Trust Lands, Surveyor General, and officers of some of the SABL grantees or holders and developers. The Third phase of our inquiry involved hearings held in the Provinces where the SABLs were located and where site visits were made. SABLs are located in New Ireland Province, East and West New Britain, East Sepik and Sandaun, Oro, Central, NCD. SABLs are also located in the Gulf & Western Provinces. Morobe and Madang have only one SABLeach being the Zifazing Cattle RanchLimitedand Urasir Development Limited respectively. The Highlands
45

Region only had three, two in Western Highlands and one in Southern Highlands.

46

PART 2
TERMS OF REFERENCE (a) TheDetermination of the legal authorityfor the issuance of SABLs.

Satellite photo - Massive land tracks taken away for SABL, Gulf Province

47

PART 2

2.

DETERMINATION OF LEGAL AUTHORITY FOR THE ISSUANCE OF SPECIAL AGRICULTURAL & BUSINESS LEASES (SABLs). Under TOR(a) the Inquiry is instructed and required to determine the legal authority for the issuance of SABLs...., or even lack of it. We consider that under this TOR we are instructed not only to present our findings on the legal authority for the issuance of SABLs but also on other applicable laws including the Laws relating to registration of interests in respect of SABLs and Judicial Precedents as may be applicable. We therefore make the following findings under TOR (a): 2.1 The Land Act 1996 (Power of State to Lease Customary Land to Lease Back) The only provisions providing for the grant of SABLs are Sections, 10, 11 and 102 of the Land Act 1996. Section 10 (1), (2), (3) and (4) which are of relevance state;

48

10. ACQUISITION OF CUSTOMARY LAND BY AGREEMENT.

(1) Subject to Section 11, customary land shall be acquired in accordance with this Section and shall be authenticated by such instruments and in such manner as are approved by the Minister.

(2) The Minister, on behalf of the State, may acquire customary land on such terms and conditions as are agreed on between him and the customary landowners.

(3)

Subject to Subsection (4), the Minister shall not acquire customary land unless he is satisfied, after reasonable inquiry, that the land is not required or likely to be required by the customary landowners or by persons on whom the land will or may devolve by custom.

(4)

Where the Minister is satisfied, after reasonable inquiry, that any customary land is not required or likely to be required for a certain period but is of the opinion that the land may be required after that period, he may lease that land

49

from the customary landowners for the whole or a part of that period. Section 10 subsections (1), (2), (3) and (4) in summary authorise the Minister for Lands & Physical Planning to acquire customary land by agreement either permanently or temporarily. In both ways the acquisition can be for the States permanent use or temporary use. Section 10 however is made subject to Section 11 so that for temporary use, the acquisition must be done only in accordance with Section 11 which in turn is subject to Section 102 of the Act.The Minister only proceeds with such acquisition on being satisfied after reasonable inquiry that the land is not required by the customary landowners or will be required after a period of time and by authentic instruments may proceed with such acquisition with the express agreement of the customary landowners. This is a very general provision allowing for acquisition of customary land by agreement either permanently or temporarily as opposed to compulsory acquisition under Division 5(Sections 12 to 16 inclusive) of theLandAct. It is noted that Section 10, subsection (1) renders Section 10 subject to Section 11 in so far as such acquisitions are temporary and are for specified periods only whereby the requirements of Section 11 shall apply. Section 11 provides that;

50

11.

ACQUISITION OF CUSTOMARY LAND FOR THE GRANT OF SPECIAL AGRICULTURAL AND BUSINESS LEASES.

(1)

The Minister may lease customary land for the purpose of granting a special agricultural and business lease of the land.

(2)

Where the Minister leases customary land under Subsection (1), an instrument of lease in the approved form, executed by or on behalf of the customary landowners, is conclusive

evidence that the State has a good title to the lease and that all customary rights in the land, except those which are specifically reserved in the lease, are suspended for the period of the lease to the State.

(3)

No rent or other compensation is payable by the State for a lease of customary land under Subsection (1).

Four important effects of Section 11 should be noted. They are: (1) The Lands Minister has the discretionary power to lease customary land for the purpose of granting a special agricultural and business lease of that land.

51

(2)

The lease of customary land must be in the approved form and executed by the customary land owners of the land which will ensure good title is taken by the State.

(3)

All customary rights in the land except those specifically reserved for the customary owners are suspendedfor the period of the lease to the State.

(4)

No rent or other forms of compensation is payable by the State for the lease of customary land as leased.

Section 102 of the Land Act then sets out the limitations on the State as to the manner of the Lease to be granted once the customary land is acquired under Section 11 from the customary landowners. Section 102 provides as follows: 102. GRANT OF SPECIAL AGRICULTURAL AND BUSINESS LEASES.

(1)

The Minister may grant a lease for special agricultural and business purposes of land acquired under Section 11.

(2)

A Special agricultural and business lease shall be granted -

(a)
52

to a person or persons; or

(b)

to a land group, business group or other incorporated body,

to whom the customary landowners have agreed that such a lease should be granted.

(3)

A statement in the instrument of lease in the approved form referred to in Section 11(2) concerning the person, land group, business group or other incorporated body to whom a special agricultural or business lease over the land shall be granted, is conclusive evidence of the identity of the person (whether natural or corporate) to whom the customary landowners agreed that the special agricultural and business lease should be granted.

(4)

A special agricultural and business lease may be granted for such period, not exceeding 99 years, as to the Minister seems proper.

(5)

Rent is not payable for a special agricultural and business lease.

(6)

Sections 49, 68 to 76 inclusive, 82, 83, 84 and 122 do not apply to or in relation to a grant of a special agricultural and business lease.

53

(7)

Notwithstanding anything in this Act, a special agricultural and business lease shall be effective from the date on which it is executed by the Minister and shall be deemed to commence on the date on which the land subject to the lease was leased by the customary landowners to the State under Section 11.

We note eight characters of Section 102 which are: (1) The Lands Minister has the discretionary power to grant a SABL over the customary land acquired by State under Section 11 from the customary landowners. (2) Such lease granted by the State must be to; (a) (b) a person or persons; or a land group, business group or other incorporated body including all forms of companies. (3) The grantee (i.e. any of these entities above) must have been agreed to by the customary landowners to be granted such a lease (SABL). Put another way, the customary landowners must agree and consent to the entity to be

54

granted title to a SABL after the land had been acquired under Section 11. (4) A statement in the agreement for lease of the customary land by the State from the landowners as to the entity to be granted the SABL is conclusive evidence of the identity of the grantee. (5) The period or term of a SABL must not exceed 99 years. (6) (7) Rent is not payable to the State for a SABL. Certain requirements under other provisions of the Land Act are excluded including reservation from lease or further lease (s.49) advertisements for leasing of land (s.68) acceptance of terms and conditions of lease (s.76) reservations and conditionsin leases (s.82) rent (s.83) improvements on land to be leased (s.84) and forfeiture of lease (s.122). (8) An SABL is effective from the date on which it is executed by the Minister for Lands for lease from the customary landowners of that land.

55

2.1.1 TheInvolvement of Custodian of Trust Land under The Land Act andLand Registration Act It would appear that the provisions under Sections 10, 11 and 102 of the Land Act are affected by the question of whether there is a vested trust in the Custodian of Trust Land pursuant to Part XX(SPECIAL PROVISIONS RELATING TO CUSTOMARY LAND.)of that Act. The special provisions relating to customary land are provided under Sections 132 to 135 of the Act and the full text of the Act is available on www.paclii.org. Except for dealings in customary land under Sections 10, 11, 12 and 102, Section 132 simply renders all customary landowners powerless and with absolutely no right to sell, lease or otherwise dispose of customary land or customary rights except to citizens but even then, they can only do so in accordance with the customs of the customary owners and the customary recipient of the land by such a transaction. Any contract or agreement made in breach of Section 132 is void and unenforceable. Simply put, any dealings in customary land not done in accordance with custom to a citizen in case of citizens, and in all other cases not done in compliance with Sections 10, 11, 12 and 102 are void and of no legal effect. Noncitizens cannot directly purchase or lease customary
56

land. No citizen can purchase or lease customary land except in accordance with custom. All other dealings in customary land can only be entered with the State in accordance with Sections 10, 11 and 102 of the Act if it is by agreement with the customary owners and in accordance with Sections 12 to 16 of that Act if it is a compulsory acquisition by the State having barred individual direct dealings in customary land, when it is not the subject of any dealings as allowed under Sections 10, 11, 102 and 12 of the Land Act. The subject land remains customary land. Once any dealing is considered to be made in respect of a customary land, the first and foremost consideration is whether such dealing is being proposed in accordance with either Sections 10, 11 and 102 (by agreement) or Section 12 (by compulsory process). In either case, whether by agreement or by compulsory acquisition, such dealing will immediately trigger and activate the directive responsibility of the Custodian of Trust Land under Section 134 of the Act. The Custodian of Trust Land is appointed pursuant to Section 167 of the Land Registration Act 191 which states that:

57

167. Appointment of Custodian

(1)

The Minister shall, by notice in the National Gazette, appoint a person to be the Custodian.

(2)

An appointment under Subsection (1) takes effect or shall be deemed to have taken effect, as the case may bein the case of the first appointment on the commencement date; and in the case of a subsequent appointment at the time that the previous office holder ceases to hold office for any reason.

(a)

(b)

The duties of the Custodian of Trust Land are as specified under Sections 134 and 135 of the Land Act. The next question is what constitutes Trust Land which the Custodian is responsible for. Section 2 of the Land Act defines trust land to mean: (a) any land held by the Custodian for Trust Land in trust for a citizen, and includes __

(i)

land held in trust for unspecified citizens or for citizens generally; and
58

(ii)

land reserved or deemed to be reserved from lease or further lease under this Act and vested in the Custodian for Trust Land in trust for a citizen or citizens generally; or

(b)

any land reserved from sale or lease, or deemed to be reserved from sale or lease, under a repealed Land Act for the purpose of a native reserve,

other than land which is the subject of a State lease. It is not spelt out in precise and unequivocal terms that customary land is included in the definition of trust land and placed in trust and vested in the custody of the Custodian. The definition of trust land in (a)(ii) however includes land reserved or deemed to be reserved from lease or further lease under this Act and vested in the Custodian of Trust Land in trust for a citizen or citizens generally. This part of the definition renders that land reserved from lease or further lease is trust land. Further on in the definition of trust land, in section 2(b) it is stated, any land reserved from sale or lease, or deemed to be reserved from sale or lease, under a
59

repealed

Act

for

the

purpose

of

native

reserve,otherthan land which is the subject of a State lease,is trust land. Both these parts of the definition of trust land under Section 2, when read in conjunction with Section 132 (disallowed dealings over customary land); Sections 134 and 135 (dealings in customary land) and Sections 10, 11, 12 and 102 (State dealings over customary land), all point to the involvement of the Custodian of Trust Land in the protection of the interests of customary landowners in such deals. Be they acquisitions by agreement or compulsory process; temporary lease from customary owners or outright purchase, the Custodian of Trust Land must be involved to protect the interests of the customary landowners. Conflicting evidence were given by the Chief Secretary, Mr Manasupe Zurenuoc2(in his former capacity as Custodian of Trust Land), and the Acting Secretary for DLPP, MrRomilly Kila-Pat in respect of whether the Certificate of Alienability (COA) is a legal requirement for the Custodian to issue in acquisition of a SABL. Mr Zurenuoc in his evidence suggested it is a requirement while Mr Kila-Pat maintains his Department had considered this
2

Refer to the evidence of Mr Manasupe Zurenuoc, Chief Secretary toGovernment in relation to his sworn th th Affidavit dated 6 September 2011 and tendered into evidence as Exhibit MZ 13on 13 September 2011. See C.O.I Transcript of Proceedings SABL 17-13/09/11 @pages 22-44.
60

requirement not of any legal import and had done away with that compliance 10 years ago, (apparently without raising the issue with the Custodian who exofficio is the Secretary of the Department of Provincial and Local-level Government Affairs). The C.O.I. considers however that the operative nature of Section 132 being prohibitive of dealings over customary land coupled with the operative responsibilities of the Custodian under Sections 134 and 135 of the Land Act must be construed to mean all customary land are trust land, dealings over which can only be valid if conducted through the Custodian who represents the State as Trustee of all customary landowners. Further, thatonly dealings in customary land conducted in accordance with Sections 10, 11, 12 and 102 of the Land Act are allowed in exception of the prohibition under Section 132. This has the effect that the Ministers duty to carry out reasonable inquiry as to whether land proposed to be acquired under Sections 10 and 11 will be required by the customary landowners must be made through the Custodian of Trust Land. In any event, the C.O.I. is of the view that based on sound policy development on the mobilisation of customary land, the roles and responsibilities of the Custodian of Trust Land can be more clearly defined
61

in any review which may be undertaken after the findings of this Inquiry. At this juncture, having considered the lack of unequivocally expressed definition of trust land, over which the Custodian is responsible, the C.O.I. is of the view that this is an area of legislation which needs to be stated in more precise terms. Nonetheless, based on the C.O.I.s interpretations of these provisions both of the Land Act and the Land Registration Act, the Custodian of Trust Land must be involved in the processing and granting of SABLs as trustee of all customary land. It would appear that implicitly, the DLPP accepted over time these interpretations in view of the fact that it had followed the procedure of land acquisitions under Sections 10, 11 and 12 of the Land Act by ensuring the recommendation for alienability were given by the Provincial Administrator of the Province SABLs are located presumably to refer to the Custodian of Trust Land to issue Certificate of Alienability (COA). It is also clear that the Custodian alone has the sole power and function to execute a COA. This power also is not delegable. The power of appointment did not include the power for the Custodian to delegate the exercise of that power to anyone else. Such delegation of power cannot be implied.
62

The upshot is that any SABL granted over customary land leased by the State (lease-lease back) based on a lease of customary land acquired from the customary landowners without a COAexecuted by the Custodian of Trust Land will automatically be a nullity and void pursuant section 132.In his evidence to the inquiry, Mr Zurenuoc told the inquiry that only forty-seven (47) COAs were formally issued for SABLs by the Custodian of Trust Land betweenthe periods1995 2011 covering a total land area of 116,492.84 hectares. Mr Zurenuoc recalled issuing only nine (9) COAs between 2003 and 2011during his time as Custodian of Trust Land. If indeed that is the case, only those nine (9) SABLs will be valid while those without such COAs will be voidable. The Custodian of Trust Land provided to the C.O.I the list of the forty-seven (47) SABLs where COAs were issued and this list is referred toin the Table Bbelow;

63

Table B LIST OF SABLs ISSUED WITH CERTIFICATE OF ALIENABILITY Records of Certificate of Alienability (COA) Issued for SABL from 1995 2011
COA 4/2-95 92/5-96 93/5-96 94/5-96 95/5-96 96/5-96 97/5-96 98/5-96 99/5-96 100/5-96 101/5-96 102/5-96 105/5-96 106/5-96 107/5-96 108/5-96 109/5-96 110/5-96 111/5-96 112/5-96 113/5-96 114/5-96 115/5-96 116/5-96 117/5-96 118/5-96 119/5-96 120/5-96 121/5-96 LAND NAME Mandres Beliau Huwapien Tolum Nilkopon Kalilo Titolum Yalentigi Humelki Wamti Labaigu Meini Nayan Beliau Wurakelki Trnaluea Trnalvea Nanum Samoru Lupaite Eipalom Frenggaopau Paukel Eingom Pauke/Eryale Naupingo Siran Faipou Kufau Umam Taingo Emingowabe Moyu Wolpango A&B Naimbele A7B Elia AREA (ha) 12,300 875 440 414 359 1158 440 2030 101 59 163 1253 1.810 0.8614 0.7150 121 1000 1909 1909 646 800 1600 1200 1288 802 100 800 530 PURPOSE Agriculture Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest
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PROVINCE East New Britain West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik

Period of Lease-back 20 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99

122/5-96 123/5-96 124/5-96 125/5-96 126/5-96 127/5-96 128/5-96 128/5-96 129/5/96 130/5-96 45/9-2004 32/6-2006 2/4-2007 3/4-2007 4/4-2007 5/4-2007 8/4-2007 7/6-2010 16/4-2011 Total: 47

Tolum Tolum Tuliara (Sokei) Kiripau Wamti Yilkili & Wilkili Uh Simeninge Uh Simeninge Pare Angole Huhotonga Bilane Pilapila Amoamo Inaoea Matairuka (P521C) Bigairuka (P52C Saroa Keina (518C Bouferena (519C) Bore (Portion 517) Iokoru & Kahiru Vabari (Portion 643C)

277 277 81 81 1069 1069 440 440 440 440 1750 569 1,068 2,031 3,573 1656 2,514 1057.45 65,800 116,492.84 hectares

Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Agro-forest Oil Palm Dev. Rice Project Casava Project Casava Project Cassava Project Cassava Project Cassava Project LNG project Agro-forest

West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West Sepik West New Britain Central Central Central Central Central Central Central Central

99 99 99 99 99 99 99 99 99 99 99 40 40 40 40 40 40 30 99

The full details of twenty-five (25) of the seventy-five (75) individual SABLs are appended to Annexure 1 of the Report. 2.1.2. Judicial Precedents Of the two case precedents involving the question of validity in the procedures and processes toward grant

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of a SABL only one case is of direct bearing on this issue. The two cases are: (1) RAMU NICKEL LTD & 2 OTHERS v. THE HON. DR. PUKA TEMU, M.P., MINISTER FOR LANDS & PHYSICAL PLANNING & 2 OTHERS (N.3252 OF 2007) (O.S. No. 950 of 2005); and (2) YANTA DEVELOPMENT ASSOCIATION INC. & 4 OTHERS v. PIU LAND GROUP INC. & 3 OTHERS (S.C. NO. 798 of 2005) (S.C.M. No. 6 of 2004). The former case involved in essence only the issues of indefeasibility of an earlier granted lease, namely a special mining lease, over the later grant of a SABL over the same land, and litigation procedural matters of the National and Supreme Court Rules. This case will be of relevance when we consider the recommendations in respect of grant of a SABL where there already exist any other type of tenements over the same customary land. Thelatter case however is of direct relevance to this Inquirys considerations of procedures followed so far in the grant of SABLs.In the latter case the Supreme Court actually considered the issues of primary compliance with the procedures, inadequate as they are, in the grant of the SABL over 50,000 hectares of land within which the CRA operated Wafi Gold mine is located and also within which the very
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many different land areas owned by different tribes are located. In the most primary aspect, the Supreme Court in that case found that there was not even an application lodged for such a lease to be granted. The Supreme Court in fact came short of branding directly the then Secretary for the Department of Lands and Physical Planning, Mr Pepi Kimas as corrupt as he signed the grant as delegate of the Lands Minister. The Supreme Court in that case nullified, ordered and directed the immediate cancellation of that SABL described as Portion 8C, Milinch of Wasu, Fourmil of Markham, Morobe Province.The imperative of this case as a precedent is that the Courts of jurisdiction have the power to order cancellation of a SABL processed and granted irregularly. 2.2 Application of the Land Registration Act 1981 (as amended byAmendment No. 21 of 2009) Until the Land Registration (Amendment) Act 2009 certified on 20th. May, 2010, (No. 21 of 2009)came into force,only Section 98 related to customary land. Section 98 provides that: (1) Notwithstanding any law to the Contrary, a right privilege or advantage over or affecting land may, with the consent of the Custodian, be created by the registered proprietor by instrument in the name of the Custodian as a trustee for customary owners.

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(2)

Where a right, privilege or advantage is created under Subsection (1), the Registrar shall register the instrument.

The Land Registration (Amendment) Act 2009 however created a whole new Part III A Registration of Customary Land(hereinafter referred to as Amendment No. 21 of 2009). The C.O.I. notes that the principal Act, the Land Registration Act 1981 in its preamble states that Act as Being an Act to unify the law relating to the registration of title to land, and for related purposes. The C.O.I. notes that the creation of Part III A in the said Amendment Act was to cater for the registration of title to customary land and/or interests therein. The C.O.I. notes that the provisions of the said Amendment Act makes no reference to its derivative jurisdiction to conduct registration of ownership, interests and title in customary land bearing in mind the prohibitive nature of Section 132 of the Land Act; the enabling powers in exception to Section 132 under Sections 11 and 102 of the Land Act in processing and grant of SABLs and the omission in the said Amendment Act to define the roles and powers of the authorities particularly responsible for the processing toward grant of SABLs as opposed to the roles and powers of the newly established office of the Director of Customary Land Registration under the Amendment Act.

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The C.O.I. examines briefly the provisions of the Land Registration (Amendment) Act 2009, in particular, Sections 34A to 34Q which provide for the procedures to be followed to eventually have title or other interests in customary land registered. It is noted that under Section 34D only representatives of an Incorporated Land Group may apply for registration of customary land. It is not stated if any other person may apply for registration of customary land nor does it expressly bar any other persons from making such an application. The rest of the provisions of the said Amendment Act set out the procedures to be followed in processing applications for registration of customary land up to and including the issue of certificate of title to a registered customary land. Once a portion of customary land is registered and title is issued, under Section340 of the said Amendment Act, the Incorporated Land Group registered as owner of the clan land has power to grant derivative rights and interests in the land or portions to itself, any land group, incorporated or unincorporated, an individual or any entity for rent or rent-free. We note significantlythat under Subsection (3) of Section34O, transfer of allodial title in clan land is prohibited. Further on at Section 34P of the said Amendment Act it is noted that statutory approval under Part XVII of the Land Act

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(Approval of Dealings) is required for any dealings in registered customary land. The C.O.I. had neither been informed during evidence given by officials of DLPP nor on its own initiative been able to establish if amendments to Sections 11 and 102 of the Land Act had been enacted to align these provisions with the said Amendment Act and vice versa. We believe no such amendments were enacted. In particular this C.O.I. is of the view that powers exercisable in the grant of SABLs ought to be brought into harmony with the powers exercisable in the registration of customary land and thereafter. The distinction however between an SABLand Registered Customary Land under Amendment No.21 of 2009 is that SABL involved acquisitions of customary land with the State as the intermediary for the use of the customary owners of those lands themselves or any other entity of their choice, while registered lands under Amendment No.21 of 2009 are acquired through that process and title issued directly to the Incorporated Land Group registered for the members of the Clan who own the land in question. The State is not involved at all in the customary land registration process. Our observation and interpretation of the principal legislations relating to SABLs discussed above concludes the C.O.I.s determination of the legal authority for the issuance of SABL

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pursuant to in particularly the Land Act 1996 and Land Registration Act 1981under TOR(a). 2.3. Summary The C.O.I. is of the view, that, in accordance with TOR (a), examination of the applicable provisions of the Land Act and the Land Registration Act conclude the C.O.I.s determination of the legal authority for the issuance of SABL. The other Legislations applicable in the administration and operation of SABLs will be examined under TOR(b) in Part 3 of this Report.

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PART 3 3. ADMINISTRATION OF SPECIAL AGRICULTURAL & BUSINESS LEASES (Determine Procedures For Issuance of SABLs If In Compliance With The Law) Under TOR (b) the C.O.I. is instructed to determine the procedure for the issuance of SABLs in accordance with the legal authority if any .We understood this instruction for us to examine the administrative procedures adapted by the Department of Lands and Physical (DLPP) in the administration of SABLs including: procedures for acquisition of customary land from the customary landowners by the State under Section 11 of the Land Act; procedures for the grant of title by the Minister for Lands and Physical Planning pursuant to Section 102 of the Land Act over the customary land acquired under Section 11 of that Act; procedures required under the Survey Act in the related survey plan to map out and register the survey map of the land being dealt with pursuant to Sections 11 and 102 of the Land Act; in the operations of SABLs which involve forest clearances for agriculture development purpose, the procedures required to be followed under the Forestry Act, Environment Act, and Conservation Areas Act;

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in the operations of SABLs which involve land within declared planning areas, the procedures required under the Physical Planning Act to be followed; and

procedures (if any) required under the applicable provisions of any other law in the operations of SABLs.

3.1. Administrative Procedures Followed in the Acquisition of Customary Land and Grant of SABLs under The Land Act. Pursuant to Section 10 of the Land Act 1996 and the Land Regulations made pursuant to Section 175 of that Act, the administrative procedures required under those Sections are followed for the purpose of Sections 11 and 102 of that Act in the process and grant of a SABL. At the time of this Inquiry no Regulations in respect of SABLs were made pursuant to Section 175 and none are in force as a guide for processing of acquisitions of SABLs as allowed under Sections 11 and 102. The Inquiry received evidence from DLPP in this regard from the Acting Secretary of the Department, MrRomilly Kila Pat, who at the time was the Deputy Secretary (Customary Lands Service)when most of the SABLs were granted. He gave evidence to this Inquiry after his appointment as Acting Secretary of DLPP on 18th July, 2011. MrRomillyKila Pat sets out the detailed procedure for dealing with the process for the grant of SABL in his affidavit sworn and

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tendered to this Inquiry on 16th August, 2011, tendered and marked as EXHIBIT RKP1. Of relevance first of all is MrRomilly Kila-Pats evidence that the current processes of issuing SABL involve five (5) divisions within DLPP. They are; (1) (2) (3) (4) (5) Office of the Secretary of DLPP. The Division of Customary Land Leases. The Division of Land Information Services. The Office of the Surveyor General, and The Office of the Registrar of Titles.

MrRomilly KilaPat stated further that the Office of the Registrar of Incorporated Land Groups (ILGs) is not always involved in the process of a SABL grant as it is not a prerequisitefor customary landowners to have ILGs registered before being considered for such a grant. MrRomilly KilaPatthen went on to set out the procedures followed in the grants of a SABL as follows:

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1)

Consultation and Survey of Customary Land for SABL. Initially customary landowners approach

developers/investors or vice versa to develop an identified land area. They approach the DLPP or its Provincial Lands Officers to conduct awareness of both the proposed development and the SABL type lease to be processed over the land to be acquired for SABL. 2) Preliminary Advice to the Landowners and Developers. Upon the approach by the landowners and/or the developers, among the preliminary advice are advices as to registration of incorporated land groups (ILGs). If they choose to register an ILG or ILGs they are then assisted in submitting their applications for that purpose to the Registrar of Incorporated Land Groups. The landowners then engage a surveyor to survey the land proposed to be granted a SABL status. Usually the developers/investors put capital up front for these purposes. Once the land is surveyed the survey plan is lodged by the surveyor to the office of the Surveyor General for examination, and if approved then registration follows thereafter.

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A copy of the survey once registered is then lodged with the Chief Information Officer for file creation of the registered parcel of land. 3) Lodgement of Lease/Lease Back Application. After the lodgement with and registration of the survey plan with the Office of the Surveyor General, the landowners lodge with the Customary Leases Division their application for grant of SABL over the land comprised in the survey plan of the land together with a development proposal attached to the application. MrRomilly KilaPat states that the DLPP does not have a proper application form for the purpose of this application and the DLPP accepts applications submitted in an ordinary land tender form or by a mere letter of expression of interest upon payment of K10.00 application fee. 4) Issuance of Land Instruction Number by DLPP. Upon receipt of the application for a SABL, the Customary Leases Division of the DLPP conducts a status check to ensure there are no existing leases over the proposed SABL area and that it is customarily owned. Upon confirmation of the status that there is no existing lease, a Land Instruction Number is registered in the Land Investigation Instruction Register and is issued to the Provincial Lands Office in whose Province the proposed SABL area is located. Where application for a SABL grant is made at a Provincial Lands
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office, that office then requests for a Land Investigation Instruction Number to be registered and issued from the DLPP through the Customary Leases Division. DLPP is the only authority that issues the Land Investigations Instruction Number. 5) Land Investigation Upon Receipt of Land Investigation Instruction as Numbered. On receipt of the Land Investigation Instruction Number including the instruction itself, the Provincial Lands Office concerned together with the DLPP Customary Leases Division have their officers assigned to carry out the land investigation. The land investigation comprises of visits to the proposed SABL area and holding of meetings with the landowners for the purposes of (i) conducting awareness with the landowners including interviews to determine if they want to lease their land for SABL; (ii) record all necessary information including topography, land ownership, consent of the landowners for the alienation of their land, appointment of agents to execute the lease of the land to the State for lease-back, and consent

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of adjoining landowners which confirms the subject land is not theirs; and (iii) the Land Investigation Report is then compiled jointly by the concerned Provincial Lands Officers and the Customary Leases Division of DLPP and referred of the to the Provincial Provincial Administrator relevant

Administration who may, if satisfied, execute a recommendation for land alienability. 6) Due Diligence After Receipt of Completed Investigation Report. The duly executed Land Investigation Report complete with the applicable Provincial Administrators Recommendation as to Alienability, is then referred to the Customary Leases Division for processing. The assigned Customary Leases Officer checks to ensure all necessary matters needed to be covered by the Report, have in fact been satisfied. In the event ILG numbers have been referred to that Officer, he/she also ensures that all these ILGs certificates have been submitted.

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The assigned Customary Leases Officer finally confirms that there is a copy of the Registered Survey Plan attached to the application. If the Land Investigation Report is not in order, it is referred back to the Provincial Lands Officer concerned to be rectified and/or completed thoroughly. Once satisfied that all necessary matters have been satisfied the Customary Leases Officer then determines whether the landowners have agreed to the lease of their land before the preparation of a lease/lease back agreement. 7) Preparation and Execution of the Lease/Lease Back Agreement. After the preceding due diligence, the Customary Leases Officer prepares the Lease/Lease Back Agreement and is brought to the applicable Province for execution by the landowners or by their duly appointed agents in the presence of the Customary Leases officer and the Provincial Lands officers. The executed Lease/Lease Back is then taken back to the Customary Leases Division for execution by the Lands Minister or his delegate the Secretary of the DLPP. There may be special projects initiated by the National Government using the SABL type lease when the Minister and the DLPP Secretary attend the signing.

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8)

Preparation, Execution and Publication of Notice of Direct Grant (of SABL). After execution of the Lease/Lease Back Agreement, the Customary Leases Officer requests for the Lands file from the Information Services Division which had already been created. All documents required in the SABL process are attached to the Lands file and a Direct Grant Notice pursuant to Section 72(c) of the Land Act 1996 is prepared by the Customary Leases Officer in duplicate. A minute is prepared and attached to the Lands file to advise the Minister or his delegate to peruse and approve and execute the direct grant notice which is then gazetted in the National Gazette. Once gazetted a copy of the notice is sent to the Customary Leases officer.

9)

Registration and Issuance of Native Land Dealing Number. On receipt of the gazetted notice of the direct Grant, the Customary Leases officer requests for the Native Land Dealing (NLD)3 to be registered with the office of the Surveyor General, whereby the Surveyor General checks that all the documents are in order. If in order the NLD is registered and a number issued. A NLD contains the following documents:

The description Native Land Dealing(NLD) had been substituted with the description Customary Land Dealing (CLD).
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(i) (ii) (iii) (iv)

Executed Lease/Lease Back Agreement. The Schedule of Owners. The Agency Agreement. The Declaration of Customary Land in relation to Land Tenure (Ownership).

(v) (vi) 10)

The Certification in Relation to Boundaries. The registered Survey Plan.4

Final Process For Title To Be Issued By The Registrar Of Titles. The final step after the NLD is registered, the Customary Leases Officer prepares the SABL Certificate of Title in duplicate which are attached to the Lands file with a checklist which is referred to the Deputy Secretary-Customary Lands Services through the Director of Customary Leases. The Deputy Secretary then refers it to the Minister or his delegate for approval and execution. The Certificate of Title as executed by the Minister or his delegate is referred to the Registrar of Titles for registration.

All the documents referred to under (i) to (vi) would have and should have been produced in the Land Investigation Report.

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MrRomilly KilaPat, after giving evidence on the current and existing procedures as set out above for the processing and grant of SABL also informed the Inquiry that the DLPP is presently reviewing the Land Act, 1996 and among the priorities is the review of the current procedures for the grant of SABL to further improve the procedures, in particular, to avoid granting of irregularly processed SABL applications. We will examine this process under the segment of this Report under Part 3.4 when we will refer to the affidavit evidence of Mr Adrian Abby5, Acting Deputy Secretary (Customary Leases Division), DLPP, sworn and produced before the Inquiry on 16th August, 2011. 3.2 REGISTRATION OF TITLES (REGISTRAR OF TITLES) The next witness on the Administrative Procedures in the processing and grant of SABL was Mr Henry Wasa, Registrar of Titles6. Mr Wasa gave evidence as to the steps taken administratively for the registration of a SABL on receiving the Certificate of Title as executed by the Minister (refer to step no.10 in MrRomilly KilaPats evidence). These steps Mr Wasa says involve a check-

The Affidavit of Mr Adrian Abby was tendered at the Inquiry on 16 th August, 2011 and marked as Exhibit AAE 2. 6 Mr Wasas sworn Affidavit dated 23/08/11 was tendered into evidence as Exhibit HW3.Refer to his evidence in C.O.I. Transcript of Proceedings SABL 7-23/08/11 @pages 2-39. Mr Wasa also provided additional Affidavit and sworn evidence on oath ass required by the C.O.I.
5

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list of documents which must have been properly compiled and executed by the various appropriate persons. These include: 1) Proof of registered survey plan of the subject land which is required to be attached to the application for grant of that SABL. 2) confirmation of the SABL having been prepared under the applicants name or nominee as required under Section 102(2) of the Land Act and incorporated in the Lease/Lease Back Agreement. 3) 4) 5) Proof of receipt of payment of K10.00 application fee. Proof of receipt of payment of K50.00 lease preparation fee. Confirm if all the requirements of Sections 11 and 102 of the Land Act have been satisfied. 6) Confirm if the instrument of lease as prescribed under Sections 11 and 102 of the Land Act has been approved by the Minister or his delegate. 7) Confirm if the instrument of lease as prescribed under Sections 11 and 102 of the Land Act had been duly gazetted in the National Gazette. 8) Check if Customary Land Dealing (CLD) formerly Native Land Dealing (NLD) had been properly compiled and
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contains all relevant documents (as specified by Mr RKP in his evidence). 9) Ensure there is in existence the applicable Lease/Lease Back agreement duly executed by the landowners and the Minister or his delegate. 10) Finally, check if the Land Investigation Report (LIR) had been duly compiled and executed by the Provincial Lands Office of the applicable Province. Mr Wasa stated that the new leases check-list form is the same used to verify various requirements prior to registration of all types of new leases, among them the SABL, and address the specific aspects relevant to the type of leases, such as in respect of a SABL, importantly there must have been landowners consent which is a compulsory requirement. When all of the abovestated checks establish satisfactorily that a SABL for registration should be registered, a new file in the Office of Registrar of Titles is created and all of the abovementioned documents are placed in that file and the land description is entered in the Register Book. The next available volume and folio number is noted from the Register Book and is affixed onto the SABL Certificate of Title. Once that is done, it is the Registrar of Titles or his Deputies who sign the SABL Certificate of Title and the date of approval of that Certificate

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is entered in the Register Book. The owners copy of the Certificate of Title is released to the owner. All of the process of registration of Certificate of Title is then entered into the DLPP computer database system, namely the Land Geographic Information System(LAGIS). The completed file is then stored in the Registry. In his evidence, the Registrar of Titles Mr Wasa said his office performs to a strict statutory duty and he has no role whatsoever in the earlier processes including initiation of the procurement of a SABL until a Certificate of Title prepared by the Deputy SecretaryDivision of Customary Leases and duly executed by the Minister or his delegate is sent to him for registration of that Certificate of Title. He said his office does that in accordance with Part III Division 1 (Sections 1 to 11) of the Land Registration Act 1981. Mr Wasa emphasised his office adheres to this process in respect of all instruments affecting interests in all types of land, among the SABL. The segment of this Report, based on the evidence presented particularly by the Acting Secretary of the DLPP, Mr Romilly KilaPat, and the Registrar of Titles, Mr Henry Wasa, fully sets out the present procedures followed in the initiation to the conclusion of the grant and registration of a SABL Certificate of Title. The administrative procedures followed in the acquisition of customary land to the grant of title under Land Act included also the compliance requirements under the Survey Act.

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The administrative procedures as set out in Mr RKPs evidence do not indicate any early involvement of other State agencies in the procurement of SABLs. This is obvious when viewing his evidence and the evidence of Mr Kanawi Pouru, the Managing Director of the National Forest Services of the PNG Forest Authority (PNGFA) the evidence of Mr Anton Benjamin (a/Secretary, DAL) Mr Francis Daink (Deputy Secretary, DAL) and Dr Wari Iamo (a/Secretary DEC). During public hearings,awareness areconducted amongst the customary landowners and as a matter of practice, State agencies responsible for SABL become involved because of their respective involvement through licensing and permit processes. 3.3. Administrative Procedures Followed in The Registration of Title andOther Interests in SABLs under the Land Registration Act 1981(asamended) As stated in the evidence of Mr Henry Wasa, the registration of title and other interests in customary land is effected by his office in compliance with procedures for registration of different interests generally provided for under the Land Registration Act. As we know, the effect of registration among many is the indefeasibility of title. In Mr Wasas evidence he states that once customary land had been acquired as a SABL, all matters of registration apply in similar manners to all other State Leases except for the special provision in relation to registration of interests created by a
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registered proprietor in the name of the Custodian for customary owners under Section 98 of the Land Registration Act 1981. However Mr Wasa did not give any evidence in respect of the procedure imposed under the Land Registration (Amendment) Act 2009. We note however that the Amendment does more than just registration of title and interests in customary land. As we noted earlier, the Amendment creates a whole new form of institutionalisation of customary land running separate but parallel to SABLs. The C.O.I. finds that the said Amendment does not apply to SABLs per se except as discussed earlier in Part 2 (supra). 3.4 DLPP Proposed New Administrative Procedures in the Processing of SABLs. Evidence on the Proposed New Administrative Procedure was given by Mr Adrian Abby (hereinafter referred to as MrAA) in his affidavit sworn and filed on 16th. August, 2011, in which he deposed to the facts of the DLPP undertaking a review of the procedures for the processing of grants of SABLs. However, Mr AA makes no reference to the Land Registration (Amendment) Act 2009 and or the Land Groups Incorporation (Amendment) Act 2009.

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At the time of giving evidence,Mr AA was the Acting Deputy Secretary (Customary Land Services Division) of the DLPP.He set out the following proposed new procedures for SABL grants which are yet to be adopted by the DLPP: 1) Lodgement of applications

Customary landowners who wish to apply for a SABL may submit an application in the approved form (assuming an appropriately designed form is approved by the Minister). Attached to the application form submitted should be the following attachments:(i) Development proposed which should indicate the level of impact of the development and its viability; (ii) consent forms from the relevant government agencies e.g. Department of Environment and Conservation and PNG Forest Authority; (iii) topographical map; (we are not sure if he is referring to a registered survey plan here); (iv) Incorporated Land Groups Certificates; (v) genealogy of the landowners; and (vi) a land use plan.

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2)

Issuance of Land Investigation Instruction Number

The application is either submitted to the Provincial Lands Officer in which the proposed SABL land area is located, or directly to the DLPP, Customary Lands Services Division. If submitted in the Province, it is sent to the Customary Lands Services Division (DLPP) with a request for a Land Investigation Instruction Number. If directly submitted to the DLPP the Customary Lands Division satisfies itself of the application having attached to it the accompanying documents specified in sub-paragraph 1 above before that Division issues a Land Investigation Instructions Number to the concerned Provincial Lands Office to conduct the Land Investigation. 3) Approval for Land-use Plan

The Customary Leases Division of DLPP will on receipt of the application together with the attachments request the Physical Planning Division for a land use plan. According to Mr AA this is a new additional procedure proposed for refining the processing of SABL applications. On the request for a land use plan the Chief Physical Planner, Planning (CPP), makes an assessment to determine the magnitude of the proposed development and land use requirement. The CPP will determine if it is a major impact
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project or a minor impact project. In case of determining either they will be treated differently as follow:(i) Minor Impact Project:-

Where an application is assessed to be a minor impact project the application will be treated as an application for a planning permission which will be in triplicate and contain the following: (a) Development Proposed, (b) Consent from relevant Government agencies, (c) Topographical map, (d) ILG Certificate, (e) Genealogy, (f) Proposed Land use Plan, and (g) Zoning proposal of the area. The Chief Physical Planner or the Provincial Physical Planner assesses the special impact of the proposed project and sends it to either the National or Provincial Physical Planning Board with recommendations. The Physical Planning Board will consider the application and invite the applicant to present the land-use proposal and after deliberations the Board notifies the applicant of its decision. Where the Board is satisfied that the proposed development or zoning (re-zoning) or a purpose which is the subject of an application for planning permission will or is likely to require
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provision of or increase the demand for a public or private amenities, utilities and services, the Board before approving planning permission will enter into an agreement with the applicant to provide those amenities, utilities and services. The approved planning permission is sent by the Chief Physical Planner to the Surveyor General as evidence of all requirements of Section 5 of the Physical Planning Act 1989 have been satisfied. (ii) Major Impact Project:Where an application is assessed to be of a major impact project the applicant must submit the following: (a) (b) land use plan; and zoning plan for subject planning area.

The Chief Physical Planner seeks the Ministers consent for a SABL pursuant to Section 50 of the Physical Planning Act 1989.The Minister after advice from the National Physical Planning Board or Chief Physical Planner may consent to the preparation of land use plan and will by notice in the National Gazette order a development plan, specified type of development plan prepared and specify any matter that shall be covered by the development plan.

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The Chief Physical Planner or Provincial Planner shall be responsible for the preparation of the development plan. Either of the two shall prepare the terms of reference and submit to a steering committee and then either to a Provincial Executive Council, National Executive Council, National Physical Planning Board or Provincial Physical Planning Board. The Chief Physical Planner or the Provincial Planner will then draft the development plan and then publish the draft Land use plan in the media where comments and objections are submitted to the National Physical Planning Board. Where there are no comments the final development plan is lodged to the Physical Planning Board and if it is refused, reasons for its refusal are given. After the approval of the subject plan and within the time specified it is then submitted by notice in the National Gazette to declare the approval of the plan and the date of gazettal is the date of effectiveness of the execution of the land use plan. Mr AA stated that all of the preliminaries set out in the assessment of minor impact project or major impact project category are carried out in accordance with the existing procedures of the National Physical Planning Board and also of other Provincial counterparts where such procedures are established. The ultimate result of these steps however, where the planning permission is approved,is that the application progresses to the next step which he said was the new additional

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step proposed for customary lands.Mr AA then went on to state the following: 4) Publication of Land Investigations. (a) Once an approval from the Physical Planning division is submitted, the Customary Leases Division then publishes a notice to the public of the ministers intention to conduct a land investigation and a survey in a particular area. (b) This is published in the daily papers. It will be aired on radio stations and a copy of the notice will be sent to that particular province, district and local level government area. (c) The notice will be published at the cost to be borne by the applicants and a 30 days waiting period will be given for objections. (d) This notice also gives other boundary sharing landowners or other parties who have interests in their land the benefit to know if the survey and land investigation will not encroach onto their customary land. (e) This is a measure identified as a factor that has not been considered in the past in facilitating the SABL through the lease/lease back arrangement that caused a
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lot of outcry from landowners, non-government organizations and other agencies of customary land being leased. (f) Land investigation and survey are vital components to identify legitimate landowners and the boundary of their customary land subject to registration. (g) Landowners claim that they were never consulted in the first instance when the land investigations and survey were conducted and never agreed to be a sub clan. An individual or land owning company, having title to land and later find out there are also disputes of neighbouring land owners claiming encroachment onto their land. (h) This new process will therefore be a measure to ensure that all landowners are aware of an investigation and survey being conducted. This notice can be published in the newspapers, radio stations, whereby landowners are then given the opportunity to object by writing to the Minister and if there are objections a land investigation will not be conducted and the Minister may refer the subject landowners to the local land court pursuant to Section 9 of the Land Act 1996 to determine the ownership of the land. (i) The Department will not conduct an investigation where an objection is received.
95

5)

Conduct of Actual Land Investigation. The land investigation report is the co-process of this whole SABL process whereby a Land Investigation Report is compiled and in that investigation report, it contains the vital information to proceed with acquiring the lease. Landownership is determined, the types of rights of clan members over that Land, the agents that will be appointed to execute the special agricultural lease arrangements and other recommendations made by the investigating officers. The stakeholders involved in the land investigation are the District Land Officers, Provincial Lands Officers, DLPP, Customary Lands Officers. (i) If the Department or the Provincial Lands Office does not receive any objections, a land investigation will be conducted whereby the Provincial Lands Officer, the Department of Lands Customary Lands Officers, a Valuer and a surveyor will go to that particular area to conduct the investigation. (ii) During the land investigation, the following steps will be conducted. (a) Awareness of this Special Agriculture Business Lease process. This awareness is conducted to ensure that landowners understand what a
96

SABL

is

and

the

advantages

and

the

disadvantages in being granted the lease. Awareness will be given about the sub lease agreement, the term of the lease with the developers and the benefits that will derive from the SABL. (b) Identification of the Landowners. All

landowners of that particular area will be identified and included in the land investigation report. Also which tribe or clan that they represent will be recorded. (c) Landowners names which have been collected both old and young will be included in the LIR and landowners over the age of 18 will be interviewed as to person or persons they want to be appointed as their agents. (d) Term of Lease.This is to determine how long the landowners want their land leased for SABL purposes. (e) Demarcation of the land boundary. An applicant who applies for that particular lease will hire a surveyor to demarcate the boundary. He will be required to walk the land and demarcate the boundary.

97

Landowners of land adjacent to that particular land of interest will walk the boundary to confirm and ensure that the landowner applicant is not encroaching onto the other landowners land. (f) A valuation of the land will be conducted by a Valuer who will also walk the land during the boundary demarcation. (g) Confirm the type of dealingthat the landowners are agreeing onfor the Special Agricultural and Business Lease. (h) Compiling the land investigation and obtaining the signatures of all those landowners who agree to lease their land, recording the names of the agents who will carry out the transactions on behalf of the landowners, all data that is required will be collected and inserted in the land investigation report. 6) Registration of Survey. (a) Once the land investigation is compiled the officers return to their respective offices and a survey of the particular area is drawn up by the Surveyor.

98

(b)

Survey registration is very important as far as SABL is concerned because a survey comes as a result of field work carried out by a registered Surveyor and upon completion of the field work, a file is lodged with the office of the Surveyor General.

(c)

The file contains the drawn plan of the land with a survey book which has the survey coordinates that was obtained through the use of the total station or theodolite. The Surveyor General assigns a survey examiner to examine the lodged survey plan to ensure that survey regulations or code of practice has been complied with.

(d)

The Surveyor General then refers the survey file to a survey allocation officer and a portion number is given and the plan is finally approved by the Surveyor General by way of his signature on the plan.

(e)

The primary reason to have a registered plan is due to the fact that land is subject to registration and must have an exact area of land documented on the title deed.

Approval

of

Land

Investigation.The

Land

Investigation Report once compiled is then endorsed

99

by the Provincial Lands Officer and is sent to DLPP headquarters for verification purpose. Once verification is conducted and where the Director Customary Leases, is of the opinion that the LIR is in order, it is sent to the Provincial Administrator to recommend for a Special Agriculture and Business Lease. 7) Preparation of Lease. This step on to the final issue of the Title by the Registrar of Titles are the same as the remaining steps from the execution of the Lease-Lease Back Agreement with the State. The step onwards to the Title being signed by the Registrar of Titles as set out by MrRomilly KilaPat, in the earlier segment of this Report. (Part 3.2) According to Mr AA, these are the proposed new administrative procedures being prepared to be adopted by the DLLP to improve the current ....SABL process..... whereby it provides for more notifications, more public awareness, and whereby, all physical planning requirements for the appropriate use of the land will be conducted by the developer (our underlining) to ensure that the land being proposed for the SABL is appropriate and comes within the perimeters of the planning requirements of Papua New Guinea.
100

Mr AA did not suggest in any way that the proposed new procedures as set out above in the administration of SABLs will run parallel to the procedures spelt out under the provisions of the Land Registration (Amendment) Act 2009(Amendment No. 21 of 2009). In fact it is quite clear that the administrative procedures in respect of SABLs will be different from the procedures set out under Amendment No. 21 of 2009. The clear distinction obviously then is that SABLs are converted through the State for use by the customary landowners while Registered Customary Land is directly registered in the name of the customary landowners principally through incorporated land groups. The effect of these two parallel systems of dealings in customary land arediscussed under TOR (h).(Effectiveness or Otherwise of Existing Legislation and Policy Framework in Respect of SABLs and Administrative Mechanismsfor Administration of SABLs in the Improved Management of SABLs in Future). At the outset the C.O.I. noted that the proposed new administrative procedure was not supported by any evidence of the legal basis upon which it is premised, nor was it made clear if these procedures would come under subordinate legislation
101

The C.O.I.has earlier noted that Mr AA makes no mention of the Land Registration (Amendment) Act 2009 (referred to as Amendment No. 21) in his evidence; particularly in view of the fact that that law was enacted in 2009 and awaiting certification, and indeed while this C.O.I. was still deliberating, Amendment No. 21 was certified and came into operation in March 2012, as notified by the Lands Technical Advisor on the C.O.I., although it is noted on the websitehttp://www. paclii.orgto have been certified on 20th. May, 2010. Notwithstanding the date of certification, in the evidence of Mr AA he makes no mention of whether the proposed new procedures for the administration of SABLs took into account the provisions of Amendment No. 21. Some meritorious aspects of the proposed new

administrative procedures are: stricter processing and approval of land use plan; assessments of project impact whether minor or major; the land investigations process itself; survey registration to follow thereon These proposed new procedures however should not be concluded in isolation from consultation and inter-action from and with other State Agencies including DAL (especially), PNGFA, DEC, Provincial Governmentof the Provinces the proposed SABLsare located.
102

3.5. Application of the Survey Act 1969 (Chapter 95) All proposed areas to be incorporated in a SABL without exception require surveys to be carried out. Accordingly as stipulated in Section 3(1), the Survey Actmust be applied to all SABLs. Pursuant to Section 3(2) of that Act, a survey carried out or a plan prepared otherwise than in accordance with Section 37 cannot be used in any document dealing in land. Section 37 states that ....an authorised survey must be carried out subject to any directions given by the Surveyor Gen eral... and .....be made in accordance with any survey information supplied by or by authority of the Surveyor General.... All such surveys or survey plans then must be lodged at the Plan Registry, and under Subsection (3) of Section 37A, cannot be registered until approved by the Surveyor General and cannot be used in any dealings in land without the consent of the Surveyor General. Dealings in land is assigned the same meaning as in Section 3(4) of the Act and include a transfer of title, a mortgage, any other encumbrances, a lease, a grant of an easement, right, power or privilege, over, or in connection with the land. For SABL, the required surveys can be accepted from the most accurate to the error margin (at the minimum) of 1m to 1000m. A Rural Class 3 survey is allowed that error margin.

103

Most if not all the surveys of SABL located in the rural areas are within the Rural Class 3 classification. The imperative however is that once approved by the Surveyor General a survey plan can be used in any land dealing. The technical aspects of survey plans of SABLs and their uses after the Surveyor Generals approval is not the problem. The problem it seems is the due diligence required to ensure that customary land not belonging to the SABL proponents being erroneously or mischievously or even fraudulently included in the survey plan for the SABL area. The C.O.I. finds that to this extent, no provisions exist in the Land Act and the Survey Act to avoid or correct such an occurrence. The C.O.I. notes in the DLPPs proposed new administrative procedures in processing of SABL...,that survey of the area proposed for a SABL is to be carried out after the land investigations have been completed and a Land Investigation Report have been endorsed by the relevant Provincial Administrator. The C.O.I. noted that this was a departure from the procedures followed to date as set out in MrRomilly KilaPats evidence, and the C.O.I. considers it a good change to minimise incidences of error, mischief and fraud.

104

Again the C.O.I. finds that no provisions of the Survey Act connect to the special care which must be taken in processing SABLs. That is also a matter to be discussed further under Part 4 (TOR (h)) of this report. 3.6 Administrative Procedures Followed in Respect of Planning Under the Physical Planning Act 1989. No evidence was given by DLPP as to the implication of the physical planning laws relating to SABL.It is our view though that at some point, aspects of physical planning will clash or contradict or affect SABLs in some respects. However, we note that no administrative procedure is in place to cater for this possibility.There is no requirement in terms of compliance and approval in physical planning before the lease of customary land for lease-back pursuant to the Physical Planning Act,1989. The only time when an approved development plan may be required is after the grant and depending on whether the proposed development on that land is within a physical planning zone. Part VII of the Physical Planning Act, 1989 makes provision for the control of the development and use of land and comprises of section 67, 68 and 69 inclusive but for present purposes, only sections 67, 68 and 69 are relevant.

105

Sections 67, 68 and 69 are as follow: 67. Declaration of Physical Planning area in the

national interest.

The Minister may, after-

(a) consideration of the advice of -

(i)

the National Physical Planning Board; and

(ii) the Chief Physical Planner; and

(b) consultation with where a province is affected the provincial minister of that province; and (ii) where the National Capital District is affected the National Capital District Commission,

(i)

by notice in the National Gazette declare an area to be a physical planning area in the national interest. 68. Declaration of Physical Planning area by provincial minister.

A Provincial minister may, after __

(a) consideration of the advice of __

106

(i)

the Provincial Physical Planning Board; and

(ii) Senior Physical Planner in the province; and

(b) obtaining the consent of the Minister,

by notice in the National Gazette, declare an area within the province to be a physical planning area. 69. Minister may refuse consent, etc.

(1) Where a provincial minister requests consent to a proposed declaration under Section 68, the Minister shall, within one calendar month of receiving the requests-

(a) give his written consent; or

(b) decide that the area should be declared as a physical planning area in the national interest, refuse the consent and refer the matter for consideration to-

(i)

the National Physical Planning Board; and

(ii) the Chief Physical Planner; or

(c) refuse his consent

107

and shall, in the case of Paragraphs (b) and (c) give the reasons for his decision.

(2) Where the Minister fails to respond in accordance with Subsection (1), he is deemed to have given his consent under Section 68(b). Essentially, if, aSABL or a proposed SABL is within a declared Physical Planning Area or subsequently becomes part of a Physical Planning Area, an approved development plan will be required.There is no provision under the current Act that deals with developments that had already taken place on a SABL and its area later becomes part of a declared Physical Planning Area. There is a need therefore to bridge this void in the legislative provisions linking the development already existing on a SABL prior to the declaration of a Planning area. Grants made in respect of SABLs located outside of planning zones and developments of which involve agriculture do not attract physical planning approvals under the current laws and regulations.

108

3.7 Application of the Forestry Act, 1991 (as amended) by Forestry (Amendment) Act 2000 (No. 36 of 2000) and Forestry (Amendment) Act 2007 (No. 19 of 2007)) 3.7.1. Forestry Law and SABL Processing

There is no requirement in the Forestry Act for any requisite compliance before the lease of customary land from customary landowners by the State and the subsequent grant of a SABL. However, where a SABL has been granted for the purpose of a proposed agricultural development in a forested area, necessitatingforest removal, and where the removed forest products are to be used commercially including sale, such activity will attractthe regulatory requirements of the Forestry Act, 1991(as amended), particularly Sections 90A and 90B. Evidence was received from the Mr Kanawi Pouru7, the Managing Director of the National Forest Services, the administrative arm of PNGFA, in respect of the procedures followed in receiving and evaluating applications for Forest Clearance Authorities (FCAs) where SABLs for agriculture purposes require clearances of large forest areas. The vital parts of Mr Pourus evidence in the operation of SABLs are as follows:

Transcript of Proceedings SABL 9 -25/08/11 and SABL 31/08/11 @pages 2-44, Affidavit of Kanawi Pouru sworn on 24th August 2011 was tendered into evidence on 25 th August 2011 and marked as Exhibit KP6 `
7

109

(1)

if trees in the forest when cleared for agriculture development are going to be sold or dealt with commercially, the PNGFA becomes involved in invoking its regulatory powers under Sections 90A and 90B of the Forestry Act and receiving and processing applications for FCAs;

(2)

in the course of the processing of FCA applications, PNGFA will not issue a FCA unless the DAL had certified the agriculture development plan or other land-use plans;

(3)

similarly an FCA will not be issued in the absence of an environmental permit (EP) issued by the Environmental Council (EC); and

(4)

on the reverse, the EC will not issue an EP unless the PNGFA had approved the forest management plan (FMP) and DAL had certified the agriculture development plan.

The evidence of Mr Pouru in essence is that his Agency (PNGFA) only becomes involved with a SABL where extractions of forest products are intended to be disposed of commercially. 3.7.2. PNG Forest Authority Administration 3.7.2.1 Background

The PNGFA finds itself in a conundrum when it deals with SABLs for two main reasons. Firstly because forest
110

clearance is permanent; usually done in order to carry out agriculture or other land use such as road building and this runs contrary to the normal practice of sustainable forestry where PNGFA insists that loggers replant trees for future harvest (to maintain forest cover). Second is the fact that PNGFA does not gain any financial returns from the merchantable timber that is cut and sold, often for huge sums of money, because royalties (if any) are paid directly to landowners. Unfortunately the view held by PNGFA in those circumstances is that FCA activities conducted in SABL areas come second in priority to other strictly forestry related or pure logging activities conducted under the pre Independence era Timber Rights Purchase Areas (TRP), Forest Management Areas (FMA) granted under the current Forestry Act 1991 and Local Forest Areas (LFA) granted under the Forestry Private Dealings Act. The three concessions (TRP, FMA & LFAs) are issued for large scale timber harvesting operations that are expected to provide development and services to the project areas, the province and nation as a whole. Timber Authorities (TA) granted under the current Forestry Act is the fourth type of concession granted for smaller areas involving small volumes of harvested timber (up to 5000 cubic meters) for instance to process through local sawmills. It became obvious to the C.O.I. on its provincial visits, that in most provinces, forestry workers based there were not
111

monitoring forest clearance activity conducted under FCA. The most active regional office was the Rabaul office covering all provinces in the New Guinea Islands region. In fact, that office was responsible for cancellation of the few FCAs that have been cancelled so far. Despite the above situation, PNGFA has tried to carry out its duties to screen applications for FCAs, monitor forest clearance under FCA and in a few instances has cancelled FCAs when developers failed to conduct agriculture activity, for example to plant oil palm, before carrying on further forest clearance in allotments of 500 hectares at any one time. Stringent measures to ensure agriculture is carried out after forest clearance are set out in detail under sections 90A and 90B of the Forestry Act, the only legislation that deals at length with SABL in contrast to the bare minimum provisions found under the Land Act. In his evidence given to the C.O.I. Mr Kanawi Pouru, Managing Director of PNGFA expressed his disappointment over the perceived failure of DAL to play its part in firstly screening and selecting genuine developers (as opposed to operators only interested in logging) and secondly to monitor and ensure that agriculture developments take place once FCAs are granted. On the 20th May 2009 Mr Pouru wrote to Mr Daink, Deputy Secretary, DAL, raising serious concerns about DALs failure to properly screen applications. He said in his letter and we quote; What has transpired has become distressing and threatens to ridicule the intentions of
112

these project types. Most notable is the ever widening gap between forest clearance activities to that of the actual agriculture establishment / implementation. The real threat here is that proponents may be disguising under the cover of a sanctioned DAL project with the underlying interest to log. 3.7.2.2 Role Played By PNG Forest Authority in SABL (Sections 90A, 90B & 90C in the2000 and 2007 Amendments) In 2001, the Forestry Act, 1991was amended by No. 36 of 2000 by the insertion of Sections 90A, and 90B to cater for developments expected to be carried out under the SABL scheme. ThatAmendment was further amended by Amendment No. 19 of 2007.Proponents of projects within SABLs are required to submit detailed information from copies of State leases, approved environmental plans, detailed development plans by proponents, certificate of approval given by DAL Secretary and a host of other information referred to below. The National Forest Service is merely a Regulator where forests upon SABLs are to be dealt with commercially but have a serious role in ensuring that the agriculture component necessitating forest clearances are implemented and the whole project is not just a forest operation under the pretext of agriculture. The PNGFA, in essence, is mandated under those two (2) provisions to monitor, evaluate and if satisfied, approve

113

FCAs and subsequent requests for furtherFCAs within the boundaries of the SABL. SECTION 90A Section 90A of Forestry Act 1991 requires strict compliance with certain preconditions before grant of a large scale conversion of forest to agricultural or other land use and these are: Under Section 90A(3) (a), applications for FCA must be accompanied by: a) b) c) A detailed development plan (by Proponents) Evaluation Report (by DAL) Certificate of approval from Secretary for DAL or other relevant departmental head. d) e) Copy of State leases Implementation schedule showing precise areas and proposed rate of harvest.Applicant must further show what he plans to do on the cleared land by submitting a successive land use development plan approved in writing by the Secretary for DAL or other relevant Head of Department such as Transport for Road construction. The schedule must also include detailed
114

start and completion dates of all activities associated with the project. f) The proponents (usually developer companies) must provide details of costs involved in the agricultural or other projects and proof of financial capacity from a bank certifying that the full costs of funding the project will be available to the applicant. g) Map and description of project area showing areas that are too steep (over 30 degrees) or unsuitable for agriculture such as a swampy area and any conservation areas. h) Verification of ownership and consent of each resource owning clan agent or ILG within the project area. The prescribed form must be signed by the clan representativeor ILG Executive in presence of a village court magistrate or the land mediator. i) Supporting letters form relevant departments and/or agencies. j) Written approval by DEC of applicants environment impact statement. k) Details of equipment and manpower plus proof of past experience in such developments (that is agricultural projects).
115

SECTION 90B After the PNG Forest Board (the Board) is satisfied that all the above requirements have been fulfilled it must take the following steps; a) b) Consult with government body concerned. Arrange public hearings where government bodies and private sector may be heard. Such hearing be held at or as near as possible to the proposed agricultural or other land use sites. c) On completion of hearing the chairman shall refer application and summary of hearing to Provincial Forest Management Committee (PFMC) who will in turn make its recommendation to the Board. d) PFMC in its deliberations must consider among others ....the commercial viability of the project including the financial resources of the applicant, the past performance of the applicant in agriculture..., analysis of cash flows and the anticipated net benefit to the resource owners and to the State. e) PFMC will refer its decision to the Board and the Board makes the decision.

116

f)

The Board shall call for tenders from registered forestry participants.If there are no tenders then the Board may invite the applicant to carry out forest clearance.

g)

The successful tender is then required to enter into the prescribed sales and purchase Agreement with the customary owners which agreement shall provide for the purchase, harvesting, processing or marketing of timber and other forest products and which agreement shall be subject to the grant of a forest clearing authority by the board.

Section 90B(22)(b) prescribes that any forest clearance operation must be done in four phases. Each phase:(i) Shall represent one quarter of the total area to becleared (ii) Shall contain conditions imposed by the Board and (iii) Shall be subdivided into blocks of 500 hectares but this can be increased at the discretion of the Board, (iv) Performance Bonds under S.98 of the Act shall be imposed by the Board when granting FCA.

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The Minister may cancel an FCA under Section 90E. 3.7.3. FCA Issued So Far We note that out of the seventy-five (75) SABLs on the C.O.I. List, FCAs have been granted and issued to seventeen (17) SABLs during the period 2008 to 2010 and these are listed in Table C below: Table C List of Records of Forest Clearance Authority (FCA) Issued for SABLs from periods 2008 2010
C.O.I. Grantee File 8 Vanimo Jaya Limited & One Uni Development Corporation Brilliant Investment Limited (BIL) Rakubana Development Pty Ltd Central New Hanover Ltd Hectares SABL Portion 248C Location FCA Issued Date and Company. Issued on 21/04/08 to Vanimo Jaya Ltd Granted on 26 June 2009 to BIL Issued on 11/09/09 to Tutuman Dev. Ltd Issued on 25/11/10 to Tutuman Dev. Ltd Issued on 26/06/09 to Allbright Ltd

47, 6262

Tadji, Aitape, Sandaun Province

20

25, 600

146C

Marienberg, Angoram, ESP Namatanai, NIP

24

25,581

871C

27

56, 592

887C

New Hanover, NIP

28

Mekeo Hinterland Holdings Ltd

116,400

45C

Central Province

118

35

Bewani Oil Palm Dev. Ltd (BOPDL) Turubu Oil Palm Limited

139,909

160C

Bewani, Sandaun Province Turubu area of Wewak and Sausia area of Yangoru Sausia, ESP

Issued on 26/03/09 to BOPDL Issued on 26/03/09 to Wewak Agriculture Dev. Ltd

36

116.840

144C

38

Abeda Agro Forest Ltd

11,700

409C

Kairuku area of Issued on Central 22/04/10 to Province Allbright Ltd Rabaul, ENBP Issued on 15/01/08 to Toriu TL No records

57

Toriu Timbers Ltd (Toriu TL)

11,240

904C

58

Toriu Timbers Ltd (Toriu TL) Rera Holdings Ltd

42,240

903C

Rabaul, ENBP

68,300

2C

Mukus Melkoi area of Pomio, ENBP Part of Sigite Mukus Integrated Rural Development project (3 separate projects) in Pomio, ENBP Part of Sigite Mukus Integrated Rural Development project (3 separate projects) in Pomio, ENBP

Issued on 07/10/10 to DD Lumber Ltd Issued by NFB on 07/10/10 to Gilford Limited

Pomata Investment Ltd

15,000

196C

Ralopal Investment Limited

11,300

197C

Issued by NFB on 07/10/10 to Gilford Limited

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Nakiura Limited

16,100

198C

North East West Investment Limited

149,114

27C

Tufi Wanigela Tree Farming Project Okena Goto Karato Dev Corp Ltd Wanigela Integrated Agriculture Project

28,100

146C

Part of Sigite Mukus Integrated Rural Development project (3 separate projects) in Pomio, ENBP Kiunga stretching up to Olsobip in the North and Nomad to the West, North Fly Western Province Oro Province

Issued by NFB on 07/10/10 to Gilford Limited

Issued on 25/11/10 to Independent Timbers and Stevedoring Limited

320,060

17C

Oro Province

Issued on 23/04/08 to Victory Plantation Limited Issued on 28/01/10 to Ang Agro Forest Management Limited. PNG National Forest Board decided in meeting of 03/08/11 to cancel FCA

It is our considered view that the provisions of Sections 90A and 90B are explicit and adequate and only requiresa competent and transparent regulatory scrutiny by the PNGFA through its National Forest Service, for strict compliances with these provisions will ensure that not only responsible forest clearances are carried out
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but also that the accompanying approved agriculture development takes place. These provisions of the Forest Act as amended however have no links to the requirements under the Environment Act, 2000 or the Conservation Areas Act, 1978 although these Acts subsumed the environmental compliances which may arise from forest clearances for agriculture or other land use of the land in a SABL. 3.8 Application of the Environment Act 2000 3.8.1. Introduction

The Environment Act 2000 is a comprehensive piece of legislation that defines clearly the roles, functions and responsibilities of the Department of Environment and Conservation (DEC) generally and also relating to SABLs. The main focus of the legislation on SABL applications is the projects impact on the environment and water ways including waste discharge associated with the project. It should be read in conjunction with Environment (Prescribed Activities) Regulation 2002. The Environment Actenables theDEC to classify different activities affecting customary land including SABLs involving agriculture, forestry, fishing, mining and so forth. The various activities are level 1, level 2 or level 3 activities. This is to attract the appropriate compliance for the purpose of environmental protection particularly to prevent contamination and destruction
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of existing and nearby ecological system, preserve themand ensure renewability in the case of renewable resources.We note essentially that the compliance requirements must be met where projects of the nature affecting environment issues are categorised as Level 1, Level 2 or Level 3. Part 5 (Divisions 1 to 5 or Sections 41 to 73) of the Environment Act 2000,subsumed the application of their provisions to the operations of SABLs, be they agriculture with associated forestry activities or other land uses.The effect of the Environment Act regulating environmental practices ensures that environmental compliances as stipulated are complied with failing which the applicable penalties will apply. Nonetheless, it is imperative as will be seen in the final analysis, that all facets for the improvement of the SABL system should be linked by express provisions of each applicable law from the Land Act, the Forestry Act,the Environment Act, and the Conservation Areas Act so that the objectives of the SABL system are achieved and are properly managed. 3.8.2. DECs Responsibility in the Processing of

Environmental Permits (EPs). DEC is responsible for issuing Environment Permits for proposed development projects once it is satisfied that all necessary requirements are fulfilled. It is a stringent five (5) step process culminating in the issuance of an Environment Permit. The Environment Permit is issued with conditions requiring
122

developers to comply with the conditions. Failure by the permit holder to comply with the conditions will result in the immediate revocation of the permit. With particular applications upon all SABLs over 50 hectares, the requirements for an Environmental Permits are more stringent and appear to be thorough. Once a permit is issued, the impact on the environment and the people within the SABL areas is significant. 3.8.3 Role of DEC in SABLs

The DEC does not necessarily play a direct role in the processing and grant of a SABL. The DECs role however is that once a SABL holder (or sub-lease holder) proposes to engage in a large scale economic impact project development within the SABL area, to ensure that the SABL holdercomplies with the relevant application for the grant of an environment permit as prescribed by the Environment Act 2000 and the Environment (Prescribed Activities) Regulation 2002 to enable it to undertake the project. As most projects fall into the category of over 50 hectares, the SABLs have genuine commercial interest that may impact on the environment and waterways and therefore, have submitted applications and were granted permits by the DEC. The process although legislated, is also contained in the DEC Environment Division Operational Manual. Projects are divided into three (3) main categories of Activities described as Level 1 3 Activities under the Environment (Prescribed Activities) Regulation 2002.
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SABL projects fall under Level 3 Activity as, in most cases, it requires forest clearing/harvesting and land clearance and agricultural development over a large tract of land. For Level 3 Activity, the following must be done pursuant to the Act, Regulations and the DECs Operational Manual8: (i) Registration of Intention to Carry out Preparatory Works (sec. 48) Prior to any feasibility or environmental studies into a Level 3 Activity, DEC would require the proponents of the project or the developer to register his Intention to Carry out Preparatory Work with the department. DEC requires sufficient information from the proponents of the project before it accepts the Notification and issues an instruction for the Environmental Impact Assessment (EIA) process to begin. A Notification will include details on the proponent/developer, company registration certificate, brief descriptions of the project and the environment (physical, biological and social) and its location. Failure to register an Intention to carry out an activity is an offence under the Act.

The Manual is referred to in the evidence of Mr Michael Wau, Acting Director of Environment by Affidavit th st sworn on 29 August, 2011 and tendered into evidence on 31 August 2011 and marked as Exhibit MW 8. Refer also to Transcript of Proceedings SABL 10 31/08/11 @pages 30-37.
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(ii) Notice

to

Undertake

Environment

Impact

Assessment (sec. 50) Once the registration of Intention is accepted by DEC, the project proponent/developer is advised in writing to undertake an Environment Impact Assessment (EIA). The first step in an EIA is the submission of the Environment Conception Report. The EIR identifies who will be conducting the EIA and their qualifications. The EIR is assessed by the Impact Assessment Branch of the DEC. Other Divisions within DEC are also invited to comment on the EIR to ensure that it complies with all the guidelines. It is now also a requirement to present the EIR to the Environment Council as an information paper so that the Council is informed of projects in the pipeline. If the EIR is satisfactory, the proponent will be informed in writing of its acceptance. The proponent will then commence with the preparation of the Environment Impact Statement (EIS). The applicant will be required to provide an EIS with sufficient details covering the following: (i) Purpose of the Development describing linkages with the 4th National Goals and Directive Principles under the preamble of the Constitution. This will also include detailing economic benefits from the project

125

for the nation and the impacted communities where the project is developed. (ii) Viability of the Project includes capital costs, details of the proponents results technological of expertise and resources, feasibility studies,

informedlandowners consent and participation in the project, lifespan of the project and development phases of the project. (iii) Description of the Proposed Activity background information, process technologies, detailed location maps, site layouts, site selections, flow chart (wastes generated), nearby development activities that may contribute to background pollution levels. (iv) Characteristics of the Respective Environment : Physical data on ambient environmental qualities Biological presence of protected species, special purpose areas, existing terrestrial and aquatic ecology and presence of vulnerable species Social existing socio-economic data on the resource owners (v) Potential Impacts of Proposal

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(vi) Waste Minimization, Cleaner Production and Energy Balance (vii) Environmental Reporting The EIS undergoes an internal assessment. The assessment is designed to ensure that the EIS complies with the operational guidelines and includes sufficient information to allow a decision to be made. (a) Public Review and Submissions (sec.55) If DEC is satisfied that sufficient information is provided the EIS is then open for public review. Advertisements are placed in the local media for submissions from the public and interested parties. The Public may also raise objections through this process. A period of one month is allowed for submissions. Other key government agencies are contacted directly in writing inviting their comments. A presentation is also made at a suitable location near the proposed development to allow for input from the local communities and resources owners/landowners. Comments made are collected and collated and are recorded and presented as part of the submission to the Environment Council. Management, Monitoring &

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(b) Acceptance of EIS (sec.56) When DEC is satisfied that sufficient information is provided regarding potential impacts and reasonable steps proposed to minimize environmental harm a written letter of acceptance of the EIS is sent to the proponent. Acceptance of the EIS is not necessarily the approval. Approval is only granted by the Minister acting on the recommendation of the Environment Council. The Environment Council has 90 days to deliberate on the EIS and make a decision whether or not to accept an EIS and recommend to the Minister to approve the project in principle. If additional information is required or some adjustments are to be made on the EIS, the Council may refuse the EIS and advise the proponent to amend or resubmit the EIS to the department after the necessary amendments or adding additional information. (c) Ministerial Approval in Principle (sec.59) The Minister for Environment & Conservation may grant the Approval in Principle for the project when he receives a recommendation from the Council to do so. The Minister may also refuse to approve an activity.

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(d) Environment Permit (sec.62) An Environment Permit for a Level 3 Project can only be applied for after an Approval in Principal is granted by the Minister. Applications for Environment Permit for wastes discharges and for taking of water also have to comply with the guidelines issued by the department. The Environment Permit is issued by the Secretary of the DEC and will set the term of the permit, fees payable and permit conditions. SABL projects that do not involve large scale forest clearance do not require an Environment Permit. Projects such as Roselaw Ltd (Idumava Multi-Purpose Marine Facility owned by Dynasty Real Estate), Konekaru 1 and 2, (Konekaru Holdings), Akami Oil Palm Estates (estates less than 1,000 hectares), Veadi Holdings Ltd (PNG LNG activities in Central Province owned by Leighton Ltd) and Zifasing Cattle Ranch Ltd (Cattle Breeding Farm, Erap, Morobe Province). (e) Management of Environment Permits Environment Permits are issued with conditions. A project proponent is required to submit a Waste Management Plan and an Environmental Management and Monitoring Plan within three (3) months of commencement of the permit. In addition, there will be a requirement to monitor discharges of wastes and to report on non-compliance with
129

conditions. Permit holders are required to submit annual performance reports to DEC. (f) Environmental Audits & Investigations (sec.74) The DEC also conducts regular environmental audits and investigations and compliance visits to ensure that the developers complied with the conditions of the environment permit. It has the power to institute court proceedings in an event of a breach including revocation of the permit. However, evidence revealed that the enforcement aspects have not been diligently carried out due to funding problems and lack of skilled and qualified manpower within DEC. (g) Restraint on Approval by other Authorities (sec. 46) The C.O.I noted the restraints on approval by other authorities in the following; (1) Other governmental authorities are restrained from issuing permits or licences for level 2 or level 3 activities (other than existing activities) which would authorize the holder to carry out an activity which would cause environmental harm where to do so would be a breach of this Act until anenvironment permit in relation to the activity has been granted in accordance with this Act.

130

(2) Subsection (1) does not apply to approvals under the Investment Promotion Act 1992. (3) Where a person applies for another kind of approval in respect of a level 2 or 3 environment impact activity, under the provisions of other legislations, the applicable governmental authority shall refer the application to the Director. 3.8.4 Table of Environmental Permits pending and/or granted to SABL Project Proponents TABLE D
GRANTEE TRUKAKE LTD BARAVA LTD LOLOKORU ESTATES LTD BAINA AGRO FOREST LTD ROSELAW LTD Term of Lease 99 45 40 99 AREA 120.7 244.7 1750 42100 25.11 SABL PORTION 46 307 1C 29C 2541C PROV ENBP ENBP WNBP CP NCD PROJECT No record No record NBPOL Baina Agro Forestry Idumava MultiPurpose Marine Facility See also Pulie Anu Oil Palm Project below West Aitape (Port. 248C)) AgroForestry Project Cattle Ranch DEVELOPER No record No record NBPOL Nasyl 98 Dynasty Real Estate (RH Subsidiary) No records STATUS No record No record Approved (EPA) Permitted In Process

PULIE ANU PLANTATION LTD

99

46233

396C

WNBP

Not Known

VANIMO JAYA LTD & ONE UNIDEV

99

47626

248C

Sandaun

One-Uni Development Corporation

Approved (EPA)

ZIFASING CATTLE RANCH

50

8374.2

79

Morobe

Zifazing Landowners

No record

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CASSAVA ETAGON LTD

PTY

99

20000

884C

NIP

Cassava

EMIRAU TRUST CHANGHAE TAPIOKA (PNG) LTD CHANGHAE TAPIOKA (PNG) LTD CHANGHAE TAPIOKA (PNG) LTD CHANGHAE TAPIOKA (PNG) LTD CHANGHAE TAPIOKA (PNG) LTD CHANGHAE TAPIOKA (PNG) LTD CHANGHAE TAPIOKA (PNG) LTD BRILLIANT INVEST LTD OKENA GOTO KARATO DEV. CORP.LTD YUMU RESOURCES LTD KOARU RESOURCE OWNERS CO LTD RAKUBANA DEV. PTY LTD TABUT LTD UMBUKUL LTD CENTRAL NEW HANOVER LTD MEKEO HINTERLAND HOLDINGS LTD

99 40 40 40 40 40 40 40 99 99

3384.3 8 1656 74.87 66.77 2514 3573 2514 2514 25600 28100

53C-58C 519C 444C 446C 517C 518C 521C 520C 146C 146C?

NIP CP CP CP CP CP CP CP ESP ORO

Free Trade Zone project Cassava Bio Fuel Project Cassava Bio Fuel Project Cassava Bio Fuel Project Cassava Bio Fuel Project Cassava Bio Fuel Project Cassava Bio Fuel Project Cassava Bio Fuel Project Angoram Integrated Project Tufi Wanigela Agroforestry Project Yumu Agro Forestry Project No records DANFU Extention SABL Mamirum SABL Umbukul SABL Central New Hanover SABL Mekeo Hinterland Oil Palm Project

Changhae Ethanol Corporation of Korea & State Rimbunan Hijau (2010) Changhae Tapioka (PNG) Ltd Changhae Tapioka (PNG) Ltd Changhae Tapioka (PNG) Ltd Changhae Tapioka (PNG) Ltd Changhae Tapioka (PNG) Ltd Changhae Tapioka (PNG) Ltd Changhae Tapioka (PNG) Ltd Brilliant Investment Ltd Victory Plantation Ltd

No record

Nil development In process (EIS) In process (EIS) In process (EIS) In process (EIS) In process (EIS) In process (EIS) In process (EIS) Permitted Not Known

99 99 99 99 99 99

115000 59460 24581 11684 25108 65692

30C 323C 871C 885C 886C 887C

CP GULF NIP NIP NIP NIP

Aramia Plantation Ltd No records Tutuman Development Ltd Tutuman Development Ltd Tutuman Development Corporation Tutuman Development Ltd Albright Ltd

In Process (EIS) Not Known Permitted In process (EIS) No record No record

99

116400

45C

CP

Permitted

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3.8.5

Constraints Faced By DEC

The administration and monitoring of environment permit conditions by DEC are as discussed in 3.8.2 and 3.8.3 (supra). The Actnonetheless subsumes the environmental compliances notwithstanding the absence of similar provisions in the Land Act or the Forestry Act.This means that environmental compliance aspects of the agriculture or other land uses to be developed upon SABLs are complied with at some point. Evidence from Dr Wari Iamo9 coupled with our examination of the procedures for environmental impact assessments of proposed projects implicating the environment impact including (inter alia) SABLs are quite elaborate and are adequate in our view. We note that the problem is not the legislative mechanisms provided for in the Environmental Act but rather the Administrative structural route through which the environmental impact assessment is made ultimately resulting in the grant or refusal of grant of Environmental Permits under Part III of the Act. Under Part III of the Act, it is a requirement to register with the Director of the Office of Environment, created under Section 15 of the Act, in submitting a proposal to carry out a level 2 or level
9

See evidence of Dr, Wari Lea Iamo sworn on 29 August 2011 and tendered into evidence as Exhibit WI7 on 31 August 2011. See also C.O.I. Transcript of Proceedings SABL 10 31/08/11 at pages 24-30.
133

3 activity which is likely to affect the environment pursuant to Section 48 of the Act. It is not necessary to refer to each Section of the Act that prescribes the process of grant or refusal of Environmental Permit that takes place, but a diagram illustrating the process map as shown below will suffice.

ENVIRONMENTAL PERMIT PROCESS MAP

Registration of Intention to Carry Out Preparatory Work lodged with the Director of Environment (usually Secretary of Department of DEC) (s 48)

Director Accepts or Refuse, Registration of Intentions Environment Impact Report, Environment Impact Report& Environment Preparatory Report (ss. 52, 53, 54 &55)

PNGFA Environmental Permit is taken to PNGFA. Secretary DEC is Deputy Chairman, Ex Officio, PNGFA Board

If Accept Refer to

Environment Council (Secretary of DEC is the Chairman) (ss. 57 & 58)

..

Minister for E&C

Recommendation for Approval in Principle (s.58 (1)(a))

Minister for E&C Approval in Principle

Director of Environment Issuance of Environment Permit (s. 60)

134

We note the process to secure an Environmental Permit for a level 2 or level 3 activity is quite efficient. However, we note the following possible conflict areas; (1) The Director of the Office of Environment is the Secretary of DEC and also the Chairman of the Environment Council. (2) As DEC Secretary, Director of Environment and Chairman of the Environment Council occupying three different positions concurrently in the environment permit process map places the occupier of these positions in a potentially conflict of interest situation that is likely to affect the public perception as to the impartiality and therefore the integrity of the process. We are of the view that the provisions for the grant of EP s are quite adequate. The Administrative structure, through which applications for EPs are processed, however is undesirable with the Secretary of DEC occupying 3 major positions in which a great amount of discretion is given him or her. In addition, we noted with concern that ex-officio as the DEC Secretary is also the Deputy Chairman of the PNGFA. This gives a total of 4 Roles particularly where development of SABLs in forested areas are being processed for both FCAs through the PNGFA and the accompanying Environment Permit applications processed by the DEC. Whilst there are no express provisions in the Environment Act specifically applying to SABLs, the requirements under the Environment Act pertaining to applications for Environmental Permits must be complied with by developers of SABLs.
135

3.9 The Conservation Areas Act 1978. The Department of Environment &Conservationalso administers the Conservation Areas Act 1978. The Act enables the DEC to classify different activities affecting customary land including SABLs involving agriculture, forestry, fishing and mining within the declared conservation and management areas. C.O.I. notes that essentially the Act provides for the preservation of theenvironment and of the national cultural inheritance inclusive of Theconservation and management of sites, and areas havingparticular biological, topographical, geological, historic, scientific or social importanceover customary land subject of declared conservation areas. Any development or land use can only be carried out in accordance with the stipulations under Part VI of that Act. The vital aspect being that any proposed development or land use of a conservation area cannot be carried out without the prior approval of the Minister. C.O.Inote here that the requirements of the Conservation Areas Act, 1978 is straight forward as noted in our discussions in Part 2 of this Report. C.O.I however caution that in any review, the discretion vested in the Minister to approve any proposed development or land-use of a declared conservation area must be strictly regulated so that that discretion is not abused. C.O.I note with gladness that no abuse in this respect has occurred despite a lack of stricter law.

136

C.O.I however note that these environmental compliances are not part of the prerequisites to the lease of customary land to the State and the subsequent grant of title on lease-back from the State. 3.10. Responsibility of DAL in Agriculture Development of SABLs 3.10.1 Introduction

There is no separate law regulating commercial agriculture developments. Sections 11 and 102 of the Land Actmake a reference toagriculture where they provide for the grant of Special Agriculture and Business Leases (SABLs). Accordingly, C.O.I feel very strongly that a specific Act of Parliament be enacted with specific reference to the mobilisation of customary land to be involved in large scale commercial agricultural developments. Such an Act should carry mainly the following (i) variety and type of agriculture in a proposed development area must follow an approval process once an intention to develop is presented. (ii) once approved, no departure from the agriculture type should be permitted without substantial justification.
137

(iii)

the thrust of the provisions of such an Act should be to ensure performance and regulate variations from original proposals, flexible in commercial realities of business and impose penalties, amongst others.

(iv)

guidelines to ensure harmony with the SABL system of leases under theLand Act, Forestry Act, Environment Act, Conservation Areas Act, and Physical Planning Act.

(v)

the establish of an administrative regulatory Committee or Council to over-see the encouragement of, regulation of, and management of all agricultural activities involving large scale commercial agriculture development involving customary land.

The Government could consider setting up under such an Act a National Agriculture Development Authority. 3.10.2 The Background Department of Agriculture and Livestock (DAL)

isresponsible for vetting large scale agriculture development plans proposed by sub lessees or developer companies invited by landowners to establish agriculture projects within proposed SABL areas. Where a SABL comprises of a forested area, unless the DAL Secretary issues a Certificate of Approval, the PNG Forest Board will not issue a FCA granting permission for a PNGFA approved Forest Industry Participant (FIP) to log
138

merchantable timber before the proposed agriculture project is established on the cleared land. These operations have come to be popularly described as Agro Forestry projects. The C.O.I. has found disturbing evidence of emphasis being placed by senior DAL officials on forestry instead of the agricultural aspect. DAL officials have embraced the developers argument that they need to conduct logging within SABL areas in order to fund the proposed agricultural project. As was set out in the previous chapter dealing with Forestry this notion is contrary to section 90A (3),(d) of the Forestry Act 1991 that requires the proposed developer to furnish details of costs involved and proof that it has sufficient existing funds verified by a bank. Unscrupulous developers have seized on this misunderstanding by DAL officials to carry on logging activities and neglectedimplementation of agriculture as planned. Senior DAL officials told the C.O.I. that projects conducted under SABLs have or should have a profound impact on the PNG economy and should come with it immediate benefit to the resource owners in the rural communities10Site visits throughout PNG done by the C.O.I. showed overwhelming evidence that in about 95 % of SABLs no agricultural activity whatsoever had been commenced other than the establishment of nurseries for tree crops (mainly oil palm, cocoa and rubber) which in the main was just for show. Except for two oil palm projects supported by New Britain Palm Oil Limited (NBPOL), namely Lolokoru SABL and Akami Oil Palm SABL both
10

Evidence of Francis Daink in the Transcript of Proceedings SABL #13at page 14

139

located in West New Britain and Porom Coffee in the Western Highlands, all the others had not even commenced planting of proposed crops although forest clearance and export shipment of logs proceed full steam ahead. The following are examples of agro-forest activities currently in progress in the following SABLs just to mention a few; Turubu Oil Palm in East Sepik. No oil Palm planted. Developer cutting trees in forested part of SABL although a huge part of the SABL consists of grassland (part of the Sepik Plain) on which the developer could already have started planting. Bewani Oil Palm in West Sepik; Large Nursery full of oil palm seedlings well past the planting stage and not a single hectare of land cleared to plant or any evidence of required machinery and lodgings for workers being constructed. In the meantime logging under FCA going ahead. Rakubana in Namatanai, New Ireland: Derelict nursery containing overgrown cocoa seedlings. No agriculture workers included among an all Asian team of about 20 forestry workers housed at the logging camp and ready to recommence logging. Trial plot planted by developer Tutuman show that all the planted cocoa trees have died and shade trees are struggling to grow due to very poor soil.

140

Tabut in New Hanover, New Ireland. No cocoa trees grown as promised by Tutuman Limited. Trees had been logged by Tutuman under the pretext of constructing a 12 kilometer road (under 12.5 km minimum requiring road clearance TA s.87 Forestry Act) leading from nowhere to nowhere. The so-called road is now a track covered in tall grass and bush.

3.10.3

Legal Authority for DAL

For such a vital governmental body (food security wise), the Department of Agriculture and Livestock (DAL) was not created by Statute or any other law. Specific laws were enacted only for the various agricultural commodities. The DAL Secretary is ex officio member on all the Commodity Boards and related regulatory and research bodies established by various Acts of Parliament including;11 1. 2. 3. 4. 5. Coffee Industry Corporation Coffee Industry Corporation Act of 1991 Cocoa Board of PNG Cocoa Board Act of 1981 Kokonas Industry Koperesen Kokonas Industry Koperesen Act of 2002 Spice Board Spice Board Act of 1989 Rubber Board Rubber Board Act of 1956

Refer to the evidence of Mr Anton Benjamin, Acting Secretary of DAL in relation to his sworn Affidavit dated 5th September 2011 and tendered into evidence as Exhibit AD 9 on 5th September 2011. See C.O.I Transcript of Proceedings SABL 13 05/09/11 @pages 2-12 and SABL 15 08/09/11 @ pages 2-33.
11

141

6.

National Authority

Agriculture National

Quarantine Agriculture

Inspection Quarantine

Inspection Authority Act of 1997 7. 8. 9. Oil Palm Industry Corporation Oil Palm Industry CorporationAct of 1992 Livestock Development Corporation Companies Act 1997 Fresh Produce Development Agency Companies Act 1997 10. Cocoa Coconut Institute Companies Act 1997 11. National Agriculture Research Institute Higher Education Act The involvement of DAL in SABL is mainly through other legislations such as the Forestry (Amendment) Act 2000 and the Environment Act. Even then DAL is only required to assess and approve agricultural plans when the developer wants to clear forest in areas over 50 hectares. 3.10.4 Role Played by DAL in SABL

Although the DAL is not involved in the granting process of SABLs its role is central to the project that is to be established within the area of the agriculture SABL. DALs role is to screen and approve agriculture project proposals and where necessary assist projects proponents in revising proposal particulars, technical capacities, land use assessments, developments and implementation schedules to satisfactory standards. DAL also conducts land suitability tests and land capability assessments (on
142

behalf of the project proponents) of all project proposals covering the total SABL area. 1) Public Hearings DAL is required under the Forestry Act1991 to co-ordinate public hearings with customary landowners of SABL areas. Provincial Administrators preside as Chairperson, DAL representative as Deputy Chairperson and officers from DLPP, DEC, PNGFA and Department of Transport make up the agencies with direct input into SABL projects. Public hearings must be conducted before approval for the developer to carry out its proposed agriculture venture. It is also necessary under the Forestry Act for these hearings to be conducted at or close to the project site before the Forest Board considers grant or otherwise of FCA. Landowners are given the opportunity to voice their approval or objection to the proposed agriculture project. Of concern to the C.O.I. is the fact that these public hearings do not necessarily have to be conducted before grant of SABL by the DLPP. Another area of concern to the C.O.I.became apparent during evidence given by Mr Daink12 that often serious landowner concerns about shortage of land is ignored by the various governmental agency representatives because of the prevailing view that the majority of land owners are for the project and its
12

Refer to the evidence of Mr Francis Daink, Deputy Secretary of DAL in relation to his sworn Affidavit dated 5th September 2011 and tendered into evidence as Exhibit FD 10 on 6th September 2011. See C.O.I Transcript of Proceedings SABL 13 05/09/11 @pages 12-26.

143

anticipated benefits. Minutes documenting a public hearing held in Pomio, East New Britain for the SABL granted to Rera Holding, show clearly that a landowner expressed concerns that there was serious shortage of land and he asked if his area could be left out or excised from the boundaries of the SABL. Mr Daink admitted to this but said the committee decided not to act on that concern effectively putting people in the area in a far worse plight than just shortage of land because they now no longer had any customary right to subsist off their own land. In another SABL, that of Urasir Resources Limited in Madang, DAL records show that no public hearing had actually been conducted. Yet the same records state that DAL had approved the proposed agriculture development plans. 3.10.5Approved Agricultural Projects Francis Daink of DAL in evidence provided a tabulated list of approved Agricultural projects that have some FCA components, referred to by the DAL as Integrated projects. This was produced by him in evidence as Exhibit FD 4 on 11th January 2011. Table E below is a list of Approved Agricultural Projects

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Table E
Province/ District Sandaun Province Vanimo Green Project Name Land Use Approval Option (s) Status (DAL) Cocoa Cocoa Cocoa Cocoa Cattle Oil Palm Oil Palm Oil Palm Approved Approved Approved Approved Pending Pending Approved Pending FCA Status (PNGFA) Approved Approved Approved Approved Pending Pending Approved Pending Development Status/Comment s Progressing well Progressing well. Progressing well Progressing well Public Hearing Conducted Provincial Approved Initial work progressing Land use assessment in progress Progressing

Scotiaho Walsa Mumuru Ori Ossima Ambai Alis Bewani

Telefomin

WammyN amea West Aitape East Aitape (Samas)

AitapeLu mi

Oil Palm Oil Palm

Approved Approved

Approved Approved

Nuku

Moile West Aitape Nuku Portion 59C PalaiYank ok, Maimai

Cocoa Cocoa, tick, Jetropha, Cocoa, rubber Jetropha Teak

Approved pending Approved Approved pending

Poor, review called for change from Oil Palm to Cocoa/Rubber New FCA Application. Pending EIR and Environment Permit pending Pending Need report for FCA Status Need Need report of report of FCA Status FAC status

East Sepik Province Angoram Wewak

Brilliant Cocoa (Marienberg Hills ) Turubu Oil Palm

Approved Approved

Approved Approved

Recommenced work for nursery seed garden. Progressing well

145

Ambunti/ Maprik Ambunti Wosera Gawi Madang Province Middle Ramu

Turubu Portion 145C NugawaBon gos Bassei Nungawa Sengo Portion 54C

Jetropha Large scale (Various) Oil Palm Rubber, Cocoa, Jetropha, Teak

Approved Approved Approved Approved

Pending Pending Pending Approved Environment permit issued

Bogia

Urasir Dev Ltd Middle Ramu/ Bogia Bogia

Approved Oil Approved Palm Oil Palm Pending Rubbber/Oil Palm Pending

Pending Pending Pending

Assessment stage Registration of ILGs Assessment Stage, Social mapping (ILG) yet to commence Yet to commence Yet to commence Project assessment stages received. Yet to commence Land use study completed EOI received FCA cancelled Proposal being assessed No progress

Oro Wanigela

Wanigela Musa Pongani Musa Pogani Eroro/ Sambogo Gadaisu Sagarai

Oil Palm 15C Approved Oil Palm Pending Portion 116C Integrated Approved Cocoa, Cassava Oil Palm Oil Palm Oil Palm Oil Palm Approved Pending Pending Approved Approved Approved

Approved Pending Pending Pending Pending Pending Approved Pending Approved

Eroro Milne Bay Alotau Central Province KairukuHi ri Kairuku Hiri Kairuku Hiri Kairuku Hiri

Baina Agro Forest Ltd Yumu Ltd

Mekeo Oil Palm Hinterland Holdings Ltd Abeda Oil Palm Agro Forest Ltd
146

Pending

Pending

Land use assessment conducted.

Abau Gulf Province Kikori Kikori East New Britain Pomio

Abau

Oil Palm

Pending

Pending

Proposal assessments stages Proposal received for assessment. Yet to commence Progressing well

Turama Vailala Illiwawas Suikol Tauri Head Mukus Melkoi Sigite Mukus Illi Stand alone Toriu

Oil Palm Oil Palm Oil Palm Cocoa, Coffee Oil Palm Oil Palm Oil Palm Cocoa/Balsa Cocoa Oil Palm Oil Palm

Pending Pending Approved Approved Approved Approved Approved Approved Approved Approved Approved

Pending Pending Approved Pending Pending Pending Pending Pending Pending Approved

Gazelle

South Baining Kairak/ Kerevat

West New Britain Bialla Talasea New Ireland Namatanai

Environment permit approved Project Monitoring required Does not require FCA. Need EIA Awaiting receipt

Lolobau Cocoa, Island Kamarere Aria Vanu Cocoa Block 2 Danfu Central Namatanai Cocoa Cocoa

Approved Pending

Pending Pending

Approved Approved

Approved Approved

Western Balimo

Project Monitoring required Project Monitoring required Project assessment in Progress

Kuria Emeti

Cocoa, sago, rice rubber, cashew, vanilla, rosewood,

Pending

Pending

147

Of the list provided there are nine (9) integrated projects that are within the 75 SABLs as contained in the initial C.O.Is Terms of Reference. It was obvious that the initial TORs did not adequately capture a true reflection of FCA affected SABLs in the country especially pertaining to integrated agriculture projects by the DAL as indicated by the above list. 3.10.6 Constraints Faced By DAL 3.10.6.1 DAL and Its Lack of Control over Provincial Agriculture Officers. A handicap faced by the DAL is that it does not employ and therefore has no control over Agriculture officers in the provinces who are full time workers employed by the Provincial Government. These workers answer to the Provincial Administration. As a result some Provinces perform better than others in facilitating and monitoring agriculture projects conducted in SABL areas. 3.10.6.2 Lack of Resources. Senior officials of DAL gave evidence to the C.O.I. that the department faces shortage of funds to send its officers out to the field to inspect and report on progress of the proposed projects to be conducted in SABLs. This in the C.O.I.s view is a perennial excuse used by the bureaucracy at large and does not excuse lack of diligence by DAL within their allocated budget. It may also be due to the lack of coordination between DAL and the agriculture
148

sector workers employed by Provincial Governments through the Divisions of Primary Industry. 3.10.6.3 Lack of Coordination among LeadAgencies Responsible For SABLs. In sworn evidence Mr Daink told the C.O.I. that Developers and resource owners submit Land Development Plans and project submissions directly to DLPP when submitting their applications for registration of SABL. DAL is not consulted during that process. A serious consequence of this is that huge tracts of land found within the boundaries of SABLs are in fact unsuitable for agriculture due to adverse topographical features such as rugged terrain and steep slopes, swampy waterlogged land and generally infertile soils not able to sustain agriculture. Another serious consequence of lack of coordination was mentioned earlier in regards to discovery of serious issues of land shortage which were only discovered during the public hearings conducted by DAL and related government agencies after grant of SABL title by DLPP.How these issues were missed in the initial information gathering and public consultations carried out by Lands officers conducting LIR is indicative of failure to consult widely. It goes against section 10 (3) of the Land Act, 1996 which states that the Lands Minister shall not acquire customary land unless he is satisfied, after reasonable inquiry, that the land is not required or likely to be required by the customary landowners

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3.10.7.

Misunderstanding by DAL that Logging Done to Raise Funds for Agriculture Projects in SABLs.

A common trend seen by the C.O.I. throughout PNG is the fact that developer companies are not registered with IPA as companies that carry on agriculture. Yet DAL does not see any problem in issuing certificates of approval for large scale agricultural projects to such operators. Part of the explanation for this serious oversight may be gleaned from evidence given by Mr Daink. Specific questions were put to Mr Daink about such situations in West Aitape (Vanimo Jaya) and Mulkus Melkoi or Rera Holdings in Pomio (DD Lumber Company) where both developer companies were registered with IPA as purely logging companies. Daink told the C.O.I. that . they are loggers and they have to show some sort of arrangement with a reputable agriculture firm to go into some sort of arrangement while the other is logging, the other firm looks after the agriculture component. Taking advantage of this very much mistaken view held by DAL, developers involved in SABL are stalling the agriculture projects using lack of sufficient funds as an excuse. The Forestry Act under section 90A (3) (d) requires applicants for FCA to provide to the Managing Director of PNGFA details of costs involved and proof of financial capacity certified by a bank.

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3.11

Application of the Land Groups Incorporation Act The Land Groups Incorporation Act 1974 (Chapter 147) had been in force until amended by the Land Groups Incorporation (Amendment) Act 2009. The amendment was mainlyto expand corporate responsibility of the members and executives of all Incorporated Land Groups (ILG). The obvious salient feature of the ILG is that, it is a corporate entity bearing all characteristics of an incorporated corporation with capacity to sueor be sued; acquire, own and dispose of both personal and real properties,enter into binding contracts, andopen to prosecution for offences and noncompliances.However, ILGs are not governed and regulated by the Registrar of Companies which is the qualified and competent authority with supervisory and and regulatory of powers of all administration enforcement compliancesby

incorporated entities. ILGsare instead supervised and regulated by the DLPP through its Land Groups Incorporation Division. This is probably because of the nature of interests represented by ILGs in customary land. The centralisation and administration of all aspects of the SABL process combinedwith thestatutory powers under the amendments in relation to theprocessing and registration ofILGs to DLPPraises very serious issues in our viewover the apparent lack of independent vetting and processing of SABLs.
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Section 34D of the Land Registration Act as amended implies that only customary landowners through an ILG can apply for registration of ownership of customary land.It is not clear if any individual customary landowner or a group of clans in shared ownership or in sharing agreement, or any other form of recognised customary group can apply for registration of a customary Land. Once an application is made for registration and the processes had been concluded including verification of registration plan under Section 34H; publication of registration plan under Section 34I, and final registration plan under Section 34J, registration of the land is effected under Section 34K and title is issued under Section 34L of the Land Registration Act. Section 34N of that Act, states that once registered the customary land ceases to be subject to customary law. We note that an ILG must seek approval of any dealings in its registered land under Part XVII of the Land Act (Approval of Dealings) unless the transaction between the ILG and its members, whether corporate or unincorporated. The inevitable question then arises as to the effect of registration of customary land with its accompanying registered title over customary land in relation to which application for a SABL is made pursuant to Sections 11 and 102 of the Land Act.

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This is a question dealt within our discussions under Part 4 of this Reportin reference to TOR (h). The distinction however between SABLs and registered customary land under Amendment No. 21 of 2009 is clear:SABLs are acquisitions of customary land with the State as the intermediary for the use of the customary owners of those lands themselves or any other entity of their choice while Registered Lands under Amendment No. 21 of 2009 are directly acquired through that process for the benefit of all the members of the clan who are owners of these lands. It suffices to say that both the Land Registration (Amendment) Act, 2009, and the Land Group Incorporation (Amendment) Act 2009 do not expressly harmonise with Sections 11 and 102 of the Land Act affecting SABLs and for that matter other forms of acquisition of customary land including by agreement and by compulsory process under sections 10 and 12 of the Land Actrespectively. 3.12 Application of the Investment Promotion Act1992 The Investment Promotion Actwill apply to SABL interests where foreign investors are involved as is the case with most SABLs. The foreign investor needs to be registered as foreign enterprises and have to meet the other requirements of the Investment

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Promotion certification.

Act1992

especially

as

toforeign

enterprise

The Investment Promotion Authority (IPA)has no specifically defined role insofar as the SABL is concerned other than in the performance of its regular statutory role in regulating and monitoring statutory compliance. The other context in which the IPA may be involved is through the Office of the Registrar of Companies in terms of regulating the legal status of companies. 3.12.1 Extent of IPAs Role in SABLs

Unless the intended business activity of the entity is known to IPA, IPA has no additional role other than to simply perform its statutory functions under the Investment Promotion Act, Companies Act, Business Names Act and Associations Incorporation Act. In the case of foreign enterprises entering the country with the express intention to participate in large scale agro-forestry or commercial projects as developers either on their own or in partnership with customary landowners on SABL, the IPAs role as the regulator and monitor of foreign enterprises is significant such as ensuring that the foreign owned companies are or have the necessary resources and expertise to undertake the business locally, and are specifically registered and issued a Foreign Enterprise Certificate.
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The other context in which the IPA can play a role in the development of an SABL in a more involved manner would be in the promotion of investment because of an approach by foreign investor as was the case of the Mekeo Hinterlands Holdings Ltd. 3.13. Administration of Companies Act in SABLs The Companies Act applies in terms of regulating the legal status of companies and monitoring statutory compliances. The C.O.I. found the majority of the SABLs were issued in favour of landowner companies and about four SABLs were issued directly in favour of foreign registered companies or PNG incorporated companies with foreign shareholdings sufficient to attract the regulatory requirements for compliance to carry on business in PNG. One or two actually sold out to foreign companies. The landowner companies were incorporated under the Companies Act. The C.O.I. considers it not to be of great imperative to determine the full provisions of the Companies Act applicable to landowner companies and therefore refers the report recipientsto look up the Companies Act.

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It suffices in brief to state that all landowner companies are required to comply with the requirements of the Companies Act except where exempted by the Companies Registrar from some requirements relating especially to annual returns and annual reports. Otherwise all landowners, directors and managers must ensure compliance with all requirements of that Act. In the landowner companies involvements as title-holders to their respective SABL they must adhere by company law in entering into contracts or agreements especially Lease or Sublease, management, financial, projects development, and other types of agreements. They must also comply with the requirements for shareholders approval where a proposed debt or liability constitutes a major transaction affecting risk exposure over company assets of over 33%. No company directors can commit the company to such major transactions without shareholders approval under Section 110 of the Companies Act 1997. This aspect of company management, especially where landowner companies hold titles to SABLs is crucial because their assets include, if not entirely, the SABL and all the natural resources occurring upon them. In the event of inability to discharge the debt, the SABL and its entire natural resource can be lost to the creditor who in nearly all instances involving SABLs areforeignentities or entities other than landowners. Customary land can be lost in this process. In the case of foreign registered companies or PNG incorporated companies with foreign shareholding and control, they must duly register their proposed business activities to be carried on in
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PNG. In that respect if among the registered businesses it involves SABLs, there is no law regulating their business activities except in accordance with the Forestry Act, Mining Act, Oil and Gas Act, Fisheries Act, Environment Act, and Conservation Act. The C.O.I. noted that, there is no special provision in all laws regulating specific features of SABLs where foreign entities are to be involved covering subleases; development types and targets; investment capital ratio based on value of SABL land and natural resources found upon them and their capital to be invested. 3.14. Extrinsic Matters Affecting the Administration of SABLs Generally. 3.14.1. Introduction

The C.O.Iconsider it extremely importantto. addressmatters of extrinsic nature and not necessarily arising from policy, legislation and administrativemechanisms, but largely people created and people related, notwithstanding the existence or otherwise of policy, legislation or administrative procedures pertaining to SABLs.

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This C.O.I. is cognizant of PNG being rated highly among the corrupt countries in the World. Corruption of the nature of official graft is the single largest measure of level of corruption in any society. This C.O.I. would be lax in not addressing this issue and indeed TOR(d)directs us to determine this aspect. 3.14.2. Integrity of Officials of the Principal Agencies of the State Affecting SABLs. No direct evidence was adduced or presented to the Inquiry whetheror not any officials of the principal State Agencies was engaged in graft and corruption in the processing of and the eventual grant of SABLs. Nearinferences from this inquiry have however been drawn where instances were noted of the DLPP officials particularly involved in the awareness and land investigations exercises who may have placed themselves in compromising positions when allowing proposed developers to fund their expenses on these exercises. The saving grace however for many of these officials from being deemed as compromised is the fact that the State through the DLPP has not provided adequate funding in the national budget to meet the costs of these exercises.In the circumstances therefore, when especially pressured by the customary landowners and accompanied with lack of or no funding, the DLPP officials, both at Provincial and National levels, proceeded to carry out land investigations and awareness program funded
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by entities other than the government and in most cases funded by developers of the project. The C.O.I. noted that some Provincial Governments, such as the East New Britain Provincial Government, took greater interest and actually made provisions in its annual budgets the funding for these exercises under universally adopted development policy combining land mobilisation with infrastructure and economic development. In some instances however,inferences from very strong evidence suggests that not only the DLPP officials but landowner companies and ILG executives have been compromised. These will be noted in instances where grants of title were made directly to foreign entities (developers) as well as where transfer of shares of the SABL title holding company to other or foreign entities resulted with control of title to be in foreign hands. In other instances also the terms and conditions entered into in the SABL Sublease Agreements particularly with the foreign developers had the effect of the SABL title being in the name and control of foreigners.The names of such individuals appear in the individual SABLs reported under Anexure 1. In respect of Forestry (PNGFA), many FCAs were issued in questionable circumstances. Many of these FCAs issued, were not supported by authentic, verified and approved agriculture development plans.Even if these FCAs were supported by properly approved agriculture development plans, during the operations in many instances it had been noted that the operators
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or developers departed or digressed from the approved agriculture plans. In other instances, the proportionate agriculture development phased out per every 500 hectares maximum area over which clear felling of forests can take place, it has been noted that FCAs were nonetheless given and logging generally continued into areas not immediately within the 500 hectares phases but over the whole areas of SABLs. 3.15 Summary Our deliberations in this Part of the Report are self-explanatory in the existence and non-existence of both legislative and administrative procedures for the administration of SABLs.

Run-down oil palm nursery, Bewani, Sandaun Province

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PART 4 4. EFFECTIVENESS SABLS AND OR OTHERWISE OF EXISTING FOR

LEGISLATION AND POLICY FRAMEWORK IN RESPECT OF ADMINISTRATIVE OF SABLs MECHANISMS IN THE ADMINISTRATION IMPROVED

MANAGEMENT OF SABLs IN FUTURE. 4.1. Introduction This part is in respect ofTOR(h) which instructed us to examine the existing legal and policy framework in the improved management of SABLs in future, including facilitating the application for legitimate applicants. We understood it firstly that TOR (h) requires the C.O.I. to inquire and assess the effectiveness of existing legal and policy frameworkinclusive of practice and procedure or processes relating to application, processing, registration and granting of SABL leases and the subsequent development and management, administration and management of SABLs in accordance with current law and policy. Secondly, if upon our inquiry and assessment we found the system to be ineffective, then we were to recommend changes to the system with a view to improving management of SABLs in future, particularly in the facilitation of application of SABLs from legitimate or genuine applicants and thereby restoring confidence
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and trust in the integrity of the SABL application, processing, granting and development and management. If we are to provide a complete assessment apart from stating our findings we will repeat ourselves. Therefore we decided that we convey our findings which in effect are our assessments as to the effectiveness or otherwise of the policy, legislative and administrative framework for SABLs. In this Part of the Report the C.O.I set out its findings inclusive in the succeeding sub-paragraphs of the Report. As no evidence on Policy was given during the C.O.I. hearings, apart from evidence from Ambassador Donigi and Mr Warwi from NLDP the C.O.I address this aspect first. 4.2. Findings on Policy Land acquisition for purposes of development has been a government scheme since 1979 when Special Agricultural and Business Leases (SABLs) were created within Sections 11 and 102 of the Land Act 1962 and subsequently became the Land Act 1996 as stated in the Statement of Case (Refer to Appendix 1).The intention of the post-independence government of Papua New Guineas was noble and well-intended but it has been left unchecked allowing it to be abused by forces that are beyond landowners capacity to cope.

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Again, as stated in the Statement of Case successive governments used the SABL scheme as a means to increase economic activities and empower the local communities in Papua New Guinea to engage in development of the country by providing customary landowners with a form of formal land title, state lease and documentation necessary to lease their land for development purposes. Through issuance of SABL communities were expected to benefit through rental payments, employment opportunities, and increased social services and infrastructure but in the late 1990s and early 2000 onwards it became controversial when foreign business interests took advantage of the schemeunder the Land Act 1996 and acquired up to 99 years leases through SABLs. SABL approvals have increased at a high rate resulting in over 5.2 million hectares of customary land acquired for commercial use at the end of April, 2011. This appearsto have been triggered by the 2001and 2007 amendments to the Forestry Act with the introduction of new sections 90A & 90B facilitating for Forest Clearance Authorities (FCAs) to interface with Agriculture Projects in forested areas, and the apparent abuse resulting from the bypass of stringent forestry regulations by forest exploiters in the disguiseof agricultural business development prompting the Government to review the SABL scheme hence the establishment of the C.O.I. Be that as it may, currently there appears to be a total void in a cohesive policy in respect of dealings in and over customary land.

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The issue arises as to why has there has been no serious policy development with resultant legislative enactmentsto facilitate customary land mobilisation.The answer lies it seems, in the trend,in the political, social and economic development of Papua New Guinea which has shifted its focus away from the FIVE (5) PILLARSof DEVELOPMENT stated in our Constitution (Five National Goals and Directive Principles). The Five (5) PILLARS OF DEVELOPMENT13are: INTEGRAL HUMAN DEVELOPMENT. EQUALITY AND PARTICIPATION. NATIONAL RELIANCE. NATURAL RESOURCES AND ENVIRONMENT. PAPUA NEW GUINEAN WAYS. All of the five (5) Pillars of Development directs all levels of leadership in PNG to drive development ultimately for the benefit of Papua New Guineans not only in the abstract but for every citizen to be personally and integrally developed in being educated and being healthy so they themselves will drive the other 4 Pillars of SOVEREIGNTY AND SELF-

13

See the Preamble to the Constitution of the Independent State of Papua New Guinea on the National Goals and Directive Principles
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development. Ultimately the final Pillar (Pillar No. 5) is to achieve Papua New Guinean Ways. Land being integral to any development, and as in the case of PNG with 97% of the land being customary land, the lack of cohesive policy development and implementation in relation to customary land is sheer negligence by successive Governments since Independence. True to the trend of development in digressing from the fivepillars, emphasis had been too strenuously in favour of foreign investment without careful and firm direction for such investments to meet the fivepillars; not just one or two but all of them conjunctively.Nearly all minerals, arable agricultural land, forests, fisheries, flora and faunaare within and upon customary land. If we are to achieve all developments by the guidance of the fivepillars, by virtue of customary ownership of land, greater participation by our citizens will be assured. Citizens who are the owners of the vast land mass of PNG and in relation to whom the fivepillars of development were issued as a direction to our leaders under our Constitution. The ownership of that land mass must therefore be recognised and the application of the fivepillars of development must be integral to the exploitation of that land mass in agriculture, minerals, oil and gas, forestry, fisheries and other developments. To ignore that ownership is to ignore our integral human development, equality and participation and sovereignty and self-reliance.

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PNG is not going to be a strong nation if the first Pillar of Integral Human Development is not realised. PNG is not going to be a strong Nation and one built on foreign domination of commerce and foreign control of a large part of its wealth.The C.O.Ifirmly believe that to commence the journey to a strong and vibrant PNG, the Government of the day here-onwards must address itself to an in-depth Policy Development to mobilise much of the customary land. Again the word mobilisation must not be used in the abstract.In this C.O.Is view the word mobilisation must be used in the context of bringing the mass of Papua New Guineans who own customary land by use of their land to enter, participate and benefit substantially in the market economy as opposed to subsistence economy. In the course of theInquiry the C.O.I wasconfronted by one unmistakeable cry from the vast majority of the rural population of PNG. That is:

We want development!
All too often this unmistakeable cry is expanded to accuse successive Governments at all levels for having failed to develop transport, education and health infrastructure with the rural areas lagging far behind in quality health and education services delivery in addition to lack of economic development of their areas despite abundance of arable agriculture land, forested areas, fisheries both inland and oceans and of course minerals, oil and gas.This cry is an indicator that a large scale policy development on mobilisation of customary land is

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long over-due.This cry however is saddled with this insistence that there will be no alienation of customary land by either the State or individuals. This Policy development therefore must embrace these wishes universally. Instances Highlighted by C.O.I. SABL Inquiry The C.O.I. therefore highlights some aspects encountered in the course of its Inquiry as guidance in the prospect of a large scale Policy development of the customary land mobilisation. 4.2.1 SABL

The majority of the rural people want to retain the SABL structure in the mobilisation of their land. However they would like to see legislative enactments in place to ensure two fundamental preserves including: (i) Integrity in the official processing of the issuance of and grant of SABLs (ii) ahigh standard of commercial ethics to be imposed not only on outside developers but on the landowners in commercial dealings over SABLs. They also want the current provisions of the Land Act and its related legislation reviewed to simplify, yet ensure integrity in the official process and achieve high business ethics between the land owners and developers.
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Ultimately the majority expressed support for the SABL type lease arrangements to be retained but those affected by serious irregularities including questions of integrity of the process by public officials, developers and landowners alike and unconscionable business ethics to be nullified and cancelled. They want all compulsory acquisition powers to be rationalised so that it occurs only for construction of public infrastructures. No compulsory acquisition should be made to later vest in another person or corporation, both citizens and foreigners alike for private use. 4.2.2. Ownership of Natural Resources To Be Primarily Recognised As Being Owned By Customary Landowners. Most customary landowners demand to be recognised by law (as they are already by customary laws) as owners of all natural resources growing or found on their land. On this aspect the landowners insist that any major policy development in the mobilisation of customary land must address the issue of ownership of natural resources seriously. In this regard we note that the ownership of natural resources varies from resource to resource. Minerals by law are owned by the State (inclusive also of oil and gas). Forestry is owned by the customary landowners whose ownership is affected by the States regulatory and licensing/permit powers and fisheries ownership is determined by the waters in which they occur.

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4.2.3.

Workable Corporate Models for Customary Landowners To Be Involved In SABLs.

The next expressed desire of the customary landowners is for workable corporate models to be used by them in mobilising their land. They are mostly aware of such legislation as the Land Groups Incorporation ActandBusiness Groups Act. They are somewhat satisfied with particularly the Land Groups Incorporation Act as the enabling legislation for a corporate vehicle to be used in SABL arrangements. Some have expressed that individual customary landowners should also be allowed to have SABLs processed in their favour. Whatever the corporate vehicle used, most are insistent that the entity to whom a SABL grant is made must be one approved by them and this approval can only be clearly obtained during land investigations. 4.3. Donigi Plan A submission under the general title of Donigi Plan For Unlocking Customary Land.was madeby Ambassador Peter Donigi14, to the C.O.I presided by Commissioner Jerewai on 15th November 2011 at 10:30 a.m. Also in attendance at the presentation of the submission was assisting counsels Ms Mayambo Peipul and Ms Avia Koisen.(The submission is available in the Transcript of Proceedings dated 15th November, 2011 and can be obtained from the C.O.I. Secretariat.)

14

A senior lawyer admitted to practice as a lawyer of the Supreme and National Court of PNG, an academic and the past President of the PNG Law Society.
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Ambassador Donigi argues that in his view poverty currently suffered and will continue to be suffered by Papua New Guinean automatic citizens is created bylack of property rights. This had rendered PNG a Nation of people with land endowed with very rich natural resources, yet are very poor and live at poverty level. Donigi argues that if we develop a legal system where we encourage property rights, we will then remove poverty overnight. Donigi argues that successive Executive Governments in PNG have ignored the 5 Pillars of Development (5 National Goals and Directive Principles pronounced in our Constitution). He argues that economic rationalisation had been the preferred approach rather than economic nationalism.As Papua New Guineans do not have two things important to enter the market economy, namely CAPITAL and EXPERTISE,we cannot compete in trade both domestic and internationally. With economic rationalism, Donigi argues, we engage for instance in privatisation which sees foreign or non-automatic citizens taking over National businesses and as an example. he cited the take-over of Papua New Guinea Banking Corporation and other State Statutory Corporations. Donigi argues that, had successive PNG Governments braved it out against the demands by International Lending Institutions such as International Monetary Fund(IMF); World Bank (WB); Asian Development Bank (ADB) for economicrationalisationand stuck to their guns with developmental approach of economic nationalism, the majority of automatic citizens of this Country would not face a bleak future living in poverty as they do now.This situation he argues had rendered our citizens to the status of being mere spectators watching their natural resources being devastated by foreign capital and expertise. All
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these have come about because successive Executive Governments of PNG have not legislated to create property rights for automatic citizens, many or all of whom own or share ownership rights and interests in customary land in PNG comprising altogether 438,900 hectares out of the total land mass 462,000 hectares. Because of this lack of property rights, ultimately the National Goals and Directive Principles of development as enshrined in our Constitution have not been achieved after almost 40 years of the Nations Independence. He argues, that is why, today we see major international trade remain firmly in foreign hands involving our nations natural resources. 4.4. The National Land Development Policy Perspective (NLDP) Evidence was given by Mr. Ezekia Warvi from the National Research Institute (NRI). He is on secondment to the National Land Development Program (NLDP) as Interim Program Manager. He therefore represented both NRI and NLDP. He presented publications including studies, monographs and other papers showing a great amount of data on the Nations ongoing land reforms as well as details of the Concept Design Documents (CDDS) that create and underpin the exercises undertaken by NLDP. In Mr. Warvis evidence he emphasized that the NLDP is intended to implement reforms to facilitate national development in PNG. The NLDP and DLPP are distinct in that the DLPP is a Government Department while the NLDP is a committee composed of representatives of the NLDP implementing agencies. The quality of the NLDP exercise is guided by regular inputs from the NRI.
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According to Mr. Warvis evidence the NLDPs mission is to facilitate national development through the vehicle created by amendments to two laws, namely ILGs under the Land Groups Incorporation Act(as amended) and voluntarily registered customary land under the Land Registration Act (as amended) particularly Amendment No. 21 of 2009. NLDPs focus, it was stated, is to empower customary land owners. Mr. Warvi said the legal frameworks created by these two laws in tandem provided the vehicle for broad based, long term rural development. In his submission, voluntarily registered customary land is an option by which customary land is accessed for national development, through the initiatives of customary landowners themselves. The NLDP in institutionalizing customary land by this process ensures, he submits, protection from being deprived of their land. Mr. Warvi submits that we should appreciate in that context the parity with PNG Vision 2050, 20102030 Development Strategic Plan (DSP) and the 2011-2015 Medium Term Development Strategic Plan (MTDS). It appears to Mr. Warvi that the NLDP is struggling to find traction due to a myriad of reasons which includes: Lack of clear leadership; Lack of structure; Lack of proper institutionalization; Lack of budget support generally and also for its oversight track; Lack of ownership by DLPP as the key and lead implementing agency. Therefore it is his considered view that the Government can seize the opportunity now and endow the NLDP with its proper status and preeminence. One need only peruse PNG Vision 2050 and its two implementation plans [2010-2030 DSP and 2011-2015 MTDP] to appreciate that the NLDPs programs is indeed the vehicle by which some critical outcomes in the 2010-2030 DSP and 2011-2015 MTDP will be realized.
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Abuses over SABL are being perpetuated under the guise of organizing and utilizing customary land for economic development, which of course is NLDPs general term of reference Mr. Warvi added. 4.5 SUMMARY Thereis no cohesive policy on customary land mobilisation. The existence of SABL provisions in law are at best to be described as a scheme of convenience to access agriculture land and the other natural resources occurring upon them. It is not based on carefully principled ideals and considerations whichmust be for the benefits to the customary landowners. The NLDP submissions do not point to clear policy development paths. There is therefore, an urgent need to develop an in-depth National Policy on commercialisation of customary land with the primary objective that the customary owners benefit substantially. The regulation and administration of the processes must not be for the administrative convenience of the politicians and bureaucrats alike but for the peoples benefits. In the absence of any clear policy in respect of SABLs or generally the mobilisation of customary lands, the C.O.I., proceeds on to make its other findings

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4.6

Findings on theEffectiveness of Legislation in the Administration of SABLs.(Absence of Regulations Providing for the Processing of Acquisitionunder Section 11 and Grant of Lease under Section 102 of the Land Act.) In respect of Legislative framework for SABLs the C.O.I. makes thefollowing findings: (1) Provisions under Sections 11 and 102 of the Land Act are good law, although as will be noted, lacked in the procedural provisions for their implementation. (2) No Regulations were made by way of sub-ordinate legislation in the manner empowered under Section 175 of the Land Act, specifying procedures to be followed in effecting acquisitions of customary land under Section 11 and the subsequent grant of SABLs under Section 102 of that Act. (3) It is assumed the procedures followed both for the purposes of Sections 11 and 102 as explained by DLPP through Mr Romily Kila Pat may have been by way of departmental instructions15 although unclear as to whether it originated from the Head of DLPP, the Minister for Lands or the National Executive Council (NEC).

15

Departmental instructions is a subordinate legislation and if not in conflict with its enabling law, has the same force and effect of a law.

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(4)

Such

procedural

provisions

whether

by

way

of

Regulations made pursuant to Section 175 of the Act or by way of departmental instructions must be for the purpose of _ (i) Preserving the integrity of and authenticity of such acquisitions and their subsequent SABL grants; and (ii) (5) Regulate the operations of SABLs after the grants.

Provisions under the Land Registration Act make no distinction between SABL types and other State Leases and instruments and hence no provisions have been made separately for SABL registration purposes except under Section 98 of the Land Registration Act 1981. Under Section 98 a SABL grant may be registered in the name of the custodian as a trustee for the customary owners. Otherwise, all dealings in SABLs after grant are treated in the same manner as all other State Leases.

(6)

The Land Registration (Amendment) Act 2009 (No. 21 of 2009), as enacted for the registration of customary land has no relation to SABLs created under Sections 11 and 102 of the Land Act,although some may converge or overlap. Customary Lands registered under Amendment No. 21 of 2009, and SABLs created under Sections 11 and 102 of

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the Land Act are distinct and separate and stand parallel and independently of each other. (7) With the exception of Agriculture, most other facets of SABLs in their operations attract the respective regulatory compliances including in respect of survey (Survey Act 1969); physical planning (Physical Planning Act 1989); forests(Forestry Act 1991);environment(Environment Act 2000 and Conservation Areas Act 1978); land groups (Land Groups incorporation Act Chapter 147) and corporate responsibilities (Investment Promotion Act 1997 and Companies Act 1997). Application of the requirements of all other Acts and Regulations in respect of different facets in the operation of SABLs are mostly by subsumation (inclusion) but not connected expressly by reference in their provisions except forestry. (8) Agriculture being among two (2) of the purposesfor SABLs is, to say the least, negligible in its legislative mention throughout all legislations with itself not at all being governed by any law significantly to ensure it is carried out in its development and not be merely used to access natural resources found on SABLs. (Refer discussions in Part 2). Legislations in respect of Commodity Boards regulate narrowly the particular crop or agricultural product
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especially in quality control and export regulatory practices and are irrelevant in actual agriculture developments including those carried on or proposed to be carried on upon SABLs. (9) Customary lands had been lost along with the natural resources found on them including temporary losses (i.e. within the specified term of Sub-leases) because there is absolutely no provision in the Land Act governing Subleases derived from SABLs as to the term of subleases,rents, development conditions, breaches and penalties, to name a few. (10) Section 11(1) and 102(1) of the Land Act give respectively a discretion to the Minister to lease customary land and to grant title to such a lease. This discretion should be made subject to Section 102 Sub-section (2) so that that discretion is exercised by the Minister only at the option of the customary landowners. (11) The involvement of the Custodian of Trust Land is vague in respect of processing of SABLs, in particular Certificates of Alienability although the C.O.I. finds that such certificates are for the time being required in the processing of SABLs in leases under Section 11 and grants under Section 102 of the Land Act. (12) Any dealings in respect of customary land including sale and transfer, leases, securities including mortgages
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charges and liens, pledges. and any other dealings whatsoever in contravention of Section 132 of the Land Act is null and void. 4.7. Findings on the Effectiveness of Administrative Procedures Followed In Accordance With Legislation In Processing SABLs and Operations of SABLs. 4.7.1 Initiation of Processing of SABLs. The C.O.I. finds the following: (1) Except for the State sponsored projects such as the Changhae Cassava Project in Rigo, and the Mekeo Hinterlands Rice Project, both in Central Province, most SABLs were initiated by the landowners jointly with foreign investors except for a few such as Akami Oil Palm Limited in West New Britain and urban related SABLs such as Veadi, Konekaru 1 & 2and Roselaw in the National Capital District. (2) Nearly all the SABLs in the rural areas throughout PNG in relation to which agriculture developments were proposed, had large forested areas with trees of highly merchantable value. (3) Nearly all if not all SABLs involved in agriculture development have in their capital investments the component

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to be generated locally through commercial disposal of forest products particularly export of whole logs. (4) In almost all initiated projects involving SABLs they do not arise from any co-ordinated National Agriculture Development Policies such as corridors of development. (5) DLPP merely responds to request by customary landowners to process SABLs over their customary land. 4.7.2. Funding of Processing of SABLs. (1) It was apparent in the course of the Inquiry that no annual budgetary provisions were made in both the National Annual Appropriations (National Budgets) and Provincial Annual Appropriations (Provincial Budgets) except perhaps for the East New Britain Province, to meet the costs for processing of SABLs. (2) Because of lack of funding in the budgetary provisions, the costs of processing of SABLs involving proposed agriculture developments were largely, if not entirely, paid by the foreign developers including survey costs, mobilization costs to assemble landowners, subsistence costs, costs of registration of ILGs, costs of land use and agriculture plans, and costs of incorporation of landowner companies (lancos).

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(3)

In some cases the foreign developers also paid the costs of travel, accommodation and travel allowances for DLPP and Provincial Department officials.

(4)

The funding considered at both the National and Provincial levels of Government is negligible and in most cases, grossly inadequate.

(5)

The landowners themselves in most SABLs had absolutely no cash capital and were extremely vulnerable to manipulation which involve cash advances of every nature from the foreign developer to the heads of ILGs, Lancos and Umbrella Lancos, such that these heads of land owning groups no longer deal with the developers at arms-length but are instead placed in debt and feel deeply indebted to the developers. This resulted in representatives of landowning groups, having a deep sense of indebtedness to developers/investors which compromised particularly the negotiations of the sub-lease agreements and the benefits to be derived from benefit sharing agreements.

(6)

The lack of funding by the State have placed Government officialsalso in vulnerable positions to an extent that they easily compromise their positions especially when developers offered to pay for the cost of carrying out land investigation and awareness programme. The C.O.I. finds that in most instances the reports and recommendations made by the Government officials are in favour of the developers with no proper consent obtained from the
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landowners, erroneous land boundary descriptions and generally unethical manipulations both between the developers and landowners and between developers and State officials. 4.7.3. Findings on the Effectiveness of Administrative Procedures for the Processing of SABLs for Lease/Lease Back under Sections 11 and 102 of the Land Act. (1) The procedures as set out by Mr Kila Pat for processing of SABLs for the Section 11 Lease from customary landowners to the Section 102 Grant of title by the Lands Minister and issue of official Title by the Registrar of Titles were never made to be Subordinate Legislation by the rules of Subordinate Legislation including: (i) Regulations made by instrument by the Head of State acting on advice pursuant toSection 175 of the Land Act; or (ii) Departmental Instructions,

both of which would have the effect and force of law. (2) The steps from (3) to (5) as set out by MrKila Pat for processing of SABLs including respectively are: (i) Lodgement of Lease-Lease Back application

182

(ii)

Issuance of Land Instruction Number by DLPP; and

(iii)

Land investigation upon receipt of Land Instruction Number afterthe survey had been carried out over the land, a survey plan is lodged with the Surveyor General, and after it is approved. This is highly undesirable as the boundary of the customary land to be included in a particular SABL are among matters which can only be determined in the course of land investigations and therefore a survey plan should be registered only after the land investigations have been concluded and Land Investigation Report had been presented and accepted by the Provincial Administrator.

(3)

The DLPP does not have a formal or standard application forms to be used in applications for Lease/Lease Back.

(4)

The most important of the primary procedures, in the C.O.I.s assessment, being procedures to ensure full awareness and understanding by the landowners and based on which they consciously consent to the surrender of their land for the purpose of the proposed SABL. The C.O.I. finds no procedures put in place by DLPP guiding the actual land investigation to be conducted, and a report of which will later be compiled in the Report (LIR).

183

(5)

There is no central coordination to ensure that land investigations are carried out in collaboration with other State Agencies including Departments of Agriculture & Livestock (DAL), Environment & Conservation (DEC), PNG Forest Authority (PNGFA) (where forests operations are to be involved), Mining (where mining is to be involved) in the conduct of public hearings.

(6)

With the majority of SABLs located in the rural PNG and all of them were processed for the purpose of Agriculture Development, the DAL was found not to be the lead agency involved in the processing of SABLs in association with DLPP. DAL instead only acts on submissions on agriculture development plans or other land uses for certification.

(7)

DAL demonstrated little or no monitoring of the progress in agriculture developments after the grant of SABLs.

(8)

There are otherwise no problems or defects with the remaining procedures outlined by Mr Kila Pat up to the grant of title for SABLs.

(9)

The procedures undertaken after the grant by the Registrar of Titles are standard as followed in respect of all dealings in State Land.

(10) The security of the files specifically affecting titles had been a big issue at the commencement of this Inquiry with both the DLPP and the Titles Registry failing to explain the
184

whereabouts of 75% of the SABL files taking over three weeks to produce most with the C.O.I. proceeding without the services of four or five SABL files. In short for the moment these files are insecure from loss. (11) Although direct evidence was not given, the C.O.I. noted very strong inferential evidence during the Inquiry into individual SABLs throughout the Provinces that extrinsic matters affected the processing of SABLs including conflicts of interest, compromising conducts and possible frauds involving landowners, developers, Provincial officials, DLPP officials, Forestry officials and DEC officials. These extrinsic matters in the C.O.I.s view are part of the more universal problem of graft and corruption in PNG. (12) It is noted that the procedures followed in processing of SABLs were followed in the same process or with other acquisitions such as acquisition by Agreement by the State under Section 10 of the Land Act. (13) In all fairness, the DLPP must be commended as an organisation (leaving aside individual officials indiscretions) for being innovative in the absence of procedural provisions of law in dealing with SABLs.

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4.7.4. Findings on the Effectiveness of the DLPP Proposed New Administrative Procedures in the Processing of SABLs. (1) The proposed new administrative procedures in the processing of SABLs noted from the evidence of Mr Adrian Abbyagain showed it was not intended to formally enact them into a Subordinate Legislation. The new procedures are not based on Subordinate Legislation and therefore do not have any legal basis for the time being. (2) The proposed new procedures were developed as a reaction to the complaints over the existing procedures in processing SABLs and it seemed, after the commencement of this Inquiry. (3) Assuming if the proposed new procedures for processing of SABLs will be made Subordinate Legislation in one form or another, the C.O.I finds the proposed new procedures to be cumbersome and imposes upon customary landowners stringent regulatory requirements as pre-conditions to both an application for a lease by the State under Section 11 and a lease-lease back (grant) under Section 102 of the Land Act and is impracticable and will defeat the primary objective of SABLs. In the C.O.I.s view, those stringent regulatory requirements should be imposed on persons or entities, both PNG citizens and corporations and foreign investors who propose agriculture or other businesses to be conducted upon the SABLs and that the Subleases of SABLs to them for
186

those purposes shall not be approved until the pre-conditions are met. These preconditions the C.O.I. noted are as in Mr Adrian Abbys affidavit evidence as follows: Approval for Land-use Plan. Minor Impact Project Major Impact Project Demonstration of Capital and Expertise (C.O.I. suggestion) (4) The evidence of the proposed new procedures for processing of issuance of SABLs given by Mr Abby makes no reference to the Land Registration Act 1981(as amended by Amendment No. 21 of 2009), in particular the procedures for registration of customary land, and the C.O.I. is therefore convinced beyond doubt that it was intended that the two processes for acquiring title to customary land namely the SABL process under Section 11 and 102 of the Land Act, and the customary land registration process under Amendment No. 21 of 2009 were intended to be kept separate but parallel to each other. (5) The proposed new procedures also failed in specifying the procedures for the conduct of the land investigationsand awarenessthemselves, which exercises the C.O.I. considers to be the most important and vital to preserve the special character of SABLs including full awareness of the effect of SABLs affecting the landowners customary rights, and thereafter giving their consents.
187

(6)

The proposed new procedures at no point suggest any interaction between State agencies such as DAL, DEC and NFA having responsibility over SABLs.

(7)

The proposed new procedures do not distinguish between the procedures for the registration of customary land under the Amendment 21of 2009 of the Land Registration Act and SABLs under Sections 11 and 102 of the Land Act and this aspect remains void of any explanations, however the C.O.I. had concluded its findings on the parallel of these two separate enactments.

(8)

The proposed new procedures apparently were not developed pursuant to any policy direction but based on criticisms of DLPPs inadequacies in the administration of SABLs including discrepancies in the processing to grant and operations after the grant. Whilst the C.O.Icommend the DLPP for taking the initiative to developthese new sets ofguidelines, it is considerered as a knee jerk reaction to the growing public concern over the management of SABLs. Infact, Mr Abby admitted during the inquiry that the new procedures were developed as a result of the public outcry over the manner in which SABLs weremanaged.

188

4.7.5. Findings in Respect of Administrative Procedures Followed in Respect of Physical Planning under the Physical Planning Act 1989. The C.O.I. finds in respect of Physical Planning the following: (1) Physical Planning in accordance with the Physical Planning Act 1987 had not been a factor in the processing of SABLs from lease/ leaseback to grant of title. (2) There are no provisions either in the Land Act or Physical Planning Act to address any implications in terms of physical planning if under Part VII of that Act an area is declared a physical planning area in accordance with section 67 of that Act either before or after a SABL covering either whole or parts of that area is processed (3) There are also no provisions in either of the said Acts to deal with developments including agriculture and other business infrastructure developed upon SABLs particularly in the rural areas, and later the SABL areas become a declared physical planning area in accordance with section 67 of that Act. (4) It is not provided for either in the Land Act or Physical Planning Act whether a township infrastructure (e.g. large scale oil palm estates) are to be subjected to physical planning under the Act or not.
189

(5)

The Chief Physical Planners (CPP) role proposed by DLPP in its proposed new procedures for the administration of SABLs to assess the question of minor impact and major impact project involving considerations for processing of SABLs is a good approach provided however that the CPP coordinates with other State Agencies including DLPP, PNGFA, DEC and Provincial Governments in determining the level of impact of a proposed project. Again this should be part of an overall review and possible for better coordination by all relevant State Agencies.

(6)

The overall roles, functions and powers under the Physical Planning Act can only be appropriately reviewed if a universal policy on customary land mobilisation is formulated.

4.7.6 Findings in Respect of Administrative Procedures Followed in Respect of Agriculture The C.O.I. finds in respect of Agriculture the following: (1) The functions, roles, responsibilities and powers of the Department of Agriculture and Livestock (DAL) are not defined by law, but the C.O.I. assumes, by instrument, creating the Ministerial Portfolio as allocated with responsibility as a Ministry in the Executive Government (NEC) in accordance with the Constitution and the Prime Minister and the National Executive Council Act. However
190

through

various

laws/statutes

establishing

different

agriculture commodity Boards, the DAL Secretary is exofficio chairman hence through those avenues DAL has legislatively defined roles, functions, responsibilities and powers. (2) Agriculture is one of the two (2)PURPOSES for which SABLs can be sought. Business purpose is the other one. Both are provided for in the most general description under Section 102 of the Land Act, and in cases of agriculture, sections 90A and 90B of the Forestry Act 2000(as amended).Except for the conjunctive but general mention of agriculture under sections 90A and 90B of the Forestry Act, they are not regulated in their forms and contents. The C.O.I. finds this accordingly. (3) Majority of the SABLs have agriculture

developments/project as their stated purpose. (4) Agriculture being the main development thrust in

applications for SABLs, the C.O.I. is disappointed to find that DAL finds itself in a secondary role to the DLPP and PNGFA. (5) The C.O.I. finds that it would be of great imperative if agriculture and any other businesses proposed for a SABL be evaluated in all their facets before the commencement of the processes for issuance of SABLs so that certification by DAL in case of agriculture and Department of Commerce
191

and Industry in case of any other businessand certification by any other relevant State Agencies as are required by their respective laws be requisites either before grant of SABLs or before approval of the sub-leases thereof to developers. (6) DAL had either totally failed or neglected or have been negligible in the monitoring and enforcement of performances in agriculture developments as certified by it in respect of SABLs and in conjunction with PNGFA and DEC in corresponding compliances with FCA conditions and Environmental Permit conditions. (7) The presence of DAL in many provinces is limited except through the Divisions of Primary Industry under the auspices of the Provincial Administrationsand that lapse has a profound effect on the evaluation of proposed agriculture projects to monitoring thereafter including those carried on upon SABLs. (8) Overall the C.O.I. repeats that absence of central coordination of all relevant State Agencies has had the effect of isolated approaches by each of them in dealing with management of SABLs. 4.7.7 Findings in Respect of Administrative Procedures in Surveys of SABL Proposed Areas under the Survey Act 1969 (Chapter 95) The C.O.I. finds in respect of survey of SABL areas the following:

192

(1)

The provisions of the Survey Act in relation to survey plans and actual maps are adequate and effective in respect of all classes of surveys affecting SABLs including a Class 3 Rural Survey.

(2)

The anomaly the C.O.I find however in respect of many SABLs is near lack of independent and impartial verification of information provided to the registered surveyors involved in drawing the surveys and in many instances the boundaries of the SABL proposed area was not walked physically to determine the boundary within the accuracy level of Rural Survey Class 3.

(3)

It is found also that in respect of a number of SABLs the Rural Survey Class 3 was conducted entirely from helicopters using the global satellite Grid Positioning System (GPS), for example Toriu Timbers SABL which is inaccessible because of very rugged terrain, Urasir Development Limited located in the Josephstal Ranges extending from Ramu to the Sepik River, East Sepik Province and the acquisition of 2 million hectares of forestedarea in the North Fly District of the Western Province extending to Sandaun, Hela and Gulf Provinces.

(4)

In the absence of walking of the boundary or even to a lesser extent, absence of a coordinated public hearing or land investigation, the C.O.I do not
193

consider that a survey concluded otherwise than by these methods will truly represent the area agreed to be included in a SABL. (5) In its findings the C.O.I. is of the opinion that all matters of survey must be determined during awareness hearings and land investigations based on which a survey plan can then be accepted for registration by the Surveyor General, whether the survey plan was drawn before or after those processes. If such survey plans were drawn before the awareness hearings and land investigations,and there be any variations or amendments, such variations or amendments must be made before registration. (6) An acceptable survey process must be settled in respect of SABLs for the purpose of avoiding disputes and litigation affecting operations of SABLs particularly in respect of inclusion of areas not agreed to or consent withheld for inclusion and involvement in SABLs.

194

4.7.8. Findings

in

Respect

of

Legal&

Administrative

Procedures Followed in Respect of ForestClearance Authorities Associated to SABLs. The C.O.I. makes the following findings in respect of legal andadministrative procedures followed in respect of FCAs associated with agriculture developments upon SABLs: (1) Sections 90A, 90B and 90C (although 90C is relevant only to roadline construction FCAs) were provisions noted to havebeen enacted recently in an amendment to the Forestry Act 1991 by Forestry (Amendment) Act 2000 (No. 36 of 2000), and later the Forestry (Amendment) Act 2007 (No. 19 of 2007). (2) These Amendments were primarily to facilitate forest clearances of forested areas required for large scale agriculture developments over areas in excess of 50 hectares divided into quarterly phases of 500 hectares to be developed prior to progressing to the next 500 hectares. (3) Accordingly FCAs are issued by the PNGFA on a quarter by quarter phases based on certificate of approval issued by the Secretary of the DAL in respect of agriculture and an Environment
195

Permit

issued

by

the

Environmental

Council

in

respect

of

environment and such other approvals as may be given by other State Agencies as applicable. (4) The grant of further FCAs for successive quarter phases of forest clearances will only be issued on satisfactory developments carried out in the preceding quarter phase. (5) The structure of the provisions under Sections 90A and 90B of the Act vests the facilitation of agriculture development primarily in PNGFA when in all reasonableness it should have been vested in the DAL in all its deliberations and then brought to the PNGFA only to facilitate FCAs. The C.O.I. finds this arrangement by law to be highly undesirable notwithstanding that the DAL could have been more pro-active and ensure compliance, despite the lead role being vested in the PNGFA, thus resulting in deeply serious deviations from lack of agriculture developments and continuously altered agriculture plans to excessive forest clearances in breach of regulation clearances permitted by law, affecting many SABLs. (6) It is found that in most SABLs, agriculture purpose had been used as the fastest route to access pristine forests for the reasons that:196

(i)

through the processes of Local Forest Areas (LFA) or Timber Rights Permit (TRP) areas the stringency in obtaining permits to harvest logs through those processes make agriculture FCAs over SABLs an easier process; and

(ii)

it was easier to breach FCA conditions including lack of cohesive inter-State Agencies evaluation and and monitoring extrinsic mechanisms scrutiny. ofcourse

influences, that there was less official

(7)

It is found with great concern that the incohesiveness and disorganised functioning of the regulatory authorities by State Agencies had exacerbated massive destruction of the forests throughout the country through FCAs which involve complete forest clearances.

(8)

It is found also that for the same reasons, but in particular the PNGFA had been either lax in enforcing quarter phased forest clearances for agriculture or by inference its officials have been affected by external influences including compromises, bribes and indiscretions to turn a blind eye to abuses of this nature, and worse,
197

they recommend to their superiors the advance to the next phase for the next FCA to be issued. (9) It is found that in terms of the proposed capital investment in agriculture, such capital is presented by the foreign investors to include revenue to be derived from the commercial disposal of logs from the forests to be extracted within the proposed agriculture development area with ordinary benefits by way of royalties, development premiums, and government taxes based on per cubic meter of logs. The C.O.I. considers this to be highly undesirable, and the total ownership and commercial value of extracted forest products should vest entirely in the landowners and the investor be restricted totally to capital investment in agriculture it brings in without the inclusion of revenue from the said forest products, while the landowner capital contribution be the arable land availed through SABL. 4.7.9. Findings in Respect ofProcedures for the Issue of

Environmental Permits in accordancewith the Environment Act 2000 and Conservation Areas Act 1978. The C.O.I. makes the following findings in respect of procurement of environmental protection compliances and issue of

198

environmental permits under the Environment Act and generally requirements of the Conservation Areas Act. The C.O.I. finds the following in respect of the procedures followed in the processing of and issuance of Environmental Permits (EP). (1) By virtue of Section 46 of the Environment Act all activities of every kind which are likely or ought to be assessed as likely to impact upon the environment including disturbances and damage to natural environment and habitat, require approval of the DEC and the Environmental Council. (2) Most, if not all, activities including agriculture and other businesses proposed or actually carried out in respect of SABLs required environmental regulatory compliances. (3) The procedures imposing necessary compliances including acceptable environmental management plans associated with such activities upon SABLs are quite elaborate and are found to be quite effective subject to the C.O.I.s further findings. (4) The C.O.I. finds that the lack of collaboration and incohesivenessbetween relevant State agencies dealing with SABLs continues even after Environmental

199

Permit is issued thereby allowing breaches of permits conditions to go undetected. (5) The capacity of DEC to enforce compliance through regular environmental audits and investigations continues to be hampered by lack of funds and resources including technically qualified personnel. (6) The C.O.I. also finds it highly undesirable that the Secretary of DEC wears four (4) hats in the processing of applications for EPs. They are:(i) Registration of intention to carry out preparatory work is received by DEC and scrutinized by the Secretary or his delegate. (ii) DEC accepts or refusesenvironmental impact report. (iii) If accepted, it is referred to the

Environmental Council of which the DEC Secretary is the chairman. (iv) Environmental Council refers the

application to the Minister with its recommendation to approve or not approve the application.

200

(v)

If EP is approved, it is referred to PNGFA with recommendations in respect of FCA considerations. DEC Secretary is ex-officio deputy chairman of PNGFA.

The C.O.I. considered the four (4) roles performed by the DEC Secretarywill place him in a conflict of interest situation and therefore resulting in partial and biased decisions being made. (7) There was no direct evidence but the C.O.I. in many instances had been poised to infer from the findings in respect of inquiries into agricultural SABLs that extrinsic matters again affected the effective administration of the environmental compliances. (8) The C.O.I. is otherwise again concerned about the absence of a central co-ordination committee or council for the purpose of unifying all forms of scrutiny from appropriate State Agencies in the granting and operation of SABLs. (9) There is neither evidence nor was there any SABL referred to the C.O.I. involving the question of SABLs issued over reserved conservation areas to attract compliance with the Conservation Areas Act 1978. The C.O.I. finds no particular concern over procedures to be followed under that Act except for

201

the Ministerial discretion which must be further restricted. 4.7.10. Findings in Respect of theRole of the Investment Promotion Authority (IPA) in respect of SABLs under the Investment Promotion Act. The C.O.I. makes the following findings in respect of the role of the Investment Promotion Authority (IPA) under the Investment Promotion Act: (1) IPA has no additional role other than to perform its statutory functions under the Investment Promotion Act,Companies Act, Business Names Act, Act and no Associations particular Incorporation with

distinction of these corporate entities being involved in businesses engaged in SABLs. (2) The C.O.I. noted that the IPA regulatory requirements for foreign investors either through foreign registered companies or PNG incorporated companies with foreign control are adequate but with no special application to businesses proposed to be conducted involving SABLs. (3) The C.O.I. finds that the I.P.A. in its strict statutory functions is not given any powers
202

under any relevant legislation to specifically require demonstration of capital and expertise in the particular agriculture development or business to be engaged in upon SABLs. (4) The C.O.I. finds that such scrutiny by IPA is necessary in view of concessions over many SABLs being given to logging companies with absolutely no agriculture background in their past operations and the total absence of agriculture specialists and employees on their pay-roll. 4.7.11. Findings in Respect of the Application of the Companies Act 1997 In respect of the application of the Companies Act and the requirements of companies involved in SABLs, the C.O.I. makes the following findings: (1) The Companies Act1997 makes no distinction as between SABL landowner companies and other companies although as companies comprised of all citizens as shareholders, these companies could be favourably considered for exemptions from filing annual returns and other statutory requirements. (2) The Companies Act is concerned with the creation of abstract entities almost on par with living persons in
203

respect of the right to acquire and dispose of assets, sue or be sued, engage in commercial activities and so on and is a person for all purposes. (3) This Act however does not distinguish between companies engaged in businesses operated upon SABLs, and whether they are foreign owned or not. Those are matters for the Investment Promotion Authority. (4) Section 110 of the Companies Act, in the our view, is an ample provision which imposes an obligation on the managers and directors of landowner companies and generally any other company to place before the shareholders for their approval if any major decisions by way of agreements and commitments will expose the assets of the company to liabilities in a large proportion. In relation to SABLs, titles of which are predominantly issued in favour of landowner companies, entering into Sub-leases to foreign investors as well as financing loans can expose the SABL title to serious risks bearing in mind that almost all landowner companies assets are their SABL land and the natural resources found on them. (5) The C.O.I.finds howeverthat specific provisions can be considered for dealings specifically in respect of SABLs particularly in terms of scrutiny of proposed risks exposures which can be enacted in harmony
204

with the provisions of the Fairness of Transactions Act. (5) The C.O.I. repeats its finding in respect of ILGs under the Land Groups Incorporation Act that that the regulatory and over-sight responsibilities should be vested with the Registrar of Companies and not with DLPP. (6) It is in the C.O.I.s considerationthat the Companies Office, among all other relevant State Agencies must function in co-ordination in respect of SABLs under a single organization perhaps or be known as the National Agricultural Development Authority with clearly defined roles and functions of such Agencies in the co-ordination of agriculture development, not only in respect of SABLs, but generally throughout the country. 4.7.12 Findings in respect of Benefits Sharing from SABL Projects Benefits to be derived by the customary landowners by the involvement of their land in SABLs had been their primary expectations. Also, as discussed in Part 4.2 (Policy), the total lack of infrastructure for health, education and vital economic services including roads and bridges. Airstrips, and Seaports, had driven the landowners to submit their land and natural resources to effect these infrastructures. Forests
205

being among natural resources immediately accessible to satisfy these needs, had also become the most abused of natural resources. The C.O.I. finds in respect of benefits sharing from SABL the following: (1) The customary landowners expectations of the benefits derived from their land incorporated in SABLs are predominant factors in SABLs. These benefits range from immediate monetary benefits to infrastructure developments. (2) The customary landowners suffered limitations in their ability to distinguish the difference between benefits to be enjoyed by them arising from the agricultural development upon their land, and the commercial value of the natural resources found on their land which are exploited commercially, in particular forests on most of the SABLs. (3) In respect of agriculture, almost without exception the customary landowners do not know the value of the proposed agriculture projects upon their land comprised in the SABLs over the period/term of the sub-lease to foreign developers. In their ignorance therefore they do not know the reasonable value of the land rentals to be charged to the developers, as

206

well as benefits to them from the agriculture developed on their land. (4) In respect of SABLs engaged in agricultural developments involving forest clearances, the customary landowners including the executives of their ILGs and landowner companies (lancos), do not understand and do not therefore distinguish between TEMPORARY BENEFITS derived from their forest products in the form of royalties, infrastructure development levies as opposed to the LONG TERM BENEFITS they must secure over the agricultural developments upon their land. (5) Because of lack of understanding and therefore inability to make the said distinctions between the different benefits, the customary landowners of SABLs requiring forest clearances assume that the Developers have an automatic right to revenue derived from the commercial forest products as if it is simply another logging operation. (6) In view of both inadequacies in policy and legislative developments therefore, benefits sharing especially to the customary landowners of SABLs are minimal and negligible.

207

PART 5

CONCLUSION OF THE REPORT

This Reportconsists of_ (1) (2) thelegislative basis for the issuance of SABLs (TOR(a)); theprocedures followed in the administration of SABLs in accordance with the legal authority, (TOR (b)); and (3) the effectiveness or otherwise of existing legal and policy framework in the improved management of SABLs in future including facilitating the applications from legitimate applicants (TOR (h)).

Appended to this Report and referred to as Annexure 1 comprise twenty-five individual Reports of which I was assigned to inquire into and make findings and recommendation thereof. This Individual Report correspond to the following provinces where the twenty five SABLs are located and are New Ireland Province, Western Province, Central Province, East Sepik Province, Morobe and Madang Provinces. The Findings and Recommendation of the Individual SABLs that I have conducted separate inquiry as a Commissioner covers Terms of Reference(c)(i)(ii)(iii)(iv)(v)(vi) &(vii), (d), (e), (f),(g)(i)(ii) &(iii) and (i).

209

APPENDIX 1 Appendix 1 comprise all twenty five (25) individual SABLs Reports covering New Ireland Province, Western Province, East Sepik Province, Central Province (specifically for four SABLs located along the Hiritano Highway), Morobe and Madang Provinces

211

NEW IRELAND PROVINCE

Central New Hanover SABL-Destruction and environmental damge resulting from logging

212

1.COI Inquiry File No 9 for Special Purpose Agricultural and Business Lease over Portion 884C Volume 16 Folio 232 Milinch: Djaul NE and Lossuk NW New Ireland Province in the name of Cassava Etagon Holdings Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to Section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the Cassava Etagon Holdings Limited SABL. These were: 1.2.1 1.2.2 1.2.3 Department of New Ireland Province, (DNIP) Department of Lands and Physical Planning, (DLPP) Department of Provincial Affairs and Local Level

Government, (DPALLG) 1.2.4 1.2.5 1.2.6 Department of Agriculture and Livestock, (DAL) Department of Environment and Conservation, (DEC) PNG Forest Authority (PNGForest Authority)

2. 2.1

Witnesses Statement and Summonses The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings are set out in the schedule below.
213

No 1

Name and Position Mr Michael Lamusan of Bagatere, West Coast of Tigak, Tikana LLG, Landowner & Mr Henry Eremas, Landowners Mr Jerry Lamasisi Landowner Mrs Margaret Elias Landowner Mrs Lydia Philip Landowner Mr Talana Tiamon Landowner Mr Anthony Luben, Unattached Public Servant & Former Deputy Secretary Lands Services 20022008, DLPP Mr Lazarus Malesa, Customary Leases Lands Officer, DLPP

Pages 16-28

Day 2

Date 25/10/11-SABL 37 KAVIENG

2 3 4 5 6 7

29-43 46-51 52-58 59-61 62-63 10-18

2 2 2 2 2 -

25/10/11-SABL 37 KAVIENG 25/10/11-SABL 37 KAVIENG 25/10/11-SABL 37 KAVIENG 25/10/11-SABL 37 KAVIENG 25/10/11-SABL 37 KAVIENG 05/01/12-SABL 68 MIROU (WAIGANI)

6-15

23/01/2012 SABL 79Mirou (Waigani)

3. 3.1.

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that:

Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission,

214

may attend the inquiry in person or may be represented by counsel. 3.2 The following were granted leave to be represented by counsel No representation by lawyers Nil

4 4.1.

Exhibits and documents There were eleven (11) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.

No 1

Item National Gazette No, G224 of 7 December 2006 (Notice of Direct Grant) SABL State Leasedated 14 May 2007 Instrument of Lease/Lease Back Agreement made on 1 November 2006 Survey Plan of KAUT SABL by Lands Department

Interested Party CEHL/DLPP

Date received 25/10/11

Exhibit Number CE 1

2 3

CEHL/DLPP DLPP/CEHL

25/10/11 25/10/11

CE 2 CE 3

CEHL

25/10/11

CE 4

5 6

Michael Lamusans C.O.I. Statement Copy of the COI National Gazette No. 80 dated 13 April 2006 Letter by C.O.I. Neighbouring Clan and Mr Eremas Clan
215

25/10/11 25/10/11

CE 5 CE6

25/10/11

CE 7

to the C.O.I. 8 Letter by five (5) dated 4 March 2011 addressed to the Honourable Minister for Lands. 9 Land Investigation Report of 2006 10 MOU Between the State of PNG and Changhae Ethanol Corporation Limited dated 4 February 2005 11 Brief Statement of Mrs Margaret Anne Elias and Recording of Proceedings Local Land Court Kavieng 5.

C.O.I.

25/10/11

CE 8

DLPP/CEHL C.O.I

25/10/11 25/10/11

CE 9 CE 10

C.O.I

25/10/11

CE 11

Timeline of events of note surrounding Cassava Etagon Holdings Limited SABL Title

5.1

The timeline showing important events concerning the SABL is shown below in chronological order of their happening:

No

Milestone

Dated of Proponent/Applicant Completion/ Grant/Issue Execution Memorandum 4th February State/Changhae of Agreement 2005 Ethanol executed Limited/DLPP/DAL/P between State NG Forest and Changhae Authority/DEC Ethanol Corporation Limited of Korea for
216

Respondent Entity/Respondent Cassava Etagon Holdings Limited/Landowner s of Kaut

developing Cassava Industry in PNG Incorporation of Cassava Etagon Holdings Limited ILG Registration and Gazettal No. G80 Inter Departmental Committee Report on Cassava Biofuel Project-Status of Land Mobilization Nd Land Availability for the Project Land Investigation (Field Report)

4th August 2005

Landowners of Kaut TRP area

ILGs registered

13th April 2006

18 Tuesday July 2006

CEHL-11 ILGs owners of customary land at Tikana LLG area was issued by ILG Registrar i=on 10th April 2006. State/Agencies/Lando wners/CEHL

All ILG listed dispute the registered ILGs

Changhae Ethanol Corporation of Korea

18th June 2006 to 01 July 2006

DLPP-Completed 9 LIR and 27 LIR pending completion and yet to be signed and accepted by landowner representatives/NIPA

CEHL/Landowners

Final Land 29th October Investigation 2006 to 11 Field Activity November 2006 6 Lease/Lease Back Agreement 1/11/2006

DLPP undertake at NIPA funding awareness and signing of Deed of Lease at Lokono village DLPP-Mr Kimas did Landowners not sign though Messrs representative/CEH Lazarus Malesa L
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10

between State and landowners representative pursuant to section 11 of Land Act Lease/Lease Back Agreement between State and landowners representative pursuant to section 11 of Land Act Notice of Direct Grant (s102)Gazettal No, 224 Notice of Grant (s102) on file for CEHL Deregistration of CEHL

(DLPP)/Martin Banovo (NIPA)and Anthony Drett (NIPA) signed as witnesses

1/11/2006

DLPP-Mr Anthony Luben signed (ass Delegate)

Landowner representatives and Executives of CEHL from Kaut/Tome/Lokono/ Kavin and Lemakot villages signed

07 Dec2006

DLPP-Mr Luben signed as Delegate on 4th December 2006 DLPP-Mr Kimas signed IPA

Landowners

01st May 2007 30 May 2008

Landowners

CEHL Shareholders and Directors

FINDINGS 5.2. The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Cassava Etagon Holdings Limited. 6 6.1. Cassava Etagon Holdings LimitedSABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette No. G224 dated 7th December 2006 for Portion
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884CLossuk NW and Djaul NE. The land is described as Kaut.The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 14th May 2007 by the Department of Lands and Physical Planning to the holder Cassava Etagon Holdings LimitedSABL(CEHL). Mr Anthony Luben, signed as delegate of the Minister for Lands. The detail of the SABL is shown below:

Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease 7 7.1 Background

Portion 884C 23/453 Cassava Etagon Holdings Limited 14th May 2007 Ninety-nine (99) years 26,000.00 hectares

A direct grant under section 102 of the Land Act for 99 year SABL lease was made on 4 December 2006 to Cassava Etagon Holdings. It was published in National Gazette number G224 of 7 December 2006. With an area of 20,000 hectares, the land known as Kaut being portion 884C in the Milinch of Djaul, Fourmil Kavieng. This land is said to be about 25 kilometres out of Kavieng town in the New Ireland Province. The area was previously logged under a Timber Rights Purchase area but that TRP expired in 2009. It is a large tract of land that runs basically from the eastern seaboard of New Ireland Province, There are two coastlines lying within the barrier of coral reefs and it runs between the eastern seaboard and up to the hills that divide the island and down to the West Coast of New Ireland Province.

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8. 8.1.

Site Inspection On Saturday 29th October 2011, the Commission conducted site inspection of the Kaut SABL. The SABL is located some 20km drive along the Buluminski Highway from Kavieng on the eastern side of the island and extends inland for another 30km onto the western part of the island ending at Kau No 2 Camp (a fishing village lying closer to Kavieng Town). The visit was to confirm that cassava was planted on land with an area of 20,000 hectares known as Kaut being Portion 882C Miilinch Djaul Fourmil Kavieng earmarked for production and exporting of dried cassava to South Korea.

8.2

Our visit confirmed that the cassava was not planted on the land registered for the purpose of growing cassava for production of ethanol as biofuel. We visited Kaut village and met the Ward Recorder and a member of the Village Planning Committee (VPC) and were told that the cassava project was not established even though the launching of the project took place in Kavieng. There was no awareness programme conducted in the village and consultative process for registration of the customary land for cassava production. DPI Office at Kopkop, Kavieng confirmed that the agriculture extension officer of Tikana LLG were not consulted on the planning and development of cassava project at proposed sites on the land known as Kaut.

8.3.

Inquiries and searches conducted by the C.O.I Agriculture Advisor at the DPI Office confirmed that there was no file established for the project. Mr Wohuinangu also observed during the site inspection that red soil was suitable for cassava and rubber tree crops. Despite the anomalies and flaws existing with SABL Portion 884C, the land mobilization should be encouraged and ILG registration and land investigation conducted to

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ensure that the landowner corporate vehicle be incorporated to proceed with the cassava project ably assisted by NIPA and government. 8.4. Cassava Etagon Holdings Ltd has not fulfilled the purpose of its registration as a business entity to grow cassava for production of ethanol as a biofuel, Very limited consultative process has been established by the customary landowners in the registration of customary land and between the government agencies responsible for the development of agriculture sector. 9. 9.1. IPA/ COMPANIES REGISTRY RECORDS According to the IPA Extracts, Cassava Etagon Holdings Limited was incorporated on 4th August 2005 and ceased operating as a company on 30th May 2008. The Company Number is 1-54388 and the current status with IPA is that it is deregistered. 9.2 The issued ordinary shares of the company are 16. The shareholders holding 1 ordinary share in CEHL comprise Messrs Jimmy Awakas (Panapai village), Vakaty Baia (Ngavalus village), Edward Bart (Tome village), Kalis Ekonia (Lokono village), Emanuel Garasale (Putput village), Pelick Kasup (Kaut village), Graham Langa (Kaut village), Munias Mais (Kavin village), Kiutie Erie Moi (Tome village), Wain Nakikus (Lokono village), William Passingan (Tome village), Walagis Robin (Kaut village), Tangap Ruby (Putput village), Jimmy Salatiel Goss (Kaut village), Motley Simpson (Lokonon village) and Salatiel Tangap (from Kasalok village and now deceased) all of Tikana LLG, Kavieng.The 15 listed shareholders came from eight villages named as Kasalok, Lokono, Kaut, Putput, Tome, Kavin, Ngavalus, and Panapai village

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9.3.

The Directors comprise Martin Mek (Lamekot village), Joseph Daniel (Kaplaman village), Jimmy Salatiel Goss (Kaut village), Robin Sanagala (Nonopai village), Gerson Rabana (Panamana village) Nangkos Kaklavui (Limanak Island), David Eliakim (Lokono village),Salatiel Tangap (Kasalok village) and Robert Rabana (Ngavalus village) all from Tikana LLG, Kavieng.

9.4.

The Secretary to CEHL is Kiutie Erie Moi and Paul Steven Taong of Kaut village.

9.5

The lesseeCassava Etagon Holdings Limited was deregistered by IPA on 30 May 2008. Under section 16 of the Companies Act 1997, A company is a legal entity in its own right separate from the shareholders and continues in existence until it is removed from the Register. Cassava Etagon no longer has capacity under law to sue or to be sued and correspondingly or consequently to own and to dispose of property.

10.

Land Mobilization (a) Meeting of 14th to 17th June 2006 to Establish CEHL as landowner company

10.1. C.O.Is perusal of document titled Land Investigation Report of New Ireland Cassava Project 2006 compiled by DLPP and under cover of IOM by Mr Oswald Tolopa, Director-Policy DLPP was submitted to Deputy Secretary in respect of the LIR process and ILG registration (Exhibit CE 9 Appendix E). Appendix E refers to CEHL Minutes of Meeting 02/06 where Ward Members (10), a Lawyer (1), Consultants (3) from NIPS CCG and Subsistence Farmers (42 landowners under CEHL) from Kaut TRP area and Lokono LFA area were present at that meeting held at LIGGA Conference Room on 14th -17th June 2006.. The list of those in attendance totalled 56 persons (including 3 females).
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10.2. Mr Paul Steven Taong was the Facilitator and Chairman of the 4 day meeting. According to the landgroups Mr Taong was not a landowner but acted as Consultant to the company and the project. The Agenda for that meeting was to discuss and resolve (1) The need for a landowner company, (2) Name of the landowner company, (3) Registration of the company, its Board of Directors, Company Secretary and (4) Shareholders. It was noted from IPA records that Mr Paul Taong acting as proposed Secretary of the company submitted the application for Registration of a company, Names of Directors, Shareholders and Application for Reservation of name Cassava Etagon Limited to IPA on 20th July 2005. 10.3 This meeting failed to inform the members that CEHL was already in existence and registered with IPA to carry on business in PNG. Those present at the meeting included Messrs Taong (Consultant), Salatiel Tangap (now deceased), Salatiel Goss, Robert Rabana, robin Sangala, David Eliakim, Joe Daniel, Martin Mek Gerson Rabana (All Ward members of Tikana LLG), Ekonia Kalis, Edward Bart and Nakikus Wain (Landowners from tome village) the interim Directors of the company. The actual cover up of the existence of the company was in our view so well executed by Mr Taong the chief initiator of the scheme who was ably supported by the elected Ward Councillors and a number of villagers from Tome and Lokono village. They withheld information on the existence of the company from those in attendance at that four day meeting. 10.4. The C.O.I considers this cover up as deceitful, fraudulent and a misrepresentation in the lead up to the Land Investigation process and the

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issuance of SABL Title to CEHL. That is conduct unbecoming of elected Ward members and representatives of the LLG and the people whose livelihood would change with the high impact project such as the cassava project. 10.5. The C.O.I notes that this very deceit resulted in DLPPs endorsement of the irregularities in the process leading to the issuance of SABL title to CEHL. Although it is confirmed that proposed project never eventuated, the irregularities within the process of land mobilization, ILG registration, the deceit of the CEHL officials and the dual role played by Special Projects as the lead Division in the LIR process it is important to highlight the involvement of officials in their constructive neglect of duty to ensure that landwas to be mobilised with the majority consent of the landowners. (b) Landowners objections to the ILG Registration and SABL Portion 884C Project 10.6. Landowners openly expressed their anger over what they termed as lack of awareness and fraudulent processing of the ILG registration process including the inclusion of their land within the SABL Project area. 10.7 The Evidence of Michael Lamusan 10.7.1. Mr Michael Lamusan, a former Public Servant and spokesman representing the people of Bagatere, West Coast Tigak in the Tikana LLG. Bagatere comprises five (5) villages Olmalak, Metiselen, Lasagok, Penumai and Batig. The villages share common border with Ngvalus to the east, Lovalei to the South and Kaut to the North/Northwest.

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10.7.2.

His evidence basically was that there was no proper awareness and most of the villagers were taken by surprise to learn that their villages have been included in the SABL Portion 884C to CEHL. The people of Bagatere disputed the authenticity of the registration of the 11 ILGs gazetted under G80 dated 13 April 2006 (Exhibit CE 6). The Chairman of ILGs named in the Certificate of ILG was deceased and that names of clan leaders was appearing in other clan.

10.7.3.

With regard to the SABL process, the awareness and the period of lease, the following extract of his evidence typifies the feelings of the people, Sir, SABL on Cassava Etagon Holdings Limited is for a 99 years Lease - lease back arrangement, I believe, and our land in Bagatere has been included under that. We have not been truly informed of the complication relating to the lease-lease back

arrangement that as we know now covers a term of 99 years. .The people must be consulted adequately and then their consent must be obtained honestly and transparently, not by force or devious means. Whilst we are angry that some unauthorized persons have gone out and register our land under suspicious circumstances, we are equally angry in the way that these people are allowed to freely roam our land in the pretext of development and enticing our ignorant and simple folks in the village in signing away their

225

land for a development project that our people can hardly benefit from. (Refer to page 24 of SABL 38 Mirou-25/10/11) 10.8. The Evidence of Jerry Lamasisi 10.8.1 Mr Jerry Lamasisi of Maxon village recalls in 2004 when late Ward Member and Director/Shareholder of CEHL Mr Salatiel Tangap and Mr Miskus Maraleu came to their village sometime in 2004 and met the villagers of Kaut at the Community centre. They told people about consent form and out of respect of Mr Tangap few people signed the consent form but majority of villagers were not too happy to sign the ILG forms as there was no proper explanation and a lot of people were in a state of confusion. 10.8.2. When it was put to Mr Lamisisi, that evidently the late Mr Tangap been the representative of the people of his clan would have been authorised by the clan/ward/village to endorse their support for the project. He responded that there was lack of consultation, collaboration and awareness and his consent could only be for his small group and not the entire village. 10.8.3 In his concluding remarks to the Commission, he states, I do not know what his motives were but this Cassava Etagon exercise, there is nothing to show this thing has actually taken place and people are still waiting. We are people, our hands are tied because there is nothing we can do or have any knowledge of and as to this day we are not sure who is holding on to the title or who is benefiting.
226

(Refer to page 51 of the Transcript).

10.9.

The Evidence of Margaret Anne Elias 10.9.1. Ms.Margaret Anne Elias representing landowners of 1,000 hectares of land belonging to Tigik, Matambua and Palmasaut protested that her land was the subject of SABL Portion 849C Nono 3 which was surveyed for real estate and rubber project. That land has been included in SABL Portion 884C to CEHL. Her people did not support the Cassava Project and since 2006 she lived at her mothers village and could not confirm if any government officers visited the village and talked to her people. There was overwhelming support for the revocation of the SABL Lease.

10.10

The Evidence of Mrs Lydia Philip 10.10.1. Mrs Lydia Philip from Kaut village on the west coast and representing the Makanuk Clan. She states that no Mamais, their village leaders, government official visited villages in the Kaut area to discuss the ILG registration and cassava project. In evidence she said, Whilst still at the village, these people never came around. But whilst we are in town or anywhere else we hear rumours of these people comingThey were saying they will come and plant tapiok at the village... (Refer to page 60-61 of Transcript).

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10.10.2.

There was no awareness and the people of Kaut did not consent indicating that this whole project was organised in the township of Kavieng.

10.11.

The Evidence of Mr Talana Tiamon 10.11.1 Mr Talana Tiamon of Nono village and representing the people of Nono to Losuk comprising 23 head clans, 96 sub-clans totalling 118 ILGs covering eight communities within the Kaut TRPO area. He confirmed that no officials from CEHL, government department consulted his people over the proposed cassava project. He confirms his peoples concerns, I would like to tell this Commission that we have no idea, we do not know what this Cassava Etagon is all about. Like I say, there was no awareness carried out, we have no idea, no knowledge of what it is all about. According to the people, we do not want this Cassava Etagon thing to go on. We just simply want our land to be returned to us. (page 63 of Transcript)

10.12.

The evidence of the landowners are genuine and confirms that the land investigation undertaken by the Special Projects Division of DLPP lacked proper management of the Land Investigation process even though it was made of of very experienced officers in the like of Elisabeth Tobea, Manu Kala and Lazarus Malesa.

10.13.

The funding and the time spent on the Land investigation is a testament of the DLPP officials lack of duty in safeguarding the interest of the landowners in the SABL process.
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11.

Department of New Ireland/New Ireland Provincial Administration

11.1. The Department of New Ireland provided funding and logistical support to the Land Investigation team comprising Ms Elisabeth Tobea (Team Leader, Special Projects), Mr Manu Kala, (Special Projects Officer) and Mr Lazarus Malesa (Customary Land Officer) from DLPP to conduct the land investigation. 11.2. The Intergovernmental Report on the Cassava Biofuel Project acknowledges the support from the New Ireland Provincial Government and its commitment to the project with the endorsement of the Working Committee on the Cassava Project in terms of funding assistance. 11.3. The C.O.I inquiry finds that self-serving consultants such as Mr Toang in full collaboration with the Ward Leaders of the Tikana LLG influenced the land mobilization process without the full knowledge of all the landowning clans/villages within SABL Portion 884C. 11.4. The Evidence of Mr Mark Waine 11.4.1 Mr Mark Waine, Provincial Lands Officer, Division of Lands and Physical Planning, Department of New Ireland was summonsed to appear and assist the C.O.I with his involvement in the Land Investigation for Kaut SABL project. He was not happy about the summons and was fortright about the lack of protocol and courtesy extended by the DLPP team at New Ireland. The C.O.I refers to the extract of his evidence

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. And in my capacity, as far as I was the boss of the Lands Department in the Province, I have no clue, no whatsoever idea, that is why I am saying I am in a unique situation, I do not know what actually happened on the ground. It was all done by Waigani, Lands Department Headquarters. Office. (My highlight for emphasis) (Transcript SABL 40 Mirou 28/10/11 at page 52) 11.5. There was a lack of coordination between DLPP and the Office of the Provincial Administrator through the Provincial Division of Lands and Physical Planning for the land investigation to be conducted. This is one of the many trends common to the way the LIR were conducted by DLPP without any consultation with the Provincial Administration. My office was never consulted, even the Provincial Administrators Office and the Governors

12.

DEPARTMENT OF LANDS AND PHYSICAL PLANNING

12.1. What prompted the rush to acquire customary land previously a TRP concession area within the Kaut for the SABL Cassava Project? The primary reason why the Land Investigation was conducted by the Special Projects Office, DLPP at Kavieng related to the Memorandum of Agreement executed between the State and CHANGHAE ETHANOL CORPORATION LIMITED

13.

MEMORANDUM OF AGREEMENT BETWEEN THE STATE AND CHANGHAE ETHANOL CORPORATION LIMITED [OF
230

THE REPUBLIC OF KOREA] FOR DEVELOPING CASSAVA INDUSTRY IN PNG

13.1. The Memorandum of Agreement (MOA) between the Independent State of PNG and the company Changhae Ethanol Corporation Limited (CECL) of Korea was executed between the parties on 4th February 2005. 13.2. The MOA is in general terms and does not make reference to the specific project earmarked for the SABL in the Kaut area of New Ireland. The C.O.I make specific reference to parts of the MOA with respect to the States intention to involve Changhae Ethanol Corporation a Korean company, to grow cassava for production of ethanol as a biofuel and to produce other products. 13.3. Recital Clause (A) & (B) provides as follows; A. Purpose of the Agreement is to establish an understanding between all parites to work in unison in promoting the commercial cultivation and export of cassava and cassava based products through a framework of economic cooperation and for parties to use their best endeavours to cooperate with each other to the extent permitted by the laws and practices in Papua New Guinea and the Republic of Korea and any other applicable international laws and regulations.

B.

GovPNG is desirous in improving the economy by promoting a broad based economic growth propelled through increased commercial agriculture activity as outlined in the GovPNGs Medium Term Development Strategy through a public/private
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partnership between GovPNG, its institutions of state and the private sector by 13.4. The C.O.I notes under Clause 2 of the Agreement that the Government of PNG is obliged to (i)Use the institutions of State including, but not limited to, the Executing Agency to identify suitable land for leases or sub-lease to CHEC for its investment purposes.and(ii)Encourage customary landowners and landowning groups to make available to CHEC or to its contracted out-growers suitable land for cultivation of cassava. The C.O.I notes further that whole intent for the MOA was to impose conditions on the State to secure up to 20,000 hectares of suitable land for cassava cultivation on suitable sites contiguous to the first 6,000 hectres, secure State lease and transfer that lease to the Developer for a period of 30 years. 13.5. Whilst the C.O.I notes that no development took placeand that the MOA has lapsed is academic. I have in my inquiry observed that a number of project agreements signed by the State over the Gre Drimgas Trans Highway Project and the Nungwaia Bongos Project disclose the very same pre-conditions on the State to secure land. 13.6. The C.O.I was not able to confirm whether the Department of Attorney General through the Office of the State Solicitor had drafted the Agreement or from which agency of government the contract was sourced. This is also a classic example of the States attempt to introduce prospective Investors and Developers to the landowners simply because of the unfair clauses agreed to in favour of the Developer. The Office of the Attorney-General must become more proactive in ensuring that Agreements do not conflict with statutory and legislative powers of the State Agencies.

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13.7. The C.O.I was unable to sightcopies of the business agreement between CEHL and Chinghai Limited, no detailed business plan for development of cassava production, processing and export to South Korea for processing of biofuel and alcohol. There is also lack of evidences on the project design and formulation processes and procedures. Therefore the SABL issued to CEHL be reviewed and adequate consultation with the customary landowners to secure their consent for land registration and appropriate cassava production and processing plan should be developed with a view of attracting private sector investment for this impact project. The C.O.I notes that there was no development since the Agreement was signed, but in terms of the manner of processing the ILG land mobilization and LIR, it is incumbent on this C.O.I to make the inquiry in accordance with the TOR. 13.8. Cassava Etagon Holdings Limited has not designed the commercial cassava production and processing plan. There was no forest clearance plan and no environmental statement for management and conservation of the environment.. The processes and procedures for customary land registration have not been adopted. There is also very limited consultative process between and the various landowning clan groups. Therefore and by law the SAB&L for 99 years of the Portion 882c Kaut ,Millinch Djaul FourMil, Kavieng should be revoked.

14.

Land Investigation Process & Report

14.1. TheTender form/Applicationstated thatthe landowners through CEHL wanted; to develop a 20,000 hectare Cassava farm in two phases, Phase 1 will involve cultivation of more than 6,000 hectares in three years and the construction of cassava driers to process and dry 10,000, it does not
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say what metric unit, but 10,000 of cassava monthly for export to South Korea. Phase 1 will cost US$6 million. Phase 2 will involve full development of 20,000 hectares and the construction of a cassava factory to produce ethanol oil and other cassava based products such as cassava wine, spirit and flour for export. 14.2. Land Instruction Number 16/06 was issued and investigation was coordinated by the Special Projects team from DLPP, Waigani. 14.3 The Land Investigation was conducted in two phases by the team over a period of almost six weeks. The first period was from 18 th June 2006 to 1st July 2006, the second phase from 29th October 2006 to 11th November 2006. The report compiled and exhibited as CEHL 9 for Secretary, DLPP indicates that the investigation was not adequately covered due to difficulties experienced due to allowances, accommodation, transportation and various other factors. The real time spent on the land investigation could have been far more less than what was provided in the brief to the Secretary. 14.4. We are likewise critical on the involvement of the Special Projects Division of DLPP in a customary land investigation, normally the responsibility of the Customary Lands Division. Their involvement in this project not only reflects poorly on the Management of DLPPallocating the customary land investigation to Special Projects in compliance witht MOA conditions. 14.5. The project is a government initiated project for PNG, but the land to be acquired is customary land, hence the Customary Leases Division including the Provincial Lands Office are equipped with the understanding to undertake field reports on the land prior to acquisition. a) Land Investigation Report
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14.6. Out of 36 LIR, only 9 LIRs was signed by the landowners representatives mostly due to the ILG registration which was disputed by the landowners of Bagatere. The remaining 27 LIR Working Files was not ready pending signatures of the landowner representatives of each clan.The file from the Lands Department does not show or reflect that those 27 outstanding LIRs had been endorsed by the Customary Landowner representatives. 14.7. To be fair to Cassava Etagon, which otherwise does not seem to have any other controversial circumstances surrounding it, there has not been as much evidence as in other SABLs which this Commission will encounter as the days go by relating to disputes between opposing customary landowners within the SABL area 14.8. Mr Malesa also confirmed that they were supported by some landowners long into the night. The Land Investigation Reports seem to have been conducted in haste and often in the night time. He said thatinstructions were normally conveyed to him from only one landowner or only a few landowners.He also confirmed disputing Mr Paul Steven Toang, Robert Rabuna and Gerson Rabuna name appearing on the Lease/Lease Back Agreement because they were non landowners. 14.9 Despite the incomplete 27 LIRs, the lease/lease back Agreement was prepared for execution. 14.10 There is a Statutory Declaration submitted to the Commission stating objections to the SABL by people within the area who claim not to have given their consent. There is some or a bit of support from the Lands files in a report submitted by Lazarus Malesa, Manu Kala and Elizabeth Tobea. They noted that, there are two opposing parties involved where one is in support of us carrying out land investigation whilst the other one
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wants us to return to Port Moresby since they claim that those organizing this project are unorganized. 14.11 By way of information, there are indications that there was pressure on the Lands Department officials to expedite this project as referred to by the Memorandum of Agreement entered into by the Government of PNG and Changhae. b) 14.12. Instrument of Lease/Lease Back Agreement

On 1 November 2006, a lease-lease back Agreement was entered into between the State (Lessee) and Jimmy Salatiel Tangap, Eliakim David, Motly Simpson, Emmanuel Garasale, Robert Rabana, Ekonia Kalis, Wilson Passingan, Pelick Kasup and Graham Langa, all of different villages; namely Kaut, Putput, Tome, Lokono, Kavin and Lemakot in the Kavieng District of the New Ireland Province (Lessors). The lease was to be for a 99 year period to run from 1 November for a rental of K10 to be paid on demand and on further condition that the State issue a Special Agriculture Lease to Cassava Etagon Holdings Limited.

14.13.

The actual Instrument of Lease/Lease Back Agreement show that Mr Pepi Kimas, the Secretary and Delegate of the Minister did not sign the document. The named landowner representatives and witnesses signed the agreement. A Notice of Direct Grant was signed by Mr Anthony Luben as delegate for the Minister and SABL registered. Mr Kimas when examined on this matter provided no explanation to the C.O.I. That flaw was the result of the incompetence of the Special Projects Officers, Mr Malesa explains, Counsel, my involvement went as far as the land investigation report and to the preparation of the lease/lease back agreement. Then everything was left with our Special

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Project Unit.. The C.O.I views this omission as clearly fatal to the acquisition of good title over the land issued in the name of CEHL. c) 14.14. Variance in Portion 884C Hectares The C.O.I took issue with the variation and changes found in the Instrument of Lease/Lease Back and the SABL title/ The variation was in relation to the original 20,000 hectares was inflated by an extra 6,000 in the title, hence 26,000 hectares. Mr Malesa attributed this variation to either an error that was corrected as a result of survey been carried after the initial estimation. 14.15. Mr Malesa also confirmed that the team was not able to carry out any awareness at Bagatere due to bad weather. He also confirmed the evidence of Mr Lamusan who had told the inquiry that the additional 6,000 hectares was part of the Bagatere land. 14.16. Rural Class 4 Surveys is less expensive but the survey conducted in acordancee with the wishes of the landowners must be realistic and not delineated from major rivers, ridges and other common features as is the case with Kaut. 14.17. C.O.I recomendation-Rural Class 4 Survey be used to identifyland areas likely for agriculture and business and not a blanket land mass which is unrealistic. 14.18. There was no evidence of; customary land owner identification and verification reports and the customary landowners participation in the selection processes of the various chairmen of the Incorporated Land Groups as the vehicles for registration of customary land.

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 genealogy study as the process of identifying customary land owning clans in the area and subsequent Incorporations of Land Groups (ILGs) as the processes for the registration of customary land . physical mapping of the area to establish external boundaries between villages and internal boundaries between the various clans. The Class 4 surveyor using the coordinates on the map to establish external and internal boundaries and this process leaves out the negotiations between two neighbouring villages and clans to establish pegs and any other verifiable physical indicators that separate boundary between clans and villages. 14.19 The evidence given at the COI hearing at Kopkop Fishery College in Kavieng indicated non complianceon the processes and procedures for customary identification and verifications as set out in the preceding paragraph. There is need to carry out new customary land identification processes and that needs to be verified by lands experts in the Department of Lands and Physical Planning in Port Moresby. There is also need to carry out field survey to establish internal and external boundaries between clans and villages within the Cassava Etagon Holdings Limited for the development of commercial cassava production and processing project.

15.

DEPARTMENT OF PROVINCIAL GOVERNMENT AND LOCAL LEVEL GOVERNMENT

15.1. The Land Investigation Report and the Recommendation for Alienability was not referred to the Custodian of trust Land for due diligence. There

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was also no Certificate of Alienability issued by the Custodian of Trust Land to allow for the registration and issuance of SABL Title to CEHL.

16.

DEPARTMENT OF AGRICULTURE AND LIVESTOCK

16.1. The C.O.I was unable to ascertain DALs involvement in this project. We note that the then Secretary of DAL Mr Benjamin witnessed the signing of the MOA. The MOA was basically to develop the cassava crop for ethanol biofuel products. 16.2. Mr Daink tendered to the C.O.I DALs Report on the Status of FCA for Agriculture Projects (Exhibit FD2) to assist the C.O.I with its inquiry. The status of the approval for FCA by DAL was noted as YET TO BE APPROVED. DAL was the main agency involved as far as the MOA was concerned particularly the commercial production of cassava and cassava based products through commercial for bio-fuel (ethanol production). It also stated that the increase production of cassava was to feed the mill in the Central Province. That meant that a cassava estate was to be established and that CEHL would be more of an out grower supplying the raw product to Central Province. It was not a standalone project. He made reference to the MOA in that status report. a) Public Hearing:

16.3 None as reported. Fairly low keyed consultation with NIPA and landowner awareness. Therefore there was much opposition and blockade by the landowners from Kaut and other nearby communities.(Refer to Exhibit FD2 b) No detailed Agriculture Plan

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16.4. There is no detailed plan cassava production and processing and the export for this project. b) No Land Use Plan for the Area

16.5. Crop farming as business firstly based on the assessment of soil suitability and rainfall pattern which determine the potential crops and livestock for investment in a given area. 16.6. There is no land use plans for the Kaut old TRP and Kavieng District that could be used for the development cassava production, processing and export project. c) No oil Suitability Assessment

16.7. Soil Survey is a detail study to determine the plant nutrition requirements which would contribute towards the input costs for the agriculture investment plan .There is no soil suitability assessment report therefore it is difficult to assess the agriculture projects and plans, input requirements for the development of agriculture and teak tree plantations development as proposed . d) Feasibility Study

16.8. Feasibility study should be next step to confirm technical, economics and financial conditions for the establishment commercial farming business. Based on the outcome of the feasibility study an investment plan would be drawn and submitted to the government and a developer/investor.

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17.

PNG FORESTRY AUTHORITY

17.1. There is no forest development plan involving the community for logging to appreciate the best interest of the people and future generations. This is an old TRP site where the entire natural forest stand had been logged out.

18.

DEPARTMENT OF ENVIRONMENT AND CONSERVATION

18.1. The C.O.I .notes that environmental issues will arise over the planned project to develop cassava tree crop and infrastructure to mill raw cassava and will impact on the environment (marine ecosystem, corals and pristine waters) and it is necessary for an environment impact report to be submitted for evaluation and approval pursuant to the Environment and Conservation Act. As there are no commercial cassava production plan and no forestry development plan there is also no environmental impact statement to determine the negative impact on the environment as a result of commercial cassava production and processing.

241

19.

RECOMMENDATION

19.1. The C.O.I. recommends that SABL Portion 884C be revoked on the basis that the land group registration process and the Land Investigation process fundamental to good title was flawed. 19.2 The Land Investigation Report was not fully completed for all the eight villages of TIKANA LLG comprising Kasalok, Lokono, Kaut, Putput, Tome, Kavin, Ngavalus and Panapai villages. No proper consultation and awareness was carried out by the Officers conducting the Land Investigation and the Report was not fully compliant with the land investigation process administered by DLPP. 19.3. The Lease/Lease Back Instrument executed between the purported representatives of the Landgroups of TIKANA LLG and the State was incomplete. The Secretary and Delegate of the Minister for Lands did not sign the Agreement rendering the registration and issuance of title to be null and void. 19.4. Cassava Etagon Holdings Limited is deregistered by IPA. The company also does not reflect shareholding of all the respective clans/tribes within the project area formerly known as KAUT TRP. The eight (8) villages of Tikana LLG to set up a new landowner company to forge development projects for its community. 19.5. Any future development plan coinciding with customary land, landowner company and ILGs must be proactive and ensure on Joint Venture/Partnership Agreement with foreign investors and corporation who comply with IPA requirements and properly screened by the Department of Commerce, Industry and Trade.
242

19.6 Registration and Issuance of Certificate of Incorporation of the following 11 ILGs as notified in the government gazette number G80 13 April 2006 to be revoked. We recommend the need to review the whole process of ILG registration through proper consultation with genuine landowners, the New Ireland Provincial Administration and the Office of the Registrar of Incorporated Land Groups to allow for landowner participation in development projects.
ILG No. 11841 11842 11843 11844 11845 11846 11847 11848 11849 11850 11851 ILG Names Makatitian Lulu MakatitianSivitan Makamuk Makatitian Lamaluo Makatitian Naris Makatitian Mit Makatitian Yanmat Makatitian Raisel Makatitian Manao Makatitian Malakaur Makatitian Patan Village Names Kawin/Bagatara Bagatara Batan Bengatara Penemai Bagatara Bagatara Olmalak Matselan Bagatara Bagatara

19.7 The Memorandum of Agreement between the State and Changhae Ethanol Corporation Limited of Korea has lapsed and should not be renewed. We however encourage the villages of Tikana LLG to seriously consider tapping into the Cassava/Rubber Project and allow a reasonable portion of land within the hinterland of old KAUT TRP to undertake such high impact project in consultation with the NIPA and relevant agencies of the State. The State must not be seen to muscle projects without the necessary data availed by the key agencies of government such as DLPP, DAL and the Provincial Governments and Administrations and the land owners concerned.

243

19.8. It is recommended that SABL issued to Cassava Etagon Holdings Ltd should be reviewed and the process of ILG registration should proceed with prober consultative programme. Dialogue should be continuing through appropriate agriculture institutions to initiate a preliminary varietal and agronomic research to develop the site specific technology. Conduct the economic and financial analysis to determine the returns to investment. Conduct social and environmental impact studies to determine the impact of this project on the standard of living of the people and conservation of land for other uses by the present and future generation. Finally identify appropriate investor with the capital and expertise to participate in the joint venture business with the customary landowners to fulfil the intentions of the Special Purpose Agriculture and Business Lease.

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COI Inquiry File No.12 for Special Purpose Agricultural and Business Lease over Portion 53C, 54C, 55C, 56C, 57C and 58C Volume 16 Folio 223 Milinch: Eloa New Ireland Province in the name of Emirau Trust.

1.1

In accordance with the powers given to the Commissioners pursuant to Section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation.

1.2

Witnesses were called from the six government agencies involved in the issuance and operation of the Emirau Trust SABL. These were: 1.2.1 1.2.2 1.2.3 Department of New Ireland Province, (DNIP) Department of Lands and Physical Planning, (DLPP) Department of Provincial Affairs and Local Level

Government, (DPALLG) 1.2.4 1.2.5 1.2.6 Department of Agriculture and Livestock, (DAL) Department of Environment and Conservation, (DEC) PNG Forest Authority (PNGForest Authority)

2 2.1

Witnesses Statement and Summonses The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings are set out in the schedule below.

245

No

Name and Position

Pages

Day

Date

Mr Gilis Silau, Landowner & Administrator of Emirau Trust Mr Albert Moses, CEO, Economic & Infrastructure Sector, DNIP & Official of Emirau Landowners Association, Landowner Mr Naidan Benny Silau Landowner (Portion 54C & 58C) Opponent of SABL. Resident of Kavieng Mr Jerry Sio Landowner (Aiune Pakena ILG), Deputy Chairman of Emirau Landowners Association Mr Venantius Gaul, Provincial Lands Officer Customary Land, Division of Lands and Physical Planning, NIPA Mr David Silakot, Former Acting Provincial Administrator & Retired Public Servant, NIPA Mr Anthony Luben, Unattached Public Servant & Former Deputy Secretary Lands Services 2002-2008, DLPP

12-31

26/10/11-SABL 38 KAVIENG

34-42

26/10/11-SABL 38 KAVIENG

43-49

26/10/11-SABL 38 KAVIENG

49-55

26/10/11-SABL 38 KAVIENG

32-44

28/10/11-SABL 40 KAVIENG

53-57

28/10/11-SABL 40 KAVIENG

2-10

SABL 68 MIROU (WAIGANI)

3. 3.1

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that:

246

Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel. 3.2. The following were granted leave to be represented by counsel No representation by lawyers Nil

4. 4.1.

Exhibits and documents There were eight (8) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
Item National Gazette No, G23 of Thursday 28 December 2006 (Notice of Direct Grant) SABL Lease-Owners Copy dated 16 March 2007 Land Investigation Report forwarded by Emirau Trust Memorandum of Understanding Made on 10 November 2004 between Ben Micah and Edward Carr Interested Party ET/DLPP Date received 26/10/11 Exhibit Number ET 1

No 1

ET/DLPP

26/10/11

ET 2

DLPP/ET

26/10/11

ET 3

ET/Carr

26/10/11

ET 4

Deed of Trust, Emirau Trust dated 24 December 2004 made between the Settlers (Emirau Islanders) and the Trustee.

ET/Emirau Islanders/Carr

26/10/11

ET 5

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6 7

Sworn Statement of Albert Amos Letter by Naidan Silau dated 21 March 2007 to the Registrar of Titles Certificate of ILG Incorporated on 29 March 2006 (Mr Naidan Benny Silau)

COI COI

26/10/11 26/10/11

ET6 ET 7

COI

26/10/11

ET 8

5. 5.1.

Timeline of events of note surrounding Emirau Trust SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:

No

Milestone

Dated of Completion/G rant/Issue Execution

Proponent/Applicant

Respondent Entity/Respondent

Memorandum of 10th November Agreement between 2004 Mr Ben Micah as Vau/Chief on behalf of all Emirau Islanders and Edward Carr of Kangaroo Ground, Melbourne, Australia Registration of Trust Deed incorporating EMIRAU TRUST 24th December 2004

Ben Micah/All Emirau Islanders/Edward Carr

ET/Carr

All 29 major landowning clans of Emirau Island referred to as Settlers (ILGs not registered with Registrar of ILGS)/ 9 Trustees 29 Land Group Chairman

ET

Certificate of Recognition of ILGs Land Investigation

13th April 2005 3rd August

ET

29 Separate LIR for ILGs

ET

248

Report 5 Recommendation for Alienability

2005 12th August 2005

(2 Bound Volumes of Report Recommendation by Mr Silakot, A/Provincial Administrator. No reservation for customary rights (99 years lease) Issued by Mr Luben as Delegate (Was authorized by Instrument of Delegation) G 238

Notice of Direct Grant issued

27th December 2006

Gazettal Notice of Notice of Direct Grant SABL Lease/Lease Back Title

28thDecember 2006

FINDINGS The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Emirau Trust Limited.

6. 6.1.

Emirau Trust SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette No. G234 dated 26th December 2006 for Portion 53C, 54C, 55C, 56C, 57C and 58C Eleoa Land. The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 26th December 2006 by the Department of Lands and Physical Planning to the holder Emirau Trust SABL (ET). Mr Anthony Luben signed as delegate of the Minister for Lands. The detail of the SABL is shown below:

249

Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease

Portion 53C, 54C, 55C, 56C, 57C and 58C 3/ Emirau Trust 26th December 2006 Ninety-nine (99) years 3384.38 hectares

7. 7.1.

Background Emirau Island is located 130 kilometres North West of Kavieng town. Emirau is among the St Mathias group of islands of which the biggest is Mussau Island. It is described as too rocky and infertile for growing groups. The Island nevertheless is rich with fish and other marine resources, including potentially and recently discovered deep sea oil and gas reserves.

8. 8.1.

Site Inspection Due to logistical and time allocated to the C.O.I. Inquiry team, we were not able to travel to Emirau Island to undertake inspection and talk to the Islanders over the inquiry into SABL Portion 53C, 54C, 55C, 56C, 57C and 58C to Emirau Trust. The Commission was not able to conduct onsite inspection and evaluation of the Emirau Trust Limited. The remoteness of the island from Kavieng and the need for air transportation to visit the island required a visit in the future during the tenure of the inquiry which never eventuated. The team acknowledges the efforts of the Emirau people to travel long distance by dinghy to present themselves at the hearing at the Kavieng Fisheries College indicative of their interest in the SABL process and the development prospects in the mobilization of customary land to Emirau Trust, trustee of the Emirau landowners to
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forge development prospects for an island that is isolated and remotely located within the Pacific Ocean. 9. 9.1. 9.2. IPA COMPANIES REGISTRY RECORDS The Commission received files and information from IPA and interested members of the public. Emirau Trust (ET) is a landowner Trust company for Emirau Islanders. The Trust was incorporated under Division 5 (Sections 69 to 74) of the Securities Act 1997. The IPA Extract indicates that the Trust has one shareholder named as Ms Elvie Judy Mave from the Sagas Nahae ILG. The IPA Extracts states that she was born on the 21 of September 1959 and resides at Section 6 Allotment 5, Bisini Parade, East Boroko. She is also the sole Director which is allowed for under Section 11 of the Companies Act 1997. Section 11 of the Companies Act 1997 states, .for purposes of a company, it is sufficient that there is one shareholder and one Director. C.O.I is concerned however, that for a trust that is set up for the benefit of a whole island or a whole community, that only one shareholder and one Director should be listed and effectively have control and direction of the Trust. DEED OF TRUST ESTABLISHING EMIRAU TRUST

9.3.

9.4.

10.

10.1. Deed of Trust titled the EMIRAU TRUST (ET) numbered 00006715090 (referred to as Exhibit ET 5) was produced to the Commission on 26th October 2011 at the SABL Hearings at Kavieng. The Deed is dated 24th day of December 2004 and the C.O.I. note that this Trust Deed was registered with the Registrar of Companies in accordance with section 70 of the Securities Act 1997 on 5th January 2005. 10.2. ET was established and registered to assume all Land and Land Usage Rights from the twenty-nine (29) registered ILGs comprising all the land owners/settlers said to cover all of Emirau Island. The consolidated ILG will allow their land to be processed under a lease/lease back title to be issued by the State through DLPP to ET. We take no issue on the incorporation of the Trust by the very nature of its existence as a
251

landowner Trust Company enjoying the support of the majority of Emirau Islanders especially on its initiative to bring economic development to Emirau. In turn the Trust intended to enter into a, Memorandum of Agreement to sublease all land on the island up to the high water mark for 99 years to a Mr Edward Car of Kangaroo Ground, Melbourne for the purpose of developing integrated industry involving fishing, tourism, airline industry and transport services that will transform Emirau Island into a strategic centre for diverse business operations in the Pacific Rim. 10.4. The Deed makes reference to a Memorandum of Understanding (MOU) between Ben Micah as Vau or Chief of Emirau Island and Mr Edward Carr, in the proposed development for Emirau Island was executed a month earlier before the Deed. 10.5. The primary object of the Deed of Trust was to give effect to the Memorandum of Understanding that was signed between Mr Ben Micah (on behalf of Emirau Landowners) and Mr Carr. The C.O.I viewsthat the on-going feud is related to suspicion, and continuos in fighting between the proponents and opponents of the proposed project development for the island. There needs to bea coordinated dialogue between the Emirau Island elites and the ordinary islanders. The misconception and major disagreements over the purported agreement with the Investor led to constant disagreement, disputes and contentions between clans both at Emirau and Kavieng. This was clearly evident during the land investigation process and the hearings of the SABL inquiry at Kavieng. 10.6. The Emirau Trust Deed was signed by the 29 Chairman of landowners referred to as Settlers in the Deed. The comprehensive Register of all beneficiaries and members are listed under Schedule 2 of the Deed. It is to be noted that the ILGs at that time was not officially registered with the Registrar of ILG, DLPP. We however note that the actual social mapping of all the 29 clans on the island was satisfactory despite evidence to the contrary that some landgroups were omitted from the list. The C.O.I suggests thatcontinuedcollaboration and understanding between the Islanders can alleviate the potential for dispute and criminal act that is the sorry state of affairs created by ET and its proponents.

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10.7. The Corporate Structure of Emirau Trust consists of the Land Group Council comprising individual chairpersons of all ILGs on Emirau Island (Clause 1.1(f)) and 4.1 and 4.2.in reference to their powers acting as Custodian of land rights) The Trustees appointed under the Emirau Trust Deed comprises individuals from within the registered ILGs. We consider a serious flaw in this arrangement as a potential for serious conflict of interest arisingin the case of clan members holding position of Trustee. The duty imposed on the Trustee is linked to the concept of fiduciary obligation and responsibilities of the Trustee to act in good faith, to act fairly, to act prudently, to act honestly and exercise the required degree of care and diligence in the conducting business on behalf of the beneficiary MAY NOT BE FULLY DISCHAGED. There is a likelihood that the trustees will act as a protagonist from some beneficiaries and in antagonism to others16 committing a serious breach of trust. 10.8. The appointment of the six (6) Trustees of Emirau Trust, show that Ms Elvee Mave the sole Director and Shareholder of Emirau Trust continues to play an important role in the Trust. She comes from the Sagas Nahae Clan. Pastor Wilson Stephen and Mr Bill Saeno both come from the same clan namely Vaum Sisasu Clan and their involvement as Trustee may constitute unfair distributions of benefits. The C.O.I raises question over the appointment of these Trustees in accordance with Clause 8.2 of the Trust Deed. There are no records of the Minutes of the Meetings produced to the C.O.I as to the election and appointment of the six (6) Trustees. 10.9. Clause 8.1.1 provides for the maximum number of Trustees as seven, but only six (6) Trustees was appointed to administer the Trust Deed. The C.O.I notes that the Trust Deed in its entirety needs to be reviewed and amended in the following Recital in respect of the reference to Mr Carr and the MOU as a paper vision with no tangible development since 2004. That MOU is obsolete and well passed its use by date and ET is required to engage with stakeholders (government agencies, provincial government and reputable

10.10. 10.11.

16

National Superannuation Fund Limited v Pacific Equities and Investment Limited [2006] SC 845 (11 July 2006) per Lay J at page 9 (www.paclii.org)
253

investment financiers) to develop the projects identified at paragraph 2 of the Recital and the St Mathias Free Zone Trade Development Proposal for Emirau Project. 10.12. The clauses dealing with Uncontrolled Discretion (Clause 7.6) and Powers of the Trustee in relation to making decisions either alone or with other Trustees in respect of the 17 matters it transacts on behalf of the Trust pursuant to Clause 5.1 (d), (e), (f), (g), (h), (i), (k), (l), (n),(o), (p) and (q) must be complemented by additional clauses dealing with Corruption and Conflict of Interest of both Trustee and employees of the Trustee. There must be a Fund Operation Manual and Investment Portfolio for the Trust in operation. Mr Silau confirms as example of abuse, that an amount of K300, 000 was paid by the New Ireland Provincial Government to ET to assist with its proposal and these monies were disbursed on lawyers fees and other programs on the island. Clearly the monies were disbursed for the beneficiaries given the unconditional discretion clause. He also states that ET does not have a bank account due to the ongoing disputes which lends his evidence as unreliable because it is incumbent that any corporate entity is required by law to establish its accounts for the purpose of accountability especially a Trust clearly empowered as a corporate vehicle for all landowners on the island. (See his evidence at page 26 to 27 of Transcript SABL 38 Kavieng-26/10/2011)

10.13 10.14.

11.

Memorandum of Understanding

11.1 The MOU was signed on 10th November 2004. Mr Micah agreed on behalf of all Emirau Islanders to lease the island to Edward Carr (known as EC) for 99 years with an option for a further 99 years lease. The lease would not be terminated by either party until the first twenty-five years had elapsed. That agreement provides for the development of Emirau Island through the lease/lease back title which purports to allow Mr Carr to undertake his conceptual blueprint for the development of the island. The C.O.I notes that the Agreement was not an agreement for the sale of the island but development to take place through the lease/lease title.
254

11.2. Under the MOU, the Emirau Islanders would grant to EC the exclusive rights to fish the waters of the Island including the waters extending from a 12 mile radius in the Murat LLG covering Mussau, Tench and Emirau Islands to remove any doubt the MOA states that no tribal or cultural issues prevent EC receiving produce fished from local waters. 11.3. In other concessions EC would be allowed by the Emirau people to build and operate one or more international airports capable of taking large aircraft like 747s and airbus. EC would charge landing and take-off fees and impound and hold any plane until such fees were paid. It was agreed that Mr Micah would work with the PNG government to allow EC to create an island economy which would use the US dollar as currency 11.4. What would the people of Emirau get in return? EC promised among other things to pay monthly rental to the Trust and to build a wharf, an airport, a fish processing operation, a fishing industry and a recycling industry (presumably the material left behind by the US army while it was based there during WWII. 11.6. The Commission notes that the signing of the MOU and the subsequent incorporation of it into the form of a legally binding Deed both preceded the formation of ILGs. The ILGs were formally incorporated and gazetted on the 13th April 2005. The Land Investigation Report is dated 3rd August 2005. There is no problem with the registration of the ILGs as the social mapping records indicate that the ILG application and registration process was coordinated properly and in accordance with the ILG registration process. 11.7. The C.O.I notes that specific timeline was also agreed to in respect of the following

1. 2.

That Ben Micah will supply to EC with the Emirau Trust Deed by 25 November 2004 That Ben Micah will provide to EC with the first draft of the lease by 20 December 2004

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3. 4.

That Ben Micah will supply to EC the ILG Certificates by 20 December 2004 By 1 January 2005 EC and Emirau Trust will execute the lease.

11.8. That timeline the C.O.I observes is the very basis for the application to register the ILG and organise the Trust to mobilise all the land on the Island for SABL. The MOA has outlived its usefulness and no longer binding on Emirau Trust. That was confirmed in evidence by Mr Gilis Silau, the employed Administrator of Emirau Trust (page 28-29 of Transcript SABL 36 Kavieng 26/10/11)

12.

New Investment for Emirau Island

12.1. The Commission is now aware that there was a further lease agreement signed sometime in November or towards the end of 2010 on Emirau Island. The Commission has not seen copies of that lease agreement. The actual event was captured in a video which was submitted to the Commission for its evaluation. We however caution Emirau Trust to ensure that the actual lease agreement with the Developer is transparent and must be coordinated in conjunction with preferably with Department of Commerce and Industry and IPA so that the proper due diligence can be assessed for its financial and technical capacity including equipment and technology to develop infrastructure on the island that will benefit the islanders. 13. Land Mobilization on Emirau Incorporated Land Groups 13.1. ILG process is described by Mr Gilis in the extract of proceedings at page 13 as follows;

A:

We begin with ILGs. ILGs were we had a lengthy process beginning in 2000, I being the officer of the Local Level Government in that time. Request was made by the Trust to carry out land mobilization on the island and we began that process in 2000. Most of his time was taken up in doing awareness and
256

educating the people on how to do land process, mobilizing their land through the ILG system. We only started doing serious land mobilization program after Local Level Government engaged the Village Court Magistrate in 2002, 2003; that is when serious land mobilization program began. Most of this time was taken up in various villages organizing village committees by themselves. The village committees then identified people who would put together, may be organizations in later on, coming up with various ILGs. We have six villages and we had six committees in those times. They all came up with a total of 29 ILGs at their own discretion. From then until 2005, a program was organized in which the Magistrate presided over all the land issues, land mediation and your honour, it was a real tiring experience working with this ILG. We concluded the program and managed to document 29 ILGs in 2005. Various ILGs were tasked to raise funds and they eventually raised required fundings to lodge their applications for registration. After this they were successfully lodged and certificates were obtained. We also raised funds after that to engage a surveyor and in about January and February, a registered surveyor came to the island and the entire island community supported him in going through the bushes and the entire circumference of the island to survey. It was completed in record time because the community supported that program. .. (SABL 38 Kavieng-26/10/13) 13.2. It is commendable on the part of Emirau Trust in behalf of the Islanders to conduct social mapping relative to lineages to land ownership covering those living on the Emirau Island, Kavieng and throughout PNG. The ILGs are as follows

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No

Names of Chairperson of all Settlers of Emirau Is.

No of Beneficiaries

ILG No (As per National Gazette G50 dated 13/04/05 10839 10840 10841 10842 10843 10844 10845 10846 10847 10848 10849 10850 10851 10852 10853 10854 10855 10856 10857 10858 10859 10860 10861 10862

Clan/ILG Name

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Frazer Mathew Jerry Moses Genan Peter Lindy Boaz Benson Thomas Kessa Roger Pr. Sio Paylo Gordon Kasane Gilis Silau Lele Amos Colin Naulu Staedis Ross Edward Jimmy Kalen Thomas Kelos Maigen Daniel Lal Peter Mitiel Jeffry Loesaraoi Kevin William Ruth Kolly Gregory David Donlee Taso Frank Kapty Edson Thomas

30 59 74 52 33 63 25 29 24 44 78 26 94 44 65 101 52 180 54 35 137 70 38

Evele Ne Manaonema Evele Ne Buliale Evele Ne Tavilu Evele Ne Pakasialele Evele Ne Eukaokao Evele Ne Tasingina Evele Ne Sauruvau Pakena Evele Sauruvau Ne Tasingina Evele Ne Ulua Evele Ne Matara Evele Ne Nuaipala Evele Eturu Ne Leoa Evele Eturu Ne Tasingina Enaiu Ne Sangas Nahae Enaiu Ne Pakenaa Enaiu Ne Ginama Enaiu Ne Gilotu Enaiu Ne Ovo Eleoa Emunganua Saitalai Malilua Matakoropa Epuarae Vaum Ne Sisasu Vaum Ne Pakena

258

25 26 27 28 29

Raclif Amanga Willie Maigen Maelon Kunivua Mackson James Yvon Mitiel

31 25 61 70 84

10863 10864 10865 10866 10867

Eloirati Eponali Eaisa Enusi Mataisao

13.3. The objection over ILG Registration was raised by Naiden Benny. Mr Benny is the son of Benny Silau who was the official spokesperson of the Emirau Landowners Association and major objector to the ILG and SABL process for Emirau Island. According to Mr Anthony Luben, the immediate past Deputy Secretary, DLPP a meeting was convened in his office which was attended by Mr Ben Micah, Gilis Silau and Pastor Wilson of the Emirau Trust and Naiden Benny and others. In that meeting Mr Benny expressed concern about the ILG formation and registration and the need to suspend registration of the ILG and open more discussion on the ILG process to which his fathers clan was not included in the 29 ILGs subject of registration and the LIR. It transpired at that meeting that Mr Bennys clan was the minority group objecting when the majority were willing to register their interest and become involved on the Emirau Project. 13.4. The C.O.I in reviewing the video concerning this meeting noted that there were a number of issues that could be resolved at a proper forum to be convened at Emirau where most of the pressing issues raised will be discussed and amicably resolved in accordance with the custom of the people. We also noted that the ILG registration required any objections within a prescribed period and no notice of objections was filed hence it would be futile for the process to be halted on the basis of the objection.

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13.5. We however received documentary evidence that Mr Benny Silau registered his ILG Evele Baupationgo Land Group (Inc) (Exhibit 8 26th October 2011) with the Registrar of ILG. A Certificate to that effect was issued by the A/Registrar (ILG) on 29th March 2006. 14. Department of New Ireland Province

14.1. Land Investigation was conducted and the report compiled by one Mr Venantius Gaul, Provincial Lands Officer attached to the Division of Lands with the New Ireland Provincial Administration (NIPA). Mr Gaul appeared under summons to give evidence to the inquiry at Kavieng. We summarise his evidence as follows 14.2. Land Instruction Number 01/05 was issued by DLPP to Office of Provincial Administrator authorizing land investigation on application by ET. 14.3. On 1st August 2005 he was released by Mr Martin Mavo, Manager for Lands to undertake the Land Investigation. 14.4. On 2nd August 2005 people from Murat LLG (Emirau) arranged speed boat for him to travel to Emirau. 14.5. 3 August 2005, he conducted a meeting with more than 200 islanders at Lonusa, Emirau Island. This was also an awareness on the SABL process and he also commenced the land investigation for each of the ILGs which he completed on 4th August 2005. He also sought the view of those present at that time if there was any objections to the proposed SABL an at that time no objections was raised. 14.6. He also consulted Chairman of the Village Court including three other Magistrates as to any ongoing dispute.

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14.7. He was not involved in the meeting at ToRot Hall at Kavieng which was organised by Mr Anthony Luben and his officers from Port Moresby, Emirau Trust offficials and the people of Emirau. 14.8. He confirmed that he proceeded on boundary inspection at Lorusa and travelled by speedboat to Muli Island, to Tavilu and Pakena and onto the Plantation at Mareluana and returned through Pasikena, leva and Lorusa. He states that he explained to the people that as a government officer it was his duty to walk the boundary to fully satisfy that this land consented by the people to be released for the proposed fishing project. 14.9. The C.O.I inquired that Portion 54C and 58C were Plantations in colonial times and may continue to do be Plantation. Mr Gaul informed the C.O.I that the land may have reverted back to the landowners in the 1980s pursuant to the Plantation Registration Scheme. 14.10. In view of his evidence reference was made to the Land Investigation Report which is noit disputed by Emirau Islanders generally.The LIR (Field Notes) comprises two volumes of all twenty nine ILGs and landgroups of Emirau Island. (Exhibit ET 3). 14.11. The relevant section of the Report was completed and includes as follows; The willingness of the clan to allow the land for lease/lease back for a period of 99 years Certification as to the boundary; Declaration of Custom in relation to Land Tenure; Schedule of Ownership, Status, and Rights to the Land; Registered ILG as per National Gazette No G 50 dated 13 April 2005;

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 Consent of the ILG on land use right to ET by meeting dated 24 th November 2004; 14.12. Completed Genealogy on the respective members of the clan as to inheritance rights over the land. 14.13. Emirau ILG land Usage Agreement dated 10th January

2005.basically allowing their land to be used for the purpose of creating economic industry as desired under the project agreement. 14.14. The LIR was completed by Mr Gau on 3rd August 2005. The Report was submitted to the Provincial Administrator for due diligence and Recommendation for Alienability. 14.15. The Recommendation for Alienability was signed by Mr David Silachot on 12th August 2005. It was evident that Mr Silachot failed to undertake a proper due diligence and also omitted to make any reservation for the continued rights of the landowners to hunting, fishing, collecting, fishing and access to sacred sites, cemetery and so on. The LIR records quoted Mr Silachot in his recommendation,: I have fully considered the question of reserving to the native owners and their descendants the rights of hunting, gathering, collecting, fishing and access and I recommend that no such reservations be made . The implication under law as stipulated in Section 11(2) of the Land Act is that all customary rights in the land, except those which are specifically reserved in the Lease are suspended for the period of the lease. He admitted this oversight during cross examination and apologised to the people of Emirau.

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14.16.

The Commission of Inquiry has a copy of a letter written on 25 July 2005 by a Mr Benny, President of the Emirau Landowners Association protesting the conduct of the Lands Investigation Report. We however accept that a proper LIR was completed in the absence of any challenges been made during the course of this inquiry into the Land Investigation Report. There was a much stronger and huge support for the project by the majority the result of a well-structured social mapping and ILG registration.

15

DEPARTMENT OF LANDS AND PHYSICAL PLANNING

15.1. The Lands Department failed to produce the NLD file and the SABL Title file and at that time put out public advertisement asking land title holders to produce owners copy in order to reconstruct their files. 15.2 The C.O.I was unable to ascertain from the lack of documentation as to the Native Land Dealings File and the Registrar of Titles files on the administrative process with regard to SABL Portions 53C to 58C in the name of Emirau Trust. 15.3. Mr Anthony Luben was Deputy Secretary, Lands. He signed as delegate of the Minister. Mr Luben from New Ireland province himself was serving as Deputy Secretary of Lands at that time. What piece of interest is that in the same Gazette, G234, two other direct grants made by Mr Pepi Kimas Secretary at that same time? The C.O.I. was informed by Mr Romilly Kila Pat that an Instrument of Appointment was current at the time Mr Luben signed as Delegate. The production of the Gazettal of the Instrument by DLPP confirmed that Mr Luben was authorized to sign the Notice of Direct Grant as delegate of the Minister for Lands.

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15.4. It is important to deal with the matter concerning DLPPs knowledge of the objections raised by some landowners from Emirau Island. Mr Lubens involvement is essential to set the records as he clearly understood it to be when the ILG was processed for registration and the meeting held prior to the Notice of Direct Grant at the conclusion of the LIR process. (a) The Meeting at Mr Lubens Office prior to the issuance of the 29 ILG Certificates 15.5. The Commission notes from Mr Lubens evidence that he tried to facilitate discussions between Mr Micah, Pastor Wilson and Mr Gilis of ET and Naiden Benny representing his father and clan over the ILG registration. He was concerned as to why ET failed to include his parents name amongst the 29 ILG applications for registration. That meeting which was recorded on video and copies submitted to the C.O.I for its viewing will confirm that Mr Benny was expressing the desire for DLPP to suspend registration of the ILG application and to allow for parties to return to Emirau and resolve the issue. 15.6. It was quite obvious that the application were gazetted and publicly advertised. The prescribed period for objections had lapsed and that registration was to take effect. The C.O.I notes that it was made clear at that meeting in the presence of Mr Luben that all the issues would be properly dealt with as it would not be feasible to stop the registration process at that time. (a) The Meeting at Peter ToRot Hall at Kavieng on 3 November 2006 15.7. We refer to the extract in the evidence of Mr Luben

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A:

So Commissioner what happened is on this particular date, I think it was on 3 November 2006 I led a delegation to Kavieng. Unfortunately, two of my colleague in that team passed away but there were about four or five of us who went there. We had an awareness and tried to talk, clarify the Emirau situation with the two parties in the ToRot hall in Kavieng town. And while the majority of the people in there were supporting, including Ben Micah was also there present at that time, the good majority of the people there supported the idea of having a lease - lease back on the island. There was a family led by Ben - as you mentioned, the counsel - that is his family that they objected to it vigorously to their proposal. They had a heated argument. Now, the argument went beyond the land issue, it went and start touching about criminal activities on the island and so forth and that is when they actually had a physical confrontation and we witnessed that, me and the delegation, and we tried to calm them down and get back to the issue of the lease thing that they were talking about.

But at that time, my assessment, if I may say so Commissioner, my assessment at that time was that the majority of the islanders who actually stay at Emirau wanted the lease - lease back thing. This so called Landowners Association of Emirau, the people who are against it, I found out later that they are not staying on the island, they are people staying in Kavieng town themselves. So according to the people who came from the island, this particular family, they are based in Kavieng and not in Emirau. So I concluded that the majority of the islanders, they agree to, they are in support of the Emirau Trust Lease.(My underlining)
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(Refer to his evidence at Transcript SABL 68 Mirou-05/01/12 at pages 210) 15.8. That evidence indicates that there was a need to allow for the grievances to be addressed and it was clearly evident that DLPP was in a position to suspend the SABL process and allow the proponents and objectors of ET to mediate issues relating to Emirau Trust, the ILG registration of the clan and the SABL process. That process was ignored in totality by DLPP and the title was issued. Despite the issuance of title to ET, the issues over Emirau land mobilization, suspicion and misunderstanding continue to abate with hostilities more profound between the warring clans. 15.9. We note that remoteness of the Island and the ability to arrange meetings between the parties was dependent on availability of the parties, the venue for the meeting and the requirement to have land court magistrate present to mediate on the issues. It was important that the meeting was held at Emirau where the SABL project site was proposed. 16 DEPARTMENT OF PROVINCIAL GOVERNMENT AND LOCAL LEVEL GOVERNMENT 16.1 The Commission notes from the evidence of Mr Manasupe Zurenuoc on the ongoing dispute and concerns raised by the objecting landowners over the issuance of SABL title over five portion of land to Emirau Island. The landowners registered their concerns with the Custodian of Trust Land (Secretary for Provincial Government and Local Level Government Affairs). The Custodian of Trust Land was contemplating proceedings in the National Court when the COI into SABL was established. (Refer to the evidence of Mr Manasupe Zurenuoc) 16.2 The Land Investigation Report and the Recommendation for Alienability was not referred to the Custodian of trust Land for due diligence. There
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was also no Certificate of Alienability issued by the Custodian of Trust Land to allow for the registration and issuance of SABL Title to ET. 17 DEPARTMENT OF AGRICULTURE AND LIVESTOCK

17.1 There are no agricultural considerations so DAL has no involvement in this SABL. 18. PNG FORESTRY AUTHORITY

18.1 There are no agricultural considerations so PNG Forest Authority has no involvement in this SABL. 19. DEPARTMENT OF ENVIRONMENT AND CONSERVATION

19.1 The C.O.I notes that environmental issues will arise over the planned project to build seaport and airport facilities that will impact on the environment and it is necessary for an environment impact report to be submitted for evaluation and approval pursuant to the Environment and Conservation Act. 20. OBJECTIONS TO SABL TITLE TO EMIRAU TRUST

20.1 The Association called Emirau Landowners Association were adamant that they did not give their unreserved consent for the formation of the Emirau Trust and the subsequent alienation of their island through the SABL for 99 years to the developer known as Edward Car. Emirau Landowners Association, a legal entity established with the IPA was legally established and registered in 2002. 20.2. Numerous objections have been received by the Commission. The objections and the protests are not new. They date back to the early 1990s when the Emirau Landowners Association was not in dispute with

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the leaders of what was then the Emirau Development Corporation (EDC) which evidently is the forerunner to Emirau Trust as it is now. 20.3. A letter dated 28 September 1994 written by then, President of the Association Mr Absolam Peter to a Mr Gilis Timothy, the President of Emirau Development Corporation (EDC), accusing him of trying to claim the whole Emirau Island as his very own. At that time there was talk of setting up a fishing industry and also a satellite launching station. Ten years later, in 2003 and 2004 the land dispute heated up again, this time between the supporters of Emirau Trust and Benny Silau, Chairman of the Emirau Landowners Association. The Commission has on file, a letter written by Mr Don Polye, then Minister for Transport and Civil Aviation in reply to concerns raised by Mr Ian Lin Stucky, then Regional Member for NIP and Governor about landowner opposition to the building of an international airport on Emirau Island. 20.4 In another letter to the Lands Department, attention to Anthony Luben, concerns were raised about why he had conducted a meeting on Friday 3 November 2006 attended by both parties, which ended up in an ugly fight and hospitalization of some landowners. Mr Anthony Luben later on went on to make a direct grant to Emirau Trust. 20.5. During the course of SABL Hearings at Kavieng Fisheries College the following persons gave evidence on oath with regard to their objections to the Emirau Trust SABL Title over the five portions covering the entire island of Emirau. The evidence provided have been fairly well covered in this report and references made to the extract of evidence from the transcript,

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The Evidence of Albert Amos 20.6. Mr Albert Amos, Chief Executive Officer, Economic and Infrastructure Sector, Kavieng, NIP and Landowner 20.7. His evidence was that there was discrepancy in the ILG registration in that some ILGs members were objecting to the SABL but eventually showed interest to be part of ET. 20.8. The reference to the bankruptcy proceedings against Hon Mr Ben Micah we consider is not within the C.O.I terms of Reference to inquire into and we make no further evaluation on this issue. (SABL 38 Kavieng 26/10/11 and refer also to Exhibit ET 6comprising a number of correspondences to relevant State agencies on the SABL to ET) The Evidence of Naiden Benny Silau 20.9 Naiden Benny Silau (the son of Benny Silau), Resident, Kavieng, Landowner 20.10 Confirm that his father and their clan did not consent to SABL Portion 53C and 58C to Emirau Trust. That land belonged to his father by inheritance and was not too happy that it was included in the SABL. They want Portion 53C and 58C to be incised from the SABL title to Emirau Trust. Portion 53C and 58C is a current coconut plantation and the family would like to continue with that agriculture activity. (Refer to evidence at SABL 38 Kavieng 26/10/11 at pages 43-49)

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The Evidence of Jerry Sio 20.11 Jerry Sio, Deputy Chairman-Emirau Landowners Association, Subsistence Farmer and Landowner 20.12. Confirm that there was no awareness on the ILG and SABL process and not happy for been excluded in the ILG registration. (SABL 38 Kavieng 26/10/11 at pages 49)

21.

RECOMMENDATION

21.1. SABL Portions53C, 54C, 55C, 56C, 57C and 58Cissued in the name of EMIRAU TRUST to be retained subject to the following conditions which are required to be addressed by the Grantee immediately 1. Memorandum of Agreement between Mr Ben Micah, a Vau/Chief on behalf of Emirau Islander and Mr Edward Carr of Kangaroo Island, Melbourne, Australia dated 2004 has lapsed and cancelled. The effect of the MOA has no binding effect on the Deed of Trust creating EMIRAU TRUST 2. A restructure of the Directorship and Shareholding of Emirau Trust with IPA. Ms Mave to be removed as sole Director and Shareholder of the Trust and replaced by all Twenty Nine (29) ILG Clan leaders/Chairperson of Emirau Island. 3. The TRUST DEED incorporating EMIRAU TRUST in its entirety to be reviewed and amended forthwith to enable transparency within the corporate structure of the Council, the Trustee and the Beneficiaries at large. These amendments must also be registered

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with the Securities Commission pursuant to section of the Securities Act. 3.1. In the interest of all islanders a Trustee company of impeccable standing and reputation be appointed to administer the Trust including employed officers of the Trustee Corporation. 4. Need to mediate land and other outstanding issues with the objectors of the Emirau Trust SABL on the way forward in terms of the development of Emirau Island. If there is no resolution to the issue, Portions within the SABL clearly the subject of the dispute will be incised and a new survey plan undertaken for the new SABL. 5. .Any future negotiations with prospective Investors and Developers over sub-lease arrangement require compliance with regulations and statutory requirements. The involvement of line agencies are necessary so as to ensure that the proposed development consistent with the St Mathias Free Trade Zone Development Proposal (Emirau Project) is realised for the traditional landgroups of Emirau Island. 6. Reservation for customary rights must also be applied and Lease/Lease Back Title amended to include that covenant. 7. The period of ninety-nine years to be carefully considered and reduced based on realistic development proposals.

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1. NEW HANOVER AND NAMATANAI DISTRICT SABLs-NEW IRELAND PROVINCE 1.1 This Report sets out the findings of the COI on a total of three (3) SABLS issued in the island of New Hanover and one (1) SABL issued in Namatanai District in the New Ireland Province of Papua New Guinea as follows: 1.1.1. The Commission of Inquiry File No. 25 for Special Agricultural and Business Lease (SABL) over Portion 885C Volume 17 Folio 01 Milinch: Lavongai, New Ireland Province in the name of Tabut Limited. 1.1.2. The Commission of Inquiry File No. 26 for Special Agricultural and Business Lease (SABL) over Portion 886C Volume 17 Folio 19 Milinch: Lavongai, New Ireland Province in the name of Umbukul Limited. 1.1.3. The Commission of Inquiry File No. 27 for Special Agricultural and Business Lease (SABL) over Portion 887C Volume 17 Folio 13 Milinch: Lavongai, New Ireland Province in the name of Central New Hanover Limited. 1.1.4. The Commission of Inquiry File No 2 for Special Purpose Agricultural and Business Lease over Portion 871C Volume 17 Folio16 Milinch: Dolomakas New Ireland Province in the name ofRakubana Development Pty Limited.

2.

HEARINGS SPECIFIC TO SABLS ON NEW HANOVER ISLAND AND NAMATANAI Date of Hearings: 24thOctober 2011 to 3 November 2011 Venue: Kavieng Fisheries College Campus

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3.

INTRODUCTION

Background

3.1.

New Hanover Island has experienced extensive exposure to logging activities as early as the 1980s when Malaysian Overseas Investment (MOI) entered into agreement with the people of Mamirum (Tabut) under the repealed Forestry (Private Dealings) Act, that permitted owners to sell their timber privately; the usual procedure was for landowner company; to acquire timber harvesting rights from customary landowners and then sell these rights on to a foreign logging company. Provided there was ministerial approval, loggers could operate without a timber permit and with minimum state supervision.17(Pedi Anis @pages 47 and 50 of SABL 42 Mirou-03/11/11). That led to the Barnett Forest Inquiry and the changes made to the Forestry Act in 1991, to which New Hanover was featured in this inquiry.

3.2.` In the late 80s and early 90s, Dominance Resources a Malaysian Company was invited by the Provincial Government under the leadership of Mr Anis to harvest logs under the Umbukul area TRP. A dispute arose and Dominance Resources abandoned its machineries and expatriate employees and left. Court proceedings were instituted by Mr Anis to recover the machinery. He confirmed that two former employees of Dominance Resources Mrs Reina Lau Hii and Mr Stephen Hii later became major shareholder partners in Tutuman Development Limited, a company that Mr Pedi Anis set up basically to harvest and export merchantable logs. (Anis at page 17-19). The company later went on to harvest logs on the cancelled Kaut TRP concession (Tikana LLG) and Danfu TRP (Namatanai District). Landowner issues became a thorn for Tutuman especially with the Kaut TRP experience and that followed through to Danfu and New Hanover.

17

Refer to Chapter 11: Forest Sector Policy Making and Implementation: Policy making since independence. http://express.anu.edu.au/ssgm/policy_making/mobile_devices/ch11s02.html
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4. 4.1.

SABL Leases on New Hanover Island and Namatanai District Special agriculture business leases on New Hanover Island issued to three landowner companies of Tabut Limited, Umbukul Limited and Central New Hanover Limited made news headlines when it was reported that the whole Island had been sold to a Singaporean company. Certainly the total area granted under the 3 leases takes up 75 % of the Island, but, it remains to be seen whether in fact that portion of a large Island in PNG has been sold off to a foreign entity(s). It is also clear that a lot of customary landowners believe that they have lost their right to the use and enjoyment of their land for the next 99 years without getting anything in return. They have also expressed serious concern about the exploitation of their land resulting in permanent environmental damage. Things came to a head early on in the piece, when landowners of the Mamirum area that is now covered by the Tabut SABL, objected to the landing and establishment of the developer company Tutuman Development Limited (TDL) on their beach front village. They were arrested and locked up at the Kavieng police station for their defiance against the sublessee who had exercised its new found rights as tenant. It is perhaps a sign of things to come in other SABL areas and an indication of what may be the negative aspects of an otherwise well intentioned concept. The news of the New Hanoverians plight brought the issue of SABLs to the publics attention and has caused sufficient public concern in the governments view to set up this inquiry. What is clear from peru sal of all the material furnished so far to the COI is that there is still a lot of discord, distress and general anxiety out there among a large number of customary landowners. Their numbers are sufficient to indicate that there may not have been informed and unequivocal consent for the creation of these leases. In fact their cries reached the ears of now Chief Secretary Manasupe Zurenuoc when he was Secretary for Provincial affairs and designated custodian of customary and trust lands. Mr Zurenuoc has since given evidence to the COI and asked the Commission to recommend for the cancellation of the 3 SABLs on New Hanover Island.

4.2.

4.3.

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5. 5.1.

Site Visits The C.O.I. team comprising Commissioner Nicholas Mirou, Counsels Paul Tusais, Jimmy Bokomi, Kako Sarufa (Associate), Ben Kaiah (Administration), Patrick Debesa, Dokta Mckenzie (Security), Joseph Wohuinangu (C.O.I Agriculturalist), Kavieng Police and Landowners travelled by sea to inspect the SABL located at New Hanover. Due to logistical convenience, team headed by Commissioner, Mr Tusais, John Sek and Kamsal Mareleu, Police Personnel travelled direct to Noipus, Umbukul. Mr Jimmy Bokomi, Mr Wohuinangu and other team travelled to the nursery site on Central New Hanover. The Commissioner later travelled back visiting Noipus, Tabut village within the Three Island Harbour on to Metaia, the log pound and nursery site on Central New Hanover. It took the team the entire day starting at around 9 am and returning to Kavieng around 9p.m. Three (3) dinghies was hired from the Fisheries College and we acknowledge the skills of our operators in ensuring our safety and wellbeing during the long and gruelling marathon traveling from Kavieng to New Hanover and returning within the same day. The C.O.I highlights these factors to be taken into account as to the time allocated for the inquiry was realistically short and funding inadequate to undertake an inquiry of this magnitude especially with the conduct of hearings and at the same time conducting site visit to various SABL locations in the province. The following is the C.O.I observation of the site visit is confirmed by the photos and video accompanying this report. Evidence of log pound with harbour facility well below international harbour standards. It is not long terms and will only serve the interest of the loggers as long logging activity continues in Central New Hanover and exported through the Three Island log pound harbour. Environmental concerns over massive destruction of mangroves, waterways, sago palms, trees on the coastline including dredging of the harbour and destruction of coral reefs affecting the ecosystem and marine life. No environmental concerns addressed by the Developer.

5.2.

5.3 5.4.

5.5.

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5.6. 5.7. 5.8. 5.9.

The District Office Building at Noipus is derelict condition and in want of renovation. Evidence of machinery used by Dominion dumped at Noipus District Offices waterway. Evidence of dredging of coral to build logging roads Evidence of a nursery on Central New Hanover SABL, but this was confirmed by the Commission Agriculturalist to be three weeks old. This would reflect the urgency of Tutuman to initiate such nursery on the understanding that the Commission was conducting its hearings and site inspection at New Ireland for two weeks commencing 15th October 2011.

6. 6.1.

TUTUMAN DEVELOPMENT LIMITED Perusal of IPA extracts show Tutuman Development Limited to be a company incorporated in PNG. The Company was registered by the Registrar of Companies on 2nd December 1999. The Company number is 1-36478. Files from PNGFA and DEC show that Regina Hii a Malaysian citizen who is resident in PNG owns 49% of the total shares. Deodatus Hii also a Malaysian citizen with PNG residency holds 12.5 % shares whilst Pedi Anis, Janet Rauveve and Degon Logo, all PNG citizens each hold 12.75 % shares. It would appear from this record that the majority shareholding of 61.5% in the company is held by foreigners. The company is a registered forest industry participant given registration number F101156 by the PNGFA. Its main activities seem to be forestry related but it also claims to be the first company in New Ireland to be granted a cocoa export licence. The shareholding structure was confirmed by Mr Pedi Anis, the current Chairman of Tutuman as two foreign nationals of Malaysia been the major shareholder of TDL The C.O.I was also informed by Mr Anis on the incorporation and registration of Tutuman Integrated Products Limited, company set up on 30 August 2007. The Company Number is 1-60628.

6.2

6.3.

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6.4.

According to the Document tendered by Mr Daink of DAL titled Integrated Agro-Forestry Project, Central New Hanover SABL, NIP (Exhibit FD 10), Tutuman Development Limited is a duly registered national company under Investment Promotion Authority Act and is specialized in logging and marketing in the New Ireland Province. Recently the TDLs subsidiary, Tutuman Integrated Products Ltd (TIPL) has switched to agriculture and reforestation land use development, making TIPL as the first nationally owned company in NIP to obtain Cocoa Export Licence. We are critical of the registration of a new subsidiary company for the three reasons, (1) Tutuman does not have the financial capacity and the expertise as an agriculture company to undertake high impact agro-forest project on New Hanover and Namatanai. In addition, the current Agriculture Sub-Lease Agreement was executed between TDL and the four (4) Landowner Company; (2) the lease agreement is it is not fulfilled by Tutuman should be terminated by Tabut, Umbukul, Central New Hanover and Rakubana, because there is no agreement with TIPL; and (3) the shift of agriculture focus from TDL to TIPL constitutes serious breach of the regulatory process of compliance in accordance with DAL approval and issuance of Certificate of Compliance Certificate to PNG Forest Authority for issuance of FCA including Level 3 Environmental Permits. The lessee has failed outright to perform the condition of the lease agreement and therefore must be terminated.

6.5.

7.

EVIDENCE OF KEY FIGURES COMMON TO THE SABLs UNDER REVIEW

7.1.

The following Witnesses either summonsed or appeared voluntarily are common witnesses to the SABLs issued to the four (4) SABLs in the New Ireland Province. The C.O.I will include Rakubana Development Corporation in this report on the basis that Tutuman is directly involved under an Agriculture Sublease to Danfu Extension SABL The common witness to the above SABLs provided information on the role they played in the formation of the SABL.
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7.2.

The C.O.I refers to the evidence of Mr Pedi Anis, Mr Miskus Maraleu and Mrs Janet Rauveve as the key figures in the four (4) SABLs on New Ireland (excluding Emirau Trust Limited), and technically Cassava Etagon Holdings Limited in the expired Kaut TRP concession. The C.O.I was unable to summons Ms Regina Hii, Mr Deodatus Hii and Mr Steven Hii as they were out of the country at the time C.O.I conducted its hearings at Kavieng. Mr Pedi Anis Mr Pedi Anis is a graduate from UPNG, a former Premier (1982-1991) and politician in the New Ireland Provincial Assembly (1982-1995), Senior Bureaucrat and Advisor to Ministers. (various roles). He typifies passion to ensure New Ireland communities mobilize and utilize their land inclusive of forest and its biodiversity for agricultural development. This is reflected in the major role he played in creation of the five SABLs in the province including former Kaut TRP area. Amongst Mr Anis employment portfolio, there are significant milestone apparently linked to the SABLs listed as part of our inquiry, 1999-2003 Negotiated Kaut TRP 2003-2007 Negotiated and signed Central New Ireland TRP 2006-2007: Negotiated and signed Tabut/Mamirum Timber AuthorityLicence for Forestry on TAO2& TAO 3, Roadline Licences & Agriculture TA (Tabut) 2008-2009 Negotiated DANFU Timber Licence for Namatanai District 2011 Negotiated and signed a multi-million Kina project development of Rubber Plantation, Rubber downstream processing, Veneer Sawmill, sawmill, Woodchip mill-New Hanover

7.3.

8. 8.1.

8.2.

8.3.

The Commission find that Mr Anis was better placed in terms of his knowledge of the entire forest related project within the province
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including his own island. He could not be underestimated at all when it comes to forestry related activities. In his own words, he said, you cannot grow cocoa on top of trees, you have to cut trees in order to grow cocoa and rubber and other cash crops. 8.4. He exerts influence among his peers, his people and with his illustrious service to the people of New Ireland, there is no doubt that the general population will accept his actions however detrimental to their interest for fear of repercussion or intimidation. He also set up Tutuman after Dominance Resources abandoned Umbukul TRP logging operation. We do not doubt the fact that his involvement in the four SABLs in the province, his understanding of the landowner issues and his impeccable standing, I find he was not able to mediate these ongoing landowner issues successfully. I have assessed the demeanour of Mr Anis disposition and attribute his credibility to one of condescending and this is clearly illustrated in the following exchanges during cross examination by the Commission (Refer to SABL 42-Mirou 03/11/11) 1) Ignorance of Mr Kamsal Maralues evidence on his involvement as Tutumans agent to coerce landowner consent

Q: So those machines, after you left Noipuas, you shipped those machines to Kaut? A: Q: A: Q: A: Yes. Okay. At that time, KamsalMaraleu was working for you? No. He moved those machines to Kaut? No, Kamsal never worked for me; he did not work. He claim to be in the engine room of Tutuman but as you know in the engine room, there are people who just wipe oil on the engine and people who just put oil in the engine; and there are engineers really who understand the engine room.

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(page 19 of the Transcript)

2)

The following extracts clearly indicate his view that the people are responsiblecreating the land disputes within themselves and it no fault of the Developer/Investor.

Q: Sorry, Mr Anis, could I just ask you this? Is that also the experience you had at Kaut that there were some landowner disputes? A: Yes, the landowner disputes are really disputes among themselves, not so much disputing the operations. It is just landowners disputing among themselves and that is always going to be a problem unless we refine the way we are going to do things here. I think I, in my experience, when the forest remains as a forest and nobody touches it for development, there are no arguments; no cross orfight. But when development comes in and the talk of development comes, people see physical money and then they also want they look at the agricultural development, first and foremost, as the way to make money on forest on timber and then that is where all the arguments come in; I own this place, I own this place.

(3)

There are processes by which the social mapping process is normally done through key agencies of government which evidently in this SABLs was processed by Tutuman through its employed lawyer Mr Maraleu.

..So the way that I have been approaching this one on later on, on New Hanover and everywhere, especially in Danfu, is to get the people in the area themselves, teach them, help them and they themselves will go and do the incorporation of their own land groups and then actually go down. The next step is do boundary
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line and the village, as you talk, understand where the boundaries are and then go together into the bush and cut your boundaries.

(4)

Ignorance of the hereditary rights of people over knowledge of customary land boundary

..You see, Commissioner, there are so many landowners who say, my land starts from here to there but if you get them into the bush, they themselves do not know where exactly is their land boundaries because they have never been there. They have been somebody has been telling them in the village. They have never gone up into that big bush and know exactly where, which point and which point the boundaries go.

THE COMMISSIONER: MrAnis, that will be an insult to the people who actually live on those lands. That is an insult to their ownership rights. You say that they do not even know the boundaries that they that these particular villages who are affected by these SABLs live in. A: Q: A: Q: Yes, sorry--You come from Umbukul? Yes. What about those ones in Kabut, Central New Hanover? Then you have Kaut, from the East Coast to the West Coast, and then you have those in the Danfu area; and you say that they do not know their boundaries? I am sorry, I--Because they do not have their customary ancestors who pass on those rights?

A: Q:

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A: Q: A:

I stand corrected. Is that not an insult to the people? The boundaries, not yes, there are so many difficulties on they know the boundaries but there are so many difficulties among themselves establishing exactly where the boundaries are. That is why when you look at these SABLs in total, they are just completely the whole track of land belonging to people even from the coastline to the backlands, or the hinterlands or where the mountainous regions are, are taken over by one particular company, which is you company. That is the sad fact about these SABLs had the involvement on Tutuman a developer in each of those SABLs in this region. Actually, four of the SABLs belong to is actually subleased to Tutuman, your company, as a developer. I come in because you said that they do not know their physical boundaries, but the people know exactly where they go and fish. They know what they do when they go hunting in the forest. Would they not know their own where their ancestors put in certain rights over land, the creek and everything that goes with it?

Q:

(Pages 19-22) (5) Reference to pollution of rivers affecting drinking water for the people of Danfu as a result of intensive logging in the hinterlands of Danfu by Tutuman. He blames the villagers for polluting the environment.

Dinamu river is an interesting river. People who live next to the river and they got cocoa blocks along the river up there. They actually some of the people use the river system as toilets and actually also as a dumping area for some of their rubbish. It happens everywhere and our people are our own worst enemy when it comes to our own
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waterways. We need to be educated and help us to be able to conserve and look after our river frontage. The cocoa goes right down to the waters edge. (page 36) MR TUSAIS: Mr Anis, look, just on that point about the river, I was on the Namu river. You are saying, look, Namu village people they excrete into the river so even if one of my bridges collapsed, it does not really matter. They have spoilt it already. Is that what you are telling the Commission? A: Q: A: Q: A No. That is what I heard you say; they build toilets over the river or the river--No, no, no. Or, the river is no good, to start with? They use the river for other things other than drinking water

(page 37)

(6)

His view on the general perception of New Hanover islanders over oil palm plantation estate development.

Q: Before you appointed a sublessee by the people of Tabut through the umbrella company Tabut Limited, did you tell the people that you would plant oil palm?

A:

Yes, there was a project documentation that we submitted that went through public hearing on oil palm and it was reported by - and DAL went through this public hearing with us. As I said Commissioner, our people change their oil palm due mainly to the fact that 90 percent of people working in Poliamba come from New Hanover; and 90
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percent of those from New Hanover come from central New Hanover and Tabut.

Now, their experience with oil palm is that it brings a lot of flies and New Hanoverians do not like flies; they hate flies, and it brings a lot of snakes. They are frightened of snakes; and it does not help to improve the soil fertility and they themselves do not want - they will rather work for the oil palm factory or oil palm company somewhere else but they would rather have a different crop on the island which, based on that and a lot of our people also from New Hanover, academics, did not agree with the oil palm and also our CCI people. So we had to engage a group of scientists to again, go around the island and we proposed to do rubber an integrated agriculture project changing from oil palm to rubber. That is what they did and we have the documentation that they have done which was endorsed by the Department of Agriculture for a change of crop.

9. 9.1

AGRICULTURAL ACTIVITY When pressed about Tutumans record with major agricultural projects, he referred to the nursery at the DANFU (Rakubana Development Limited) and the KAUT project. The C.O.I noted a nursery site at DANFU but the seedlings in the polybag was overgrown and left to the forces of nature. The cocoa plots we observed were struggling and dried up including the shade trees. It was not a promising venture and virtually nil agriculture activity, apart from extensive logging. The C.O.I during its exhaustive site visit to Danfu SABL project area was not able to visit what Mr Anis referred to as 30 hectares cleared for cocoa farming. This was also confirmed by Mrs Rauveve and Mr Maraleu. In fact Mrs Rauveve expressed that there was no Agriculturalist on site, and the site was currently managed by Mr Husain, a Business graduate from Indonesia who has neither agricultural background nor experience. (Refer to evidence under Rakubana Development SABL Report) This also
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9.2

brought the attention of the PNG Forest Authority concerned about TDLs capacity to meet its implementation schedule as the Logging and Agriculture plans. The monitoring inspection report attributed a poor performance rating to TDL on the Danfu Extension SABL.

10.

The Evidence of Miskus Maraleu

10.1. He has practised in the public sector and since 1981 has practised as a private Lawyer. He is the current lawyer for Tutuman. He was formerly Chairman of the Forest Industry Council and conversant with the basic operations of Forestry Logging Operations. (a) Capacity of TDL to undertake Agriculture Projects

10.2. It was evident that TDL was supplying polybags to landowners within the agricultural parts of the project area and build nurseries so that panting can take place on cleared land. Mr Maraleu confirmed that TDL did not have the capacity to develop oil palm but would do so by sub-contracting the agricultural component of the project. The Commission finds that this is very unusual in that Section 90(3) C Forestry Act requires TDL when applying for FCA to convince PNG Forest Authority that it has the implementation schedule showing precise areas and proposed rate of harvest and also show what TDL intends to do on the cleared land by submitting a successive land use development plan approved by DAL. 10.3 It became evident that TDL did not have the capacity to run estates and organise structured plantation type operation. Mr Maraleu agreed that TDL had misled PNG Forest Authority when it applied for FCA for all the four SABLs. In the case of Central New Hanover and Rakubana FCA was granted based on this misleading information. (b) Conflict of Interest

10.4. Mr Maraleu at the time of the Inquiry was the Corporate Secretary and lawyer of TDL, the Secretary for Umbukul Limited and Secretary for Tabut Limited. The IPA extract currently confirmed his status; hence his involvement in the land investigation process was highly irregular.

285

10.5. The C.O.I deem that his involvement as Corporate Secretary to the Developer and two SABL title Holders is a conflict of interest and raises ethical issues of good corporate governance in terms of the interest he serves. 10.6. He told the C.O.I that when he was employed by TDL in 2007, he found out that there was a lot of work undertaken in the land mobilization period to 2007. He also discovered that there was a lot of Consent Forms and Agreements with Tutuman to get the subject land. He subsequently did work on the DANFU Extension and became involved with the landowner company Rakubana Development Limited. 10.7. According to Mr Maraleu, at the completion of the ILG registration, TDL invited Mr Malesa to conduct the LIR. He confirms that he accompanied Mr Malesa to New Hanover and conducted awareness and investigation at Umbukul for one full week, Tabut for 1-2 days and Central New Hanover for 4 days. They did not conduct any awareness or investigation for the outlying islands of Sohe, Nukus, Nuslik, Nusa and Ungalik Island. These island communities are also landowners on the mainland of Central New Hanover. They also did not conduct any investigation for those landowners living in the hinterland. (c) Land Investigation.

10.8. The whole investigation process was conducted without any input from the Provincial Lands Office. He accompanied Mr Malesa on the trip to introduce Mr Malesa to the Chairman of each ILG (landowners have disputed that appointment of the Chairman), leaders of the community and the community. 10.9. This would have been made possible had DLPP consulted the Lands Office at Kavieng to assist in facilitating the land investigation awareness. The presence of TDL in the LIR process was highly irregular because the Developer was so involved in the process. The Commission finds that the requisite requirement of consent may not have been properly obtained and if that happened, it was basically through those individuals and landgroups that supported TDL.

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10.10 The following documents was tendered as part of his evidence.

No. 1

Document Tendered ENVIRONMENT IMPACT STATEMENT FOR CENTRAL HANOVER, SABL PROJECT BY TUTUMAN DEVELOPMENT LIMITED PROVIDED BY N SYSTEMS MANAGEMENT SERVICES LIMITED EXHIBIT MM1 BUNDLE OF THREE DOCUMENTS, RAKUBANA DEVELOPMENT LIMITED REPOR, A SET OF PHOTOGRAPHS AND THE FORMS; CONSENT FORMS 165 AND 166 SALES AND PURCHASE AGREEMENT FIVE DOCUMENTS IN BUNDLE; CENTRAL NEW HANOVER LTD BY MISKUS MARALEU OF TUTUMAN LIMITED BUNDLE OF DOCUMENTS IN RELATION TO TABUT LIMITED TENDERED BY MISKUS MARALEU OF TUTUMAN LIMITED BUNDLE OF DOCUMENTS FOR UMBUKUL LIMITED BY UMBUKUL LIMITED BY MISKUS MARALEU OF TUTUMAN LIMITED

Exhibit No. MM1

MM2

MM3

MM4

11.

THE CONDUCT OF THE LAND INVESTIGATION PROCESSMR LAZARUS MALESA

11.1 The C.O.I. does not intent to repeat the findings in respect of the LIR (landowner consent), ILG registration and consent of the landowners in all the four (4) SABLs on New Hanover and Namatanai respectively. There is a common trend in the process of LIR which is grounded on the evidence of Mr Lazarus Malesa, currently Manager-Customary Land DLPP (Refer to SABL 79-Mirou 23/01/12) (a) Funding by Tutuman Development Investigation and Awareness to conduct Land

11.2 Mr Malesa trip was fully funded by Tutuman in terms of Allowances, Accommodation and Transportation including incidentals. The C.O.I also recognise that this was common trend in the SABL covered by the
287

Commission on the compromise of employees of the State accepting bribes sanctioned by their superiors as a normal state business. The C.O.I understands that Mr Malesa was caught in a situation forced upon him when he was directed by Mr Anthony Luben on TDLs request to carry out the investigation. 11.3. The Commission in the strongest term condemn such practice and urge the government to ensure that funds are budgeted for future land investigation into customary land, ILG Registration, conduct of awareness, proper survey plans conducted by officers sanctioned to perform survey on behalf of the Surveyor General 11.4. The Commission recommends for serious disciplinary action to be taken by Departmental Heads against Senior (National Contract) Managers who knowingly issue such illegal directive to subordinates. This also relate to Heads of Department and Statutory at National, Provincial and Local Level Government Affairs. (b) Land Investigation Report (Working Files)

11.5. Mr Malesa produced land investigation working files used for individual ILG groups within the project area and compiled one overall land investigation. The four SABL grantees have a common Agriculture SubLease agreement with Tutuman Development Limited, a foreign owned company incorporated in Papua New Guinea. Mr Malesa also confirmed that he conducted land investigation for Cassava Etagon Holdings Limited (Expired Kaut TRP), Rakubana Development Limited (Danfu Extention) and the three (3) SABLs located on the expired MAMIRUM TRP concession on New Hanover Island. 11.6. The working file folders for Central New Hanover consisting of 11 LIRs, working file folders for Tabut SABL containing 11 LIRs and working file folders for Umbukul SABL consisting 18 LIRs. The files for Rakubana Development Limited (Danfu Extention-Namatanai) totalling 15 LIRs were produced. Mr Malesa states that ..I only worked during the trip and you will notice that the Land Investigation have different handwritings. Some of them are mine and some of them done by I think the agents they have been using for each of the project area and perhaps Mr Miskus Maraleu.(Transcript SABL 80 24/01/12 @ page 16).The most crucial fact of the LIRs are that Mr Miskus Maraleu, Corporate Lawyer
288

and Secretary for Tutuman Development Limited and his agents directed and compiled the whole report including ILG registration and the consent forms for the landowners. 11.8. We refer to the main criticism of the ILG Registration and Land Investigation process as well as the Lease/Lease Back Agreement which is flawed. (c). Major Facilitator of the LIR process 11.9. Mr Miskus Maraleu, a lawyer by profession and from Umbukul was instrumental in coordinating the land investigation and awareness. Mr Malesa was unable to coordinate an independent Land Investigation a criticism already levelled against him by the Provincial Lands Office. He was not able to undertake the due diligence of all the landholding clan which included a massive coastline stretching from Central New Hanover to Tabut and Umbukul including the hinterland. The extract of evidence discloses his dilemma substantially meaning that the process was flawed,

Q: You yourself you did not go to cross-check and verify yourself, to satisfy yourself that---

A:

No. I have actually used the working files for each of those projects areas, which some I have done. In every visits I made and awareness, I have also asked the landowners whether they understand the SABL process and are they willing to be part of the project, and whether this village was willing to be part of the project, he can come forward so that I can sit with him and do the land investigation reports for them, for their ILG group. Not most of them attended and that is the problem.

Q:

Yes, what the people - just generally, this is in Namatanai as well as on New Hanover, what they say is the few that

289

attended,these were chosen by Miskus and Tutuman.These were selected groups that you were doing awareness to.

A: Q:

That is true. The majority of people of Namatanai, at least in the Danfu Extension area and the three SABLs on New Hanover, they are totally unaware. They did not know that your team was around saying these things about SABL. I think it came out in the Papers and they said, Oh, my land is gone. That is what they are saying. That is true. Okay. Counsel, my visits to those areas were most of the landowners and communities were not aware that a Lands officer was going and I think it was a failure with our department also not getting involved the provincial administration through the Lands division to make an announcement earlier prior to our visits. This is one of the reasons why most landowners were not present during our visit to conduct awareness.

A: Q: A:

(SABL 79 Mirou 23/01/12 @ pages 26-27 per Mr Malesa) Evidence of Custody of Land Investigation Report 11.10. Mr Malesa relates to the Commission that on the morning he had a terrible accident at Noipus Village, Umbukul. Whilst he climbed limestone cliff about five metres high to answer the call of nature, he slipped and fell horizontally onto the jagged limestone (karanas) injuring his side (not mention part of the body in evidence) and was scared as result of the injury. He says, So In decided to quit making awareness in any land investigation on whatever so for the company at that time. So on 24th to 30th, I was in a sorry, on the 23rd, we travelled back to Tabut and there were some landowners who arrived at Tabut that time in the night, which I was also nursing my sore body and tried my best to do some land
290

investigations. That is in the Tabut area. Okay from the 25 th , we travelled to Metamin, another village, we tried to conduct awareness but no landowners were there. (page 35 of SABL 79) 11.11 All LIRs were returned to Tutuman for its completion and submission to DLPP Land Investigation awareness-15th to 30thMay 2007. 11.12. The depth of the awareness for mobilisation of the land on the island clearly indicated that there was no proper awareness conducted, and if anything there was already history of logging taking place on the island prior to the SABL which was basically a conversion from the expired Maimirum TRP concession. Below is a summary of the land investigation diary to indicate that it was a difficult task to undertake land Investigation over three SABLs in a record two week tour of the island. 15th to 17th May 2007- The team talked to 10 people at night at Tabut 17th to 18th May 2007-The team talked to few villagers at Kone village (past Umbukul) 18th to 19th May 2007-Miskus and Reuben Peni of Tutuman instructed Malesa to travel to Bawun village (north) which is on the boundary of Umbukul and Tabut and talk to few landowners. Travelled to Butulum village and talk to few landowners on 20th May 2007, Accident at Noipuas Village 22 May 2007 23 May 2007 travelled to Tabut-met some landowners at night 25th May 2007 travelled to Metemin-no landowners present to conduct awareness and travelled to Unusa Island, Central New Hanover and talked to few landowners on 26th May 2007 and returned to Metemin and met a handful of LOs. The LOs did not want any involvement in the project because of the presence of Mr Maraleu and the ongoing issues with logging and encroachment by TDL. On 27th Returned to lodge at Nunga Island. 27th May 2007 travelled to Meteai, no landowners available but only four Landowners present and he was forced to talk to them. Did very little by way of Land Investigation as well as awareness.
291

11.13

 29th May 2007 they all returned to Kavieng,

11.14.

The C.O.I notes that the trip was not coordinated well enough to gauge the majority landowners along the coastline and the hinterland of the three (3) SABLs and often times, the awareness was conducted late in the evening, the days spent travelling from village to village. The C.O.I experienced the hardship travelling by sea around the island which is quite exhausting and dependent on good weather and the wind that causes major tides and swells in the sea. Boundary Walks

11.15.

Mr Malesa told the inquiry that he attempted to walk the boundary, but the steep rugged mountains and limestone provided a barrier for his access to the land boundary. They only followed the coastline and conducted the investigation and awareness to the coastal villages only. The details of the three SABL boundary was provided by TDLs Miskus Maraleu and Reuben Peni, and significantly Mr Peni seem to appear as a landowner in all the details relating to land boundaries walks. (pages 3738) Schedule of Owners

11.16

Amongst the LIRs produced to the inquiry and confirmation from the objections and concerns raised by the landowners, landowner forum groups and prominent New Hanoverians, the continued abuse of the process was evident in the clan listing basically for. Aihi Vonge clan of Umbukul, The listed name of clan members indicate Miskus Mareliu, Margaret Mareliu, Mauna Mareliu, Miskus Jnr Mareliu, Maloni Mareliu, Majorie Mareliu and Melki Jedek Mareliu. Objections were raised by the landowners of Poronbus village (affected village) and references is made to the clan landowning representatives who appeared at the C.O.I hearing at Kavieng Fisheries College on their views as to the SABLs.

11.17

11.18

12.

Commissions observation of the site inspection

292

12.1. The following observations (evidenced by photographs and video) on the SABL relative to Central New Hanover are as follows;

12.2 Evidence of harassment of local landowners with the developer in relation to the landing of machinery on the shoreline at Lavongai. The use of arms and force by members of the Mobile Unit stationed at Tomaringa Barracks, East New Britain Province resulting in the shooting of a youth and hospitalization. This was done on the orders of the owners of Tutuman. 12.3 Consent not obtained from the people and no awareness done prior to the issuance of the SABL. It would seem that the landowner company was coerced into entering into a sub-lease agreement with Tutuman; 12.4. ILG names not conforming to lineages and persons from other clans were used to sign for a particular clan. 13. The PURCHASE AND SALE OF NEW HANOVER ISLAND

13.1 This was the major contention of the people of New Hanover and the C.O.I was reminded of the alleged sale and purchase of New Hanover Island. The following documents were produced to the C.O.I by Mr Anis. 13.2 According to Mr Anis, Tutuman entered into a Logging and Marketing Agreement with Gromax (a company owned by Palma Hacienda) to harvest logs and commence process of establishing nursery for Oil Palm including the setup of infrastructure into various clan blocks to grow oil palm. The Sublease Agreement has been registered with the Registrar of Titles on the SABL Title held in the name of the four landowner companies of Portion 885C, 886C, 887C and 888. 13.3. The Sale and Purchase Agreement was executed between TDL (Seller) and Palma Hacienda (PH-Buyer), a company incorporated in PNG and having a place of businessin Kavieng on 10th June 2009. 13.4. Tutuman representing itself as the Seller and holding itself out as the Leaseholder and Beneficial owner of SABL Portion 885C, 886C and 887C comprising a total 93, 564 hectares of land. KH intended to purchase the Plantation land (as was referred to) and the Noipuas lease
293

land or any other lease land in Central New Hanover for US$600, 000. The said monies to be paid into Citibank Singapore Limited Bank Account No. 0348592017 in the name of Regina Lau Yii Kuong.

13.5. Amongst the six conditions, conditional to that Agreement (Clause 3), , TDL was required to, transfer its legal title of the three (3) Plantation Lands to Palma Hacienda (Clause 3.1); and transfer its legal title of Noipuas lease or any other lease to PH. A Supplementary Agreement dated 10th June 2009 stipulated an additional payment of US$200, 000 to be paid immediately on signing of the Agreement. We infer that this was a bonus to TDL for settling the deal to sell Portion 885C, 886C and 887C. 13.6. The Agreement was signed by both Chairman of TDL and PH. Mr Maraleu when asked about his advice on the Agreement, responded, Mr Anis did not consult him and acted on his own free will to sign the Agreement. 13.7. Mr Anis was asked in cross examination on the Sale and Purchase Agreement and the following was his initial reaction; Q: Did you sign a document called Sale and Purchase Agreement between Tutuman Limited and Palma Hacienda for the sale of plantation lands back on New Hanover? A: Q: I cannot recollect. You are under oath. It is just a simple question, did you sign a paper called the Sale and Purchase Agreement between Tutuman Limited and Palma Hacienda on 30 - in June 2010? Yes. Okay. How much for? There was no amount. For 1.6 million US dollars?

A: Q: A: Q:

294

A: Actually, that 1.6 million has never been deposited or come to the companys account. That is why - that is the deal that went bad.

Q:

There are certain receipts that we have. It shows that certain amounts were paid into the account of Mrs Hii; Regina Lau Hii. I will just show it to you. Perhaps, copies could be made later. Just look at those there are certain sums paid to Mrs Regina Hii in consideration of a sale of plantation land. There are certain sums, US$300,000 - significant sums made several payments made over a period of time to the same account for the same reason. Is that payment in relation to that agreement that you signed in June 2010?

A:

This, I do not know.

13.8. The following documents (Exhibit) was tendered to the C.O.I on 3rd November 2011 by Mr Anis in response to the questions raised regarding his involvement in the deal with PH to sell the three SABL Portion (as Plantations) including other leases on the island.
No. 1 2 3 Document Tendered MAP OUTLINE OF PROPOSED DEVELOPMENT ON CENTRAL NEW HANOVER REPORT ON TABUT LIMITED, PORTION 885C MILINCH LAVONGAI, FOURMIL KAVIENG. BUNDLE OF DOCUMENTS TRANSACTION MADE ON 23 JUNE 2009 FROM JAMATA PROFITS LIMITED, CARE OF HAM TING SIEW, 2 WAY LINCOLN ROAD, UNIT 24-08,PARK INFINIA AT WINHAM, SG308364, SINGAPORE LETTER FROM JOINLAND GROUPLIMITED 2 NOVEMBER 2011; OUTWARD REMITTANCE YEAR 2000 REGINA LAU HII WONG LETTER FROM UBS 2 NOVEMBER 2011 JOINLAND GROUP LIMITED RE OUTWARD REMITTANCE 2009 TO 2010 LETTER FROM JAMAKA PROFITS LIMITED BASED IN VIRGIN ISLANDS 2 NOVEMBER 2011 REOUTWARD REMITTANCE MADE IN 2009 FOR
295

Exhibit No. PA 1 PA 2 PA 3

4 5 6

PA 5 PA 6 PA 7

7 8 9 10

11

REGINA LAU HII WONG LETTER OF CONFIRMATION FROM CITI BANK 31 OCTOBER 2011 CENTRAL NEW HANOVER LIMITED PORTION 887C, MILINCH OF LAVONGAI, FOURMIL KAVIENG, NEW IRELAND PROVINCE REPORT KNOWN AS UMBUKUL LIMITEDPORTION 886C, MILINCH OF LAVONGAI, FOURMIL, KAVIENG LAND DEVELOPMENT SCHEME FOR NEW IRELAND PROVINCE BY TUTUMAN DEVELOPMENT LIMITED, JANUARY 2001, REVISED JANUARY 2008 BY MR PEDI ANIS, OBE SALES AND PURCHASE AGREEMENTBETWEEN TUTUMAN DEVELOPMENT LIMITED, THE SELLER AND PALMA HACIENDA LIMITED, THE BUYER DATED 10TH DAY OF JUNE, 2009

PA 8 PA 9 PA 10 PA 11

PA 12

13.9. The C.O.I finds that there is a major irregularity in the transaction for the following reason; (1) TDL is not the titleholder of SABL Portion 885C, 886C and 887C and therefore has no legal authority to sell the subject SABL leases. The leaseholder to the subject land is in the name of the respective landowner company; (2) There are no plantation on the subject land, except for logging activity as a result of the sub-contract between TDL and PH to harvest log currently on Portion 887C (CNHL). (3) TDL has entered into an Agriculture Sub-lease Agreement to develop agriculture on the land. That sub-lease was registered with the Registrar of Titles. 13.10 In the final analysis Mr Anis explained that no monies were paid out of the Agreement to TDL or Mrs Regina Lau Hii. He produced a bundle of documents to substantiate this claim, which we recommend be the subject of further investigation to substantiate and verify with the bank concerned.
296

13.11

The C.O.I will recommend for further investigation into this purported deal to sell the land without the authority of the landowners, the legitimate landowners whose customary rights, exist. That the purported deal be the subject of a criminal investigation by the appropriate authority, We consider that the Agreement that was signed was fraudulent and dishonest on the part of TDL to mislead and hold itself out as the legitimate owner of SABL Portion 885C, 886C and 887C in order to secure a deal financially and in the process dispose customary land amidst a continuing discord and contention by the aggrieved landowners and concerned New Hanover islanders living on the island, Kavieng and around PNG.

14.

The Evidence of Mrs Janet Rauveve

14.1. Mrs Janet Rauveve comes from Bok village, Namatanai and evidently she is a landowner (through her genealogy to her grandmother who is from Hilalon village) over the SABL held in the name of Rakubana Development Limited (RDL) a.k.a Danfu Extension. She is a Forester by profession and was previously employed by the PNG Forest Authority (1981 to 1999) and joined TDL in March 1999 as Director and Forester undertaking technical aspects of the company in the preparation of forestry plans and ensuring that implementation schedules are met by the field officers on project sites. 14.2 Much of what she says about her involvement on TDL operation was the Kaut TRP (2000-2003), Central New Ireland TRP (2003-2007), Danfu One (Forest Licence), Mamirum One (FA-Clear and plant cocoa), Tabut (Agriculture TA). During their operation on Tabut TA, advice was received from PNG Forest Authority that since the TA normally was

297

renewable annually it was feasible to undertake large-scale agriculture development through SABL process and issuance of FCAs.

14.3. She also confirmed that movement of TDL from the Central New Ireland TRP was based on landowner disputes and it was her advice that it was necessary to move out and operate where there was no disputes. It was during that time, that they coordinated the people of Danfu to incorporate RDL and organise ILG for the conversion of the Danfu Extention into SABL. She had no involvement in the Tabut and Umbukul FCA. 14.4. In terms of the real agriculture development and the low rating on TDLs performance in meeting its forest clearing and planting of cocoa trees, Mrs Rauveve was unable to convince this Commission due to the fact that there was no Agriculturalist in the employ of TDL to oversee the implementation of the FCA requirements at Danfu and the other project sites. 14.5 Environmental issues relating to the Danfu Extension lack proper supervision for example road construction conducted by TDL for logging activities resulted in soil entering into a creek and affecting the water source for the villagers living on the coastal villages. Despite Mrs Rauveves assurance that TDL maintained a high level of s afety checks, the C.O.I received numerous accounts from the villagers during the inspection visit of environmental damage and continuous logging operation, the dumping of machinery near the log pound site which is a hazard to coastal villagers nearby. The lack of due regard to environmental compliance by TDL employed foresters and machine operators continue to be a major problem for TDL as a logging company.

298

14.6 The Commission make no adverse findings against Mrs Rauveve as she played no integral role in Land Investigation process and ILG registration process leading to the acquisition of SABL title. The Commission recommends that she ensures TDL full compliance of the FCA and PNG Forest Authoritys requirements on the Danfu Agriculture project.

299

1.COI

Inquiry File No 25 for Special Purpose Agricultural and Business Lease over Portion 885C Volume 17 Folio 01 Milinch: Lavongai New Ireland Province in the name of Tabut Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. Witnesses were called from the six government agencies involved in the issuance and operation of the Tabut Limited SABL. These were: 1.2.1 1.2.2 1.2.3 1.2.4 1.2.5 1.2.6 Department of New Ireland Province, (DNIP) Department of Lands and Physical Planning, (DLPP) Department of Provincial Affairs and Local Level Government, (DPALLG) Department of Agriculture and Livestock, (DAL) Department of Environment and Conservation, (DEC) PNG Forest Authority (PNGForest Authority)

1.2

Witnesses Statement and Summonses 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings are set out in the schedule below.
Name and Position Jephat Sipmaul, Village Court Magistrate & Landowner (Moloi Numo Clan), Lopas Village, West Lavongai Electorate Isaiah Tamti MBE, Chairman Noipuas Primary School, Noipuas Village, New Hanover Pages 29-35 Day 4 Date 27/10/11-SABL 39 Mirou

No 1

35-38

27/10/11-SABL 39 Mirou

300

John Sek, Landowner, Correctional Services Officer, Kulikatan Land Group, Anekunaman Village, Tabut, NH Mr Pedi Anis, Landowner, Umbukul Village, Chairman of Tutuman Development Ltd

2-16

28/10/11-SABL 40 Mirou

8-54

03/11/11-SABL 33 Mirou

2-14 &21-29 29-67

04/11/11-SABL 34 Mirou

Mr Miskus Mareliu Corporate Lawyer &Secretary, TDL Landowner, Umbukul,Secretary (Umbukul Ltd & Tabut Ltd)

04/10/11-SABL Mirou

Mr Anthony Luben, Unattached Public Servant & Former Deputy Secretary Lands Services 2002-2008, DLPP Mr Pepi Kimas, Former Secretary, DLPP Mr Lazarus Malesa, Customary Leases Lands Officer, DLPP

10-18

05/01/12-SABL 68 MIirou (WAIGANI)

7 8

6-15

23/01/2012 SABL 79-Mirou (Waigani)

2. 2.1.

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel.

301

The following were granted leave to be represented by counsel No representation by lawyers Nil

3. 3.1

Exhibits and documents There were nine (9) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
Item Statement of Jephat Sipmaul Statement of Isaiah Tamti, MBE Statement of John Sek Lease/Lease Back Agreement (through Mr Sek) Schedule Of Owners, Status And Rights To The Land From Umbukul LIR Report For Umbukul Prepared By Mr Lazarus Paul Malesa Letter Dated 5th May 2006 From Provincial Lands Manager, Mr M Banovo, New Ireland Province Notice Of Direct Grant Letter By Mr Robinson Sirambat, Provincial Administrator To The Secretary, Department Of Lands, Dated 19 November 2007, Revocation Of Rakubana Development Propriety Limited, Tabut, Umbukul And Central New Hanover As Registered Entity Interested Party C.O.I C.O.I C.O.I C.O.I Date received 27/10/11 27/10/11 28/10/11 28/10/11 Exhibit Number TL 1 TL 2 TL 3 TL 4

No 1 2 3 4

C.O.I

23/01/12

LPM1

C.O.I

23/01/12

LPM2

C.O.I

23/01/12

LMP3

C.O.I

23/01/12

LMP4

302

Appendix G Field Trip Report By Mr Lazarus Paul Malesa

C.O.I

23/01/12

CE9

4. 4.1.

Timeline of events of note surrounding Tabut Limited SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:

No

Milestone

Dated of Completion/G rant/Issue Execution 2 December 1999

Proponent/Applicant

Respondent Entity/Respondent

Incorporation of Tutuman Development Limited (TDL) Incorporation of Tutuman Integrated Products Limited Land Investigation Report (Incomplete) Survey Plan of SABL Portion 885C (Expired Mamirum TRP) Instrument of Lease/Lease Agreement

Tutuman Development Ltd

TDL/Tabut Ltd

30 August 2007 ? May 2007 16 August 2007

TDL

TDL/Tabut Ltd

3 4

Tabut Limited Tabut Ltd/DLPP

Tabut/State Tabut/TDL

24th September 2007 (Minister not sign the Agreement)

Tabut Ltd/State

Tabut Limited

Notice Under Section 10th October 11 (Signed by Pepi 2007 Kimas) Notice of Direct Grant (s102)-Signed by Pepi Kimas Gazettal Notice G161 on SABL title 16 October 2007 17th October,

State/TL

TL

State/TL

TL

TL

TL

303

for Portion 885C 9 10 SABL Lease to TABUT Limited Request by TDL to DLPP for Cancelation of Sublease Agreement with TL/Umbukul/Central New Hanover (Letter by Mr Miskus Mareleu, Company Lawyer) Agricultural Sublease Agreement between TDL and TL (Stamp Duty Endorsement)-99 years

2007 29th October 2007 29 September 2009 Tabut TDL/State Tabut/TDL TDL

11

29 September 2009

TDL/TL/State

TDL/TL

FINDINGS 5.2. The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Tabut Limited.

6. 6.1.

Tabut Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette No. G161 dated 17th October 2007 for Portion 885CLavonagi. The land is described as Mamirum.The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 16th October 2007 by the Department of Lands and Physical Planning to the holder Tabut LimitedSABL(TL). Mr Pepi Kimas OL, signed as delegate of the Minister for Lands. The detail of the SABL is shown below:

304

Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease

Portion 885C 23/467 Tabut Limited 16th October 2007 Ninety-nine (99) years 11, 864.00 hectares

7. 7.1.

LOCATION OF SABL Located about 70 kms north west Kavieng town the lease commences at the mouth of Neisung river and runs in a southerly direction for 11.6 kms then turns east for a further 6.3 kms until reaches the Nivau river. From there it turns north easterly and goes on for 3 kms until it reaches the mouth of the Min River. IPA COMPANIES REGISTRY RECORDS According to the IPA Extracts dated 21st September 2011, Tabut Development Limited was incorporated on 4th October 2007 and is currently registered. The Company Number is 1-60998. The issued ordinary shares of the company comprise 10 listed shareholders holding 1 ordinary share in TDL namely Obed Kakmalisa, John Lapaken, Lapanrut Makius, Eliap Malpo, Passingan Kasup Patrick, Reuben Peni, Allan Samson, Isaih Tanglik, and Robin Ulawai. The shareholders address is Section 10 Allotment 6 Anir Street, Kavieng, NIP which is the principal place of business. The seven (7) Directors are Passingan Kasup Patrick, Reuben Peni, Eliap Malpo, Obed Kakmalisa, Lapankan, Boski Martin and Lapanrut Makius The Secretary to TDL are Elizabeth Melun and Miskus Maraleu.

8. 8.1

8.2

8.3 8.4

305

9. 9.1.

Landowners objections to the ILG Registration and SABL Portion 884C Project Landowners openly expressed their anger over what they termed as lack of awareness and fraudulent processing of the ILG registration process including the inclusion of their land within the SABL Project area. Two witnesses gave evidence that basically covered the objections raised by the landowners of Portions 885C. The Evidence of Jephat Sipmaul

9.2.

9.3.

Mr Jephat Sipmaul of Lopas village, West Lavongai village and Mr Isaiah Tamti, MBE, from Noipuas village, Chairman of Noipuas Primary School and from the Moloi Numa clan confirmed to the inquiry that there was lack of consultation, knowledge and proper awareness conducted by DLPP, DEC, DAL and PNG Forest Authority at the four (4) main villages that make up Tabut LLG. They were not even aware of Mr Malesas land investigation and were not consulted. Mr Tamti also told the inquiry that the clans within Tabut did not hold a general meeting to appoint nor authorize Mr Obed Kakmalisa to be their clan leader, Shareholder and Director of Tabut Ltd. The main villages of Tabut demanded that SABL Portion 885C be revoked and proper land mobilisation and awareness carried out for their benefit.

9.4

9.5.

The Evidence of John Sek 9.6 Mr John Sek, Clan Leader from Anekunman village, Kulikatan Land Group, Tabut.The C.O.I sets out extract of his evidence on the movement of machinery onto his village at Tabut, On 19 March 2006, Tutuman Development Limited landed its machineries at the beachfront of Tabut village. People were caught surprised and half of the village were forced to vacate their houses and moved inland. It was saddening that they had to sleep in makeshift houses at their garden sites until proper shelters were built. Until to date, no one of those affected was built a house as promised by Tutumang Development Limited. Tabut village was
306

not an approved landing site for TDL to land its machineries. The FCA granted to TDL was for a registered area within the Mamirum TRP area known as Mamirum Plantation, portion 644 and 6448. Therefore, the approved landing site was Mamirum Harbor. After setting up of the camp site, a log pond was to have been constructed at the spot where the people vacated their homes. The landowners sought a court order and prevented the completion of the log pond. This was too late as damage was already done. This action resulted in a few local boys been locked up at the Kavieng police cell.. The Company then has to construct a road right around to the original landing site. In the process of the road construction trees were felled and logs were scaled for shipment. This was when the formation of ILGs came into play as the landowners were arguing as to whom the royalties be paid to. This was done by clients of the company who already knew which clans have big volumes of timber in their land. The operations extended to areas beyond the boundaries of the originally approved area. I personally witnessed some instances when landowners confronted the camp manager who at that time was Daniel Hii for trespassing on their customary land and harvesting timber. I have always wondered how this could happen when there was a forestry officer on the ground supervising the project and a company employing two senior former foresters who should have known better. Mr Commissioner, it is not written here, but to my knowledge the registered FCA was granted to was the chairman of the PMFC (Marius Soiat) had an interest over that area at that time. . After the granting of the SABL for Tabut Limited on the 16 th day of October 2007, to date you could hardly see a plantation of cocoa, coconut nor any reforestation. In anyones good thinking mind, I think the acquiring of the SABLs for the three portions of land on New Hanover was only for the interest of harvesting timber. When TDL left Tabut Limited for Central New Hanover, all the promises to the people were never fulfilled. All was left behind were rotten logs rotting over in the bushes, spilled oil on the surface of the
307

ground and damaged water sources. Sir, it is not written but on behalf of my people I call upon the Commission of Inquiry within its Term of Reference, that those who are involved in this fraudulent dealings be brought to justice so that justice can be done to the people of New Hanover. . 9.7. The TOR requires this Commission to inquire into the behaviour of foreign logging companies and the total disregard of environmental concerns, the customary rights of the people basically supported by very eminent Papua New Guineans. Mr Sek also confirmed the following; Landowners were accommodated at Kavieng Hotel in 2007 to meet Mr Malesa on the Land Investigation. He was surprised at his exclusion since he was considered as clan leader for Tabut. Approached by Mr Miskus Maraleu to sign a form at Tutuman Office and he signed without knowing fully well what was the purpose of signing the consent form. Environmental damage to ecosystem, the destruction of mangrove tree, removal of betel nut and coconut trees, total disregard of the sacred sites, and pollution of the waterways and the only creek supplying water to the village was dug up and had since dried up. The movement of machinery was to construct a 12 km road inland through forest around the Three Islands Harbour to Meteai Log Pound on Central New Hanover for the purpose of logging. 9.9 The evidence of the landowners are genuine and confirms that the land investigation process undertaken by the DLPP lacked proper management and oversight on the part of the Land Investigation team. The C.O.I request that appropriate attention be made to the landowners concerns over prosecution of companies (foreign and national) for breaching laws of PNG

9.8.

308

10.

Department of New Ireland/New Ireland Provincial Administration

10.1 The Provincial Lands and Physical Planning Office, NIPA was not involved in the Land Investigation and ILG process on the island of New Hanover and Namatanai. 10.2 The C.O.I notes that Mr Lazarus Malesa was directed by Mr Anthony Luben, then Deputy Secretary on request by Tutuman Development Limited to assist with the ILG registration and the LIR process. It became obvious that when Mr Malesas trip was fully funded and paid by Tutuman, that he saw no need to make any contact with his provincial counterpart to assist in the land investigation on the island and at Namatanai 10.3 The lack of protocol on the part of DLPP resulted in a letter written by Mr Robinson Sirambat, Provincial Administrator to Secretary, DLPP dated 19 November 2007 seeking to revoke all the SABLs in the province. This was on the premise that the Provincial Lands Office headed by Mr Banovo was ignored and that no direction was issued for their involvement as the lead agency. The letter in part reads, It is sad to note that your Lands Officer, Mr Lazarus Malesa, failed to consult my Lands Manager as a matter of protocol when he visited the province to conduct LIRs on Mamirum, Central New Hanover, Umbukul and Danfu. 10.4 The same issue was raised by the current Manager Mr Mark Waine in the Cassava Etagon Holdings SABL hearings. This was refuted by Mr Malesa who said that he was invited to be part of the team on the land mobilization for Kaut SABL. 10.5 There was a lack of coordination between DLPP and the Office of the Provincial Administrator through the Provincial Division of Lands and Physical Planning for the land investigation to be conducted. This is one of the many trends common to the way the LIR were conducted by DLPP without any consultation with the Provincial Administration involvement.

309

11.

DEPARTMENT OF LANDS AND PHYSICAL PLANNING

11.1 The evidence of Mr Malesa as the Lands Officer conducting the Land Investigation and Report on Portion 885C is applicable to Portion 885C (Refer to Common Witnesses) In summary, the C.O.I has perused the Land Investigation Report prepared by Mr Malesa in collaboration with Mr Maraleuof Tutuman Development Limited. Land Investigation Process & Report 11.2. No Tender Form/Application was sighted and we doubt whether any such application was submitted by the Executives of the Tabut Limited to DLPP to verify the application in respect of existing State Leases. No Land Instruction Number was issued to authorize Provincial Lands Office at NIPA to conduct the land investigation and ILG social mapping awareness and registration. 11.3. The pertinent details as indicated from all the LIRs inspected generally indicate that it was rushed and did not fully capture the important aspects of majority consent of landowners for inclusion in the report. We also note that Mr Malesa travelled from village to village and at times conducted his awareness at night amongst far less than 10 people, which was not the best scenario to conduct the land investigation. He was also reported to have conducted his land awareness with selected landowners at Kavieng Hotel and not on site. 11.4. LIR was not completed with the following details either missing or left as blank Lack or no names of female clan leaders because it is a matrilineal society which casts a lot of doubt on the Declaration of Custom in relation to Land Tenure. The Declaration as to Custom in relation to Land Tenure consisted of agents names as indicated in the report Certificate as to Land Boundary is flawed because Mr Malesa was constantly travelling with his companions. Valuer Generals Requirements is incomplete and blank A person named Miskus Maraleu appears in forms attached to LIRs called Schedule of owners, status and rights to the land. Representatives for the Ahi Vonge clan are Miskus Maraleu, Mageret
310

Maraleu, Mauna Maraleu, Miskus Juniour Maraleu, Malonie Maraleu, Majorie Maraleu and Melchicedek Maraleu 11.5. The Recommendation as to Alienability is not signed by the Provincial Administrator and blank. This document will serve the basis for the verification and processing of the lease/lease back agreement. It is crucial to the SABL process and the lack of it renders the registration and issuance of the SABL title as null and void. Instrument of Lease/Lease Back Agreement 11.6 The lease/lease back Agreement was executed between the State and the Agents on behalf of the landowners on 24 th September 2007. The Minister for Lands and Physical Planning did not sign the Instrument ratifying the requisite consent under section 11 of the Land Act. This is another major flaw in the process leading to issuance of Direct Grant and registration of title pursuant to section 102 of the Land Act. Mr Martin Banovo, Manager Lands, NIPA and Lazarus Malesa, Customary Lands Officer witnessed the agreement.

12.

AGRICULTURE SUB LEASE AGREEMENT

12.1 Agriculture Sub Lease agreement signed between Ruben Peni as Chairman of Tabut, Pelick Isaiah and Passingan Kasup Ruik as Committee members of Tabut on the one part and Steven Hii as Managing director of Tutuman on the other. The agreement was witnessed by Miskus Maraleu as tenant or lawyer for tenant. 12.2. TL agreed to lease to Tutuman for 40 years Agriculture lease at an Annual rent set at K10, 000 per annum. The Commissions inquiry into other SABLs for example Lolokoru Estate SABL in West New Britain Province, New Britain Palm Oil Limited pay K50,000 per year for harvest of oil palm fruit on only 2,000 hectare of land. This is great disparity to the amount paid to Tabut Limited. TDL should review the rent paid at the current market value and increase the rental amount to K50, 000.

311

ENDORSEMENTS NOTED ON SABL PORTION 885C TITLE DOCUMENT 12.3. We note evidence of Sub-lease agreement duly registered with the Office of the Registrar of Titles. The endorsements at back of the SABL Title indicate sublease to TDL on 5/11/07, cancelled on 30/09/09, subleased again to Palma Hacienda Limited on 01/10/09. This sublease cancelled on 21/03/2011 and subleased again to TDL on 20/09/2011.

13

DEPARTMENT OF PROVINCIAL GOVERNMENT AND LOCAL LEVEL GOVERNMENT

13.1 The Land Investigation Report and the Recommendation for Alienability was not referred to the Custodian of trust Land for due diligence. There was also no Certificate of Alienability issued by the Custodian of Trust Land to allow for the registration and issuance of SABL Title to Tabut Limited.

14.

DEPARTMENT OF AGRICULTURE AND LIVESTOCK

14.1 Input by DAL has been minimal as was evident in other SABLs. The trend seems to be that DAL enthusiastically supports agriculture development plans and urges DEC to approve permits and PNGFA to approve FCAs then they disappear off the radar. In this 3 SABLs deputy secretary Daink has done just that. There does seem to be invitation put out for public hearings but there is no record of those hearings taking place. 14.2. Just as an aside, the same was done by DAL in the SABL granted to Rakubana Limited over an area known as Danfu in Namatanai. The same agriculture development plans were proposed there and DAL was full of praise. When it came to implementation of that agricultural program it seems that the PNGForest Authority Service and the Forest Service officer in NGI demanded that Tutuman implement its agriculture component.

312

14.3. As far as the New Hanover projects are concerned the COIs whirlwind tour of the site to ascertain the developments show very little evidence of cocoa tree estates. There have been landowner complaints that TDL has not kept its part of the bargain to plant cocoa and coconut and the few trees planted so far are now under thick bush as a result of neglect, though Tutuman was only facilitating the supply of cocoa seedlings to growers, who were farming their plots individually. 14.4 The C.O.I takes note of DALs involvement with the SABL Project on New Hanover. (1) A public notice on Public Hearing to be held at Tabut/Mamirum and Central New Hanover Integrated Agriculture and Forestry Project organised by DAL in consultation with PNG Forest Authority and other key Agencies of the Government in the conduct of a public hearing at New Hanover. The Meeting we note for the letter of invitation was to be held on 27th to 28th June 2009. Copies was circulated to PNG Forest Authority, DEC, Administrator, NIPA, Pedi Anis, Chairman, TDL and Tom Peni, NDAL, Kokopo.

14.5 C.O.I has not received any further information whether the awareness was conducted. The evidence by the landowners seem to suggest that there was no awareness nor any meetings conducted at New Hanover. (2) Mr Daink, Deputy Secretary (PATS), DAL advises Mr Anton Benjamin, Secretary, DAL by letter dated 14th July 2009, that proposals submitted by TDL to conduct agroforestry projects requiring large areas of forest land to be cleared for agriculture purposes was assessed by his office and they were satisfied that an approval under Form 235 Certificate for Compliance be approved.

14.6. The Commission notes that under Form 235, DAL approval must be based on a detailed development plan, evaluation report to be assessed and determined. The detailed plans were not submitted when the application was made, though volumes of Agro-Forestry Plans submitted by TDL was done after the approval was granted. This is grossly negligent, in that Form 235 is an important process whereby no grant for
313

FCA can be processed after DAL approves that the Developer has the capacity to deliver on its agricultural product with full financial backing and an implementation schedule. The C.O.I. notes that this is a common trend that has become a norm for DAL to allow investors without any agricultural background and financial capacity to be allowed to have access to prime forest area especially under SABL for logging purpose. 14.7 The C.O.I also noted that a map and description area of the project area is made showing any areas of slope in excess of 30% or other area that is unsuitable for agriculture, other land use purpose and conservation. This was a cocoa project and such information was required as a pre-requisite to grant of FCA. 14.8 C.O.I has noted that the Management of TDL has now embarked on the Rubber Plantation Development. The Document was prepared for TDL by Escol Consulting Sdn Bhd of Malaysia and is dated May 2011. The C.O.I is highly suspicious on the manner in which TDL has decided to change its argricuture approach of originally planting cocoa to rubber. This is an abuse of the process for FCA approval, which was originally planned and approved by DAL for cocoa estate. No detailed Agriculture Plan 14.9 There is no detailed plan cocoa production, processing and processing of cocoa product.. No Land Use Plan for the Area 14.10. Crop farming as business firstly based on the assessment of soil suitability and rainfall pattern which determine the potential crops and livestock for investment in a given area. There is no land use plans for the expired Mamirum TRP that could be used for the development,cocoa production, processing and export project. No oil Suitability Assessment 14.12 Soil Survey is a detail study to determine the plant nutrition requirements which would contribute towards the input costs for the agriculture investment plan .There is no soil suitability assessment report,
314

14.11.

therefore it was difficult to assess the agriculture projects and plans, input requirements for the development of agriculture development as proposed . Feasibility Study 14.13. Feasibility study should be next step to confirm technical, economics and financial conditions for the establishment commercial farming business. Based on the outcome of the feasibility study an investment plan would be drawn and submitted to the government and a developer/investor.

15.

PNG FORESTRY AUTHORITY

15.1. There have been complaints made that the PFMC is constituted by the Chairman who is related to Mr Pedi Anis the Chairman of TDL and the Deputy Chairman is said to be a part of the TDL company. 15.2 The C.O.I notes that there is no mention of FCA being granted by PNFA Board.

16

DEPARTMENT OF ENVIRONMENT AND CONSERVATION

16.1 Environment permits have been issued for Central New Ireland by DEC. It is still considering Permit for Tabut Limited and has no record for Umbukul Limited. There is no mention on DEC files as to whether public hearings and awareness were conducted to gauge views of customary land owners.

17

RECOMMENDATION

17.1. The C.O.I. recommends that SABL Portion 885C be revoked on the basis that the integrity of the Land Group Registration process and the Land Investigation process fundamental to good title was flawed and must be nullified. The recommendation is consistent with the findings based on the sworn evidence of witnesses; Affidavit and Statements of Witnesses and production of documentary evidence
315

1.

The Land Group Incorporation Registration process and awareness conducted was not transparent affecting consent of majority landgroups within Tabut Electorate of New Hanover Island

2.

The Integrity of the Land Investigation process and disregard of the ad hoc administrative process adopted by DLPP in conducting land investigation for SABL was compromised;

(1)

Failure of DLPP to fund the officers operational costs to conduct the Land Investigation and also conduct public awareness on SABL.

(2)

Tutuman Development Limited funded the operational cost for the Officer conducting the land investigation and directed and took charge of the whole process.

(3)

The Land Investigation Report was not fully completed and the details were missing.

(4)

DLPP failed to collaborate and coordinate the field report with the Provincial Administrators Office and the Provincial Lands and Physical Planning Division.

(5)

The Recommendation for Alienability was not signed by the Provincial Administrator, NIPA in the LIRs produced to the Commission; and

316

(6)

The Minister or his Delegate also did not sign the Instrument of Lease/Lease Back Agreement. This affected the requisite consent requirement pursuant to section 11 of the Land Act.

17.2. On the basis of points (5) and (6) above means that the Notice of Direct Grant, Gazettal Notice, Registration and Issuance of Title are legally deemed to be void. 17.3. The Shareholding/Directorship of Tabut Development Limited must be restructured in terms of Shareholding and Directorship within the recognised and legitimate clans/villagers of Umbukul District. 17.4. The Election of the Chairman of the company must be conducted in a transparent way and with the consent of the people through their nominated agents acting as shareholders in the company. 17.5. All Resolutions and Decisions of the Company with respect to development issues should adhere to the provisions of the Companies Act and its Regulations. 17.6 Any future development plan coinciding with customary land, Landowner Company and ILGs must be proactive and ensure on Joint Venture/Partnership Agreement with foreign investors and corporation who comply with IPA requirements and properly screened by the Department of Commerce, Industry and Trade 17.7 It is recommended that SABL issued to Tabut Ltd should be reviewed and the process of ILG registration should proceed with prober consultative programme. Dialogue should be continuing through appropriate agriculture institutions to initiate a preliminary varietal and agronomic research to develop the site specific technology. Conduct the economic and financial analysis to determine the returns to investment. Conduct social and environmental impact studies to determine the impact of this project on the standard of living of the people and conservation of land for other uses by the present and future generation. Finally identify appropriate investor with the capital and expertise to participate in the joint venture business with the customary landowners to fulfil the intentions of the Special Purpose Agriculture and Business Lease.

317

1. COI Inquiry File No 26 for Special Purpose Agricultural and Business Lease over Portion 886C Volume 17 Folio 19 Milinch: Lavongai New Ireland Province in the name of Umbukul Limited.

1.1

In accordance with the powers given to the Commissioners pursuant to Section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation.

1.2

Witnesses were called from the six government agencies involved in the issuance and operation of the Umbukul Limited SABL. These were: 2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 2.2.6 Department of New Ireland Province, (DNIP) Department of Lands and Physical Planning, (DLPP) Department of Provincial Government, (DPALLG) Affairs and Local Level

Department of Agriculture and Livestock, (DAL) Department of Environment and Conservation, (DEC) PNG Forest Authority (PNGForest Authority)

Witnesses and Summonses 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings are set out in the schedule below.
No 1 Name and Position Mr Kamsal Maraleu, Ward Councillor, Ward 12 LLG, West Lavongai, Clan Leader & Deputy Chairman of Ianga Clan Mrs Gedjolly Aron, Nursing Officer & Pages 16-22 Day 5 Date 28/10/11-SABL 40 Mirou

23-28

28/10/11-SABL 40 Mirou

318

6 7

Landowner Silau Clan, Kone Village, Umbukul Mrs Delta Passingan Nates, Office Manageress, Melrose Place, Kotkot Clan, Soson Island, Umbukul Dickson Passim Kasi, Clan Leader of Manusap Clan& Pastor of Covenant Ministry International, Umbukul Ward 12 LLG. Mr Pedi Anis, Chairman, Tutuman Development Corporation & Landowner of Umbukul Mr Pepi Kimas, OL, Former Secretary, DLPP Mr Anthony Luben, Unattached Public Servant & Former Deputy Secretary Lands Services 2002-2008, DLPP Mr Lazarus Malesa, Customary Leases Lands Officer, DLPP

28-30

28/10/11-SABL 40 Mirou

58-60

28/10/11-SABL 40 Mirou

28/10/11-SABL 40 Mirou

5 10-18 -

28/10/11-SABL 40 Mirou 05/01/12-SABL 68 MIROU (WAIGANI)

6-15

23/01/2012 SABL 79-Mirou (Waigani)

Parties represented by counsel

2.1

Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel.

2.2

The following were granted leave to be represented by counsel No representation by lawyers Nil

319

Exhibits and documents

3.1. There were nineteen (19) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1 2 3 4 5 6 Item Statement of Kamsal Mareleu Statement of Gedjolly Aron Statement of Delta Passingan Nates Statement of Dickson Kasi Statement of Charles Lamangan Schedule Of Owners, Status And Rights To The Land From Umbukul Interested Party C.O.I C.O.I C.O.I C.O.I C.O.I C.O.I Date received 28/10/11 28/10/11 28/10/11 28/10/11 28/10/11 24/01/12 Exhibit Number UL 1 UL 2 UL 3 UL 4 UL 5 LPM1

LIR Report For Umbukul Prepared By Mr Lazarus Paul Malesa

C.O.I

24/01/12

LPM2

Letter Dated 5th May 2006 From Provincial Lands Manager, Mr M Banovo, New Ireland Province Notice Of Direct Grant

C.O.I

24/01/12

LMP3

Letter By Mr Robinson Sirambat, Provincial Administrator To The Secretary, Department Of

C.O.I

24/01/12

LMP4

320

Lands, Dated 19 November 2007, Revocation Of Rakubana Development Propriety Limited, Tabut, Umbukul And Central New Hanover As Registered Entity

10

Land Investigation Report for Milinch of Lavongai Applicant Manag Katakesep, Guna Nuna Landgroup Land Investigation Report for Milinch of Lavongai Applicant Aihi Venge Clan Working File Folder for Central New Hanover Consisting of 11 Land Investigation Reports Working File Folder for Tabut Consisting of 11 Land Investigation Reports Working File Folder for Umbukul Consisting of 18 Land Investigation Reports Working File Folder for Danfu Consisting of 15 Land Investigation Reports The Brief Report of the Process Used to Register The SABL For Portion 885C, 886C, 887C and 871C Danfu

C.O.I

24/10/12

LMP 5

11

C.O.I

24/10/12

LMP 6

12

C.O.I

24/01/12

LPM 8

13

C.O.I

24/01/12

LPM 9

14

C.O.I

24/01/12

LPM 10

15

C.O.I

24/01/12

LPM 11

16

C.O.I

24/01/12

LPM 12

321

17

An Outline of a Field Trip to New Ireland Province in 2007 by Mr Malesa Appendix G Field Trip Report By Mr Lazarus Paul Malesa

C.O.I

24/01/12

LPM 13

19

C.O.I

23/01/12

CE9

4. 4.1.

Timeline of events of note surrounding Umbukul Limited SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
Milestone Dated of Completion/G rant/Issue Execution 2 December 1999 Proponent/Applicant Respondent Entity/Respondent

No

Incorporation of Tutuman Development Limited (TDL) Incorporation of Tutuman Integrated Products Limited Incorporation of Umbukul Ltd Land Investigation Report (Incomplete)

Tutuman Development Ltd

TDL/Umbukul Ltd

30 August 2007 30 August 2007 17th May 2007

TDL

TDL/ Umbukul Ltd

3 4 5

Umbukul Umbukul Limited State/UL

Umbukul/TDL Umbukul/State UL

Notice Under Section 10th October 11 (Signed by Pepi 2007 Kimas) Notice of Direct Grant (s102)-Signed by Pepi Kimas Gazettal Notice G161 on SABL title for Portion 886C SABL Lease to 16 October 2007 17th October, 2007 29th October

State/UL

UL

UL

UL/TDL

UL

UL/TDL

322

Umbukul Limited 9 Request by TDL to DLPP for Cancelation of Sublease Agreement with TL/Umbukul/Central New Hanover (Letter by Mr Miskus Mareleu, Company Lawyer) Agricultural Sublease Agreement between TDL and UL (Stamp Duty Endorsement)-99 years

2007 29 September 2009 TDL/State TDL

10

29 September 2009

TDL/UL/State

TDL/UL

FINDINGS 4.2 The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Umbukul Limited SABL.

5. 5.1.

Umbukul Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette No. G161 dated 17th October 2007 for Portion 886CLavongai. The land is described as Umbukul.The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 16th October 2007 by the Department of Lands and Physical Planning to the holder Umbukul LimitedSABL(UL). Mr Pepi Kimas OL, signed as delegate of the Minister for Lands. The detail of the SABL is shown below:

323

Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease

Portion 886C 23/468 Umbukul Limited 16th October 2007 Ninety-nine (99) years 25,108.00 hectares

6. 6.1

Background There was no mention of boundaries and distances involved in the material perused but the lease is contiguous to Central New Hanover Limited and Tabut Limited SABLs.

IPA COMPANIES REGISTRY RECORDS

7. 7.1.

UMBUKUL LIMITED According to the IPA Extracts dated 2nd August 2011, Umbukul Limited was incorporated on30 August 2007 and is currently operating. The Company Number is 1-54388.The principal place of business in Section 10 Allotment 6, Anir Street, Kavieng. The issued ordinary shares of the company comprise 22. The listed shareholders holding 1 ordinary share in ULarePassingan Anis, Manuel Emos, Tusa Eremas, Kulepmu Gedion, Tugak Gira, Makago Isanah, Moris Japhet, Nipal Kepas, Enoch Konesikei, Iguatumaip Kunas, John Lapankun, Silas Lasaro, Joseph Nomba, Reuben Peni, Septe Sakias, John Sek, Isaiah Slavun, Akuila Sosonga, Isaiah Tangik, Kepas Temerem, Robin Tonaup and Temevoi Toropi. The 22 listed shareholders address is the same as the primcipal plave of business. The seven (7) Directors are Reuben Peni, Tugak Gira, Passingan Anis, Makago Isanah, Akuila Sosongo, Moris Japhet and Kepas Temerem The Company Secretary to ULis named as Miskus Maraleu.

7.2

7.3 7.4

324

8 8.1

LANDOWNERS OBJECTIONS TO THE SABL PORTION 886C Landowners openly expressed their anger over what the C.O.I found consistent with New Hanover to be lack of awareness and fraudulent processing of the ILG registration and SABL processing of their land within the SABL Project area. The following witnesses representing the different clans within the Umbukul LLG were called to confirm the general dissent against the umbrella landowner company and the wide spread abuse in the SABL which affected their habitation and general livelihood. These witnesses including two (2) female landowners who gave evidence to the inquiry.

8.2

The Evidence of Mrs Gedjolly 8.3. Mrs Gedjolly from the Silau clan was approached by her relative Reuben Peni and Kepas Temeran at her house in the evening to obtain her signatures over what they said was for land registration. She signed the documents only to learn as a result of the inquiry that she signed consent to allow her land to be converted to SABL. Mrs Nates expressed concern over the future of her children, the lack of awareness and consultation between the parties.

The Evidence of Mr Kasi 8.4 Mr Dickson Kasiinsisted and reinforced the views of the majority for more awareness on the SABL process demanding the return of the SABL land back to his people of Manusap Clan at Metetui Village This situation could not have occurred had the government agencies entrusted with the legal and statutory duties ensured that the process of acquiring customary land was done professionally with the illiterate, unsophisticated rural villager better informed on the disadvantages, advantages and the impact such development will have on their lives especially in the most basic subsistence life they enjoy. That is the most important duty that is expected from public servants and this must not be compromised for example payment of allowances and other expenses by the benefactor of the project. This continues to occur where the vast majority of people live in subsistence economy and their disability over understanding a concept
325

so foreign to then requires patience and time to coordinate the land investigation process properly.

The Evidence of Mr Kamsal Maraleu 8.5. He was the young brother of Miskus Maraleu. He was honest and played a significant role on behalf of Tutuman through his brother and Mr Pedi Annis, Chairman of Tutuman to ensure that consent was obtained from the landowners resulting in the sub lease agreement. He was instrumental in assisting the Malaysians in bringing machinery to Maitiea where the local landowners set up a blockade. He only became aware that the people no longer owned the land, through a conversation between Pedi Annis and two clansman namely Reuben Peni and Kepas Temeren on the signing of the consent form that you just sold your land!.

8.6.

In admitting his mistakes to his people and his resolve to return the land back to his people, he freely volunteered the information to the inquiry. After he gave evidence he was assaulted by his nephew. The C.O.I denounces such action and at the time of the incident it was reported to police. Mr Maraleu had assisted the C.O.I on the site visit to New Hanover. We refer to the extract to his statement to the Inquiry which sets out the behaviour of Tutuman in its dealings with the people at New Hanover and Namatanai, Thank you. I, Kamsal Maraleu, brother of Miskus Maraleu, lawyer; uncle to Pedi Anis, Chairman of Tutuman Development. I came and surrender myself to the Commission of Inquiry because I have a heart for my people. My statement is short in this paper which is now in front of you. A: I would like to tell the Commissioner that I was there during all these preparation. Dominance, Tutuman, Joinland and another company they are one, with different names but they are same people. They used me because I am a leader and I have influence on the island. The way they went about all these was not right. I got the machineries from
326

Dominance to start Tutuman Limited, the new company, and we went and operated at Kaut in Central New Ireland and Namatanai, later our plan was to go to the island because the island had plenty of trees. A: New Hanover Island. There are many educated people from New Hanover Island. That is why handpicked some of these people to pursue this idea. We selected these people from the three areas. We selected people from interested clans who would be able to follow us through with this idea. We did not follow the right way. I landed the machinery like my other brother from Central New Hanover. We were forced to make sure the machinery must go. When I landed the machine there was dispute. Myself and David, a Malaysian, manager went to seek advice from lawyer, Miskus Maraleu, to find out what we will do; the machine will go or what. He replied that the machine had to go and the Police must be present. The signing of every documents, I used to grease the people to sign it in the interest of the company. Q: Sorry witness, could you just elaborate. You said, you grease. How did you grease them? Did you promise them anything? Just tell the Commissioner. I used to tell them to sign the paper because there will be some changes to help each of the families. That is what I thought would happen. But these evil people have hidden agendas. The signing of the permits, and to organize the director to talk to the PA and landowners I organized them. I did not put it on paper because we are family. One day during my good times I signed the last document to transfer a permit to Palma Hacienda. Miskus was there that time in the office, Pedi Anis, Deo, Mr Hiis son, and Mrs Regina Hii. When I completed signing, Pedi shook my hands and said, You have sold your land. They were all happy. After this they paid me K100 for the paperwork I had done. I was troubled and I cried. I cry because I see the future of
327

A:

the children, grandchildren will not be good. So I got up and left everything. I did not cry for money, I went out because I have a heart for my people. I started to do some work to return the land back to our people. After three months away from work I heard that they had received a large amount of money; US$1.6 million. They got the money from the sales of Portion 887, Central New Hanover and 886C, Umbukul. I am from Umbukul. . I stand firm to tell this Commission like this that these three Malaysians, Mr Sisi and Mr Deo and their workers that they must not return again to New Ireland and also to New Hanover and this lease - leaseback will have to stop. Get rid of the title from that company and the other companies that are on the island will have to leave the island. And whatever outstanding that they did not pay for in rental they have to pay up and they have to finish from working or stop working and the company Tutuman will to stop, cease operation . (Refer to pages 17-19 of Transcript) 8.7. He also highlighted specific actions taken by Tutuman in its dealings with the SABL and that all the decisions undertaken by Umbukul Ltd was done by the Directors of the Company who attended the office of Tutuman at Kavieng. There was no consultation and decisions taken by Umbukul with the clan back at the village and the views of the landowners/villagers/clans were not represented. Everything was conducted in a veil of secrecy with the handpicked Shareholders/Directors of the company who at all times were Tutumans cronies. This equally applied to landowner companies Rakubana, Tabut and Central New Hanover His explanation of the thick development plan by Tutuman to grown cocoa, coconut oil and oil palm was for interest in the volume of timber.

8.8

328

The Evidence of Mr Lamangan 8.9 Mr Charles Lamangan described as fraudulent and criminal the consent obtained from traditional landowners to register ILGs in an area that was previously surveyed as the now expired Mamirum TRP area. He said the method of converting the expired TRP area into the SABL was to fast track the SABL process and under that arrangement acquires accessibility to the entire island of New Hanover. In his statement to the Commission he again reinforced the general feelings of the people on Tutumans involvement in the registration of ILG and Land Investigation process as fraudulent and the use of consultants that either were compromised or had potential conflict of interest.

8.10 The Commission finds that Tutuman appeared to have compromised its independent role as investor and Developer by personal and direct involvement in the ILG registration and the LIR process. We note that this conflict of interest did in fact continue with the involvement of the DLPP officer who was paid by Tutuman to undertake the LIR at its direction. That element of conflict does amount to gross abuse of the process and interference with public officials in the discharge of their statutory functions without fear and favour. This is in fact the worst kind of interference by a Developer whose shareholders/Directors are also landowners themselves.

9 9.1

Department of New Ireland/New Ireland Provincial Administration The Provincial Lands and Physical Planning Office, NIPA was not involved in the Land Investigation and ILG process on the island of New Hanover and Namatanai. The C.O.I notes that Mr Lazarus Malesa was directed by Mr Anthony Luben, then Deputy Secretary on request by Tutuman Development Limited to assist with the ILG registration and the LIR process. It became obvious that when Mr Malesas trip was fully funded and paid by Tutuman, that he saw no need to make any contact with his provincial counterpart to assist in the land investigation on the island and at Namatanai

9.2

329

9.3

The lack of protocol on the part of DLPP resulted in a letter written by Mr Robinson Sirambat, Provincial Administrator to Secretary, DLPP dated 19 November 2007 seeking to revoke all the SABLs in the province. This was on the premise that the Provincial Lands Office headed by Mr Banovo was ignored and that no direction was issued for their involvement as the lead agency. The letter in part reads, It is sad to note that your Lands Officer, Mr Lazarus Malesa, failed to consult my Lands Manager as a matter of protocol when he visited the province to conduct LIRs on Mamirum, Central New Hanover, Umbukul and Danfu. The same issue was raised by the current Manager Mr Mark Waine in the Cassava Etagon Holdings SABL hearings. This was refuted by Mr Malesa who said that he was invited to be part of the team on the land mobilization for Kaut SABL. There was a lack of coordination between DLPP and the Office of the Provincial Administrator through the Provincial Division of Lands and Physical Planning for the land investigation to be conducted. This is one of the many trends common to the way the LIR were conducted by DLPP without consulting the Provincial Administration for its assistance and involvement.

9.4

9.5

10.

DEPARTMENT OF LANDS AND PHYSICAL PLANNING

10.1 The evidence of Mr Malesa as the Lands Officer conducting the Land Investigation and Report on Portion 886C is applicable to other Portions (Refer to Common Witnesses) In summary, the C.O.I has perused the Land Investigation Report prepared by Mr Malesa in collaboration with Mr Maraleu of Tutuman Development Limited. Land Investigation Process & Report 10.2. No Tender Form/Application was sighted and we doubt whether any such application was submitted by the Executives of the Umbukul Limited to DLPP to verify the application in respect of existing State Leases. No Land Instruction Number was issued to authorize Provincial Lands Office at NIPA to conduct the land investigation and ILG social mapping awareness and registration.
330

10.3. The pertinent details as indicated from all the LIRs inspected generally indicate that it was rushed and did not fully capture the important aspects of majority consent of landowners for inclusion in the report. We also note that Mr Malesa travelled from village to village and at times conducted his awareness at night amongst far less than 10 people, which was not the best scenario to conduct the land investigation. He was also reported to have conducted his land awareness with selected landowners at Kavieng Hotel and not on site. 10.4. LIR was not completed Lack or no names of female clan leaders because it is a matrilineal society which casts a lot of doubt on the Declaration of Custom in relation to Land Tenure. The Declaration as to Custom in relation to Land Tenure consisted of agents names as indicated in the report Certificate as to Land Boundary is flawed because Mr Malesa was constantly travelling with his companions. Valuer Generals Requirements is incomplete and blank A person named Miskus Maraleu appears in forms attached to LIRs called Schedule of owners, status and rights to the land. Representatives for the Ahi Vonge clan are Miskus Maraleu, Mageret Maraleu, Mauna Maraleu, Miskus Juniour Maraleu, Malonie Maraleu, Majorie Maraleu and Melchicedek Maraleu 10.5. The Recommendation as to Alienability was not signed by the Provincial Administrator and was blank. This document will serve the basis for the verification and processing of the lease/lease back agreement. It is crucial to the SABL process and the lack of it renders the registration and issuance of the SABL title as null and void. Instrument of Lease/Lease Back Agreement 10.6. No lease/lease back Agreement was sighted by the C.O.I and executed between the State and the Agents on behalf of the landowners on 24 th September 2007. We are unable to ascertain and verify if such an Agreement exists. If there is in fact no such documentation, then the statutory requirements under section 11 of the Land Act is highly questionable.
331

10.7. On 16th October 2007, Notice of Direct Grant was signed by Pepi Kimas dated and the Owners copy of lease shows that Lease to Umbukul was signed on the 29th/10/2007 10.8. This whole process of registration without compliance of the statutory requirement of the lease/lease back agreement is flawed and is subject to nullification. DLPP is unable to monitor and enforce irregularities basically for the reason that there is no regulatory process governing the procedure and process of SABLs apart from ad-hoc administrative process accepted by DLPP which has been abused in all the SABLs we have evaluated and audited.

11.

AGRICULTURE SUB LEASE AGREEMENT

11.1 Agriculture Sub Lease agreement signed between Nipal Kepas as Chairman of Umbukul, Benvan Rovi and Passingan Anis as Committee members of Umbukul on the one part and Steven Hii as Managing director of Tutuman on the other. The agreement was witnessed by Miskus Maraleu as tenant or lawyer for tenant. 11.2. UL agreed to lease to Tutuman for 40 years at the annual rent set at K10, 000/annum. Other SABLs for eg Lolokoru estate in WNBP, NBPOL pay K50, 000/yr for harvest of oil palm fruit on only 2,000 ha of land. ENDORSEMENTS NOTED ON SABL PORTION 885C TITLE DOCUMENT 11.3. We note evidence of Sub-lease agreement duly registered with the Office of the Registrar of Titles. The endorsements at back of the SABL Title indicate sublease to UL on 5/11/07, cancelled on 30/09/09, subleased again to Palma Hacienda Limited on 02/10/09. This sublease cancelled on 21/03/2011 and subleased again to TDL on 22/03/2011.

332

12.

DEPARTMENT OF PROVINCIAL GOVERNMENT AND LOCAL LEVEL GOVERNMENT

12.1. The Land Investigation Report and the Recommendation for Alienability was not referred to the Custodian of trust Land for due diligence. There was also no Certificate of Alienability issued by the Custodian of Trust Land to allow for the registration and issuance of SABL Title to Tabut Limited.

13.

DEPARTMENT OF AGRICULTURE AND LIVESTOCK

13.1 Input by DAL has been minimal as was evident in other SABLs. The trend seems to be that DAL enthusiastically supports agriculture development plans and urges DEC to approve permits and PNGFA to approve FCAs then they disappear off the radar. In this 3 SABLs Deputy Secretary Daink has done just that. There does seem to be invitation put out for public hearings but there is no record of those hearings taking place. 13.2 The C.O.I takes note of DALs involvement with the SABL Project on New Hanover. 1) A public notice on Public Hearing to be held at Tabut/Mamirum and Central New Hanover Integrated Agriculture and Forestry Project organised by DAL in consultation with PNG Forest Authority and other key Agencies of the Government in the conduct of a public hearing at New Hanover. The Meeting we note for the letter of invitation was to be held on 27 th to 28th June 2009. Copies of that Minute were circulated to PNG Forest Authority, DEC, Administrator, NIPA, Pedi Anis, Chairman, TDL and Tom Peni, NDAL, Kokopo. C.O.I has not received any further information whether the awareness was conducted. The evidence by the landowners seems to suggest that there was no awareness nor any meetings conducted at New Hanover. 2) Mr Daink, Deputy Secretary (PATS), DAL advises Mr Anton Benjamin, Secretary, DAL by letter dated 14th July 2009, that
333

proposals submitted by TDL to conduct agro-forestry projects requiring large areas of forest land to be cleared for agriculture purposes was assessed by his office and they were satisfied that an approval under Form 235 Certificate for Compliance be approved. 3. The Commission notes that under Form 235, DAL approval must be based on a detailed development plan, evaluation report to be assessed and determined. The detailed plans were not submitted when the application was made, though volumes of Agro-Forestry Plans submitted by TDL was done after the approval was granted. This is grossly negligent, in that Form 235 is an important process whereby no grant for FCA can be processed after DAL approves that the Developer has the capacity to deliver on its agricultural product with full financial backing and an implementation schedule. The C.O.I. notes that this is a common trend that has become a norm for DAL to allow investors without any agricultural background and financial capacity to be allowed to have access to prime forest area especially under SABL for logging purpose. The C.O.I also noted that a map and description area of the project area is made showing any areas of slope in excess of 30% or other area that is unsuitable for agriculture, other land use purpose and conservation. This was a cocoa project and such information was required as a pre-requisite to grant of FCA. 4. C.O.I has noted that the Management of TDL has now embarked on the Rubber Plantation Development. The Document was prepared for TDL by Escol Consulting Sdn Bhd of Malaysia and is dated May 2011. The C.O.I is highly suspicious on the manner in which TDL has decided to change its argricuture approach of originally planting cocoa to rubber. This is an abuse of the process for FCA approval, which was originally planned and approved by DAL for cocoa estate.

334

No detailed Agriculture Plan 13.3 There is no detailed plan cocoa production, processing and processing of cocoa product.. No Land Use Plan for the Area 13.4. Crop farming as business firstly based on the assessment of soil suitability and rainfall pattern which determine the potential crops and livestock for investment in a given area. 13.5. There is no land use plans for the expired Mamirum TRP that could be used for the development,cocoa production, processing and export project. No oil Suitability Assessment 13.6 Soil Survey is a detail study to determine the plant nutrition requirements which would contribute towards the input costs for the agriculture investment plan .There is no soil suitability assessment report therefore it is difficult to assess the agriculture projects and plans, input requirements for the development of agriculture development as proposed . Feasibility Study 13.7 Feasibility study should be next step to confirm technical, economics and financial conditions for the establishment commercial farming business. Based on the outcome of the feasibility study an investment plan would be drawn and submitted to the government and a developer/investor.

14

PNG FORESTRY AUTHORITY

14.1 The C.O.I notes that there is no mention of FCA being granted by PNG Forest AuthorityBoard.No mention of FCA being granted by PNG Forest AuthorityBoard.

335

15

DEPARTMENT OF ENVIRONMENT AND CONSERVATION

15.1 Environment permits have been issued for Central New Ireland by DEC. It is still considering Permit for Tabut Limited and has no record for Umbukul Limited. There is no mention on DEC files as to whether public hearings and awareness were conducted to gauge views of customary land owners.

16

RECOMMENDATION

16.1 The C.O.I. recommends that SABL Portion 886C be revoked on the basis that the integrity of the Land Group Registration process and the Land Investigation process fundamental to good title was flawed and must be nullified. The recommendation is consistent with the findings based on the sworn evidence of witnesses; Affidavit and Statements of Witnesses and production of documentary evidence 16.1.1. The Land Group Incorporation Registration process and awareness conducted was not transparent affecting consent of majority landgroups within Umbukul Electorate of New Hanover Island The Integrity of the Land Investigation process and disregard of the ad hoc administrative process adopted by DLPP in conducting land investigation for SABL was compromised; Failure of DLPP to fund the officers operational costs to conduct the Land Investigation and also conduct public awareness on SABL. Tutuman Development Limited funded the operational cost for the Officer conducting the land investigation and directed and took charge of the whole process. The Land Investigation Report was not fully completed and the details were missing.

16.1.2.

16.1.3.

16.1.4.

16.1.5

336

16.1.6.

DLPP failed to collaborate and coordinate the field report with the Provincial Administrators Office and the Provincial Lands and Physical Planning Division. The Recommendation for Alienability was not signed by the Provincial Administrator, NIPA in the LIRs produced to the Commission; and The Minister or his Delegate also did not sign the Instrument of Lease/Lease Back Agreement. This affected the requisite consent requirement pursuant to section 11 of the Land Act. On the basis of points (16.1.7) and (16.1.8) above means that the Notice of Direct Grant, Gazettal Notice, Registration and Issuance of Title are legally deemed to be void.

16.1.7.

16.1.8.

16.2 The Shareholding/Directorship of Umbukul Limited must be restructured in terms of Shareholding and Directorship within the recognised and legitimate clans/villagers of Umbukul District. 16.3 The Election of the Chairman of the company must be conducted in a transparent way and with the consent of the people through their nominated agents acting as shareholders in the company. 16.4 All Resolutions and Decisions of the Company with respect to development issues should adhere to the provisions of the Companies Act and its Regulations. 16.5. Any future development plan coinciding with customary land, Landowner Company and ILGs must be proactive and ensure on Joint Venture/Partnership Agreement with foreign investors and corporation who comply with IPA requirements and properly screened by the Department of Commerce, Industry and Trade. 16.6. It is recommended that SAB&L issued to Umbukul Ltd should be reviewed and the process of ILG registration should proceed with prober consultative programme. Dialogue should be continuing through appropriate agriculture institutions to initiate a preliminary varietal and agronomic research to develop the site specific technology. Conduct the economic and financial analysis to determine the returns to investment. Conduct social and environmental impact studies to determine the impact
337

of this project on the standard of living of the people and conservation of land for other uses by the present and future generation. Finally identify appropriate investor with the capital and expertise to participate in the joint venture business with the customary landowners to fulfil the intentions of the Special Purpose Agriculture and Business Lease.

338

1 COI Inquiry File No 27 for Special Purpose Agricultural and Business Lease over Portion 887C Volume 17 Folio 013 Milinch: Lavongai New Ireland Province in the name of Central New Hanover Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to Section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the Central New Hanover Limited SABL. These were: 1.2.1 Department of New Ireland Province, (DNIP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGForest Authority) Witnesses and Summonses 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings are set out in the schedule below.

339

No 1 2

Name and Position Felman Isaac, Landowner, Konematirik village Ismael Passingan, Electoral Officer, Landowner, Nuslik Village, Central New Hanover Nelson Posikai, Landowner, Inungulus Siabun Clan Patikin Village, CNH Elijah Sakias, Landowner, Sugun Village Darius Kanai, Patipai Village, North Lavongai, Ward 3 Paul Pira, Teacher, Lavongai Primary School, Metamaram Village Benjamin Wenmot, Nanilara Village Sition Passingan, Private Lawyer & Representative of the Central New Hanover Forum Mr Pedi Anis, Landowner, Umbukul Village, Chairman of Tutuman Development Ltd Mr Miskus Maraleu Corporate Lawyer, Tutuman, Landowner, Umbukul

Pages 10-16 16-21

Day 4 4

Date 27/10/11-SABL 39 MIROU 27/10/11-SABL 39 MIROU

22-25

27/10/11-SABL 39 MIROU

4 5

22-25 28-29

4 4

27/10/11-SABL 39 MIROU 27/10/11-SABL 39 MIROU

66-69

28/10/11-SABL 40 Mirou

7 8

70-72 14-21

28/10/11-SABL 40 Mirou 04/11/11-SABL 43-MIROU

8-54

03/11/11-SABL 42 MIROU

2-14 29-67

04/11/11-SABL 43 MIROU 04/11/11-SABL MIROU

10

11 12

Mrs Janet Rauveve, Director, TDL & Forester, Francis Daink, Deputy Secretary, (PATS), DAL

67-79 02-15

04/11/11=SABL MIROU 11/01/12 SABL 77- MIROU

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13

Mr Anthony Luben, Unattached Public Servant & Former Deputy Secretary Lands Services 2002-2008, DLPP Mr Pepi Kimas, Former Secretary, DLPP Mr Lazarus Malesa, Customary Leases Lands Officer, DLPP

10-18

05/01/12-SABL 68 MIROU (WAIGANI)

14 15

3-52 6-15

18/01/12-SABL 77-WAIGANI 23/01/2012 SABL 79-Mirou (Waigani)

2. 2.1.

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel.

2.2

The following were granted leave to be represented by counsel

No representation by lawyers Nil

3. 3.1.

Exhibits and documents There were twenty-one (21) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.

341

No 1 2 3 4 5 6

Item Statement of Felman Isaac Statement of Nelson Posikai Statement of Elizah Sakias Statement ofDarius Kanai Statement of Paul Pira Schedule Of Owners, Status And Rights To The Land From Umbukul

Interested Party C.O.I C.O.I C.O.I C.O.I C.O.I C.O.I

Date received 27/10/11 27/10/11 27/10/11 27/10/11 27/10/11 24/01/12

Exhibit Number CNH 1 CNH 2 CNH 3 CNH 4 CNH 5 LPM1

LIR Report For Umbukul Prepared By Mr Lazarus Paul Malesa

C.O.I

24/01/12

LPM2

Letter Dated 5th May 2006 From Provincial Lands Manager, Mr M Banovo, New Ireland Province Notice Of Direct Grant

C.O.I

24/01/12

LMP3

Letter By Mr Robinson Sirambat, Provincial Administrator To The Secretary, Department Of Lands, Dated 19 November 2007, Revocation Of Rakubana Development Propriety Limited, Tabut, Umbukul And Central New Hanover As

C.O.I

24/01/12

LMP4

342

Registered Entity

10

Land Investigation Report for Milinch of Lavongai Applicant Manag Katakesep, Guna Nuna Landgroup Land Investigation Report for Milinch of Lavongai Applicant Aihi Venge Clan Working File Folder for Central New Hanover Consisting of 11 Land Investigation Reports Working File Folder for Tabut Consisting of 11 Land Investigation Reports Working File Folder for Umbukul Consisting of 18 Land Investigation Reports Working File Folder for Danfu Consisting of 15 Land Investigation Reports The Brief Report of the Process Used to Register The SABL For Portion 885C, 886C, 887C and 871C Danfu An Outline of a Field Trip to New Ireland Province in 2007 by Mr Malesa Appendix G Field Trip Report By Mr Lazarus Paul Malesa

C.O.I

24/10/12

LMP 5

11

C.O.I

24/10/12

LMP 6

12

C.O.I

24/01/12

LPM 8

13

C.O.I

24/01/12

LPM 9

14

C.O.I

24/01/12

LPM 10

15

C.O.I

24/01/12

LPM 11

16

C.O.I

24/01/12

LPM 12

17

C.O.I

24/01/12

LPM 13

19

C.O.I

23/01/12

CE9

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20

Report on Status of Forest Clearance Authority Agriculture Projects by Mr Francis Daink, DAL Affidavit of Sition Passingan including Annexures A, B & C and Report of TDL dated October 2010.

C.O.I

11/01/12

FD2

21

C.O.I

04/11/11

SP(CNH) 1

4.

Timeline of events of note surrounding Central New Hanover

Limited SABL 4.1. The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution 2 December 1999 30 August 2007 30 August 2007 17th May 2007 28 September 2007 10th October 2007 16 October 2007 17th October,
344

Proponent/Applicant

Respondent Entity/Respondent TDL/CNHL

2 3 4 5

5 6 7

Incorporation of Tutuman Development Limited (TDL) Incorporation of Tutuman Integrated Products Limited Incorporation of Central New Hanover Ltd Land Investigation Report (Incomplete) Lease Lease Back Agreement (Not signed by Minister or Delegate) Notice Under Section 11 (Signed by Pepi Kimas) Notice of Direct Grant (s102)-Signed by Pepi Kimas Gazettal Notice

Tutuman Development Ltd TDL CNHL CNHL CNHL/State

TDL/ CNHL CNHL/TDL CNHL/State CNHL

State/CNHL State/ CNHL CNHL

CNHL CNHL CNHL/TDL

8 9

10

G161 on SABL title for Portion 886C SABL Lease to Umbukul Limited Request by TDL to DLPP for Cancelation of Sublease Agreement with TL/Umbukul/Central New Hanover (Letter by Mr Miskus Maraleu, Company Lawyer) Agricultural Sublease Agreement between TDL and CNHL (Stamp Duty Endorsement)-99 years

2007 29th October 2007 29 September 2009 CNHL TDL/State CNHL/TDL TDL

29 September 2009

TDL/CNHL/State

TDL/CNHL

FINDINGS 4.2 The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Central New Hanover Limited.

5 5.1

Central New Hanover Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette No. G161 dated 17th October 2007 for Portion 887CLavongai. The land is described as Central New Hanover.The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 29th October 2007 by the Department of Lands and Physical Planning to the holder Central New Hanover LimitedSABL(CNHL). Mr Pepi Kimas OL signed as delegate of the Minister for Lands. The detail of the SABL is shown below:

Legal Description Registered Survey Plan Catalogue No SABL Holder

Portion 887C 23/469 Central New Hanover Limited

345

Date of Registration of Lease Period of Lease Land area of lease

16th October 2007 Ninety-nine (99) years 56, 592.00 hectares

6 6.1.

Background According to submissions made by Tutuman Development Limited the land on which they intend to develop agro forestry project is located approximately 50 kilometres from Kavieng town. Its boundaries commence on the North Coast of New Hanover Island at the mouth of the Min River which is to be found at the eastern boundary of the former Mamirum TRP. The border continues south westerly up the Min River for 12.5 kilometres and then runs 3 kms up the Nivau river turning westerly along this river for 6.3 kms before reaching the Neissung River. From there the project area goes for another 5 kms southwards to the Tirpitz range.

IPA COMPANIES REGISTRY RECORDS 7. 7.1. CENTRAL NEW HANOVER LIMITED According to the IPA Extracts dated 2nd August 2011, Central New Hanover Limited was incorporated on30 August 2007 and is currently operating. The Company Number is 1-60626. The issued ordinary shares of the company comprise 26 listed shareholders holding 1 ordinary share in CNHL namely William Alfred, Luis Alik, Patrick Kanai, John Lapanbot, Sirimui Laun, Nelson Tauvungum, Silas Tigimat, Lasiu Turas, John Vani, Kilkil Nguma ILG, Ungules Siavun ILG, Malapat Tien ILG, Sivigiluai Silau ILG, Manangkata Kesep ILG, Tonminulis ILG, Tusisokovut ILG, Potpot ILG, Kulivuka Vuka ILG, Votaimos Yanga ILG, Igua Sokon Manilava ILG, Vengevenge Ikavi ILG, Meterakingliang ILG, Patilasing ILG, Pativalang ILG, Lamantong ILG, Pogol ILG, Tikingang ILG, Neikeputuk ILG, Bangia-Singinagaung ILG, Vutenguma ILG, Kumala ILG, Paluten Sivatmasung ILG, Neimatas ILG, Tukulikaiu ILG, Matamani ILG and
346

7.2.

Lapansapirik ILG. The shareholders address is Section 10 Allotment 6 Anir Street, Kavieng, NIP which is the principal place of business. 7.3. 7.4. The seven (7) Directors are Luis Alik, Patrick Kanai, Nelson Tauvungum, Lasiu Turas, William Alfred, Silas Tigimat and Sirimui Laun. The Secretary to CNHL isDominic Siavai.

8. 8.1

LANDOWNERS OBJECTIONS TO THE ILG REGISTRATION AND SABL PORTION 887C PROJECT Landowners openly expressed their anger over what they termed as lack of awareness and fraudulent processing of the ILG registration process including the inclusion of their land within the SABL Project area.

THE LANDING OF HEAVY MACHINERY AND INCIDENT AT KONOMATALIK VILLAGE 8.2. This incident is well publicised and occurred at Konomatalik village where heavy equipment and machinery belonging to GROMAX (a foreign Malaysian logging company), the subcontractor of Tutuman Development Limited entered Isabel Bay. According to Mr Sition Passingan, a private lawyer and former Acting Judge of the National Court and lawyer for the Central New Hanover Landowner Forum, wrote a letter of demand for payment of charges to Mr Pedi Anis on this issue on 26th May 2010. The letter in part reads, On the 12th May 2010 your tugboat and pontoon transporting your heavy logging machinery entered the Isabel Passage through Tsoi Island and landed at Konomatalik point. From the 12th to 15th your vessels anchored there and sailed to and fro until 15th May (total of 41/2 days) The coastal village affected by the operation was Puas, Metemin, Patiyagaga, Volpua, Sulava, Metiai, Patipai and Vukavuka, including surrounding villages of Soi, Lukus, Luslik, Unusa and Uwalik. Mr Passingan provided to the C.O.I. affidavit evidence to emphasise the continuing concerns and opposition to the operation and conduct of the developer company, the environmental damage and pollution to the sea and ocean and the seashore.

8.3.

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Tutuman Development Limited landed suddenly on the shore of Konematalik village on or about the morning of Wednesday 12 May 2010 and between 12th and 13 May 2010 all machineries landed at Konematalik proposed log pond with no proper consultation and awareness. My family and I were at Patipai village for Sunday Worship. Moved by the disturbance and widespread dissatisfaction over the lack of consultations with the customary land owners, we took action to organize Konematalik landowners to stop the landing and operations. The village magistrate at Patipai was used for this purpose. (6) During the first few days, there were divisions within the families, clan members, clans and communities. We returned to Soia Island that Sunday and organize our people and people of the neighbouring island of Nukus. We were concerned about the impacts of such operations to our environment and livelihood. We took our stand to oppose the Tutuman Development operations on our mainland which is Central New Hanover. On Monday 17th Day of May 2010, we made our first visit to the landing site at Konematalik. We witnessed the initial destruction to the mangroves, some of the sacred sites and peoples houses. Early noticeable effects of the operation was the destruction to the high school, the water supply at Konematalik. Then shortly after we organized and formed a Central New Hanover Landowners Forum. The main purposes of the Forum were; To oppose the logging operations by Tutuman Development Limited and its partners; and To oppose, investigate and have the 99 year lease revoked. (Refer to page 18 of SABL 34-Mirou 04/11/11) 8.4. Evidence insupport came fromMr Felman Isaac who was a member of the landowner group that protested the landingof heavy machinery by setting up customary blockade (planting gorgor) at Konomatalik Point prohibiting entry onto the beach and the land. In spite of opposition, the company landed heavy machinery and equipment and commenced
348

(7)

building the log pound and constructing road to Taskul and the project area without PNG Forest Authority FCA. There was a complete disregard for sacred places, reefs, hunting and fishing areas. 8.5. Tutuman hired Task Force policeman from Tomaringa Barracks, Kokopo to protect the company and its employers and to allow the deployment of machinery onto Central New Hanover. Mr Isaac also says that police used force to disperse the people and as a result a young protestor was shot and was hospitalised for injuries to his leg and chest. The C.O.I was unable to confirm or interview any of the Asians working at that time, but it was revealed by the landowners that most of the workers were mechanics, chainsaw operators, bulldozer drivers and mostly forestry workers. Mr Anis response was that the landowners had agreed for the machinery to be allowed into the project area. The Commissions assessment on the evidence of Ismael Passingan, Nelson Posikai, Elijah Sakias, Darius Kanai, Lamugan Wenmat depicting events on Central New Hanover as follows; i. Filed complaint against Regina Lau Hii with the Major Crimes Unit, Royal PNG Constabulary on the illegal deals over the Sale and Purchase Agreement for SABL Portion 885C, 886C and 887C. Fight between landowners and employees of Tutuman at Konematilik log pond resulting in 11,000 cubic meters of log stranded on the log pond jetty. Executives of CHNL (landowners) appointed because of their close alliance to TDL and used by TDL to make decisions without the majority knowledge of the people they represent through the supposed umbrella company. The lack of proper social mapping of all the clan group and lineages within the Inugulus Siabun clan of Min Area, Patikin village comprise a total of 28 villages. Out of the ILG registration, only two out of 28 villages was registered, hence a lisleading incorporation of clans within that village. The same applies to other landgroups of Tabut and Umbukul, and that all villages did not nominate and appoint the Chairman of each ILG. The Chairman were handpicked by TDL for the furtherance of illegal act.

8.6. 8.7.

ii.

iii.

iv.

349

v.

vi.

vii.

Sugin village confirem that the shareholder of the landowner company was not elected by the village at a General Meeting convened for that purpose. The common concern was lack of knowledge, no consultation with appropriate officers of key agencies of government linked to the SABL process. The majority had no input nor knowledge of how TDL was engaged as the Developer/Investor of agricultural crops for the land under SABL.

8.9

Mr Malesa dilemma to conduct and independent land investigation given his experience was the direction made by Mr Luben on request from TDL and also the enormous duress resulting from been directed by TDL to cover villages known to be supportive to TDL venture to acquire what is the expired Mamirum TRP area.

8.10 The funding and the time spent on the Land investigation is a testament of the continuing ignorance of DLPP Management and its field officers in safeguarding the interest of the landowners in the SABL process and Central New Hanover Limited SABL Project is no exception.

9. 9.1.

Department of New Ireland/New Ireland Provincial Administration Mr Moses Makis, then Acting Provincial Administrator by letter dated 2 nd May 2011 requested the Office of the Registrar of Titles to extinguish and recall all the SABLs issued to New Hanover in what he termed as due to lack of due consideration and consultation by DLPP when it processed and issued SABL to Portions 885C. 886C and 887C New Hanover. His concerns resulted from the constant complaints flooding his office as a result of the National Government Departments ability not to involve the Administration in the initial stages of the land investigation and awareness. Mr Waine also raised similar concern in his evidence in relation to Kaut SABL.

9.2

There was a lack of coordination between DLPP and the Office of the Provincial Administrator through the Provincial Division of Lands and Physical Planning for the land investigation to be conducted. This is one
350

of the many trends common to the way the LIR were conducted by DLPP without any consultation with the Provincial Administration involvement.

10.

DEPARTMENT OF LANDS AND PHYSICAL PLANNING

10.1 The C.O.I notes that there are no official records of the Application or Tender submitted to DLPP to undertake the Land Investigation by Central New Hanover Limited. 10.2 The Lease/Lease Back agreement was signed by the Agents of the Landowner but the Minister or his delegate did not sign the Agreement. 10.3 There was no evidence of; (1). customary land owner identification and verification reports and the customary landowners participation in the selection processes of the various chairmen of the Incorporated Land Groups as the vehicles for registration of customary land. genealogy study as the process of identifying customary land owning clans in the area and subsequent Incorporations of Land Groups (ILGs) as the processes for the registration of customary land .and physical mapping of the area to establish external boundaries between villages and internal boundaries between the various clans. The Class 4 surveyor using the coordinates on the map to establish external and internal boundaries and this process leaves out the negotiations between two neighbouring villages and clans to establish pegs and any other verifiable physical indicators that separate boundary between clans and villages.

(2)

(3)

10.4 It was evident from the landowners that non-compliance of the SABL processes and procedures for customary identification and verifications was not followed. There is need to carry out new customary land identification processes and that needs to be verified by lands experts in the Department of Lands and Physical Planning in Port Moresby. There is
351

also need to carry out field survey to establish internal and external boundaries between clans and villages within the Central New Hanover Limited for the development of commercial cocoa tree farm

11

DEPARTMENT OF PROVINCIAL GOVERNMENT AND LOCAL LEVEL GOVERNMENT

11.1 The Land Investigation Report and the Recommendation for Alienability was not referred to the Custodian of trust Land for due diligence. There was also no Certificate of Alienability issued by the Custodian of Trust Land to allow for the registration and issuance of SABL Title to Central New Hanover Ltd.

12

DEPARTMENT OF AGRICULTURE AND LIVESTOCK

12.1 Mr Daink tendered to the C.O.I DALs Report on the Status of FCA for Agriculture Projects (Exhibit FD2) to assist the C.O.I with its inquiry. The status of the approval for FCA by DAL was noted as APPROVED to developer Tutuman Development Limited. The purpose of the approval was for major Cocoa and Coconut (13,000 ha), and reforestation using commercial species (identified)(14,000ha) on non-arable land with slopes exceeding 25degrees slopes. Again smallholders involvement is noted as important. The Tututman Development Limited to provide cocoa and coconut seedlings from 60,000 capacity cocoa nursery and other inputs such as buying, processing and export of agriculture products. Whilst it look quite convincing to DAL on paper, C.O.I evaluation and assessment of the agricultural project on the New Hanover is less promising. No Detailed Agriculture Plan 12.2 Agriculture development plan is usually based on the land suitability assessment and a land use plan for the area which was proposed for the development of agro-forestry project. The land use plan and soil suitability assessments were conducted by PNG Cocoa Coconut Institute Ltd confirmed that the area is suitable for cocoa, robusta coffee and oil palm.

352

12.3 In a letter dated 10th of October 2008 the chairman of Tutuman Development Ltd advised the Director of the Department of Environment & Conservation that its company planned to cultivate 19,000 hectares of cocoa, coconut and oil palm over a ten year period. We find that there was no feasibility study undertaken by independent experts on cocoa, coconut and oil palm to consolidate the technical requirements for production, processing and marketing of those crops. There was also no assessment of the costs and returns to indicate that the farming business will generate adequate revenue to pay for the operational costs and sustain the operations 12.4. The tentative Development Schedule in Chapter Five (5) pages 14 18 of the Inception Report for issuance of the Environmental Permit for logging is only a token to satisfy the statutory requirements from the PNG Forest Authority and the Department of Environment and Conservation. All large scale land clearance and agriculture development requires independent environmental and social impact studies to show that the environment and biodiversity is preserve for future generation. The logging company TDL does not have the capacity for the development of the agriculture projects planned for development of cocoa, coffee and oil palm. 12.5. TDL had failed to develop agriculture and other infrastructure projects that were promised before the commencement of logging operations on the western side ((Tabut and Umbukul) of New Hanover Island, (Sigulogos letter dated March 22,2010). Nursery Development 12.6. The Tutuman Development Ltd has established a nursery with a capacity of producing 100,000 seedlings. At the time of visit there 11,000 rubber and 15,000 cocoa seedlings and some unknown quantity of forest tree seedlings established in the nursery. 12.7. Based on a 4mx3m square plant population those seedlings are adequate to plant 14 hectares. The land for planting of cocoa and rubber has not been identified. The adhoc management of the nursery and the plan for planting cocoa and other tree crops indicated that there is lack of agricultural experts for planning and development of the plantation crops within the management of Tutuman Development Ltd.
353

12.8 Our site inspection of the nursery indicated that the nursery was established more recently and the cocoa seedlings were three weeks old and could just be a show piece to impress the Commission of Inquiry. Our C.O.I. Agriculture Advisor Mr Wohuinangu was also shown the plan for replanting of forest trees by the camp manager after the logging and there were no plans indicating the planting agricultural crops. Summary 12.9 The government process and procedure for the establishment of project was not adhered with. The process for the design, formulation and financing of a project includes: an idea, design, formulation, feasibility study, investment plan and financing through a Public Investment Programme. The private sector is an investor that facilitates the development process by the provision of finance and makes money from the agriculture business. The basic process for project design and formulation, feasibility studies for investment and environmental sustainability and benefit sharing agreements between the investor and the resource owners has not been adopted.. Illegal Operation of Logging without FCA 12.10 This aspect of the inquiry is important because Tutuman had continuously operated illegally through its subcontractor to conduct illegal logging operation at New Hanover.

12.11

The PNG Forest Authority entered into an understanding with Tutuman at meeting held at the PNG Forest Authority Office. Mr Pouru in his letter to Mr Anis restated the purpose of the meeting and to Mr Anis team having come to a round table forum to discuss your development plans for New Hanover FCA project while at the same time highlighting the failure on the part of your subcontractor in not having to comply with specific regulatory requirements in light of the illegal logging operation. PNG Forest Authority also reminded Tutuman to ensure that all future development undertakings should be in conformity to laws, regulatory requirements, approved plans and standards or procedures of line government agencies or Statutory bodies whether it be
354

PNG Forest Authority , DAL, DEC, to void punitive action, been taken to your operation if contrary conduct practices are been employed.(See Mr Pourus letter to Mr Anis dated 10th February 2011 titled Affirmation of Understandings Reached in Meeting of 8/2/11.) The understanding reached was for the logs harvested illegally could not be exported and stringent cordon placed to separate logs prior to FCA.

13.

PNG FORESTRY AUTHORITY

13.1 FCA # 16-02 granted on 25/11/2010.

14.

DEPARTMENT OF ENVIRONMENT AND CONSERVATION

14.1 Environment permits have been issued for Central New Ireland by DEC. It is still considering Permit for Tabut Limited and has no record for Umbukul Limited. There is no mention on DEC files as to whether public hearings and awareness were conducted to gauge views of customary land owners.

355

15.

RECOMMENDATION

15.1. The C.O.I. recommends that SABL Portion 887C be revoked on the basis that the integrity of the Land Group Registration process and the Land Investigation process fundamental to good title was flawed and must be nullified. The recommendation is consistent with the findings based on the sworn evidence of witnesses; Affidavit and Statements of Witnesses and production of documentary evidence 1. The Land Group Incorporation Registration process and awareness conducted was not transparent affecting consent of majority landgroups within Central New Hanover Electorate of New Hanover Island The Integrity of the Land Investigation process and disregard of the ad hoc administrative process adopted by DLPP in conducting land investigation for SABL was compromised; (1) Failure of DLPP to fund the officers operational costs to conduct the Land Investigation and also conduct public awareness on SABL. Tutuman Development Limited funded the operational cost for the Officer conducting the land investigation and directed and took charge of the whole process. The Land Investigation Report was not fully completed and the details were missing. DLPP failed to collaborate and coordinate the field report with the Provincial Administrators Office and the Provincial Lands and Physical Planning Division. The Recommendation for Alienability was not signed by the Provincial Administrator, NIPA in the LIRs produced to the Commission; and

2.

(2)

(3) (4)

(5)

356

(6)

The Minister or his Delegate also did not sign the Instrument of Lease/Lease Back Agreement. This affected the requisite requirement for consent pursuant to section 11 of the Land Act. On the basis of points (5) and (6) above means that the Notice of Direct Grant, Gazettal Notice, Registration and Issuance of Title are legally deemed to be void.

3,

The Shareholding/Directorship of Central New Hanover Limited must be restructured in terms of Shareholding and Directorship within the recognised and legitimate clans/villagers and the surrounding islands of Central New Hanover District. (1) The Election of the Chairman of the company must be conducted in a transparent way and with the consent of the people through their nominated agents acting as shareholders in the company. All Resolutions and Decisions of the Company with respect to development issues should adhere to the provisions of the Companies Act and its Regulations. Any future development plan coinciding with customary land, Landowner Company and ILGs must be proactive and ensure on Joint Venture/Partnership Agreement with foreign investors and corporation who comply with IPA requirements and properly screened by the Department of Commerce, Industry and Trade. It is recommended that SAB&L issued to Central New Hanover Ltd should be reviewed and the process of ILG registration should proceed with prober consultative programme. Dialogue should be continuing through appropriate agriculture institutions to initiate a preliminary varietal and agronomic research to develop the site specific technology. Conduct the economic and financial analysis to determine the returns to investment. Conduct social and environmental impact studies to determine the impact of this project on the standard of living of the people and
357

(2)

(3)

(4).

conservation of land for other uses by the present and future generation. Finally identify appropriate investor with the capital and expertise to participate in the joint venture business with the customary landowners to fulfil the intentions of the Special Purpose Agriculture and Business Lease.

358

1. COI Inquiry File No 12 for Special Purpose Agricultural and Business Lease over Portion 871C Volume 17 Folio 16 Milinch: Dolomakas New Ireland Province in the name of Rakubana Development Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to Section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. Witnesses were called from the six government agencies involved in the issuance and operation of the Rakubana Development Limited SABL. These were: 1.2.1 1.2.2 1.2.3 1.2.4 1.2.5 1.2.6 Department of New Ireland Province, (DNIP) Department of Lands and Physical Planning, (DLPP) Department of Provincial Government, (DPALLG) Affairs and Local Level

1.2

Department of Agriculture and Livestock, (DAL) Department of Environment and Conservation, (DEC) PNG Forest Authority (PNGForest Authority)

3. 3.1.

Witnesses Statement and Summonses The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings are set out in the schedule below.
Name and Position Kepas Tapkon, Managing Director of Rakubana Development Corporation Ltd, Nokon village (Outside SABL) Thomas Tomar, Ex Chairman, RDL Pages 12-18 Day 6 Date 31/10/11-SABL 41 MIROU

No 1

18-30

31/10/11-SABL 41 MIROU

359

Jamal Husin Imran Bin, Estate Manager, Tutuman DL, Danfu SABL

30-54

31/10/11-SABL 41 MIROU

3-6 4 Mr Pedi Anis, Chairman of Tutuman Development Ltd 8-54

7 7

03/11/11-SABL 42 MIROU 03/11/11-SABL 42 MIROU

2-14 5 Mr Miskus Maraleu Corporate Lawyer, Tutuman 6 7 8 Mrs Janet Rauveve, Director, TDL & Forester Francis Daink, Deputy Secretary, (PATS), DAL Mr Anthony Luben, Unattached Public Servant & Former Deputy Secretary Lands Services 2002-2008, DLPP Mr Pepi Kimas, Former Secretary, DLPP Mr Lazarus Malesa, Customary Leases Lands Officer, DLPP 67-79 02-15 10-18 29-67

8 8

04/11/11-SABL 43 MIROU 04/11/11-SABL MIROU

04/11/11-SABL MIROU 11/01/12 SABL 77- MIROU 05/01/12-SABL 68 MIROU (WAIGANI)

9 10

3-80 6-15

17/01/12-SABL 77 WAIGANI 23/01/2012 SABL 79-Mirou (Waigani)

4. 4.1.

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel.

360

4.2

The following were granted leave to be represented by counsel

Representation by Lawyer No lawyers

5. 5.1.

Exhibits and documents There were seventeen (17) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.

No 1

Item Notice of Direct Grant By Pepi S. Kimas, Delegate, Minister of Lands dated 16 October 2007 Special Agriculture and Business Lease to Rakubana Development Limited Survey Plan of Portion 871 Milinch of Dolomakas Fourmil of Namatanai PNG General Work Permit of Jamal Husin Imran Bin Eight (8) page Extract of Danfu Integrated Agro Forestry Project Progressive Report Bachelor of Business Administration Degree to Jamal Husin Imran Bin dated 10 October 1991, Sigaperbangsa University, Indonesia Department of Labour Approved Foreign Work

Interested Party C.O.I

Date received 31/10/11

Exhibit Number RDL 1

C.O.I

31/10/11

RDL 2

C.O.I

31/10/11

RDL 3

C.O.I

31/10/11

RDL 4

C.O.I

31/10/11

RDL 5

C.O.I

04/11/11

RDL 6

C.O.I

04/11/11

RDL 7

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Permit to Jamal Husin Imran Bin issued 03-Jul2009 to 03 Jul-2012 8 Department of Labour Approved Foreign Work Permit to Arnell Gualiza Medina issued 10-Nov2009 to 05 Nov-2012 Department of Labour Approved Foreign Work Permit to Gregorio Buhia Camaso issued 03-Jul2009 to 03 Jul-2012 C.O.I 04/11/11 RDL 8

C.O.I

04/11/11

RDL 9

10

Department of Labour C.O.I Approved Foreign Work Permit to Tanggui Kurong Anaik issued 24-Jan-2011 to 24 Jan-2013 Department of Labour Approved Foreign Work Permit to Ching Loi Sun issued 10-March-2011 to 10 March-2013 Department of Labour Approved Foreign Work Permit to Elmer Heconimbang issued 22-Jan2010 to 22 Jan-2013 Department of Labour Approved Foreign Work Permit AnaikTuan JIgga issued 19-Jan-2011 to 19 Jan-2013 DANFU Agriculture Project Report for Namuh and Hilalon Nursery as at 04/11/11 by Imran Husin, Operations Manager COI Site Visit Photographs 30/10/11 at Namuh Nursery, DanfuSignpost of Danfu Agro C.O.I

04/11/11

RDL 10

11

04/11/11

RDL 11

12

C.O.I

04/11/11

RDL 12

13

C.O.I

04/11/11

RDL 15

14

C.O.I

04/11/11

RDL 15

15

C.O.I

24/01/12

RDL 16

362

Forest Project Nursery 16 COI Site Visit Photographs 30/10/11 at Namuh Nursery, DanfuSignpost of Danfu Agro Forest Project Nursery (Overgrown Cocoa Trees in Polybag/Nursery is derelict) COI Site Visit Photographs 30/10/11 at Namuh Nursery, DanfuSignpost of Danfu Agro Forest Project Nursery (Overgrown Cocoa Trees in Polybag/Nursery is derelict) C.O.I 24/01/12 RDL 17

17

C.O.I

24/01/12

6 6.1

Timeline of events of note surrounding Rakubana Development Limited SABL The timeline showing important events concerning the SABL is shown below in chronological order of their happening:

No

Milestone

Incorporation of Tutuman Development Limited (TDL) Incorporation of Tutuman Integrated Products Limited Incorporation of Rakubana Development Ltd Gazettal Notice G161 on SABL title for Portion 871C Agricultural Sublease

Dated of Completion/ Grant/Issue Execution 2 December 1999

Proponent/Applicant

Respondent Entity/Respondent

Tutuman Development Ltd

TDL/RDL

30 August 2007

TDL

TDL/ RDL

25 April1997 16th October 2007 29 September

RDL

RDL/TDL

RDL

RDL/TDL

TDL/RDL/State

TDL/RDL

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Agreement between TDL and RDL(Stamp Duty Endorsement)-99 years)

2009

FINDINGS The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Rakubana Development Limited.

7 7.1

Rakubana Development Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette No. G161 dated 17th October 2007 for Portion 871CDolomakas. The land is described as Danfu Extension.The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 29th October 2007 by the Department of Lands and Physical Planning to the holder Rakubana Development LimitedSABL(RDL). Mr Pepi Kimas OL signed as delegate of the Minister for Lands. The detail of the SABL is shown below:

Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease

Portion 871C 21/353 Rakubana Development Limited 16th October 2007 Ninety-nine (99) years 29, 581.00 hectares

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8. 8.1.

Background This SABL is a 99 year lease granted to a Corporation called Rakubana Development Corporation Limited. It is found in the Namatanai District of New Ireland Province the long thin strip that runs down continuously from Kavieng town which is at the other end, located 300 kilometres to the North West.

8.2

The SABL covers a large area, all of which falls on customary land of about seven villages namely Rativis, Kudukudu, Balai, Naumu, those are the first four villages, the two first letters of which form what is called Rakubana. Then the other three villages are Igalon, Imau and Puranbus. Imau is at the furthest end south east, and Rativis village is the one nearest from Namatanai, the first village within the SABL area.

8.3.

The lease is located within the expired Danfu TRP concession area. Under this TRP, timber was logged by a Corporation called Gaisho Limited of Japan at the invitation of a local company called Tasukolak Pty Limited. It is an old company formed prior to the new Companies Act.

9. 9.1

Location Its boundary starts at the mouth of the Numbai River which is on the eastern border of the Danfu TRP running in a Southerly direction along the river for 8 and a half kilometres and then in a South Easterly direction for another 20 kilometres until the river terminates at its mouth with the sea. It is about 9 kilometres by 20 in dimension and there is a slight variation or difference in the area as found under the lease.

10.

Site Visit

365

10.1 On Sunday 28th October 2011 at around 0830am, the Commission party comprising Commissioner Nicholas Mirou, Messrs Paul Tusais, Jimmy Bokomi, Kako Sarufa, Joseph Wohuinangu, Brian Salo, Patrick Debessa, Dokta Mckenzie, Ben Kaiah and Miles Romano left Kavieng and travelled by road (273 kilometre) to Namatanai arriving at 2.30pm. This was to commence our hearings and site inspection of the SABL project area. 10.2 At around 3.30pm the Commission continued with the site visit to ascertain where exactly it is located and to determine how many villages was located within the SABL area called Danfu Extension. Huris Coconut Plantation was passed along the way and after two and a half hours drive the party arrived at Numbai River the start of the SABL area .We travelled mostly along the coast passing coastal villages within the project area to the Log Pond Jetty & Harbour facility (made up of logs and soil), Namu Nursery and loggers Base Camp. The party continued on until we arrived at Kesin River where the SABL ends. 10.3 That SABL area begins at Numbai River where Raggia Village is located and by using the speedometer estimated about 30.6 km drive one way. The party travelled from Kavieng to Namatanai (273 Km) and Namatanai to Kesin River (30.6 Km) and return to Namatanai (30.6km). The party travelled exhaustively for almost 334 kilometres on that day to Namatanai and the coastal site visit of the DANFU Eextention and SABL project area. 10.4 The Commission noted the following (and evidenced by photographs); Log Pond and makeshift Harbour/jetty facilities made up of logs and filled with dirt/soil from the area near the wharf. Heavy machinery and equipment dumped and left to rust on the beach front. Requires.
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 Observed shade trees and cocoa trees planted along the main road, but the trees were not yielding well because the red soil according to Mr Wohuinangu, Agriculturalist was not suitable for commercial tree crop such as cocoa. No harvested logs sighted as the logging operations were suspended at that time. The Nursery at Namu, near the loggers base camp is overgrown with shrubs and the dryer is filled with old decaying cocoa. This is sign of neglect Overgrown cocoa trees still in polybags The nursery is neglected and the green shade destroyed No water pump in sight. The Logging Base camp comprises a Mechanical Workshop and accommodation for workmen. 10.5. Met people on the way and they expressed surprise that their land was within the SABL project area. Evidence of lack of awareness undertaken by DLPP, DAL & DEC on the ILG registration and SABL process. 10.6 Villagers complained about the collapse of a bridge (makeshift and made of felled logs) polluting river used for drinking water and other uses. Promise by the developer to provide water tanks were never fullfilled and people are still waiting for the delivery of the water tanks.

10.7 Evidence of five (5) foreign nationals of Asian origin on site. The site Manager produced documents confirming valid passport, work and residency permit. All of the Asians on the SABL site have experience in forestry and are engaged as store keepers, mechanic and other general duties normally work reserved for PNG Nationals.
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10.8 There was evidence of non-compliance with Immigration laws in relation to work permit renewals. It was evident that Mr Husin, Tutuman Operation Manager had his work permit processed and renewed whilst he remained without a valid work permit and entry permit for the period in PNG. We are concerned that Immigration and Tutuman officials have collaborated to short circuit the immigration work permit process. C.O.I was unable to continue with the inquiry. 10.9 The Commission also missed the opportunity to visit the 30,000 hectares clearing and planting of cocoa trees on the hinterlands, Hilalon Village, Namatanai. This was well covered in the evidence of the common witnesses Mr Pedi Anis, Mrs Rauveve and Mr Maraleu and Mr Husin, the Operations Manager for TDL on the project site. 10.10 The Commission recommends that the Developer Company companies comply with Regulation and Statutory Requirements of maintaining a harbour and jetty facility for the long terms benefit to the community and not during the life of the project. It must be compulsory especially for the people of Namatanai and access to East New Britain Province to conduct business. 11. Hearing of SABL Portion 871C -Namatanai District Conference Centre. 11.1 On Monday October 2011, the Commission held its hearing at Namatanai District Conference Room and it was well attended by concerned landowners. Due to the shortness of the Commission trip to Namatanai, with the view of returning to Kavieng to deal with the three SABLs on New Hanover the Commission informed the landowners that it will return in January 2012 to complete its inquiry into the DANFU Extension SABL.
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11.2 The Commission acknowledged that in terms of logistical difficulties, the lack of public transport, the deteriorating road conditions and terrain the villages within the project area was unable to receive any benefits from the development taking place on their land.

IPA COMPANIES REGISTRY RECORDS 12 TUTUMAN DEVELOPMENT LIMITED

12.1. Please refer to the discussion on the common witnesses of TDL and background information. 13. RAKUBANA DEVELOPMENT LIMITED

13.1 Rakubana is a nationally owned company. According to IPA extracts, it was formed by the villagers within the expired Danfu Extension TRP, incorporated and registered with the Registrar of Companies on 25 April 1997. 13.2 It has 22 Shareholders and the same number of Directors. The Shareholders have also made up the Directors. Annual returns have been filled consistently from the year 1998 up to 2009. 14 LANDOWNERS OBJECTIONS TO THE ILG REGISTRATION AND SABL PORTION 871C PROJECT 14.1 The Commission received no formal submission from the villagers and landowners of Danfu SABL project area. The Commission noted that the remoteness of the SABL and the logistical difficulties faced by the people in terms of public transport and proper road maintenance, much of the population the Commission met and talked to on that evening of Sunday 30th October 2011 were totally surprised to hear that their land was
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subject of the SABL which was under a Agriculture Sublease agreement to TDL for 40years. 14.2 Mr Thomas Tomar, former Secretary of Rakubana Development Corporation Limited, from Lamu Village, Chairman of Tarakeva ILG. According to Mr Tomar, Rakubana was formed by the villagers to embark on harvesting logs in their area. RDL applied for Forest Industry Participant Certificate and it was approved by PNG Forest Authority. TDL was engaged by RDL to undertake logging activity in the area under Logging and Marketing Agreement which was signed in 2005. The following is a summary of the evidence of Mr Tomar with regard to ILG Registrations, SABL awareness, and Developer meeting with the villagers a) Land Investigation and ILG Registration process

He named Mr Malesa and Mr Maraleu as the two men conducting ILG registration and the land investigation at only two village Prombus and Namu village. The other five villages missed out on the awareness in 2007. During that time, Mr Maraleu conducted the ILG applications and did not inform the villagers on the disadvantages or advantages of the ILG process. Mr Malesa conducted awareness on the Lease/Lease Back arrangement, the lease title will be in the name of Rakubana Development Limited. The ILG process included the appointment of the Chairman, the Secretary and other officials as required by the ILG Act. There was instance of appointment of Chairman from different clan and that caused a dispute at Hamus village. Mr Lake Tovo of the Koro Clan was named as Chairman of Hirimaran ILG. The Koro Clan comprises people of Bulai and Huris. Tutuman was accused of this misleading the people and putting names of
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individuals from other clans as Chairman. This was a common trend featured in the New Hanover SABLs conducted by TDL with the assistance of Mr Malesa. b) Logging activity and pollution of Namu River

Logging activity in the mountains between three villages inland and heavy rainfall caused a major collapse of the logging road resulting in the makeshift log road and soil to enter the river stream and pollute drinking water for the people. Namu River and Balu River was affected by this manmade disaster. A complaint was lodged and the promised water tanks by TDL were never supplied despitepromise to deliver water tanks..

c)

Mrs Hiis outburst on the agriculture sub-lease

At a formal launching of the TDLs development plan for the project, Mrs Hii told the villagers in the project site that she will plant cocoa on the land. There was a dispute that arose and she was heard to have told the landowners, After that argument with Forestry and the landowners, Mrs Hii said the land is hers. She made us the landowners realize that land is already on lease.

14.3 The Commission observes that Namatanai is the closest township to the major mining project at Lihir Island. The SABL project has not yielded any significant progress and changes to the people of the DANFU SABL Project area, in terms of properly maintained road, permanent harbour

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facility and public transportation for the least undeveloped area of the province. 14.4 The Commission was allocated 10 working days on the SABL Circuit and had to accommodate Namatanai by conducting that arduous trip on Sunday and run a short half day hearing returning to Kavieng for the site visit to New Hanover. 14.5. The funding and the time spent on the Land investigation is a testament of the continuing ignorance of DLPP Management and its field officers in safeguarding the interest of the landowners in the SABL process and Central New Hanover Limited SABL Project is no exception.

15.

Department of New Ireland/New Ireland Provincial Administration

15.1. Mr Moses Makis, then Acting Provincial Administrator by letter dated 2 nd May 2011 requested the Office of the Registrar of Titles to extinguish and recall all the SABLs issued to New Hanover including Namatanai in what he termed as due to lack of due consideration and consultation by DLPP when it processed and issued SABL to Portions 885C. 886C and 887C New Hanover and 871C Namatanai. His concerns resulted from the constant complaints flooding his office as a result of the National Government Departments ability not to involve the Administration in the initial stages of the land investigation and awareness. Mr Waine also raised similar concern in his evidence in relation to Kaut SABL. 15.2. There was a lack of coordination between DLPP and the Office of the Provincial Administrator through the Provincial Division of Lands and Physical Planning for the land investigation to be conducted. This is one

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of the many trends common to the way the LIR were conducted by DLPP without any consultation with the Provincial Administration involvement.

16.

DEPARTMENT OF LANDS AND PHYSICAL PLANNING

16.1 No files have been furnished by the Lands Department. This is one of many that the system has either lost or simply cannot locate because of the chaotic and disastrous system it maintains. Consequently, the Commission does not have original copies of the lease, the land investigation report including certificate or recommendation for alienability by the Provincial Administrator. 16.2 What the Commission does have are files provided by the Department of Environment and Conservation, the Department of Agriculture and Livestock, the PNG Forest Authority and Investment Promotion Authority. We are able to say from perusal of these files that Rakubana subleased to developer, Tutuman Development Limited of P O Box 167, Kavieng, New Ireland Province. It is subleased for a period of 40 years. 16.3 The C.O.I notes that there are no official records of the Application or Tender submitted to DLPP to undertake the Land Investigation by Rakubana Development Limited. 16.4 The Commission has not sighted any Lease/Lease Back agreement signed between the Agents of the Landowners and the Minister or his delegate. 16.5. Mr Malesa in evidence (at page 20 SABL 79-Mirou23/01/12)confirmed that 1. That TDL funded the Land Investigation which he conducted for a period of three (3) weeks commencing 4th May 2007 to 31 May

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2007. He was paid between K1-2,000 in allowances, acomodation and incidentals.

2.

He interviwed a number of Executives of the landowner company as a means to obtain the necessary agreement and consent without the benefit of talking to the entire community of New Hanover villagers.

3.

In terms of awareness he says, But I have actually conducted several awareness in the-that is in the Susurunga area of Namatanai visitng villages like Raivis, Orongus, Himaull, Hilalon, Namu, the idea first was to make the landowners aware of the SABL process.

4.

Confirmed that the ILG part was conducted by Maraleu, but it was done before the Land Investigation process. ..from what I know the ILGs were done before I was in Danfu. And the working plan that I was using, the Soe plan comprised of several clan boundaries within the survey area where it shows different clans and I was working along with those clan names. Unfortunately, time could not permit me to thorough investigate each of those individual ILG groups because I think I have spent about a week in the Danfu

16.6 In view of the land form and mountain after the coastal strip, there was grave doubts as to any potential for cocoa or agriculture development and proved very difficult for travelling or even walking the boundary, According to Mr Malesa in evidence, The area beyond the, especially the villages, they were not suitable for whatever projects because I think the landowners, especially with the landowners trying to walk the
374

distance, it would be quite difficult for them. And the cocoa project, I do not think it was suitable for a cocoa project within that area.

The Land Investigation Report 16.7 This extract provides the explanation from Malesa as to the Land Investigation Report for Rakubana My visit, as I have said included the Himaul village, Namu Boronbush, Namu, Rativis and Kudukudu villages. Now there was one village which the landowners also disbuted, that is Boronbush -. Boronbush village and I took note of that. But in the process, I have done the land investigation reports but after the compilation of the land investigation reports, the reports were referred to the Tutuman Development office which I believe is not the right place but that is how we operated during my trip in New Ireland.

So most of these land investigations that I have done were incomplete because of the timing factor and also the availability of the genuine landowners, especially in the Danfu area and also the New Hanover area. That is why if you look through some of the documents, land investigation reports were not done properly, and I believe the staff themselves from Tutuman have gone ahead and done the land investigation reports for some of those ILGs, which eventually I compiled; one whole land investigation report for each project area, from those four areas. 16.8 All the Land Investigation Files was kept by Tutuman for whatever reason, DLPP never really took ownership and custody of what was
375

supposed to be an independent investigation. This general trend continued in place of the normal process and justifies nullification.

17

DEPARTMENT OF PROVINCIAL GOVERNMENT AND LOCAL LEVEL GOVERNMENT

17.1 The Land Investigation Report and the Recommendation for Alienability was not referred to the Custodian of trust Land for due diligence. There was also no Certificate of Alienability issued by the Custodian of Trust Land to allow for the registration and issuance of SABL Title to Central New Hanover Ltd.

18

DEPARTMENT OF AGRICULTURE AND LIVESTOCK

18.1 Under the sublease granted to Tutuman by Rakubana, agreement was made specifically for Tutuman to enter into agricultural project to grow cocoa, coconut and oil palm after clear felling remaining stands of forest. At page 2 of the Agriculture Development plan found in the DAL files, the project areas estimated at a gross of 24,851 hectares, out of that a net area of 9,267 hectares with an inaccessible area of 15.584 hectares and the report does not say why it is not inaccessible. The main reason for this is that the report is not complete. There were 25 pages of that report but the Agriculture Department only submitted five pages. The other 20 pages is missing. 18.2 Mr Daink tendered to the C.O.I DALs Report on the Status of FCA for Agriculture Projects (Exhibit FD2) to assist the C.O.I with its inquiry. The status of the approval for FCA by DAL was noted as APPROVED to developer Tutuman Development Limited. The purpose of the approval
376

was for major Cocoa and Coconut, and reforestation development project involving smallholder participation over an area of 9,267 hectares. The total gross at 1,000 per year. Developer will provide cocoa and coconut seedlings from an established infrastructure for processing and trading. All processed products are for export of product. 18.3 Whilst it look quite convincing to DAL on paper, C.O.I evaluation and assessment of the agricultural project on the New Hanover is less promising. The actual report from the Operations Manager at Danfu indicated two nursery operated by TDL. The Nursery at Danfu is virtually non-existent and overgrown due to the fact that the Tutuman has no qualified agriculturalist and that it is a logging company. 18.9 The developer Tutuman Development Limited (TDL) did not develop a detail agriculture plan for growing of cocoa, coconut, and oil palm after the felling of the remaining stand of forest as the requirement of the sublease agreement. The details agriculture plan will have crop production schedules, costs and revenue schedules showing return to investment and a road map for developing the crop production industry. There are no business plan for developing the logging business and linking with the agriculture investment plan. The business plans for the large scale agriculture development would be certified by the Secretary for the Department of Agriculture and Livestock in form 235 under the Forestry Act of 1991 and submitted to the PNG Forest Board for forest clearance.

No detailed Agriculture Plan

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18.10

The developer TDL did not prepare a detail agriculture development plan as a requirement under the SABL for establishment after the forest clearance. There is lack of evidence of the approval of agriculture development plan of TDL by the Secretary of the Department of Agriculture and Livestock as a requirement under Sections 90A of the Forestry Act of 1991.

18.11

Therefore the sublease granted to TDL for investment in large scale agriculture and land use development is flawed because the TDL is a logging company. No Land Use Plan for the Area

18.12

Crop farming as business firstly based on the land use plan which determines the potential crops and livestock for investment in a given area/district.

18.13

There is no land use plans for the Namatanai District and the project area and therefore it is difficult to determine the areas that are suitable for crops and livestock production and processing. No Soil Suitability Assessment

18.14

Soil Survey is a detail study to determine the plant nutrition requirements which would contribute towards the input costs for the agriculture investment plan .There is no soil suitability assessment report therefore it is difficult to assess the agriculture projects and plans, input requirements for the development of agriculture as proposed . Feasibility Study

18.15

Feasibility study should be next step to confirm technical, economics and financial conditions for the establishment commercial

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farming business. developer/investor.

Based on the outcome of the feasibility study an

investment plan would be drawn and submitted to the government and a

18.16

In the forestry projects this processes is undertaken through under the Development Option Study under the provisions of Section 62 subsection (2) and (3) of the Forestry Act 1991.There was no feasibility study cited in the information provided about the RDCL to the COI.

19.

PNG FORESTRY AUTHORITY

19.1 The company Tutuman Limited is a Registered Forest Industry Participant given registration number F101156 by the PNG Forest Board. Its main activities seem to be forestry related but it also claims in what it submitted to the Environment Department and Forestry Authority that it is the first company in New Ireland to be granted a cocoa export licence. 19.2 Forest Clearance Authority number 16-01 was granted to Tutuman on 24 August 2010. Status report done by PNGFA dated May 11, 2011 indicates that currently there are no logging operations in the Danfu FCA, Forest Clearance Area. Correspondence noted on PNGFA records reveal ongoing concernsraised by the Regional Office of the PNG Forest Service about Tutumans compliance or more specifically lack of compliance with Section 90 requirement under the Forestry Act. According to a Status Report filed, after file checks done by the PNG Forest Authority Regional office of New Guinea Islandsin 2010, only one block out of three blocks approved by PNGFA had been harvested while the other three were not touched due to landowner disputes.
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19.3 This is the first indication that things do not seem to be all that well with the SABL, and that there may be issues relating to customary owners disputes. This same status report, noted that satellite images provided by the University of Papua New Guinea showed that Tutuman had operated beyond its approved areas. 19.4 On 15 December 2010, Managing Director of PNGFA, Mr Kanawi Pouru, wrote to Mr Pedi Anis, Chairman of Tutuman and bluntly told him that Tutuman had failed in its implementation of agriculture and tree plantation development component of the project. The PNGFA conditionally approved Tutumans 2010-2011 annual logging plans but only for three months, commencing from 1 January 2011. Within those three months, the Forestry Service field officers would monitor progress and make a final report after checking on 31 March 2011. PNGForest Authority warned Tutuman to improve on its poor performance. 19.5 The PNGFA files, is a letter dated 18 April 2011, written by Mr Peter Lat, the PNG Forest Authority Officer wrote again to the Chairman of Tutuman and said, though the company did a number of improvements in forest clearances and cocoa planting for agriculture, it is not sufficient to necessitate a favourable consideration from PNGFA. I would advise that TDL put in more effort to completely plant the 150 hectares identified in block 1 as arable land suitable for cocoa farming. He says, You have planted 17 hectares and cleared over 23 hectares of forest therefore you are to continue further or increase the rate of your work in the field because the results we have only shows an 11 percent success in your performance. The letter goes on to point out concerns over landowner issues.

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19.6 As been seen by evidence found in the files the National Forest Service of PNG based in the New Guinea islandsseem to have been vigilant, diligent in the implementation or administration of the tasks that it is supposed to do. 19.7 The current Directors and Management of TDL was tasked by the C.O.I on the PNG Forest Authoritys poor rating on the clearance and planting of cocoa. This is reflected in their evidence as common witnesses.

20

DEPARTMENT OF ENVIRONMENT AND CONSERVATION

20.1 DEC documents produced to the C.O.I indicate that Environment Impact Statement dated 26th February 2009 was submitted to DEC. DEC accepted the EIS for assessment on 2nd April 2009 and records reveal that the Meeting of the Environment Council deliberated on the EIS at its Meeting No EC05/2009 on 24th July 2009 and Council accepted the EIS (Decision Number 7/2009) and recommended to the Minister to issue an Approved in Principle. This was issued on 30th July 2009. 20.2 TDL applied for Environment Permits on 12th August 2009 which was subsequently issued on 17th August 2009.

20.3 The Environmental Monitoring and Management Program and the Waste Management Plan (Conditions 34 and 27 of the Environment Permit) were submitted in November 2009. 20.4. It seems ironic that the Agriculture Subleasse Agreement was only executed on 29th September 2009. There was no sub-lease agreement but

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TDL was already applying for environmental permit for the SABL at Danfu.

21.

RECOMMENDATION

21.1 The C.O.I. recommends that SABL Portion 871C be revoked on the basis that the integrity of the Land Group Registration process and the Land Investigation process fundamental to good title was flawed and must be nullified. The recommendation is consistent with the findings based on the sworn evidence of witnesses; Affidavit and Statements of Witnesses and production of documentary evidence 1. The Land Group Incorporation Registration process and awareness conducted was not transparent affecting consent of majority landgroups within Namatanai, Danfu Extension area 2. The Integrity of the Land Investigation process and disregard of the ad hoc administrative process adopted by DLPP in conducting land investigation for SABL was compromised; 3. Failure of DLPP to fund the officers operational costs to conduct the Land Investigation and also conduct public awareness on SABL. 4. Tutuman Development Limited funded the operational cost for the Officer conducting the land investigation and directed and took charge of the whole process. 5, The Land Investigation Report was not fully completed and the details were missing.

382

DLPP failed to collaborate and coordinate the field report with the Provincial Administrators Office and the Provincial Lands and Physical Planning Division.

7,

The Recommendation for Alienability was not signed by the Provincial Administrator, NIPA in the LIRs produced to the Commission; and

8,

The Minister or his Delegate also did not sign the Instrument of Lease/Lease Back Agreement. This affected the requisite consent requirement pursuant to section 11 of the Land Act.

On the basis of points (7) and (8) above means that the Notice of Direct Grant, Gazettal Notice, Registration and Issuance of Title are legally deemed to be void.

21.2 The Shareholding/Directorship of Rakubana must be restructured in terms of Shareholding and Directorship within the recognised and legitimate clans/villagers and the surrounding islands of Central New Hanover District. 21.3 The Election of the Chairman of the company must be conducted in a transparent way and with the consent of the people through their nominated agents acting as shareholders in the company. 21.4 All Resolutions and Decisions of the Company with respect to development issues should adhere to the provisions of the Companies Act and its Regulations. 21.5 Any future development plan coinciding with customary land, Landowner Company and ILGs must be proactive and ensure on Joint

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Venture/Partnership Agreement with foreign investors and corporation who comply with IPA requirements and properly screened by the Department of Commerce, Industry and Trade.

21.6 It is recommended that SAB&L issued to Rakubana Ltd should be reviewed and the process of ILG registration should proceed with prober consultative programme. Dialogue should be continuing through appropriate agriculture institutions to initiate a preliminary varietal and agronomic research to develop the site specific technology. Conduct the economic and financial analysis to determine the returns to investment. Conduct social and environmental impact studies to determine the impact of this project on the standard of living of the people and conservation of land for other uses by the present and future generation. Finally identify appropriate investor with the capital and expertise to participate in the joint venture business with the customary landowners to fulfil the intentions of the Special Purpose Agriculture and Business Lease.

384

WESTERN PROVINCE

385

WESTERN PROVINCE SABLs COVERED BY THIS REPORT 1. This Report sets out the findings of the COI on a total of nine (9) SABLS issued in the Western Province of Papua New Guinea as follows: 1.1 The Commission of Inquiry File No. 66 for Special Purpose Agricultural and Business Lease (SABL) over Portion 27C Awin Pari Volume Folio Milinch: Alice, Tedi, Sari, Palmer & Kiunga, Western Province in the name of North East West Investment Limited. The Commission of Inquiry File No. 65 for Special Purpose Agricultural and Business Lease over Portion 1C Awin Pari Volume Folio Milinch: Palmer, Sari, Muller, Carrington, Alice, Elevala, Strickland & Tomu Western Province in the name of North East West Investment Limited. Commission of Inquiry File No. 64 for Special Purpose Agricultural and Business Lease over Portion 14C Awin Pari Volume Folio Milinch: Carrington, Karius, Strickland, Bosavi, Campbell, Aiema, Tomu & Sisa, Western Province in the name of Tosigiba Investment Limited. Commission of Inquiry File No. 48 for Special Purpose Agricultural and Business Lease over Portion 1C Aibolo Volume Folio Milinch: Aramia, Bosavi, Miwa, Aiema, Wawoi, Campbell, Kaim, Soari, Avu, Kotale, Piareme, & Samaki, Western Province in the name of Tumu Timbers Development Limited. Commission of Inquiry File No. 49 for Special Purpose Agricultural and Business Lease over Portion 5C Volume Folio Milinch: Guavi, Western Province in the name of La Ali Investments Limited. Commission of Inquiry File No. 50 for Special Purpose Agricultural and Business Lease over Portion 6C Volume Folio Milinch: Guavi, Western Province in the name of Mudau Investment Limited.

1.2

1.3

1.4.

1.5.

1.6.

386

1.7.

Commission of Inquiry File No. 51 for Special Purpose Agricultural and Business Lease over Portion 7C Volume Folio Milinch: Guavi, Western Province in the name of Godae Land Group Incorporated. Commission of Inquiry File No. 52 for Special Purpose Agricultural and Business Lease over Portion 8C Volume Folio MilinchGuavi, Western Province in the name of Haubawe Holdings Limited. Commission of Inquiry File No. 53 for Special Purpose Agricultural and Business Lease over Portion 9C Volume FolioMilinch:Guavi, Western Province in the name of Foifoi Limited.

1.8.

1.9

2.

Western Province SABL Circuit

Date of Hearings: 16th November 2011 to 25th November 2011 Venue: 2.1. Kiunga Vocational Technical College

The Commission commenced its hearings on the nine (9) SABLs on Wednesday 16th November, 2012 at the Kiunga Vocational Technical College Mess/Recreation Hall. The late start was the result of logistical and administrative difficulties related to scheduled flights into Kiunga resulting in the Commissions late arrival on Tuesday 15th November 2011. Despite the late start to the hearings of the inquiry, the Commissions advance party was able to make the necessary arrangements with the Provincial Administrators Office, the Kiunga Guesthouse, Transportation, Provincial Police Commanders Office, Landowner companies, Public Servants and all interested persons. Much of the logistical and administrative support arrangements on the venue for hearing, site visit, security and provincial administration support location and summoning of witnesses and other persons of interest to the Commission was done by the lead team comprising counsel

2.2

2.3

387

assisting the Commissioner, administrative and security personnel 5 days prior to arrival of the Commissioner. 2.4. In total, eight days were allocated to the conduct of hearings of oral evidence by persons of interest and those persons who have been summoned to provide both documentary and oral evidence. The circuit time was limited to allocation of one SABL a day as we commenced our hearing at Kiunga on Wednesday 16th November 2011. Therefore with 8 days allocated for the public hearing, including SABL site visit (and there were 4 SABLs located in the North Fly Electorate and 5 SABLs located in the South Fly Electorate), it was practicable that evidence from the landowners was confined only to spokespersons on behalf of clans. We however found that a majority of landowners were not happy when they found that their land was within the SABL and also there was huge interest in the packed hall for the hearings and the placards calling for their land to be returned. Site Visits The Commission conducted site visit to Portion 27C Awin Pari which accessible by road along the Kiunga/Tabubil Highway turning of at Gre village junction and travelling on a 12 kilometre feeder road that ends at Drimgas village situated along on the western bank of the Fly River. From Drimgas village, Portion 1C Awin Pari consisted of mainly heavily forested land is located on the eastern bank of the Fly River where a proposed electronic bridge will be constructed across the Fly River linking Portion 27C to Portion 1C. Runginae Rural Hospital is also located on Portion 27 and is situated some 32 km from Kiunga. Runginae is an ELCPNG facility consisting of airstrip, rurall hospital, residential houses and other amenities. This institution lies alongside the Tope River that feeds into the Fly River. The Commission was unable to visit Portion 1C Aibolo held by Tumu Timber Ltd and the other 4 SABLs located along the Strickland River on the South Fly electorate as it required additional funding for chopper or fixed wing plane to conduct aerial inspection due to logistical difficulties having access to the SABL within the vast area of the North Fly District.

2.5.

3. 3.1.

3.2.

3.3

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3.4.

The Report is divided into two parts and is based on common reasons for acquisition under SABL to develop and enhance economic development for the landowners whose main issues are accessibility to good government services and economic activity. Part A of the Report covers the four SABLs held in the name of North East West Investment Limited, Tosigiba Investment Limited and Tumu Timbers Development Limited. The SABLs are located in the North Fly and Middle Fly electorates. Part B of the Report covers the five SABLs held in the name of La Ali Investments Ltd, Mudau Investment Ltd, Godae Land Group Incorporation, Haubawe Holdings Ltd and Foifoi Ltd. The SABLs are located in the South Fly electorate.

3.5.

3.6.

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PART A 1.0 Introduction 1.1 The four (4) SABLs featured under Part A of our report for Western Province is linked to the proposed construction of the GRE_DRIMGAS_WAWOI FALLS road and referred to as the Trans Papuan Highway. There is evidence of majority support which has the support of the people of Awin Pari, Nomad and Wawoi Falls, the North Fly Provincial Government and the National Government. The national highway on completion will link the township of Kiunga, Tabubil, Nomad, Wawoi Falls, Gulf Province, Central Province and the National Capital District, 1.2. The first phase of the Project relates to the Aimbak-Kiunga-Gre-Drimgas Road, The second phase of the project is the subject of proposed Trans Papuan Highway Contract to be constructed by IT&SL commencing Drimgas village through Nomad and Wawoi Falls on the border of Western Province and Gulf Province. 2.0 BACKGROUND TO SABL PORTION 27C, PORTION 1C PORTION 14C AWIN PARI LAND AND PORTION 1 C AIBOLO 2.1 The proposed Gre-Drimgas Nomad Road Project was initiated by Mr Kala Swokin a former Member of the National Parliament in 2002 The initial intent of the project was to build a road for accessible purpose of the large population of people living in North East, Awin, Pari, and Nomad area who have since Independence, did not have any or very little form of government services. The idea was to find a developer or Aid
390

assistance from overseas or within the country to build the road at their expense since the Fly River Provincial Government has little funds to build such road in the province as the province is so large. And to pay for the cost of the construction was to get consent from landowners to allow for timber permit or authority to harvest logs within 1 kilometer of both side or selective felling along the road, starting from Gre-Drimgas across Fly River, all the way to Nomad and Wawoi Falls area. The whole plan and purpose for the road project was to firstly provide accessibility for the population that lives in the North East West Pari and Nomad towards Wawoi Falls.

Secondly, the economic logs to meet the cost of the road construction through timber permit obtained by the developer to sell and recoup the cost of construction of the road. There was no intention of SABLs. It was a simple road project for accessibility purpose to provide accessibility to the people of that region.

After the discussion was agreed, former leader, Kala Swokin and old man Sam Wigan, Sevi Bona on the following week went to Department of Works, Forestry Department, National Planning on their deliberations on whether the proposed idea was ideal or not. Since then the Department of Works, Forestry Department, National Planning gave their preliminary consents for feasibility work to proceed. The records of these arrangements can be obtained from Works Department or National Planning. The negotiations and consultation began among the national agencies responsible for this project went well. (Imen Ita Papa)

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3.0

COMMON FINDINGS ON THE TRANS PAPUAN HIGHWAY PROJECT OVER CUSTOMARY LAND

3.1

Mr Imen Ita Papa, the Provincial Lands Officer who signed the Land Investigation Report for the Portion 27C Awin Pari, Portion 1C Awin Pari, Portion 14C and Portion 1C Aibolo in the North Fly Districts in his evidence which I detail separately in the Report said he did not do the Report. The Report was compiled by Mr Hudson Hape of IT&SL and he was only told to sign, and left the Report for IT&SL to complete. This is a common trend we find also happening at New Ireland. (Refer to Imen Ita Papa-Transcript 16/11/11 pages 19-23)

4.

INVOLVMENT AND SUPPORT FOR THE ROAD PROJECT BY THE NATIONAL GOVERNMENT. NEC Decision No 115 of 2002

4.1

On 22nd March 2002 the National Executive Council (NEC) approved in principle the construction of Stage 2 of the Trans Papuan Highway aka Drimgas-Guavi Road. NEC approved government assistance and incentives to be negotiated together with other appropriate terms and conditions through the Project Agreement negotiation process.

4.2

NEC approved Department of Works (DoW) as the lead state agency in the project agreement negotiations. However there is conclusive evidence from documents submitted by IT&SL that feasibility studies was conducted and exchanged between IT&SL and DoW, the Commission is concerned that for a national project concerning a national road, proper tender process was not followed in the engagement of IT&SL in this regard.
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4.3

It was however noted that the technical Working Group endorsed by the NEC was only a smokescreen for the engagement of IT&SL and seem to fortify the notion that that this was the endorsement to engage with landowners over the customary land. That Special Projects group involving other state agencies is farcical when the Commission notes that this was for a national road project. The Recommendation

4.4

NEC Decision was made in the interest of the people of Western Province for a highway that enable access by the people in the most remote areas of PNG to towns and to involve in economic activity.

4.5

DoW in conjunction with the National Roads Authority, Department of Transport, Department of National Planning and Implementation, Department of Finance, NSTB, Department of Justice & Attorney General would have been involved in the process on that NEC endorsement. (See Clause 5 Construction- This should be part of the feasibility process with DoW- The Company shall construct and develop the road (highway) in accordance with the Department of Works Standards and Specifications and attend to harvesting, reforestation and processing in accordance with the Timber Authorities.(Clause 5 Construction and Development).prior to commencement and NEC Decision 293 of 2008

4.6

NEC Decision 293/2008 relate to two specific decisions to implement NEC Decision 115 of 2002 concerning Drimgas to Duava Road Project,
393

WP by directing the Minister for Commerce and Industry in consultation with the project proponents to obtain FCA from PNG National Forest Authority, basically to obtain approval for the construction of the roadline economic corridor. The reference to project proponents would include the Provincial Government, IT&SL and the customary landowners. The direction to the Minister responsible for Trade and Industry is not within the ambit of that ministry which is our view could have been the DoW through the normal tendering process which will also encapsulate all that requirements through proper negotiations. As will be seen all this process was floundered because the authorisation gave IT&SL a free rein to negotiate the agreement without much input from the stakeholders. Although the Inquiry was not inquiring into the aspects of tendering process, it has become evident that the whole web of acquiring the land was linked to this deal that was negotiating with the government and not conceding to the process for roadline projects. 4.7 A specific direction was made for the Minister responsible for Agriculture and Livestock to compulsory acquire 40metre road corridor of customary land for the purpose of constructing the road. That submission to the NEC which was sighted failed to include that very important aspect of the acquisition. 4.8 We take note that the road project agreement was prepared by the Department of Treasury, and no reference made on the involvement of Ministry of Works and Ministry of Attorney General & Justice. 5. GRE DRIMGAS-DUARA-WOIWOI FALLS TRANS PAPUAN HIGHWAY (STAGE TWO) ROAD PROJECT AGREEMENT between the State, Fly River Provincial Government, North East
394

West Investment Limited (NEWIL), Kebogas Investment Limited, Tosigiba Investment Limited, PNG Agency For International Development and Independent Timber & Stevedoring Limited. 5.1. On 23 March, 2011 the NEC (Special NEC Meeting No. 06/2011) advised the Governor General to enter into and execute on behalf of the Independent State of Papua New Guinea Project Agreement between the State, Independent Timber & Stevedoring Limited and the Western Province. 5.2 The Project Agreement was prepared by the State Solicitor who gave legal clearance for the execution of the agreement between the said parties. In a letter dated 3rd December 2010, State Solicitor advised Mr John Andreas, acting Secretary, Department of Commerce and Industry that the project agreement was cleared by his office on 8 th May 2007 which implied absence of proper negotiations of the Agreement by the relevant State Agencies. It is presumed that no proper discussions and negotiations to gauge the views of the stakeholders were addressed. 5.3 The Agreement was executed by Honourable Sir Michael Ogio, Governor General and Head of State of PNG acting on the advice of the NEC on behalf of PNG on 23rd May 2011 in the presence of John Andreas (Acting Secretary, Department of Commerce and Industry); Joel Luma (Secretary, Department of Works); Mr Kanawi Pouru (National Forest Authority). 5.4 It is noted that key government stakeholders named as signatories on the Agreement were not present at the signing ceremony. Those named but not present were Mr Gabriel Yer Secretary, Department of Finance; Ms Ruby Zariga, Department of National Planning and Monitoring;
395

Honourable Bob Danaya, then Governor of the Western Province and Mr Gul Gurom, Provincial Administrator, Department of Western Province This means only one thing and that all the stakeholders had not been provided with the documents and had not commented on it during the drafting stages which was already done in 2007. 5.5 Mr Imen Ita Papa had asked Mr Harsely to convene a special meeting at Kiunga and make presentation of the project agreement. That letter was signed by the Provincial Administrator and he refused the offer. Instead, Mr Harsely funded the trip for the Executives of NEWIL, Tosigiba& Kebogas to travel to Port Moresby for the signing ceremony. Dina Gabo then Chairman of Tosigiba refused to travel to Port Moresby and insisted on IT&SLs transparency over the Agreement, that IT&SL lawyer funded the trip for the Soki Samisi, the signatory on the agreement. Mr Samisi was later installed as the acting Chairman with the assistance of Mr Titus, lawyer engaged by IT&SL. There is evidence that all the executives of the landowner company expressed concern that they did not know what they were signing and that no copy of the agreement was provided. 5.6 Pertinent issues arise following our examination of the project agreement which the Commission finds contravenes Section ---of the Fairness of Transactions Act. For example, under recital letter O, Recital letter O IT & SL in conjunction with the landowners is seeking a timber authority (T/A) to cover the harvesting of log product covering some seven thousand (7,000) cubic metre per kilometre and or selective harvesting of timber from 1,000 hectares per kilometre of road length or which is the greater of the two for selective
396

harvesting of commercial species and the removal of timber from the 40 metre road corridor or 20 metres either side of the road centreline and a distance of 5, 000 metres on either side of the road corridor which has been initially agreed with traditional landowners. 5.7 The Commissions review of the 2009 Draft Agreement (Exhibit 27C) prepared by the State Solicitor notably excludes und er Recital O the reference to 5,000 hectares. It only corresponds to 40 metre road corridor or 20 metres either side of the road centreline. The C.O.I finds this to be erroneous, misleading, and mischievous. That provision we also find contradicts the statutory requirements for road line forest clearance pursuant to Section 90C of the Forestry Act. 6 6.1 EVALUATION AS TO FAIRNESS OF THE CONTRACT The effect period of the agreement for a period of twenty-five years is questionable and whether it takes twenty five years to construct the 600 km roadline (Clause 2.1.(a)(b)), issuance of Timber Authority through NFA (Clause 3.2.(a)), submission of environmental permit application from DEC (Clause 3.2(c)); submission of an application to the Minister for Lands and Physical Planning under the lease back agreement through the three (3) landowner company, hence reference to the SABL process (Clause 3.2(d)), construction and development (Clause 5) need for roadline feasibility to be completed before contract is awarded and funding available-logging will occur for over twenty five years. (Clause 5 (c)-, Obligations with State and Provincial Government.)

397

6.2

The Western Provincial Government was not present at that signing ceremony.

6.3

Mr Neville Harsely of IT&SL; Mr Waiti Kwani of NEWIL; Mr Max Miyoba (Kebogas Investment Limited) Sami (Tosigiba) signed the document as the Developer and landowners respectively. The signing of the contract was a major concern to the Fly River Provincial Government and the landowners for the reasons expressed by Mr Imen Ita Papa. (Refer to his evidence and evidence of other landowners in this Report).

6.4

The absence of the most important stakeholders leaves a lot to be desired as to how this project document signed by the government would be determined by the very action of IT&SL and the Executives of the Landowning companies.

7. 7.1.

Recommendation All government Contracts must be transparent and the involvement of the Office of the State Sloicitor as an important Office involved in State Contarcts is compulsory. Transparency and involvement of all the Stakeholders must be paramount in all decisions and contractual obligations. The State has been inundated by litigation resulting from irresponsible behaviour of very important instrumentalities of the State. This Contract was not prepared by the State Solicitor and brings into question what is the purpose of that Office in terms of providing advice to the State.

398

8 8.1

Papua New Guinea Agency for International Development The Papua New Guinea Agency for international Development (PNGAID) is providing assistance to the landowner companies in the development and humanitarian needs in this road project. This connotes the intention of the company to provide apart from funding project assiatance, but humanitarian assistance largely in exchange for merchantable logs for export. The road project has been given a lifeline of twenty five years where IT&SL is benefiting from the agreement at the expense of the four companies, the provincial government having no involvement in matters affecting customary land in the WP and key agencies of government.

8.2

Under recital letter L of the Agreement states; The Landowner Companies have approached PNGAID to seek financial assistance for the project funding. In consultation with the landowners, PNGAID has agreed to assist in the development and humanitarian needs in this road project. All funding has been provided by IT&SL and there will no cost or liability to the State, the Provincial Government and the landowners in connection with the construction of Stage 2 of the Road Project. (Recital L).

8.3

The Commission notes that funding of the road project will be sourced from the logging activities of IT&SL as stipulated under this agreement, the Joint Venture Agreement with the Landowner companies and under the 25 years sub lease agreement.

8.4

Recital U of the Agreement further states, PNGAID has assigned the road construction and logging operation to IT&SL and IT&SL have
399

entered into separate contractual arrangement with the landowner Companies for the purpose of implementing the Road Project and harvest the timbers. 8.5 We find fundamental to this aspect of inquiry that PNGAID played a pivotal role acting as the middleman agency for the landowner companies, IT&SL and the State from inception of the project to the signing of the project agreement. The Commission noted that PNGAID was the funding agency and had engaged its own contractor to implement the road project thus eliminating CSTB involvement in awarding of the contract, minimising delays relating to DOW depleted in-house Design capacity, and minimise delays in outsourcing survey and design components to Consultants, however, the planning and procurement aspects of the PNGAID proposal required approval of the Department of Treasury, National Planning and Finance respectively. Mr Mumu then Deputy Secretary of DOW also advised PNGAID that the new Design concept was accepted subject to DOW Design Standards of Roads and Bridges. (Roy Mumu letter dated 07th September 2006). According to records the proposed design, construction and funding of the road was an initiative taken by the private sector in the provision of a major transport infrastructure in compliance with DOW design standards hence a national road asset subject to the discretion of the Minister of Transport to declare that road as a national road asset. (Mr Parakei, Secretary-Transport-letter dated 21st September, 2006) 8.6 A Memorandum of Understanding was executed between the State and PNGAID on 8th July 2005. The signatories to that MOU were Mr Valentine Kambori, then Secretary for National Planning and Rural Development and Mr Paul M. Japhlom, Managing Director of PNGAID.
400

Under that MOU, the State will use its best endeavours to facilitate investment by PNGAID in the areas of Economic and Social Development, facilitate the processing of approvals, endorsement, licences, permits and other clearance as may be required by PNGAID to develop identified projects in PNG and the Department of National Planning and other relevant agencies will provide support and assistance to PNGAID in its dealing with local authorities, landowners and other interested groups. (See MOU) 8.7 Likewise amongst other things PNGAID will access US and other international multilateral public funding agencies to provide financial, technical and human resources to establish economic and social projects. 8.8 IPA extracts of IT&SL reveal that Paul Michael Japhlom and his wife Winnie Winifred Japhlom each held 50 shares from 7 th November 2003 to 5th April 2006. They also held the Directorship and Secretary position jointly to November 2006. The Commission did not interview or receive any evidence from Mr Japhlom on his involvement as Director of IT&SL and the setting up of PNGAID of which he is the Managing Director. The Commission finds that IT&SL became involved with the Trans Papuan Road project as early as 2003, the time Mr & Mrs Japhlom were Shareholders, Directors and Secretary of IT&SL. The Commission conclude as a matter of fact that a potential conflict of interest on the part of Mr Japhlom existed when he established PNGAID to forge investment on behalf of the landowners, the State and IT&SL of which he was a previous active corporate member. 8.9 The Commission notes that a Mr John Mulcahy signed the Road Project Agreement as Managing Director of PNGAID on 23rd May 2011. We find
401

as a fact that the same Mr John Mulcahy is a non-resident active Director/Employee of IT&SL referred to in the evidence of Mr Neville Harsely (Harsely 10/1/12-SBL 76 Mirou at pages 52-53). Subject to further inquiry on this aspect of the inquiry, the Commission sighted a letter from Meridian Capital Group (Merchant Bankers) dated 1 st October 2005 where a Mr John Mulcahy, Managing Director Meridian Capital Group wrote to the Secretary for Transport, Mr Henry Parakei stating that the Meridian Capital Group was acting as an intermediary in regard to Trans Papuan Highway Project, As an intermediary to foreign governments and domestic sources of funding, we have arranged to provide capital required to design, implement and maintain socially conscious infrastructure projects such as the National Road Projects. 8.10 The triangular web created by forging understanding with the State, the abuse of the lease back process and the acquisition of the two (2) million hectares the Commision finds is questionable for the fact that IT&SL is the main source of outworking towards the road project and directly manipulating the SABL lease back process. The source of that manipulation is absolutely encouraged by the agencies of the State whose responsibilities border on gross negligence. 8.11 The State Agencies responsible for foreign company registration and investment portfolio are required to undertake indepth due diligence on all foreign corporations, individuals (both national and foreigners) investors to avoid gross abuse of natural resources and having acess to the peoples asset, the land. 8.12 We recommend that further investigation undertaken to ascertain the involvement of Messrs Japhlom, Harsely, Malcahy and to establish if an
402

international racketeering over land acquisition has been committed by the company(s) over the SABLs Portion at Awin Pari, Nomad and Wawoi Land. 9 ELC RUN RUNGINAE RURAL HOSPITAL AND OTHER EXISTING STATE LEASES 9.1 It appears from the acquisition that a number of existing SLs was not excised from the SABL. Mr Max Ako current Hospital Administrator of the Runginae Rural Hospital gave evidence on oath. Runginae Rural Hospital is located some 62km from the township of Kiunga (along the Kiunga/Tabubil Road) and is a private hospital administered by the Evangelical Church of Papua New Guinea (ECPNG). The current SABL also includes that current hospital facility, administration block, airstrip and residential houses and other amenities. In what was a very strong statement to the inquiry involving a private run hospital and essential service to North Fly ECPNG raised very serious concerns over the inclusion of an existing mission lease including various leases within the district that is crucial to the decision of the Commission to revoke the SABL without any consideration to NEWIL and IT&SL. 9.2 The statement to the Inquiry in part reads; The executive committee of the Evangelical Church of Papua New Guinea Health Services North Fly has some concerns regarding the granting of SABLs in the areas where we operate health service which effectively extinguishes the mission church lease under which we were operating. At a minimum, we would like to see the areas of mission church lease exercise from the SABLs. ECPNG Health Services North Fly operates a rural hospital at Rumginai which serves a referral centre for a very large area of Western Province
403

as well as a Community Health Worker Training School. As well as the hospital and CSW school we also operate five health centres namely; Moguru Health Centre in Nomad, Debepari Health Centre in Nomad, Havena Health Centre north of Rumginai and Dome, this is not in the SABL area, in the North Fly and Obo in the Middle Fly and 10 aid-posts namely; Senamrai, Atkamba, Sonai, Dahamo, Suabi, Adumari, Honenabi, Yehebi, Fuma and Hesaribi. And six of these last ones are, I think, within the SABL lease. A large number of our aid post and our busiest health centre Moguru have been directly affected by the granting of the Special Purpose Agriculture and Business Lease which now includes the ground where these facilities have been built. The SABLs have also taken away land from the mission stations in which these facilities are based including land where there are schools and other facilities. .As a health service the granting of SABLs has presented us with a number of concerns. Rumginai hospital was built in the late 1960s and many of our facilities are also quite old and run down. We are in the process of presenting project submissions to various agencies. We have no longer hold a valid lease over the land where our facilities are built. We are not going to be able to convince potential donors to assist us with rebuilding or rehabilitating our facilities. To secure funding for

infrastructure project, we need to have a valid lease. Our church service has a very high standard with regard to healthy living and respectful behaviour. 9.3 The project agreement between the State, Fly River Provincial Government and the Independent Timber and Stevedoring Limited is not binding and enforceable because it fails to meet necessary statutory requirements in relation to public contract. For example, tendering
404

requirements under Public Finance (management) Act 1995 as amended were not complied with. Also, the contract does not comply with either statutory requirement such as Section 90 C of the Forestry Act. 9.4 The recital letter O to the project agreement is illegal or fraudulent in that there was no real consensus ad idem between the landowners and the independent Timber Stevedoring Limited and on the subject matter before the agreement were executed by the Head of State, acting on advice of the NEC.

405

1. COI Inquiry File No. 66 for Special Purpose Agricultural and Business Lease over Portion 27C Volume -- Folio -- Milinch: Alice, Tedi, Sari, Palmer & Kiunga, Western Province in the name of North East West Investment Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to Section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the North East West Investment SABL. These were: 1.2.1 Department of Western Province, (DWP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGFA) Witnesses Evidence and Summonses 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings, including titles, are set out in the schedule below. For ease of reference, the schedule also lists the

406

transcript pages at which the person commenced giving evidence against the name of the witness.
No Name and Position Mr Imen Ita Papa, Provincial Lands Adviser, Provincial Lands & Physical Planning Office, DWP Mr Manase Dimonai, District Administrator, North Fly District, DWP Mr Hudson Hape, Surveyor, IT&SL Mr Michael Titus, Lawyer, Private Legal Practitioner Mr Ronny Guran Landowner, Dahamo Village (Ward 16), Ward Councillor, Olosobip LLG Mr Steve Kwani Landowner, Tmigondok village, Husioke Clan, Chairman-Nakrone Forest Area Landowners Association Mr Jack Kwani Landowner & Chairman of Gase Clan, Drimgas & Tupensomi village, Mr Giwi Giwi Landowner-Sawi Clan, Awin Tribe, Tiomnai Village (Kiunga/Tabubil Road) Mr Max Ako, Hospital Administrator, Runginae Rural Hospital, Evangelical Church of PNG, Kiunga Mr Ronny Guran Landowner Mr Norbert Gwame Landowner, Somoe clan, Somoekwankia village, Ningerum Rural LLG Mr Nelson Women Landowner(Also refer to evidence under Portion 1C Awin Pari) Pages 3-50 36-51 74-75 101-103 63-75 62-74 13Day Date 16/11/11-SABL 58-MIROU 21/11/11-SABL 61-MIROU 21/11/11-SABL 61-MIROU 21/11/11-SABL 61-MIROU 17/11/11-SABL 59-MIROU 21/11/11-SABL 61-MIROU 22/11/11 21/11/11 22/11/11 16/11/11-SABL 58_MIROU

1 5 5 5 2 5 6 5

2 3 4 5

12-13 50-55

6 1

58-66

16/11/11-SABL 58-MIROU

67-78

16/11/11-SABL 58-MIROU

55-57

16/11/11-SABL 58-MIROU

78-85

16/11/11-SABL 58-MIROU

10 11

50-55

1 1

16/11/11-SABL 58-MIROU 16/11/11 SABL 58-MIROU

12

19-28

17/11/11-SABL 59-MIROU

407

13 14 15 16 17 18 19 20 21

Mr Neville Harsely, CEO, IT&SL Mrs Betty Wine, Chairlady, Women in Mining, Kiunga Mr Waiti Kwani Chairman-NEWIL Drimgas village Mr Foxy Asobi Secretary-NEWIL Mr Samson Ubre Director-NEWIL Mr Aaron Dupnai Landowner, Awin Tribe Mr Patoro Ako, Landowner, Awin Tribe Mr Pepi Kimas Former Secretary, DLPP (200 to 2010) Mr Simon Malo

1-73 3767 5 6 5 5 8 347-87 2

10/01/12-SABL MIROU 23/11/11-SABL 64-MIROU 21/11/11-SABL 61-MIROU 22/11/11-SABL 62-MIROU 21/11/11-SABL 61-MIROU 21/11/11-SABL 61-MIROU 25/11/11-SABL MIROU

`17/11/11-SABL 59-MIROU 17/01/12-SABL 80-NUMAPO/ MIROU

2, 2.1

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be representedby counsel.

2.2

The following were granted leave to be represented by counsel

Laywer for NEWIL & IT&SL Mr Michael Titus

3. 3.1
No 1 2 3 4 5

Exhibits and documents There were fourteen (14) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
Item Survey Map of Portion 27C Notice of Direct Grant Land Investigation Report Instrument of Lease-Lease Back Agreement Response by Mr Imen Ita Interested Party C.O.I C.O.I C.O.I C.O.I C.O.I
408

Date received 16/11/11 16/11/11 16/11/11 16/11/11 16/11/11

Exhibit Number NEWIL 27C(1) NEWIL 27C(2) NEWIL 27C(3) NEWIL 27C(4) NEWIL 27C(5)

6 7

9 10 11 12 13

Papa, Acting Advisor, Division of Lands and Physical Planning-Trans Papuan Highway Road Project in Kiunga, WP Bachelor of Land Studies Degree-Mr Imen Ita Papa dated 28/11/97 Agreement Between The Independent State of PNG, Fly River Provincial Government and NEWIL and KEBOGAS Investment Limited and Tosigiba Timbers Group Limited and PNG Agency for International Development and Independent Timbers and Stevedoring Limited ECPNG Letter dated 15 November 2011 from Max Ako, Runginae Rural Hospital Administrator Affidavit of Waiti Kwani & List of ILG Consent Form signed on /11/11 Affidavit of Foxy Asobi Affidavit of Samson Ubre Affidavit of Betty Wine Supplementary Affidavit of Max Ako & Map of Project Areas Covered under Portion 27C (NEWIL) & Portion 14C (TOSIGIBA) Statement of Aaron Dupnai dated 22 August 2011 re: Inclusion and Investigation to be conducted, PNG Highway and SABLs

C.O.I C.O.I

16/11/11 16/11/11

NEWIL 27C(6) NEWIL 27C(7)

C.O.I

16/11/11

NEWIL 27C(8)

C.O.I C.O.I C.O.I C.O.I C.O.I

NEWIL WK

25/11/11 25/11/11

BW 18/11/11 MA 1 MA 2

14

C.O.I

25/11/11

AD 1

4, 4.1

Timeline of events of note surrounding NEWIL SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:

409

No

Milestone

1 2

3 4 5 6 7

10

Incorporation of North East West Investment Limited Independent Timbers & Stevedoring Limited Application for SABL to Portion 27C Land Investigation Report(s) Survey Plan Catalogue Lease-Lease Back Agreement NEC Decision 115/2007 dated 22nd March 2007 re: Government Support and Approval in Principle sought for the construction of the Drimgas to Duara (Tegana) Road ProjectWestern Province, PNG NEC Decision 293/2008 dated 15th December 2008. re: Implementation of NEC Decision 115/2007 Drimgas to Duara Road Project, Western Province Special NEC Meeting No. 06/2011 re Advice to the Governor General dated 25th March 2011. Trans Papua Highway Road Project Stage II

Dated of Completion/ Grant/Issue Execution 10 May 2044

Proponent/Applicant

Respondent Entity/Respondent

NEWIL

NEWIL

7 November 2003

IT & SL

IT & SL

19/12/2008

IT & SL

IT & SL

19/12/2008 24/07/2009 22/03/2007

IT & SL IT & SL IT & SL IT & SL

IT & SL IT & SL IT & SL IT & SL

15/12/2008

IT & SL

IT & SL

25/03/2011

IT & SL

IT & SL

23/03/2011

IT & SL

IT & SL

410

5, 5.1

FINDINGS The findings follow the chronology of table of notable events above surrounding the SABL lease title held by NEWIL.

6, 6.1

North East West Investment Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette no. G218 dated 24th September 2010 for Portion 27C Awin Pari Land. The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 23rd September 2010 by the Department of Lands and Physical Planning to the holder North East West Investment Limited (NEWIL).The details of the SABL is shown below:

Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease IPA 7 7.1 North East West Limited

Portion 27C 9/133 North East West Investment Limited 23rd September 2010 Ninety-nine (99) years 149,117.0 hectares

North East West Investment Limited (NEWIL) is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. The Company was incorporated on 10th May 2004 and the current Principal
411

Place of Business is Room 1001, 10th Floor, Pacific View Apartments, Pruth Street, Korobosea, National Capital District. As at 3rd October, 2011 IPA records confirms that it is operating. The Company number is 1-51352. 7.2 The latest IPA company extract provided to the Commission dated 3rd October 2011 indicates 62 shareholders of NEWIL holding 1 ordinary share each in their capacities as Incorporated Land Groups within the land known as Awin Pari, North Fly electorate of the Western Province. 7.3 The extract discloses Messrs Robin Yawa, Foxy Asobi, Dimo Sobori, Paul Wasi, Joe Skai, Waiti Kwani, Samson Ubre, Susan Bale, Ronson Moya and Tusa Dimabo as Directors of the company. Mr Foxy Asobi is also the current Secretary of the Company with Mr Kwani appointed as the Chairman. The Annual return for the company was made up to 30 th June 2010. 7.4 Messrs Waiti Kwani, Foxy Asobi and Samson Ubre, the current Executives of NEWIL told the inquiry the importance of development for the people of North Fly district and collectively confirmed that the people agreed in principle to allow IT&SL to develop the district through the road project. It was on this basis that the majority consented for the road project to be constructed on their land. Mr Waiti Kwani, current Chairman of NEWIL told the inquiry that on 16th March 2003, the Executives convened a meeting at Sarekona for the landowners of Portion 27C, Portion 1C and Portion 14C to inform them that IT&SL heard our cry for development and was interested in constructing a road, selective logging and agriculture project from Drimgas, Guavi Falls and all landowners must form ILGs to participate in the project.
412

On 23 March 2003, Neville Harsely of IT&S came and met more than 500 people at the old Kiunga Rural LLG Council chamber and Mr Harsely advised everyone he was prepared to partner them by carrying out the developments in exchange for forest resources. 7.5 It was after that meeting that awareness and ILG was organised by the Executives with the assistance of Mr Michael Titus, a private lawyer paid by IT&SL to assist all the landowners register their respective ILGs. According to Mr Waiti the ILG registration finalised in 2006, and that all landowners were aware of the proposed road project agreed to solve their disputes and register their ILG at a later date. This fact was pursued when Mr Waiti attached to his Affidavit a list of clan members endorsing their support and consent, copies of the signatures signed in the presence of lawyer Michael Titus on October 2011, some 2 weeks before the inquiry commenced its hearing at Kiunga. 7.6 Mr Waiti further states that in 2007, that when IT&SL commenced feasibility studies on all components of the road project, authority for the road line TA was refused by NFA because of changes to the Forestry Act, as the requirement for roads more than 12.5km required FCA. It was that point in time that SABL was mooted and agreed to as the best vehicle for development and for the avoidance of further NFA process where the request for feeder road by landowners during the life of the project would not be an impediment to the IT&SLs construction of the 600 km economic road line for the North Fly District linking Gulf Province, Central Province and eventually Port Moresby. This was admitted as the very basis for converting the initial request for road line into an SABL concept as Waiti states in his evidence;
413

.And since NEWIL represented the landowners now given all the awareness programs, the landowners has consented for the project, a next half activities to be undertaken in the project based on the Department of Lands advice. It was agreed the appropriate way forward was by way of an SABL. Through the SABL, the customary lands would be secured for the project fundamentally, because aside from the main Trans Papuan Highway, the potential request for feeder roads by the landowners would see feeder roads closing the entire project area. .

Apart from the Trans Papuan Highway, corridor and the development alongside the corridor of the highway, airstrips, base camps, all other parts of the project area would not be utilized unless the landowners wanted feeder roads, selective logging for agriculture projects on their customary lands.

Awareness of SABL. After learning the need to secure the land by way of an SABL, in November 2008 we had a meeting with all Pari, Waitu, Awin, Nomad, Biyami tribes at Sarekona and then form teams and we went to advise them to advise them of what we understood and described to the landowners was agricultural lease, timber over their land for the road and agricultural forest project. We went to all the same villages along the proposed road corridor and up the Fly and Palmer River. ..

414

7.7

In that evidence Mr Waiti confirmed that during the process of the Land Investigation process they made representation to Mr Sikabi Maika, then Provincial Lands Adviser and learnt that the district lands office was short staffed and their was funding problems to undertake the LIR. The Executives used that information to approach IT&SL and the developer agreed to facilitate the LIR. Mr Hudson Hapa was instrumental in assisting the landowners in surveying the land and conducting the LIR.

7.8

Mr Waiti, Chairman of NEWIL produced a detailed list of landowners names from all the various clan members and signature to indicative that majority consent for Portion 27C and 1C was obtained. This was an attempt to mislead the COI and it was noted during the hearings that Mr Titus was assisting the executives in the preparation of the Affidavits. The Affidavit tendered in as evidence indicate that it was sworn on 17th September 2011 and the Attachment a confirming landowner support of the project and the signatures indicate that signatures was obtained between periods 30/10/11, 1st, 2nd, 3rd, 4th, 5th, 6th, 7th and 8th November 2011. The list was prepared some two weeks before the commencement of the hearings at Kiunga and places a lot of question on the integrity of the land investigation process.18

8 8.1

Recommendation The Chairman and Executives of landowner companies must exercise responsibility in land mobilization process and should not be influenced by any means that is a contravention of any laws or process.

18

Pepi Kimas confirmed that when Forestry policy changed in 1996 this led to wholesale changes to the way SABL was processed-(page 11 of Transcript SABL 80-Mirou-17/01/12)

415

8.2

The IPA must also become proactive and undertake workshops for lanwoners executives in understanding the corporate laws and its process. That must be a compulsory exercise to educate the mushrooming landowing companies.

9 9.1

EVIDENCE OF THE LANDGROUPS OF AWIN PARI The proceedings of the inquiry into Portion 27C Awin Pari gave opportunity for the landowners under SABL Portion 27C Awin Pari to provide evidence on their understanding of the SABL and the issue of consent. It is significant to ascertain whether the consent and general awareness was conducted by the Lands Officers or the Provincial administration into all aspects of the land investigation. The general thrust of landowner consensus is that the majority villagers within the road corridor project had consented to the construction of the Trans Papuan Highway, which also included allowance for the clearance of forest area to build the road. That road clearance in compliance with Forestry Act would entail a 40mtere road corridor forest clearance.

9.2

The evidence of the landowners is indicative of their understanding of what was a genuine road line project becoming a source of venue to acquire customary land under the guise of road project basically to undertake logging activity

9.3

Ronny Guran, a Ward Councillor from Dahamino village, Olsopip LLG told the Commission, that the five (5) villages within Ward 16 was not aware of the existence of NEWIL as the umbrella landowner company. He confirmed that there was virtually no awareness carried out in the area
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by NEWIL or DLPP, but the villagers only knew of the Trans Papuan Highway project and any feeder road that would be constructed for the village to enable access to the highway and the township of Kiunga or other major towns. Olsopip is located further north on the border towards Sandaun Province. 9.4 Giwi Giwi from Tiomna village which is some 13km from Kiunga (on the Kiunga/Tabubil Highway) and representative spokesperson for the 70plus members of the Sami clan, Awin tribe confirmed that they were not aware of the SABL Portion 27C until they saw the gazettal listing published by the Commission of Inquiry. The whole village was not aware of the existence of NEWIL as the landowner umbrella company, and also knew nothing of any government representation in the land investigation process. 9.5 Steven Kwani, Chairman of Nakrone Forest Area Landowners Association, spokesman representing the USIOKE clan from Trigondok village also confirmed that his people were not aware of the SABL that also included their land. According to Mr Kwani, his people were only told that a roadline will be constructed connecting the Gre Drimgas road across the Fly River over Portion 1C to the Wawoi Falls. There was no involvement from DLPP or the Provincial Lands Office. He also states that he comes from a clan that has about 105 adults and children. In total there are also 10 clans making up their tribe totalling 246 inhabitants. 9.6 Jack Kwani, spokesman from Drimgas village and of the Gause Clan which is one of the 12 clans along the Fly River where the proposed roadline will be constructed. He said on oath that from Drimgas to Tupensomi there are about 624 inhabitants. He also restated that the
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people of Drimgas to Tupensomi were not fully aware of SABL until the date of the SABL inquiry hearings at Kiunga, There was awareness about the Trans Papuan Highway, but IT&SL did not make that very clear to the people. 9.7 In respect of the ILG forms, it was confirmed that Waiti Kwani, Samson Ubre and Foxy Asobi were conducting the ILG awareness and collecting signatures basically on the roadline project and not the SABL. He was present at the time the road project agreement was signed at the Office of the Governor General but was insisting on the ILG Certificate for his clan. The important aspect of his evidence is that IT&SL had no presence in Kiunga especially an office to conduct business with the Awin landowners including heavy machinery and equipment since 2006. The current feeder road between Gre village and Drimgas on the Fly River was built jointly by Department of Works and Trima Construction Limited. 9.8 Patoro Ako comes from Grengas village which is about 10km from Kiunga along the Kiunga/Tabubil Highway. He is a member of the Hongas clan. Mr Ako states that he played a very significant role by assisting IT&SL as a former Director of NEWIL in the process leading to the acquisition of Portion 27C and the other three SABL lease back titles. He agreed that whilst the initial intent for the consent was for the road corridor roadline, the SABL process was not considered by the majority landowners. He confirmed that his clan have never given the approval or consent and supported calls for the revocation of the SABL title. 9.10 Nelson Women (SABL 59-MIROU 17/11/11 pp 19-28) comes from Tmingondok village which lies on the land bordering Portion 27C and
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Portion 1C Awin Pari land and covers about 30,000 hectares of land. The villages comprising nine (9) clans are located on the eastern (Portion 1C) and western banks (Portion 27C) of the Fly River. He is the leader of the Gase clan and Deputy Chairman of the Dispute Settlement Authority. 9.11 He expressed disappointment on behalf of his clan over the absence of government officials in conducting awareness over the SABL, the land investigation process and the fraudulent means of obtaining the consent of his people by using another person by the name of Julius Mangunen, who is the member of the Musiok Clan (ILG 12448) on the east bank of the Fly River. He even said that their village lies well outside of the intended road construction project and could not understand how and why it was included under the two portions under the NEWIL and subleased to IT&SL under the JV Agreement. His clan did not fill out the consent form as required in the Land investigation process and they also did not approve Julius Mangunen to be the agent for their clan. 9.12 Aaron Dupnai comes from the Giponai village some 30km up the Fly River from Kiunga, He represents his people of the Gre Clan of the EKium Tribe. At the time of the hearing, Mr Dupnai in the company of his people in their traditional regalia in a silent protest holding placards simply calling for their land under SABL to be returned to them. Mr Dupnai registered his peoples complaints over the acquisition of their customary land by the umbrella Landowner Company and IT&SL without the knowledge and consent of his people. He also expressed a number of matters that will require further investigation especially over the lack of consent and the forging of signatures on the consent form, the road corridor extension of forest clearance to 5km in breach of the

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Forestry Act and the lack of financial capacity of IT&SL to construct the road. 10. INDEPENDENT TIMBERS AND STEVEDORING LIMITED

10.1 The proposed developer for the SABL is Independent Timbers & Stevedoring Limited (IT&SL) a foreign company registered and located in Delaware, United States of America. It registered in PNG on 7 th November 2003 as a branch or operation office under section 386 of the Companies Act, 1997. The company registration number is 1-500930 and is wholly owned by IT&SL USA, INC. 10.2 In terms of the share structure and composition of shareholders the company has issued a total of 19,242,603 shares Between 5 April 2006 and 31 May 2011 the company had issued a total of 7million shares. The registered office of IT&S(USA) Incorporated is stated as 3500 South Dupont Highway, Dover, Detroit 19901 USA. 10.3 The current directors of the company are Mr Neville John Harsely and Clifford Ian Frazer, both are Australian citizens. 10.4 The company applied for certification as a foreign entity operating in PNG and the IPA Certificate Committee deliberated and approved the application on 3rd August 2006. A foreign certificate with Certificate No. 91629 with terms and conditions was issued to IT&SL on 11th August 2006. 10.5 The company was certified to carry on business activities of Infrastructure and Construction development; Harvesting of Forest
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Products, Processing of Forest Products and Buyers and Exporters of Sawn Timber. Its registered office is located at Section 72, Allotment 31, Korobosea Drive, National Capital District and its operating location to conduct the its certified activities is DRIMGAS to DUNA (TEGANA)Western Province. That variation was issued to IT&SL by IPA on 18 th February 2011. According to IPA, the company intended to work with NEWIL and to implement its Project Executive Work Plan executed on 4 November 2005. 10.6 The Commission is concerned about the lack of presence of the company including heavy machineries, office infrastructure to carry out the project. Under the Schedule of Terms and Conditions of IPA Certification, the company is required to (1). Commence operations of the approved activities and locations within 6 months from Certification; and;(4). Within 6 months from the date of certification and every 6 months thereafter, provide details of any capital expenditure and other economic statistics such as employment creation as stated in the business plan, import/export statistics and productions data that may be deemed necessary for the purposes of the Investment Promotion Act, 1992. The company has not complied with this requirement and may be liable for prosecution under the Investment Promotion Act, 1992since the Certificate was issued on 11th August 2006.19

19

Refer to Affidavit and Annexure attached to the Affidavit of Alex Tongayu, Registrar of Companies dated 20 October 2011 to COI SABL 48 Portion 1C Tumu Timbers Limited 421

The Evidence of Mr Neville Harsely 10.7 Mr Neville Harsely20 is an Australian and the Managing Director of IT&SL operations in Papua New Guinea. He played a leading role in establishing rapport with the landowner company executives, government agencies especially with the Trans Papuan Highway for the past 8 years culminating in the execution of the road project agreement between the State, the landowner companies and his company. 10.8 The Commission has noted with concern that since the company was accorded the status of developer company, there was no significant progress over the second phase of the project been only feasibility studies and on-going negotiations over forestry roadline clearance, environmental issues, agricultural and at the highest the National Executive Councils authorization for government agencies to lend support to IT&SL as the preferred developer. 10.9 Company has worked in the Western province for eight (8) years and done detailed engineering on the project. (Nothing tangible and operations not visible in terms of the road project both at Kiunga & Port Moresby). Following the amendment to the Forest Act, company was forced to consider other process to utilise the land earmarked for the construction road corridor. We set up a very significant point by saying that the road construction and clearing had to be done and designed in what we call 20 kilometre sections so that we do survey on site, we design road section in 20 km sections which is submitted to the Department of Works in engineering alignment sheets. The DoW duly approved those

20

SABL 76-MIROU-10th January 2012 pages 1-72

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20km sections for then to be able to commence construction on, (page 4 line 46-51)21 10.10 Confirm retaining Michael Titus as lawyer to assist the Landowners, Mr Titus is paid by our company to provide independent legal counsel to the respective landowner companies. So that way companies are provided some form of legal guidance from where they are. We (IT&SL) do not involve ourselves in any of those meetings and we preclude ourselves. 10.11 According to his evidence, IT&SL commenced feasibility studies on the road project which included application for grant of TA. NFA advised IT&SL that proposed road project did not require TA concept based on amendments to the Act, recommending that they submit for roadline FCA . It was at that point in time that IT&SL ..went back to the landowners advising them in Kiunga at a public meeting that the Forestry had advised us that we could not use the TA concept along the road from where it was that we had to use the new adapted FCA concept for the roadline which involved an FAC roadline clearance authority for the forty metre wide and then to achieve the other areas of the road for FCA agriculture. So that was the concept; we went back to the landowners with the briefing that we were provided by Forestry. The landowners then agreed that that was the most applicable way for us to proceed with where we were with agricultural activities and the road along there. 10.12 IT&SL went further by creating the idea that feeder roads would also be constructed linking the road corridor project hence those outside
21

Reference is made to his involvement in the appointment of Soki Samisi of Tosigiba aided by Michael Titus. The fall out of Dina Gabo and the subsequent signing of the project agreement at p 6 line 29-38 and page 7 lines 14-23

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the project area would require access from their remote areas. They consulted National Mapping Bureau to obtain the maps the result of the survey plans and the SABL. 10.13 Mr Harselys explanation on the SABL process and IT&SLs

involvement,And there was very much number of meetings there. I personally attended the meetings, I do not send out some lands person to brief the people. I personally went out myself. I had travelled to Wakina, Togina, Deabi. I have been to Suabi,Juha, Movalulu, Nomad, Wawoi Falls, Sempoka, Yabo and Hesalibi and Honinabi, the major villlages.. 10.14 These were related to the road and the SABL process. Confirm involvement of Simon Malu with reference to a meeting that was convened for the community at Sempoka village. Mr Malo interpreted what was said to the people in the Pidgin language.Mr Imen Papa and Biyama also attended the forum and the documents were signed in the presence of the people. Used landowners for consultation, conduct awareness on the land investigation, named Samson Ubre, Foxy Asobi, Waiti Kwani, Dina Gabo Steven Kwani and representatives from Kiunga Timbers. Provided assistance outboard fuel, boat hire to conduct awareness within the project area. Agree that the LIR was signed in Port Moresby A. Commissioner, those provincial lands officers just did not walk in for five minutes and sign documents. I know for a fact because we
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had them in our office, they were using our facilities to go through with landowner representatives present.

Q.

In Kiunga?

A.

In Port Moresby.

Q.

Kiunga, I mean that is where the-these lands are located in Western Province not in Port Moresby?

A.

Yes, and we also had the same officers present at the meetings with the landowners in Kiunga. Imen Papa was present at those meetings in Kiunga, Ipisa Biyama was present at those meeting in Kiunga and the same representatives came up here to formalize things with Lands Department here in Port Moresby. And the landowner representatives were present were present in Kiunga and they were also present at meetings in our office with officers.

Q.

But the lands investigation report says that alkl these documents were signed in Kiunga not in Port Moresby. Now, you say that it has been signed in Port Moresby?

A.

No, in the agreement on the customary boundaries, Commissioner, we had representatives from the respective clan groups at a meeting with the provincial lands officer to agree on the boundaries. We used, where we could the river systems as the boundary because the way river systems provides a boundary on the lease

Q.

Mr Harsely, that is quite true. Your Mr Hape has confirmed that

evidence. He did not walk the boundary, he just simply used what you are saying, used the river systems, the ridges

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10.15

Construction Corridor-required additional 10km to grow vegetables, cash crop (cabbage, beetroots, lettuce, tomatoes and light chi chi trees-to be used for catering over project sites camps etc.-No expertise in agricultural development (page 28 line 18 to line 50 on page 29; page 41-42).

10.16

NFA questions capacity of IT&SL to fund the road project-pages 30 line 1 to DEC also queries further submission on the application for further 5,000metres.(Kei Vuatha Kapa) Company has no profile in PNG and apart from the reference to certain experts within IT&SL operations and will concentrate on logging and shipping We are going to have the same life in the village mentality that is going to do nothing. I am not here and when I first was invited down at Kiunga by the people, they told me no money politics, no mobilization money because the biggest thing that corrupts this community at the moment is sign documents, to get them to sell their rights out. Before this project agreement was signed, I ensured that the landowner companies shares were issued to all of the ILGs so those companies were owed by the people; not a group of six directors sitting in Port Moresby doing some dirty deal on peoples land. I have tried to take a moral position on this project over eight years to protect the rights of people. If I have made a mistake, I will stand by it. You know from where the land investigation reports; if there is a correction to be done, I will do it. I am not going to walk away from it but the other things is let me say is that people over this period of time said. Well the project agreement is signed; then we
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know it is real. Since the project agreement was signed, we have registered another 200 ILGs which encompass everyone. From where Tumu Timbers is; when Forestry went through originally they had 52 ILGs. We found out there is another 55 ILGs whose land comes in the project area too. We fixed it, we have registered then (Page 49 line 42 to page 50 line 19) 10.17 The above answer was in response to the question put to Mr Harsely by Mr TusaisCounsel forC.O.Ithat the SABL LIR process was defective and had no legal basis for an issuance of SABL to the three Landowner Umbrella Company. 10.18 C.O.I questioned Mr Harsely on the Minute that was send out by

Hudson Hapa to Cliff Frazer, Noah Vica and John Mulcahy seeking K60, 000as reasonable fee to compensate them for putting their careers and professional standing on the line to process the LIR and defend it. Explanation was that it was done by a potential candidate for the seat held by Sir Puka Temu and a conspiracy to solicit funds from IT&SL to fund election campaign as he was previously employed by IT&SL (Pages 52-53) - It is quite extraordinary in that the allegation in itself was a request to pay the Secretary and officers to process project area one and two SABL. Simon Malu asked for K5000 to assist him with his fathers funeral expenses and IT&SL never paid the money to him.

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11

The Evidence of Hudson Hape (SABL 62 KIUNGA- 22nd November 2011-pages 13-77

11.1 Mr Hudson Hape is a duly qualified and registered company surveyor and graduated from University of Technology with a Bachelor of Technology specialising in Surveying in 1988..On examination by the Commission of Inquiry at Kiunga, Mr Hape confirmed that he was currently employed as a registered company surveyor for IT&SL. At the time the land investigation process begun as a result of the companys involvement in negotiations with the Landowners over the road project 11.2 He played a leading role in the Land Investigation, coordinated the ILG formations with the Executives of the Tumu and produced the rural class 4 survey from the maps that was already available and provided coordinates for the identification of the boundaries of Portion 1C without any input from the Provincial Lands Officer. It was a direct involvement between DLPP (Waigani) and IT&SL, the developer. He says that he became involved in the LIR and land surveys on his engagement in 2008, and that much of the surveys were already conducted and his role was to ensure that the coordinates were in order before it was finalised. 11.3 When asked by the Commission over his endorsement of the Cadastral Map for Portion 1C, he was adamant it was not his work. 11.4 We are critical on this manner of involvement as there is already evidence obtained from the DLPP and the Provincial Lands Officer that nullifies the LIR. Evidence from Mr Romilly Kila Pat, Simon Malu, Imen Ita Papa, Pepi Kimas painted a completely different analogy to the process.
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Mr Kimas in evidence says, It is not the job of users-for owners of the project to go there and carry out investigations, it is the job of District Officers or Lands Officers to carry out the investigation and that is the normal thing.(Kimas-SABL 80-Numapo/Mirou 17/01/12 at page 64-65) 11.5 The evidence of Mr Hudson Hape is very critical to the four (4) SABLs located in the North Fly District and Middle Fly District of the Western Province. His evidence features the depth by which his employer IT&SL manipulated the landowner companies in the Trans Papuan Highway project to acquire customary land under the SABL process, a hallmark tainted with corruption involving DLPP, Department of Western Province and the executives of the umbrella landowner companies through lack of awareness and proper advice proceeded to accept IT&SLs tactical ploy and deception over eight years association with a company that had no real presence in Kiunga which included heavy equipment and machinery anywhere in PNG. 11.6 He told the Inquiry that he was involved in preparation of the Survey Plan and Maps for Portion 27C Awin Pari, Portion 1C Awin Pari in the name of NEWIL, Portion 14C Awin Pari to Tosigiba and Portion1C Aibolo in the name of Tosigiba (and Kebogas Investment Limited). He was also responsible for the Land Investigation Report for four SABLs. He confirmed his involvement at that time he commenced work with IT&SL, in fact confirming the survey plans were already done and his involvement was to enter the coordinates on topographical maps scaled at1:100,000. 11.7 The Commission accepts that evidence Rural Class 4 survey specifications require GPS land boundary coordinates which can be
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manipulated through the desktop rather than the physical land survey requirements under Class 1 and 2 survey which is normally expensive. The surveying land boundaries are transposed onto aerial topographical maps provided by the National Mapping Bureau and the Office of the Surveyor General. The coordinates of land boundaries are the natural rivers, ridges, mountain tops which are transposed onto the aerial topographical maps by the cartographer. 11.8 The survey plan is then vetted by the surveyor as to the correctness of the land boundaries, the landowners instructions on boundaries. When the surveyor is satisfied he then certifies the survey map and registers it with the Surveyor Generals Office. The certified map bearing the Rural Class 4 boundaries are then provided to the DLPP for the issuance of title. Mr Hapa agreed that the survey was done not for the Trans Papuan Highway but purposely done for customary land registration. 11.9 In his evidence, Mr Hapa facilitated that process and that we find that he only confined the land investigation and organized the ILGs through the Executives of the four companies. The fowing information based on evidence confirms that Mr Hapa of IT&SL; 1. Submitted the Tender Form/Application form for SABL on behalf of NEWIL, Tosigiba Investment Limited/Kebogas Investment Limited, Tumu Timbers Development Limited to DLPP on The Tender form was prepared and submitted after the issuance of the title. That anomaly is our view is deceptive and clearly fraudulent when the land comprises in excess of 2 million hectares.

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2. Requested for Land Instruction Number and it was passed onto IT&SL. This would normally be issued to the Provincial Lands Office, Department of Western Province. The Land Instruction Number was issued after the issuance of the title. This indicates the fraudulent nature by which IT&SL colluded with DLPP to fraudulently acquire the said SABLs. 3. Conducted the Land Investigation Report with the assistance of the Executives of the umbrella landowners companies. In his evidence he states that he was so authorized by Mr Simon Malu, Customary Leases Division. This authorization was not done within the acceptable process of administering SABL application. 4. Mr Titus who was paid by IT&SL to assist the landowner companies in the registration of ILGs worked closely with ILGs were completed basically to facilitate the consent of the landowning members of the clan. 5. Certified the survey plan without conducting field survey on the land boundaries with the landowners. 6. Collated the LIR and then got Mr Imen Ita Papa and Ipisia Biyama of the Department of Western Province to sign the LIR. Both Officers signing the LIR knowing it to be false because they did not conduct the land investigation. They signed the LIR at Port Moresby, but the LIR shows that it was signed in Kiunga which was false. 7. The Recommendation for Alienability was signed by Mr Dimonai, the District Administrator for North Fly at Port Moresby whilst he was on
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duty travel. The place of the signing indicates Kiunga which is totally false and misleading. Mr Dimonai did not conduct due diligence and out of ignorance of the fact that the LIR was incomplete and did not clearly show the whole tribes/clans in the SABL Portion. Most of the landowners included in the LIR are from within the Kiunga and surrounding village communities. 11.10 However upon cross examination at the hearings Mr Hudson Hape affirmed on oath that the LIR was provided to Land group leaders to conduct. On assessment of the LIRs they were found to be filled by one or two agents or Executors for many people. This is unsatisfactory as two things can happen and that is, (1) names could be made up and (2) numbers of people inflated to mislead. This bore true when on inspection of individual clan group LIRs the names of people named in a certain group was included in two or three other clan groups 11.11 It was also found that people appointed as Agents by a particular land group were also found appointed as Agents in two or three other land groups. For example Mr Montford Awetari appeared as an agent for Tumten and Gre-Dmesuk land groups. His stated village is Gusiore village along Elevala River under those land groups over Portion 1C Awin Pari. Mr Awoke Wando appears as Agent for Uga Somi and Kyankwenai Dmesuke Land Groups with his stated village as Kmom in those land groups. It is improper and fraudulent for a person to be named in more than one land group for the purposes of the LIR. This raises questions on the authenticity of the data collected. There were twenty-six landgroups who participated in the LIR leading to the NEWIL SABL as provided below:

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No Name of Land Group 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Tumten Srontia Suli Bube Skai Kusy Waintia Solomkia Waintya Domana Kuse Sagai Samaka Ihensmo Ihen Usiok Grupe Srunai Gas Ryanka Drim Kmom Uga Somi Kyankwenai Dmesuke Gre DweDmesuke Dmesuke Ungasomi Kwape Gre Drim Kmom Gre Dmesuk Mepu Durankia

No of Lease No of Names of Appointed people Period people Agents in Agreed signing land (years) Agency group Agreement 9 25 9 Montford Awetari 11 25 11 Wikri Kikri 26 25 26 Joel Megime 26 25 28 Gill Atigi 20 25 20 Dumo Sokom 20 25 20 Frank Wiko 14 25 14 Wanaka Suguari 37 25 38 Hubert Wasu 25 25 35 Nainu Wokri 26 26 26 32 40 24 50 23 9 9 12 9 29 11 23 21 24 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 30 27 38 31 40 24 43 0 9 9 12 0 29 10 23 0 24 Thomas Hela Wanaka Saguari Max Dwepu Raka Tangu Julius Mgunen Melsam Sape Neme Sika Wasinai Sakonai Awoke Wando Awoke Wando Willie Sare Asonge Kwiiwed Hunda Udena Amos Daue Wasinai Sakonai Montford Awetare Arake Wosebi

Stated village of Appointed Agents Gusiore Gusiore Kana Kwomhe Nai Tegina Diabi Pipila Kwomhnai Igubia Igubia Pipila Drimgas Gusiore Trimgondok Kmom Gre Drim Kmom Kmom Kmom Turudmesuk Drimgas Kmom Drim Gusiore Gre

11.12 The total number of people collated in the LIR report total 658, a far cry from the stated 28, 000 odd persons (1,100 @2% growth) NEWIL has been making itself out to represent. Clearly numbers have been inflated under a form of manipulation to aid grant of the lease.

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12

Recommendation

12.1 The involvement of a foreign owned company in the customary land investigation process, the grant and issuance of title, the security of title in its offices and the agreement to ensure that the State Entities disregard their statutory obliigations is a real concern for the State. 12.2 The State should become more proactive in the enforcement of regutions and exercise its powers to protect the asset of the rural community, the customary land of PNG. 12.3 That the owners of IT&SLand their employed Surveyor be questioned on their role in facilitating the NEWIL SABL. 13. The Evidence of Michael Titus

13.1 Mr Michael Titus is a lawyer by profession and the principal of his law firm Titus Lawyers. He is currently operating his practice at Section 2 Allotment 7 Emirau Street, Kavieng, NIP. He graduated with a law degree from UPNG in 1995. 13,2 Mr Titus is a person of interest to the inquiry in that he has acted as lawyer on record for NEWIL, Tosigiba and Tumu over the grant of SABL concerning portion 27C, 1C, 14C and 1C Aibolo. When crossexamined as to his involvement as a lawyer acting for the landowner companies and IT&SL, he said that he was not acting for IT&SL. Mr Harsely has confirmed that IT&SL engaged and paid Titus Lawyers to assist the landowner companies with legal advice more so with the SABL

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acquisition, the ILG formation and consent forms, and general advice to company directors and executives over meetings and company returns. 13.3 Mr Titus was engaged by IT&SL to assist Tumu Timber Development Limited at the time Mr Dina Gabo and executives of Tosigiba Development Ltd decided to pursue carbon trading initiatives much to IT&SLs dislike. According to Mr Titus, they were referred to as the rogue directors and was considered in our view a sabotage what has been a fruitful cooperation between IT&SL and the landowners. It is confirmed that after the Project Agreement was signed in Port Moresby in May 2011, Mr Titus convened a meeting with Soki Samisi and others at Kiunga for changes to be made to the chairmanship and directorship of the company. Mr Gabo and other executives were not properly advised of that meeting which is contrary to the requirements of the Companies Act. 13.4 Mr Titus was cross examined on his role as the lawyer for the three (3) landowner company and IT&SL as a potential conflict of interest with regard to the SABL and a number of agreements that have since been executed. That conflict of interest relates directly to the fact that since he was paid by IT&SL it constituted divided loyalties as to his professional and ethical duties to discharge his professional duties as a lawyer to his clients, the landowner company. The potential conflict was evident with regard to the project agreement clauses which are considered as unfair to the landowners for e.g. The original draft of the Project Agreement relating to the harvesting of logs from the road construction corridor was initially 20metre either side of the road was subsequently increased to 5,000metre either side of the road. Recital Clause O was not even discussed with the
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landowners. The project agreement with the amended clause was executed by the State on May 2011. In reference to paragraph 3.2(d) of the Project Agreement (Condition Precedent to States Obligation) states that the landowner companies NEWIL, Tosigiba & Kebogas are obliged by this agreement to fast track SABL Lease-lease back process and appoint IT&SL as the developer company in order to carry out the project. Paragraph 6 (Development Licence) obligates the State to fast track Lease-lease back agreements in favour of IT&SL. 13.5 These examples reflect the unfair nature of the contract that was drafted by the State Solicitors Office where there is clauses that in our view obligates agencies of government to compromise the regulatory and monitoring powers of state agencies such as DLPP, DEC, NFA, DAL etc. to ensure IT&SL has the ultimate control over all that land for a period of 25 years. Recommendation 13.6. Mr Titus must be referred to the PNG Law Society for his involvement with the landowners companies whilst been paid by IT&SLconstituting serious ethical questions over the conduct of his legal services to competing interests. 14. Department of Western Province

14.1 The Department of Western Province is the bureaucratic arm of the North Fly Provincial Government whose primary role it is to facilitate government policies and directives through the work of its divisions of
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which the Lands Division is an important one. In the issuance of the NEWIL SABL there was no formal Land Investigation Report (LIR) conducted by the Lands & Physical Division of the Department of Western Province. Findings 14.2 It was found that the whole process of Land Investigation, the survey of the land boundaries, the appointment of agents by a particular land group and the authenticity of the data collected from within the said 26 landgroups comprising the land referred to as Portion 27Cemanated from the developer company IT&S with the able assistance of the Executives of the umbrella land owner company NEWIL. Land Investigation Process 15 IMEN ITA PAPA

15.1 Mr Imen Ita Papa in his evidence to the inquiry at Kiunga categorically stated that he was not involved in the investigation from the very beginning until the time Mr Hudson Hape contacted him at Port Moresby whilst he was on official business to sign the Land Investigation Report. MR BOKOMI: Under normal circumstances from your experience as a government Lands officer, who should actually take the lead in the land investigations? Should it be the developer company or should it be government Lands officers? A: Commissioner, it is the functions of the government; the agent of Lands Department in Western Province is Division
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of Lands and Physical Planning, which I am responsible for all land investigations, every land dealings in Western Province, I must be consulted first. Q: Where you actually physically involved in the lands investigations in respect of the three project areas? A: No, I have not been to the project site.

15.2 Mr Imen Ita Papa was the then District Lands Officer (now elevated to the position of Acting Advisor, Provincial Lands and Physical Planning Office) at the Department of Western. Evidence before the COI indicated that he was the officer responsible for all Provincial Government matters in the Western Province and was not aware of the SABLs issue over the said road project. In his evidence to the Commission Mr Papa said that most dealings by the landowners, leaders and developer were always done with the national agency by-passing provincial authorities through the project that was in the WP. The only consultation was when the project was referred by the National Forest Authority to the Provincial Forest Management Committee for its deliberation and endorsement. 15.3 Mr Papas evidence is crucial to the inquiry and we make specific references the depth of his evidence to which he states unequivocally that IT&SL played a major role in manipulated the LIR process through the road project initiative in the Western Province. The major thrust of that evidence is the admission of his non-involvement in that process follows; A: I now will admit to the Commission of what actually I have done to the Lands Investigation Reports. The initial arrangement was to consent for road corridor and 1 kilometers both sides of the road.
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Firstly, my office in

Kiunga have no records of these registered plans. Special Agriculture and Business Lease listed at number 64 held by Tosigiba Investment Limited over land described as Portion 14C Milinch of Kariton, Karia, Strickland, Bosavi, Campbell, Iema, Tomu and Sisa fourmil of Kutubu, Wabag Blucher and Raggi located in the Upper Middle Fly area of Western Province, National Gazette number 3218 of 24 September 2010. Special Agriculture and Business Lease listed as

number 65 held by North East West Investment Limited over land described as Portion 1C, Milinch of Palmer, Sari, Mula, Karrington, Alice and Evara, Strickland and Tomu, fourmil of Blucher and Raggi located in the Middle Fly district of Western Province. Notice of direct grant under section 102 of the Land Act of 1996 was published in the National Gazette No G.218 of 24 September 2010. Special Agriculture and Business Lease listed as number 66 held by North East West Investment Limited over land described as Portion 27C Milinch of Alice, Tedi, Palmer and Kiunga fourmil of Blucher and Raggi located in the Middle Fly district of Western Province. Notice of direct grant under section 102 of the Land Act of 1996 was published in the National Gazette No G.218 of 24 September 2010. During the project feasibility studies status, land investigation and lands surveys were part and parcel of the feasibility work. The IT&S officers,

Department of Works officer and landowners have collectively completed the lands investigation report for my signature only. All I understood was that once the project feasibility was sanctioned by national relevant agencies, lands surveys, lands investigation was one of the component
439

of the feasibility studies.

And because all various

professionals who went out on the field collected data were the agents of the State including landowners leaders and IT&S officials, though I was not out in the field carrying out inspections, I relied all information before me for signature were all true and correct as it was sanctioned by State and the landowners before the actual feasibility work

commenced. While I was in Port Moresby in 2008 on other official duties, I was called in to sign the lands investigation report for the proposed road project at the Pacific View up at the 10th floor at 2 Mile Hill in the presence of few landowners and the company IT&S officials, I signed the lands investigation report as North Fly District Lands officer. MR BOKOMI: You stated earlier on to the Commission that

you never conducted the lands investigations yourself? A: No, I stated that I was not involved in the investigation out

on the field. Q: Well, if I put to you that you were not physically involved in the investigations yourself - leave aside all those others who may have done it - is that a true statement? You were not involved in the lands investigations yourself? A: That is a true statement. I was not involved in the

investigation reports that were compiled. Q: Then my further question to you is, how then can you sign the lands investigation report? Is it possible? A: I made a statement that because at the initial consent by the landowners in the start of the project, negotiations, consultations with landowners in Kiunga, because they gave
440

their consent for feasibility to commence, other departments like Environment Department, Lands Department, Forestry Department, other State agencies were involved in other components, as well as the IT&S and their lands officers and surveyors being an agent of the State, conducted I cannot go out to the forest and I was, as I have stated, I was on other official duty in Port Moresby and the report was before me. Believing that all the reports were related to the road corridor that is within the 1 kilometer, both side, as initially agreed by people, not outside of the both sides 1 kilometer. Q: Mr Papa, I will show you something. Before I do that, you would agree with me if I put to you that under normal circumstances, the Lands officer who signs the investigation report is the one who actually physically goes out to the area to conduct the investigations and then thereafter to confirm by taking a land boundary walk with the relevant landowners that these are parcels of land that they do not require in the near future and they can have it alienated by the State for whatever purpose that the State would require the land for. Is that not a true statement of your duties and functions as the Lands officer? A: That is correct. I should be physically on the ground

identifying the area that investigations should cover which are the landowners that I should interview or provide consultations and negotiations for the project to go through as well as identifying the landowners physically on the ground. Q: That should have been the correct procedure?
441

A: Q: A: Q:

That should have been the correct procedure I am saying. But who told you to sign the land investigation report? I signed on the understanding that --No, my question to you is, who told you to sign the land investigation report? Who asked you?

A:

I was asked by the IT&S company. They picked me up in Waigani while I was on other official duty.

Q: A:

Yes, where did you sign the Lands investigation report? Pacific View, 10th Floor.

(Transcript SABL58-Mirou-16/11/2011) 16 The Evidence of Mr Ronald Manase Dimonai

16.1 Mr Dimonaicomes from the Awin tribe and has been the District Administrator for the past 13 years and obtained a Masters Degree from Western University, Australia in 1998. 16.2 In December 2008 he confirmed that Mr Imen Ita Papa and himself were at Port Moresby on duty travel. He says that Mr Imen Ita Papa and Mr Hudson Hape visited him Lamana Hotel where he was residing and brought documents namely copies of 26 pages of the Recommendation for Alienability and he signed believing that all the information for the purpose of the Trans Papuan Highway, which was road accessibility to bring economic benefits to his people and NOT SABL. 16.3 On December 2008, Mr Dimonai the current District Administrator for the North Fly District was asked by Mr Imen Ita Papa at Lamana Hotel in Port Moresby to sign the Recommendation for Alienability for LIR into SABL Portion 27C. The recommendation was signed at Port Moresby in
442

the presence of Mr Imen Ita Papa and Mr Hudson Hape of IT&SL. The twenty six separate LIR for each of the clan groups comprising the land referred to as Portion 27C contained no recommendation for reservations to be made on the customary hence extinguishing the customary rights over the for a period of 99 years to NEWIL and subsequent Sub Lease Project Agreement for a period of up to 40 years in the name of the IT&SL and the joint venture company in the name of Awin Pari Lumber 16.4 He also confirmed that .The signing was done for the purposes of acquiring the land to provide road accessibility for my people on the North East as well as our people in the Nomad area for the road acquisition and it is not for SABL. That was the understanding I had when I signed this document now in front of you. That they were to build the road in exchange for the logs as well as the road, that document was signed for the acquisition of the road from Drimgas to Nomad for the purpose of the Trans Papuan Highway. While in the course of all the meetings that was held by IT&S, no officers within my office or from the North Fly District Administration was deployed to conduct land investigation report, investigation to identify landowners along the proposed road corridor. None of my officers were deployed to conduct the road, the land investigation to identify landowners who own the land along this proposed road corridor. There was no clear direction from National Department and Physical Planning or any other organizations directing North Fly District Administration through my office to deploy officers to conduct land investigation reports to identify landowners along this proposed road

443

16.5 Mr Dimonai expressed that he had no idea about the LIR and had not conducted any due diligence on the report which was incomplete, contained serious omissions in respect of signatures of landowners appointment of agents and discrepancy Recommendation 16.6 That the SABL be revoked pending a fresh LIR to be reconducted by the Department of Western Province with the walking of the boundaries and certification as to ownership by custom. 16.7 That Mr Imen Ita Papa, Dimonai, and Provincial Administrator be reminded as to their respective roles regarding SABLs and to be reeducated and reinforced as necessary regarding proper conduct of LIRs. 17 DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) Findings 17.1 The COI in its inquiry into this SABL found no evidence of a Certificate of Alienability having been issued by the Department of Provincial Affairs to complement the Recommendation as to Alienability instrument signed by Mr Dimonai as the District Administrator on behalf of the Administrator of the Western Province in December 2008

444

Recommendation 17.2 That all LIRs be provided to the Secretary of Provincial Affairs as the Custodian of Customary Land for issue of certificate of Alienability. 18 DEPARTMENT OF LANDS AND PHYSICAL PLANNING

18.1 DLPP file records on SABL Portion 27C Awin Pari disclose that an Application or Tender Form duly filled out by the agent for NEWIL and dated 17th June 2009 was submitted for consideration. The agent whose signature appears on the document was confirmed as those of Mr Hudson Hape, Registered Company Surveyor for IT&SL as having been authorized by NEWIL to be their agent. It was revealed that no such authorization was approved by the Board of Directors, NEWIL on matters related to the acquisition of Portion 27C for SABL. 18.2 The purpose of the application was, for Forestry-Reforestation, Sawmilling, Agriculture and Major Road Construction. Estimated Value for Improvement is about K192.0 Million. The Commission noted with interest that Portion 27C was specifically referred to in the Application. This application was reflected in the application for SABL regarding Portion 1C Awin Pari, Portion 14C Awin Pari and Portion 1C Aibolo symbolically considered as illuminating the manipulation of a foreign corporation over the people of Awin Pari being unsophisticated with a handful of intellectuals. 18.3 The DLPP file also disclosed that Mr Simon Malu then Caretaker Manager, Customary Land in a letter dated 24th November 2008 to the Managing Director, IT&SL confirmed issuance of Land Instruction
445

Number for Portion 27C Milinch of Alice; Fourmil: Raggi as 01/316 including references to Portion 1C Awin Pari; Portion 14C Awin Pari and Portion 1C Aibolo. This date confirm that the Land Investigation process was conducted without submission of the most primary documentation that will allow DLPP to carry out vetting on the proposed land in particular existing leases. 18.4 Mr Malu instructed IT&LS to liaise with Customary Lands Section and the Fly River Provincial Government Administration to carry out awareness and complete the Land Investigation process. 18.5 Land Investigation Report for Portion 27C was completed and signed by Mr Imen Ita Papa Provincial Land Adviser, Provincial Land and Physical Planning Office of the Department of Western Province, North Fly Electorate on 19th December 2008. The LIR comprised 26 clans submitting their consent for 25hectares of their land within the Awin Pari region of Kiunga to be freed up for 25 years. 18.6 Recommendation as to Alienability was signed by Mr Ronald Manise Dimonai, District Administrator, North Fly Region of Western Province at Kiunga on 19th December 2008 as was purportedly indicated on the LIR. No reservation for the continuation of reasonable access for hunting, fishing, gardening and other necessities conducive to access onto the land. 18.7 Instrument of Lease-Lease Back for Customary Land pursuant to section 11 of the Land Act, was executed on 24th June 2009 between the 29 Agents for and on behalf of the landowners as identified in the LIR in the presence of Simon Malu (Senior Customary Lands Officer-DLPP) and
446

Sikabu Maika (Adviser Lands WP) and Mr Pepi Kimas, then Secretary, DLPP signed as the delegate of the Minister of Lands and Physical Planning and the State. It is however noted that under Schedule Part 2 Term of the Lease (Instrument) states that the customary landowners agree to lease the subject land to the State for a period of 99 years, The lease was to come into commence and be complied, for all intents and purposes on the date of this Agreement pursuant to section 102 (7) of the Land Act. 18.8 In relation to the issuance of the title to the applicants namely NEWIL, we note for the DLPP files that a letter directed to the then Secretary of Lands by the Executives of TOSIGIBA Investment Limited, Mr Iya Fami (Acting Chairman); Frank Neobia (Director), John Wabi Sari (Director) and Waiti Kwani (Director) in a Minute dated 27 September 2009 with instructions to DLPP to release the ninety-nine (99) years SABL Title to IT&SL for safe custody keeping it in a secured premises to avoid loss and fraudulent copies of the title. 18.9 By letter dated 29 June 2009 from IT&SL to DLPP Secretary submitting 3 copies of the Instrument of Lease for Customary Land (Lease-lease Back Agreement) and accompanying documents for two of the AgroForestry and Road Project Sites to Kiunga and Nomad sub-district in the North Fly District of Western Province. The project sites referred to in the letter included the following; Portion1C, chartered as Catalogue Plan Number 9/133 Area 1 Portion 27C, chartered as Catalogue Plan Number 9/133 Project Area 1
447

Project

Portion 14C, chartered as Catalogue Plan Number 28/126 Project Area 2 18.10 Mr Hape of IT&SL also follows up with a very similar letter on 3 April 2009. 18.11 The Notice of Direct Grant to NEWIL on Portion 27C is for 99 years. In the LIR, the 26 landowning clans with their immediate members of the clan or unit have agreed to allow 25 hectares of their land freed up for SABL for a period up to 25 years. The underlying reason for giving their consent to this SABL was for the Trans Papua Highway to be built across Portion 27C (Kiunga-Gre-Drimgas), Portion 1C Awin Pari, Portion 14C (Nomad). The objections were basically that their consent was manipulated by IT&SL to obtain access to all the hectares of prime pristine forest which is suspicious and fraudulent. Not consistent with section 11 and 102 of the Land Act. 18.12 In the evidence provided there was found Land Instruction Number given for the LIR to be conducted, a notice of Direct Grant under Section 102 and the signed Lease/leaseback instrument. 18.13 However as noted earlier it is a condition for processing of customary land that a Certificate of Alienability is issued from the Department of Provincial Affairs prior to the customary leases officer at the DLPP preparing a Lease/leaseback agreement and a Notice under section 102 to be published in the National Gazette. This procedure was not met prior to the land grant being published in the National Gazette and issue of title.

448

19

The evidence of Simon Malu (SABL 71-Mirou-04/01/12)

19.1 Director, Land Acquisition, joined in 2001 Degree in Land Management 2000 University of Technology 19.2 Mr Malo states that he attended meetings organised by IT&SL on the Trans Papuan Highway project with the landowners. He confirmed been paid allowances by IT&SL for the chartered plane trip to Kiunga. In terms of his knowledge over the LIRs, he stated in evidence that he had instructed Hudson Hape to liaise with Mr Imen Ita Papa or Mr Biyama for the officers to conduct the LIR. He didnt conduct any due diligen ce on the completed LIR and proceeded to prepare the Lease-Lease Back agreement for the execution by the Minister or Delegate with the authorized agents of Tumu. He knew Mr Hape because he normally frequented his office over land survey matters 19.3 That lack of due diligence from Mr Malo is expressed in his evidence Q .you said you gave instructions to Mr Hudson Hape. Would it not have been proper for you to give instructions directly to Mr Imen Papa and then follow it on from there personally to ensure that he conducted the land investigations, rather than giving it to Mr Hape as a government officer to another government officer, not to a private sector employee..? A. Q. A. yes that is correct Why did you do that? Okay, Hudson, he came to the office and saw me regarding this project, since he was present at that time, and I had to issue an
449

instruction. I told him that you have to go to Kiunga and liaise with Imen Papa or whoever officer is on the ground, you liaise with him and do the land investigation report, So it was Hudson who was present at that time that I gave the instruction. Q. A. Q. Did you ever confirm with Hudson later on--I did As a follow up measure to ascertain whether or not he did go to Kiunga and he did talk to Mr Imen Papa and that Mr Papa did the investigation personally, did walk the land boundaries as it is stated in the land investigation report? No? A. I did check with Hudson, Since he was in and out of the office because of this project, so from time to time I talked to him and I asked him if he had contact with Imen and he was also going to, he had probably a few trips to Kiunga and back to Moresby. Q. A. What did Hudson tell you? Hudson did indicate that he is in contact with Imen and as soon as the reports are completed they will submit it to me. Q. You never talked to Imen at all? I mean you never talked to Mr Papa at all, even after getting that kind of response from Mr Hape? A. Q, A. No You think you should have? Yes

19. 4 Mr Malo failed in his duties as the Director-Customary Leases to conduct proper due diligence on the LIR we find contained gross defects and anomalies prior to the preparation of the Lease-lease back agreement, No due diligence was conducted and it is evident that he was merely been directed by IT&SL due to the fact that he had already compromised his position when he was paid allowances IT&SL over the said project. That
450

project was the high point in all the activities he understood was for IT&SL benefit. 19.5 Mr Malo was merely interested in ensuring that the Lease-lease back agreement was settled, despite the anomalies noted in LIR. No due diligence was conducted and it is evident that he was merely been directed by IT&SL due to the fact that he had already compromised his position when he was paid allowances IT&SL over the said project. That project was the high point in all the activities he understood was for IT&SL to benefit from. Recommendation 19.6 That the elase be revoked forthwith 19.7 Mr Malo should be disciplined for not doing his job and the result of that neglect of duty has led to the lack of integrity in the SABL process. His actions are a well documented trend in all the SABL inquired by this Commission. 20 DEPARTMENT OF AGRICULTURE AND LIVESTOCK

20.1 There was no evidence illicitied from DAL over the land area. We make no findings or recommendation. 21 PNG FOREST AUTHORITY

21.1 The Commission noted that on 25th November 2010 and pursuant to section 90D (8) of the Forestry Act 1991 (Regulation 273 and Form 252)
451

the Board of the National Forest Authority issued Forest Clearance Authority Number FCA 01-01 to IT&SL to carry out larger scale conversion of Forest Road Development. Of note to the FCA was the fact that The Project area is about 600 kilometres of road alignment in the North Fly District of the Western Province. It is to be known as the GreDrimgas to Nomad Road Alignment.The maximum forest clearance of road corridor from forest edge to forest edge is to be strictly confined to 40 metres (20 metres of both sides of the road centre line).(Refer Schedule 1 and 4(1) of the FCA). 21.2 The Commission however finds that IT&SL has deliberately increased the FCA road line approval for a 40metre forest clearance with an additional 5,000metres clearance of forest under the Contract between the State and IT&SL dated 23rd May 2011. The changes are reflected under Recital O, IT&SL in consultation with the landowners, is seeking timber authority (TA) permit to cover the harvesting of log product covering some seven thousand (7000) cubic metre per kilometre and or selective harvesting of timber from 1000 hectares per kilometre of road lengths or which is the greater of the two for selective harvesting of commercial species and the removal of timber from 40 metre road corridor or 20 metres either side of the road centreline and a distance of 5,000mtres on either side of the road corridor which has been initially agreed with by the traditional landowners. (Contract Agreement at page 7) 21.3 In fact the Commission has also sighted an earlier version of the Contract which stipulates as follows; IT&SL in consultation with the landowners, is seeking timber authority (TA) permit to cover the timber harvesting period of twenty five years and also to cover the harvesting of log product
452

covering some seven thousand (7000) cubic metre per kilometre and or selective harvesting of timber from 1000 hectares per kilometre of road 600 kilometres of road lenght or which is the greater of the two for selective harvesting of commercial species and the removal of timber from 40 metre road corridor or 20 metres either side of the road centreline which has been initially agreed with by the traditional landowners. 21.4 That is a major deviation from the original requirement of road clearance as issued by the Board of PNG Forest Authority. 21.5 In conformity to the FCA requirements for a performance bond in the sum of K595, 000.00 to be paid within 21 days of the issuance of the FCA, IT&SL provided an ANZ BANK Guarantee in the said sum of K595, 000.00 to PNG Forest Authority on 16th December 2010. RECOMMENDATIONS 21.6 That the PNGNFA officers summoned and failing to appear with material before the COI be served a stern warning so as to prevent future similar behavior by PNGFA officers. 22 DEPARTMENT OF ENVIRONMENT AND CONSERVATION

22.1 In terms of environmental permit, there was no evidence taken and wew make no findings or recommendation.

453

COI Inquiry File No. 65- for Special Purpose Agricultural and Business Lease over Portion 1C Volume -- Folio -- Milinch: Alice, Tedi, Sari, Palmer & Kiunga, Western Province in the name of North East West Investment Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to Section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. Witnesses were called from the six government agencies involved in the issuance and operation of the North East West Investment SABL. These were: 1.2.1 Department of Western Province, (DWP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGFA) Witness Summons and Statement 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.
Name and Position Mr Imen Ita Papa, Provincial Lands Adviser, Provincial Lands & Physical Planning Office, WPA Mr Manase Dimonai, District Administrator, North Fly District, WPA Mr Hudson Hape, Surveyor, IT&SL Mr Michael Titus, Lawyer, Private Legal Practitioner Mr Montford Awetari Mr Samuel Kepuknai, Pages 3-50 36-51 74-75 101-103 63-75 62-74 1312-12 9-18 43454

1.2

No 1

Day 1 5 5 5 2 5 6 6 2 2

Date 16/11/11-SABL 58-MIROU 21/11/11-SABL 61-MIROU 21/11/11-SABL 61-MIROU 21/11/11-SABL 61-MIROU 17/11/11-SABL 59-MIROU 21/11/11-SABL 61-MIROU 22/11/11-SABL 62-MIROU 22/11/11-SABL 62-MIROU 17/11/11-SABL 59 MIROU 17/11/11-SABL 59 MIROU

2 3 4 5 6

7 8

10 11 12 13 14 15 16 17

Former Director-NEWIL, Landowner, Drimskai village Mr Frank Hameshu, Landowner, Drimdamasau village Mr Nelson Women Landowner(Also refer to evidence under Portion 1C Awin Pari) Mr Max Ako, Hospital Administrator, Runginae Rural Hospital, Evangelical Church of PNG, Kiunga Mr Neville Harsely, CEO, IT&SL Mrs Betty Wine, Chairlady, Women in Mining, Kiunga Mr Waiti Kwani, Chairman NEWIL Mr Foxy Asobi, SecretaryNEWIL Mr Samson Ubre Director-NEWIL Mr Aaron Dupnai, Landowner, Awin Tribe Mr Pepi Kimas, Former Secretary, DLPP (20002010) Mr Simon Malo

54-62 19-28

2 2

17/11/11-SABL 59 MIROU 17/11/11-SABL 59 MIROU

78-85

1 8

16/11/11-SABL 58 MIROU 25/11/11-SABL- MIROU 10/01/12-SABL MIROU

1-73 3767 5 6 5 5 8 7-87

23/11/11-SABL 64 MIROU 21/11/11-SABL 61 MIROU 22/11/11-SABL 62 MIROU 21/11/11-SABL 61 MIROU 21/11/11-SABL 61 MIROU 25/11/11=SABL-MIROU 17/01/12-SABL 80NUMAPO/MIROU

2. 2.1

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be representedby counsel.

2.2

The following were granted leave to be represented by counsel

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Counsel 3. 3.1 Exhibits and documents

Mr Michael Titus

There were ten (10) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.

No 1 2 3

Item Survey Map of Portion 1C Land Investigation Report 30/10/10 Notice of Direct Grant Gazette No. G 218 dated 27/09/10 Instrument of Lease-Lease Back Agreement Response by Mr Imen Ita Papa, Acting Advisor, Division of Lands and Physical Planning-Trans Papuan Highway Road Project in Kiunga, WP Bachelor of Land Studies Degree-Mr Imen Ita Papa dated 28/11/97 Agreement Between The Independent State of PNG, Fly River Provincial Government and NEWIL and KEBOGAS Investment Limited and Tosigiba Timbers Group Limited and PNG Agency for International Development and Independent Timbers and Stevedoring Limited ECPNG Letter dated 15 November 2011 from Max Ako, Runginae Rural Hospital Administrator Supplementary Affidavit of

Interested Party C.O.I C.O.I C.O.I

Date received 17/11/11 17/11/11 18/11/11

Exhibit Number NEWIL 1C(1) NEWIL 1C(2) NEWIL 1C(3)

4 5

C.O.I C.O.I

18/11/11 16/11/11

NEWIL 1C(4) NEWIL 1C(5)

C.O.I

16/11/11

NEWIL 1C(6)

C.O.I

16/11/11

NEWIL 1C(7)

C.O.I

16/11/11

NEWIL 1C(8)

C.O.I

25/11/11

MA 1

456

10

Max Ako & Map of Project Areas covered under Portion 27C and 1C (NEWIL) & Portion 14C (Tosigiba) Statement of Aaron Dupnai dated 22 August 2011 re: Inclusion and Investigation to be conducted, PNG Highway and SABLs

MA 2

C.O.I

25/11/11

AD 1

4. 4.1

Timeline of events of note surrounding NEWIL SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
Milestone Dated of Completion/ Grant/Issue Execution 10/05/04 Proponent/Applicant Respondent Entity/Respondent

No

3 4

7 8

Incorporation of North East West Investment Limited Independent Timbers & Stevedoring Limited (US) Inc. Survey Plan Catalogue Land Investigation Report(s)-30th October 2010 26 separate LIRs signed by Mr Imen Papa. Recommendatio n for Alienability Land Instruction No, issued by DLPP Application/Ten der for SABL to Portion 1C Lease-Lease Back Agreement SABL Notice of Direct Grant

07/11/03 (IPA Registration)

Hapa

19/11/08

19/11/08

24/11/08

DLPP/IT&SL (Malo/Hapa)

17/06/09

24/06/09 24/09/10

457

10

11

12

NEC Decision 115/2007 dated 22nd March 2007 re: Government Support and Approval in Principle sought for the construction of the Drimgas to Duara (Tegana) Road ProjectWestern Province, PNG NEC Decision 293/2008 dated 15th December 2008. re: Implementation of NEC Decision 115/2007 Drimgas to Duara Road Project, Western Province Special NEC Meeting No. 06/2011 re Advice to the Governor General dated 25th March 2011 Trans Papua Highway Road Project Stage II

FINDINGS 4.1 5. 5.1 The findings follow the chronology of table of notable events above surrounding the SABL lease title held by NEWIL. North East West Investment Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette no. G218 dated 24th September 2010 for Portion 27C Awin Pari Land. The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 23rd September 2010 by the Department of Lands and Physical Planning to the holder North East West Investment Limited (NEWIL).The details of the SABL is shown below:
458

Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease

Portion 1C 9/133 North East West Investment Limited 23rd September 2010 Ninety-nine (99) years 470,462.0 hectares

6 6.1

IPA North East West Investment Limited (NEWIL) is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. The Company was incorporated on 10th May 2004 and the current Principal Place of Business is Room 1001, 10th Floor, Pacific View Apartments, Pruth Street, Korobosea, National Capital District. As at 3 rd October, 2011 IPA records confirms that it is operating. The Company number is 1-51352.

6.2

The latest IPA company extract provided to the Commission dated 3 rd October 2011 indicates 62 shareholders of NEWIL holding 1 ordinary share each in their capacities as Incorporated Land Groups within the land known as Awin Pari, North Fly electorate of the Western Province.

6.3

The extract discloses Messrs Robin Yawa, Foxy Asobi, Dimo Sobori, Paul Wasi, Joe Skai, Waiti Kwani, Samson Ubre, Susan Bale, Ronson Moya and Tusa Dimabo as Directors of the company. Mr Foxy Asobi is also the current Secretary of the Company with Mr Kwani appointed as the Chairman. The Annual return for the company was made up to 30 th June 2010.

459

6.4.

Messrs Waiti Kwani, Foxy Asobi and Samson Ubre, the current Executives of NEWIL told the inquiry the importance of development for the people of North Fly district and collectively confirmed that the people agreed in principle to allow IT&SL to develop the district through the road project. It was on this basis that the majority consented for the road project to be constructed on their land.

7 7.1

The Evidence of Waiti Kwani Mr Waiti Kwani, current Chairman of NEWIL told the inquiry that on 16th March 2003, the Executives convened a meeting at Sarekona for the landowners of Portion 27C, Portion 1C and Portion 14C to inform them that IT&SL heard our cry for development and was interested in constructing a road, selective logging and agriculture project from Drimgas, Guavi Falls and all landowners must form ILGs to participate in the project.

On 23 March 2003, Neville Harsely of IT&S came and met more than 500 people at the old Kiunga Rural LLG Council chamber and Mr Harsely advised everyone he was prepared to partner them by carrying out the developments in exchange for forest resources. 7.2 It was after that meeting that awareness and ILG was organised by the Executives with the assistance of Mr Michael Titus, a private lawyer paid by IT&SL to assist all the landowners register their respective ILGs. According to Mr Waiti the ILG registration finalised in 2006, and that all landowners were aware of the proposed road project agreed to solve their disputes and register their ILG at a later date. This fact was pursued when Mr Waiti attached to his Affidavit a list of clan members endorsing their
460

support and consent, copies of the signatures signed in the pre sence of lawyer Michael Titus on October 2011, some 2 weeks before the inquiry commenced its hearing at Kiunga. 7.3 Mr Waiti further states that in 2007, that when IT&SL commenced feasibility studies on all components of the road project, authority for the road line TA was refused by NFA because of changes to the Forestry Act, as the requirement for roads more than 12.5km required FCA. It was that point in time that SABL was mooted and agreed to as the best vehicle for development and for the avoidance of further NFA process where the request for feeder road by landowners during the life of the project would not be an impediment to the IT&SLs construction of the 600 km economic road line for the North Fly District linking Gulf Province, Central Province and eventually Port Moresby. This was admitted as the very basis for converting the initial request for road line into an SABL concept as Waiti states in his evidence; .And since NEWIL represented the landowners now given all the awareness programs, the landowners has consented for the project, a next half activities to be undertaken in the project based on the Department of Lands advice. It was agreed the appropriate way forward was by way of an SABL. Through the SABL, the customary lands would be secured for the project fundamentally, because aside from the main Trans Papuan Highway, the potential request for feeder roads by the landowners would see feeder roads closing the entire project area.

461

Apart from the Trans Papuan Highway, corridor and the development alongside the corridor of the highway, airstrips, base camps, all other parts of the project area would not be utilized unless the landowners wanted feeder roads, selective logging for agriculture projects on their customary lands.

Awareness of SABL. After learning the need to secure the land by way of an SABL, in November 2008 we had a meeting with all Pari, Waitu, Awin, Nomad, Biyami tribes at Sarekona and then form teams and we went to advise them to advise them of what we understood and described to the landowners was agricultural lease, timber over their land for the road and agricultural forest project. We went to all the same villages along the proposed road corridor and up the Fly and Palmer River. .. 7.4 In that evidence Mr Waiti confirmed that during the process of the Land Investigation process they made representation to Mr Sikabi Maika, then Provincial Lands Adviser and learnt that the district lands office was short staffed and their was funding problems to undertake the LIR. The Executives used that information to approach IT&SL and the developer agreed to facilitate the LIR. Mr Hudson Hapa was instrumental in assisting the landowners in surveying the land and conducting the LIR. 7.5 Mr Waiti, Chairman of NEWIL produced a detailed list of landowners names from all the various clan members and signature to indicative that majority consent for Portion 27C and 1C was obtained. This was an attempt to mislead the COI and it was noted during the hearings that Mr Titus was assisting the executives in the preparation of the Affidavits.
462

The Affidavit tendered in as evidence indicate that it was sworn on 17 th September 2011 and the Attachment a confirming landowner support of the project and the signatures indicate that signatures was obtained between periods 30.10/11, 1st, 2nd, 3rd, 4th, 5th, 6th, 7th and 8th November 2011. The list was prepared some two weeks before the commencement of the hearings at Kiunga and places a lot of question on the integrity of the land investigation process. Recommendation 7.6 That landowner companies must become accountable to their landgroup in terms of holding meetings and been transparent in their duties and responsibilities as agents for the people. 8 8.1 EVIDENCE OF LANDOWNERS OF AWIN PARI The proceedings of the inquiry into Portion 27C Awin Pari gave opportunity for the landowners under SABL Portion 27C Awin Pari to provide evidence on their understanding of the SABL and the issue of consent. It is significant to ascertain whether the consent and general awareness was conducted by the Lands Officers or the Provincial administration into all aspects of the land investigation. The general thrust of landowner consensus is that the majority villagers within the road corridor project had consented to the construction of the Trans Papuan Highway, which also included allowance for the clearance of forest area to build the road. That road clearance in compliance with Forestry Act would entail a 40mtere road corridor forest clearance.

463

8,2

The evidence of the landowners is indicative of their understanding of what was a genuine road line project becoming a source of venue to acquire customary land under the guise of road project basically to undertake logging activity

9. 9.1

The Evidence of Montford Awetari Montford Awetari (SABL 59-MIROU 17/11/11) comes from Gusieri village, the first village on the Elevala River from Kiunga. His village is located within SABL Portion 1C Awin Pari Land. That potion of land is bounded by Elevala River to the south which empties into the Fly River and is about 2 hours boat ride upstream from Kiunga. He is the Chairman of TUMTEN Clan with a population of about 15 people. There are 14 landgroups within the village and his land is located under Portion 1C in which his clan owns about 1,000 hectares of land.

9.2

On behalf of his clan, Mr Awetari on oath stated, I have never heard of the SABL up until after Gazettal No. G 218 was released. That was early this year (2011), I was the one who did the awareness campaigning to cease or terminate Gazettal No. 218 under SABL.(Page 11) He confirmed having knowledge of the SABL as a result of the publication of the list of SABL by the COI.

9.3

He said that he signed the lease-lease back agreement as the appointed agent for his clan for the Trans Papuan Highway road project for a period of up to 25 years. The formation and registration of the Tumten Clan ILG (ILG No. 12432) was done by the Executives of NEWIL without any involvement of DLPP and the Department of Western Province. He
464

confirmed that Mr Samson Ubre told him to sign the ILG applications and the Consent Forms at Tumten village in a rush, and that he was not allowed to confirm the ILG and the consent for SABL with members of his clan. 9.4 Mr Awetari raised concern over the inclusion of his clan under Portion 27C Awin Pari which is fraudulent and false. The Commission confirm that Tumten Clan is also referred to in the ILGs named under the Land Investigation Report for Portion 27C. 10 The Evidence of Nelson Women

10.1 Nelson Women (SABL 59-MIROU 17/11/11 pp 19-28) comes from Tmingondok village which lies on the land bordering Portion 27C and Portion 1C Awin Pari land and covers about 30,000 hectares of land. The villages comprising nine (9) clans are located on the eastern (Portion 1C) and western banks (Portion 27C) of the Fly River. He is the leader of the Gase clan and Deputy Chairman of the Dispute Settlement Authority. 10.2 He expressed disappointment on behalf of his clan over the absence of government officials in conducting awareness over the SABL, the land investigation process and the fraudulent means of obtaining the consent of his people by using another person by the name of Julius Mangunen, who is the member of the Musiok Clan (ILG 12448) on the east bank of the Fly River. He even said that their village lies well outside of the intended road construction project and could not understand how and why it was included under the two portions under the NEWIL and subleased to IT&SL under the JV Agreement. His clan did not fill out the consent

465

form as required in the Land investigation process and they also did not approve Julius Mangunen to be the agent for their clan. The Evidence of Samuel Kepukunai 11.1 Mr Samuel Kepuknai (SABL 59-17/11/11 pp 43-) of Drimskai village located on the eastern bank of the Fly River is about 3 hours outboard motor ride from Kiunga. He is the clan leader of the Susuke Clan and a former Director of NEWIL. He was elected to the position of Director by shareholders of Drimskai and Swipen villages and was involved with IT&SL over the said road project. He confirmed that no government officers from both the national and provincial level was involved and that the project and voiced concern on the manner in which the project became isolated from the people as it was emanating from Port Moresby and the illiterate community were forced to consent to alienation of land under the guise of the road project and other agricultural projects that will benefit the people as promised by Mr Harsely of IT&SL. He resigned his directorship of NEWIL when he questioned on or about September 2010 as to the manner by which IT&SL coerced illiterate villagers bypassing government office, the North Fly Office which is the Department of Western..(page 44 line 33 of Transcript). He also told the inquiry that he had no idea about the SABL over his land. 12 The Evidence of Frank Hameshu Hameshu (SABL 59-MIROU-17/11/11 pp. 54-) from

12.1 Frank

Drimdamasu village-East Awin Census Division and from the Phayuri clan. His village is located on the Elevala River and Fly River on the SABL survey plan. He stated that his land even though it is outside the
466

SABL, his land is actually surveyed as part of the SABL. He explains as follows; A Okay, my village is Drimdamasu just above Kiunga, and then that

is on the Fly River then to the mouth, you turn to Elevala and then Elevala right up follow up Elevala then to Ketu. Mouth of Ketu is another river above Busuri village and my land is within Elevala and Ketu about maybe 3,000 hectares of land. 12.2 He was aware of the landowner company NEWIL and IT&SL over the road project, but at no one time was proposal to acquire customary land through the SABL process discussed with his people. There was no representation by any officers from either the national or provincial government in those key agencies involved with the landowners except their understanding that an electronic bridge will be built over the Fly River rive linking Awin with Nomad and onto the Gulf Province. (An example of why boundary walks are crucial in determining land boundaries where minority dissent means dissection from the SABL survey plan.) 13. The Evidence of Aaron Dupnai

13.1 Aaron Dupnai comes from the Giponai village some 30km up the Fly River from Kiunga, He represents his people of the Gre Clan of the EKium Tribe. At the time of the hearing, Mr Dupnai in the company of his people in their traditional regalia in a silent protest holding placards simply calling for their land under SABL to be returned to them. Mr Dupnai registered his peoples complaints over the acquisition of their
467

customary land by the umbrella Landowner Company and IT&SL without the knowledge and consent of his people. He also expressed a number of matters that will require further investigation especially over the lack of consent and the forging of signatures on the consent form, the road corridor extension of forest clearance to 5km in breach of the Forestry Act and the lack of financial capacity of IT&SL to construct the road. 14 INDEPENDENT TIMBERS AND STEVEDORING LIMITED

14.1 The C.O.I makes reference to the evidence under C.O.IReport on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. 15. The Evidence of Mr Neville Harsely

15.1 The C.O.I makes reference to the evidence under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. 16. The Evidence of Mr Hudson Hape

16.1 The C.O.I makes reference to the evidence under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. 16.2 In addition to Mr Hapas evidence, the following number of inhabitants indicated in the Land Investigation he produced does not reflect the majority of people who have been omitted or missed out of the listing.
468

This is tantamount to fraudulent practices and also it is not indepenedent and unreliable.
No Name of Land Group No of people in land group 0 11 0 20 20 0 37 34 24 0 0 0 32 39 0 0 10 25 9 12 10 29 11 20 24 Lease Period Agreed (years) 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 25 No of people signing Agency Agreement 26 11 28 20 0 9 37 33 24 30 26 33 30 40 26 43 10 23 9 (All 9 did not sign) 1 0 29 10 0 22 Names of Appointed Agents Stated village of Appointed Agents

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Suli Srontia Bube Skai Kusy Waintia Solomkia Waintya Dowana Kuse Utana Kuse Sagai Samaka Ihensmo Ihen Usiok Grupe Srunai Gas Ryanka Kyankwenai Dmesuk Drim Kmom Uga Somi Gre DweDmesuke Dmesuke Ungasomi Kwape Gre Gre Dmesuke Mepu Durankia

Joel Megime Wikri Kikri Gill Atigi Dumo Sokom Frank Wiko Wanaka Suguari Hubert Wasu Nainu Wokwi Dumo Sobovi Thomas Hela Wanaka Saguari Max Dwepu Raka Tangu Julius Mgunen Melsam Sape Neme Sika Awoke Wando Awoke Wando Dimas Binai Dimas Binai Asonge Kwined Hunda Udena Amos Daue David Tunai Arake Wosebi

Kana Gusiore Kwomhenai Tegena Diabi Pipila Kwomhnai Igubia Tegina Tegina Pipila Drimgas Gusiore Trimgondok Kmom Kmom Kmom Kmom Kmom Kmom Turudmesuk Drimgas Kmom Trimdmesuk Gre

16.3 The above table indicates that the total number of people collated in the LIR report total 658, a far cry from the stated 28, 000 odd persons (1,100 @2% growth) NEWIL has been making itself out to represent. Clearly numbers have been inflated under a form of manipulation to aid grant of the lease.

469

Recommendation 16.4 The involvement of a foreign owned company in the customary land investigation process, the grant and issuance of title, the security of title in its offices and the agreement to ensure that the State Entities disregard their statutory obliigations is a real concern for the State. 16.5 The State should become more proactive in the enforcement of regutions and exercise its powers to protect the asset of the rural community, the customary land of PNG. 16.6 That the owners of IT&SLand their employed Surveyor be questioned on their role in facilitating the NEWIL SABL. 17 The Evidence of Mr Michael Titus

17.1 The C.O.I makes reference to the evidence under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. 18 Department of Western Province

Findings 18.1 It was found that the whole process of Land Investigation, the survey of the land boundaries, the appointment of agents by a particular land group and the authenticity of the data collected from within the said 26 landgroups comprising the land referred to as Portion 27Cemanated from the developer company IT&S with the able assistance of the Executives of the umbrella land owner company NEWIL.
470

Land Investigation Process 18.2 The C.O.I makes reference to the evidence under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. 19 The Evidence of IMEN ITA PAPA

19.1 The C.O.I makes reference to the evidence under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. 20 The Evidence of Mr Ronald Manase Dimonai

20.1 The C.O.I makes reference to the evidence under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. Recommendation 20.2 The C.O.I makes reference to the Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The recomendation is common to the SABL under review. 21. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) 21.1 Even though there was evidence of the North Fly District Administrator Mr Dimonai signing recommendations as to alienability of customary land for a number of ILG groups, there is no evidence that the LIRs were
471

brought to the office of the Custodian of Customary Land for a certificate of alienation to be issued. This important facet of complying with the procedures for alienation of land was not complied with prior to the grant of the SABL by DLPP. 21.2 No Certificate of Alienability was issued under the hand of the Custodian of Trust Land in accordance with section of the Land Act. Recommendation 21.3 That all LIRs be provided to the Secretary of Provincial Affairs as the Custodian of Customary Land for issue of certificate of Alienability. 22 DEPARTMENT OF LANDS AND PHYSICAL PLANNING

22.1 The C.O.I makes reference to the evidence under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. 23 The Evidence of Simon Malu East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. Recommendaton 23.2 The C.O.I makes reference to the Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The Recomendation is common to the SABL under review.

23.1 The C.O.I makes reference to the evidence under C.O.I Report on North

472

24

DEPARTMENT OF AGRICULTURE AND LIVESTOCK

24.1 There was no evidence elicited from DAL over the land area. We make no findings or recommendation. 25 PNG FOREST AUTHORITY

25.1 The C.O.I makes reference to the Evidence and the Recommendations under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. 26 DEPARTMENT OF ENVIRONMENT AND CONSERVATION

26.1 In terms of environmental permit, there was no evidence taken and we make no findings or recommendation.

473

COI Inquiry File No 64 for Special Purpose Agricultural and Business Lease over Portion 14C Volume -- Folio --Milinch: Carrington, Karius, Strickland, Bosavi, Campbell, Aiemu, Tumu & Sisa, Western Province in the name of Tosigiba Development Limited 1.1 In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the Tosigiba Development SABL. These were: 1.2.1 Department of Western Province, (DWP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGFA) Witness Summons and Statement 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.

474

No 1

3 4

10

11 12

Name and Position Mr Imen Ita Papa, Provincial Lands Adviser, Provincial Lands & Physical Planning Office, DWP Mr Manase Dimonai, District Administrator, North Fly District, DWP Mr Hudson Hape, Surveyor, IT&SL Mr Michael Titus, Lawyer, Private Legal Practitioner Mrs Waeya Bugaebo, Biyami Tribe, Mougulu village, Noamd LLG, Middle Fly Mr Dina Gabo Landowner & Chairman, Tosigiba Timber Group Ltd, ILG Chairman of Yugri Clan, Sodiobi Village, Nomad LLG, Middle Fly District Mr Max Miyoba Chairman/Director, Kebogas Investment Ltd Landowner, Kukulababi village, Nomad LLG, Middle Fly Mr Soki Samisi Director of TTGL Landowner-Wodibi village, Nomad LLG, Middle Fly District Mr Iya Fami Landowner-Sodiri village, Nomad LLG, Middle Fly Secretary TTGL Mr Max Ako, Hospital Administrator, Runginae Rural Hospital, Evangelical Church of PNG, Kiunga Mr Nelson Women Landowner Mr Neville Harsley, CEO,

Pages 3-50 36-51 74-75 101-103 63-75 62-74 13-

Day 1 5 5 5 2 5 6 5

Date 16/11/11-SABL 58-MIROU 21/11/11-SABL 61-MIROU 21/11/11-SABL 61-MIROU 21/11/11-SABL 61-MIROU 17/11/11-SABL 59-MIROU 21/11/11-SABL 61-MIROU 22/11/11 21/11/11 22/11/11 18/11/11-SABL 60-MIROU

12-13 18-31

6 3

7-33

21/11/11-SABL 61_MIROU

133-143

22/11/11-SABL 62-MIROU

143-153

22/11/11-SABL 62 -MIROU

154-158

22/11/11-SABL62 -MIROU

78-85

16/11/11-SABL 58-MIROU

19-28 1-73
475

17/11/11-SABL 59-MIROU 10/01/12-SABL MIROU

13

14 15

IT&SL Mrs Betty Wine, Chairlady, Women in Mining, Kiunga Mr Aaron Dupnai Landowner, Awin Tribe Mr Pepi Kimas Former Secretary, DLPP (200 to 2010) Mr Simon Malo

3-

23/11/11-SABL 64-MIROU

25/11/11-SABL

MIROU

7-87

16

17/01/12-SABL 80-NUMAPO/ MIROU SABL 71 MIROU-04/01/12

2. 2.1

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be representedby counsel.

2.1

The following were granted leave to be represented by counsel Counsel Mr Michael Titus

3 3.1
No 1 2 3 4 5

Exhibits and documents There were fourteen (14) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
Item Survey Map of Portion 27C Notice of Direct Grant Land Investigation Report Instrument of LeaseLease Back Agreement Response by Mr Imen Ita Papa, Acting Advisor, Division of Lands and Physical Planning-Trans Papuan Highway Road Interested Party C.O.I C.O.I C.O.I C.O.I C.O.I Date received 16/11/11 16/11/11 16/11/11 16/11/11 16/11/11 Exhibit Number NEWIL 27C(1) NEWIL 27C(2) NEWIL 27C(3) NEWIL 27C(4) NEWIL 27C(5)

476

10 11 12 13

14

Project in Kiunga, WP Bachelor of Land Studies Degree-Mr Imen Ita Papa dated 28/11/97 Agreement Between The Independent State of PNG, Fly River Provincial Government and NEWIL and KEBOGAS Investment Limited and Tosigiba Timbers Group Limited and PNG Agency for International Development and Independent Timbers and Stevedoring Limited ECPNG Letter dated 15 November 2011 from Max Ako, Runginae Rural Hospital Administrator Affidavit of Waiti Kwani & List of ILG Consent Form signed on /11/11 Affidavit of Foxy Asobi Affidavit of Samson Ubre Affidavit of Betty Wine Supplementary Affidavit of Max Ravo Ako & Map of Project Areas Covered under Portion 27C and IC Granted to NEWIL & 14C Granted to TOSIGIBA Investment Ltd Statement of Aaron Dupnai dated 22 August 2011 re: Inclusion and Investigation to be conducted, PNG Highway and SABLs

C.O.I

16/11/11

NEWIL 27C(6)

C.O.I

16/11/11

NEWIL 27C(7)

C.O.I

16/11/11

NEWIL 27C(8)

C.O.I

NEWIL WK

C.O.I C.O.I C.O.I C.O.I

25/11/11 25/11/11

BW 18/11/11 MA 1 MA 2

C.O.I

25/11/11

AD 1

5.

`FINDINGS

477

5.1

I make the following findings follow the chronology events as documented and by evidence adduced during the hearings surrounding the SABL lease title held by TOSIGIBA.

6. 6.1

Tosigiba Investment Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette no. G218 dated 24th September 2010 for Portion 14C Awin Pari Land. The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 23rd September 2010 by the Department of Lands and Physical Planning to the holder Tosigiba Investment Limited (Tosigiba).The details of the SABL is shown below:

Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease

Portion 14C 28/126 Tosigiba Investment Limited 23rd September 2010 Ninety-nine (99) years 632538.0 hectares

IPA 7 7.1 TOSIGIBA INVESTMENT LIMITED Tosigiba Investment Limited is not incorporated as a company in PNG and does not exist. The issuance of the SABL title Tosigiba Investment Limited contravenes s 102 of the Land Act in that this company has no legal capacity to operate as a landowner company. Mr Dino Gabo stated that to the best of my knowledge no company by that name has ever been registered by the Registrar of Companies.
478

7.2

The other glaring effect also is that the Notice of Direct Grant is issued to Tosigiba Investment Limited, according to IPA records, is not even registered at all; hence, there are no formal and legal records of registration and or incorporation of that company pursuant to the Companies Act 1997.

8 8.1

TOSIGIBA TIMBER GROUP LIMITED The purpose for the formation of TOSIGIBA TIMBER GROUP LIMITED (TTGL) was to encourage the development of the remote areas of the district in joint partnership with a logging company. At that time RH whose presence as a logging company was visible in the Nomad area, was able to provide such assistance to the landowner groups. Tosigiba ceased discussions with RH in 1998 since its inception as a company in 1996.

8,2

Tosigiba Timber Group Limited (TTGL) was incorporated on 27 th March 1996 and as at 5th August 2011 was currently operating as an entity in PNG. The Company number is 1-25389 and is a national owned company. Its principal place of business is c/-Titus Lawyers, 4th Floor, Defens Haus, Corner Champion Parade and Hunter Street, Port Moresby, NCD. The companys total number of ordinary shares is issued is 82.

8.3

The Certificate of Incorporation dated 19th August 1996 show that the original name of the company was JINDALEE NO.1 PTY LTD, followed by a name change to JOSIGIBA TIMBER GROUP PTY LTD and a further name change to TOSIGIBA TIMBER GROUP LTD on 1st July

479

2008. That was registered by the IPA on 4th August 2008. JINDALEE P/L was incorporated on 27th March 1996. 8.4 The initial and current shareholders are 81 ILGs representing the people of TOMU River, SLU River, GLOME River and the BAIYA River areas of part of the NOMAD District of Western Province. On 26th November 1996, TTGL was approved and registered by National Forest Authority as a Forest Industry Participant, Registration No. F1797. 8.5 The Directors of TTGL as at 10th August 1996 are Dina Gabo, Jimmy Obabo, Foyo Gaia, Honiabi Bogou, Moses Uwomali, Soki Samisi, Martin Asuwe, Usima Duluwa, Alengo Bayo, Uga Uwok, Opi Sisibai, Hiwabi Umae, Philip Ebagi and Abi Kasubia. Mr Foyo Gaia was appointed as the company Secretary. The Company return is current to 10th May 2011. 8.6 The evidence in relation to the issue of the majority consent by members of each clan and ILG and their understanding on the process and registration of the SABL concept was adequately covered in the evidence of former and current Executives of Tosigiba Timber Group Limited. It had become evident during the course of our inquiry that there was factions between the former executives/directors and those executives endorsed to replace Dino Gabo and his group with the assistance Michael Titus and IT&SL. The facts leading up to this dispute within the rank of the Executives of Tosigiba could also be described as unfortunate when it represented the illiterate community which the company stands to foster partnership with entities to develop what is a virtual remote and difficult areas of the district.

480

8.7

Dina Gabo the foundation Chairman of Tosigiba Timber Group Limited on oath described his removal as Chairman in May 2011 right after the signing of the Trans Papuan Highway Agreement at Government House at the behest of Mr Harsely of IT&SL. He told the inquiry that he had requested Mr Harsely to send his lawyer Michael Titus to Kiunga with the Stage II Project Agreement so that NEWIL/TOSIGIBA can understand what the content of the agreement consisted of before they agreed in principle to execute. Mr Harsely refused the request through Mrs Betty Wine, a women leader of the province. That was the basis for the urgent meeting held at Nomad station immediately after the agreement was signed at Government House to appoint new Executives. Mr Gabo had refused to travel to Port Moresby to witness the execution of the Project Agreement and also to sign as Chairman of TTGL.

8.8

Mr Soki Samisi, Director of Tosigiba and the three Executives of NEWIL travelled to Port Moresby, the trip fully funded by IT&SL to attend the signing ceremony at Government House and Mr Samisi signed on behalf of Tosigiba and the 81 ILGs that the company represented. (Tosigiba did not hold a meeting authorising Mr Samisi to sign on behalf of the company and its shareholders).

8.9

Mr Gabo later learned from the shareholders of Tosigiba that after the signing ceremony at Port Moresby, Mr Iya Fami in the company of Michael Titus flew from Port Moresby direct to Honinabi and walked to Nomad District Station where a Special General Meeting was held to appoint Mr Soki Samisi ass the acting Chairman of the company. (This was done irregularly and in breach of section 102 of the companies Act-Chairman was not informed of the meeting and agenda procuring his attendance).
481

8.9

Mr Gabo does not deny that he was a party to early negotiation with Mr Harsely in 2003 when he was introduced through former MP Kala Swokim and that Mr Harsely was working for a humanitarian company that was interested in constructing the road from Kiunga to Nomad. It was at the first and only meeting that was attended by Mr Harsley, Paul Japhlom representing PNG Agency for International Development at Kiunga when IT&SL informed the landowners of the companys interest to involve in the Trans Papuan Highway Project.

10.

Proponents of the SABL

10.1 Despite the major defects in the process combined with the lack of awareness and concern over the involvement of the developer company in the land dealings and process, IT&SL was able to convince other executives of Tosigiba to commit to the 25 year sub-lease agreement. 11 The Evidence of Iya Fami

11.1 Mr Iya Fami, shareholder representative of Tosigiba Timber Group Limited on the Joint Venture Company registered as Awin Pari Nomad American Lumber Joint Venture Company Limited confirmed the importance of the road project and the initiatives for development to his people. 11.2 In cross examination, Mr Fami referred to Annexure A of his Affidavit to the Commission sworn on 21st November 2011 attaching Statutory Declaration showing consent of the landowners in Nomad, Juha and

482

Biami. The Statutory Declarations were brought to all the people by Allan Epsi, Derek Wau, Sambo Kobi and Max Miyoba. 11.3 The Statutory declaration was an attempt by the Mr Fami in collaboration with their lawyer Mr Michael Titus to show that the 1,551 signatures of the members of the landgroups was effectively majority consent for the SABL. This is very fraudulent because the process requires that the essential prerequisite of consent is obtained during the land investigation process. The actual dates on which this exercise took place is a period encompassing 26th October 2011, 27th October 2011, 31st October 2011, 2nd November 2011 and 3rd November, 2011 respectively The Commission conducted its hearings at Kiunga on 16 th November 2011 and thus this was a deliberate attempt to mislead the Inquiry with respect to the issue of majority consent. Further to that the signatures of each individual land owners was considered to be fraudulent as was very clear to the Commission that the majority of inhabitants are illiterate and unsophisticated are not able to sign on the small space within the columns and legibly. It is also a concern that the singatures were obtained in a space of three to four days thus suspicions arise. 12 The Evidence of Max Miyobi

12.1 Max Miyobi, the current Chairman of Kebogas Development Limited endorsed Tumu Timber Group Limited as the landowner company vested with their authority to apply for SABL over their customary land. Kebogas land group owns almost 5/6 of the land in the Nomad LLG and Tumu land group would hold 1/6 of the land totalling hectares. The reason for this arrangement was that Kebogas had not organised its ILGs and the need for Stage 2 of the Roadline Project at that time required the
483

SABL to be issued. Kebogas had lend its support to IT&SL in the lead up to the signing of the Gre-Drimgas-Wawoi Falls Agreement. 12.2 (Recommend that Kebogas facilitate the SABL process and organise land group into ILGs for the purpose of facilitating SABL in its name in the future for the development of its customary land. It would not be in the interest of the majority of the land groups within the umbrella of Kebogas to be controlled by another landowning company in the district. Mr Miyoba had not been authorized by Kebogas to make that arrangement by its customary unit holders of land.) 13. The Evidence of Soki Samisi

13.1 Soki Samisi was ably supported by IT&SL when Mr Gabo questioned IT&SL over the Agreement and the need for a presentation to be made to the Los in Kiunga. We find that Mr Harsely of IT&SL, Mr Michael Titus funded the trip to Port Moresby to execute the Agreement at Government House. In fact, the Agreement was never provided to all the stakeholders including the North Fly Provincial Administration, Governor, NEWIL, Tosigiba, Kebogas and Tumu for its consideration prior to the signing of the document. 13.2 Imen Ita Papa has confirmed that most of the landowners including himself were spectators and were treated with contempt by Mr Harsely after the signing ceremony. They were not even given copies of the Agreement-Unfair Contracts Act 14. KEBOGAS INVESTMENT LIMITED

484

14.1 Kebogas Investment Limited is the umbrella company of the landowners in the Nomad District, Middle Fly, Western Province. This company was included as an applicant for the SABL Portion 1C Aibolo with Tosigiba Development Limited. The evidence of Mr Max Miyoba by Affidavit and on sworn testimony confirms their willingness to participate in the road project and was very supportive of IT&SL as the developer of the project stage II. Mr Miyoba is the current Director and Chairman of Kebogas Investment Limited (Kebogas) and comes from Kukuhalo village, Nomad District. He is the leader of the Miyami people and told the inquiry that played a principal role in promoting the Trans Papuan Highway, selective logging and agriculture projects in the Noma District. He had extensive knowledge of the project and worked closely with Waiti Kwani of NEWIL during the feasibility stages of the road link project, formation of ILG and SABL 14.2 He stated that he travelled extensively to Nomad, Sobodi and Mogulu carrying out awareness of the benefits that the roadline and SABL will bring to the project area. That awareness had no input from the key government agencies involved in SABL and the very pertinent aspect of that inquiry was that the road project will also bring numerous request by landowners for feeder roads on both sides of the proposed highway, hence the best way forward was the acquisition of customary land under the lease back system. 14.3 The Commission was unable to peruse any documentation over the incorporation, directorship, shareholding and corporate structure of the company. It was stated in evidence that Kebogas was not able to coordinate its clan and formalise registration of the ILGs, that it decided

485

to nominate Tosigiba to hold the lease in behalf of the Kebogas until such time it was able to formalise its ILGs. 14.4 The C.O.I is very critical of such agreement basedon the following factors; 1. Tosigiba does not have a controlling authority over the landowners to whom Kebogas was formed to represent. 2. There was no agreement between the two entities over such arrangement and it was not authorised by the Directors and Shareholders of the companies. In any event, Kebogas was a legitimate company incorporated in PNG and was at liberty to organize its ILGs and allow for separate LIR to be conducted within its land boundaries. This arrangement was contrary to the Land Act in so far as consent and issuance of the title is concerned. 3. The 82 ILGs represented in the LIR does not include any landowners from Mogulu to Juha along the SHP border across Strickland River and Nomad Station. This would have been excised from the Portion 14C Awin Pari Land. Recommendation 14.5 That there should be continuous dialogue and collaboration based on mutual understanding between the land groups over the land allocated for agricultural or business activity and that if there is a need to go alone on a business venture that should be allowed to occur. The on going disputes between Lancon Executives is an impediment to progress and
486

development and is not a iicence for powerplay and politics in the corporate setting. 15 LANDGROUPS OF STRICKLAND RIVER AND KASUWE RIVER COMPRISING PART OF SABL PORTION 14C AWIN PARI 15.1 The inquiry received evidence from landowners representing the respective villagers and clans from within Portion 14C Awin Pari Land. It is significant to ascertain whether the consent and general awareness was conducted by the Lands Officers on the land investigation. It is general consensus that they had in fact consented to the 600km road corridor project including the 20m by 20m road corridor clearance of forest area to build the road. 15.2 The evidence of the landowners is indicative of their understanding of what was a genuine road line project becoming a source of venue to acquire customary land under the guise of road project basically to undertake logging activity 16 The Evidence of Mrs Bugaebo

16.1 Mrs Bugaebo is from Gogodala, Balimo but now lives with her husband who is from the Biyami Tribe, Mougulu village which is about six hours walk from Nomad Station. It is about eight (8) days walk from Mougulu village to Kiunga township. The Commission has noted the hardships faced by the people in having access to Kiunga/Tabubil due to the river tributaries, dense jungle and heavily forested areas, the stark remoteness of villages which epitomises the drive for development and the need for a national road network with proper feeder roads into various rural
487

community. These hardship are very real and in her evidence she told the inquiry of her 8 days walk to Kiunga to attend the hearings of the SABL inquiry and to express her concerns for her tribe in Mougulu which is located at the border closer to the Southern Highlands Province. A: I am Mrs Waeya Bugaebo but Luia. I am from Balimo, Gogodala; got married to Biyami.

MR BOKOMI: Your husband is from the Biyami tribe?

A:

Biyami tribe.

Q:

Where do the Biyamis live?

A:

In Mougulu.

Q:

Mougulu. How far is Mougulu from Nomad?

A:

It is six hours walk.

Q:

Six hours walk. How far is Mougulu from Kiunga?

A:

I have walked eight days.

Q:

Eight days. Commissioner, I am asking these questions simply to establish one tract and that is that some of these SABLs, they cover, as confirmed by the survey plans; very

488

extensive areas and for government officers to even walk, will take them a considerable period of time.

COMMISSIONER MIROU: Considering that you have to cross rivers, tributaries, swamps, forests---

MR BOKOMI: Swamps, mountainous areas.

COMMISSIONER MIROU: Yes.

MR BOKOMI: Densely and populated rainforest.

COMMISSIONER MIROU: Yes, it is very difficult. We thank Mrs Bugaebo for her efforts to come to Kiunga. (Our emphasis) 16.2 She expressly called for the revocation of the SABL title in the name of Tosigiba Investment Ltd (a non exisiting corporate entity) in that no awareness was carried out on each of the 82 indegenous land groups that includes 44 villages in the Biyami tribe, Mount Bosavi and Wawoi Falls. She emphasised the need for proper social mapping before any ILGs are registered. Based on the information and proper collation of land groups and other disputes that may arise over land boundary the land groups can make informed decision on how they would like to deal with their land. She emphasised the need for the Developer to wait until all the pressing issues are resolved, which is our view was not forthcoming fron DLPP and the provincial lands office.

489

16.3 In evidence she also identified to the Commission that the SABL in fact included mission leases and airstrip leases that was run by ECPNG and the Catholic Church. (Mougulu Catholic Mission Lease, Fuma Mission Station, Eselevi (ECPNG), even includes government onwed station/district offices etc. 16.4 In conclusion she told the inquiry that the SABL should be revoked but the road mustconstructed to allow for access to towns and market. 17 The Evidence of Giwi Giwi

17.1 Giwi Giwi from Tiomna village which is some 13km from Kiunga (on the Kiunga/Tabubil Highway) and representative spokesperson for the 70plus members of the Sami clan, Awin tribe confirmed that they were not aware of the SABL Portion 27C until they saw the gazettal listing published by the Commission of Inquiry. The whole village was not aware of the existence of Tosigiba as the landowner umbrella company responsible for facilitating and negotiating on behalf of the villagers on their involvement in projects that will benefit the landowners collectively. Mr Giwi stated that his clan members and other surrounding villagers never had any meeting with any government representatives over the land investigation process. 18 The Evidence of Steven Kwani

18.1 Steven Kwani, Chairman of Nakrone Forest Area Landowners Association, spokesman representing the USIOKE clan from Trigondok village also confirmed that his people were not aware of the SABL that also included their land. According to Mr Kwani, his people were only
490

told that a roadline will be constructed connecting the Gre Drimgas road across the Fly River over Portion 1C to the Wawoi Falls. There was no involvement from DLPP or the Provincial Lands Office. He also states that he comes from a clan that has about 105 adults and children. In total there are also 10 clans making up their tribe totalling 246 inhabitants. 18 The Evidence of Jack Kwani

18.1 Jack Kwani, spokesman from Drimgas village and of the Gause Clan which is one of the 12 clans along the Fly River where the proposed roadline will be constructed. He said on oath that from Drimgas to Tupensomi there are about 624 inhabitants. He also restated that the people of Drimgas to Tupensomi were not fully aware of SABL until the date of the SABL inquiry hearings at Kiunga, There was awareness about the Trans Papuan Highway, but IT&SL did not make that very clear to the people. 18.2 In respect of the ILG forms, it was confirmed that Waiti Kwani, Samson Ubre and Foxy Asobi were conducting the ILG awareness and collecting signatures basically on the roadline project and not the SABL. He was present at the time the road project agreement was signed at the Office of the Governor General but was insisting on the ILG Certificate for his clan. The important aspect of his evidence is that IT&SL had no presence in Kiunga especially an office to conduct business with the Awin landowners including heavy machinery and equipment since 2006. The current feeder road between Gre village and Drimgas on the Fly River was built jointly by Department of Works and Trima Construction Limited.

491

19 INDEPENDENT TIMBERS AND STEVEDORING LIMITED 19.1 The C.O.I makes reference to the evidence under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. 20 Mr Neville Harsely (SABL 76-MIROU-10th January 2012 pages 1-72) 20.1 The C.O.I makes reference to the evidence under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. 21 The Evidence of Mr Hudson Hape East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. 21.2 The evidence with respect to this SABL in relation to the Land Investigation are; 21.3 It was also found that people appointed as Agents by a particular land group were also found appointed as Agents in two or three other land groups. For example Mr Montford Awetari appeared as an agent for Tumten and Gre-Dmesuk land groups. His stated village is Gusiore village along Elevala River under those land groups over Portion 1C Awin Pari. Mr Awoke Wando appears as Agent for Uga Somi and Kyankwenai Dmesuke Land Groups with his stated village as Kmom in those land groups. It is improper and fraudulent for a person to be named 21.1 The C.O.I makes reference to the evidence under C.O.I Report on North

492

in more than one land group for the purposes of the LIR. This raises questions on the authenticity of the data collected. 21.4 There were twenty-six landgroups who participated in the LIR leading to the NEWIL SABL as provided below: 24.1.1 It was also found that people appointed as Agents by a particular land group were also found appointed as Agents in two or three other land groups. For example Mr Montford Awetari appeared as an agent for Tumten and Gre-Dmesuk land groups. His stated village is Gusiore village along Elevala River under those land groups over Portion 1C Awin Pari. Mr Awoke Wando appears as Agent for Uga Somi and Kyankwenai Dmesuke Land Groups with his stated village as Kmom in those land groups. It is improper and fraudulent for a person to be named in more than one land group for the purposes of the LIR. This raises questions on the authenticity of the data collected. There were twenty-six landgroups who participated in the LIR leading to the NEWIL SABL as provided below: 24.1.2. There were nine landgroups who participated in the LIR leading to

the TOSIGIBA DEVELOPMENT LIMITED SABL as provided below:

No Name of Land Group No of people in land group 21 Lease Period Agreed (years) 25 No of people signing Agency Agreemen t 0 Names of Appointed Agents Stated village of Appointed Agents

Orasi

Robert Kusagi, Todoba Kusagi, David

Siohomesu

493

Seasu (Whoin)

21

25

Seasu B

16

25

Sowasu

39

25

Siligai

73

25

Somulo

18

25

Yowdow

33

25

Sorobo

12

25

Toboda, Hoduofoi Hang, & Hodguva Hang. Yubiai Tionai, Saiyo Tionai, Joe Woyoosu, Thomas Yoyoosu & Joshua Uago Reuben Wasiyo, Someyo Siabo, Daibo Reuben & Debit Siabo Gwagu Kwaro, Kobauo Kwaro, Luke Boiu & Wambi Kowa Alex Uwo, Jack Soyuwo, Jacob Dobose, Fayo Dobuse, Wahayo Hahaloi & Kurabieae Gobagui Ugo Dimabi, Husi Biago, Brago Husa & Mamisi Ugo Usaho Wabogo, Huhuo Bedaiyo, Sisa Bedaiyo, Siso Bediayo, Danny Bediayo, Gau Hawonau & Semion Gase Waharo Nogo, Bameyo Salia, Waharo Nogo, Saragol

Udamobi

Udamobi

Udamobi

Kwobi

Sodiobi

Siohmesu

Fabi

494

Wofsaik One

35

25

10

Wowobau

27

25

11

Alamo Bologia

30

25

12

Siyafikiyali

24

25

13

Tiali

18

25

14

Tiga Buwo

21

25

Kobo, Sigiba Nogo & Gosomo Habale Hawi Wagu, Sepeti Paul, Peter Hawi, Gilayo Dadguba, Gilamo Elo, paul Osalap, Wugolop Aliyebi, Dadgobo Osalap Nomol Toyop, Seyal Abalae, Keloli Nomolo, Koiso Kus, Sigop Bosep, Abawe Bosaip & Dagili Bosaip Gulowo Woiai, Twaiyo Helali, Obo Baboae, Vas Woiai, Nomagai Duka, Woiai Bosobeai, Hiwabi Umai Fesuwan Bogubai, Tibo Siyale, Obaka Fesuwan, Gulo Walo & Allan Amadi Wosiapo Soli Ondiae, Kogea Osugnae, Dimabi Osugnae, Dage Osugnae & Darukwamo Ondiae Asiye Wahame,

Yulabi

Yulabi

Kududobi

Tiriabi

Sodiobi

Tilivabi

495

15

Utugo

16

25

16

Wosigi

14

25

17

Beami

10

25

18

Siasoso

49

25

19

Siagugl Boyabo

43

25

20

Edagisoba

30

25

21

Hunhun

11

25

Dawoko Wahame, Hagowe Kuyamo, Koyabi Wahame & Pogoa Wahame Tioma Wologon, Owage Wologo, Gobuku Kesemo & Haneyo Oyaijo Yowo Hube, Ameyo Oma, Suluky`Hube, Timothy hube & Hube Sosoae Mogodiye Susumo, Komolo Tegeai, Joseph Udae & Soda Gosali Togedi Gosalobo, Soki Gosoalobo, Dobi Sabede & Fiaoso Oyali Osu Walai, Dohou Gisawe, Gesebiae Gisawe, Sibo Soda, Opi Silibae & Usayo Walai Suwa Yowamo, Bude Kese, Iya Fami, Oska Kese & Ulubadio Esay Guba Simugu, Ken Osobo, Asele

Bebelubi

Belubi

Wodiobi/Siohomeui

Wonabi

Sokabi

Wodiobi

Wonabi

496

22

Kelegege

25

23

Kielen

28

25

24

Dafo Woeamotof i

10

25

25

Bubusi

17

25

26

Torogofu

26

25

Simugu & John Guba Swayo Hiyofo, Sisale Nesuae & Hilofo Nesuae Sodibai Gaia, Debeka Ede, Moses Sumo, Foyo Gaia & Sumo Suiyo Hidiai Onyomoi, Made Dewali, Hayou Onyonmoi, Dewali Kibi Sogawo, Wabo Mogobe & Dakiyo Giyoba Howali Ifagu, Toyobo Hadeomoi, Philip Toyobo, Kosali Soai & Ifagu Busu

Sokabi

Sodiobi

Bebelobi

Wodiori

Sodiobi

O depicts that even though names of villagers appeared on the list, there was no signatures verified as to their endorsement of the agent for the ILG or clan.

The total number of people collated in the LIR report total 658, a far cry from the stated 28, 000 odd persons (1,100 @2% growth) NEWIL has been making itself out to represent. Clearly numbers have been inflated under a form of manipulation to aid grant of the lease. Recomendation The C.O.I makes reference to the Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The Recomendation is common to the SABL under review.

497

The Evidence of Michael Titus The C.O.I makes reference to the Evidence andRecomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The Evidence and Recomendation is common to the SABL under review. We only highlight certain aspects of his evidence distinct to this SABL as folows Mr Titus was engaged by IT&SL to assist Tumu Timber Development Limited at the time Mr Dina Gabo and executives of Tosigiba Development Ltd decided to pursue carbon trading initiatives much to IT&SLs dislike. According to Mr Titus, they were referred to as the rogue directors and was considered in our view a sabotage what has been a fruitful cooperation between IT&SL and the landowners. It is confirmed that after the Project Agreement was signed in Port Moresby in May 2011, Mr Titus convened a meeting with Soki Samisi and others at Kiunga for changes to be made to the chairmanship and directorship of the company. Mr Gabo and other executives were not properly advised of that meeting which is contrary to the requirements of the Companies Act. Recommendation Mr Titus must be referred to the PNG Law Society for his involvement with the landowners companies whilst been paid by IT&SL constituting serious ethical questions over the conduct of his legal services to competing interests. Notable features of the Land Investigation process for Portion 14C Aibolo LIR 01/314

498

Name of Applicant: Kebogas Investment & Tosigiba Investment Limited. On the face of the LIR the site from Kiunga is about 80km east. The sub district is NOMAD which is situated within the project site is about 120km from Kiunga.Each of the 26 clans agreed to 25 years. The population estimated with a 2% growth was 1,100 increase. The consent does not reflect that the majority consented.The LIR was signed on 15th December 2008 and the walk on the boundary was done on that very day Papa Domonai, North Fly DA signed the recommendation for alienability on 19th December 2008 at Kiunga.-No due diligence and signing took place at Port Moresby and not Kiunga. Papa endorses that reservations be allowed for gardening, hunting, sacred sites, rivers, villages, roads and other complementary uses to the project Means of livelihood of owners-subsistence farming, nomadic gatherers, hunting and fishing. Names of Los endorsing agents all appear on the LIR but no signatures endorsing the agents thus affecting the Instrument of Leaese-lease back agreement. Malu and Sikabu signed and Pepi Kimas signed as the delegate of the Minister.Signed at Kiunga on 12th February 2009. (Instrument) Recommendation That the owners of IT&SL. be questioned as to their role in facilitating the NEWIL SABL.

499

Department of Western Province The C.O.I makes reference to the Evidence and Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The Evidence and Recomendation is common to the SABL under review. Land Investigation Process THE EVIDENCE OF IMEN ITA PAPA The C.O.I makes reference to the Evidence and Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The Evidence and Recomendation is common to the SABL under review. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) Even though there was evidence of the North Fly District Administrator Mr Dimonai signing recommendations as to alienability of customary land for a number of ILG groups, there is no evidence that the LIRs were brought to the office of the Custodian of Customary Land for a certificate of alienation to be issued. This important facet of complying with the procedures for alienation of land was not complied with prior to the grant of the SABL by DLPP.

No Certificate of Alienability was issued under the hand of the Custodian of Trust Land in accordance with section of the Land Act. Recommendation
500

That freshly conducted LIRs be provided to the Secretary of Provincial Affairs as the custodian of customary land for issue of certificate of Alienability. DEPARTMENT OF LANDS AND PHYSICAL PLANNING The Department of Lands and Physical Planning processes SABLs under two main legal criteria prescribed under the Lands Act Chapter 5 (the Land Act). The relevant provision referred to are sections 10 and 11 of the Act and section 102 of the Act. DLPP file records on SABL Portion 27C Awin Pari disclose that an Application or Tender Form duly filled out by the agent for NEWIL and dated 17 th June 2009 was submitted for consideration. The agent whose signature appears on the document was confirmed as those of Mr Hudson Hape, Registered Company Surveyor for IT&SL as having been authorized by NEWIL to be their agent. It was revealed that no such authorization was approved by the Board of Directors, NEWIL on matters related to the acquisition of Portion 27C for SABL. The purpose of the application was, for Forestry-Reforestation, Sawmilling, Agriculture and Major Road Construction. Estimated Value for Improvement is about K192.0 Million. The Commission noted with interest that Portion 27C was specifically referred to in the Application. This application was reflected in the application for SABL regarding Portion 1C Awin Pari, Portion 14C Awin Pari and Portion 1C Aibolo symbolically considered as illuminating the manipulation of a foreign corporation over the people of Awin Pari being unsophisticated with a handful of intellectuals.

501

The DLPP file also disclosed that Mr Simon Malu then Caretaker Manager, Customary Land in a letter dated 24th November 2008 to the Managing Director, IT&SL confirmed issuance of Land Instruction Number for Portion 27C Milinch of Alice; Fourmil: Raggi as 01/316 including references to Portion 1C Awin Pari; Portion 14C Awin Pari and Portion 1C Aibolo. This date confirm that the Land Investigation process was conducted without submission of the most primary documentation that will allow DLPP to carry out vetting on the proposed land in particular existing leases. Mr Malu instructed IT&LS to liaise with Customary Lands Section and the Fly River Provincial Government Administration to carry out awareness and complete the Land Investigation process. Land Investigation Report for Portion 27C was completed and signed by Mr Imen Ita Papa Provincial Land Adviser, Provincial Land and Physical Planning Office of the Department of Western Province, North Fly Electorate on 19th December 2008. The LIR comprised 26 clans submitting their consent for 25hectares of their land within the Awin Pari region of Kiunga to be freed up for 25 years. Recommendation as to Alienability was signed by Mr Ronald Manise Dimonai, District Administrator, North Fly Region of Western Province at Kiunga on 19th December 2008 as was purportedly indicated on the LIR. No reservation for the continuation of reasonable access for hunting, fishing, gardening and other necessities conducive to access onto the land. Land Investigation Report

502

The Tender form submitted by the agent Mr Hape from IT&SL for SABL to be issued to Tosigiba Investment Limited is dated 17th June 2009. This application was submitted to DLPP after the issuance of the Instruction Number, the land boundary survey and land investigation; and the lease-lease back agreement. This is fraudulent and would in our view require criminal investigation on the manner in which the process for customary land dealings was corrupted at the very beginning. (Lands Official and IT&SL to be investigated for criminal misconduct and conspiracy to acquire customary land without due regard to the process) Land Investigation Report was conducted by Mr Hapea from IT&SL. It was submitted to Mr Imen Ita Papa who signed each of the 26 individual clan reports on 15th December 2008. Mr Manase Dimonai, District Administrator North Fly District signed the Recommendation for Alienability on 19th December 2008. There is fraud involved as the applicant(s) in all the 26 reports refers to Tosigiba Timber Group Limited & Kebogas Investment Limited Mr Michael Titus was paid by IT&SL to assist the Executives of the umbrella landowner company Tosigiba with IPA registration, meetings, annual returns and also with the ILG forms. (see evidence of Harsley on that retainer arrangements, even though Mr Titus strenuously refused to accept the Commissions observation that he was actually paid by IT&SL to provide legal assistance to the Landowner companies-Tosigiba/NEWIL/Tumu. Instrument of Lease-Lease Back Agreement Our investigation confirms that there was two Instrument of Lease-lease Back Agreement in existence. These documents disclose the corruptible nature of the company IT&SL to manipulate the company executives and ILG agents during
503

the land acquisition process. Major discrepancies indicate that the agreement is tainted with fraud as was evident in the discovery of two lease-lease back agreements over Portion 14C Awin Pari land. Agreement dated 12th February 2009 (TOSIGIBA 4) Mr Gabo confirmed signing the Instrument dated 12th February in the presence of Mr Imen Ita Papa at the Provincial Lands Advisors Office at Kiunga. The other eighty one agents as authorized agents of the respective ILG were also present and signed the agreement. He was not aware of the second Lease-Lease Back agreement dated July 2009 that led to the issuance of the direct grant to Tosigiba under section 102 of the Land Act. That agreement was not signed by the Minister or by his Delegate. Agreement dated 24th June 2009 (TOSIGIBA 9) This agreement led to the issuance of the Direct Grant signed by Mr Kimas as the Delegate of the Minister for Lands and Physical Planning. The Agreement dated 24th June 2009 was signed by 81 agents of the landgroups but Mr Gabos signatures is omitted. The agents signed the agreement in the presence of Mr Sikabu Maika and Simon Malu Title The substantive title holder to Portion 14C Awin Pari is in the name of TOSIGIBA INVESTMENT LIMITED. It is evident that Tosigiba Timber Group Limited was incorporated in 2006 and is recognised as the umbrella company for 81 landowning clans in the Nomad District.

504

By letter dated 26th October 2010, Mr Hape of IT&SL wrote to Mr Simon Malu, Director Customary Lands Administration, DLPP for addendum to Notice of Direct Grant under section 102 of the Land Act adding that SABL grantee should be changed to TOSIGIBA TIMBER GROUP LIMITED in compliance with IPA business name requirements. SERIOUS DEFECTS IN THE PROCESS THAT WE OBSERVE ARE FRAUDULENTS AND CORRUPTIBLE Period of Lease-lease back The lease - lease-back agreement in relation to the subject land was executed by parties on 24 June 2009. Land investigation reports, generally are incomplete and or unsigned in most relevant and necessary parts thereof. The Notice of Direct Grant expressly says that a Special Agriculture and Business Lease under section 102 of the Land Act is granted to Tosigiba for a period of 99 years. However, according to the lands investigations conducted purportedly by the Lands Officer based in Kiunga, one Mr Imen Ite Papa, in relation to portion 14C, the landowners were and are not willing to sell their land outright but, rather, were and are willing to lease for only 25 years and not 99 years as stipulated in the Notice of Direct Grant. The lease period of 25 years as consented to and approved by the customary landowners, as it appears during the land investigations, found the expression as an essential term of the lease - lease-back agreement executed between the landowners and the State. That particular term is found in part 2 of the terms of the lease as set out in the schedule to the lease which says in particular that the customary landowners agree to lease the subject land to the State for a period of 25 years.
505

There is a glaring contradiction between the term as set out in the notice of Direct Grant and the term set out in the lease entered into between the State and the landowners. In the lease, landowners are willing to give away their land for only 25 years, whilst in the Notice of Direct Grant, 99 years. The Notice of Direct Grant was signed by Mr Kimas, and it was witnessed by Mr Simon Malu who is now the Director Customary Lands Division, Lands Department Waigani; and Mr Sikabu Maika who was the then Provincial Lands Adviser. (He has now been transferred to Alotau, Milne Bay Province). It is also noteworthy to mention that only 29 of the 56 ILGs from the area, covered by the SABL, signed through their respective agents the lease instrument. According to the land investigation reports, all the clans owning land within the SABL have, respectively, a population of 1100 persons at 2 per cent natural increase rate per annum. That is the population of almost each and every village that was apparently in which land investigations were conducted. The COI in its inquiry into this SABL found no evidence of a Certificate of Alienability having been issued by the Department of Provincial Affairs to complement the Recommendation as to Alienability instrument signed by Mr Dimonai as the District Administrator on behalf of the Administrator of the Western Province in December 2008. In the evidence provided there was found a instruction no. ---- given for the LIR to be conducted, a notice of Direct Grant under Section 102 and the signed Lease/leaseback instrument. However as noted earlier it is a condition for processing of customary land that a Certificate of Alienability is issued from the Department of Provincial Affairs prior to the customary leases officer at the DLPP preparing a Lease/leaseback
506

agreement and a Notice under section 102 to be published in the National Gazette. This procedure was not met prior to the land grant being published in the National Gazette and issue of title. The Evidence of Simon Malu The C.O.I makes reference to the Evidence and Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The Evidence and Recomendation is common to the SABL under review. DEPARTMENT OF AGRICULTURE AND LIVESTOCK The C.O.I makes reference to the Evidence and Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The Evidence and Recomendation is common to the SABL under review.

507

PNG FOREST AUTHORITY Files provided to the Commission by NFA reveal that on 25 th November 2010 and pursuant to section 90D (8) of the Forestry Act 1991 (Regulation 273 and Form 252) the Board of the National Forest Authority issued Forest Clearance Authority Number FCA 01-01 to IT&SL to carry out larger scale conversion of Forest Road Development. We note from the Forest Clearance Authority (FCA) that clearly stated that The Project area is about 600 kilometres of road alignment in the North Fly District of the Western Province. It is to be known as the Gre-Drimgas to Nomad Road Alignment.The maximum forest clearance of road corridor from forest edge to forest edge is to be strictly confined to 40 metres (20 metres of both sides of the road centre line).(Refer Schedule 1 and 4(1) of the FCA). The Commission however finds that IT&SL has deliberately increased the FCA road line approval for a 40metre forest clearance with an additional 5,000metres clearance of forest under the Contract between the State and IT&SL dated 23 rd May 2011. The changes are reflected under Recital O, IT&SL in consultation with the landowners, is seeking timber authority (TA) permit to cover the harvesting of log product covering some seven thousand (7000) cubic metre per kilometre and or selective harvesting of timber from 1000 hectares per kilometre of road lengths or which is the greater of the two for selective harvesting of commercial species and the removal of timber from 40 metre road corridor or 20 metres either side of the road centreline and a distance of 5,000mtres on either side of the road corridor which has been initially agreed with by the traditional landowners. (Contract Agreement at page 7)

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In fact the Commission has also sighted an earlier version of the Contract which stipulates as follows; IT&SL in consultation with the landowners, is seeking timber authority (TA) permit to cover the timber harvesting period of twenty five years and also to cover the harvesting of log product covering some seven thousand (7000) cubic metre per kilometre and or selective harvesting of timber from 1000 hectares per kilometre of road 600 kilometres of road lenght or which is the greater of the two for selective harvesting of commercial species and the removal of timber from 40 metre road corridor or 20 metres either side of the road centreline which has been initially agreed with by the traditional landowners. That is a major deviation from the original requirement of road clearance ass issued by the Board of NFA. In conformity to the FCA requirements for a performance bond in the sum of K595, 000.00 to be paid within 21 days of the issuance of the FCA, IT&SL provided an ANZ BANK Guarantee in the said sum of K595, 000.00 to NFA on 16th December 2010. RECOMMENDATIONS The PNG Forest Authority should cancel the FCA and allow new process to be applied consistent with the Road Line Authority and not for Agriculltural purpose. DEPARTMENT OF ENVIRONMENT AND CONSERVATION No findings and recommendations as no application was made for environmental permit

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COI Inquiry File No 48. -- for Special Purpose Agricultural and Business Lease over Portion 1C Volume -- Folio -- Milinch: Aramia, Bosavi, Miwa, Kaim, Soari, Avu, Kotale, Piareme & Samaki, Western Province in the name of Tumu Timbers Development Limited 1.1 In accordance with the powers given to the Commissioners pursuant to Section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the North East West Investment SABL. These were: 1.2.1 Department of Western Province, (DWP) 1.2.2 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.3 Department of Lands and Physical Planning, (DLPP) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 PNG Forest Authority, (PNGFA) 1.2.6 Department of Environment and Conservation, (DEC) Witness Summons and Statements/ Evidence 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.
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No 1

Name and Position Mr Imen Ita Papa, Provincial Lands Adviser, Provincial Lands & Physical Planning Office, DWP Mr Ipisa Biyama, District Administrator, South Fly District, DWP Mr Hudson Hape, Surveyor, IT&SL Mr Michael Titus, Lawyer, Private Legal Practitioner Mr Abini Gesele, Councillor of Ai village, Awala Clan of Boyadari Tribe comprising 36 ILGs President of Gogodala LLG & Chairman for Economics in the Provincial Executive Council, Middle Fly (TTL 7-Statement of Gesele) Mr Alex Tongayu Registrar of Companies IPA George Deposie Mr Soki Samisi Director of TTGL Landowner-Wodibi village, Nomad LLG, Middle Fly District Mr Iya Fami Landowner-Sodiri village, Nomad LLG, Middle Fly Secretary TTGL Mr Max Ako, Hospital Administrator, Runginae Rural Hospital, Evangelical Church of PNG, Kiunga Mr Solomon Kosa, Mr Neville Harsely, CEO, IT&SL Mr Aaron Dupnai Landowner, Awin Tribe Mr Pepi Kimas Former Secretary, DLPP (200 to 2010)

Pages 3-50 36-51 74-75 101-103 63-75 62-74 13-

Day 1 5 5 5 2 5 6 5

Date 16/11/11-SABL 58-MIROU 21/11/11-SABL 61-MIROU 21/11/11-SABL 61-MIROU 21/11/11-SABL 61-MIROU 17/11/11-SABL 59-MIROU 21/11/11-SABL 61-MIROU 22/11/11 21/11/11 22/11/11 23/11/11-SABL 63-MIROU

2 3 4 5

12-13 36-

6 3

7 8

143-153

22/11/11-SABL 62 -MIROU

154-158

22/11/11-SABL62 -MIROU

10

78-85

16/11/11-SABL 58-MIROU

11 12 13 14 15

8 1-73 8

25/11/11-SABL 65-MIROU 10/01/12-SABL MIROU 25/11/11-SABL MIROU

7-87

17/01/12-SABL 80-NUMAPO/ MIROU

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2, 2.1

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be representedby counsel.

2.2

The following were granted leave to be represented by counsel

Counsel Mr Michael Titus

3 3.1

Exhibits and documents There were eleven (11) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.

No 1 2 3 4

Item Land Investigation Report Survey Map of Portion 1C Aibolo Notice of Direct Grant No G 78 dated 28/04/09 Instrument of Lease-Lease Back Agreement dated 01/04/09 and Deed of Amendment of the Joint Venture Agreement between Pisa American Lumber Shareholder Agreement dated 27/02/09 Notice of Direct Grant under Section 102 dated 27 April 2009: Undated Instrument of Lease for Customary Land Leaselease Back Agreement pursuant to s 11 of the Land Act. Special Agriculture And Business Lease dated 1 April 2009. Agreement Between The Independent State of PNG, Fly River Provincial Government and NEWIL

Interested Party C.O.I C.O.I C.O.I C.O.I

Date received /11/11 23/11/11 23/11/11 23/11/11

Exhibit Number TTL (1) TTL (2) TTL (3) TTL (4)

C.O.I

23/11/11

TTL (5)

6 7

C.O.I C.O.I

23/11/11 16/11/11

TTL (6) NEWIL 27C(7)

512

8 9 10

11

and KEBOGAS Investment Limited and Tosigiba Timbers Group Limited and PNG Agency for International Development and Independent Timbers and Stevedoring Limited Statement of Abini Gesele Personal Statement of Wisa Suspie Copy of letter from EcoForestry dated 9th November 2011 and Copy of Interim Orders OS (JR) 259 of 2006 Copy of Court Proceeding OS 737 of 2011 Initiated by Mr Wisa Susupie

C.O.I C.O.I C.O.I

23/11/11 23/11/11 23/11/11

TTL (7) TTL (8) TTL (9)

C.O.I

23/11/11

TTL (10)

FINDINGS The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Tumu Timbers Development Limited. Tumu Timbers Development Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette no. G78 dated 28th April 2009 for Portion 1C Aibolo Land. The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 27th April 2009 by the Department of Lands and Physical Planning to the holder Tumu Timbers Development Limited (Tumu).The details of the SABL is shown below:
Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease Portion 1C 35/15 Tumu Timbers Investment Limited 27th April 2009 Ninety-nine (99) years 790,800.0 hectares
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The Commission also notes the existence of the SABL Title in the name of Tumu Timber Development Limited which was signed on 10 th May 2009 (See Exhibit TTL6). This discrepancy indicates the lack of proper supervision and management of land dealings contributed largely by the reckless disregard for proper administrative observance of the land investigation process thus compromising the safe custody and security on indefeasibility of the SABL title (including other State Leases) by DLPP. IPA Tumu Timber Development Limited (Tumu) is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. The Company was incorporated on 20th July 1994 and the current Principal Place of Business is DFK Hill Mayberry, 5 th Floor Defens Haus, Corner Champion Parade & Hunter Street, Port Moresby National Capital District. As at 14th April, 2009 IPA records confirms that it is operating and the Company number is 1-22269. The company status on the IPA Extract is that it is deregistered for failure to file company returns as is required under the Companies Act. Mr of Tumu confirms that the company having submitted returns to IPA, it is currently operating. The latest IPA company extract provided to the Commission dated 14 th February 2011 confirm that there are 81 shareholders comprising Incorporated Land Groups within the land known as Aibolo, North Fly District of the Western Province. The Company has issued total number of 145 ordinary shares.
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The extract discloses Messrs Ablie Wape, Wisa Susupie, Yamai Umtadie, Walama Paimama, Billy Toroti and Yaiye Bosai as Directors of the company. Mr Walama Paimama is also the current Secretary of the Company with Mr Wisa Susupie appointed as the Chairman. The Annual return for the company was made up to 17th March 2008. EVIDENCE OF LANDGROUPS OF STRICKLAND RIVER AND KASUWE RIVER The proceedings of the inquiry into Portion 1C Aibolo gave opportunity for the landowners to and appear and assist the inquiry with evidence based on their understanding of the SABL and the issue of consent. It is significant to ascertain whether the consent and general awareness was conducted by the Lands Officers or the Provincial administration into all aspects of the land investigation. The general thrust of landowner consensus is that the majority villagers within the road corridor project had consented to the construction of the Trans Papuan Highway, which also included allowance for the clearance of forest area to build the road. That road clearance in compliance with Forestry Act would entail a 40mtere road corridor forest clearance. The evidence of the landowners is indicative of their understanding of what was a genuine road line project becoming a source of venue to acquire customary land under the guise of road project basically to undertake logging activity Abini Gesele Councillor of Ali village and President of the Gogodala LLG, Chairman of Economics, Provincial Executive Council, Fly River Provincial Government. He belongs to the Awala Clan of the Boiyadari Tribe which has 36 registered ILGs. stated in his evidence and sworn testimony that his clan and
515

tribe from Ali village, Balimo, Muye village in Lake Murray was not aware of the acquisition of their land under SABL. As their representative, he also stated that the BOYDARI LAND GROUP and BEGUA RESOURCES CONSERVATION did not consent to the acquisition of their land under SABL and they treated the signing of the land deal as illegal and lack the consent of all the members of his tribe and clan. If there was any agricultural activities was to eventuate on that land then there would have been a submission made to the PEC of which he was a member of the Committee tasked with the oversight of all agricultural activities within the Province. Wisa Suspie comes from Songoba village and speaks the Doso and Kamula dialect. He belongs to the Kawokwok clan which is situated in Middle Fly of the project area. He is an experienced logger having worked as a Chief Scaler, Marketing Officer for logs, Camp Assistant at logging camps with RH Group of Companies. He currently holds a loggers licence No. 054. He has worked at Kamusi, Teredau, Vailala, and Doa/Tuna Camp (Central Province). He represented his people of the Kamula Doso area which is part of the SANBL encompassing the logging concession known as Kamula Doso TRP operated by RH. He was the mandated Chairman of Tumu Timbers Development Limited. Tumu is the umbrella landowner company which has 52 ILGs within the Kamula Doso FMA area the shareholder of the company. He confirmed in his evidence that no boundary inspection took place and that proper surveys were not carried out in consultation with Tumu. He told the inquiry that between periods 2006-2008, Tumu under his chairmanship worked closely with IT&SL on the registering each ILGs with regard to the road project. He became concerned when IT&SL prepared the Joint Venture Agreement with the shareholding structure of ninety (90) percent in the name of IT&SL and ten (10) percent to Tumu. The control of
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the joint venture company will be in the name of IT&SL, which will nullify the sub lease requirement under the lease back title in the name of Tumu. His group was referred to as the rogue directors by IT&SL (Harsely/Titus) when they decided in 2009 to pursue carbon trade as a means of preserving their forest due to the forest concession held by the forest developer RH. He confirmed that after the signing of the road agreement at Port Moresby on May 2011 Mr Harsely directed Mr Titus to organise and convene a meeting of BOD basically to deal with the continued leadership of Mr Suspie, A aircraft at the expense of IT&SL was chartered to transport all the directors to Wawoi Falls. That meeting was convened on location at Wawoi Falls and on 9 th May 2011 Inwapa Yama was appointed as Chairman, Nodie Imare and Walama Painama was appointed as Directors replacing Mr Suspies executives. The meeting was convened without proper notice given to Suspie and his executives to be present at that meeting. It was stated in evidence that IT&SL was trying to protect the SABL interest and that he was seen as an obstacle to IT&SLs role in bringing economic development to Western Province. He has confirmed that there two factions created over the leadership and directorship of Tumu, the subject of current proceedings in the National Court. The other faction is led by George Deposie and the current records at IPA indicate that both Deposie and Suspie are not registered as Directors of Tumu. Mr Solomon Kosa who is the spokesman for the other 5 SABL in the South Fly District informed the Commission that there was a dispute between Tumu Timber Development Corporation and Wawoi Tumu Holdings over the FMA concession for the harvest of timber within the Kamula Doso area. It transpired that there is a current proceeding in the National Court between the two landowner company over the FMA concessions. The subject of the proceedings
517

is not known but the essence of that proceeding is for the reason that Wawoi cannot renew and obtain extension for FMA to carry out logging activity within Makapa FMA and Wawoi Falls FMA on the basis of the SABL that was issued under the name of Tumu Timber Development Limited. He said in evidence that the majority of the people wanted to continue with logging activity but was now restrained because of the SABL. Further to that the National Forest Authority has advised that it would not issue any new FMA for the area until the SABL issue was resolved. Mr Kosa was assisting the warring groups in resolving the differences with the intent of carrying on logging in the area. According to Mr Kosa, Waoi Guavi Timber company was requested by NFA for extension of Wawoi Guavi operations of 791,000, 200 hectares of land is heavily forested area. The Kamuladoso FMA was signed in 1997 having lapsed was the subject of an application by the company seeking renewal and extension of the FMA. Aaron Dupnai comes from the Giponai village some 30km up the Fly River from Kiunga, He represents his people of the Gre Clan of the EKium Tribe. At the time of the hearing, Mr Dupnai in the company of his people in their traditional regalia in a silent protest holding placards simply calling for their land under SABL to be returned to them. Mr Dupnai registered his peoples complaints over the acquisition of their customary land by the umbrella Landowner Company and IT&SL without the knowledge and consent of his people. He also expressed a number of matters that will require further investigation especially over the lack of consent and the forging of signatures on the consent form, the road corridor extension of forest clearance to 5km in breach of the Forestry Act and the lack of financial capacity of IT&SL to construct the road.

518

INDEPENDENT TIMBERS AND STEVEDORING LIMITED The C.O.I makes reference to the evidence under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. The Evidence of Mr Neville Harsely The C.O.I makes reference to the Evidence and Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. The Evidence of Mr Hudson Hape The C.O.I makes reference to the Evidence and Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. The Evidence of Michael Titus The C.O.I makes reference to the Evidence and Recommendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. PISA AMERCIAN LUMBER JOINT VENTURE COMPANY Pisa American Lumber Joint Venture Limited (PALL) was set up as a joint venture company for IT&SL and Tumu Timber Development Ltd. The Deed of Amendment Joint Venture Shareholder Agreement (Exhibit TTL4) between
519

IT&SL, Tumu Timber Development Ltd Pisa American Lumber Ltd, and Neville Harsely was executed on 5th February 2009. The agreement was prepared by Gadens Lawyers based in Queensland, Australia. The Commission is concerned that the instruction and the agreement was done outside of PNG when there were law firm quite capable of preparing an agreement that is for the benefit of the landowners and not the developers as will be highlighted in the content of the shareholders agreement. A. Very serious and this why we started with a process of what we needed and what the people needed by the MOUs through the contracts so the landowners counsel, under those contracts if we do not perform they can sue us. They can sue for damages. We have had a reputable Australian Law Firm with offices in PNG in Gadens draw up those contracts. So we have provided rights in equal parity to the people and to us so if we do not perform counsel, the landowners can physically take us to court and sue us and we can be cited for breach. This project is covered by a project agreement and it provides for provisions under that project agreement for legal ramification so that landowners are also as an insurance policy are protected by the project agreement.

(Refer to his evidence at page 25 commencing line 44 to and Exhibit NEWIL 27(7)) Recital (A), (B), (C),(D)(E) &(F) sets out the background to the agreement. I set out the pertinent recitals below; A. IT&S is a PNG Company and holds a Certificate of Registration as a Forest Industry Participant (registration number F101573) and is

520

recognised under Part IV of the PNG Forestry Act1991. The Company is certified to harvest, process and sell forest products in PNG.

B. Tumu is an umbrella company representing each and every customary landowner and/or Incorporated Land Group (ILG) of all land in the Kamula Doso (KD Area) FMA Concession. Tumu is duly incorporated and registered under the laws of PNG and is the company recognised by the Provincial and National Government as the legal entity representing the rightful landowners of the KD concession area.

C. KD Area is an area of land in the Western Province that has been identified by the State of PNG (State) and the PNG Department of Forestry, as a Forest Management Authority Timber Concession (FMA) as recognised under the PNG Forestry Act 1991, and described as Portion 1C, Aibolo, LIR No. 01/317, in the Locality of Balimo, District of Middle Fly, Western Province, on Survey Plan Cat No, 35/15, having an area of 790,800 hectares.

D. IT&S and Tumu have formed a joint venture (the Joint Venture) to undertake the commercial development of the timber and other forest resources within the KD FMA as granted under the Forestry Act 1991, and have set out the terms and conditions of their joint venture in an agreement dated 30 November 2007 (the Joint Venture Agreement)

E. Pursuant to the Joint Venture Agreement, IT&S and Tumu have established and registered Pisa as a special purpose entity for the purpose of the Joint Venture.
521

F. IT&S and Tumu have required that Pisa agree to carry out the terms of the Joint Venture Agreement on its part required, and Pisa has agreed to do so. We are concerned that the Agreement does not accord any right to the landowners to exercise free will and decision on nominating a developer over land dealings affecting pristine forest located within the said project area. The Agreement is in my view an attempt to substitute the sub-lease process under the lease back system and introduce the joint venture agreement which we strongly believe undermines the landowners ability to use the process the lease in accordance with agriculture, the central basis for the lease. Clause 1.4 and Clause 1.5 of the Lease Back Agreement states; Clause 1.4. In a lease-lease back agreement, the Customary Landowners are the Lessor and the State becomes the [Head] Lessee and when the land is leased back as agreed, it becomes a Sublease arrangement, hence, the person(s), land group, business group or other incorporated body

nominated/appointed by the Customary landowners become the Sublessee.

Clause 1.5. The Sublessee can either retain the registered interest that it secures and develop the land according to the agreed special agriculture and business lease terms and conditions or it can further Sub-sublease the land to another party (i.e: a developer, etc.) for the remaining term of the lease.

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In addition the agreement does not accord any room for benefits to flow from any proposed agricultural activity as envisaged under the SABL process but one that is concerned entirely on the construction corridor and logging. The following are some examples of such exploitation that is to occur and contravenes s of the Fairness of Transactions Act, 1999, 1. IT&S will hold 90 Ordinary shares and Tumu holds 10 A (Royalty) Class shares hence IT&SL retains the controlling interest over the SABL lease and the payment of royalties. (Clause 2.1 (a)-Shares in Pisa; Clause 2.1 (e) Royalty payable under the Marketing Agreement) 2. Clause 2.1(f) imposes an obligation on Tumu to take all steps to arrange with the customary landowners and the State and to secure the Minister for Lands agreement and all statutory and legal approvals for leasing of the customary land covering the whole of the project area for the purpose of lease-lease back agreement and to ensure the leasing by Tumu to Pisa of the whole of the Project Area for the purpose of logging and taking of timber and associated purposes in accordance with any rules and guidelines from time to time provided for under the Forest Act (the Business Lease). 3. The holding of Timber Authorities by Tumu whether now held or granted in the future in respect of the project area are to be assigned to IT&S and it may direct that those rights be granted to Pisa. Under clause 2.1(g), Tumu shall not grant (or procure or consent to the grant of) any logging rights in the Project area to any other party other than IT&S or Pisa 4. Clause 2.1 (h) (Right to timber; undertaking of logging and marketing operations) provides that IT&S shall itself undertake (either itself or by
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any independent contractor or contractors) all logging operations on the project Area. Pisa is also required to grant IT&S the right to take for its own benefit timber from the project area, and any benefits of carbon sequestration in respect of those areas. 5. We also note that under clause 2.1.(j)(k)(l) the reference to the project area to mean the actual road construction corridor and the requirement under the Forestry Act 1991 for a road corridor of 40metre from the centre line. The JV agreement was executed to give effect to the notion that IT&SL would require an additional 5000 metres to harvest logs within the road corridor, an agreement they insist was agreed to by the landowners. We deem this as irresponsible action and the Agreement contravenes the statutory requirements stipulated under section 90C of the Forestry Act, 1991, hence it is illegal and null and void. The reference to the 5,000metres can be found under Clause 2.1(i) (iii) of the JV Agreement and Recital O of the Project Agreement 6. The agreement also contravenes the provisions of section 102() of the Land Act, in relation to payment of rent whereby clause 2.1 (l)(v) and (n) states that entitlements of Pisa to royaltiesare in lieu of any other right to compensation (whether by way of royalties or rent payable under the Business Lease or fees or royalties payable under any Marketing Agreement or under any Management Agreement (or otherwise) payable to Tumu or the Incorporated Landowner Groups which represents in respect of the Project Areathe royalties payable under the agreement shall be reduced by the amount of that payment. We take the view that any land rental or compensation paid will be deducted from the royalty paid out of the logs harvested subject to the share component of Tumu 10 A (Royalty) Class shares.
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Whilst the reference to the construction corridor this agreement also provides IT&SL through its controlling stake in Pisa to have access to all the land under Portion 1C Aibolo. Recommendation The agreement should be nullified as it contravenes the Fairness of Transactions Act in relation to the inability of Tumu to benefit fully from what is to be a logging operation been legitimised under the guise of the JV Agreement, The roadline requirements under section 90C of the Forest Act have also been contravened. The lease back requirement for sub-lease has not been executed and that the JV Agreement cannot be the ideal substitute as it only progresses the intent of IT&SL to use PISA as the vehicle to carry out logging activities not only in the construction corridor project area but the entire hectares of land. Department of Western Province The C.O.I makes reference to the Evidence and Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review.

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Recommendation That the SABL be revoked as the fundamental aspects of land mobilization through the ILG process and LIR process was not independently processed by DLPP in collaboration with the Department of Western Province. That the Provincial Lands Officers undertake training workshop to be facilitated bvy the DLPP as a compulsory course for all public servants of any agencies of government involved in the land investigation of state leases and in particular the SABL process either in the present format or a new format that is subject to government intervention as this system of SABL process is abused and entrenched. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) Even though there was evidence of the District Administrator signing recommendations as to alienability of customary land for a number of ILG groups, there is no evidence that the LIRs were brought to the office of the Custodian of Customary Land for a certificate of alienation to be issued. This important facet of complying with the procedures for alienation of land was not complied with prior to the grant of the SABL by DLPP. Recommendation The SABL is to be revoked as the Certificate of Alienability was not signed by the Custodian of Customary Land.

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DEPARTMENT OF LANDS AND PHYSICAL PLANNING The C.O.I makes reference to the Evidence and Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The Evidence and Recommendation is common to the SABL under review. The C.O.I highlights distinctive features of the SABL, The Lease-lease back agreement was signed by the agents authorized by the fifty-two (52) landowning clans/groups of Portion 1C Aibolo and Hon. Dr. Puka Temu (now Sir), Minister for LPP on behalf of the State on 24th June 2008 in the presence of Sikabu Maika (then Advisor Lands-WPA) and Simon Malu , Customary Lease Section, DLPP. Clause 2.0 of the lease-lease back agreement refers to the customary landowners listed in the LIR and the nominated representatives and agents whose signature appears in the Agreement. That clause implies the important nexus with the LIR and in this case fifty-two (52) individual LIR was not conducted by Mr Biyama. This agreement therefore was executed without the primary document authenticating consent of the majority landowners apart from the two parts of the LIR referred to above. The lack of due diligence or deliberate attempt on the part of the persons so implicated constitutes the lack of majority consent for the release of the land for agriculture and business activities. The evidence of Simon Malu The C.O.I makes reference to the evidence under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review.

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DEPARTMENT OF AGRICULTURE AND LIVESTOCK The Commission was unable to sight any agricultural reports arising, as the main thrust of the developers interest was on the construction corridor and ensuring that approvals be granted for harvesting of forest products within the confines of the project area (Trans Papuan Highway). PNG FOREST AUTHORITY The Commission noted that on 25th November 2010 and pursuant to section 90D (8) of the Forestry Act 1991 (Regulation 273 and Form 252) the Board of the National Forest Authority issued Forest Clearance Authority Number FCA 01-01 to IT&SL to carry out larger scale conversion of Forest Road Development. Of note to the FCA was the fact that The Project area is about 600 kilometres of road alignment in the North Fly District of the Western Province. It is to be known as the Gre-Drimgas to Nomad Road Alignment.The maximum forest clearance of road corridor from forest edge to forest edge is to be strictly confined to 40 metres (20 metres of both sides of the road centre line).(Refer Schedule 1 and 4(1) of the FCA). The Commission however finds that IT&SL has deliberately increased the FCA road line approval for a 40metre forest clearance with an additional 5,000metres clearance of forest under the Contract between the State and IT&SL dated 23 rd May 2011. The changes are reflected under Recital O, IT&SL in consultation with the landowners, is seeking timber authority (TA) permit to cover the harvesting of log product covering some seven thousand (7000) cubic metre per kilometre and or selective harvesting of timber from 1000 hectares per kilometre of road lengths or which is the greater of the two for selective
528

harvesting of commercial species and the removal of timber from 40 metre road corridor or 20 metres either side of the road centreline and a distance of 5,000mtres on either side of the road corridor which has been initially agreed with by the traditional landowners. (Contract Agreement at page 7).There is fraud involved in this case as to how IT and SL managed to increase harvesting of timber from 80 wide road corridor on 20 meters either side of the road with an additional 5,000 meters clearance of forest under the contract between the state and the IT & SL dated 23rd May, 2011. In fact the Commission has also sighted an earlier version of the Contract which stipulates as follows; IT&SL in consultation with the landowners, is seeking timber authority (TA) permit to cover the timber harvesting period of twenty five years and also to cover the harvesting of log product covering some seven thousand (7000) cubic metre per kilometre and or selective harvesting of timber from 1000 hectares per kilometre of road 600 kilometres of road length or which is the greater of the two for selective harvesting of commercial species and the removal of timber from 40 metre road corridor or 20 metres either side of the road centreline which has been initially agreed with by the traditional landowners. That is a major deviation from the original requirement of road clearance as issued by the Board of PNG National Forest Authority. In conformity to the FCA requirements for a performance bond in the sum of K595, 000.00 to be paid within 21 days of the issuance of the FCA, IT&SL provided an ANZ BANK Guarantee in the said sum of K595, 000.00 to NFA on 16th December 2010.

529

RECOMMENDATIONS That FCA for Portion 1C is cancelled pending fresh application for Roadline Authority. DEPARTMENT OF ENVIRONMENT AND CONSERVATION No evidence of application for DEC Level 3 Environment Impact Statement We make no findings and Recomendation

530

PART B-SOUTH FLY DISTRICT-WESTERN PROVINCE Five SABLs are registered in the Middle and South Fly District of the Western Province. The landowner companies represent the people living along the floodplains, plains and plateau along the tributaries of the Fly and Strickland Rivers. The population density of the Western province is the lowest in the country and represents 2 persons per square kilometre. That is based on the population figure for the province at 153,30422 and a total land area of 98, 541.2 hectares. (Refer to Exhibit FD5 Natural Resources and Land Use Potential of PNG compiled by the Land Utilization Section of DAL-Francis Daink) That statistics provides a useful guide to the landowners as to the type of economic crops suitable for their land in terms of the lease-lease back scheme. The landform for the Middle Fly and South Fly District is predominantly floodplain landform and is more extensive and has characteristics of major river systems and the drainage and watershed basins to which these land areas are associated. The tyoe of economic activity and tree crops to be planted are compatible to soil suitability for the region with respect to oil palm is marginally suitable indicating an area whose limitations are more than two limiting factors such as a number of environmental factors are identified as being constraints to the growth and production of a crop. Cocoa has the potential to yield favourably further from the river tributaries and in the forested areas and may not suitable if planted on the coastline or the tributaries that is the land arability test is virtually unsuitable.

22

Figures from 2000 Census

531

The four landowner companies including a land group corporation come from the area known as the Wawoi Guavi TRP In 1982 logging operations commenced in the Wawoi Guavi area up and including the date of the inquiry hearing at Kiunga. The landowners themselves were aware that the TRP was to expire on 10th April 2012 and that the area according to evidence has been the subject of logging, second entry logging and re-logging along what is the Wawoi river and the Guavi river, hence the name of the logging operator Wawoi Guavi Timber Company. The people have suffered throughout the logging operation for over a period of 20 years and have not been formally informed about the exit strategy of the company in terms of benefits and other economic activities that will enhance the livelihood of the people in that area. It was on this basis that the villagers commenced a series of meetings with regard to the future land use program after the logging company had exited. This was the major thrust of their resolve to seek assistance from RH to assist in the oil palm development. That drive for economic independence and development for the Wawoi Guavi area commenced in 2008 with the application for SABL and direct grant of the lease back on or about 2009.

532

COI Inquiry File No 49for Special Purpose Agricultural and Business Lease over Portion 5C Volume 35 Folio 104 Milinch: Guavi, Fourmil: Aworra Western Province in the name of La Ali Investments Limited In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. Witnesses were called from the six government agencies involved in the issuance and operation of the La Ali Investments Limited SABL. These were: 1.2.1 Department of Western Province, (DWP) 1.2.2 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.3 Department of Lands and Physical Planning, (DLPP) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 PNG Forest Authority (PNGFA) 1.2.6 Department of Environment and Conservation, (DEC) Witness Summons, Statements/ Evidence The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.

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No 1 2 3

Name and Position Mr Ipisa Biyama, District Administrator, South Fly District, DWP Mr Solomon Kosa, Landowner and Lead Consultant Mr Francis Daink, Deputy Secretary, PATS, DAL

Pages 63-75 62-74 8 2 5

Day

Date 17/11/11-SABL 59-MIROU 21/11/11-SABL 61-MIROU 25/11/11-SABL 65-MIROU 2012

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be representedby counsel. The following were granted leave to be represented by counsel
No appearance by counsel None on record

Exhibits and documents There were nine (9) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1 2 3 4 5 6 Item Land Investigation Report Survey Map of Portion 5C Aworra Notice of Direct Grant No G 217 dated 30/10/09 Instrument of Lease-Lease Back Agreement dated 24/07/08 Special Agriculture And Business Lease dated 6 Interested Party C.O.I C.O.I C.O.I C.O.I C.O.I C.O.I Date received /11/11 25/11/11 25/11/11 25/11/11 /11/11 25/11/11 Exhibit Number La Ali (1) La Ali (4) La Ali (1) La Ali (2) La Ali (5) La Ali (3)

534

7 8

November 2009 Report of Development Proposal Copy of Sub-lease proposed between Godae Landgroup Incorporated and Sovereign Hill PNG Ltd Proposed Infrastructure Map of Wawoi Guavi Consolidated TRP

C.O.I C.O.I

25/11/11 25/11/11

SK 1 SK2

C.O.I

25/11/11

SK3

Timeline of events of note surrounding LAALI SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution 02/09/09 14/08/08 Proponent/Applicant Respondent Entity/Respondent La Ali/ DLPP

1 2

3 4 5 6 7 8

Incorporation of La Ali Investments Limited Application or Tender Form for SABL to Portion 5C Aworra Survey Plan Catalogue Land Investigation Reports Recommendation for Alienability Instrument of LeaseLease Back Agreement Notice of Direct Grant SABL Lease Title dated 6 November 2009

La Ali Landowners La Ali/ Mr Gabei Gaima, Chairman, La Ali Landgroup Committee Mr Ipisa Biyama/District Lands Officer, WPA Sikabu Maika, AdvisorLands and Physical Planning-WPA

26/11/08 05/12/08 24/07/08 30/10/09 6/11/09

WPA/Provincial Administrator DLPP/Secretary

La Ali Investments Limited

FINDINGS

535

The findings follow the chronology of table of notable events above surrounding the SABL lease title held by La Ali Investments Limited. LAALI INVESTMENTS LIMITED A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette no. G217 dated 30th October 2009 for Portion 5C Miromu Land. The term of the lease was for seventy (70) years. A Special Agricultural and Business Lease was registered and issued on 30th October 2009 by the Department of Lands and Physical Planning to the holder La Ali Investments Limited (La Ali).The details of the SABL is shown below:
Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease Portion 5C 36/21 La Ali Investments Limited 30th October 2009 Seventy (70) years 7,170.0 hectares

IPA The Investment Promotion Authority (IPA) is a statutory organization, established by an Act of Parliament in 1992, to promote and facilitate investment in Papua New Guinea. The IPA does this through various programs including the establishment and maintenance of a company/business registry, certification of foreign enterprise and promotion of investment opportunities in PNG. Findings La Ali Investments Limited (La Ali) is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG
536

under the Companies Act 1997. The Company was incorporated on 2nd September 2009 and the current Principal Place of Business is 39, 4 Ilimo Street, Boroko National Capital District. As at 5th August, 2011 IPA records confirm that it is operating. The Company number is 1-69420. The IPA company extract provided to the Commission confirm that there are three (3) shareholders namely Messrs Bawage Bosei, Samoge Gabei and Max Mekere. The Company has issued total number of 3 ordinary shares. The extract discloses Messrs Bawage Bosei, Samoge Gabei and Max Mekere as Directors of the company. Mr Max Mekere is also the current Secretary of the Company. The last annual return lodged with IPA was not found. Mr Kosa states in his evidence that Siko Gabei is the Chairman of La Ali. That is confirmed by the sworn Affidavit by Siko Gabei dated 5 th September 2011 and submitted to the COI on 21st September 2011 stating that he was the Chairman of LaAli. He also supported the evidence of Mr Kosa wherein in respect of the SABL title that all mandatory processes and procedures required under the Land Act of 1996 and other enabling Acts and Regulations in obtaining the Special Agriculture and Business Lease Titles have been complied with at all material times. (refer to paragraph 4 of the Affidavit of Siko Gabei). The Commission was unable to verify with Mr Kosa, whether Siko Gabei was the same person named in the IPA extract as Samoge Gabei, otherwise the chairmanship of Siko Gabei in LaAli is illegal and not recognized according to law.

537

Recommendation The C.O.I recommends that the Shareholding and Directorship be reviewed and changed to include all the ILGs representatives in the landowner company. EVIDENCE OF CONSULTANT TO LAALI INVESTMENTS LIMITED Mr Solomon Kosa is a common witness to the five SABLs located in the Wawoi Guavi timber concession area. He comes from the LaAli clan. The Commission noted his demeanour to be one of sincerity and honesty, there any faults that arise resulting from the inquiry was intentional but one principally to assist his fellow villagers to engage in economic activity before the departure of RH the logging operator in April 2012. He basically coordinated and negotiated the setup of the five landowner companies according to his evidence as a trial basis for further involvement of other villagers within the TRP concession. In his evidence he states that the villagers comprising the five companies were located in Block 1, 2 and 3 of the TRP, where logging had taken place, replaced by secondary forestry growth and reclogging by RH. Mr Kosa initiated negotiations with RH and advised that the landowners had identified 60 hectares of land for the purpose of oil palm estate, to which RH was obligated to assist before the TRP expired. Whilst that was Mr Kosas understanding, it was also important for him to appreciate that the TRP was the responsibility of the National Forest Authority and any other benefits and infrastructure development for the people would be found in the TRP agreement and this was not availed to the Commission.

538

However the SABL process was a way forward for his people and also to set up any economic base for the Wawoi Guavi region of the province. The actual land investigation process has been included and SABL titles issued for each of the five villagers involved in this agricultural business venture. Mr Kosa was asked as to the reasons why he failed to have dialogue with DAL, DEC and National Forest Authority, which was a major concern to the progress of the oil palm imitative. He admitted that since he was dealing with DLPP, it became priority that the process be completed. He was to embark on the next process and that was to puruse dialogue with DAL, DEC and NFA. The Commissions concern was the failure of Mr Kosa and his group to consult NFA, DAL and DEC who are considered as part of the SABL package. He explained in his evidence, That is why in my report I have stated there agriculture the project proposal is going to be prepared by the Agriculture Department. Agriculture Department will prepare that and give it to the developer and the Agriculture Department prepare that, they will give to us and we have a look at it before signing anything. So next is environment and continue until. An agriculture report was also exhibited as relates to the proposed Wawoi Guavi Oil Palm Project. By a letter dated 08th August, 2011, a Mr Solomon Kosa who appears to be a Consultant and or spokesperson for Mudau (Portion 6C) and four (4) other SABL holders from the Balimo area viz LaAli Investments Ltd (Portion 5C); Godae ILG-(Portion 7C), Haubawe Holdings Limited (Portion 8C) and Foifoi Limited (Portion 9C) has written to the Commission of Inquiry to give evidence on the herein mentioned SABLs.
539

Mr Kosa in his correspondence claims that all processes and procedures required for acquisition of customary land and subsequent registration and grant of SABLs over the land so acquired have been followed. Mr Kosa further says that only the processes involving the Department of Agriculture and Livestock (which is to do with the preparation, submission and approval by the DAL of an Agricultural Development Plan and of the PNG National Forest Authority (as to the presentation and submission of an application for a Forest Clearance Authority under section 90C of the Forestry Act 1991 (ass amended) still remain to be completed. There is no indication on file as to whether steps have been taken or are been taken to harness the above processes to facilitate for any concrete development activities to be initiated and or undertaken within the subject SABL. In a final plea to the Commission not to revoke the SABL because of flaws but for the benefit of his underprivileged people who will suffer when the logging operator leaves A: It will be a disgrace for my people, Commissioner, if my five ILGs or five SABLs take a long time, as I have mentioned earlier, timber permit is expiring next year and our only access, our only light is through that logging operations. Logging goes out, we are left behind. We will be back seven, ten times backwards without the developments. Please if while going through if you have seen that I have followed the process rightly or if there are some errors I ask the Commission that you can use your powers and enable me and my group to complete the process as soon as possible. And I
540

am saying, I have been wondering, why I am here if I have already from my knowledge completed the settle process that is required under the law of Papua New Guinea. Without completing all other process I should not be here. I live this to your good hands, I hope and trust our Heavenly Father will bless your job, your work that you are now commissioning, good Lord will bless as you move on to make decisions in the near future. Thank you. SOVEREIGN HILL (PNG) LIMITED The proposed developer for the SABL is Sovereign Hill (PNG) Limited (Sovereign) was incorporated in PNG on 14 April, 1987 and is currently operating as a company in PNG. The IPA company registration number is 112045. The registered address of the company as at 1 April 1995 is Section 479, Allotment 1, Kennedy Road, Hohola, National Capital District (PO Box 5697 Boroko, NCD). In terms of the share structure and composition of shareholders the company has issued a total of 1000002 shares. The IPA historical extract dated 19 th September, 2011 reveal that the following shareholders as Mr Ilk King Tiong, a Malaysian national issued with one (1) ordinary share on 14 August, 1993; Rimbunan Hijau (PNG) Ltd, issued with 999998 ordinary shares on 15 August, 1992 and one (1) ordinary share on 30 June 2000. The records reveal that Mr Tiong resides at 11 Collyer Quay, #15-01 The Arcade, Singapore The current Directors of the company are Messrs Hiew King Tiong, Thai King Tiong, Ik King Tiong, James Lau Sze Yuan, Ivan Su Chiu Lu and Chiong Ong
541

Tiong all Malaysian nationals. The extract show that apart from Ik King Tiong, James Lau Sze Yuan and Ivan Su Chiu Lu, the other three Directors reside in Singapore and Malaysia respectively. The company Secretary is Geok Liam Wong who commenced on 21 October 1996. The Commission was not able to verify with IPA whether or not the company had applied for certification as a foreign entity operating in PNG due to the composition of the directorship of a company that is foreign by its operation. The lack of certification by IPA on the type of activities to be carried out by the company to undertake oil palm estates and in particular, its credentials in the area of oil palm management Rimbunan Hijau. A sub-lease arrangement appears to have been proposed by LaAli, to be entered into with a company called Sovereign Hill (PNG) Limited. However, this proposed arrangement is only in draft form and an unexecuted copy thereof has been provided to the Commission as part of the SABL title holders submission to the inquiry. The Commission notes that the sub-lease agreement in its current format is a standard agreement that we have sighted in other sublease arrangements with other SABL the subject of our inquiry that may contravene the Fairness Transactions Act. The Commission notes that no work has been undertaken since the title holders negotiated with Sovereign to establish the Oil Palm and Forest Plantations project in the forest concession area. either in PNG or in Malaysia is quite questionable, because the current logging operator of the Wawoi Guavi area is

542

Recommendation Soveriegn Hills is a Logging Company and registered by IPA to carry out logging in the country, The current arrangement should be cancelled and negoitiations preferably through the Provincial Administration and the Department of Commerce and Industry to find a Developer that is capable of establishing high impact agricultural project. Department of Western Province The Department of Western Province is the bureaucratic arm of the North Fly Provincial Government whose primary role it is to facilitate government policies and directives through the work of its divisions of which the Lands Division is an important one. In the issuance of the LaAli SABL there was formal Land Investigation Report (LIR) conducted by the Lands & Physical Division of the Department of Western Province. Findings Mr Ipisa Biyama, the District Lands Officer for the Middle Fly District conducted land investigation for the LaAli clan on the 26 th day of November, 2008. According to the report he interviewed and compiled statistics accounting for 86 persons on the day of his visit. That may not constitute a fair representation of the villagers of Wareho on site where the investigation was conducted. Further, as it appears from a perusal of the LIR the landowners of the LaAli clan of Wareho village, Kamusie, Balimo gave their consent for the acquisition

543

of their customary land by the State and to later, as it appears, have it registered as a State Lease under section 102 for a period of seventy (70) years. The population density is very low within the subject area and estimated at 250 hectares per person. It also appears to be demonstrated by the LIR that in terms of its current usage the land area covered by the SABL, it is under the Wawoi-Guavi TRPA logging concession of the RH Group of Companies. According to the Schedule of Owners Status and Rights to Land of Clan contained in the LIR only the landowners/villagers of Wareho Village, Kamusie signed and or gave their consent and their approval for the acquisition. In total 69 of them appear to have given their consent. The Commission has noted that Max Mekere a director of LaAli has not formalised his consent under the schedule which includes the names of Gabei Gaimili, Siko Gabei, Bawage Bosei and Solomon Kosa all of Wareho village. The name of Mr Mekere is missing from the list and we have not verified this with Mr Kosa to date, hence it is highly questionable for a director of the company not to be involved in the LIR process. The company had no corporate legal status in so far as the issuance of the title was to be made out to LaAli Investment Limited as the landowner umbrella company for the LaAli clan. There is no formalised ILG for each of the landowner clans which is a substantial aspect of landownership through clan/tribes as was evident in the landowner companies in the North Fly District. Therefore with the lack of ILG representation, the activities of the company seem to be placed on a three (2) men directorship, though questions now arise whether or not the company
544

represents the true intention of each and every member of the tribe/clan living on Aworra land. On the 4th day of December, 2008 the Certificate in relation to Boundaries was executed by Ipisa Biyama, the District Lands Officer has having walked along as far as practicable and indicated the boundaries of the subject land also on the 5th day of December, 2008. The Recommendation as to Alienability was executed and issued on the 5th day December 2008 at Kamusie by a Mr Sikabu Maika, the then Advisor for Lands and Physical Planning, Western Province Provincial Administration. Mr Sikabu was an officer in charge of the Division of Lands and Physical Planning within the Department of Western Province and was not delegated with the responsibility of signing the recommendation for alienability. That recommendation is flawed because it was signed off by either the District Administrator for Middle Fly or the Provincial Administrator who is the administrative head of the Provincial Administration. This investigation report was in my considered view rushed to give effect to the changing circumstances of the expiry of the logging concession in 2012 and the need for continued economic activity with lack of proper formation of ILGs within the area, the lack of structure within the directorship and shareholding of the company and the complete trust in engaging a company whose major concerns was logging whereas no infrastructure or economic activity was identified for the good of the people.

545

Recommendation That the SABL be suspended pending a fresh LIR to be re-conducted by the Department of Western Province with the walking of the boundaries and certification as to ownership by custom. That Mr Ipisa Biyama and Provincial Administrator be reminded as to their respective roles regarding SABLs and to be re-educated and reinforced as necessary regarding proper conduct of LIRs. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) Even though there was evidence of the Mr Sikabu signed the recommendations as to Alienability of customary land for LaAli Investment Ltd, there is no evidence that the LIRs were brought to the office of the Custodian of Customary Land for Certificate of Alienation (COA) to be issued. This important facet of complying with the procedures for alienation of land was not complied with prior to the grant of the SABL by DLPP. No Certificate of Alienability was issued under the hand of the Custodian of Trust Land in accordance with section of the Land Act. Recommendation That freshly conducted LIRs be provided to the Secretary of Provincial Affairs as the custodian of customary land for issue of certificate of Alienability.

546

DEPARTMENT OF LANDS AND PHYSICAL PLANNING The Department of Lands and Physical Planning processes SABLs under two main legal criteria prescribed under the Lands Act Chapter 5 (the Land Act). The relevant provision referred to are sections 10 and 11 of the Act and section 102 of the Act. The COI in its inquiry into this SABL found no evidence of a Certificate of Alienability having been issued by the Department of Provincial Affairs to complement the Recommendation as to Alienability instrument signed by Mr Sikabu as the Advisor, Lands and Physical on behalf of the Administrator of the Western Province in December 2009. In the evidence provided there was found no Land Instruction Number was given by DLPP for the LIR to be conducted. That may be minor flaw in the process as we have noted that an officer of the Department of Western Province and a Senior Lands Officer conducted the Land Investigation. However as noted earlier it is a condition for processing of customary land that a Certificate of Alienability is issued from the Department of Provincial Affairs prior to the customary leases officer at the DLPP preparing a Lease/leaseback agreement and a Notice under section 102 to be published in the National Gazette. This procedure was not met prior to the land grant being published in the National Gazette and issue of title. APPLICATION AND/OR TENDER FOR SABL The Application or Tender Form for SABL and Lease/Lease Back submitted by a Mr Gabe Gamili on the 14th September, 2008, the proposed improvements and
547

purpose for the subject land is for large scale Agricultural (Oil Palm) Plantation with:(a) (b) (c) (d) (e) (f) (g) (h) (i) Administration Offices Housing Blocks for Staff, Employees and Local Residents Nursery Sites and Buildings Power lines & Electricity Supply; Domestic Water Supply System; Drainage & Sewerage reticulations; Warehouse and Store Building; Processing Plant; and Road network

The Commission was not able to verify from DLPP records if any proposed oil Palm Agricultural and Business Plans was submitted to National Forest Authority and DAL respectively. Land Instruction Number Commission was not able to verify whether a Land Investigation number was issued, but the involvement of Mr Biyama as the investigator confirms that the instruction was issued to the Department of WP to conduct investigation. Land Investigation process The Landowners confirmed their intention to allow their land to be leased for a period of 70 years. That was inserted into the Direct Grant and SABL Title and is not contested.

548

Reservation for customary rights Mr Biyama made the following recommendations (page 2 of LIR) The following be considered; Hamlets not to be disturbed and allow forest buffer zones encompassing village Graveyards and sacred sites be left as they are; Buffer zones along waterways and creeks to stop erosion (maybe 50m). Maintain natural sago clumps for local staple diet. He also recommended, it is important to note that the landowners still maintain a traditional way of life. They live on subsistence farming, hunting and gattering and depend on bush materials for housing requirements. Given the foregoing, there must be reservation and conservation of certain areas for essential landowner needs for their livelihood. The Commission fails to identify from the Direct Grant and the SABL title that this reservation was considered as important for the continued use of the land was not included on the Notice of Direct Grant and the SABL Title. It is a concern that the officer concerned the late Jacob Waffinduo and including other lands officer have a duty to ensure that the relevant reservations are clearly inserted prior to submission to the Minister of his delegate to sign the Notice of Direct Grant. In addition to that, the recommendation as to alienability does not clearly demarcate whether reservations can be made or not. The reference to an attachment A is also missing and is misleading.

549

INSTRUMENTS OF LEASE & REGISTRATION On the 24th July, 2008 a lease/lease back agreement (instrument of lease) was executed between the State and the landowners in respect of the subject land covered by the SABL. Further, a Special Agriculture and Business Lease was registered and vested in LaAli Investments Limited over the subject land on 06 th November, 2009 and comprised in the Registrar of State Leases Volume 35 Folio Number 104. The Commission notes that LaAli Investments Limited was incorporated as a company on 2nd September 2009. During the period 2nd September 2008 when the application for SABL was submitted, the conduct of the Land investigation up to 24th July 2008 when the Lease-Lease Back agreement was executed between the State and the agents of the LaAli. Recommendation That the lease be amended from 45 years to 40 years as supported by LIRs, Lease/leaseback agreement and schedule of Notice of Grant under Section 102. DEPARTMENT OF AGRICULTURE AND LIVESTOCK The Commission was informed by Mr Kosa that whilst the SABL title has been issued LaAli, they would pursue as a matter of course on the submission of a agriculture project plan to DAL including environmental plan and FCA. The FCA may impact on the existing TRP and that under an SABL process, there must be evidence of an agriculture plan submitted prior to the issuance of the title.
550

Findings It is found in the evidence before the enquiry that neither LaAli, its first or second proposed development partner have obtained a Certificate of Compliance from DAL to warrant issuance to them of a FCA permit from PNGFA and all other relevant processes thereafter. Recommendation The Executives of La Ali must engage a developer that has agricultural background to be under a Sub-lease arrangement for the feasibility study and development of the oil palm project including other initiatives to be derived out of this business venture PNG FOREST AUTHORITY THE Papua New Guinea Forest Authority (PNGFA) was established in 1993 under the 1991 Forestry Act replacing the former Department of Forest, and unifying all Provincial Forest Divisions and the Forest Industries Council. All these came about as a result of the 1989 Barnett Commission of Inquiry into aspects of the forestry industry. The PNGFA, with its headquarters at Hohola in the National Capital District, has 19 provincial offices including five regional offices. The PNGFA mission statement is to: Promote the management and wise utilization of the forest resources of Papua New Guinea as a renewable asset for the well- being of present and future generations. Its main objective is to work toward achieving sustainable forest management in Papua New Guinea.

551

The current Forestry Act provides that all relevant stakeholders must participate in the harvesting and management of the national forest resource. Forestry functions are decentralized wherein the respective Provincial Forest Management Committees established under the provision of the Forestry Act make decisions relating to the management of their forest resource. There were no Forestry files brought to the Inquiry as requested through emails, fax and phone. The material on Forestry was presented through copies from other presenters at the Commission such as BAFL, CPG and DEC. It was found that the Forestry Amendment Act 2007 (No. 19 of 2007) amended some of the provisions of Section 90A, 90B, 90C and 90D of the principle Forestry Act 1991 where laws governing agriculture and road development comes under the amended provisions. The PNGFA is the ultimate enforcing agency of the National Forest Act, 1991. Under these new provisions the issue of a Forest Clearance Authority (FCA) lies in the PNGFA subject to the approvals sought in the DAL submissions and Certificate of Compliance and those of the DEC submissions. It was found from evidence presented that LaAli was not registered as a Forest Industry Participant. There is no evidence of application for FCA as is the process with agro-forest activities. RECOMMENDATIONS The requirement for FCA is crucial any agro-forest activity on the land and is required. LaAli ass a matter or course must consult NFA for FCA process to be initiated and approved as is required under the Forestry Act

552

DEPARTMENT OF ENVIRONMENT AND CONSERVATION We make no findings and recommendation on DECs involvement with this SABL project.

553

COI Inquiry File No 50.for Special Purpose Agricultural and Business Lease over Portion 6C Volume 35 Folio 103Milinch: Guavi, Fourmil: Aworra Western Province in the name of Mudau Investment Limited In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. Witnesses were called from the six government agencies involved in the issuance and operation of the Mudau Investment Limited SABL. These were: 1.2.1 Department of Western Province, (DWP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGFA) Witness Summons, Statements/ Evidence The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.

554

No 1 2 3

Name and Position Mr Ipisa Biyama, District Administrator, South Fly District, DWP Mr Solomon Kosa, Mr Francis Daink

Pages 63-75 62-74 8

2 5

Day

Date 17/11/11-SABL 59-MIROU 21/11/11-SABL 61-MIROU 25/11/11-SABL 65-MIROU

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be representedby counsel. The following were granted leave to be represented by counsel
No appearance by counsel None on record

Exhibits and documents There were eight (8) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1 2 3 4 5 6 7 Item Land Investigation Report dated 26th November 2008 Survey Map of Portion 6C Aworra Notice of Direct Grant No G 217 dated 30/10/09 Instrument of Lease-Lease Back Agreement dated 24/07/08 Special Agriculture And Business Lease dated 6 November 2009 Interested Party C.O.I C.O.I C.O.I C.O.I C.O.I C.O.I C.O.I
555

Date received /11/11 25/11/11 25/11/11 25/11/11 /11/11 25/11/11

Exhibit Number Mudau (1) Mudau (4) Mudau (1) Mudau (2) Mudau (5) Mudau (3)

8 9

10

Report of Development Proposal Copy of Sub-lease proposed between Godae Landgroup Incorporated and Sovereign Hill PNG Ltd Proposed Infrastructure Map of Wawoi Guavi Consolidated TRP

C.O.I C.O.I

25/11/11 25/11/11

SK 1 SK2

C.O.I

25/11/11

SK3

Timeline of events of note surrounding MUDAU SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution 28 April 2009 29/09/08 Proponent/Applicant Respondent Entity/Respondent Mudau DLPP

1 2

3 4 5 6 7 8

Incorporation of Mudau Investment Limited Application or Tender Form for SABL to Portion 6C Aworra Survey Plan Catalogue Land Investigation Reports Recommendation for Alienability Instrument of Lease-Lease Back Agreement Notice of Direct Grant SABL Lease Title dated 6 November 2009

Mudau Landowners Mr Solomon Silas/ Chairman, Mudau Landgroup Committee Mudau

DLPP WPA/Provincial Administrator DLPP/Secretary Mudau/State Pepi Kimas/DLPP

26/11/08 05/12/08 24/07/09 30/10/09 6/11/09

Mr Ipisa Biyama/District Lands Officer, WPA Sikabu Maika, AdvisorLands and Physical Planning-WPA Mudau/State Mudau Investment Limited

FINDINGS

556

The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Mudau Investment Limited. MUDAU INVESTMENT LIMITED A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette no. G217 dated 30th October 2009for Portion 6C Namili Tao Land. The term of the lease was for seventy (70) years. A Special Agricultural and Business Lease was registered and issued on 30th October 2009 by the Department of Lands and Physical Planning to the holder Mudau Investment Limited(Mudau).The details of the SABL is shown below:
Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease Portion 6C 36/21 Mudau Investment Limited 30th October 2009 Seventy (70) years 10,450.0 hectares

IPA The Investment Promotion Authority (IPA) is a statutory organization, established by an Act of Parliament in 1992, to promote and facilitate investment in Papua New Guinea. The IPA does this through various programs including the establishment and maintenance of a company/business registry, certification of foreign enterprise and promotion of investment opportunities in PNG. Findings Mudau Investment Limited (Mudau) is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG

557

under the Companies Act 1997. The Company was incorporated on 28th April 2009 and the current Principal Place of Business is Section 39, Allotment 4 Ilimo Street, Boroko National Capital District. As at 2 nd August, 2011 IPA records confirm that it is operating. The Company number is 1-67588. The IPA company extract provided to the Commission confirm that there one (1) shareholder namely Mr Solomon Gali who holds 100 ordinary shares in the company. The Company has issued total number of 100 ordinary shares as at 28th April 2009. The extract discloses Messrs Solomon Gali and Harry Bobby as Directors of the company. Messrs Solomon Gali and Max John act as joint Secretary to the Company. The last annual return lodged with IPA was not found. The chairmanship of the company is reflected in the statement of one Akare Apa of Wareho village and that is confirmed by his sworn Affidavit dated 5 th September 2011 and submitted to the COI on 21 st September 2011 confirming to the effect that he was the Chairman of Mudau. He also supported the evidence of Mr Kosa wherein in respect of the SABL title that all mandatory processes and procedures required under the Land Act of 1996 and other enabling Acts and Regulations in obtaining the Special Agriculture and Business Lease Titles have been complied with at all material times. ( Refer to paragraph 4 of the Affidavit of Akare Apa). The Commission was unable to verify with Mr Kosa as to why his name does not appear in the shareholding or directorship of the company. The exclusion of his name in the directorship of the company does not entitle him to hold himself out as the chairman and is illegal and not recognized according to law.

558

Recommendation 1. The shareholding structure of the company does not reflect entirely that is represents the interest of the villagers and clan of Mudau. The shareholding in the name of an individual defeats the purpose of a landowner company that comprises a number of clans, which is clearly defined under the ILG formation and concept. 2. The appointment of a chairman needs to be properly coordinated in accordance with the Company Act. The Commission does not accept the statement of Mr Akare Apa ass he is not a representative of the company either as a shareholder or director. EVIDENCE OF CONSULTANT TO MUDAU INVESTMENT LIMITED Mr Solomon Kosa is a common witness to the five SABLs located in the Wawoi Guavi timber concession area. He comes from the LaAli clan. The Commission noted his demeanour to be one of sincerity and honesty.He was the principal player in the SABL basically to assist his fellow villagers to engage in economic activity before the departure of RH the logging operator in April 2012. He coordinated and negotiated the setup of the five landowner companies according to his evidence on a trial basis for future involvement of other villagers within the TRP concession area. In his evidence he states that the villagers comprising the five companies were located in Block 1, 2 and 3 of the TRP, where logging had taken place, replaced by secondary forestry growth and reclogging by RH.

559

Mr Kosa initiated negotiations with RH and advised that the landowners had identified 60 hectares of land for the purpose of oil palm estate, to which RH was obligated to assist before the TRP expired. Whilst that was Mr Kosas understanding, it was also important for him to appreciate that the TRP was the responsibility of the National Forest Authority and any other benefits and infrastructure development for the people would be found in the TRP agreement and this was not availed to the Commission. However the SABL process was a way forward for his people and also to set up any economic base for the Wawoi Guavi region of the province. The actual land investigation process has been included and SABL titles issued for each of the five villagers involved in this agricultural business venture. Mr Kosa was asked as to the reasons why he failed to have dialogue with DAL, DEC and National Forest Authority, which was a major concern to the progress of the oil palm imitative. He admitted that since he was dealing with DLPP, it became priority that the process be completed. He was to embark on the next process and that was to puruse dialogue with DAL, DEC and NFA. The Commissions concern was the failure of Mr Kosa and his group to consult NFA, DAL and DEC who are considered as part of the SABL package. He explained in his evidence, That is why in my report I have stated there agriculture the project proposal is going to be prepared by the Agriculture Department. Agriculture Department will prepare that and give it to the developer and the Agriculture Department prepare that, they will give to us and we have a look at it before signing anything. So next is environment and continue until.

560

An agriculture report was also exhibited as relates to the proposed Wawoi Guavi Oil Palm Project. By a letter dated 08th August, 2011, a Mr Solomon Kosa who appears to be a Consultant and or spokesperson for Mudau (Portion 6C) and four (4) other SABL holders from the Balimo area viz LaAli Investments Ltd (Portion 5C); Godae ILG-(Portion 7C), Haubawe Holdings Limited (Portion 8C) and Foifoi Limited (Portion 9C) has written to the Commission of Inquiry to give evidence on the herein mentioned SABLs. Mr Kosa in his correspondence claims that all processes and procedures required for acquisition of customary land and subsequent registration and grant of SABLs over the land so acquired have been followed. Mr Kosa further says that only the processes involving the Department of Agriculture and Livestock (which is to do with the preparation, submission and approval by the DAL of an Agricultural Development Plan and of the PNG National Forest Authority (as to the presentation and submission of an application for a Forest Clearance Authority under section 90C of the Forestry Act 1991 (ass amended) still remain to be completed. There is no indication on file as to whether steps have been taken or are been taken to harness the above processes to facilitate for any concrete development activities to be initiated and or undertaken within the subject SABL. In a final plea to the Commission not to revoke the SABL because of flaws but for the benefit of his underprivileged people who will suffer when the logging operator leaves

561

A:

It will be a disgrace for my people, Commissioner, if my five ILGs or five SABLs take a long time, as I have mentioned earlier, timber permit is expiring next year and our only access, our only light is through that logging operations. Logging goes out, we are left behind. We will be back seven, ten times backwards without the developments. Please if while going through if you have seen that I have followed the process rightly or if there are some errors I ask the Commission that you can use your powers and enable me and my group to complete the process as soon as possible. And I am saying, I have been wondering, why I am here if I have already from my knowledge completed the settle process that is required under the law of Papua New Guinea. Without completing all other process I should not be here. I live this to your good hands, I hope and trust our Heavenly Father will bless your job, your work that you are now commissioning, good Lord will bless as you move on to make decisions in the near future. Thank you.

SOVEREIGN HILL (PNG) LIMITED The proposed developer for the SABL is Sovereign Hill (PNG) Limited (Sovereign) was incorporated in PNG on 14 April, 1987 and is currently operating as a company in PNG. The IPA company registration number is 112045. The registered address of the company as at 1 April 1995 is Section 479, Allotment 1, Kennedy Road, Hohola, National Capital District (PO Box 5697 Boroko, NCD).

562

In terms of the share structure and composition of shareholders the company has issued a total of 1000002 shares. The IPA historical extract dated 19 th September, 2011 reveal that the following shareholders as Mr Ilk King Tiong, a Malaysian national issued with one (1) ordinary share on 14 August, 1993; Rimbunan Hijau (PNG) Ltd, issued with 999998 ordinary shares on 15 August, 1992 and one (1) ordinary share on 30 June 2000. The records reveal that Mr Tiong resides at 11 Collyer Quay, #15-01 The Arcade, Singapore The current Directors of the company are Messrs Hiew King Tiong, Thai King Tiong, Ik King Tiong, James Lau Sze Yuan, Ivan Su Chiu Lu and Chiong Ong Tiong all Malaysian nationals. The extract show that apart from Ik King Tiong, James Lau Sze Yuan and Ivan Su Chiu Lu, the other three Directors reside in Singapore and Malaysia respectively. The company Secretary is Geok Liam Wong who commenced on 21 October 1996. The Commission was not able to verify with IPA whether or not the company had applied for certification as a foreign entity operating in PNG due to the composition of the directorship of a company that is foreign by its operation. The lack of certification by IPA on the type of activities to be carried out by the company to undertake oil palm estates and in particular, its credentials in the area of oil palm management Rimbunan Hijau. A sub-lease arrangement appears to have been proposed by LaAli, to be entered into with a company called Sovereign Hill (PNG) Limited. However, this proposed arrangement is only in draft form and an unexecuted copy thereof has been provided to the Commission as part of the SABL title holders submission to the inquiry. The Commission notes that the sub-lease agreement
563

either in PNG or in Malaysia is quite

questionable, because the current logging operator of the Wawoi Guavi area is

in its current format is a standard agreement that we have sighted in other sublease arrangements with other SABL the subject of our inquiry that may contravene the Fairness Transactions Act. The Commission notes that no work has been undertaken since the title holders negotiated with Sovereign to establish the Oil Palm and Forest Plantations project in the forest concession area. Recommendation The engagement of a logging company and the SubLease Agreement must be reviewed by the Landowning Companies and cancelled. We believe that Soveriegn will notbe able to develop large scale oil palm estate and it is evident that they are an established logging company within the area for over twenty years. Department of Western Province The Department of Western Province is the bureaucratic arm of the North Fly Provincial Government whose primary role it is to facilitate government policies and directives through the work of its divisions of which the Lands Division is an important one. In the issuance of the LaAli SABL there was formal Land Investigation Report (LIR) conducted by the Lands & Physical Division of the Department of Western Province. Findings Mr Ipisa Biyama, the District Lands Officer for the Middle Fly District conducted land investigation for the Mudau clan on the 26th day of November,
564

2008. According to the report he interviewed and compiled statistics accounting for 75 persons on the day of his visit to the SABL site. That may not constitute a fair representation of the villagers of Wareho on site where the investigation was conducted. Further, as it appears from a perusal of the LIR the landowners of the Mudau clan of Wareho village, Kamusie, Balimo gave their consent for the acquisition of their customary land by the State and to later, as it appears, have it registered as a State Lease under section 102 for a period of seventy (70) years. The population density is very low within the subject area and estimated at 250 hectares per person. It also appears to be demonstrated by the LIR that in terms of its current usage the land area covered by the SABL, it is under the Wawoi-Guavi TRPA logging concession of the RH Group of Companies. According to the Schedule of Owners Status and Rights to Land of Clan contained in the LIR only the landowners/villagers of Wareho Village, Kamusie signed and or gave their consent and their approval for the acquisition. In total 69 of them appear to have given their consent. The Commission has noted that Solomon Gali, Harry Bobby respectively the single major shareholder and Directors of Mudau has not formalised their consent under the schedule which only includes the name of Mr Akare Apa, the de-facto chair of Mudau, Wareho village. The name of Messrs Solomon Gali and Harry Bobby are missing from the list and we have not verified this with Mr Kosa to date, hence it is highly questionable for a shareholder and director of the company not to be involved in the LIR process.
565

There is no formalised ILG for each of the landowner clans which is a substantial aspect of landownership through clan/tribes as was evident in the landowner companies in the North Fly District. Therefore with the lack of ILG representation, the activities of the company seem to be placed on a two (2) men directorship, though questions now arise whether or not the company represents the true intention of each and every member of the tribe/clan living on Aworra land. On the 4th day of December, 2008 the Certificate in relation to Boundaries was executed by Ipisa Biyama, the District Lands Officer has having walked along as far as practicable and indicated the boundaries of the subject land also on the 5th day of December, 2008. It is highly likely that a walk around the land boundary as big as the land would take one day to complete and for that matter three (3) other adjoining SABLs. The Recommendation as to Alienability was executed and issued on the 5th day December 2008 at Kamusie by a Mr Sikabu Maika, the then Advisor for Lands and Physical Planning, Western Province Provincial Administration. Mr Sikabu was an officer in charge of the Division of Lands and Physical Planning within the Department of Western Province and was not delegated with the responsibility of signing the recommendation for alienability. That recommendation is flawed because it was signed off by either the District Administrator for Middle Fly or the Provincial Administrator who is the administrative head of the Provincial Administration. This investigation report was in my considered view rushed to give effect to the changing circumstances of the expiry of the logging concession in 2012 and the need for continued economic activity with lack of proper formation of ILGs
566

within the area, the lack of structure within the directorship and shareholding of the company and the complete trust in engaging a company whose major concerns was logging whereas no infrastructure or economic activity was identified for the good of the people. Recommendation That non -inclusion of the names of the shareholder and Director of the company is a classic case of creating entities in the name of development but simply a guise for other ventures. That further inquiries be conducted into the structure and composition of the company. That the SABL be suspended pending a fresh LIR to be re-conducted by the Department of Western Province with the walking of the boundaries and certification as to ownership by custom. That Mr Ipisa Biyama and Provincial Administrator be reminded as to their respective roles regarding SABLs and to be re-educated and reinforced as necessary regarding proper conduct of LIRs. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) Even though there was evidence of the Mr Sikabu signed the recommendations as to Alienability of customary land for Mudau Investment Ltd, there is no evidence that the LIRs were brought to the office of the Custodian of Customary Land for Certificate of Alienation (COA) to be issued. This important facet of complying with the procedures for alienation of land was not complied with prior to the grant of the SABL by DLPP.
567

No Certificate of Alienability was issued under the hand of the Custodian of Trust Land in accordance with section of the Land Act. Recommendation That freshly conducted LIRs be provided to the Secretary of Provincial Affairs as the custodian of customary land for issue of certificate of Alienability. DEPARTMENT OF LANDS AND PHYSICAL PLANNING The COI in its inquiry into this SABL found no evidence of a Certificate of Alienability having been issued by the Department of Provincial Affairs to complement the Recommendation as to Alienability instrument signed by Mr Sikabu as the Advisor, Lands and Physical on behalf of the Administrator of the Western Province on 5th December 2008. In the evidence provided there was found no Land Instruction Number was given by DLPP for the LIR to be conducted. That may be minor flaw in the process as we have noted that an officer of the Department of Western Province and a Senior Lands Officer conducted the Land Investigation. However as noted earlier it is a condition for processing of customary land that a Certificate of Alienability is issued from the Department of Provincial Affairs prior to the customary leases officer at the DLPP preparing a Lease/leaseback agreement and a Notice under section 102 to be published in the National Gazette. This procedure was not met prior to the land grant being published in the National Gazette and issue of title.

568

APPLICATION AND/OR TENDER FOR SABL The Application or Tender Form for SABL and Lease/Lease Back was submitted by a Mr Solomon Silas on the 09th September, 2008, the proposed improvements and purpose for the subject land is for large scale Agricultural (Oil Palm) Plantation with:(a) (b) (c) (d) (e) (f) (g) (h) (i) Administration Offices Housing Blocks for Staff, Employees and Local Residents Nursery Sites and Buildings Power lines & Electricity Supply; Domestic Water Supply System; Drainage & Sewerage reticulations; Warehouse and Store Building; Processing Plant; and Road network

The Commission was not able to verify from DLPP records if any proposed oil Palm Agricultural and Business Plans was submitted to National Forest Authority and DAL respectively. Land Instruction Number Commission was not able to verify whether a Land Investigation number was issued, but the involvement of Mr Biyama as the investigator confirms that the instruction was issued to the Department of WP to conduct investigation.

569

Land Investigation process The Landowners confirmed their intention to allow their land to be leased for a period of 70 years. That was inserted into the Direct Grant and SABL Title and is not contested. Reservation for customary rights Mr Biyama made the following recommendations (page 2 of LIR) The following be considered; Hamlets not to be disturbed and allow forest buffer zones encompassing village Graveyards and sacred sites be left as they are; Buffer zones along waterways and creeks to stop erosion (maybe 50m). Maintain natural sago clumps for local staple diet. He also recommended, it is important to note that the landowners still maintain a traditional way of life. They live on subsistence farming, hunting and gattering and depend on bush materials for housing requirements. Given the foregoing, there must be reservation and conservation of certain areas for essential landowner needs for their livelihood. The Commission fails to identify from the Direct Grant and the SABL title that this reservation was considered as important for the continued use of the land was not included on the Notice of Direct Grant and the SABL Title. It is a concern that the officer concerned the late Jacob Waffinduo and including other lands officer have a duty to ensure that the relevant reservations are clearly inserted prior to submission to the Minister of his delegate to sign the Notice of
570

Direct Grant. In addition to that, the recommendation as to alienability does not clearly demarcate whether reservations can be made or not. The reference to an attachment A is also missing and misleading that important information were excluded by an omission or deliberate action on the part of the officers empowered with the responsibility to undertake due diligence. INSTRUMENTS OF LEASE & REGISTRATION On the 24th July, 2008 a lease/lease back agreement (instrument of lease) was executed between the State and the landowners in respect of the subject land covered by the SABL. Further, a Special Agriculture and Business Lease was registered and vested in Mudau Investment Limited over the subject land on 06 th November, 2009 and comprised in the Registrar of State Leases Volume 35 Folio Number (not legible). The Commission notes that Mudau Investment Limited was incorporated as a company on 28th April 2009. During the period 9th September 2008 when the application for SABL was submitted and the actual conduct of the Land investigation up to 24th July 2008 when the Lease-Lease Back agreement was executed between the State and the agents of the Mudau the company had no corporate legal status in so far as the issuance of the title was concerned. The actual title was made to Mudau Investment Limited as the landowner umbrella company for the Mudau clan.

571

Recommendation That the lease be amended from 45 years to 40 years as supported by LIRs, Lease/leaseback agreement and Schedule of Notice of Grant under Section 102. DEPARTMENT OF AGRICULTURE AND LIVESTOCK The Commission was informed by Mr Kosa that whilst the SABL title has been issued LaAli, they would pursue as a matter of course on the submission of a agriculture project plan to DAL including environmental plan and FCA. The FCA may impact on the existing TRP and that under an SABL process, there must be evidence of an agriculture plan submitted prior to the issuance of the title. Recommendation The Executives of Mudau must enter into a Joint Venture Agreement with a Developer that has agricultural background and be able to conduct feasibility study and development of the oil palm project including other initiatives to be derived out of this business venture PNG FOREST AUTHORITY There were no Forestry files brought to the Inquiry as requested through emails, fax and phone. The material on Forestry was presented through copies from other presenters at the Commission such as Mudau and DEC. It was found that the Forestry Amendment Act 2007 (No. 19 of 2007) amended some of the provisions of Section 90A, 90B, 90C and 90D of the principle
572

Forestry Act 1991 where laws governing agriculture and road development comes under the amended provisions. The PNGFA is the ultimate enforcing agency of the National Forest Act, 1991. Under these new provisions the issue of a Forest Clearance Authority (FCA) lies in the PNGFA subject to the approvals sought in the DAL submissions and Certificate of Compliance and those of the DEC submissions. It was found from evidence presented that Mudau was not registered as a Forest Industry Participant. There is no evidence of application for FCA as is the process with agro-forest activities. RECOMMENDATIONS The requirement for FCA is crucial any agro-forest activity on the land and is required. LaAli as a matter of course must consult NFA for FCA process to be initiated and approved as is required under the Forestry Act DEPARTMENT OF ENVIRONMENT AND CONSERVATION We make no findings and recommendation in respect DEC in this SABL

573

COI Inquiry File No 51for Special Purpose Agricultural and Business Lease over Portion 7C Volume Incorporated. In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. Witnesses were called from the six government agencies involved in the issuance and operation of the Godae Land Group IncorporatedSABL. These were: 1.2.1 Department of Western Province, (DWP) 1.2.2 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.3 Department of Lands and Physical Planning,(DLPP) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 PNG Forest Authority, (PNGFA) 1.2.6 Department of Environment and Conservation, (DEC) Witness Summons, Statements/ Evidence The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.
574

35 Folio 102Milinch: Guavi, Fourmil:

Aworra Western Province in the name of Godae Land Group

No 1 2 3

Name and Position Mr Ipisa Biyama, District Administrator, South Fly District, DWP Mr Solomon Kosa, Mr Francis Daink

Pages 63-75 62-74 8

Day 2 5

Date 17/11/11-SABL 59-MIROU 21/11/11-SABL 61-MIROU 25/11/11-SABL 65-MIROU

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be representedby counsel.

The following were granted leave to be represented by counsel

No appearance by counsel None on record

Exhibits and documents There were nine (9) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1 2 3 4 5 Item Land Investigation Report dated 26th November 2008 Survey Map of Portion 6C Aworra Notice of Direct Grant No G 217 dated 30/10/09 Instrument of Lease-Lease Back Agreement dated 24/07/08 C.O.I C.O.I C.O.I C.O.I C.O.I
575

Interested Party

Date received /11/11 25/11/11 25/11/11 25/11/11 /11/11

Exhibit Number Godae(1) Godae (4) Godae (1) Godae (2) Godae (5)

6 7 8

Special Agriculture And Business Lease dated 6 November 2009 Report of Development Proposal Copy of Sub-lease proposed between Godae Landgroup Incorporated and Sovereign Hill PNG Ltd Proposed Infrastructure Map of Wawoi Guavi Consolidated TRP

C.O.I C.O.I C.O.I

25/11/11 25/11/11 25/11/11

Godae (3) SK 1 SK2

C.O.I

25/11/11

SK3

Timeline of events of note surrounding GODAE SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution 4 September 2002 10th August 2001 Proponent/Applicant Respondent Entity/Respondent Godae DLPP

1 2

3 4 5 6 7 8

Incorporation of Godae Holdings Limited Application or Tender Form for SABL to Portion 7C Aworra Survey Plan Catalogue Land Investigation Reports Recommendation for Alienability Instrument of Lease-Lease Back Agreement Notice of Direct Grant SABL Lease Title dated 6 November 2009

Godae Landowners Mr Micah Esame/ Chairman, Godae Landgroup Committee Godae

DLPP WPA/Provincial Administrator DLPP/Secretary Mudau/State Pepi Kimas/DLPP Godae/DLPP

26/11/08 05/12/08 24/07/09 30/10/09 6/11/09

Mr Ipisa Biyama/District Lands Officer, WPA Sikabu Maika, AdvisorLands and Physical Planning-WPA Godae/State Godae Landgroup Incorporated Godae

576

FINDINGS The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Godae Landgroup Incorporated. GODAE LAND GROUP INCORPORATED A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette no. G217 dated 30th October 2009 for Portion 7C Namili Tao Land. The term of the lease was for seventy (70) years. A Special Agricultural and Business Lease was registered and issued on 30 th October 2009 by the Department of Lands and Physical Planning to the holder Godae Land Group Inc. (Godae).The details of the SABL is shown below:
Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease Portion 7C 36/22 Godae Land Group Inc 30th October 2009 Seventy (70) years 15, 153.0 hectares

IPA The Investment Promotion Authority (IPA) is a statutory organization, established by an Act of Parliament in 1992, to promote and facilitate investment in Papua New Guinea. The IPA does this through various programs including the establishment and maintenance of a company/business registry, certification of foreign enterprise and promotion of investment opportunities in PNG.

577

Findings Godae Land Group Incorporated Godae Land Group Incorporated is not registered as a legal entity with IPA. The Commission had conducted searches within the records of IPA and there are no documents to verify the corporate status of the land group. This requires further investigation and confirmation. Mr Kosa was not crossexamined over the existence of the incorporation of the land group. Godae Holdings Limited Godae Holding Limited (Godae HL) is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. The Company was incorporated on 4th September 2002 and the current Principal Place of Business is Section 139, Allotment 13 Gari Street, Hohola, National Capital District. As at 5 th August, 2011 IPA records confirm that it ceased operating as of 31 March, 2005 and is de-registered. The Company number is 1-47202. The IPA company extract provided to the Commission confirm that there are two (2) shareholder namely Mr Kaiks Esami who holds 1000 ordinary shares and Micah Esami who also hold 1000 shares respectively in the company. The Company has issued total number of 2000 ordinary shares as at 4 th September, 2002. The extract discloses Messrs Micah Esami and Kaiks Esami as Directors of the company. A Mr Lesly Micah is the Secretary to the Company. The last annual return lodged with IPA was not found.
578

The chairmanship of the company is reflected in the statement of Mr Micah Esami of Wareho village and that is confirmed by his sworn Affidavit dated 5 th September 2011 and submitted to the COI on 21 st September 2011 confirming to the effect that he was the Chairman of Godae Land Group Inc. He also supported the evidence of Mr Kosa in respect of the SABL title that all mandatory processes and procedures required under the Land Act of 1996 and other enabling Acts and Regulations in obtaining the Special Agriculture and Business Lease Titles have been complied with at all material times. ( Refer to paragraph 4 of the Affidavit of Micah Esami). The Commission notes that Mr Micah Esami is a Shareholder and Director of Godae Land Group Incorporated which is no longer operating. By the operations of the Companies Act, all the assets of the company vests in the Registrar of Companies until the statutory officers of the company comply with the requirement to submit their returns. It is also important that this issue be resolved by Mr Kosa and the landowners of Godae as to the corporate vehicle for their involvement in the SABL process. AT this stage the Commission accepts on the face of it that Godae HL is deregistered entity and that subject to further verification, the Godae Land Group incorporation is not registered with IPA.The only inference to be drawn is that the shareholder and directors are very similar to the Land Group Inc application for SABL. Recommendation The shareholding structure of the company does not reflect entirely that is represents the interest of the villagers and clan of Godae. The shareholding in the name of an individual defeats the purpose of a landowner company that
579

comprises a number of clans, which is clearly defined under the ILG formation and concept. EVIDENCE OF CONSULTANT TO MUDAU INVESTMENT LIMITED The C.O.I refers to the evidence of Mr Kosa and recomendation under Mudau Investment Limited which is common and applicable to this SABL. SOVEREIGN HILL (PNG) LIMITED The C.O.I makes reference to the Evidence and Recomendation under C.O.I Report on North East West Investment Limited Portion 27C Awin Pari. The evidence is common to the SABL under review. Department of Western Province The Department of Western Province is the bureaucratic arm of the North Fly Provincial Government whose primary role it is to facilitate government policies and directives through the work of its divisions of which the Lands Division is an important one. In the issuance of the Godae SABL there was formal Land Investigation Report (LIR) conducted by the Lands & Physical Division of the Department of Western Province. Findings Mr Ipisa Biyama, the District Lands Officer for the Middle Fly District conducted land investigation for the Godae clan on the 26 th day of November, 2008. According to the report he interviewed and compiled statistics accounting for 75 persons on the day of his visit to the SABL site. That may not constitute a fair representation of the villagers of Wareho on site where the investigation was conducted.

580

Further, as it appears from a perusal of the LIR the landowners of the Godae clan of Wareho village, Kamusie, Balimo gave their consent for the acquisition of their customary land by the State and to later, as it appears, have it registered as a State Lease under section 102 for a period of seventy (70) years. The population density is very low within the subject area and estimated at 250 hectares per person. It also appears to be demonstrated by the LIR that in terms of its current usage the land area covered by the SABL, it is under the Wawoi-Guavi TRPA logging concession of the RH Group of Companies. According to the Schedule of Owners Status and Rights to Land of Clan contained in the LIR only the landowners/villagers of Wareho Village, Kamusie signed and or gave their consent and their approval for the acquisition. In total 69 of them appear to have given their consent. The Commission has noted that Micah Esami and Kaiks Esami are the two shareholders and directors of Godae Holdings Limited and also Godae Land Group Incorporated and that is a substantial aspect of landownership through clan/tribes as was evident in the landowner companies in the North Fly District. Therefore with the lack of ILG representation, the activities of the company seem to be placed on a two (2) men directorship, though questions now arise whether or not the company represents the true intention of each and every member of the tribe/clan living on Namili/Tao land. On the 4th day of December, 2008 the Certificate in relation to Boundaries was executed by Ipisa Biyama, the District Lands Officer has having walked along as far as practicable and indicated the boundaries of the subject land also on the
581

5th day of December, 2008. It is highly likely that a walk around the land boundary as big as the land would take one day to complete and for that matter three (3) other adjoining SABLs. The Recommendation as to Alienability was executed and issued on the 5th day December 2008 at Kamusie by a Mr Sikabu Maika, the then Advisor for Lands and Physical Planning, Western Province Provincial Administration. Mr Sikabu was an officer in charge of the Division of Lands and Physical Planning within the Department of Western Province and was not delegated with the responsibility of signing the recommendation for alienability. That recommendation is flawed because it was signed off by either the District Administrator for Middle Fly or the Provincial Administrator who is the administrative head of the Provincial Administration. This investigation report was in my considered view rushed to give effect to the changing circumstances of the expiry of the logging concession in 2012 and the need for continued economic activity with lack of proper formation of ILGs within the area, the lack of structure within the directorship and shareholding of the company and the complete trust in engaging a company whose major concerns was logging whereas no infrastructure or economic activity was identified for the good of the people. Recommendation That non -inclusion of the names of the shareholder and Director of the company is a classic case of creating entities in the name of development but simply a guise for other ventures. That further inquiries be conducted into the structure and composition of the company.

582

That the SABL be suspended pending a fresh LIR to be re-conducted by the Department of Western Province with the walking of the boundaries and certification as to ownership by custom. That Mr Ipisa Biyama and Provincial Administrator be reminded as to their respective roles regarding SABLs and to be re-educated and reinforced as necessary regarding proper conduct of LIRs. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) Findings Even though there was evidence of the Mr Sikabu signed the recommendations as to Alienability of customary land for Godae Land Group Inc, there is no evidence that the LIRs were brought to the office of the Custodian of Customary Land for Certificate of Alienation (COA) to be issued. This important facet of complying with the procedures for alienation of land was not complied with prior to the grant of the SABL by DLPP. No Certificate of Alienability was issued under the hand of the Custodian of Trust Land in accordance with section of the Land Act. Recommendation That freshly conducted LIRs be provided to the Secretary of Provincial Affairs as the custodian of customary land for issue of certificate of Alienability.

583

DEPARTMENT OF LANDS AND PHYSICAL PLANNING The COI in its inquiry into this SABL found no evidence of a Certificate of Alienability having been issued by the Department of Provincial Affairs to complement the Recommendation as to Alienability instrument signed by Mr Sikabu as the Advisor, Lands and Physical on behalf of the Administrator of the Western Province on 5th December 2008. In the evidence provided there was found no Land Instruction Number was given by DLPP for the LIR to be conducted. That may be minor flaw in the process as we have noted that an officer of the Department of Western Province and a Senior Lands Officer conducted the Land Investigation. However as noted earlier it is a condition for processing of customary land that a Certificate of Alienability is issued from the Department of Provincial Affairs prior to the customary leases officer at the DLPP preparing a Lease/leaseback agreement and a Notice under section 102 to be published in the National Gazette. This procedure was not met prior to the land grant being published in the National Gazette and issue of title. APPLICATION AND/OR TENDER FOR SABL The Application or Tender Form for SABL and Lease/Lease Back was submitted by a Mr Micah Esami on the 10 th August, 2001, the proposed improvements and purpose for the subject land is for large scale Agricultural (Oil Palm) Plantation with:(a) (b) Administration Offices Housing Blocks for Staff, Employees and Local Residents
584

(c) (d) (e) (f) (g) (h) (i)

Nursery Sites and Buildings Power lines & Electricity Supply; Domestic Water Supply System; Drainage & Sewerage reticulations; Warehouse and Store Building; Processing Plant; and Road network

The Commission was not able to verify from DLPP records if any proposed oil Palm Agricultural and Business Plans was submitted to National Forest Authority and DAL respectively. Land Instruction Number Commission was not able to verify whether a Land Investigation number was issued, but the involvement of Mr Biyama as the investigator confirms that the instruction was issued to the Department of WP to conduct investigation. Land Investigation process The Landowners confirmed their intention to allow their land to be leased for a period of 70 years. That was inserted into the Direct Grant and SABL Title and is not contested. Reservation for customary rights Mr Biyama made the following recommendations (page 2 of LIR) The following be considered; Hamlets not to be disturbed and allow forest buffer zones encompassing village Graveyards and sacred sites be left as they are;

585

 Buffer zones along waterways and creeks to stop erosion (maybe 50m). Maintain natural sago clumps for local staple diet. He also recommended, it is important to note that the landowners still maintain a traditional way of life. They live on subsistence farming, hunting and gattering and depend on bush materials for housing requirements. Given the foregoing, there must be reservation and conservation of certain areas for essential landowner needs for their livelihood. The Commission fails to identify from the Direct Grant and the SABL title that this reservation was considered as important for the continued use of the land was not included on the Notice of Direct Grant and the SABL Title. It is a concern that the officer concerned the late Jacob Waffinduo and including other lands officer have a duty to ensure that the relevant reservations are clearly inserted prior to submission to the Minister of his delegate to sign the Notice of Direct Grant. In addition to that, the recommendation as to alienability does not clearly demarcate whether reservations can be made or not. The reference to an attachment A is also missing and misleading that important information were excluded by an omission or deliberate action on the part of the officers empowered with the responsibility to undertake due diligence. INSTRUMENTS OF LEASE & REGISTRATION On the 24th July, 2008 a lease/lease back agreement (instrument of lease) was executed between the State and the landowners in respect of the subject land covered by the SABL. Further, a Special Agriculture and Business Lease was registered and vested in Mudau Investment Limited over the subject land on 06th November, 2009 and
586

comprised in the Registrar of State Leases Volume 35 Folio Number (not legible). Recommendation That the lease be amended from 70 years to 25 years as supported by LIRs, Lease/leaseback agreement and schedule of Notice of Grant under Section 102. DEPARTMENT OF AGRICULTURE AND LIVESTOCK The Commission was informed by Mr Kosa that whilst the SABL title has been issued Godae Land Group Incorporated they would pursue as a matter of course on the submission of a agriculture project plan to DAL including environmental plan and FCA. The FCA may impact on the existing TRP and that under an SABL process, there must be evidence of an agriculture plan submitted prior to the issuance of the title. Recommendation The Executives of Godae Land Group Incorporated and a developer that has agricultural background to be engaged under a Sub-lease arrangement for the feasibility study and development of the oil palm project including other initiatives to be derived out of this business venture PNG FOREST AUTHORITY It was found from evidence presented that Mudau was not registered as a Forest Industry Participant. There is no evidence of application for FCA as is the process with agro-forest activities.

587

RECOMMENDATIONS The requirement for FCA is crucial any agro-forest activity on the land and is required. Mudau as a matter of course must consult PNGFA for FCA process to be initiated and approved as is required under the Forestry Act DEPARTMENT OF ENVIRONMENT AND CONSERVATION The C.O.I makes no finding and recommendation.

588

COI Inquiry File No 52for Special Purpose Agricultural and Business Lease over Portion 8C Volume 35 Folio 101Milinch: Guavi, Fourmil: Aworra Western Province in the name of Haubawe Holdings Limited In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. Witnesses were called from the six government agencies involved in the issuance and operation of the Haubawe Holdings Limited SABL. These were: 1.2.1 Department of Western Province, (DWP) 1.2.2 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.3 Department of Lands and Physical Planning, (DLPP) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 PNG Forest Authority, (PNGFA) 1.2.6 Department of Environment and Conservation, (DEC) Witness Summons Statements The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.

589

No 1 2 3

Name and Position Mr Ipisa Biyama, District Administrator, South Fly District, DWP Mr Solomon Kosa, Mr Francis Daink

Pages 63-75 62-74 8 2 5

Day

Date 17/11/11-SABL 59-MIROU 21/11/11-SABL 61-MIROU 25/11/11-SABL 65-MIROU

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be representedby counsel. The following were granted leave to be represented by counsel No appearance by counsel Exhibits and documents There were nine (9)documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1 Item Land Investigation Report dated 26th November 2008 Survey Map of Portion 8C Aworra Notice of Direct Grant No G 217 dated 30/10/09 Instrument of LeaseLease Back Agreement dated 24/07/08 Special Agriculture And Interested Party C.O.I Date received 25/11/11 Exhibit Number Haubawe (1)

None on record

2 3 4

C.O.I C.O.I C.O.I

25/11/11 25/11/11 25/11/11

Haubawe (4) Haubawe (1) Haubawe (2)

5 6

C.O.I C.O.I
590

/11/11 25/11/11

Haubawe (5) Haubawe (3)

7 8

Business Lease dated 6 November 2009 Report of Development Proposal Copy of Sub-lease proposed between Godae Landgroup Incorporated and Sovereign Hill PNG Ltd Proposed Infrastructure Map of Wawoi Guavi Consolidated TRP

C.O.I C.O.I

25/11/11 25/11/11

SK 1 SK2

C.O.I

25/11/11

SK3

Timeline of events of note surrounding MUDAU SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution 6 May 2004 14/08/08 Proponent/Applicant Respondent Entity/Respondent Haubawe HL DLPP

1 2

3 4 5 6 7 8

Incorporation of Haubawe Holdings Limited Application or Tender Form for SABL to Portion 8C Aworra Survey Plan Catalogue Land Investigation Reports Recommendation for Alienability Instrument of LeaseLease Back Agreement Notice of Direct Grant SABL Lease Title dated 6 November 2009

Haubawe Landowners Haubawe/Obert Kibu/ Chairman, Board of Directors, Haubawe Holdings Limited Haubawe Holdings Limited Mr Ipisa Biyama/District Lands Officer, WPA Sikabu Maika, AdvisorLands and Physical Planning-6WPA Haubawe Holdings Limited /State Haubawe Holdings Limited

DLPP WPA/Provincial Administrator DLPP/Secretary Haubawe/State Pepi Kimas/DLPP

26/11/08 05/12/08 24/07/09 30/10/09 6/11/09

FINDINGS

591

The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Mudau Investment Limited. HAUBAWEHOLDINGS LIMITED A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette no. G217 dated 30th October 2009 for Portion 6C Namili Tao Land. The term of the lease was for seventy (70) years. A Special Agricultural and Business Lease was registered and issued on 30th October 2009 by the Department of Lands and Physical Planning to the holder Haubawe Holdings Limited (Haubawe HL).The details of the SABL is shown below:
Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease Portion 8C 36/23 Haubawe Holdings Limited 30th October 2009 Seventy (70) years 11,110.0 hectares

IPA The Investment Promotion Authority (IPA) is a statutory organization, established by an Act of Parliament in 1992, to promote and facilitate investment in Papua New Guinea. The IPAdoes this through various programs including the establishment and maintenance of a company/business registry, certification of foreign enterprise and promotion of investment opportunities in PNG. Findings Haubawe Holdings Limited (Haubawe HL) is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. The Company was incorporated on 6th

592

September 2004 and the current Principal Place of Business is c/-Rimbunan Hijau (PNG) Ltd, section 479 Allotment 1, Kennedy Road, Gordons National Capital District. As at 2nd August, 2011 IPA records confirm that it is operating. The Company number is 1-51331. The IPA company extract provided to the Commission confirm that there are four (4) shareholders namely Messrs Duabele Bisowa, Obert Kibu, Max Saiya and Peter Samae who each hold 5 ordinary shares respectively in the company. The Company has issued total number of 20 ordinary shares. The extract discloses Messrs Obert Kibu, Aima Sumili, Max Saiya, Tiai Udoi, Duabele Bisowa, Dandy Genuru, Peter Samae and Goae Kaisino as current Directors of thecompany. Mr Peter Samae was appointed as the Secretary to the Company and currently holds that position in the company. The last annual return lodged with IPA was not found. The chairmanship of the company is reflected in the Affidavit of one Max Saiya of Sila village dated 5th September 2011 and submitted to the COI on 21st September 2011. The deponent confirms to the effect that he was the Chairman of Haubawe. He also expressed support on the evidence of Mr Kosa in respect of the SABL title that all mandatory processes and procedures required under the Land Act of 1996 and other enabling Acts and Regulations in obtaining the Special Agriculture and Business Lease Titles have been complied with at all material times. (Refer to paragraph 4 of the Affidavit of Max Saiya). Recommendation The shareholding structure of the company does not reflect entirely that is represents the interest of the villagers and clan of Haubawe. The shareholding in the name of an individual defeats the purpose of a landowner company that
593

comprises a number of clans, which is clearly defined under the ILG formation and concept. The appointment of a chairman needs to be properly coordinated in accordance with the Company Act. The Commission does not accept the statement of Mr Akare Apa as he is not a representative of the company either as a shareholder or director. EVIDENCE LIMITED The C.O.I makes reference to the Evidence of Mr Kosa and Recomendation under C.O.I Report on MudauPortion 5C. The evidence is common to the SABL under review. SOVEREIGN HILL (PNG) LIMITED The C.O.I makes reference to the Evidence of Soveriegn and Recomendation under C.O.I Report on MudauPortion 5C. The evidence is common to the SABL under review. Department of Western Province The Department of Western Province is the bureaucratic arm of the North Fly Provincial Government whose primary role it is to facilitate government policies and directives through the work of its divisions of which the Lands Division is an important one. In the issuance of theHaubawe SABL there was formal Land Investigation Report (LIR) conducted by the Lands & Physical Division of the Department of Western Province. OF CONSULTANT TO HAUBAWE INVESTMENT

594

Findings Mr Ipisa Biyama, the District Lands Officer for the Middle Fly District conducted land investigation for the Haubawe clan on the 26th day of November, 2008. According to the report he interviewed and compiled statistics accounting for 363 persons on the day of his visit to the SABL site. That may not constitute a fair representation of the villagers of Wareho on site where the investigation was conducted. Further, as it appears from a perusal of the LIR the landowners of the Haubawe clan of Wareho village, Kamusie, Balimo gave their consent for the acquisition of their customary land by the State and to later, as it appears, have it registered as a State Lease under section 102 for a period of seventy (70) years. The population density is very low within the subject area and estimated at 250 hectares per person. It also appears to be demonstrated by the LIR that in terms of its current usage the land area covered by the SABL, it is currently under the Wawoi-Guavi TRPA logging concession of the RH Group of Companies. According to the Schedule of Owners Status and Rights to Land of Clan contained in the LIR only the landowners/villagers of Wareho Village, Kamusie signed and or gave their consent and their approval for the acquisition. In total 363 of them appear to have given their consent. There is no formalised ILG for each of the landowner clans which is a substantial aspect of landownership through clan/tribes as was evident in the landowner companies in the North Fly District. Therefore with the lack of ILG representation, the activities of the company seem to be placed on a what is
595

deemed to be a group of persons holding themselves out as leaders in the Haubawe clan, though questions now arise whether or not the company represents the true intention of each and every member of the tribe/clan living on Aworra land. On the 3rdday of December, 2008 the Certificate in relation to Boundaries was executed by Ipisa Biyama, the District Lands Officer has having walked along as far as practicable and indicated the boundaries of the subject land also on the 5th day of December, 2008. It is highly likely that a walk around the land boundary as big as the land would take one day to complete and for that matter three (3) other adjoining SABLs. The Recommendation as to Alienability was executed and issued on the 5th day December 2008 at Kamusie by a Mr Sikabu Maika, the then Advisor for Lands and Physical Planning, Western Province Provincial Administration. Mr Sikabu was an officer in charge of the Division of Lands and Physical Planning within the Department of Western Province and was not delegated with the responsibility of signing the recommendation for alienability. We find that no instrument of delegation have been produced by the provincial administration setting a list of names of officers having been delegated with the authority to execute recommendations as to alienability. That recommendation is flawed because it was not signed off by either the District Administrator for Middle Fly or the Provincial Administrator who is the administrative head of the Provincial Administration. There is no evidence of due diligence been carried out by Mr Maika, which also raises questions about the land investigation process that is depended on majority consent by the people of the Haubawe tribe/clan. This investigation report was in my considered view rushed to give effect to the changing circumstances of the expiry of the logging concession in 2012 and the
596

need for continued economic activity with lack of proper formation of ILGs within the area, the lack of structure within the directorship and shareholding of the company and the complete trust in engaging a company whose major concerns was logging whereas no infrastructure or economic activity was identified for the good of the people. Recommendation That further inquiries be conducted into the structure and composition of the company. That the SABL be suspended pending a fresh LIR to be re-conducted by the Department of Western Province with the walking of the boundaries and certification as to ownership by custom. That Mr Ipisa Biyama and Provincial Administrator be reminded as to their respective roles regarding SABLs and to be re-educated and reinforced as necessary regarding proper conduct of LIRs. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) The COI in its inquiry into this SABL found no evidence of a Certificate of Alienability having been issued by the Department of Provincial Affairs to complement the Recommendation as to Alienability instrument signed by Mr Sikabu as the Advisor, Lands and Physical on behalf of the Administrator of the Western Province on 5th December 2008.

597

Recommendation That freshly conducted LIRs be provided to the Secretary of Provincial Affairs as the custodian of customary land for issue of certificate of Alienability. DEPARTMENT OF LANDS AND PHYSICAL PLANNING In the evidence provided there was found no Land Instruction Number was given by DLPP for the LIR to be conducted. That may be minor flaw in the process as we have noted that an officer of the Department of Western Province and a Senior Lands Officer conducted the Land Investigation. However as noted earlier it is a condition for processing of customary land that a Certificate of Alienability is issued from the Department of Provincial Affairs prior to the customary leases officer at the DLPP preparing a Lease/leaseback agreement and a Notice under section 102 to be published in the National Gazette. This procedure was not met prior to the land grant being published in the National Gazette and issue of title. APPLICATION AND/OR TENDER FOR SABL The Application or Tender Form for SABL and Lease/Lease Back was submitted by a Mr Obert Kibu on the 14 th September, 2008, the proposed improvements and purpose for the subject land is for large scale Agricultural (Oil Palm) Plantation with:(a) (b) (c) (d) (e) (f) Administration Offices Housing Blocks for Staff, Employees and Local Residents Nursery Sites and Buildings Power lines & Electricity Supply; Domestic Water Supply System; Drainage & Sewerage reticulations;
598

(g) (h) (i)

Warehouse and Store Building; Processing Plant; and Road network

The Commission was not able to verify from DLPP records if any proposed oil Palm Agricultural and Business Plans was submitted to National Forest Authority and DAL respectively. Land Instruction Number Commission was not able to verify whether a Land Investigation number was issued, but the involvement of Mr Biyama as the investigator confirms that the instruction was issued to the Department of WP to conduct investigation. Land Investigation process The Landowners confirmed their intention to allow their land to be leased for a period of 70 years. That was inserted into the Direct Grant and SABL Title and is not contested. Reservation for customary rights Mr Biyama made the following recommendations (page 2 of LIR) The following be considered; Hamlets not to be disturbed and allow forest buffer zones encompassing village Graveyards and sacred sites be left as they are; Buffer zones along waterways and creeks to stop erosion (maybe 50m). Maintain natural sago clumps for local staple diet.

599

He also recommended, it is important to note that the landowners still maintain a traditional way of life. They live on subsistence farming, hunting and gattering and depend on bush materials for housing requirements. Given the foregoing, there must be reservation and conservation of certain areas for essential landowner needs for their livelihood. The Commission fails to identify from the Direct Grant and the SABL title that this reservation was considered as important for the continued use of the land was not included on the Notice of Direct Grant and the SABL Title. It is a concern that the officer concerned the late Jacob Waffinduo and including other lands officer have a duty to ensure that the relevant reservations are clearly inserted prior to submission to the Minister of his delegate to sign the Notice of Direct Grant. In addition to that, the recommendation as to alienability does not clearly demarcate whether reservations can be made or not. The reference to an attachment A is also missing and misleading that important information were excluded by an omission or deliberate action on the part of the officers empowered with the responsibility to undertake due diligence. INSTRUMENTS OF LEASE & REGISTRATION On the 24th July, 2008 a lease/lease back agreement (instrument of lease) was executed between the State and the landowners in respect of the subject land covered by the SABL. Further, a Special Agriculture and Business Lease was registered and vested in Haubawe Holdings Limited over the subject land on 06 th November, 2009 and comprised in the Registrar of State Leases Volume Folio Number (not legible).

600

Recommendation That the lease be amended from 45 years to 40 years as supported by LIRs, Lease/leaseback agreement and schedule of Notice of Grant under Section 102. DEPARTMENT OF AGRICULTURE AND LIVESTOCK The Commission was informed by Mr Kosa that whilst the SABL title has been issued LaAli, they would pursue as a matter of course on the submission of a agriculture project plan to DAL including environmental plan and FCA. The FCA may impact on the existing TRP and that under an SABL process, there must be evidence of an agriculture plan subvmitted prior to the issuance of the title. Recommendation The Executives of Haubawe Holdings Limited engage a developer that has agricultural background under the proposed Sub-lease arrangement to enable the process of carrying out feasibility study and development of the oil palm project including other initiatives to be derived out of this business venture PNG FOREST AUTHORITY The C.O.I makes no finding and recommendation as no FCA application has been processed. DEPARTMENT OF ENVIRONMENT AND CONSERVATION The C.O.I makes no finding and recommendation as no application for level 3 enviromental permithas been processed.

601

1. COI Inquiry File No. 53- for Special Purpose Agricultural and Business Lease over Portion 9C Volume 35 Folio 100 Milinch: Guavi, Fourmil: Aworra Western Province in the name of Foifoi Limited 1.1 In accordance with the powers given to the Commissioners pursuant to Section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the Foifoi Limited SABL. These were: 1.2.1 Department of Western Province, (DWP) 1.2.2 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.3 Department of Lands and Physical Planning, (DLPP) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 PNG Forest Authority (PNGFA) 1.2.6 Department of Environment and Conservation, (DEC) Witness Summons, Statements and Evidence 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.

602

No 1 2 3

Name and Position Mr Ipisa Biyama, District Administrator, South Fly District, DWP Mr Solomon Kosa, Mr Francis Daink

Pages 63-75 62-74 8

Day 2 5

Date 17/11/11-SABL 59-MIROU 21/11/11-SABL 61-MIROU 25/11/11-SABL 65-MIROU

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be representedby counsel. The following were granted leave to be represented by counsel
No appearance by counsel None on record

Exhibits and documents There were nine(9)documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.

No 1 2 3 4 5

Item Land Investigation Report dated 26th November 2008 Survey Map of Portion 8C Aworra Notice of Direct Grant No G 217 dated 30/10/09 Instrument of Lease-Lease Back Agreement dated 24/07/08

Interested Party Kubeai Landgroup Kubeai Landgroup Kubeai/Foifoi Kubeai/Foifoi

Date received 25/11/11 25/11/11 25/11/11 25/11/11 25/11/11

Exhibit Number Foifoi (1) Foifoi (4) Foifoi (1) Foifoi (2) Foifoi (5)

603

6 7 8

Special Agriculture And Business Lease dated 6 November 2009 Report of Development Proposal Copy of Sub-lease proposed between Godae Landgroup Incorporated and Sovereign Hill PNG Ltd Proposed Infrastructure Map of Wawoi Guavi Consolidated TRP

Kubeai/Foifoi Foifoi/RH(PNG)Ltd Foifoi/Sovereign Hill (PNG) Ltd

25/11/11 25/11/11 25/11/11

Foifoi (3) SK 1 SK2

Foifoi/Sovereign/DLPP

25/11/11

SK3

Timeline of events of note surrounding FOIFOI SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/Gr ant/Issue Execution 2 September 2009 14/08/08 Proponent/Applicant Respondent Entity/Respondent Foifoi Limited DLPP

1 2

3 4 5 6 7 8

Incorporation of Foifoi Limited Application or Tender Form for SABL to Portion 9C Aworra23 Survey Plan Catalogue Land Investigation Reports Recommendation for Alienability Instrument of Lease-Lease Back Agreement Notice of Direct Grant SABL Lease Title dated 6 November 2009

26/11/08 05/12/08 24/07/09 30/10/09 6/11/09

Kubeai village Landowners Haubawe/Obert Kibu/ Chairman, Board of Directors, Kubeai Landgroup Kubeai Landgroup/Foifoi Limited Mr Ipisa Biyama/District Lands Officer, WPA Sikabu Maika, AdvisorLands and Physical Planning-WPA Foifoi Limited /State Foifoi Limited Foifoi Limited

DLPP WPA/Provincial Administrator DLPP/Secretary Haubawe/State Pepi Kimas/DLPP Foifoi Limited/Kubeai Landgroup

23

Application for SABL was submitted to DLPP under the name of Kubeai Landgroup on 14 August 2008 prior to the incorporation of Foifoi Limited on 2 September 2009.
604

th

FINDINGS The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Foifoi Limited. FOIFOI LIMITED A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette no. G217 dated 30th October 2009 for Portion 6C Demowi, Agila and Wasala Land. The above named land corresponds to three (3) rivers that demarcate the boundary to Kubeai village. The term of the lease was for seventy (70) years. A Special Agricultural and Business Lease was registered and issued on 30th October 2009 by the Department of Lands and Physical Planning to the holder Foifoi Limited (Foifoi).The details of the SABL is shown below:
Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease Portion 9C 36/23 Foifoi Limited 30th October 2009 Seventy (70) years 33,900.0 hectares

IPA The Investment Promotion Authority (IPA) is a statutory organization, established by an Act of Parliament in 1992, to promote and facilitate investment in Papua New Guinea. The IPA does this through various programs including the establishment and maintenance of a company/business registry, certification of foreign enterprise and promotion of investment opportunities in PNG.

605

Findings Foifoi Limited is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. The Company was incorporated on 2nd September 2009 and the current Principal Place of Business is Section 39 Allotment 4, Ilimo Street, Boroko National Capital District. As at 2nd August, 2011 IPA records confirm that it is operating. The Company number is 1-69429. The IPA company extract provided to the Commission confirm that there are seven (7) shareholders namely Messrs Seia Bagili, Wadame Bosai, Simeon Davi, Baela Nenamo, Dumai Nenamo, Taru Saowe and Aimei Sumili who each hold 1 ordinary shares respectively in the company. The Company has issued total number of 7 ordinary shares. The extract discloses Messrs Seia Bagili, Wadame Bosai, Simeon Davi, Baela Nenamo, Dumai Nenamo, Taru Saowe and Aimei Sumili as current Directors of the company. Mr Dumai Nenamo was appointed as the Secretary to the Company and currently holds that position in the company. The last annual return lodged with IPA was not found. The chairmanship of the company is reflected in the Affidavit of one Aimei Sumili of Kubeai village dated 5th September 2011 and submitted to the COI on 21st September 2011. The deponent confirms to the effect that he was the Chairman of Foifoi Limited. He also expressed support on the evidence of Mr Kosa in respect of the SABL title that all mandatory processes and procedures required under the Land Act of 1996 and other enabling Acts and Regulations in obtaining the Special Agriculture and Business Lease Titles have been complied with at all material times. (Refer to paragraph 4 of the Affidavit of Aimei Sumili).
606

Recommendation The shareholding structure of the company does not reflect entirely that is represents the interest of the villagers and clan of Kubeai under the landowner company Foifoi. The shareholding in the name of an individual defeats the purpose of a landowner company that comprises a number of clans, which is clearly defined under the ILG formation and concept. EVIDENCE OF CONSULTANT TO FOIFOI LIMITED The C.O.I makes reference to the Evidence of Mr Kosa and Recomendation under C.O.I Report on MudauPortion 5C. The evidence is common to the SABL under review. SOVEREIGN HILL (PNG) LIMITED The C.O.I makes reference to the Evidence of Soveriegn and Recomendation under C.O.I Report on MudauPortion 5C. The evidence is common to the SABL under review. Department of Western Province Mr Ipisa Biyama, the District Lands Officer for the Middle Fly District conducted land investigation for the Duinemi, Mowo and Wasala clan on the 26th day of November, 2008. According to the report he interviewed and compiled statistics accounting for 122 persons on the day of his visit to the SABL site. That may not constitute a fair representation of the villagers of Kubeai on site where the investigation was conducted. Further, as it appears from a perusal of the LIR the landowners of theFoifoi clan of Kubeai village, Kamusie, Balimo gave their consent for the acquisition of

607

their customary land by the State and to later, as it appears, have it registered as a State Lease under section 102 for a period of seventy (70) years. The population density is very low within the subject area and estimated at 250 hectares per person. It also appears to be demonstrated by the LIR that in terms of its current usage the land area covered by the SABL, it is currently under the Wawoi-Guavi TRPA logging concession of the RH Group of Companies. According to the Schedule of Owners Status and Rights to Land of Clan contained in the LIR only the landowners/villagers of Kubeai Village, Kamusie signed and or gave their consent and their approval for the acquisition. In total 122 of them appear to have given their consent. There is no formalised ILG for each of the landowner clans which is a substantial aspect of landownership through clan/tribes as was evident in the landowner companies in the North Fly District. Therefore with the lack of ILG representation, the activities of the company seem to be placed on a what is deemed to be a group of persons holding themselves out as leaders in the Haubawe clan, though questions now arise whether or not the company represents the true intention of each and every member of the tribe/clan living on Aworra land. On the 3rdday of December, 2008 the Certificate in relation to Boundaries was executed by Ipisa Biyama, the District Lands Officer has having walked along as far as practicable and indicated the boundaries of the subject land also on the 3rdday of December, 2008. It is highly likely that a walk around the land

608

boundary as big as the land would take one day to complete and for that matter three (3) other adjoining SABLs. The Recommendation as to Alienability was executed and issued on the 5th day December 2008 at Kamusie by a Mr Sikabu Maika, the then Advisor for Lands and Physical Planning, Western Province Provincial Administration. Mr Sikabu was an officer in charge of the Division of Lands and Physical Planning within the Department of Western Province and was not delegated with the responsibility of signing the recommendation for alienability. We find that no instrument of delegation have been produced by the provincial administration setting a list of names of officers having been delegated with the authority to execute recommendations as to alienability. That recommendation is flawed because it was not signed off by either the District Administrator for Middle Fly or the Provincial Administrator who is the administrative head of the Provincial Administration. There is no evidence of due diligence been carried out by Mr Maika, which also raises questions about the land investigation process that is depended on majority consent by the people of the Kubeai village which include the Duinemi, Mowo and Wasalaclan. This investigation report was in my considered view rushed to give effect to the changing circumstances of the expiry of the logging concession in 2012 and the need for continued economic activity with lack of proper formation of ILGs within the area, the lack of structure within the directorship and shareholding of the company and the complete trust in engaging a company whose major concerns was logging whereas no infrastructure or economic activity was identified for the good of the people. Further to that, the initial tender for the SABL was submitted on behalf of the Kubeai Landgroup but the SABL title was issued in the name of Foifoi Limited
609

and questions arise whether it was possible for Minister or his delegate to issue notice of direct grant in the name of Foifoi when it was incorporated a year after the initial application was submitted.. This is a question of irregularity arising out of the issuance of title to another company who was not the original applicant amount to an abuse of process on the part of DLPP. It goes to the issue of indefeasibility of title. Recommendation That further inquiries be conducted into the structure and composition of the company. That the SABL be suspended pending a fresh LIR to be re-conducted by the Department of Western Province with the walking of the boundaries and certification as to ownership by custom. That Mr Ipisa Biyama and Provincial Administrator be reminded as to their respective roles regarding SABLs and to be re-educated and reinforced as necessary regarding proper conduct of LIRs. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) The COI find no evidence of a Certificate of Alienability having been issued by the Department of Provincial Affairs to complement the Recommendation as to Alienability instrument signed by Mr Sikabu as the Advisor, Lands and Physical on behalf of the Administrator of the Western Province on 5th December 2008.

610

Recommendation That freshly conducted LIRs be provided to the Secretary of Provincial Affairs as the custodian of customary land for issue of certificate of Alienability. DEPARTMENT OF LANDS AND PHYSICAL PLANNING In the evidence provided there was found no Land Instruction Number was given by DLPP for the LIR to be conducted. That is a major flaw in the process because it encompasses a specific instruction to the officers concerned to undertake a land investigation consistent with the process as accepted by DLPP. However as noted earlier it is a condition for processing of customary land that a Certificate of Alienability is issued from the Department of Provincial Affairs prior to the customary leases officer at the DLPP preparing a Lease/leaseback agreement and a Notice under section 102 to be published in the National Gazette. This procedure was not met prior to the land grant being published in the National Gazette and issue of title. APPLICATION AND/OR TENDER FOR SABL The Application or Tender Form for SABL and Lease/Lease Back was submitted by a Mr Taru Sawoe as Chairman, Kaubia Landgroup Committee and Kubeai Landgroup jointly on 14th September, 2008, the proposed improvements and purpose for the subject land is for large scale Agricultural (Oil Palm) Plantation with:(a) (b) (c) (d) (e) Administration Offices Housing Blocks for Staff, Employees and Local Residents Nursery Sites and Buildings Power lines & Electricity Supply; Domestic Water Supply System;
611

(f) (g) (h) (i)

Drainage & Sewerage reticulations; Warehouse and Store Building; Processing Plant; and Road network

The Commission was not able to verify from DLPP records if any proposed oil Palm Agricultural and Business Plans was submitted to National Forest Authority and DAL respectively. Land Instruction Number Commission was not able to verify whether a Land Investigation number was issued, but the involvement of Mr Biyama as the investigator confirms that the instruction was issued to the Department of WP to conduct investigation. Land Investigation process The Landowners confirmed their intention to allow their land to be leased for a period of 70 years. That was inserted into the Direct Grant and SABL Title and is not contested. Reservation for customary rights Mr Biyama made the following recommendations (page 2 of LIR) The following be considered; Hamlets not to be disturbed and allow forest buffer zones encompassing village Graveyards and sacred sites be left as they are; Buffer zones along waterways and creeks to stop erosion (maybe 50m). Maintain natural sago clumps for local staple diet.

612

He also recommended, it is important to note that the landowners still maintain a traditional way of life. They live on subsistence farming, hunting and gattering and depend on bush materials for housing requirements. Given the foregoing, there must be reservation and conservation of certain areas for essential landowner needs for their livelihood. The Commission fails to identify from the Direct Grant and the SABL title that this reservation was considered as important for the continued use of the land was not included on the Notice of Direct Grant and the SABL Title. It is a concern that the officer concerned the late Jacob Waffinduo and including other lands officer have a duty to ensure that the relevant reservations are clearly inserted prior to submission to the Minister of his delegate to sign the Notice of Direct Grant. In addition to that, the recommendation as to alienability does not clearly demarcate whether reservations can be made or not. The reference to an attachment A is also missing and misleading that important information were excluded by an omission or deliberate action on the part of the officers empowered with the responsibility to undertake due diligence. INSTRUMENTS OF LEASE & REGISTRATION On the 24th July, 2008 a lease/lease back agreement (instrument of lease) was executed between the State and the landowners in respect of the subject land covered by the SABL. Our perusal of the DLPP file, a memo written under the hand of late Mr Waffinduo, Acting Manager, Customary Land which was dated 20 th October 2009 under caption Approval of Lease-lease Back Instruments over Portion 9C Milinch Guavi, Fourmil of Aworra, WP to the Secretary, we note the Secretarys handwritten notation on the memo as Is this a landowner company? Provide proof of this. This goes the issue we raised as to whether or
613

not the proper title holder should be Kubeai Landgroup or Foifoi Limited. The Commission was also not able to verify whether or not Kubeai Landgroup was registered under IPA. Further, a Special Agriculture and Business Lease was registered and vested in Haubawe Holdings Limited over the subject land on 06 th November, 2009 and comprised in the Registrar of State Leases Volume Folio Number (not legible). Recommendation That the lease be amended from 45 years to 40 years as supported by LIRs, Lease/leaseback agreement and schedule of Notice of Grant under Section 102. DEPARTMENT OF AGRICULTURE AND LIVESTOCK The Commission was informed by Mr Kosa that whilst the SABL title has been issued Foifoi, they would pursue as a matter of course on the submission of a agriculture project plan to DAL including environmental plan and FCA. The FCA may impact on the existing TRP and that under an SABL process, there must be evidence of an agriculture plan subvmitted prior to the issuance of the title. Recommendation The Executives of Foifoi Limitedengage a developer that has agricultural background under the proposed Sub-lease arrangement to enable the process of carrying out feasibility study and development of the oil palm project including other initiatives to be derived out of this business venture PNG FOREST AUTHORITY C.O.I makes no findings and Recomendation

614

DEPARTMENT OF ENVIRONMENT AND CONSERVATION C.O.I makes no findings and Recomendation

615

CENTRAL PROVINCE

616

FOUR (4) CENTRAL PROVINCE SABLS (HIRITANO HIGHWAY) COVERED BY THIS REPORT 1.1 This report sets out the findings of the COI on a total of four (4) out of eight (8) SABLS issued in the Central Province of Papua New Guinea as follows: 1.1.1 The Commission of Inquiry File No. 05 for Special Purpose Agricultural and Business Lease (SABL) over Portion 29C Volume 29 Folio 182 Milinch: Kase, Buna, Central Province in the name of Baina Agro Forests Limited. 1.1.2 The Commission of Inquiry File No. 22 for Special Purpose Agricultural and Business Lease over Portion 30C Volume 31 Folio 120 Milinch: Kase, Buna, Central Province in the name of Yumu Agro Forests Limited. 1.1.3 Commission of Inquiry File No. 28 for Special Purpose Agricultural and Business Lease over Portion 45C Volume31 Folio 249 Milinch: Kase, Buna, and Central Province Mekeo Hinterlands Holdings Limited; 1.1.4 The Commission of Inquiry File No. 38 for Special Purpose Agricultural and Business Lease over Portion 409C Volume 32 Folio 171Milinch: Epo and Kairuku, Yule Island, Central Province in the name of Abeda Agro Forests Limited.

617

SITE VISIT The C.O.I did not conduct any site visit to the four (4) SABLs situated along the Hiritano Highway starting from Kuriva to Mekeo Hinterland.

618

1. COI Inquiry File No. 05 for Special Purpose Agricultural and Business Lease over Portion 29C Volume 29 Folio 182 Milinch: Kase Buna, Central Province in the name of Baina Agro Forests Limited. 1.1. In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2. Witnesses were called from the six government agencies involved in the issuance and operation of the Baina Agro Forests Ltd. SABL. These were: 1.2.1 Department of Central Province, (DCP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGFA) 1.3. Witnesses and Summonses

1.3.1 Other persons of interest were also summonsed to provide evidence at the hearing. The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of

619

reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.
No 1 2 3 4 5

Name and Position AIA, LINUS (Consultant, Adviser, Baina Agro Forest Ltd.) BOUTAU, CLIFF (Manager Lands, Dept. of Central) Francis DAINK (Deputy Sec. DAL) GULU, RAGA (Senior Lands Officer, Dept. of Central) POURU, KANAWI (MD, PNGFA) ZURENUOC, MANASUPE (Custodian of Customary Land)

Pages 82-118 50-71 12-27 2-33 2-24 2-11 2-44 22-44

Day

Transcript 29/12/11-SABL 64 MIROU 29/12/11-SABL 64 MIROU 05/09/11-SABL13 06/09/11-SABL 29/12/11-SABL 64 MIROU 25/08/11-SABL 9 WAIGANI 31/08/11-SABL 65 WAIGANI 13/09/2011-SABL 17

1.4.

Parties represented by counsel

1.4.1. Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel. The following were granted leave to be represented by counsel
620

No representation by lawyers

Nil

1.5.

Exhibits and documents

1.5.1. There were twenty-six (26) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1 2 3 4 5 6 7 8 9 10 11 12 13 Item IPA records concerning Baina Agro Forests Limited IPA records concerning PMS Timber Limited LIRs Lands Department file material Statutory Declaration COI Submission Support Letter COI Submission COI Submission COI Submission COI Submission Letter and Submission COI Submission Samakuma LIR (Mr Raga) 22/12/2011 Interested Party C.O.I C.O.I C.O.I Lawrence Martin Vauro Baina Agro Forest Ltd (Linus Aia- adviser Central Province Administrator DEC LIR (DLPP) PNG Forest Authority Kanawi Pouru, MD, PNG Forest Authority BAFL-Joe Bagaro-Chairman IPA BAFL Records C.O.I Date received Not sighted 02/11/11 15/08/11 23/08/11 30/11/11 27/10/11 Not Sighted 26/10/11 29/08/11 24/08/11 12/09/11 01/08/11 29/12/11 Exhibit Number C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register BAL 1

621

14 15 16 17 18 19 20 21 22

23

24 25

26

Fagaga LIR Simalolo LIR Hokuma LIR Biabina LIR Obea LIR Kuniroma LIR Yaua LIR Eka LIR Minute under the letterhead of the Office of the Provincial Administrator dated 10/01/07 by Mr Boutau to Mr Yibmaramba Document titled Agriculture Development Plan for Oil Palm and Forest Plantation Management In BAF Agricultural Project dated 10th April 2007 Photograph Depicting a Nursery at Baina Agro by NSAYL in 2005 Photograph of Trip to Malaysia by the Chairman of BAFL, Mr Jerewai (as Counsel), Governor and Provincial Administrator in 2006 Bundle of Documents comprising Submission of BAFL to COI by Mr Bagaro and Agriculture Sub-lease between PMS timber Ltd and BAFL dated 20 April 2011 for a period of 45 years.

C.O.I C.O.I C.O.I C.O.I C.O.I C.O.I C.O.I C.O.I C.O.I

29/12/11 29/12/11 29/12/11 29/12/11 29/12/11 29/12/11 29/12/11 29/12/11 29/12/11

BAL 2 BAL 3 BAL 4 BAL 5 BAL 6 BAL 7 BAL 8 BAL 9 BAL 10

C.O.I

29/12/11

BAL 11

C.O.I C.O.I

29/12/11 29/12/11

BAL 12 BAL 13

C.O.I

29/12/11

BAL 14

1.6.

Timeline of events of note surrounding BAFL SABL Title

1.6.1. The timeline showing important events concerning the SABL is shown below in chronological order of their happening:

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No

Milestone

Change of name from UVAL No. 46 to Baina Enterprises Ltd. Registration of Developer Nasyl No.98 Ltd. as a Forestry Industry Participant with PNGFA Change of name from Baina Enterprises Ltd. to Baina Agro Forest Limited Formation of Baina Agriculture Development Board Survey Plan catalogue no. 43/400 Registered Land Investigation Reports

Dated of Completion/G rant/Issue Execution 29/06/93

Proponent/Applicant

Respondent Entity/Respondent IPA

Linus Aia, John Havi, Michael Tama, Daniel Mona, Ray Ond Nasyl No. 98 Ltd.

04 July 2004

PNG Forest Authority

19/08/2004

Linus Aia, Joe Bagoro, Wasanata Boti, John Havi, Daniel Mona,Michael Tama No evidence on File

IPA

03/02/2005

BAFL, Department of Central Province, Woitape LLG Office of Surveyor General, Dept of Lands and Physical Planning Lands Division Department of Central Province

11/07/2005

Baina Agroforest Limited

26th July 2005

Samakuma, Fagaga, Simalolo, Hokuna, Biabina, Orbea, Yaua, Kuniroma and Eka Land Groups No evidence on file

Issue of Certificate of Alienability SABL Lease/Lease Back Agreement Direct Land Grant gazetted. Development Agreement with NASYL No. 98 Ltd. Issue of SABL title Environment Permit WDL3 (87) discharge waste for 25 years 27/10/2005 28/10/2005

Secretary, Department of Provincial Affairs and Local Level Government Minister for Lands (Dr Puka Temu) Minister for Lands/Delegate NASYL No. 98 Ltd and Baina Agriculture Development Board Department of Lands and Physical Planning Department of Environment and Conservation

8 9 10

27 Landowning ILGs Minister for Lands/delegate No evidence on file

11 12

03/11/2005 06/03/2006

Baina Agroforest Limited Baina Agroforest Ltd

623

13

14

15

16 17 18

Environment Permit WEL3 (66) extract water for 25 years Timber Permit license no PNGFA L-432/06 granted to Nasyl No. 98 Ltd. Letter of approval to Nasyl No. 98 regarding PNGFA License Caveat registered by NASYL No. 98 Ltd. Application for replacement title Project Agreement, Baina and PMS Limited Agricultural Sublease Advertisement by Registrar of Titles in the National Gazette for replacement title Obtain Replacement Title

06/03/06

Baina Agroforest Ltd.

Department of Environment and Conservation National Forest ServicePNG Forest Authority Nasyl No. 98 Mr Jack Goh Registrar of Titles DLPP Registrar of Titles DLPP Baina Agroforest Limited and PMS Timber Limited (Joe Bagoro and Linus Aia) Baina Agroforest Ltd and PMS Timber Ltd. National Gazette

31/03/2006

Nasyl No. 98 Ltd

05/04/2006

PNG Forest Authority National Forest Service NASYL No. 98 Ltd. BAFL (Joe Bagoro/PMS Timbers) Baina Agroforest Limited and PMS Timber Limited (Joe Bagoro and Linus Aia) Baina Agroforest Ltd and PMS Timber Ltd. Registrar of Titles (Benjamin Samson)

02/09/2009 03/05/2011 05/05/2011

19 20

20 April 2011 19/05/2011

Date not evidenced on file

1.7

FINDINGS

1. 7.1 The findings follow the chronology of table of notable events above surrounding the SABL lease title held by BAFL. Baina Agro Forests Limited SABL 1.7.2 A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette no. G157 dated 28th October 2005 for Portion 29C. The term of the lease was for forty (40) years. A Special Agricultural and Business Lease was registered and issued on 3rd November 2005 by the

624

Department of Lands and Physical Planning to the holder Baina Agro Forest Limited (BAFL).The details of the SABL is shown below:
Legal description Registered Survey Plan catalogue no. SABL Holder Date of Registration of lease Period of Lease Land area of lease Portion 29C, Kase, Buna, Central Province 43/400 Baina Agroforest Limited 03/11/2005 27/10/2005 to 26/10/2045 42,100 hectares

Location 1.7.3. The SABL Portion 29C is situated west of Doa Rubber Estate near Kuriva on the Hiritano Highway between Kairuku Hiri LLG and Woitape LLG, Central Province. This particular SABL sits adjacent to another SABL Portion 30C, which is in the name of Yumu Resources Limited. Baina Agro-Forest Limiteds portion is covering a total area of 42,100 hectares. 1.8. IPA established by an Act of Parliament in 1992, to promote and facilitate investment in Papua New Guinea. The IPA does this through various programs including the establishment and maintenance of a company/business registry, certification of foreign enterprise and promotion of investment opportunities in PNG. Findings 1.8.2 Baina Agro Forests Limited (BAFL) is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. The company has undergone a number of name changes leading to the current name of
625

1.8.1. The Investment Promotion Authority (IPA) is a statutory organization,

Baina Agro Forest Ltd. The company was first known as UVAL (No. 46) Pty. Ltd.with one share each owned by a Vetali Maino and Alice Haromairi who were also Directors. 1.8.3 On 29th June 1993 the company was changed to Baina Enterprises Ltd. Mr Vetali Maino and Alice Haromiri resigned as shareholders and Directors and Messrs Linus Aia, John Havi, Michael Tama, Daniel Mona and Roy Ond were registered as new Directors and shareholders. 1.8.4 On 27th July 2004 Directors of the company by way of company resolution applied for change of name of the company from Baina Enterprises to Baina Agro Forest Ltd. (BAFL). This was effected by the Registrar of Companies with issuance of Certificate indicating the name change to Baina Agro Forest Ltd. under hand of the Registrar of Companies on 19 August 2004. 1.8.5 The latest IPA company extract provided to the COI dated 1st August 2011 indicates six shareholders of BAFL holding 10 shares each in their individual capacities and not on trust for their respective communities on the company register. The shares were held in the names of Messres Linus Aia, Joe Bagoro, Wasana Boti, John Havi, Daniel Mona and Michael Tama. The extract discloses these six were also directors of the company together with seven other directors being messrs Morris Oki, Augustine Mark, Michael Mogo, Simon Boni, David Bemu, Henry Mona and Nikial Efi. 1.8.6 There were no Annual returns submitted by the company from 2004 to the present.

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1.8.7 The COI finds that a company set up for landowners interests has the shares held not in trust for the clans, but in the names of individual persons. It is recommended that this is a glaring defect which must be rectified as soon as possible or in the failure thereof to recommend for withdrawal of the SABL Lease. Recommendation 1.9. NASYL NO. 98 LIMITED 1.9.1 NASL No. 98 Limited was the developer identified by the partners in the Baina Agro Forestry Project to undertake logging and oil palm project. The partners were BAFL, Central Provincial Government, Woitape LLG and Kairuku LLG. Findings 1.9.2 In Mr Linus Aias letter dated 2nd February 2006 to DEC there were contentions from the BAFL that NASL No. 98 was simply a shelf company brought into the project as a Consultant. It however maneuverer its way around to positions of influence with the Central Provincial Government. From an Investment Agreement draft drawn up by a Ahamba & Co. Chambers an Attorney based in Nigeria it was seen that the principle partners in the logging and oil palm venture being contemplated was a Dr David Smith based in Nigeria as financial investor and Mr Jack Goh a Malaysian. 1.9.3 There were no legal documents on file regarding engagement of NASL No. 98 Ltd. by the Provincial Government or BAFL including dates of commencement of NASL no. 98 Ltd. Neither were there information on dates of cessation of NASLs activities. On file is a letter dated 1st July
627

2005 from DEC FAS Mr Gunther Joku to Managing Director of Nasyl No. 98 Ltd. acknowledging the latters Environmental Inception Report and advising that the next requirement in the process is the conduct of an Environment Impact Assessment and Environmental Impact Statement. This letter indicates Nasyl No. 98 Ltd.s involvement in the project at being around or before mid 2005. 1.9.4 It was found on file that Nasyl No. 98 Ltd. complied with DEC procedures to obtain Environment permits from DEC by satisfactorily conducting a EIS as borne in a letter dated 31st January 2007 from Secretary of DEC to Secretary DAL. There is also evidence of substantial logging machinery and operational manpower on the ground during the early part of 2007 following substantial feasibility reports and correspondences between CPG and DAL and NFA. Recommendation 1.9.5. That the owners of Nasyl No. 98 Ltd. be questioned as to their role in facilitating the BAFL SABL. 1.10. PMS TIMBER LIMITED 1.10.1 According to evidence from IPA (Company extract dated 2nd November 2011), this company was incorporated on 22nd September 2008 with its registered address being at Section 515, Allotment 8 & 9 Waigani. The company structure shows issued shares of 100 shares held by a sole shareholder Mr Eii Sing Hii a Malaysian by nationality. 1.10.2 The company extract shows three directors being Mr Eii Sing Hii, Mr Stephen Hii, an Australian by nationality and a Chiong Hieng Tiew, a Malaysian by nationality.
628

Findings 1.10.3 From the evidence PMS Timber Limited was picked up as a developer with the demise of Nasyl No. 98 Limited. It is not clear if this decision was made between all project partners, being the Central Provincial Government and the Woitape and Kairuku LLG as there were no meeting minutes to verify this. A Project Agreement dated 5th May 2011 was signed between Baina Agroforest Limited and PMS Timber Limited. The Project Agreement stipulated a sub-lease clause no. 6.2 in which the term of the sub-lease would be for a period of 99 years. 1.10.4 Clause no. 6.2 raises important issues of how such a sub-lease agreement could be held to be binding in a Project Agreement when the proposed term of the sub-lease is over twice as long a time duration as the Head Lease itself (SABL held by BAFL is only for a period of 40 years). 1.10.5 Prior to the project agreement being signed between the two parties an Agricultural Sub-Lease had been signed on 20 April 2011 between the Chairman of Baina Agroforest Ltd. Mr Joe Bagoro and Director Mr Linus Aia on the one hand and PMS Timber Ltd. on the other, witnessed by the Provincial Administrator Mr Raphael Yibmaramba. The duration of the sub-lease schedule however, in difference to the Project Agreement clause 6.2 stated 45 years to commence on 5th May 2011 and terminating on 4th May 2056.This again raises questions as to the validity of the sublease since the Head Lease held by Baina Agroforest Ltd. was for 40 years as of 27/10/2005 to 26/10/2045. Clearly the sub-lease period ending in 2056 would exceed the head lease period by a period of 11 years. This requirement was a binding requirement. In the circumstances it was not enforceable the effect is that the sub-lease is invalid.

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1.10.6

Moreover the form showing the appended signature and stamp of the Registrar of titles to effect registration of the sub-lease dated 06 July 2011 shows a blank square where the expiring term of the sub-lease is normally entered. Only the square showing the commencement period of 5th May 2011 was filled. The omission of the expiry date is crucial. Without it being filled in the document should not have been stamped at the Stamp Duties office of IRC. Neither should it have been registered by the Registrar of Titles at DLPP. Critical enquiry should have been made by both statutory offices as to why this box was left blank, failing which the Stamp Duties Office and Registrar of Titles Office could be assumed to be implicit in the fraud.

1.10.7 It is also not stated whether PMS Timbers Ltd. as the new developer would have to obtain new Environmental Permits by virtue of the fact that the old Environment 1.10.8 Currently PMS and BAFL are awaiting the moratorium imposed by the conduct of the COI and subsequent decisions to be taken by government before they can apply for timber permits. Recommendation 1.10.9. That the Registrar of titles and Stamp Duties OIC be reprimanded for failing to properly ensure the sub-lease instrument was correctly filled out before executing their respective statutory duties in appending their signatures and stamps to the sub-lease document.

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1.11. Department of Central Province 1.11.1 The Department of Central Province is the bureaucratic arm of the Central Provincial Government whose primary role it is to facilitate government policies and directives through the work of its divisions of which the Lands Division is an important one. In the issuance of the BAFL SABL there was a formal Land Investigation Report (LIR) conducted by the Lands Division of the Department of Central Province. Findings 1.11.2 However upon cross examination at the hearings Mr Cliff Boutau affirmed on oath that the LIR was provided to Land group leaders to conduct. On assessment of the LIRs they were found to be filled by one or two agents or executors for many people. This is unsatisfactory as two things could be surmised from this, firstly names could be made up and secondly the number of people inflated with members of other clan, deceased people and small children. This bore true when on inspection of individual clan group LIRs the names of people named in a certain group re-aapeared in two or three other Land groups 1.11.3 It was also found that people appointed as Agents by a particular land group were also found appointed as Agents in two or three other land groups. For example Mr Augustine Maka appeared as an agent for Eka, Mauru and Yaua land groups. His stated village is Baida, Banola and Mauru villages under those land groups. Mr Linus Aia appears as Agent for Eka and Kuniroma Land Groups with his stated village as Baida and Banola in those land groups. It is improper and fraudulent for a person to be named in more than one land group for the purposes of the LIR.This raises questions on the authenticity of the data collected. There

631

were nine landgroups who participated in the LIR leading to the BAFL SABL as provided below:
No Name of Land Group No. of people in land group 18 17 29 23 Lease Period Agreed (years) 40 40 40 40 No. of people Signing Agency Agreement 18 15 24 21 Names of Appointed Agents Stated village of Appointed Agents Baida village Banola village Mauru village Yaua village

1 2 3 4

Eka Kuniroma Mauru Yaua

Biabina

31

40

14

Simalolo

26

40

104

Samakuma

70

40

67

Fagaga

47

40

24

Hokuma

39

40

24

Luciano Sabiga, John Sabiga, Augustine Maka, Michael Tama, Linus Aia Linus Aia, Hani Ovia, Cannolo Ovia, Gavia Aia Augustine Maka, Daniel Tama, Aia Peto, Maini Alano, Daniel Linus Gari Aia, Daniel Linus, Oboro Ovia, Augustine Maka, Camillo Ovia, Peter Aia Roy Aubo, Mona Bagoro, Joe Bagoro, Havila Muina, Ivaiko Aubo, Wasana Boti Burida Ovia, Moda Maini, Madlen Guwara, Joe Burida, Emmanuel Moda Joe Bagoro, Mena Roaima, Daniel Essi, Wasana Boti, Fiuta Daniel, Iga Mona, Mona Boti Joseph Gavara, David Asume, Imona Mona, Yori Asume, Boa Burida, Goia Burida, Mona Asume Henry Mona, John Mona, Mathew Kogabe, Kasina Eves, Guna Kora

Inaya village

Inaya village

Inaya village

Inaina village

Inaya village

1.11.4

The total number of people collated in the LIR report total 300, which is a very small percentage of the reported 6000 inhabitants of the project area, BAFL has been making itself out to represent. Clearly numbers have been inflated under a form of manipulation to aid grant of the lease.

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Mr Raga Gulu 1.11.5 Mr Raga Gulu was the Senior Lands Officer at the Department of Central. Evidence before the COI indicated that he was responsible for the LIRs. In his evidence to the Commission Mr Gulu states that the LIR was prepared around July 2005. 1.11.6 Mr Raga Gulu conducted the LIR for all the nine (9) ILGs, but was limited in collating all the information due to logistical difficulties. He confined his investigation to one or two villagers and failed to undertake the boundary walk with the landgroups. That in fact would have been impossible due to the large area of land surveyed under Rural Class 4 renders his account as truthful, because the trend was simply for lands officers conducting LIRs just to fill out the information, sign of and return to the Provincial Administrator for execution of the Recommendation for Alienability. That process invariably required any due diligence test. Recommendation 1.11.7 That the SABL be revoked so that the SABL process subject to fresh application and processing pending a fresh LIR to be re-conducted by the Department of Central Province with the walking of the boundaries and certification as to ownership by custom. 1.11.8 That Mr Gulu Raga, Cliff Boutau, Manase Rapilla and Raphael Yibmaramba be reminded as to their respective roles regarding SABLs. 1.11.9 That DLPP organise a workshop for all key agencies including Provincial Administration and all Lands Officers involved in land investigation to be properly trained and equipped with all the necessary
633

information on the law, the process and laws. This must be a complete package of training module which is lacking since SABL was introduced some 30 years ago. 1.12. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) 1.12.1 The DPALLG Secretary holds the position of Custodian of Customary land throughout Papua New Guinea as appointed by the Minister responsible under section 167 of the Land Registration Act. The Secretary of the Department of Provincial and Local Government Affairs had always been appointed as Custodian for Trust Land, prior to Independence and continues to do so to date. The role of the Custodian is described in Section 166 of the Land Registration Act. 1.12.2 In the process of alienating customary land for a SPABL, the role of the Custodian of Customary Land (Secretary for DPALLG) is to check and be satisfied with the information provided him in the LIR to warrant his issuing a certificate of alienability for alienation and acquisition process to commence. Findings 1.12.3 Even though there was evidence of the Central Province Administrator Mr Raphael Yibmaramba signing Recommendations as to Alienability of customary land for a number of ILG groups, there is no evidence that the LIRs were brought to the office of the Custodian of Customary Land for a Certificate of Alienation to be issued. This

634

important facet of complying with the procedures for alienation of land was not complied with prior to the grant of the SABL by DLPP. Recommendation 1.12.4 In the future any LIRs fully completed and compiled with the Recommendation as to Alienability be submitted as a compulsory process to the Secretary of Provincial Affairs as the Custodian of Customary land for issuance of Certificate of Alienability. 1.13. DEPARTMENT OF LANDS AND PHYSICAL PLANNING 1.13.1 The Department of Lands and Physical Planning processes SABLs under two main legal criteria prescribed underSection 10 and 11 of the Lands Act Chapter 5 (the Land Act). 1.13.2 The COI in its inquiry into this SABL found no evidence of a Certificate of Alienability having been issued by the Department of Provincial Affairs to complement the Recommendation as to Alienability instrument signed by the Central Province Administrator in September 2005. In the evidence provided there was found a instruction no. 06/05 given for the LIR to be conducted, a notice of Direct Grant under Section 102 and the signed Lease/leaseback instrument. 1.13.3 However as noted earlier it is a condition for processing of customary land that a Certificate of Alienability is issued from the Department of Provincial Affairs prior to the customary leases officer at the DLPP preparing a Lease/leaseback agreement and a Notice under section 102 to be published in the National Gazette. This procedure was
635

not met prior to the land grant being published in the National Gazette and issue of title. 1.13.4 A Project Agreement dated 5th May 2011 was signed between Baina Agroforest Limited and PMS Timber Limited and witnessed by Provincial Administrator Mr Raphael Yibmaramba. The Project Agreement stipulated a sub-lease clause no. 6.2 in which the term of the sub-lease would be for a period of 99 years. It is found that this 99 year requirement makes the sub-lease invalid as the Head Lease itself (SABL held by BAFL) is only for a period of 40 years. 1.13.5 Prior to the project agreement being signed between the two parties an Agricultural Sub-Lease had been signed on 20 April 2011 between the Chairman of Baina Agroforest Ltd. Mr Joe Bagoro and Director Mr Linus Aia on the one hand and PMS Timber Ltd. on the other, witnessed by the Provincial Administrator Mr Raphael Yibmaramba. The duration of the sub-lease schedule stated 45 years to commence on 5th May 2011 and would last to 4th May 2056.This again raises questions as to the validity of the sub-lease since the Head Lease held by Baina Agroforest Ltd. was for 40 years as of 27/10/2005 to 26/10/2045. Clearly the sub-lease period ending in 2056 would exceed the head lease period by a period of 11 years. This requirement was a binding requirement. In the circumstances it was not enforeceable the effect is that the sub-lease is invalid. 1.13.6 Moreover the form showing the appended signature and stamp of the Registrar of titles to effect registration of the sub-lease dated 06 July 2011 shows a blank square where the expiring term of the sub-lease is normally entered. Only the square showing the commencement period of 5th May 2011 was filled. The omission of this date is crucial. Without it
636

being filled in the document should not have been stamped at the Stamp Duties office of IRC. Neither should it have been registered by the Registrar of Titles at DLPP. Critical enquiry should have been made by both offices as to why this box was left blank, failing which the Stamp Duties Office and Registrar of Titles Office could be assumed to be implicit in the fraud. 1.13.7 Another anomaly on file is that in early May 2011, a statement by way of a Statutory Declaration by Chairman of BAFL Mr Joe Bagoro stated that the original SABL lease title for the land had been lost. He had tendered this Statutory Declaration in his evidence to DLPP to obtain a replacement title. The replacement title was provided by the Registrar of Titles sometimes in late May 2011. The replacement title however showed that the lease period had changed from 40 years. The title now showed 45 years. 1.13.8 There were no supporting documents on file to explain whether the lease period increase from 40 to 45 years was authorised. Such supporting documents would include evidence of all customary clans and land groups agreeing to the increase and subsequent amendment to the schedules of the notice of direct grant under section 102 giving 45 years instead of the previous notice of 40 years. This increase in the lease period from 40 to 45 years without any supporting evidence is seen as a committed fraud on the part of the lease preparation officers or the Registrar of Titles office to exceed the agreed no. of years by landowners. 1.13.9 Following the issue of the SABL title to BAFL on 3rd November 2005, there was a letter sighted in DECs tendered evidence dated 6 September 2005, of the then BAFL Chairman Mr Linus Aia writing to Dr
637

Wari Iamo Secretary of DEC seeking the support of DEC to conduct an oil palm activity. Recommendation 1.13.10. That the lease be amended from 45 years to 40 years as supported

by LIRs, Lease/leaseback agreement and schedule of Notice of Grant under Section 102. 1.14. DEPARTMENT OF AGRICULTURE AND LIVESTOCK 1.14.1 The issue of a Forest Clearance Authority (FCA) lies in the PNGFA subject to the approvals sought in the DAL submissions and Certificate of Compliance and those of the DEC submissions. It is found in the evidence before the enquiry that neither BAFL, its first or second proposed development partner have obtained a Certificate of Compliance from DAL to warrant issuance to them of a FCA permit from PNGFA and all other relevant processes thereafter. 1.15. PNG FOREST AUTHORITY 1.15.1 It was found from evidence presented that NASYL No. 98 Ltd. was registered as a Forest Industry Participant and a certificate of registration dated 19 July 2004 was issued. Also noted on BAFL document was a timber permit on Forestry Regulation form 175 issued to NASYl No. 98 Ltd. by the PNGFA dated 31st March 2006. 1.15.2 There were no copies of applications for either the Forest Industry Participant or timber license sighted on file, either from PNG Forest Authority or NASYl. There was a copy on BAFL document showing
638

letter dated 28th March 2006 from Terry Warra A/Managing Director of PNGFA acknowledging receipt of NASYl s application for a license. RECOMMENDATIONS 1.15.3 That the PNG Forest Authority officers summoned and failing to appear with material before the COI be served a stern warning so as to prevent future similar behaviour by PNGFA officers. 1.16. DEPARTMENT OF ENVIRONMENT AND CONSERVATION 1.16.1 A file was submitted to COI from DEC. Information contained in the file showed that a developer named NASYL No. 98 Ltd. was engaged by the Baina Agriculture Development Board to seek Environment permits to conduct forest clearing for an Oil Palm project. The Environmental Impact Statement (EIS) conducted in selected locations in Kairuku was approved by DEC on 6th March 2006. 1.16.2 However due to a fallout between the SABL Holder BAFL and the Developer, the Environment Permit was amended so as to cancel NASYl No. 98 Ltd. as the Operator of the Permit and installed BAFL as the Operator on the Permits. 1.16.3 Permit Nos. WD-L3 (87) and WE-L3(66) were granted for 25 years commencing 3rd April 2006 to BAFL. There were stringent conditions attached to the permits. One of the conditions of the Environment Permit (condition 25) required the operator, BAFL, to produce a waste management plan within three (3) months of the permit commencement date (3/4/06). This Plan is a management tool that guides
639

the operator of the project to manage the environmental issues identified in the EIS. It was not evident in the DEC file whether a Waste Management Plan had been submitted and whether the Annual charge of K2, 853 for each year since 2006 had been paid by BAFL. 1.16.4 It is also not stated whether PMS Timbers Ltd. as the new developer signed up by BAFL would have to obtain new Environmental Permits prior to it undertaking any development by virtue of the fact that the old Environment permits were obtained by the previous Developer NASYl No. 98 Ltd. RECOMMENDATION 1.16.5 That in the absence of compliance by BAFL to any statutory requirement of the DEC that appropriate penalties under its enabling legislation be immediately instituted by DEC.

640

2. COI Inquiry File No. 22 for Special Purpose Agricultural and Business Lease over Portion 30C Volume 31 Folio 120 Milinch: Kase, Buna, Central Province in the name of Yumu Resources Limited. 2.1 In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 2.2 Witnesses were called from the six government agencies involved in the issuance and operation of the Yumu Resources Ltd. SABL. These were: 2.2.1 Department of Central Province, (DCP) 2.2.2 Department of Lands and Physical Planning, (DLPP) 2.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 2.2.4 Department of Agriculture and Livestock, (DAL) 2.2.5 Department of Environment and Conservation, (DEC) 2.2.6 PNGForest Authority (PNGFA) 2.3 Other persons of interest were also summonsed to provide evidence at the hearing.The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.

641

2.4.

Witnesses and Summonses

2.4.1 Other persons of interest were also summonsed to provide evidence at the hearing. The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.
No. 1 2 3 4 5 6 7 Name and Position AIA, LINUS (Project Coordinator, Yumu Resources). BOUTAU, CLIFF (Lands Manager, Dept. of Central) KATAKUMB, DANIEL (Director, Lands Administration, DLPP) KIMAS, PEPI (Secretary, DLPP) LUBEN, ANTHONY (Deputy Secretary, DLPP) RAGA, GULU (Senior Lands Officer, DCP) YIPMARAMBA, RAPHAEL (Provincial Administrator, Central Province) Pages Day Date 10/01/12-SABL 10/01/12-SABL 24/01/12-SABL 3-80 2-10 18/01/12-SABL77 -SABL68 MIROU 10/01/12-SABL 3-8 27 October 2011

2.5.

Parties represented by counsel

2.5.1. Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry

642

under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel. The following were granted leave to be represented by counsel
No representation by lawyers Nil

2.6.

Exhibits and documents

2.6.1. There were eleven (11) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1 2 3 4 Item IPA records concerning Yumu Resources Limited IPA Extract of Aramia Plantation Limited Lands Department file material Letter of Support Office of Administrator ,DCP COI Submission COI Submission Yumu Agro Forestry Project COI Submission COI Submission Letter of Support Additional Documents to COI Letter dated 11th April 2007 re: Registration of Portion 30C Lease/Lease Back COI COI COI COI Interested Party Date received 05/08/11 02/11/11 15/08/11 27/10/11 Exhibit Number

5 6 7 8 9 10 11 12

Yumu Resources Ltd. (Paul Hara, Chairman) Linus Aia Project Coordinator Aramia Plantation Ltd. Aramia Plantation Ltd. (Wesley Pao) DEC Provincial Administrator, DCP Linus Aia Project Coordinator C.O.I

19/12/11 28/11/11 13/09/11 19/09/11 27/09/11 27/10/11 17/10/11 10/1/12 Yumu 1

13

C.O.I
643

10/01/12

Yumu 2

14

15

Agreement dated 4th April 2007 SABL Title (Owners Copy) for SL Vol 31 Folio 120 dated 7/5/07 Minute of 23/04/12 by Mr Katakumb over concerns with regard to Process of SABL to Secretary

C.O.I

10/01/12

Yumu 3

C.O.I

24/01/12

Yumu 4

2.7. Title

Timeline of events of note regarding Yumu Resources Ltd. SABL

2.7.1. The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution Not sighted Proponent/Applicant Respondent Entity/Respondent Dept. of Central DLPP Dept. of Central DLPP Prov. Administrator Dept. of Central

2 3

Issuance of an Instruction no. from DLPP for the conduct of an LIR Production of an LIR Report Signed Recommendation as to Alienability by Prov. Administrator Certificate of Alienability issued by Custodian of Customary Land Registered Survey Plan cat.no. 43/401 Execution of Lease/Leaseback Agreement Gazettal of Section 102 notice as to Land Grant Registration and issue of SABL title

No evidence on file

Not sighted Not sighted

No evidence on file No evidence on file

Not sighted

No evidence on file

Secretary, Dept. of Provincial Affairs

04/04/2007

6 7 8

Yumu Agro Forest Surveyor General Project 05/03/2007 Yumu Agro Forest DLPP Project 04/04/2007 Yumu Resources Ltd. State 03/05/2007 09/05/2007 DLPP DLPP DLPP DLLP

644

9 10

11 12

13 14

Development Agreement with Mansfield Ltd. Development Agreement with Aramia Plantations Ltd. Sub-lease to Aramia Plantations Ltd. Certificate of Compliance Large Scale Conversion of Forest to Agriculture or other Land Use EIS Payment of K50,000 fee for proposed Agroforestry Project FCA licence

Not sighted 11/10/2009

No evidence on file YRL and Aramia Plantations Ltd. YRL and Aramia Plantations Ltd. Aramia Plantation Ltd.

YRL and Mansfield Ltd. YRL and Aramia Plantations Ltd. DLPP DAL

06/11/2009 27th May 2011

Around 29th March 2010 18/08/2010

No evidence on file Aramia Plantation Ltd.

DEC PNGFA

15

Not sighted

No evidence on file

PNGFA

2.8

FINDINGS surrounding the SABL lease title held by Yumu Resources Ltd.

2. 8.1 The findings follow the chronology of table of notable events above

2.9.

Yumu Resources Limited SABL Land Act was Gazetted in the National Gazette No. G68 by the Secretary Department of Lands and Physical Planning. SABL title on Portion 30C Milinch Kase, Fourmil Buna, Central Province dated 7th May 2007 and registered 9th May 2007 was issued by the Department of Lands and Physical Planning to Yumu Resources Ltd. The Lease covered a land area of 115,000 hectares was for a period of 99 years commencing on 3rd May 2007 and expiring 2nd May 2106. Details of the SABL is shown below:

2.9.1 On 3rd May 2007 a Noticed of Direct Grant under Section 102 of the

Legal description Registered Survey Plan Catalogue no.

Portion 30C, Volume 31 Folio 120, Milinch Kase, Buna, Central Province 43/401
645

SABL Holder Date of Registration of lease Period of Lease Land area of lease

Yumu Resources Ltd. 9th May 2007 99 years 115,000 hectares

Location 2.9.2 SABL Portion30C is situated north of Doa Rubber Plantation near Kuriva on the Hiritano Highway between the Kairuku LLG and Woitape LLG provinces. The SABL claims a total area of 115,000 hectares and is on the western side of that SABL adjacent to it is the Baina Agro-Forest Limited. 2.10. IPA 2.10.1. The Investment Promotion Authority (IPA) is a statutory organization, established by an Act of Parliament in 1992, to promote and facilitate investment in Papua New Guinea. The IPA does this through various programs including the establishment and maintenance of a company/business registry, certification of foreign enterprise and promotion of investment opportunities in PNG. Findings 2.10.2 Yumu Resources Ltd. is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. Incorporation of the company occurred on 21st July 2006. At the time of incorporation it was found that the company had four (4) shareholders, six (6) directors and three (3) company Secretarys. 2.10.3 The shareholders holding one share each in their individual capacities and names were Alan Hara, Gelend Koloko, Jeffrey Onda and Kasina Somba. The Directors were Paul Hara, Iruma Asi, Besef Mona,
646

Salo Doa, Hala Enga and Duba Hara. The company secretary was Julio Mona, Francis Koma and Joe Obu. 2.10.4 the It is noted that the shares were not held in trust for any clan or ILG as would be the case with a landowners company. It is further noted that 19 members who signed as customary landowners for Lease/leaseback with the State cannot be conclusively taken to be absolute owners of the entire 115,000 hectare of land under the SABL because of the absence of a LIF report determining ownership by custom by all interested parties in the land. 2.10.5 Because the shares are not held in trust for any clan or ILG it is safe to assume that Yumu Resources is not a landowner company within the meaning of a SABL processed title, but is a privately owned enterprise belonging to four individuals. Recommendation 2.10.6 That in the absence of a LIR evidencing authorization for individuals to represent them on Yumu Resources Ltd. the purported landowner company, and by virtue of the shares being held privately by individuals that the SABL title is not held on trust by agents for all customary landowners on the face of the company records. The so named shareholders be instructed to obtain evidence of their being authorized to hold the shares in their individual capacities of the customary landowners. 2.11. Department of Central Province 2.11.1 The Department of Central Province (DCP) is the bureaucratic arm of the Central Provincial Government whose primary role it is to facilitate
647

government policies and directives through the work of its divisions of which the Lands Division is an important one. Findings 2.11.2 There was no evidence of a formal Land Investigation Report (LIR) having been conducted by the Lands Division of the Department of Central Province (DCP) to facilitate the huge 115,000 hectares of land being alienated from customary ownership for Yumu Resources Ltd. SABL. Although DCP material provided to the COI showed DCP was attempting to develop a agro-forestry project, these were sketchy. There was no report or project submission regarding the project provided to the COI by DCP. 2.11.3 It is noted that the most fundamental omission in processing of the SABL was the LIR. In the normal course of events the DCP should have obtained an Instruction number from Department of Lands and Physical Planning (DLPP) for the processing of an LIR. Than it should have proceeded to conduct the LIR. No LIR material was sighted as requested of DCP. 2.11.4 In the Statutory Declaration of Mr Gulu Raga declared on 15th December 2011 he stated that he conducted a Land Investigation for the Yumu Agro-Forestry Project which involved the registration of seven ILGs for the area. The COI notes that the coduct of a land investigation and registration of ILGs does not satisfy the conduct of a LIR. These are two different and distinct activities because the LIR deals with processes leading up to the alienation of customary land for a SABL after a Land Investigation number has been issued by DLPP, whereas the Land

648

Investigation for ILG registration appears to be a Divisional operational activity being undertaken by DCP. 2.12. Department of Central Lands Office urging for Section 102 Notice 2.12.1 Of interest and concern is a letter from the same officer (Mr Raga Gulu) dated 11th of April 2007 to the Manager Customary Land at DLPP requesting him to proceed with the preparation of a Section 102 Notice. This letter advises that the landowners wished todevelop their land for oil palm planting purposes jointly with a developer (unnamed). In paragraph three of that letter Mr Gulu points out that due to the urgency of the project the Central Provincial Administration has proceeded to execute signing of Lease leaseback Agreement between Landowners and the State while the lands investigation was still in the process of being conducted. This request was found to be auctioned by DLPP. 2.12.2 This is found to be a direct and flagrant violation of due process where three important steps in the land alienation process has been directly breached. Firstly, there was no conduct of a Land Investigation Report (LIR). The LIR for all intents and purposes is critical to determining the rightful owners of the subject land and obtaining their approval for the land to be utilized for the proposed project including the set number of years for which the land is to be alienated for the project. 2.12.3 The LIR was critically important to ascertaining ownership as to custom, by owners of the subject land and owners of adjacent lands to the subject land. The LIR would also lead to the appointment of agents by the customary landowners to act on their behalf, whereby the agents would

649

sign Lease/leaseback documents and also be holding shares in the SABL holding company on trust on behalf of customary landowners. 2.12.4 Secondly, there was found to be no recommendation as to alienability of the subject land by the Provincial Administrator as required under the LIR and SABL process. This would have normally followed had a LIR been conducted and the Provincial Administrator upon satisfying himself as to the facts on the LIR that there was no Land dispute over the subject land would have signed a Recommendation as to Alienation instrument for the land. 2.12.4 Thirdly, the recommendation as to alienability would be taken with the LIR to office of the Secretary for Provincial Affairs and Local Level Government for registration. Following registration, the Provincial Affairs Secretary in his role as Custodian of Customary Land would issue a Certificate of Alienation over the subject land which is then passed on to Department of Lands to follow further processes leading up to issuance of the SABL. It was found from evidence before the COI that these three important steps in the SABL process was not followed. 2.12.5 The most incriminating evidence lending to these flaws in due process for producing the Yumu Resources Ltd SABL is in Mr Gulu Ragas 11th April 2007 letter to the Manager Customary Land at DLPP in which he appeals to the Manager of Customary Lands to proceed and gazette the Section 102 Notice as soon as possible so that the developer (unnamed) can be given a copy of it so it can have confidence to start the project. This is in clear breach of the established processes where gazettal of Section 102 Notice should only be done after all antecedent acts including certificate of alienation from Department of Provincial Affairs
650

and Local Level Government had been given to the DLPP. Mr Ragas assertion that an investor would feel confident to conduct business with a copy of the title, following the committal of a flawed process is found to be totally unacceptable. Recommendation 2.12.6 That the SABL be revoked in its entirety. That a LIR be conducted by the Department of Central Province with the walking of the boundaries and certification as to ownership by custom. That only after the LIR has been completed, agent agreement signed, recommendation as to alienation, certificate of alienation issued and Lease/lease back agreement signed can further actions be taken to process a SABL over the subject land. 2.12.7 That Mr Gulu Raga be charged and disciplined as warranted. That Mr Cliff Boutau, Manase Rapilla and Raphael Yibmaramba be reminded as to their respective roles regarding SABLs and to be reeducated and reinforced as necessary regarding due process in the conduct of LIRs. 2.13. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DPALLG) 2.13.1 It was found that the Department of Provincial Affairs and Local Level Government was omitted from processing of the Yumu Resources SABL in a highly unusual suspicious manner. There was no fault found in the Department. The fault lay in the Department of Central Province and Department of Lands and Physical Planning.
651

Recommendation 2.13.2. That the Department of Provincial Affairs and Local Level Government be encouraged to submit as a matter of urgency for the amendment of the relevant laws to ensure the integrity of the office of the Custodian of Customary Lands in so far as issuance of Certificate of Alienability covering all customary lands in Papua New Guinea is concerned. 2.14. DEPARTMENT OF LANDS AND PHYSICAL PLANNING 2.14.1 The Department of Lands and Physical Planning processes SABLs under the two mainlegal criteria prescribed under Section 10 and 11 of the Lands Act 1996 (the Land Act). 2.14.2 Both the Lands File and the Registrar of titles failed to provide relevant documents to the COI regarding Yumu Resources SABL. The landowner company Yumu Resources Ltd (YRL) provided copies of Lands Department documents which the COI has received; however they were noted to be defective and incomplete. 2.14.3 Material pertaining to be the Registrar of titles file discloses a copy of the title deed of SABL Portion 30C Volume 31 Folio 120 Milinch: Kase, Buna, Central Province. The SABL is issued in the name of Yumu Resources Limited dated 09 May 2007. Only the front part of the title Deed is copied but the back details which indicate whether the title has been subsequently sub-leased is blank.
652

2.14.4

A copy of Survey Plan Cat. No. 43/401 for the Yumu Agro-Forest area was also on file. The land portion of 115,000 hectares shown as Portion 30C was shown to have been surveyed by a Patrick R Kobal, Registered Surveyor on 22nd February 2007. The survey plan was registered by the Surveyor Generals office of the DLPP on 5th March 2007.

2.14.5

Another interesting document on file was a letter dated the 08th of August 2011 from Yumu Resources Ltd. to the Secretary for Lands attention Mr Romilly Kila Pat in which Yumu Resources Ltd. was responding to a newspaper editorial by DLPP for SABL holders to submit relevant documents. The letter states the following; i that the investor developer did not spend any money on social mapping or ILG registration and that all finances to get the SABL issued was from the Woitape LLG funds. II. That the developer Mansfield Limited sublease was terminated for non-compliance with logging and marketing agreement (LMA), date of termination is not stated however it is interesting to note that an LMA is specifically for logging purposes and not for agricultural purposes such as oil palm projects. III. That YRL has executed a new sublease agreement with a new developer Aramia Plantation Limited (APL). The letter states that APL has submitted an Environmental Impact Statement (EIS) for consideration for an Environment Permit
653

with the Department of Environment and Conservation (DEC). 2.14.6 In the evidence tendered to the COI by the current Chief Secretary and former Department of Provincial Affairs Secretary on the processing of customary land into a SABL, it is a condition precedent for a Certificate of Alienability to be issued under the hand of the Custodian of Customary Land being the Secretary of the Department of Provincial Affairs prior to preparation of Lease/leaseback agreement by DLPP and Notice under section 102 being published in the National Gazette of grant of the land. It is found that this important process was not followed prior to the lease/leaseback agreement being signed and land grant being published in the National Gazette. 2.14.7 The lease agreement was executed for and on behalf of the State by Anthony Luben Deputy Secretary Land Services Division on 4th April 2007. For the Land Owners the agreement was signed by 19 people witnessed by Mr. Linus Aia, President of the Woitape Local Level Government, Gulu Raga Provincial Lands Officer and Cliff Boutau Project Coordinator Central Provincial Administration. 2.14.8 The conduct of Mr Raga Gulu of Department of Central Province was in breach of due process when a week later in a letter dated 11 April 2007 to the Manager Customary Land at DLPP he advised the Manager to proceed with preparation of a Section 102 Notice as the Lease/leaseback agreement had already been executed. He stated We have gone to sign the lease agreement with the landowners whilst the land investigation process is in progress.
654

This was found to be illegal and fraudulent by the COI because no LIR was in progress or had been conducted then or since. 2.14.9 It was also a direct breach of process by the Manager Customary Land at DLPP to heed the request from Mr Raga Gulu and action the section 102 notice whilst a Land Investigation Report was absent from file and a certificate of alienability from Department of Provincial Affairs and Local Level Government was not in place. 2.14.10 On 23rd April 2007 a minute was issued by the Director for Lands Administration Mr Daniel Katakumb to the A/Secretary for Lands regarding 11 lands files. The memo explicitly states that all requirements have been complied with and endorsed by the respective provincial authorities (Central Provincial Administration) and asks for Secretarys signature to allow for gazettal of the land parcels. The COI notes that this was a misleading minute for the Yumu SABL because no LIR had been done and no certificate of alienation had been issued for the subject land. 2.14.11 On 4th May 2007 another minute was sent to the Secretary from Mr Daniel Katakumb attaching the title deed and file and more or less directing the Secretary to affix his signature on the title deed. The memo further states that with the assistance of the developer the CPA has liaised with the DLPP for registration of the SABL to give them some confidence in investing. The tenor of the letter implies the developers involvement in the issuance of the SABL.

655

2.14.12

A copy of a section 11 Notice declaring that there has been reasonable enquiry and that the minister is satisfied the land will not be required for use by customary land owners was dated 11 May 2007 and executed by the delegate of the Minister. A copy of its publication was not on file. A copy of a Section 102 direct grant Notice regarding Portion 30C dated 18 May 2007 executed by Pepi Kimas delegate of the Minister for Lands. A copy of the National Gazette dated Thursday 03rd of May 2007 was also on file. The gazette confirms the publication of the Section 102 direct grant Notice.

2.14.13

The COI in its inquiry into this SABL found no evidence of a Certificate of Alienability having been issued by the Department of Provincial Affairs. Neither had there been a Recommendation as to Alienability instrument signed by the Central Province Administrator. Neither was there a instruction number given by DLPP for an LIR to be conducted by DCP and there was no LIR conducted. It is noted by the COI that the Lease/leaseback agreement was executed without an LIR being conducted. It is evident that very important processes and procedures under Section 10 of the Land Act was not observed and complied hence statutory breach in the issuance of this SABL.

2.14.14

A separate sublease Agreement which is undated was entered into by both YRL as sub lessor and Aramia Plantations Ltd. (ARL) as sub lessee for 97 years commencing 11 October 2009 and expiring 3rd May 2106. The terms of the sublease states that the sub lessor shall lease the land Portion 30C for oil palm growth and log harvesting and in consideration for the use of the land the sub
656

lessee shall pay sub-lease rent of two million kina for the term of the sub-lease agreement. The Rent was to be paid in 2.14.14 Consecutive years with annual payment of K200, 000 and the first payment to occur after the first shipment of logs harvested from the land. The Lease-Lease back Agreement in clauses 1 and 6 refer to rent being paid annually at a rate to be set by the Valuer General. These clauses contravene Section 11 of the Land Act which says no rent is payable by the State for a lease of customary land under an SABL. Recommendation 2.14.15. 2.14.1 That the SABL be revoked in its entirety. That a LIR be conducted by the Department of Central Province with the walking of the boundaries and certification as to ownership by custom. To effect this, that the DLPP issueLand Instruction Number to DCP authorising that Department to undertake Land Investigation and ILG registration process. That only after the LIR has been completed, agent agreement signed, recommendation as to alienation and certificate of alienation have been issued, can DLPP prepare a Lease/lease back agreement and proceed to issue a section 102 notice. 2.14.2. That Mr Simon Malu be charged and disciplined as warranted. That all line officers be re-educated in the processes involved in processing of SABLs and be advised of consequences of not following due process.

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2.15. DEPARTMENT OF AGRICULTURE AND LIVESTOCK 2.15.1 It is found in the evidence before the Inquiry that Yumu Resources Ltd have obtained a Certificate of Compliance from DAL dated 27th May 2011. However there was no evidence that they have obtained a FCA permit from PNGFA. The issue of a Forest Clearance Authority (FCA) lies in the PNGFA subject to the approvals sought in the DAL submissions, the issue by DAL of a Certificate of Compliance and EIS from DEC. 2.15.2 In a letter dated 29th May 2008 from Mr Anton Benjamin the Secretary of DAL to Mansfield Enterprise (PNG) Limited, he advised that Mansfield has satisfactorily met all the requirements under the Agro-Forest Development Project and should make formal application through PNGForest Authority and DEC to effect issuance of necessary permits and licenses. 2.16. PNG FOREST AUTHORITY 2.16.1 There were no Forestry files brought to the Inquiry as requested through emails, fax and phone. The material on Forestry was presented through copies from other presenters at the Commission such as DCP, DAL, Yumu Resources Ltd. Aramia Plantations Ltd. and DEC. 23.6 There was no evidence found of the previous developer Mansfields application before the PNGForest Authority as Forest Industry Participant, however there was a certificate of Registration as Forest Industry Participant of Aramia Plantation Ltd dated 10 February 2010.
658

Also noted was a receipt no. A00361 dated 18/08/10 to Aramia Plantation Ltd. from PNGForest Authoritys National Forest Service for the amount of K50,000, this being payment to process a FCA. 24. DEPARTMENT OF ENVIRONMENT AND CONSERVATION

24.1 A file was submitted to COI from DEC concerning the Yumu Resources Ltd. (YRL) application for Environment permit dated 27/09/11. The DEC file contained an Environment Inception Report for Yumu Agro-Forestry Project dated November 2008. It was submitted by Yumu Resources Ltd. in association with Mansfield Enterprises (PNG) Ltd. Also in the file was a Five year forest working plan submitted by Mansfield Enterprise (PNG) Ltd. in November 2008. The file also contained an Environmental Impact Statement for Yumu Agro-Forestry Project dated March 2010. It was submitted by Yumu Resources Ltd. in association with Aramia Plantations Limited. 24.2. It was noted that in a Notice dated 08/06/2008 under Section 50 of the Environment Act 2000, the DEC had advised YRL to undertake an Environment Inception Report (EIR) and a Environment Impact Statement (EIS). There was no further correspondence between DEC and YRL until a letter from DEC to YRL dated 08/06/2010 acknowledging that an EIS and and application fee for same had been received from YRL on 29th March 2010. 24.3 Again there was another letter dated 12th August 2011 from Acting Executive Director of DEC Mr Michael Wau to YRL acknowledging receipt of YRLs Environment Impact Statement (EIS). It was not adequately explained to the COI by either YRL or the DEC as to why a
659

second EIS had been provided to DEC (the first on 29 March 2010 and another on 12 August 2011), or why two clear years had transpired between service of Section 50 Notice by DEC to YRL to YRLs production of a EIS. 24.4 In a minute dated 02/07/2010 by the DEC it was noted that a public hearing as required under the Act was conducted for the EIA at Kuriva village attended by only 20-3- people. The general consensus was that a proper landowner association should be set up for the landowners. It was noted that no other public hearing was conducted in the subject land or nearby areas in preparation of the EIA and EIS for Yumu Resources Ltd. 24.5 A letter dated 22nd August 2011 from the Environment Council to YRL stated that its EIS had been rejected. The reasons for the rejection was that there were two EIS statements before the council. One was by YRL and the other was by their developer Mansfield Enterprises (PNG) Limited which should not have been the case. The other reason given was that Mansfield Enterprises (PNG) Limited has commenced the process to obtain an approval in principle for the project. If a new developer had been brought in, than a brand new application process was needed

660

3. COI Inquiry File No. 28 for Special Agricultural and Business Purpose Lease over Portion 45C Volume 31 Folio 249 Milinch: Kase, Buna, and Central Province in the name of Mekeo Hinterland Holdings Limited. 3.1 In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 3.2 Witnesses were called from the six (6) government agencies involved in the issuance and operation of the Mekeo Hinterlands Holdings Ltd. SABL. These were: 3.2.1 Department of Central Province, (DCP) 3.2.2 Department of Lands and Physical Planning, (DLPP) 3.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 3.2.4 Department of Agriculture and Livestock, (DAL) 3.2.5 Department of Environment and Conservation, (DEC) 3.2.6 PNGForest Authority (PNGFA) 3.3. Witnesses and Summonses have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.

3.3 1. The names of the persons who have been summoned to appear and who

661

No 1 2 3 4 5

6 7 8 9

10 11

12

Witness BENJAMIN,ANTON (Secretary, DAL) IAMO, WARI (Director, DEC) KALA, MANU (Land officer, DLPP) KATAKUMB, DANIEL (Director, Lands Div. DLPP) KIPO, ROGER (Chairman, Uda Mekeo Farmers Cooperative Society Ltdl. MANGABI, JOSEPH (Taure Lakekamu ILG) POIA, MATHEW (Hon. Member for Goilala). POMALEU, IVAN (Managing Director, IPA) POURU, KANAWI (Managing Director, PNGFA) RAGA, GULU (Senior Lands Officer, DCP) TOBEA, ELIZABETH (Special Projects Manager, DLPP) YIPMARAMBA, RAPHAEL (Provincial Administrator, Central Province)

Pages

Date of Hearing

24/01/12-SABL80 33-62 20/12/11-SABL65-WAIGANI

62-77 11-46

20/12/11-SABL65-WAIGANI 06/01/12-SABL69 01/02/12-SABL

3-8

Thursday, 27 October 2011

3.4.

Parties represented by counsel

3.4.1 Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel. 3.4.2. The following were granted leave to be represented by counsel.

662

Party Albright

Counsel Saulep Lawyers

3.5.

Exhibits and documents

3.5.1. There were 10 documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.

No 1

Item IPA records concerning Mekeo Hinterlands Holdings Limited Lands Department file material Statutory Declaration COI Submission COI Submission COI Submission COI Submission COI Submission

Interested Party

Date Received

Exhibit Number C.O.I Secretariat Register C.O.I Secretariat Register Register

Kathy Asiri

29/08/11

7 9 10 6 3

Manu Kala (DLPP) PNGFA DEC Albright Limited (Saulep Lawyers) Uda Mekeo Farmers Cooperative Society (Roger Kipo, Chairman) Mr Kipo

08/08/11 21/08/11 06/09/11 19/11/11 29/08/11

C.O.I Secretariat C.O.I Secretariat Register MHHL 1 MHHL 2

5 8

Instrument of Lease -Lease Back Agreement Affidavit of Roger Kipo dated 19/12/11 Set of Documents to C.O.I by R.Kipo (Letter dated 10/8/11) COI Submission COI Submission

20/12/11

MHHL 2 (Kipo) MHHL 3

Uda Mekeo Farmers Cooperative Society (Roger Kipo, Chairman Roger Kipo documents and submission

20/12/11

20/12/11

MHHL 4

Gongopu Clan (Joseph Managabi) Mathew Poia

20/12/11 06/01/12

MHHL 5 MHHL 6

663

9 10

11

ILG Consent Bound Set of Documents Under Cover Manu & Associates dated 2 July 2008 Letter Inviting Developer CP SAWIT to MHHL Project dated 30/11/11

(Chairman, MHHL) Mathew Poia Mathew Poiya

06/01/12 06/01/12

MHHL 7 MHHL 8

Mr Ivan Pomaleu, IPA

01/02/12

MHHL 9

3.6.

Mekeo Hinterlands Limited SABL

3.6.1. It was noted by the COI that in light of court proceedings matter OS (JR) 400 of 2009, that the lease title has been surrendered to DLPP by MHHL on a Lands Department lease surrender form dated 1st October 2010. 3.6.2. It was also noted by the COI that subsequently an order of the National Court dated 21st December 2010, ordered the SABL held in the name of Mekeo Hinterlands Holdings Ltd. null and void, ab initio. 3.6.3. On 22nd November 2007 a Notice of Direct Grant was issued by the Secretary, Department of Lands and Physical Planning. under Section 102 of the Land Act and gazetted in the National Gazette No. G182. SABL title on Volume 31 Folio 249 dated 20 th November 2007 and registered 11th December 2007 was issued by the Department of Lands and Physical Planning. The Lease covering a land area of 116,400 hectares was for a period of 99 years commencing on 21/11/2007 and expiring on 21/11/2106. The details of the SABL is shown below:

664

Legal description Registered Survey Plan catalogue no. SABL Holder Date of Registration of lease Period of Lease Land area of lease

45C Omeri, Central Province 42/381 Mekeo Hinterlands Holdings Limited 11/12/2007 99 years 116,400 hectares

3.7

Timeline of events of note surrounding Mekeo Hinterlands Ltd.

SABL Title 3.7.1 The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/Grant/I ssue Execution 07/08/06 Proponent/Appli cant Peter AI, Chris Aia, Leo Ambrose, Leo Ameua, Charles Eueki,John Kala,Mathew Poia,Andrew Rudaka,Michael Uaiz. MHHL and CP Sawit Ltd. CP Sawit Ltd. Minister for Agriculture and Respondent Entity/Respondent IPA

Incorporation of MHHL

3 4

Execution of MOA between MHHL and CP Sawit Ltd. Integrated Plantation Development Plan NEC Policy submission for Mekeo Hinterland Integrated

08/08/06

MHHL and CP Sawit Ltd. MHHL, CPG, DAL, NEC

Dec. 2006 10/05/2007

5 6 7

Land Investigation Unsigned and Report (LIR) undated Signing of 16/11/2007 16th November 2007 Lease/leaseback Agreement Gazettal of Section 30 November 2007 102 notice in National Gazette Issue and registration 30/11/2007
665

MHHL/Landgrou ps MHHL/DLPP MHHL/DLPP

MHHL/DLPP DLPP DLPP

DLPP

MHHL

of SABL title to MHHL 9 Sub-lease agreement between MHHL and Albright Ltd Public Review of EIS Public Hearing DAL IPA certificate permitting Albright Ltd. a foreign entity to conduct business in PNG Certificate of Compliance for large scale conversion of forest to Agriculture use Issue of Environment Permit to discharge waste WD-L3(201) for 25 years. Issue of Forest Clearing Authority (FCA) No. 03-01 for 15 years National Court Order declaring SABL title held by MHHL to be null and void ab inito Voluntary surrender of SABL Title to be cancelled by DLPP (Mr Poiyas Sworn Statement to C.O.I) 5th May 2008 MHHL Albright Limited

10 11

7th October 2008

Albright Limited

Albright Limited

12

14

30 January 2009

Albright Limited

Albright Limited

15

16

21st July 2009 (lack of evidence on the project development and schedule for implementation 2nd December 2010 (by consent)

Albright Limited

Albright Limited

ILGs of Mekeo Albright Limited Hinterland (Sub-lessee) Holdings Limited

17

05th October 2010

MHHL

MHHL

FINDINGS The findings below follow the chronology of table of notable events above surrounding the SABL lease title held by Mekeo HinterlandHoldings Ltd.

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3.8.

IPA

3.8.1 The Investment Promotion Authority (IPA) is a statutory organization, established by an Act of Parliament in 1992, to promote and facilitate investment in Papua New Guinea. The IPA does this through various programs including the establishment and maintenance of a company/business registry, certification of foreign enterprise and promotion of investment opportunities in PNG. Findings 3.8.2 Mekeo Hinterlands Ltd. is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. Incorporation of the company occurred on 7th August 2006. (IPA company incorporation Exhibit). At the time of incorporation it was found that the company had nine shareholders, nine directors and one secretary. 3.8.3 The nine shareholders holding ten shares each in their individual capacities and names were Peter Ai, Chris Aia, Leo Ambrose, Leo Ameua, Charles Eueki, John Kala, Mathew Poia, Andrew Rudaka and Michael Uaiz. These nine shareholders were also the Directors of the company. The company secretary was Chris Aia. 3.8.4. It is noted that the shares were not held in trust for any clan or ILG as would be the case with a landowners company. It is further noted that the 19 ILG representatives who signed the land for Lease/leaseback with the State cannot be conclusively taken to be absolute owners of the entire 116,400 hectare of land under the SABL because of the absence of a LIF
667

report determining ownership by custom by all other interested parties in the land. 3.8.5 Because the shares are not held in trust for any clan or ILG it is safe to assume that MHHL is not a landowner company within the meaning of a SABL processed title, but is a purely privately owned enterprise. 3.8.6. It is noted that a MOA for the agro-forestry project was executed between MHHL and a Malaysian company CP Sawit Ltd on 8th May 2006 which was the day after the MHHLs incorporation. From this it can be safely assumed that MHHL was simply a vehicle to facilitate the proposed agroforestry project. Recommendation 3..8.7 That in the absence of a LIR evidencing authorization for individuals to represent them on Mekeo Hinterlands Holdings Ltd., and by virtue of the shares being held privately by individuals in that company that the SABL title is not held on trust by agents for all customary landowners. The so named shareholders be instructed to obtain evidence of their being authorized to hold the shares in their individual capacities on behalf of the customary landowners. 3.9. DEPARTMENT OF AGRICULTURE AND LIVESTOCK

3.9.1 The National Department of Agriculture &Livestock stated role is to formulate and provide appropriate policy and technical advise, and to monitor and evaluate the implementation of the national agricultural programmes. In doing so, to achieve the national agricultural goal of
668

improved productivity and sustainability of food and export crops and livestock, for greater food security and income for an increased national standard of living. 3.9.2. The Departments origin can be traced back to the then Department of Agriculture, Stock and Fisheries (DASF) under the colonial administration of the External territories before 1975. The first name change of the department from DASF to the Department of Primary Industries (DPI) was after 1975, which included the Fisheries and Forestry portfolios as well. A separate Department of the Agriculture and Livestock (DAL) was created in 1989 because of the separation of the Fisheries and forestry portfolios. 3.9.3 With growth in sub sectors in the mid-1980s and the subsequent policy changes, the department introduced corporatisation and privatisation programs for those activities that were commercial viable. This saw the formation of: Coffee Industry Corporation (CIC), Cocoa and Coconut Extension Agency (CCEA), Copra Marketing Board (CMB), Oil Palm Industry Corporation (OPIC), National Agriculture Research Institute (NARI) and National Agriculture and Quarantine Inspection Authority (NAQIA). Thus, DAL now is left the primary role for policy formulation and coordination, development planning, and the Compliance Monitoring and Evaluation of policy implementation. 3.9.4 Under the new legislation in the Forestry Amendment Act 2007, the Department of Agriculture and Livestock has the role of effecting a Certificate of Compliance leading up to the approval of a Forest Clearance Authority (FCA) for large scale conversion of Forest land to Agriculture or other Land Use. The Certificate of compliance is issued
669

following compliance by the Developer/Operator to four main requirements furnished to DAL. These are a Sound Agriculture Project Proposal, Land Capability and Land Suitability Assessment Report, Land Use Development Plan and Project Implementation Schedule and a Public Hearing. 3.9.5 It is found in the evidence before the Inquiry that much of the early work regarding the then Uda Mekeo Resources Project before it became the Mekeo Hinterlands Agroforestry Project was prepared by Department of Agriculture and Livestock (DAL) which also in the course of time provided procedural approvals for the project. 3.9.6. It was found that a NEC submission for Mekeo Hinterland Integrated Agroforest project file no. 44-1-20(2) dated 10th May 2007 was jointly signed and submitted to NEC by The Minister for Agriculture and Livestock Hon. Sasa Zibe and Minister for Lands, Hon Puka Temu. It was noted on the evidence provided by Manu and Associates lawyers to the Inquiry that NEC approved the submission in Decision No. 190/2007 dated 27 June 2007 and directed all relevant line Departments and Agencies to help facilitate appropriate licenses and permits to CP Sawit Ltd. the developer and associated landowner groups and to immediately commence implementation of the project. 3.9.7 A Certificate of Compliance from DAL dated 7th November 2008 was issued to the Developer Albright Ltd. Following this a Forest Clearance Authority (FCA) permit was issued by PNGFA dated 26th June 2009 to Albright Ltd. The issue of a Forest Clearance Authority (FCA) lies in the PNGFA subject to the approvals sought in the DAL submissions, the

670

issue by DAL of a Certificate of Compliance and approval of an EIS by DEC. Recommendation 3.9.8 That the Secretary Mr Anton Benjamin and Mr Leka Mou of DAL be further investigated to explain why Uda Mekeo Resources Project changed design and scope to be known as the Mekeo Hinterland Agroforestry project. 3.9.9. That the Secretary Mr Anton Benjamin and Mr Leka Mou be instructed to explain the use of NADP funds of K3.4million earmarked for the Uda Mekeo Resources Project. 3.10. PNG FOREST AUTHORITY 3.10.1 The Forestry file was brought to the Inquiry as requested and presented on 24th August 2011. The file contained 13 documents, eight (8) originated from the PNGFA files submitted to C.O.I and two (2) were from DLPP and three (3) documents came from DAL. 3.10.2 The Forestry material sighted was PNGFA Southern Region report for 2011 which contained information pertaining to the performance of Forest Clearance Authority holders in the Southern region of the country. Of interest was information on a table in the report showing that Mekeo Hinterland Integrated Agriculture Project being halted due to court injunction due to land disputes.

671

3.10.3 There was also sighted a minute from the Manager Finance to the Revenue Accountant dated 29th July 2009 advising that a bank guarantee had been lodged by Albright Ltd. in relation to the recently issued FCA 03-01. Also sighted was a letter of support from the Goilala Member Hon. Mathew Poia dated 2nd May 2008, Certificate of Incorporation of Albright Ltd., Certificate of Registration as a Forestry Industry Participant of Albright Ltd., Deed of undertaking signed between MHHL and Albright Ltd. dated 5th May 2008, FCA permit no. FCA-03-01 issued to Albright Ltd. dated 26th June 2009 and PNGFA board meeting minutes dated 9th July 2009 granting FCA permit to Albright Ltd. 3.10.4 The DLPP material on the Forestry file was a copy of the SABL title held by MHHL and copy of the sub-lease agreement between Albright Ltd. and MHHL. 3.10.5 DAL material held on the Forestry file included a letter dated 4th July 2008 from the Secretary for DAL Mr Anton Benjamin to the Member for Goilala advising the member on the progress of the NEC submission. Also sighted was a letter dated 20th June 2008 from the Secretary to Managing Director of PNGFA Mr Kanawi Pouru advising compliance by the Agroforestry project and that Albright Ltd. should be granted FCA permit. There were also minutes of a public hearing that had been conducted at Adio village, Kubuna on 27th September 2008. 3.10.6 The COI found no irregularities in the issuance of the permit for FCA by PNGFA. 3.11 DEPARTMENT OF CENTRAL PROVINCE

672

3.11.1.

The Department of Central Province is the bureaucratic arm of the

Central Provincial Government whose primary role is to facilitate government policies and directives through the work of its divisions of which the Lands Division is an important one. Findings 3.11.2 There was no evidence of a formal Land Investigation Report (LIR) having been conducted by the Lands Division of the Department of Central Province (DCP) to verify the huge 116,400 hectares of land being alienated for MHHLs SABL. 3.11.3. On the CP Sawit Ltd. Integrated Plantation Development Plan of

December 2008 there is a Central Provincial Government PEC attachment for meeting no. 23/04 citing Uda Mekeo Agroforest Development Project. This PEC document appears to the first official recognition of the project. 3.11.4. In the evidence of Lieutenant Colonel (Retired) Roger Kipo

representing Uda Mekeo Farmers Cooperative Society he presents that there was an entity provided by CPG for the project in 2004. The company was Uda Mekeo Development Corporation Pty Ltd. however in not being supported by CPG it has become `defunct. 3.11.5. He further states that following PECs endorsement of the Uda

Mekeo Agroforest Development Project funding of K3.4million kina was applied for under a Public Investment Program (PIP) and appropriated under the National Agriculture Development Plan (NADP) in 2008. He states that at this time the project changed from Uda Mekeo Agroforest
673

project to the Mekeo Hinterland Agro Forest Project and the funds have been used by Mekeo Hinterlands Holdings Ltd. (MHHL). 3.11.6. There is also evidence on DEC file of a CPG PEC decision no.

16/05 approving funding of K18, 600 for the purposes of conducting a feasibility study for the Uda Mekeo Project. 3.11.7 In the Lands Department file a submission by Mr Manu Kala, Manager for Projects to the COI dated 1st November 2011 discloses that four CPG officers were part of the team that set out to conduct a Land Investigation Report (LIR) for Mekeo Hinterlands Agro Forest Project. The CPG officers and their designation is provided below.
Officer Gulu Raga Moses Kila Kila Bai Author Unage Designation Customary Lands Officer Provincial Valuer Technical officer Cartographer

3.11.8 In the evidence of Albright submitted by their lawyer, Saulep Lawyers, a copy of an incomplete LIR was attached. The incomplete LIR showed names of individuals from only one village, Ibi village, from which the MHHL chairman comes. Of interest is the number of years agreed for by the villagers for alienation of their land, which was stated at 40 years duration. This was not followed in the SABL grant which showed 99 years. This incomplete LIR did not show a certificate in relation to boundary being signed or a recommendation as to alienability. 3.11.9 The evidence of Mr Manu Kala states that Land Investigation reports (LIR) of the Mekeo Hinterlands Project was conducted in each village visited. Eight villages were visited. These were Velei 1, Velei 2, Mariboi
674

1, Mariboi 2, Mariboi 3, Imounga, Ioi and Maipa. He states that the LIRs were taken by Gulu Raga for endorsement by the Provincial Administrator before returning them to DLPP. 3.11.10. On file is a letter dated 12 November 2007 signed by the Minister

for Lands and Physical Planning Hon. Puka Temu to the DCP Administrator Mr Yibmaramba requesting that in light of the Lease/leaseback signing happening four days later on 16th November 2007, that the LIR be endorsed and returned immediately to DLPP. 3.11.11 As noted earlier the LIR deals with processes leading up to the alienation of customary land after a Land Investigation Number has been issued by DLPP and the LIR has been conducted. 3.11.12 The COI finds this as a direct and flagrant violation of due process

where three important steps in the land alienation process was breached. Firstly, there was no Land Investigation Report (LIR) conducted. As highlighted earlier, the LIR is critical to determining the rightful landowners of the subject land and obtaining landowners approval for the land to be utilized for the planned project and the set number of years decided on. Also the LIR would ascertain ownership as to custom by both owners of the subject land and owners of adjacent land. The LIR would also lead to the appointment of agents by the people to act on their behalf, the agents signing Lease/leaseback documents and holding shares in the SABL holding company on behalf of clan members. 3.11.13 Secondly, there was no recommendation as to alienability of the

subject land for SABL purposes as would normally suffice if a LIR had been conducted. The recommendation as to alienability would have been
675

signed by the Provincial Administrator after perusing the LIR and ascertaining that there was absence of Land dispute over the subject land. In this case it was found that the Provincial Administrator did not execute a Recommendation as to Alienation instrument. 3.11.14 Thirdly, the recommendation as to alienability would be taken with

the LIR to office of the Secretary for Provincial Affairs and Local Level Government for registration. Following registration, the Provincial Affairs Secretary as custodian of Customary Land would issue a Certificate of Alienation over the subject land which is then passed on to Department of Lands for the Lands Department to action a few more processes leading up to issuance of the SABL. It is seen from the evidence before the COI that this was not done. Recommendation 3.11.15. That because of the failure to comply with procedures leading to

the issue of the SABL the SABL should be revoked. That a fresh LIR be conducted by the Department of Central Province with the walking of the boundaries and certification as to ownership by custom. That only after the LIR has been completed, agent agreement signed, recommendation as to alienation instrument signed, certificate of alienation issued, Lease/lease back agreement signed can further actions be taken under the procedures to process a SABL. 3.11.16. That Mr Gulu Raga be charged and disciplined for failing to comply with lawful direction to provide copies of the LIR to the Inquiry, thereby prolonging inquiry into the matter. That Mr Cliff Boutau, Manase Rapilla and Raphael Yibmaramba be reminded as to their respective roles
676

regarding SABLs and to be re-educated and reinforced as necessary regarding proper conduct of LIRs. 3.12 DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT 3.12.1 It was found that the Department of Provincial Affairs and Local Level Government was omitted from processing of the Mekeo Hinterland Holdings Ltd. SABL through the failure of DCP to present LIR and Recommendation as to Alienation so that it could process the issuance of a Certificate of Alienation. Recommendation 3.12.2 That the Department of Provincial Affairs and Local Level Government be encouraged to submit as a matter of urgency for the amendment of the relevant laws to ensure the integrity of the office of the Custodian of Customary Lands in so far as issuance of Certificate of alienability covering all customary lands in Papua New Guinea is concerned. 3.13. DEPARTMENT OF LANDS AND PHYSICAL PLANNING 3.13.1 The DLLP was found to be the lead agency out of other government agencies in producing the SABL for the Mekeo Hinterlands Agroforestry project. The COI in its inquiry found gross irregularities and breaches in DLLP complying with the set SABL procedures. At the outset the Officers of the Department of Lands and Physical Planning failed to consult the Provincial Lands Office at the Department of Central by

677

issuing the Land Investigation Number authorizing the Provincial Lands Office to undertake land investigation. 3.13.2 Because of this anomaly, there was incomplete or total omission of the conduct of a Land Investigation Report (LIR). There was none sighted on DLPP file. There was a Lease/leaseback Agreement on file that was executed by 19 ILG representatives and the State through Minister for Lands dated 16th November 2007. There was also a gazettal in the National Gazette of Section 102 Notice of Direct Grant to MHHL dated 22nd November 2007. Thecopy of the SABL were also sighted. No other documents relevant to the SABL process were sighted. 3.13.3 Critical evidence as to landowner participation and involvement in the LIR, Certification as to ownership by custom, Recommendation as to Alienability instrument executed by the Provincial Administrator and Certificate of Alienation instrument signed by the Secretary of Provincial Affairs as the Custodian of Customary Lands, was not evident on file (or on any of the other files tendered by other COI witnesses). 3.13.4 The evidence of Mr Manu Kala as mentioned earlier states that Land Investigation Reports (LIR) of the Mekeo Hinterlands Project were conducted in eight villages these being Velei 1, Velei 2, Mariboi 1, Mariboi 2, Mariboi 3, Imounga, Ioi and Maipa. He states that the LIRs were taken by Gulu Raga for endorsement by the Provincial Administrator before returning them to DLPP. 3.13.5 On file is a letter dated 12 November 2007 signed by the Minister for Lands and Physical Planning Hon. Puka Temu to the DCP Administrator Mr Yibmaramba requesting that in light of the Lease-Leaseback signing
678

happening four days later on 16th November 2007, that the LIR be endorsed and returned immediately to DLPP. 3.13.6 This is found to be a direct and flagrant violation of due process where three important steps in the land alienation process we find have been breached. (1) Firstly, there was no Land Investigation Report (LIR) conducted. As highlighted earlier, the LIR is critical to determining the rightful landowners of the subject land and obtaining landowners approval for the land to be utilized for the planned project and the set number of years decided on. Also the LIR would ascertain ownership as to custom by both owners of the subject land and owners of adjacent land. The LIR would also lead to the appointment of agents by the people to act on their behalf, the agents signing Lease/leaseback documents and holding shares in the SABL holding company on behalf of clan members. (2) Secondly, there was no Recommendation as to Alienability of the subject land for SABL purposes as would normally suffice if a land investigation had been conducted. The Recommendation as to Alienability would have been signed by the Provincial Administrator after perusing the LIR and ascertaining that there was absence of Land dispute over the subject land. In this case it was found that the Provincial Administrator did not execute a Recommendation as to Alienation instrument; and (3) Thirdly, the Recommendation as to Alienability would be taken with the LIR to office of the Secretary for Provincial Affairs and
679

Local Level Government for registration. Following registration, the Provincial Affairs Secretary as custodian of Customary Land would issue a Certificate of Alienation over the subject land which is then passed on to Department of Lands for the Lands Department to action a few more processes leading up to issuance of the SABL. It is seen from the evidence before the COI that this was not done. 3.13.7. It has been noted in the evidence of Saulep Lawyers that a

voluntary surrender of the title was made effective by DLPP dated 1st October 2010 on its Surrender of State Lease Form. Recommendation 3.13.8 The C.O.I recommends since the SABL Lease has been surrendered to the State, that Mekeo Hinterland Holdings Limited renew their application consistent with the SABL process including transparency in the mobilization of the land through formal registration of the ILG process. 3.13.9 The customary land area recognised as suitable for a large scale agroforest development should be approved by DAL and that the Developer we recommend should have the financial resources and capabilities to develop large scale agriculture commercial crops should not be a logging company in this instance, Albright Limited. 3.14 DEPARTMENT OF ENVIRONMENT AND CONSERVATION

680

3.14.1 A file was submitted to COI from DEC concerning the Mekeo Hinterlands Holdings Ltd. (YRL) application for Environment permits. 3.14.2 The table below shows the correspondences entered into between DEC and MHHL leading up to issue of the permits.
No 1 2 3 4 5 6 7 8 9 10 11 12 13 Date 09/05/2008 21/05/2008 04/06/2008 17/06/2008 02/06/2008 20/08/2008 15/09/2008 24/10/2008 07/10/2008 10/11/2008 17/11/2008 17/11/2008 05/08/2009 Author Chairman MHHL Chairman (MHHL) Chairman (MHHL) Secretary DEC (Dr Wari Iamo) Andrew Rudaka Secretary DEC (Dr. Wari Iamo) A/Secretary (Kelly Gawi) Chairman (MHHL) Director of Env. (Dr. Wari Iamo) Secretary DEC (Dr. Wari Iamo) DEC DEC Joe Katape Sent to A/Dep Secretary DEC (Mr Kelly Gawi) Director of Env. (Mr Kelly Gawi) Acting Secretary DEC (Mr Kelly Gawi) A/Dep Secretary DEC (Mr Kelly Gawi) Secretary DEC Chairman MHHL Chairman MHHL Chairman Environment Council of PNG Chairman MHHL Chairman MHHL MHHL MHHL MHHL Subject of Correspondence Inquire on approval of their EIR Submission of EIS Acceptance of EIS for assessment Public review of EIS Ombudsman Commission investigation into Chairman MHHL Environment permit approval pending Rejection of EIS due to nonauthenticity of report Inclusion of bio-data information and response on authenticity of report Acceptance of amended EIS Rejection of EIS due to nonauthenticity of report Issue of Environment Permit to extract water WE-L3(155) for 25 years. Issue of Environment Permit to discharge waste WDL3(201) for 25 yrs. baseline data submission by MHHL

681

4. COI Inquiry File No. 38 for Special Purpose Agricultural and Business Lease over Portion 409C Volume 32 Folio 171 Milinch: Epo, Kairuku, Central Province in the name of Abeda Agro Forests Limited. 4.1 In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 4.2 Witnesses were called from the six government agencies involved in the issuance of the SABL. These were: 4.1.1 The Department of Central Province, (DCP) 4.1.2 The Department of Lands and Physical Planning, (DLPP) 4.1.3 The Department Government, (DPALLG) 4.1.4 The Department of Environment and Conservation, (DEC) 4.1.4 Department of Agriculture and Livestock (DAL) 4.1.5 PNG Forestry Authority (PNGFA) 4.1.6 Investment Promotion Authority (IPA) Witnesses and Summonses 4.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.
682

of Provincial

Affairs

and

Local

Level

No. 1

5 6

Name and Position Mr Joseph Fanau, Landowner & Director of AAFL Mr Andrew Manau Landowner & Chairman, AAFL Mr LAU SIEKON Managing Director, Albright Limited BOUTAU, CLIFF Special Project Officer, DCP RAGA, GULU Senior Lands Officer, DCP Dr HOSEA GEDION, PROFESSOR, UPNG and former Environment Council Member YIPMARAMBA, RAPHAEL (Provincial Administrator, DCP)

Pages 58-70

Transcript of Proceedings 21/12/12-SABL 66 MIROU

71-78

21/12/12-SABL 66 MIROU

5-19

21/12/12-SABL 66 MIROU

48-57

21/12/12-SABL 66 MIROU

32-48 24-31

21/12/12-SABL 66 MIROU 21/12/12-SABL 66 MIROU

3-8

Thursday, 27 October 2011

4.4.

Parties represented by counsel

4.4.1 Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel. 4.4.2 The following were granted leave to be represented by counsel.
Party Albright Ltd Counsel Saulep Lawyers
683

4.5

Exhibits and documents

4.5.1. There were (14)fourteen documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1. Item IPA records concerning Abeda Agro Forests Limited DEC file material COI Submission Interested Party IPA Date received Not sighted Exhibit Number C.O.I Secretariat Register

2 3

DEC Joseph Fanau, Deputy Chairman Abeda Agroforest Ltd. Peter Manene Abeda Agroforest Ltd. PNGFA Albright Ltd. Saulep Lawyers Saulep Lawyers DLPP Daniel Katakumb Andrew Manau Joseph Fanau Peter Manene Joe Waede C.O.I

Not sighted 23/09/11

C.O.I Secretariat Register C.O.I Secretariat Register

Statutory Declaration COI Submission COI Submission COI Submission COI Submission COI Submission COI Submission COI Submission COI Submission COI Submission COI Submission Albright Documents on Part

27/10/11

C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register C.O.I Secretariat Register AAFL 1

5 6 7 8 9 10 11 12 13 14

10/09/11 13/09/11 21/09/11 12/12/11

13/12/2011 20/12/11 20/12/11 20/12/11 20/12/11 21/12/11

684

of the Sub-lease Agreement and additional information Logging and Marketing Agreement Information on Financial Assistance to Landowner in Particular Clause 4.2, 6.1 and 6.2 of the Sub-lease Agreement. Authorization for Log Pond from PNG Forest Authority Land Suitability Assessment for Integrated Development Project in AAFL (Albright Limited) Submission on Waste Management Plan submitted by AAFL to DEC Bundle of Documents Relating to FCA and Agriculture Development Plan 2010-2014 Forest Participant Certificate issued by PNGFA to Albright Limited dated 21/6/06 Original Document of National Forest Service FCA03-02 Abeda Integrated Agro-forest Authority

C.O.I

21/12/11

AAFL 2

C.O.I

21/12/11

AAFL 3

C.O.I

21/12/11

AAFL4

C.O.I

21/12/11

AAFL5

C.O.I

21/12/11

AAFL6

C.O.I

21/12/11

AAFL7

C.O.I

21/12/11

AAFL8

C.O.I

21/12/11

AAFL9

685

Land Investigation Report Agreement between Albright Limited and AAFL signed on 1 May 2008 IPA Extract for AAFL dated 30/8/11 Letter by Mathew Poiya MP in support of Abeda Agro-Forest Integrated Forest Development Minutes of Meeting Environment Council EC 09 dated 10 December 2009 IPA letter-Extract for AAFL 15/11/11 Response by Mr Joseph Fanau to C.O.I Summons Response by Mr Joseph Waede to C.O.I Summons Response by Mr Andrew Manau to C.O.I Summons Response by Mr Peter Manene to C.O.I Summons Letter to Central Provincial Administration from AAFL dated 7/7/08 Logging and Marketing Agreement between AAFL and Albright Limited 22/09/08

C.O.I C.O.I

21/12/11 21/12/11

AAFL10 AAFL11

C.O.I

21/12/11

AAFL12

C.O.I

21/12/11

AAFL13

C.O.I

21/12/11

AAFL14

C.O.I C.O.I

21/12/11 21/12/11

AAFL15 AAFL16

C.O.I

21/12/11

AAFL17

C.O.I

21/12/11

AAFL18

C.O.I

21/12/11

AAFL19

C.O.I

21/12/11

AAFL20

C.O.I

21/12/11

AAFL 21

686

Land Investigation Report for Portion 29C (Sama Kuma Clan)

C.O.I

22/12/11

AAFL 21

4.6.

Location

4.6.1 The subject land is situated north-west of Kubuna Catholic Mission Station along the Tapini Road and east of Bereina Government Station. The land is bounded by Angabanga River on the northern end and the Kubuna Road on the Southern end. It is generally east of Bereina Government Station of Kairuku District in the Central Province. Most of the land in the Central and Northern area is covered with dense forest. 4.7. Abeda Agro Forests Limited SABL

4.7.1 On 1st September 2008 a Notice of Direct Grant was issued by the Secretary DLPP under Section 102 of the Land Act was gazetted in the National Gazette no. G152. SABL title on Volume 32 Folio 171 dated 5thSeptember 2008 and registered 11th September 2008 was issued by the Department of Lands and Physical Planning. The Lease covering a land area of 11,700 hectares was for a period of 99 years commencing on 25/07/2008 and expiring 24/07/2107. 4.7.2. The detail of the SABL is shown below:
Legal description Registered Survey Plan Catalogue No. SABL Holder Date of Registration of lease Period of Lease Land area of lease Portion 409C, EPO & Kairuku, Central Province 42/382 Abeda Agro Forest Limited 11th September 2008 99 years 11,700 hectares

687

4.8.

Timeline of events of note surrounding Abeda Agro Forests Ltd.

SABL Title 4.8.1 The timeline showing important events concerning the SABL is shown below in chronological order of their happening
No 1 2 3 Milestone Incorporation of AAFL Incorporation of Albright Limited Land Investigation Report Certificate of Alienability (by Cliff Boutau, Deputy Provincial Administrator) Gazettal Notice of SABL Portion 409C to AAFL Land Title Copy of SABL Lease Agriculture Sub-Lease Agreement Notice of Preparatory Works Notice to Undertake Environment Impact Assessment Environment Inception Report (EIR) Environment Impact Statement (EIS) Public Review Date of Completion/Grant Execution/Issue 30 April 2008 06 April 2006 25 July 2008 Undated Proponent/ Applicant Shareholders/Directors of AAFL Shareholders/Directors of Albright Limited AAFL/DLPP AAFL/DLPP Responsible Entity/ Respondent IPA/Albright Limited IPA/Albright Limited AAFL/DLPP AAFL/DLPP

05 September 2008

AAFL

AAFL/DLPP

5 6 7 8

05 September 2008 22 September 2008 29 July 2009 17 August 2009

AAFL AAFL/Albright Limited Albright Limited Albright Limited

AAFL/DLPP AAFL/Albright Limited DEC DEC

30 April 2009 Approved by DEC on 06/10/2009 21 May 2009 20 October 2009

10 11

Albright Limited Albright

688

DEC DAL/DEC/PNGFA

12 13

14 15 16 17

18

19

20

of EIS to various Stakeholders by DAL and acceptance of EIS Minutes of EIS public hearing at Kubuna, CP Minutes of Environment Council Meeting No. 15/2009 (EC09/2009) Ministers Approval In Principle Application for Environment Permit Environment Permit (25 years) Waste Management Plan Approval DAL Certificate of Compliance for large scale agro-forest conversion of forest to agriculture PNG FA Public Hearing report (overwhelming support for project) FCA Approved

Limited/Stakeholders

10 November 2009 10 November 2009

Albright Limited Albright Limited

DEC/Stakeholders DEC

23 December 2009 18 January 2010 22 January 2010 10 February 2010 19/02/10 10 December 2009

Albright Limited Albright Limited Albright Limited Albright Limited

DEC DEC DEC DEC

Albright Limited

DEC

12 April 2008

Albright Limited

DEC

27 July 2010

Albright/AAFL

Albright/AAFL/PNGFA

FINDINGS 4.8.2 The findings below follow the chronology of table of notable events above surrounding the SABL lease title held by Abeda Agro Forests Ltd.

689

4.9.

IPA established by an Act of Parliament in 1992, to promote and facilitate investment in Papua New Guinea. The IPA does this through various programs including the establishment and maintenance of a company/business registry, certification of foreign enterprise and promotion of investment opportunities in PNG.

4.9.1 The Investment Promotion Authority (IPA) is a statutory organization,

4.10. Abeda Agro Forest Limited 4.10.1. The IPA file contains just the current extract of Abeda Agro Forest Limited (AAFL) dated 02 August 2011. AAFL.is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. The information on the extract shows that AAFL was incorporated on 30 April 2008 having its registered office at Section 225 Allotment 10 Kunai Street Hohola National Capital District. Also on file is a copy of a Certificate of Incorporation dated the 06th of April 2000 Company Registration no. 1-63262 of AAFL. 4.10.2 The C.O.I evidently confirmed with Mr Fanau (Directors of AAFL who gave evidence) on the current status of the company, that it was deregistered on 20 April 2010, basically for failure to file annual returns as required under the Companies Act. That means that company has no legal status to enter into any agreement for an on behalf of the company. Therefore any action or decision it has made as a company since 20 April 2010 has no legal effect and is null and void. It would merely have a domino effect on all the decisions it made with Albright Limited over the SABL lease.

690

4.10.3

A total number of five shares have issued so far equally divided between Directors /shareholders named as follows; Joseph Fanau of Dua village, Julian Inau of Dua village, Andrew Manau of Foio village, Joe Waede of Mone village, Brendan Waide of Aumala village .

4.10.4.

No annual returns have never has been filed since the companies

registration. 4.10.5. On the face of the information on the current extract the

Shareholders/Directors of AAFL hold such a position not in trust for and on behalf of their ILGs groups or Landowner clans but the fact that they hold such position in their personal capacities. 4.10.6 The C.O.I finds that AAFL is not a Landowner umbrella Company as shares are not held in Trust for landowner clans but are instead held in company names. AAFL Capacity to keep custody of Company documents 4.10.7 It also became evident to the C.O.I that landowner company executives and especially the Secretary was not exercising full control as the custodian of records of the Company. The evidence we elicited from Mr Lau, current MD for Albright was that all the documents relating to the Lease-Lease SABL title, the Agriculture Sub-lease Agreement, the DEC approvals were not in the possession of the Company, but with a Mr Dominc Woo, who was acting as Consultant to Albright. 4.10.8 It also became evident during the evidence of the three (3) landowner executives of AAFL that the ILG registrations were completed
691

and passed on to Mr Woo who organised the ILG Certificates. In addition, the Agriculture Sub-lease Agreement signed between AAFL Executives and Mr Woo at his place of work (Waigani Village Premises Unit 9) was done without any opportunity given to the landowners to consult a lawyer or their landgroups on an important agreement that will lead to Albright taking ownership of the land through the sub-lease agreement. (Refer to the evidence of Messrs Joseph Fanau and Peter Manene) Recommendation 4.10.9 The Company is required to restructure its shareholding and directorship to reflect the number of ILGs represented in AAFL as an umbrella landowner company. Any resolutions concerning the project and decisions will require the assent of the appointed ILG Chairman of each ILG represented in the company. 4.10.10 The company must comply with Company requirements to submit

annual returns and ensure that it is re-registered. 4.10.11. Albright through its agents Mr Dominic Woo must return all the

ILG Certificates and SABL Title to AAFL forthwith. 4.10.12. The Company must ensure that the Secretary is fully aware of his

duties and responsibilities as required under the Company Act to keep secure all relevant company documents. This was a trend that existed with all landowning umbrella company incorporated as a vehicle to forge alliance with foreign developers to develop the land with commercial agricultural projects.
692

4.11. ALBRIGHT LIMITED 4.11.1 Although there is no evidence of Albright document on file a perusal of the NFA file reveals a Certificate of Registration of Albright Limited dated 06 April 2006 Company no 1-56187. Also on file is the Certificate of a Foreign Enterprise to carry on business in an activity Company no. 1-56187 dated 20 October 2008. 4.11.2 Albright Limited appears to be the same developer in the SABL for Mekeo Hinterlands Holding Limited. 4.11.3 Albright Ltd. signed an Agriculture sublease agreement on portion 409C with AAFL. This Standard Sub-lease Agreement contains provisions that are grossly unfair to the landowners in terms of ownership of the infrastructure development, the tree crops and in event of objections and disputes arising the company can take out orders in the National Court to restrain them and be compensated for loss of revenue and other costs incurred. The C.O.I notes that this standard Sublease Agreement has been used in a number of SABL project currently under this C.O.Is review. Recommendation 4.11.4 The landowners must be assisted by the Department of Commerce and Industry in terms of finding an investor that has the financial resources, reputable in delivering on high impact agricultural project and not a logging company. We recommend that the Sub-lease Agreement be revoked immediately.
693

4.12 Department of Central Province 4.12.1 The Department of Central Province is the bureaucratic arm of the Central Provincial Government whose primary role is to facilitate government policies and directives through the work of its divisions of which the Lands Division is an important one. Findings 4.12.2 Mr Raga Gulu who was the Provincial Lands Officer was involved in the Land Investigation and signed of the report. It became evident during his evidence that he conducted preliminary investigations and due to other commitments delegated the task to Mr Lazarus Malesa of DLPP to complete the rest of the investigation. When the report was completed, Mr Gulu signed it as the Investigating Officer. We find that this is unacceptable practice and we are concerned that such practice are allowed to occur at the convenience of lands officers whose task are to ensure that they have fully satisfied the requirements of the LIR process and signing it off. 4.12.3 Mr Cliff Boutaus evidence was that he was satisfied on the LIR conducted by Mr Raga, since he was a very senior lands officer and was quite capable and competent. He did not undertake any due diligence, whereas in fact there was evidence of lack of detail in relation to the evidence that only seven members of each ILG signed as landowners when the actual population was 1400. Mr Boutau admitted in evidence that he failed to carry out due diligence on the Report and signed the Recommendation of Alienability as Deputy Provincial Administrator.
694

4.12.4

Mr Boutau failed to recommend for reservation of full customary rights on the project area and in the process also failed to include the date he signed of the Recommendation for Alienability.

Recommendation 4.12.5 That any future land investigation conducted, any parts of the Report must be certified by the Officer who physically conducted that part of the Report, say for example, walking the boundary. That will alleviate the situation where misleading and falsity in the actual land investigation on the part of the officer who conducted the LIR. It is not a good practice to allow another officer to relieve another officer who is on the investigation unless it is of importance that relieve arrangements are organised with specific tasks. 4.12.6. All future Land Investigation Report must be scrutinised and due

diligence undertaken by the Provincial Administrator before he signs the Recommendation for Alienability. This is one of the most abused process which has been found lacking not only in this SABL, but all the other SABL processed and evaluated by this C.O.I 4.13. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT 4.13.1. No Certificate of Alienability was issued by the Custodian of Trust Land

695

Recommendation 4.13.2 That all future Recommendation for Alienability and the LIR be submitted to the Custodian of Trust Land for due diligence and certification for Alienability 4.14. DEPARTMENT OF LANDS AND PHYSICAL PLANNING 4.14.1 The C.O.I perusal of the Department of Lands and Physical Planning contained the following; (1). A Lands Title copy of the SABL lease dated 05 September 2008 for Portion 409C Volume 32 Folio 171 Milinch: Epo and Kairuku, Foumil: Yule, Central Province. (2). A copy of Gazettal of the Section 102 direct grant dated the 01st of September 2008, G152 under the hand of Mr Pepi Kimas (3) A Draft notice of Section 11 Notice however there is no evidence of a gazettal of this Notice. (4) (5) A Land Investigation Report dated 25 May 2008. The LIR includes a Certificate in relation to boundaries dated 25 July 2008

696

(6)

A Certificate of Recommendation as to Alienability which is undated and executed by Mr Cliff Boutai, then Deputy Provincial Administrator

4.15 4.15.1

DEPARTMENT OF ENVIRONMENT AND CONSERVATION The Department of Environment and Conservation is an important agency in terms of regulating and permitting development activities on state and customary land in terms of the Environment Act 2000. The Department of Environment and Conservation (DEC) is an important agency in terms of regulating and permitting development activities on state and customary land in terms of the Environment Act 2000. Defined by the Act (2000), the Project and its associated activities are prescribed and involve matters of national importance, or which may result in serious environmental harm. Therefore, the regulatory process requires prescribed activites of the identified level (1-3) to be put through the environment impact assessment process which would enable thorough evaluation by DEC and recommend relevant improvements to the proposal or its environment management regime before an Environment Permit is issued.

4.15.2

A file was submitted to COI from DEC concerning the Abeda Agroforest Ltd. application for Environment permits. The table below shows the correspondences entered into between DEC and Abeda Agroforest Ltd leading up to issue of the permits.

4.15.3

This Environment Permit amended the earlier permit issued to include Kara log pond the loading of timber for export. This particular amended permit was issued without public consultation. In a minute
697

dated 02 August 2010 Michael Wau the Acting Executive Director Environment Protection Wing to the Secretary DEC which minute states the reasons for the no public consultation as follows: i. ii. iii. Kara log is an exciting site previously used as a jetty for loading of timber ; As da previously disturbed site no substantial harm in re using the pond Landowner consent was obtained. (evidence of such a consent not on file) 4.15.4. A Waste Management Plan for the Kara Log Pond Wharf project

dated September 2010 4.15.5. On face of the evidence on this file the Developer may have met all

legal requirements under the Environment Act 2000. However, the C.O.I is concerned that for any applications for permit to occur in the high impact agricultural project, the Developer must as a matter of procedure obtain DAL Agricultural Clearance (Form 235) which will lead to FCA approval from the PNG Forest Authority. 4.15.6 The C.O.I notes that the Notice of Preparatory Work was submitted by Albright to DEC on 29th July 2009. DAL approved compliance for agricultural project to be undertaken in forested areas of the project site on 10th December 2009. The most crucial factor is that the DEC process was commenced almost simultaneously to the DAL application under Form 235. The Ministerial Approval in Principle was issued by the then Minister on 23 December 2009. This aspect of the C.O.I concern is propounded by the lack of co-ordination between key agencies of
698

government to forge collaboration and realistically deal with Developers who intend of circumventing the process and in most cases taking advantage of the current situation faced by the line agencies responsible for land use, forest clearance and agriculture component. 4.15.7 The Commission was able to obtain reliable information from the former Council member of the DEC Council on this aspect. The Commission reproduce extract of Dr Hosea Gideon, currently an Academic and Professor attached to the School of Physical Science, UPNG evidence on the Councils decision making process as follows A:

Yes, the business paper was EIS for Abeda Integrated

Agriculture Project.

Q:

Could you advise us what EIS stands for?

A:

The Environmental Impact Statement.

Q:

And that is the statement that the Council looks at prior to

issuing a permit?

A:

That is correct.

Q:

Dr Gedion, I will just take you to paragraph 5 of that Item 5, where it reads; Dr Gedion expressed concern over the surrounding logging - logged-over-area which the company should consider to develop into agriculture logs, than to log out and clear a new forest. Can you see that paragraph?

699

A:

Yes.

Q:

Are you able to explain to us what your concern was there?

A:

Thank you. As expert on the eco-systems and bio-diversity, my concern was that the project area is a known highpopulation density, and there has been a lot of developments and a lot of forest degradation in the area. I also understand that the present that the project is going to log out some of the areas that was originally I think TRP project area. So the concern I raised with the Council was if the project or the developer was serious with agriculture development, there is already enough degraded land around to convert to oil palm plantations. This is a concern I made for this project but it is a concern I could make and I ask Commission for permission to make a submission in general for similar projects in relation to bio-diversity concentration in this country.

..

A:

Thank you, Commissioner. I would like to do that as soon as we come back to the hearing again. But the concern was that there is quite a lot of degraded land in the area and any serious development would obviously start with already degraded land rather than clearing forest. There is already a lot of concern about high bio-diversity areas being cleared and the government has no policy at the moment on regulating land allocation for all of these projects. We lose
700

a lot of bio-diversity, we lose a lot of eco-systems and as a concern as enshrined in our Constitution, we have an obligation to share the wealth that God has given us to future generations; and I think we will fail our future generations if we do not do that. Government needs to take serious steps in developing policies to address these issues.

Q:

So, Dr Gideon I take it from what you have just said that it may have been unnecessary for Albright the developer to have requested for another permit when there was already land that had been cleared previously and that they could have used that land to go into oil palm planting. Is that what you are saying?

A:

That was the position I had.

Q:

And I see from the minutes of this meeting which I have given to you that the council proceeded anyway and accepted the environment impact statement?

A:

Yes, that is correct.

Q: .

And subsequent to that, based on that environment impact statement a license was issued?

A: ..

Approval in principle, that is right.

701

A:

By the minister, yes.

MS KOISEN:

Dr Gideon, if I can just refer you to paragraph

10 as well of item 5. You obviously made a comment also again a concern over the conservation of the environment with regard to flora and fauna which you have just covered and you asked the council to take a stand in laying a bench mark for certain percentage of that particular forest area to be excluded from logging. Are you able to advise us as to whether or not council has taken this matter any further to your knowledge?

A:

To my knowledge, the council has not further taken any serious steps in particular to the area or project area. There is a if I may point out that there is a statement on statement number 9 by Dr Kalinoe, if I could read that. Dr Kalinoe said; To accept the - for Abeda Integrated Agro project on the condition that every 500 hectares logged should be developed into agriculture before the next 500 hectares is logged. To your knowledge, has that been has Environment Department abided by that recommendation? To my knowledge, no.

Q:

A:

(Refer to pages 25-26 of Transcript SABL 61-Mirou)

702

4.15.8

His views on the process of DECs involvement in evaluating and processing application for Level 3 environment impact projects Q: Okay, being a member of the council and to Environment and Conservation you also look at agricultural reports that are provided because it is also relates to the soil suitability?

A:

Yes, that is one of the point I want to present in my submission. I think there is a that the government system needs to be properly organized. For example, these kinds of projects at the moment are the agriculture processes, undertaking, independent of the environmental assessments and also forestry assessments for FCA. I remember at one point I had to request for all the technical people in all three organizations to get together and deal with one of the issues. And I think something needs to be done in coordinating the government processes. (Refer to page 28 of Transcript SABL 61-Mirou) If I may also just just another point I would like to mention, but I will put it in my submission. It relates to dealing with the landowners. I presume that the Government needs to take more provide more support to the landowners. They need to be able to provide some kind of assistance so that the landowners understand documents before they sign. And I took as a nationalist where-ever I went I tell the people that if you cannot understand the documents, get somebody else to read it and explain to you
703

before you sign and in particularly the two log export agreements and that kind of thing. So what the landowners hear is 6 million they are going to get, they do not know how much that company is going to get, how much the Government will get, they are only told what they are going to get. And these are some of the issues that although they may be in the document, may be, not clearly explained to them. (Refer to page 30 of Transcript SABL 61-Mirou) Recommendation 4.15.9. The Director of Environment must thoroughly assess on receipt of

the Notice of Preparatory Work from Project Developers to ascertain if DAL has in fact completed its assessment process. It would be useful for all that information to be availed subject also to PNG Forest Authority approval for FCA. This also is dependent on the DLPP SABL lease back process. 4.15.10 The C.O.I recommends that the ideal process is that DEC approval

must be commenced as soon as DAL completes its assessment on all the relevant documents submitted to DAL by the Developer. The DEC Council should only act if DAL, PNG Forest Authority and DLPP complete their process. The process is that there is a land approved for that purpose under the lease back system (DLPP), agriculture component is also approved by DAL and subsequent to that PNG Forest Authority approval for FCA.

704

4.15.11.

The permit must also take into consideration the conservation of

any areas within the project site that may affect biodiversity. It is important that serious considerations for the conservation of these areas are to preserve the flora and fauna that co-exist on that land for breeding, migratory and habitation.

705

EAST SEPIK PROVINCE

Protestors-ESP SABL Hearings

Log Pond at Nagam logging activity, ESP

706

1. COI Inquiry File No. 20 for Special Purpose Agricultural and Business Lease over Portion 146C Volume 14 Folio 19 Milinch: Marienberg, East Sepik Province in the name of Brilliant Investment Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the Brilliant InvestmentLimited SABL. These were: 1.2.1 Department of East Sepik Province, (DESP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGFA) 1.3. Witnesses and Summonses

1.3 1 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.

707

No 1

Name and Position

Pages

Day 2 4 2 4 2

Date 09/02/12-SABL 2 WEWAK 13/02/12-SABL 4 WEWAK 09/02/12-SABL 2 WEWAK 13/02/12-SABL 4 WEWAK 09/02/12-SABL 2 WEWAK

Mr Peter Yapog, Acting 5-18 Provincial Customary Lands Officer, Division of Lands 3-19 &Physical Planning, DESP Mr Richard Kali, Provincial 18-35 Forest Officer DESP 19-21 Mr Tony Hobiagu Unattached Public Servant and formerly Acting Provincial Adviser, Division of Agriculture & Livestock, DESP Mr Moses Gawi, Landowner, Chairman of Marienberg Hills Resource Development Limited Mr Andrew Bracamonte, Project Manager, Brilliant Investment Limited Mr Francis Warren, Unattached Lands Officer (on retrenchment), DESP Mr Francis Daink Mr Leka Mou 36-47

52-106

09/02/12-SABL 2 WEWAK

106-131

09/02/12-SABL 2 WEWAK

21-40

13/02/12-SABL 4 WEWAK

7 8

12-26 2-33 1-33

05/09/11-SABL13 (Waigani) 06/09/11-SABL (Waigani) 29/02/12-SABL8 WEWAK (Waigani)

1.4

Parties represented by counsel Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be representedby counsel. The following were granted leave to be represented by counsel
708

1.4.1 Section 8 of the Act relates to the appearance of counsel before the

Mr Peter Kuman of Kuman Lawyers

Brilliant Investment Limited and Marienberg Hills Limited

1.5.

Exhibits and documents

1.5.1 There were Sixteen (16) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1 Item Letter by Mr Tony Hobiagu, Acting Provincial Adviser, Division of Agriculture &Livestock dated 8th August, 2008 Letter by Mr Tony Hobiagu dated 23rd September, 2008 to Mr Moses Gawi re: Marienberg Hill Project Binding Agreement dated 1 November, 2006 signed between Mr Henry Ling, General Manager-Brilliant Investment Limited & Mr Moses Gawi, Marienberg Hills Limited Submission to the COI by Mr Moses Gawi on behalf of Marienberg Hills Development Limited. Received by the COI on 6 October, 2001. Angoram Large Scale Integrated Agriculture Project Proposal-Cocoa Development Projects Angoram Large Scale Integrated Agriculture Project Agriculture Land Use Plan and Updated Implementation Schedule Progressive Monthly Report dated 23rd January, COI Interested Party Date received 09/02/12 Exhibit Number BIL 1

COI/Marienberg Hills Development Limited

09/02/12

BIL2

COI/Marienberg Hills Investment Limited/Brilliant

09/02/12

BIL3

COI

09/02/12

BIL4

COI

09/02/12

BIL5

COI

09/02/12

BIL6

COI

13/02/12

BIL 7

709

10

11 12 13 14

15

16

2012 on Angoram Large Scale Project by Mr Kali, Provincial Forest Officer, DESP Land Investigation Report for Land Fourmil Vanimo/Bogia Milinch Angoram/Marienberg-Land Reference 1419/0146C Annexure of Valuer Generals Report on the Valuation of the Land, Part of Document 8 and Document Number 3 of the Land Investigation Report. Lease of Land Deed, (Unsigned)-Certificate By Officer executing Document (Unsigned) Draft Partnership Agreement Certificate of Incorporation of Land Groups Form 165-Landowner Consent Forms Petition dated 31 January 2012 to the Manager, Star Avenue by Clement Komba under Marienberg Hills Resources Development Limited letterhead Petition under letterhead of Marienberg Hills Resources Development Limited to Camp Manager, Star Avenue Minute dated 11 November, 2008 by Mr Leka Mou to Deputy Secretary, PAT, DAL re: Marienberg Project

COI

14/02/12

BIL7

COI

14/02/12

BIL8

COI

14/02/12

BIL9

COI COI COI Brilliant/Star Avenue/COI

14/02/12 14/02/12 14/02/12 14/02/12

BIL10 BIL11 BIL12 BIL13

Brilliant/Star Avenue/COI

14/02/12

BIL14

DAL Secretary

29/02/12

LM1

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1.6.

Timeline of events of note surrounding Brilliant SABL Title

1.6.1. The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution 06/07/2004 Proponent/Applicant Respondent Entity/Respondent

Incorporation of Brilliant Investment Limited Incorporation of Marienberg Hills Investment Limited Binding Agreement between Marienberg Hills Limited and Brilliant Land Investigation Report(s)

C.O.I

C.O.I

11/10/2006

C.O.I

C.O.I

01/11/2006

C.O.I

C.O.I

10/01/07

C.O.I

C.O.I

1.7.

FINDINGS

1.7.1. The findings follow the chronology of table of notable events above surrounding the SABL lease title held by BRILLIANT. 1.8. Brilliant Investment Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette no. G22 dated 25th February 2007 for Portion 146C Marienberg Land. The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 12 th February 2007 by the Department of Lands and Physical Planning to the holder Brilliant Investment Limited (BRILLIANT). Mr Pepi S. Kimas

711

signed as delegate of the Minister for Lands. The detail of the SABL is shown below:
Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease Portion 146C 3/605 Brilliant Investment Limited 12th February, 2007 Ninety-nine (99) years 25, 600.0 hectares

1.9. IPA 19.1 The Investment Promotion Authority (IPA) is a statutory organization, established by an Act of Parliament in 1992, to promote and facilitate investment in Papua New Guinea. The IPA does this through various programs including the establishment and maintenance of a company/business registry, certification of foreign enterprise and promotion of investment opportunities in PNG. Findings 1.9.2. The proposed developer for the SABL is Brilliant Investment Limited and is registered title holder of SABL Portion 146C Brilliant Investment Limited (Brilliant) is a limited liability company registered in the Register of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. The Company was incorporated on 6th July, 2004 and the current Principal Place of Business is Section 515 Allotment 25 & 26, Waigani, Hohola, National Capital District. As at 2nd August, 2011 IPA records confirms that it is operating. The Company number is 151701.

712

1.9.3. The latest IPA company extract provided to the Commission dated 2nd August, 2011 indicates 2 shareholders namely Chung Ching TING holding thirty-six (36) ordinary shares and Min Yong YU holding sixtyfour (64) ordinary shares in Brilliant. This indicates that the majority shareholding by two foreign nationals of Malaysia makes the company a foreign company. The company has issued 100 ordinary shares in the company to the two foreigners. 1.9.4 The extract discloses both Messrs Chung Ching TING and Min Yong YU also as Directors of the company. No company Secretary was appointed by the company. The Annual return for the company was made up to 30 th June 2011. The principal activity of the company is the Export of Timbers within the Forestry Sector. It commenced operations as at 5th January, 2005. The formation of Brilliant Investment Limited 1.9.4. Company registry searches with the IPA and in this instance the Commission examined the status of Brilliant Investment Limited pursuant tohistorical extract obtained from the IPA on 19 September 2011. SABL grantee, BrilliantInvestment Limited was registered and incorporated by one PNG national Toripe Koava on 6 July 2004 holding 100 shares. It is currently operating. However on 25th or 26 April 2005 these 100 shares were transferred to Gohill Timber SDN BHD, a company with a Malaysian registered officer. It is unknown at the time of this report whether it was registered with IPA as a foreign company in PNG. 1.9.5. Over the course of five years Gohill Timber SDN BHD did transfer much of its 100 shares as follows; 35 shares to one Ling Neng Lii (otherwise
713

known as Henry Lii) a Malaysian national resident at Section 38 Allotment 29 new Hohola commercial estate Gordons NCD and the transfer was effected on 1 January 2006. Twenty (20) shares were then transferred to Ting Chung Ching (otherwise known as Douglas Ting), a Malaysian national resident at Section 38 Allotment 29 new Hohola commercial estate Gordons NCD on 1 January 2006. 45 shares were then transferred to one Yu Ming Yong a Malaysian national resident at Section 38 Allotment 29 new Hohola commercial estate Gordons NCD on 1 January 2006. On 6 July 2009 Neng Lee Ling transferred his or her shares to the other two shareholders as follows: Chung Ching Ting received 16 shares and Ming Yong Yu received 19 shares. 1.9.6. On August 27 as confirmed by examination of the historical extract obtained from the Companys register by order of the Nati onal Court, Brilliant Investment Limited was placed under receivership with James Kruse of Deloitte Touche Tohmatsu appointed as receiver of the companys property. However, this was discontinued on 29 November 2007 with the agreement of all parties. Both shareholders Chung Ching Ting and Ming Yong Yu remain as current shareholders and also as company Directors at that time. 1.9.7. There is no evidence on the IPA Extracts of any appropriate foreign enterprise certification, although the Commission acknowledges that have shareholding of the company is above 51 percent PNG nationally owned. Marienberg Hill Resources Development Limited 1.9.8 Marienberg Hill Resources Development Limited (MHRDL) is a limited liability company registered in the Registrar of Companies of the
714

Investment Promotion Authority of PNG under the Companies Act 1997. The Company was incorporated on 11th October, 2006 and the current principal place of business is Section 515 Allotment 4 & 5, Waigani Drive, Gordons, National Capital District. As at 19th September, 2011 IPA records confirms that it is operating. The company number is 1-7860. 1.9.10 The latest IPA company extract provided to the Commission dated 19 th September, 2011 indicate 10 shareholders of MHRDL each holding 100 ordinary share in their capacities as landowner representatives of seventyfive ILGs within the Marienberg SABL Cocoa project area. The shareholders are Messrs Joe Andi, Moses Gawi, Xavier Kasia, Simon Kasimo, Simon Kuaien, Anton Kusi, Leo Makis, Melchior Mangino, Hillary Patua and Nelson Tabi and most of them reside in their village in the Angoram District. Moses Gawi is the current Chairman of the MHRDL. 1.9.11. The extract discloses Messrs Moses Gawi, Simon Kuaien, Joe

Andi, Nelson Tabi and Simon Kasimo as Directors of the Company. 1.9.12 The shareholding structure of the company does not adequately cover the majority of the 75 ILGs listed in the submission by Mr Gawi to the COI (Exhibit BIL4). In evidence, Mr Moses Gawi expressed overwhelming support for his chairmanship and that the majority of villagers actually supported the engagement of Brilliant as a developer for logging activity and the cocoa project. This is shown below in the listing of ILG provided to the Commission.

715

No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Village Mamber

ILG No 4234 6802 6801 6804 6805 6803

Land Group Oro Orona Momuin Kuna Daruma Rongorua Duangua Momunua Gasina Tae Boana Yakana Roamo Mogit Momuin Kurari Newa Kuina

Chairman Moses Gawi Peter Krebo Samson Sale Clement Kombe Leonard Mira

No 39 40 41 42 43 44

Village

ILG No

Land Group Waueh Amoyana Amai Sainea Kambreto Momuinua Yuaton Hukai Kiando Sumbrum Kanaputo Kaparo Yuaton Ymuto Olemaneai 1 Olemaneai 2 Mukusinea Wakapniel 1 Wakapniel 2 Wakapniel 3 Atemniel Moareniel

Chairman Henry Pokai Bath Yatu Alber Yari Peter Boga Simon Koien Joe Salle Cletus Bob Melchior Baipu Luke Apeso Kony Maiua Michael Mara Danny Wasu Terrance Massange Lawrence Wakia Linus Arimba Raphael Suari Augustine Bogobu Titus Auia David Wagiso John Gari Mathew Maso Juth Simai Xavier Gasia Christiengegane Sonny Yatu Smeky Babi Herman Bau Paul Aipa Luke Taria Eddy Wino Steven Pandiku Isaac Sapiel Jerry Patua Augustine Salle Martin Bigso

Suk

Mansep

4247 4237 6812 4231 4243 4242 4246 4241 4244 6799 4245 4238

Arnold Biari 45 Theo Parun Leo Wakamo Joe Warui Yakana Andrew Asipa Valentine Singe Andrew Andi Jackary Paren Joe Andi Simon Kasimo 53 51 52 46 47 48 49 50

Bian

Mabuk

Ariapa n

19 20 21 22 23 24 25 26 27 28 29 30 31 32 33

Gavien

4248 4239 4225 4226 4221 4222 4229

Yokna Yona Wakap 42 Rongumi Mania Fremo Gaweka Momina Moarem Wamana Matari Mreana Arro Waimuna Homina

Amba Natape Leo Wapo Lawa Wanga Kenuth Tun Tatius Andi Michael Yawgin Paul Kima Jack Kasemo Daniel Naga Tatake Onol David Mandawa Peter Paki Henry Patua Joe Salle

54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 Waskur in Manga n

Mangana Arena Wena Mavetwa Tukna Yono Gokina Tavakop Andaren Arigunial Bugi Soboatiel Solonbok Koanek

4223 Boanam 6800 4229 4238 4230 4240

34 35 36 37 38

Mosan

6803 6809

Sikhamat Akunea Frame Momina Mamariang

Mathew Raymond Mapo Damban Gokiuon Yakaue Hym Joe Kusi

70 71 72 73

1.9.13.

The following Instances reveal a serious lack of landowner

involvement includingmajority consent on the engagement and authorization of Brilliant to be named as the grantee of the SABL Title

716

and also as the Developerof the high impact cocoa project at Marienberg land,Angoram. The listing of ILG registration numbers are missing for villagers numbered 26, 32, 36-73 totalling 40 villagers. There was no explanation from the Chairman as to why these villagers were not registered at the time the ILG registration was conducted in 2006 by Mr Gawi and his Directors. A Mr Joe Salle appears as Chairman of ILG 4240 Homina village (Number 33) and at the same for Momuia village (Number 44). There was no explanation provided for that discrepancy. The shareholding within MHRDL does not disclose the inclusion of all the individual chairmans of each village or ILG and there is a major deviation from the majority consent and evident that there is lack of fair representation of the villagers in MDRDL. Joe Andi is from Gavien village and not Mansep village. (page 83Gawi 9/2/12) Mr Gawi in evidence confirmed that Waskirin village comprising ILG numbered 69-73 was not originally named within the Marienberg project in 2006 and was added recently to the list. He states that Waskirin Village was originally with the Sepik River Development Corporation and its village was outside the SABL held in the name of Brilliant. They are according to Mr Gawi not genuine landowners and would be considered as a ploy on the part of Mr Gawi to include ILGs

717

and villagers who are not genuine landowners. (Moses Gawi-SABL2Wewak-9/2/2012 at pages 86-87). Despite Mr Gawis contention that majority of the clan leaders within the Marienberg project area had agreed to engage Brilliant relative to logging operation as well the proposed large scale cocoa project in 2006. It was revealed by documents submitted to the COI on 11 th August 2011 that about 25 clan leaders within the project area raised serious concerns about their initial support and subscribed consent in Consent Form 165 on 27th July 2006 at Mansep village. The leaders in their statements dated 8th November 2008 expressed disappointment over benefits being derived from logging, the lack of awareness conducted by the Provincial Forestry Officer, one Richard Manjo when the consent forms were signed. They also rejected the view that all the leaders agreed that SABL title to be issued to the Brilliant. The leaders whose statement was attached to duly filled Consent Form 156 dated 27th July 2006 at Mansep include leaders whose name appear on the ILG listings seeking withdrawal of their Timbers Authority consent which was ultimately used to legitimise the grant of SABL over Marienberg land as follows
No 1 2 3 4 5 6 7 8 9 10 11 12 Name of Leader Raphael Digi Zachary Kasi Simon Wandio Joe Andi Tom Tobo Harry Wabo Arnold Biari Bernard Warui Valentine Wapi Theodore Parum Wagame Maino Herman Asipa Tadius Mori Village Clan Momina Kurari Yakana Wena Kuina Momin Boangue Boana Mogi Gasina Roamo Preme

Mansep Mansep Mansep Mansep Mansep

Gavien 718

13 14 15 16 17 18 19 20 21 22

Jack Kasemo Michael Nuguanie Leo Wapo Lawrence Wanga Bameh Kaph Theo Koruma Paul Kimh Zachary Kaisi Martin Wandea Joe Warui

Gavien Gavien Gavien No. 1 Gavien Gavien Gavien Mansep Gavien Mansep

Merena Gavenna Woikap Longumi Youna Yokna Mominah Kluari Mania Boana

The consent form were not signed by the clan leaders and is deemed to be signed by persons having no authority to sign on their behalf 1.10. Binding Agreement 1 November 2006 Between Mr Henry Ling, General Manager of Brilliant Investment Limited and Mr Moses Gawi of MHRDL (Exhibit BIL 3) 1.10.1. The C.O.I noted with interest prior to the SABL, an agreement was

entered into between the Marienberg Hills Development Limited and Brilliant. This was to invite Brilliant to undertake logging within the Marienberg area under the replaced TRP concession as was understood by the C.O.I from the evidence of the Mr Gawi. 1.10.2 Mr Moses Gawi confirmed that he signed the agreement with Brilliant in Port Moresby with the MD of Brilliant on the Marienberg project. The major transaction was not agreed to by the majority of the landowners as represented by the Shareholding/Directorship of the company. This is contrary to the requirements of the Companies Act, where the Resolution of the Company is necessary over major decisions of the Company. We reproduce relevant parts of his evidence as follows

719

MS PEIPUL: Now that this Agreement has been tendered, we can just go through a few of those. Unfortunately, we only just have two copies of this document, so perhaps, I can give it to the witness; just a few issues within the just a few points. Firstly, in clause 3 or, perhaps, going back to clause 1, Commissioner. It is just reference to the area in which you are intending to develop or enter into agreement about. It says 26 to 30,000 hectares, but the land is essentially the same land that is now over which because there are annexures that we do not have on this.

A:

Exactly.

Q: about.

So, that is essentially the same land that you are talking

A:

Exactly, Counsel.

Q:

But as you can see, it is 26,000 to 30,000 and the SABL is 26,000 a bit over 26,000 hectares, so that is confirmed of the same area. I think within clause 3 we turn to clause 3, and you will note that there is only mentioning of logging. There is no mentioning of there are particulars a mention of Agriculture Development Agreement; however, the SABL as an entity over which a particular will be granted is not mentioned within this particular clause.
720

So you can agree that at the time that you were negotiating with Brilliant Investment, there was no mention of SABL. Is that correct?

A:

No.

Q:

In 2006 when you initially negotiated with Brilliant, were you only negotiating over logging or was that the genuine agriculture component within the initial negotiations?

A:

Counsel, in regards to your question, as you know that Forestry have their own set up. First, they come up with TRPs, and then later LFAs and then we come to the stages of now, the FCAs. FCAs are meant for agriculture

development, large-scale agriculture. That is what I believe in. So I thought my people will be happy with the

agriculture development here, that is why I got the agreement with the Brilliant people coming to establish whatever agriculture projects we want. So in our case, we have got cocoa. Cocoa is already established in our area, and that is what I am after, and my people will benefit in a later date rather than logging, logging, like LFAs. I am also on the Forest PFMC and also National Forest Board.

Q:

So you are saying there was a genuine agriculture component that you intended to develop with Brilliant Investment. Is that correct?

721

A:

Exactly, Counsel, yes.

Q:

But you are aware now these issues are ongoing with Brilliant with respect to shut down; stopping of logging and so forth? There are issues now---

A:

That, Counsel, I would not elaborate too much on that because in this time of hearing, I cannot just jump the gun and come and tell you that, tomorrow, I am closing down the project; I am closing this and that; I cannot do that. If Forestry wants to do that, they should have done it long time, yes,

(See evidence of Moses Gawi on 9/2/12 SABL 2-Wewak at pages 68-74) 1.10.3. The C.O.I notes from that evidence that while the Developer was

already on the project site harvesting logs under the TRP concession, the Forestry Act was amended in 2007 introducing the FCA and the need to utilise the SABL process so that agriculture component is tied to the FCA. 1.10.4. The C.O.I finds that this very transition is a common thread that

was cunningly utilised in the New Ireland Province by Tutuman over the SABLs that it benefits from under the Agriculture Sub-lease Agreement. Basically Mr Gawi was also misguided in this venture because he was misled by the erroneous advice offered by the Provincial Lands Office on the appropriate way to deal with SABLs and the FCA requirement for large scale agriculture component. We find that this very same cunning was employed in this particular SABL and this was so entrenched because the Lands Officer Mr Simon Malu once again in his notoriety for
722

failing to produce a full LIR conveniently short circuited the process to enhance Brilliants continued logging presence in the area, under the SABL and FCA component. 1.11 Department of East Sepik Province 1.11.1. The C.O.I determination of the Land Investigation process is that no LIR was conducted by the Provincial Lands Officer Mr Peter Yapog. He told the Inquiry that his colleague Mr Francis Williams was responsible for the Land Investigation. 1.11.2. Mr Francis Williams appeared before the C.O.I and his evidence

basically was that Mr Gawi had approached him for advise on the need to include the Marienberg land as an SABL. 1.11.3. Mr Francis Williams is a veteran public servant and an Unattached

Officer at the time he gave evidence to the C.O.I at Wewak. He had served as a Provincial Lands Officer for up to 17 or 18 years and well acquainted with field investigation concerning land maters. He was sincere and honest to inform the Inquiry that Mr Gawi had inquired with his Office on the need to convert Marienberg land into SABL. Mr Williams told the inquiry of the sequence of events on his advice as follows; 1) In 2006 he advised Mr Gawi , that he is to liaise closely with the District Lands Officer-In-Charge, the Angoram District Administration of which Marienberg falls under Angoram District Administration, with regard to the conduct of Land Investigation and ILG registration.

723

2)

Later on that year 2006, Mr Gawi invited Mr Williams to advice the Board Members of the Marienberg Hills Development Limited in a more informal setting at Wewak on the need to undertake Land Investigation and this time to carry out large scale cocoa project on the Land. Mr Williams advised them to see the District Lands Officer based at Angoram to assist them with their request and he also explained that the SABL process was a useful process to undertake agro-forest activity. Mr Wiliam however failed to obtain more information from DLPP as his knowledge on the SABL process and procedure was virtually minimal.

1.11.5 The C.O.I finds that this trend of Provincial Lands Officers and even those in DLPP and other key agencies need to formalise a training module in order to enhance the officer involved in the field land investigation to be better equipped to render advice and undertake the land investigation diligently and effectively without questions been raised as to the irregular practices the C.O.I notes exists which is detrimental to the indefeasibility of title. Recommendation 1.11.6 That the SABL be revoked pending a fresh LIR to be re-conducted by the Department of East Sepik Province with the walking of the boundaries and certification as to ownership by custom. 1.11.7. He gave wrong adviseto Mr Gawi on the process. and it is this

Commissions Recommendation that DLPP undertake workshops to assist the Provincial Customary Lease Officers with the basic understanding of the law and its process. Lack of proper consultation and coordination
724

between DLPP and Provincial Lands Officer has resulted in serious discrepancies affecting the process. 1.12 DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) 1.12.1 The C.O.I notes that no Certificate of Alienability was issued by the Custodian of Trust Land Recommendation 1.12.2 That freshly conducted LIRs be provided to the Secretary of Provincial Affairs as the Custodian of Customary Land for issue of Certificate of Alienability. 1.13 DEPARTMENT OF LANDS AND PHYSICAL PLANNING Brief on the Land File provided to COI 1.13.1 The C.O.I was not able to sight any of the essential forms that primarily set into the motion the Land Investigation process for SABL applications. No tender form No Land Instruction No No LIR, but one produced by Mr Gawi was incomplete and not signed Consent of the landowners was an issue as evidenced by the no of objections raised by other landowners 1.13.2. The relevant files produced to the Commission for examination and

inquiry from the Department of Lands and Physical Planning and

725

especially from the Registrar of Title, which is an Office which forms part of the establishment of DLPP. The Registrar of Titles Mr Henry Wasa produced to the Commission on 15 August 2011[including amongst other SABLs] other documents within the Brilliant SABL file (that was produced) on the Title document was blank therefore the Commission was unable to ascertain whether the document was a sub-lease agreement. 1.13.3. The next document that was on file was a fax dated 15 February

2007 and it confirmed the Board of Directors at the time of Marienberg Hills Resources Development Company and that it was the chairman Moses Gawi signed that under the company seal. 1.13.4. Another document that is on the Registrar of Titles file was a

signed Section 11 Notice of the Land Act dated 12 February 2007 and that was signed off by ministerial delegate Pepi Kimas the former past Departmental Secretary of DLPP. 1.13.5. Notice of grant under Section 102 was also on file and that is dated

12 February 2007 and also signed by Pepi Kimas 1.13.6. We also note on the files was a letter from the acting Surveyor

General John Sireh (at the time) dated 6 December 2006 addressed to the Chairman of the Marienberg Cocoa Project, approving essentially the carrying out of a Survey under Rural Class 4 and they were advised to engage a private surveyor and further advise the GPS reading to be taken to mark out the corner points and boundaries of the land. This is one of the rare times that a letter from the Surveyor General has been sighted on the Titles file.

726

1.13.7. 1.13.8.

A copy of the Gazettal Notice is also on that same file. Importantly and with respect to Brilliant Investment, there was no

Customary Lands Division held Native Land Dealings file produced. Although, the Customary Division Deputy Secretary, Mr Romilly Kila Pat swore in an Affidavit that it had been produced the desire expression that no file from that particular Division had been produced todate and none has been produced thus far. 1 13.9 The C.O.I notes that the Land Investigation Report was certified and signed by Mr Simon Malu on 10th January 2007. He was careless, reckless and negligent due to the evidence that there was a lot of omissions, blank and high likelihood that the agency and landowner signatures we assume could have been forged. This is evidently so because Commissioner Alois Jerewai who is a member of the landowning clan of Marienberg whose name and signature was noted on the Agency Agreement is not his signature. That assumption in reality is true because of the desperate situation to obtain the lease, Mr Gawi colluded with Mr Malu to fast track the grant and issuance of the title. 1.13.10. We note that Mr Malu and Mr Kimas gave evidence to the Inquiry

and their evidence on oath is reflected in the Transcript of Proceedings referred to in this Report. 1.14. DEPARTMENT OF AGRICULTURE AND LIVESTOCK 1.14.1 In the file forwarded by DAL to the C.O.I, there was one Agro-Forestry Project Proposal on file including a proposal to vary the work plan for clearing timber. There also was evidence on that file of a required public
727

hearing and that meeting was to have been held on 18 July 2008 at the Marienberg Catholic Mission Station, Angoram District. 1.14.2. There is a letter on file addressed to the Department of Agriculture

and Livestock Secretary dated September 2008 and that Mr Daink, Deputy Secretary appears to be urging the Secretary to sign the Certificate of Compliance for the large scale conversion of forest to agriculture to which he has attached a report that he had intended to present to the PNG Forest Authority. 1.14.3 There is an Internal Office Minute dated November 2008 from Mr Leka Mou Southern Regional Director for Provincial Agriculture Technical Services Division (PATS) of which Mr Daink is actually the Deputy Secretary. Importantly within that minute, Mr Mou states that any approval for large scale agro-forest development (Form 235) DAL would have to ensure that the stipulations within the requirements of that Form must be strictly complied by the Developer, and that any apparent deficiencies in procedures of granting approval would not serve a useful purpose. The Commission was able to have Mr Mou appear on a summons to explain in detail the content of his letter to Mr Daink. Obviously, there was a real need to be vigilant in assessing and evaluating the volumes of proposal which at times was questionable and could not be trusted. 1.14.4 The C.O.I notes that there was a letter dated 3 September 2009 from the Secretary of the Department to the Managing Director of Brilliant Investments where he indicated the approval of the Implementation Schedule for 4,000 hectares of forest being felled for cocoa planting in the 3rd and 4th quarter of this year 2011. The letter is copied to the PNG
728

Forest Authority and states that based on the Department of Agriculture approval, appropriate Forestry Clearance approvals can now be given by the PNG Forestry Authority. 1.14.4. In further correspondence, dated 8 November 2010, Brilliant

Investments informs Department of Agriculture and Livestock that it has grown 50,000 cocoa seedlings that were ready for planting, however that it wanted to diversify its operations into oil palm and as such was seeking approval for integrated agro-industrial business on the site. 1.14.5. In a letter in response from Mr Francis Daink, he states that, firstly

the planting of the cocoa seedlings needed to happen before approval for further cutting of 500 hectares of timber would be given; that the land use assessment of the oil palm growing needed to be conducted as well, and that a further public hearing to gauge public opinion on oil palm/cocoa integration needed also to be conducted. He proposed therefore to Brilliant Investment that the cocoa remain the primary crop for five years so as to continue to operate under the current FCA. This was to avoid seeking a new FCA licences, meaning the need to submit new proposals for approvals. 1.14.6. Mr Daink suggested the need for Brilliant to revise its Land Use

Plans and Implementation Schedules. Mr Francis Daink suggested that Brilliant Investment remain with cocoa and their proposal that they diversify into oil palm should not be pursued. 1.14.7. Mr Tony Hobiagu, then acting Provincial Advisor, Division of

DAL and W, Department of East Sepik was invited by Mr Gawi to assess the proposed Angoram Integrated Agriculture Project EIS of the
729

Developer and he expressed his opinion in a letter dated 8 th August 2008 to the Director of Environment, copies circulated to Moses Gawi and Raphael Digi, landowners. In his evaluation, he was critical of the EIS proposal of the Developer as follows, A sample traverse similar to sample wood volume should have been used also for flora, wildlife, fauna determination. What is given is general description, this is a rush job to blindfold ignorant,. This was conservation of biodiversity areas which undoubtedly was not considered in the proposal. Mr Hobiagu expressed concerns over the Land Identity Demarcation Survey which was required to be completed before the FMA Certificate was issued. (Also Refer to his evidence in detail referred to in this report.) 1.14.7. C.O.I Agriculturalist Mr Wohuinangu24 who accompanied the C.O.I team evaluated the Agriculture component of the Project and reported that no detailed agriculture plan was rolled out by the Developer as was the case in point with DAL. He states as follows; Agriculture development plan is usually based on the land suitability assessment for the area and matching with the agronomic requirements of the crops and in particular cocoa. The land use plan and soil suitability assessments should also be supported by a report of the independent cocoa production and processing expert to determine the potentials and constraints for cocoa production and processing in the area. A project feasibility study should also be conducted to determine the costs and returns for cocoa production, processing and marketing. Based on the outcome of the feasibility study a development plan should evolve detailing the planting schedule for the nucleus estate and the out
24

Joseph Wohuinangu, Agriculture Advisors Report COI SABL dated 15 October 2012. Mr Wohuinangu travelled with Commissioner Nicholas Mirou to East Sepik, New Ireland and Madang to evaluate all the agricultural component of the Project sites and his invaluable contribution to the Team was appreciated.
730

th

growers, costs for development of the nursery and distribution plan for the seedlings and management of the plantations until harvest and processing into cocoa beans for export. The cocoa production, processing and marketing plan has not been developed and costed. . The Department of Agriculture and Livestock did not certify the agriculture development plan for Brilliant Investment Limited in form 235 under sections 90A (3) (1) of the Forestry Act of 1991 and submitted to PNG Forest Board for approval. Thus the Forest Clearance Authority was issued to BIL without a professional assessment of the cocoa development project by competent expert as a requirement for the issuance of the SAB&L. 1.15 PNG FOREST AUTHORITY 1.15.1. Forest Clearance Authority was granted on 26 June 2009 and it has a number FCA 11-02 to Brilliant Investment Limited and that is for the large scale integrated agriculture and cocoa development project. 1.15.2. Pursuant to evidence given by Kanawi Pouru when he came to the Commission for an affidavit sworn on 24 August this year, he states that there is a certain documentation that needs to be provided in order for them to make their assessment which is: (i) the prescribed Regulation Application Form 235 of the Forestry Act Regulations; (ii) there is a provision of the duly completed project proposal; and

731

(iii)

there is a list of documents not all of them need to be provided but at least some of them need to be provided and briefly; (1) there is a certified boundary description from the Department of Lands and Physical Planning outlining exact are of project area, (2) there needs to be landowner verification and consent as evidenced by lease documentation, (3) there needs to be duly completed sales and purchase agreements with the customary owners, landowners and there needs to be agreement oversee or MOUs between landowners and developers, (4) Feasibility studies of soil suitability for proposed agriculture use, (5) and there needs to be DAL report on stakeholder public hearing, (6) Department of Agriculture and Livestock prescribed Form 235, and (7) an Environmental Permit is also to be attached for the proposal to proceed.

1.15.3.

The C.O.I notes from the files provided that the documents received, C.O.I have not sighted any of these documents.
732

1.15.4.

The C.O.I also notes on file that there is some notices and correspondences relating to the current operations by Brilliant Investment Limited. There is a stop work notice, issued by PNG Forestry Authority to Brilliant Investment on 25 August 2010 in regards to the felling of trees.

1.15.5.

On 10 March correspondence Mr Kanawi Pouru wrote to the Managing Director of Brilliant Investment, a Mr Yu Ming Yong, dated 23 March, that as a result of a site visit on 10 March 2011, that there was very poor performance of the Integrated Agriculture Project. Mr Pouru pointed out to Mr Yong that; (i) 100 hectares of clear fell land had no cocoa plants planted and that this land was left idle with no planned use; (ii) Only one building had been properly constructed, all others were still were made of bush material; (iii) There was no Joint Venture Agreement between the landowner company, Marienberg Hills Resource Development Limited and Brilliant Investment Limited; (iv) There was no clear direction for the management of the cocoa plantation; and (v) that 61,397.376 cubic metres of net resource had been cleared to that date. That is of an estimated total volume of 536,000 cubic metres gross for the acreage of the SABL being 25,600. It just goes towards showing how much has been cleared
733

without any agricultural development, essentially agricultural work. So that figure goes towards showing that. 1.15.6. Those assessments are confirmed by this C.O.I, during its site visit to the project site. There was a nursery set up, and we observe that there was much more logging activity in excess of 50,000 hectares. At that time a pontoon arrived to load on the Kwila at the Marienberg log pond/jetty at the time of the visit. 1.15.7. The C.O.I gives credit to the PNG Forest Authority for their enforcing their regulatory and statutory authority to compel Developers to follow their implementation and crop planting schedule plans. 1.15.8 This was expressed by the Provincial Forest Officer Mr Richard Kali who was called to give evidence on their monitoring activity that this was at times limited due to logistical difficulties and because of those reasons, logging activities continued unabated. 1.16 DEPARTMENT OF ENVIRONMENT AND CONSERVATION 1.16.1. Mr Michael Wau,who is the Director Environmental Wing, gave an account of the processes that have to be undertaken in order for Environmental Permits to be issued. In this instance, an Environmental Permit was issued to commence on 6 January 2009. 1.16.2 In terms of the steps that were undertaken, C.O.I noted on file that there was indeed the Step 1 which is a notification of preparatory
734

work, and that was prepared and lodged by Brilliant Investment on 2 April 2008. Then secondly, that an Environmental Inception Report needs to be submitted, and that was done so on 2 May 2008. Then there was an Environmental Impact Statement which was also lodged on 24 June 2008 and this Environmental Impact Statement needed to be accepted by the Director, after that, there was a public review and stakeholder review process that happened. The notice was put out on 24 July 2008. 1.16.3. Interestingly, there was a letter from the East Sepik Provincial Administration dated 8 August 2008 but it was received on 4 September 2008 which actually highlights quite critically issues that the writer had with the proposed project and the true impact that it will have on the community. 1.16.4. Interestingly In a letter dated 15 December 2008, the

Environmental Impact Statement was initially rejected for two reasons; firstly, there was insufficient information on the biological component of the Environmental Impact Statement; and secondly, there was concern on the authenticity of the information provided. 1.16.5 The suggestion was that the Environmental Impact Statement was to be reviewed and resubmitted to the Director of Environment. It appears that that must have been done, it is not quite clear on the file, the process there but we see the next step being the Counsel has made positive recommendations and that has led to the Ministerial Approval in Principle which is essentially the final step before the granting of Environment Permits. So the

735

Environmental Council met and a decision in favour of granting, the appropriate approvals were made. 1.16.6 So the approval in principal,wasgranted by the concerned Minister on 19 November 2008. 1.16.7. The actual Environmental Permit which is two permits includes one is essentially to discharge waste and the other one is to use and take water. Those were granted on 1 December 2008 and 9 December 2009. So that is the permitting process that Brilliant Investment went through. 1,17 The Commission makes the following findings 1.17.1. Land Investigation Report conducted and signed by Mr Simon Malu, Customary Lands Officer was fundamentally flawed, The LIR dated 10th January 2007 (amongst other things) failed to address the following issues consistent with majority consent 17.1.1. The Report was based on the application of Brilliant, who obviously was not a landowner company. The Shareholders and Directors of the Company were foreigners. 17.1.2. Total alienation of the land for ninety-nine years by the landgroups is misleading, because Brilliant does not have any connection to the land at Marienberg. 17.1.3. Mr Malus recommendation and Certification is baseless because of the total lack of content in the field investigation
736

and the consent of the people over Brilliants application. The statement however genuine it is does not reflect the true feelings of the people as follows; The Landowners have missed out on vital

government services for quiet (sic) too long and they see this as a window of opportunity which they have initiated themselves to gain from and realise some potential economic benefit with their own resources can generate and which they can fully participate in the development of their area 17.1.4. The Schedule of Owners Status and Rights to land indicate 17 pages of names of each clan but really fails to show the connection within the whole report. 17.1.5. The Declaration of custom in relation to land tenure consists of 10 pages of names with some signatures. These signatures required to/ be authenticated as it involves illiterate and unsophisticated individuals who seem to know how to sign. I have alluded to the observation that forgery may have occurred with the signatures sighted against the names. An example is that of Mr Alois Jerewais name and signature appearing in the list is undoubtedly not his signature. 17.1.6. 17.1.7. No land boundary walk certified over the huge land area. No Recommendation as to Alienability noted and signed by the Provincial Administrator including the reservation of
737

customary rights over the land during the period of the SABL lease. 17.1.8. Mr Moses Gawi was the main player in this SABL grant to Brilliant and we cannot single out any individuals for that matter. It is so unrealistic in the dealings he made in 2006 with Brilliant and continued on into the agro-forest cocoa project. 17.1.9. To absolve himself from this situation, Mr Gawi in my view was ignorant of the wishes of his people, and we are mindful of the fact that development must come to Marienberg, but not in the context for logging. On 28th September 2011 he wrote to the C.O.,I and enclosed the LIR which we found is highly irregular and will only lead to nullification and new process to be followed as a matter of course. This he says in his letter, For the record, we the landowners, gave our consents and authority through our clan representatives for BIL to be nominated entity to which the gazettal of the lease should be issued to. 17.1.10. We have received evidence from the company Brilliant Investment Limited as to the operation and the costs that they have imposed on this project. We are of the view that despite those aspects and concerns, we are also mindful of the fact that the huge areas within the SABL have been logged hence question arise as to how much more will required to be cleared to undertake pure cocoa agricultural activity.
738

17.1.11

The C.O.I site inspection revealed wholesale logging activity and also less on the agriculture component. There was a nursery located in the site, but the condition of the nursery, the broken down water pump to irrigate the land and the state of the housing needs of the workers leaves much to be desired. The Office complex located at the Log pond and Jetty on the Sepik River is not permanent and consist of makeshift buildings, indicating that movements within the area is normal process for the Developer, who has no capacity to develop the cocoa project at Marienberg.

1.18. RECOMMENDATION 1.18.1. The SABL Portion 146C is recommended to be revoked forthwith. (a) The landowners of the Marienberg community are encouraged to mobilise their ILG groups in a more coordinated and transparent manner. The SABL process requires to be revisited and proper Land Investigation conducted to ensure that majority consent is obtained from all the members of the clan/.ILG. (b) The Landowners must also seek assistance of the Department of Commerce and Industry to vet and engage a reputable agriculture investor to under the large scale cocoa project at Marienberg. The developer must not be a logging operator who will then sub-contract to an agriculture company to undertake the activity, but a company that has the financial resources to develop the cocoa project.

739

COI Inquiry File No. 75 for Special Purpose Agricultural and Business Lease over Portion 55C Volume 19 Folio 14 Milinch: Masalagar, East Sepik Province in the name of Nungawa Rainforest Management Alliance Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the Nungawa Rainforest Management Alliance Limited SABL. These were: 1.2.1 Department of East Sepik Province, (DESP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGFA) 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.

740

No

Name and Position Mr Peter Yapog, Acting Provincial Customary Lands Officer, Division of Lands &Physical Planning, DESP Mr Richard Kali, Provincial Forest Officer DESP Hon. Mr Gabriel Kapris MP & Minister for Commerce & Industry, Division of Agriculture & Livestock Mr Steven Mera Secretary, Department of Commerce and Industry, Hon. Mr Tony W. Aimo, MP, Landowner. Mr Suriya Moorthy, CEO, SPZ Ltd Mr Sugunarao Subramanian, General Manager-, SPZ Ltd Mr Andrew Sapuko, Landowner Mr Alex Anisi, Former Premier of ESP, Businessman & Landowner Mr Don Bakat, Consultant & Landowner Mr Roy Kenba Balagawi CEO, Basse Oil Palm Ltd & Landowner, Ambunti Mr Mose Joshua, Landowner Mr Augustine Kaugen, Landowner Mr Sam Akike, Landowner

Pages 101-147

Day 5

Date 14/02/12-SABL 5 WEWAK

18-35 3-19 53-68

2 4 4

09/02/12-SABL 2 WEWAK 13/02/12-SABL 4 WEWAK 13/02/12-SABL 4 WEWAK

69-100

13/02/12-SABL 4 WEWAK

101-137

13/02/12-SABL 4 WEWAK

51-92

14/02/12-SABL 5 WEWAK

92-100

14/02/12-SABL 5 WEWAK

8 9

149-161 162-171

5 5

14/02/12-SABL 5 WEWAK 14/02/12-SABL 5 WEWAK

10 11

10-42 65-87 43-51

6 6 6

15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK

12 13 14

51-62 64-65 88-100

6 6 6

15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK

15

Mr Michael Caypah, Landowner

116-122

15/02/12-SABL 6 WEWAK

741

16 17 18 19 20

Mr Michael Koimo, Landowner Mr Michael Marmber, Landowner Mr Gabriel Dagun, Landowner Mr Michael Sau, Landowner Mr Francis Daink, Deputy Secretary (PATS), DAL Mr Leka Mou, Agriculturalist, DAL Mr Pepi Kimas, Former Secretary, DLPP Mr Simon Malu, DLPP Director, Customary Leases, DLPP

122-123 125-127 128-132 138-158 12-26 2-33 1-33

6 6 6 6

15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK 05/09/11-SABL13 (Waigani) 06/09/11-SABL (Waigani)

21 22 23

29/02/12-SABL8 WEWAK (Waigani) January 2012 SABL WAIGANI January 2012-SABL WAIGANI

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel. The following were granted leave to be represented by counsel
No representation by lawyers Nil

742

Exhibits and documents There were Twelve (12) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
NO 1 2 Item Petition to C.O.I SABLNRMAL NEC Decision No. 8 of 2009 Nungwaia Bongos Integrated Large Scale Agricultural Projects (2 pages) NEC Decision No. 288 of 2008 Nungwaia Bongos Integrated Large Scale Agricultural Projects 15 December 2008 COI COI/NRMAL/SPZ Interested Party Date received 13/02/12 13/02/12 Exhibit Number NRMAL 1 NRMAL2

COI/NRMAL/SPZ/Commerce & Industry

13/02/12

NRMAL3

6 7

10

Affidavit of Hon. Tony Aimo, MP dated 8th September, 2011 Letter to the PresidentRoadline Construction dated 14 October 2011 Affidavit of Mr Suriya Moorthy -CEO of SPZ Affidavit of Mr Sugunarao V. Subramanian, Plantation General Manager, SPZ Land Investigation Report prepared by Mr Yapog, Senior Customary Lands Officer, Division of Lands, ESP Administration. Instrument of Lease/Lease Back Agreement dated 3 March 2011 Affidavit of Mr Don Bakat, Background to the

COI

13/02/12

TA 1

COI

13/02/12

TWA2

COI COI

14/02/12 14/02/12

Exhibit 3 Exhibit 4

C.O.I.

14/02/12

NRMAL5

C.O.I

14/02/12

NRMAL 6

COI

15/02/12

NRMAL8

743

11

12

Project and his concerns over the acquisition of SABL Submission by Moses Joshua-Secretary, Wamagian Development Corporation Limited Letter by Sam Akike dated 8th February 2012

COI

15/02/12

NRMAL9

COI

15/02/12

NRMAL10

Timeline of events of note surrounding Nungwaia Rainforest Management Alliance Limited SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution 22/11/2000 2006 Proponent/Applican Respondent t Entity/Respondent 230 Land Group Chairman 230 ILGs and PNG Forest Authority ILG ILG SPZ/STATE

1 2 3

Certificate of Recognition of ILGs FMA Agreement between State and 230 ILGs Formalization of Project Agreement between State and SPZ Enterprise (PNG) Ltd Consent of 230 ILGs to terminate NB-FMA Agreement

16th April 2009 State and SPZ Enterprises (PNG) Ltd 29th June 2009 PNG Forest Authority and 230 ILGs (Supplementary of 157 ILGs also added to the list) Hon. Gabriel Kapris MP, Hon. Tony Aimo, MP

SPZ

NEC Decision 08/2009 re Proposed Project for NBIntegrated Large Scale Agricultural Project (NBILSA Project) Public Hearing on the Proposed NBILSA Project

2009

STATE

30 October 2009

Drekikir Station, Hon. G. Kapris MP, Ronald Asik MP & T. Aimo MP, Mr Samson Torovi, Mr Daink, Mr Mera, Mr
744

STATE/STAKEH OLDERS

8 9 10

Certificate of Compliance for large scale conversion of Forest to Agriculture or other land use development FMA Agreement terminated Environment Impact Statement Supplementary ILGs comprising 157 Landgroups added to the 230 ILGs for NB confirmed Incorporation of Nungwaia Rainforest Management Alliance Limited Land Investigation Report

3rd December 2009

Hobiago, Mr George Gua, Mr Tom Peni, Mr Swong, Mr Failau, Mr Aulem, & Mr Buruka including Chairman of ILGs present. PNG Forest Authority/DAL/SPZ Enterprises (PNG) Ltd. Hon, Belden Namah, Minister for Forest SPZ/DEC Hon Tony Aimo present/ All 157 ILG Chairman confirming and signing the ILG application for Registration. NRMAL

SPZ

18 November 2009 13 May 2010 15-16th May 2010.

STATE SPZ SPZ

11

08th October 2010 Two weeks commencing 13/11/10 and ending on 22/11/10 12/02/11

NRMAL

12

Mr Yapog/Mr Tony Aimo MP/Certain ILG Chairman

DLPP

13 14

Survey of Portion 55C Masalaga, ESP Instrument of Lease/Lease Back Agreement between State and NRMAL Written Protest by on Notice of Direct Grant and prior to issuance of SABL Title

15

16 17

SABL Title issued in the name of NRMAL Agriculture Sublease Agreement between NRMAL and SPZ

Completed and certified by Surveyor General 03 April 2011 T Aimo MP and Agents of ILGs (Question as to the nomination of the Agents not recorded in LIR) 04 April 2011 Protest against SABL to NRMAL for NB/DLPP not respond to protest even though they physically met with Mr Malo of DLPP. 19th April 2009 NRMAL-99 year lease/lease back 20 May 2011 Mr Herman Massimbor, Chairman signed at Ela Beach Hotel,
745

DLPP DLPP/NRMAL

ILG

NRMAL NRMAL/STATE

18

K1million Advance Rental paid by SPZ to NRMAL K1million deposited into NRMAL ANZ Operating A/C. Forest Clearance Authority

10 June 2011

19 20

14 June 2011

Port Moresby with Mr Peter Song, Chairman, SPZ Received by Interim Chairman, Mr Massimbor at Ela Beach Hotel pool Side. ANZ Harbour City Branch, Konedobu Completed and registered but not issued to date

NRMAL

NRMAL SPZ

FINDINGS The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Nungwaia Rainforest Management Alliance Limited. Nungwaia Rainforest Management Alliance Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette No. G86 dated 4th April 2011 for Portion 55C Masalaga Land. The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 4th April 2011 by the Department of Lands and Physical Planning to the holder Nungwaia Rainforest Management Alliance Limited (NRMAL). Mr Pepi S. Kimas, OL signed as delegate of the Minister for Lands. The detail of the SABL is shown below:
Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease Portion 55C 3/671 Nungwaia Rainforest Management Alliance Limited 4th April, 2011 Ninety-nine (99) years 109,500.0 hectares

746

The Nungwaia Bongos Integrated Large Scale Agro Forest Project (NBILSAF) comprises 110,415 hectares of land within theAmbunti/Drekikier Districts of the East Sepik Province. That is referred to as SABL Portion 55C which is held in the name of NRMAL. The Commission acknowledges the efforts of the political leaders of the East Sepik Province and Sandaun Province in 1996 who promoted the concept of developing large scale agro forest projects to empower the least developed areas of the province. That concept has continued to progress with involvement of concerned landowners and ably assisted by District Administrators, Office of the Provincial Administrator, and key government agencies, Key Stakeholders and the National Government. However, there are matters of importance that needs to be fairly well understood when it comes to the acquisition, registration and alienation of customary land for periods of up to 99 years. The NBILSAF inquiry determines that whilst there is noble and genuine effort to progress and promote development, the majority consensus and agreement of all members of the landowning group must in principle be acquired to part with their land for one (1) year to ninety-nine (99) years. That is the compulsory statutory requirement pursuant to section 11 and 102 of the Land Act. C.O.I SABL INQUIRY INTO SABL PORTION 55C TO NUNGWAIA RAINFOREST MANAGEMENT ALLIANCE LTD The following facts arise out of the evidence and documents submitted by all concerned persons which is essential to determine if the statutory requirements for acquisition of the land known as Masalaga was satisfied

747

1.

May 2008 Daniel Katakumb on behalf of the landowners of Aplatak and Hambukan villages within the land known as Bassei advised the Hon. Tony Aimo on the establishment of the Oil Palm Development Project.

2.

The initiative for the oil palm project was initiated by the landowners and included the conducting of a feasibility study and documentation for the project at their own expense. The report was submitted to then Prime Minister, Right Honourable Grand Chief Sir Michael Somare who supported the project. The Prime Minister referred the Feasibility Study Report to Hon. Patrick Pruaitch, then Minister for Forest and Hon. Peter Hickey, then Minister for Agriculture and Livestock to provide funding and technical assistance to the Bassei Landowners.

3.

Hon Tony Aimo was asked by the landowners to support the initiative financially as it will encompass the Ambunti/Drekikier Electorate with the desire to develop the area into a major oil palm producer.

4.

At the time Mr Aimo was informed on the landowners initiative to develop the oil palm project at Bassei, there was an existing Forest Management Authority (FMA) Agreement between the 230 Incorporated Land Groups in the land known as Nungwaia-Bongos. The 230 ILGs had agreed to allow the area known as Nungwaia/Bongos to be made available for forest management and harvesting in accordance with sustained yield principle25. The Agreement was executed between the 230 ILGs and the

25

Refer to RECITAL E to the FMA Agreement and Clause 19 of the Agreement defines sustained yield principle means the management and control of forest management and harvesting in accordance with any applicable standards and/or code of practice to ensure that the net harvestable forest area contained within the minimum sustainable working area will yield a perpetual, more or less even flow of industrial wood which is harvested in a manner which does not adversely affect forest productivity, and which minimises the risk of adverse impact on environmental values.
748

Papua New Guinea Forest Authority (PNG Forest Authority) on 16th August 2006 for a period of fifty years. 5. I also note that the Provincial Forest Management Committee certified on their inquiry pursuant to section 21 of the Forestry Act that the customary landowners were willing to enter into the FMA Agreement. The resolution was certified by the then chairman Mr John Alman on 27th March 2006 6. Mr Valentine Kambori signed as the Chairperson of the PNGFA witnessed by Mr Pouru, the MD of NFS 7. I note from the bundle of documents provided to the C.O.I on 26th September 2011 (Exhibit) that Hon. Tony Aimo, (as the then Minister for Correctional Services), received a letter dated 3rd September 2008 from then Minister for Forest, Hon. Belden Namah MP, informing him on the progress of the submission pertaining to Mr Aimos electorate landowners wishes to convert the Nungwaia Bongos FMA to a large scale Agriculture Timber Authority was under consideration. Mr Namah further advised that, The Managing Director was personally directed by myself to facilitate the request which I now understand has been done accordingly, and the National Forest Service has furnished a positive recommendation to the National Forest Board.. to officially approve the conversion of FMA to FCA at the PNG Forest Board Meeting to be convened on 25th September 2008. 8. Between 28th and 30th July 2009, the original 230 ILGs who executed the FMA agreement pursuant to the Forestry Act 1991, collectively consented to revoke and cancel the FMA agreement. There is no record as to how the ILGs were advised on that decision, but the records indicates of the signing
749

of Consent Form pursuant to Forestry Act (as amended) to cancel FMA. The cancellation meant that any process to acquire FCA would require acquisition of land under SABL and the Agricultural component as required by the Forestry Act. 9. On 18th May 2009, Mr Namah, MP (then Minister for Forest) terminated the FMA Agreement on 18th November 2009. Despite that termination, the FCA process would require separate submission for FCA on the part of all landowners in relation to agro-forest project at Nungwaia Bongos. 10. I accept that Mr Aimo, MP, Landowner and life member of NRMAL conveniently commenced the process to convert the existing FMA to FCA as a precursor to the process of further converting the FMA surveyed area into a SABL. That process I consider started when the Bassei Landowners conducted the feasibility study report in 2008 and made known their intention to seek the support of their leaders. This is notable with regard to the intense objections that existed and was evident at the time the COI convened its hearing at Wewak. within the SABL Portion 55C by Bassei Landowning Group and Mapsera Development Limited the title holder to SABL Portion 54C which is located within the Portion 55C. NEC Decision 288/2008-11th December 2008 (Exhibit NRMAL 2-SABL 4 Wewak 13/02/12) NEC approved the process of preparing a project agreement for the Nungwaia Bongos Project subject to the guidelines for Development Project Proposals and Project Agreement. The Decision was made on 11 December 2008.

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NEC Decision 08 of 2009 11th February 2009 (Exhibit NRMAL 3-SABL 4 Wewak 13/02/12) 11 The underlying reason for the large scale agriculture project was ...that project has been in the pipeline for ...about more than 20 years, and with the intention of the landowners using the resources to allow for tangible development whether it be in forestry, logging or into agriculture. ..Intentionally the project was going to be forestry logging but because of the importance of the resource, we would like to change that into a large scale agriculture project with the government giving approval for the Forest Clearance Authority to allow land to be used for agriculture . (Kapris at page 54 of the Transcript of Proceedings SABL 4-Wewak 13/02/12) The involvement of Tony Aimo, Gabriel Kapris is commendable, however the aspects of acquiring customary land for agro-forest project should be allowed to be processed independently from political manipulation and pressure, which undoubtedly came in the form of NEC Decision 08 of 2009. It is evident that the then Minister for Commerce and Industry and former Member of Maprik/Wosera sponsored the Statutory Business Paper on Nungwaia Bongos Integrated Large Scale Agriculture Project to NEC and the NEC approved for a project agreement to be executed between the State and the SPZ Enterprises PNG Pty Ltd (Developer) through a Foreign Direct Investment (FDI) the responsibility of the Department of Commerce and Industry compelling the key state agencies involved in SABL and related agro forest requirements to be directed including the application, registration and issuance of lease/lease back of customary land (DLPP), the issuance of Environment Permits (DEC), Certificate of compliance of large scale agro forest activity
751

(DAL), Forest Clearance Authority (PNG Forest Authority) and Import and Excise Tax Exemptions (IRC) Under the NEC Directive, the lead agency was Department of Commerce and Industry whose sole responsibility was to facilitate the project agreement and implement the directive. It is not known as to how SPZ Enterprises (PNG) Ltd was chosen by Commerce and Industry to be the developer of the Project. SPZ company profile and IPA foreign registration clearly indicates that it has experience in forestry and logging activities but clearly lacks capacity to undertake large scale agro forest activity in a huge area under SABL Portion 55C. The website address was only constructed in 2011 and lacks relevant details as to its operations in Australia and elsewhere. Department of Commerce and Industry The Department through Ministerial oversight involved in ensuring that SPZ Enterprises (PNG) Limited was nominated as the Developer of the project. The Department according to the Minister was tasked with the responsibility of assisting Papua New Guineans into business, setting up on industries into downstream processing of agricultural process. According to Mr Mera, the Department of Commerce and Industry is responsible for industrial projects upstream, downstream, for mining projects in the past, large agricultural projects, salt and Napa Napa Oil and in recent times, sectoral agencies have gone and taken sector projects which the Department supports and complements. Amongst these portfolio, the Department is involved when investors or the government ask Commerce and Industry in
752

economic corridor projects such as Nungwaia Bongos, which cuts across the southern part of East and West New Britain trying to connect and the Toriu Agro-Forestry project which cuts across the north trying to open up the northern corridor and the Drimgas Trans Papuan Highway linking Gulf, Central and NCD.. Recommendations The involvement of the Department of Commerce and Industry is very important and necessary for landowner involvement in large scale agro forest project. The functions of the Department involves assistance to landowner companies in gaining access to foreign developer who have the technical, financial, equipment and resources to embark on large scale agricultural projects as partners in a joint venture agreement. The Department involve itself in projects that were already processed through the NEC Decision for example, Nungwaia Bongos Large Scale Integrated Agricultural Project (ESP/Sandaun), Gre Drimgas Trans Papuan Highway project (Western Province/Gulf/Central/NCD), Illi Wawas Project as economic corridor projects (ENBP/WNBP) Changhae Tapiocca (CP) and Toriu AgroForest projects (WNBP) The Departments national function is to ensure that the right Developers are engaged through a transparent tendering process. The Department must cause due diligence on the developer in respect of their financial and technical capabilities internationally. The Department must support all business ventures operated by land owner companies in respect of SABLs rather than on the basis of regional or wantok system basis. There must be dialogue with all the relevant agencies of government where the land is customary land. That the involvement
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of the Department was lacking in some of the least developed provinces where SABL existed. (Kapris @ pages 55-57 and Steven Mera at pages of Transcript SABL 4-Wewak 13/02/12 respectively) The Departments portfolio and responsibilities under SABL would include 1 2. Registrar of Cooperative Society Foreign Direct Investment (FDI)

There is a need for transparency in the choice of developers. Awareness with Landowners as to the project and the requirement to engage a developer with the necessary capacity to develop agriculture projects. Call for international and domestic tendering process-with the involvement of the landowners and provincial administration. Inter-agency involvement with no political involvement, even where the landowner is a politician, there is a need to refer all matters through a transparent process. PROJECT AGREEMENT BETWEEN THE STATE AND SPZ

ENTERPRISE (PNG) PTY LTD (Document submitted to C.O.I. on 26th September 2011) The Project Agreement was executed on 16th April, 2009 between the State and SPZ. The Project agreement was cleared by then State Solicitor Mr George Minjihau, pursuant to NEC Decision 08/009.

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The Commission has not sighted any documentation to ascertain whether the Office of the Attorney General had undertaken due diligence and due regard in the preparation, consideration and advice to government on the legal implication of the agreement concerning a vast area of customary land, and to accept on face value the decision of the NEC. Grand Chief Sir Paulias Matane, Governor General signed for the State and Mr Peter Song, Chairman, SPZ signed for the developer. There is no reference made whatsoever to the landgroups and land owners of Nungwaia Bongos in respect of what was to be economic corridor project involving the Nungwaia Bongos and the Sandaun Province We set out some pertinent aspects of the Contract we consider in its entirety to be unfair and no doubt imposes obligations that is viewed as compelling to the State, all key government agencies directly involved in SABL process including the unsuspecting landowners whose involvement was virtually non-existent from the inception of the choice of the developer and the project agreement phase. a. The Agreement provides no specified period of time for parties to negotiate an option to renew agreement. The contract commenced retrospect to February 2009. (Clause 2-Commencement, Term and Project Implementation) b. The Agreement compels the State, the Provincial Government and the key state agencies to ensure that all necessary requirements are processed for the company to commence its operation on the project site.

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c.

The major scope of activity of the project was to harvest timber resources for export timber resources, provide agricultural and infrastructure improvements to the people of Ambunti/Drekikir District, Wosera/Gawi Maprik Districts and ESP. (Clause 2.2)

d.

The State is required under the Agreement to facilitate for SPZ environmental permit (DEC), lease/lease back arrangement over project site (DLPP), IPA Certification to SPZ for logging, processing, construction and sales of products associated with the project (IPA), written approval for large scale conversion of forest to agriculture and other land use under section 90A and 90B 0f the Forestry (Amendment) Act 2007 (DAL), approval for reforestation program (PNG Forest Authority), approval for wages and salaries in accordance with Labour Laws (Department of Labour and Employment) and Approval of Business Plan and Project Implementation Schedule (Department of Commerce and Industry) (Clause 3.and Schedule 1 of the Agreement).The state is required to fulfil these requirements for SPZ made subject to finalisation and execution of the Financing Agreements. The contract states The parties acknowledge that the condition in Clause 3.3 is for the benefit of the Company and that the company may waive such conditions. e. Clause 8.2 provides for the right of SPZ to export logs with specific directive that the State in its best endeavours should ensure that the Company has the right to export log from PNG resulting from the operation. f. Tax & Excise exemptions for capital equipment and other materials to SPZ in terms of the project. Most of the equipment relate mostly to logging activities. (Clause 8.6-Import Duty, Excise
756

Duty and Goods & Services (GST) Exemptions; Clause 9 Authorisations and Allowances & Schedule 2-Nungwaia Bongos Integrated Large Scale Agricultural Project List of Machinery, Equipment, Consumables and Permanent Fixture and Supplies for Excise and Duty and GST Exemption) SPZ was nominated as a developer but it has not produced its financial capability and expertise in developing the large scale agricultural project at Nungwaia/Bongos. The Agreement ensures that the State deliver on the agreement by ensuring that they have access to the forest, the land and unspecified term under the agreement to develop the Nungwaia Bongos agricultural project. No capacity or financial resources was provided by the company to the company to make a fair assessment on its capabilities. We are concerned that SPZ was acquired by Geoff Palmer under no known circumstances, and its CEO said in evidence that 100% acquisition meant that Geoff Palm would carry on when SPZ was acquired. This requires further investigation as the Commissions research on the website revealed that Geoff Palm was incorporated in Malaysia and its website was only constructed in 2011. The webpage contain very little information on the companys profile in the oil palm industry internationally. RECOMMENDATIONS We recommend that the Project Agreement be rescinded forthwith largely to the fact that it imposes an obligation on all the agencies of government whose functions and responsibilities are covered by their respective enabling legislation. The provisions of the Project Agreement contradicts the statutory obligations of the Departments functions to carry out independent assessment
757

and verification of the SABL process, hence major flaws have occurred in the underlying basis for customary land alienation under the SABL process. THE PRINCIPAL ARCHITECTS OF THE NUNGWAIA BONGOS PORJECT Mr Steven Mera, Secretary Department of Commerce and Industry (DC&I) The involvement of Mr Steven Mera as a facilitator of the project during the period 2009 to the present is relevant. Mr Mera gave evidence as the Departmental Head responsible for Commerce and Industry and confirms that he was appointed as a Departmental Head on October 2011. He denied any involvement with SPZ in any consultancy or managerial capacity. He was engaged by the Mr Kapris to facilitate implementation of the Project Agreement for the Nungwaia/Bongos Project. He states in evidence, My involvement with the Company SPZ is in my capacity as a Consultant to Commerce and Industry. The Minister then Honourable Gabriel Kapris and Honourable Aimo, I was already a Consultant in the Department when the Minister asked for someone to drive and deliver this project for the people of East Sepikthe then Secretary Kulit asked that I be assigned to deliver the project for them.(See page 71 of Transcript SABL 4 Wewak-13/02/12) Documentary evidence relating to environmental permit from Department of Environment and Conservation to C.O.I on 26th September 2011 contradicts Mr Meras contention that he had no direct involvement with SPZ in any capacity except through dealings as a Consultant for DC&I. This is also confirmed by Mr

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Moorthy in his evidence on oath that Mr Mera was employed as a Consultant to SPZ prior to his appointment as Secretary to DC&I Mr Mera participated in the Public Hearing on the Nungwaia Bongos Large Scale Agriculture Development Project of Ambunti-Drekikier held at Drekikier Station on 30 October 2009. He was referred to in the draft Minutes as Project Advisor-Department of Commerce and Industry. Mr Mera is referred to as SPZ Partner in PNG, Team Leader and Project Development Advisor. Obtained from the SPZ Company Profile annexed to the Environment Impact Statement dated 13th May 2010. DEC confirmed receipt of EIS on 8th June 2010. By letter dated 28th March, 2011 Mr Mera in his capacity as the Country Manager for SPZ makes a follow up on the Environment Permit Application submitted by his company SPZ. Mr Mera made presentation on SPZs Application for Level 2/3 Environmental Permit for Nungwaia Bongos Project at the Council Meeting held at Gateway Hotel from Friday 11 th February to Saturday 12th February, 2011. (Minutes of Environment Council Meeting No. EC 01/2011 at pages 2-19) The decision on the Approval in Principle was conveyed by Secretary DEC to Mr Mera in his capacity as Country Manager-SPZ on 11th March, 2011, Mr Mera at all material times was an active employee of SPZ in the Nungwaia Bongos project, which we deem to be constructive conflict as to his dual role as

759

both Advisor to the Department of Commerce and Industry and SPZ up to the time he was appointed Secretary in October 2011. At this point, the involvement of all the landgroups and landowners are minimal or non-existence except for the public hearing meeting held at Drekikier Station in October 2009 and the signing of the application to cancel the Forest Management Authority Agreement. Mr Gabriel Kapris The nature of his involvement reflects the lack of negotiating through the Foreign Direct Project would require the Tendering process and assessment, which undoubtely was not considered at Cabinet level. The Department role in business is commendable but it would have to consider amongst its oversight that acquisition of customary land process requires the DLPP involvement followed by proper assessment as to the type of project and landowner joint venture agreements with developers and not the state. That was not even considered, but it would in my view play a very integral role by assisting landowners identify foreign companies that have impeccable capacity both financially and experience to be considered in the SABL agro forest projects. Hon Tony W. Aimo, MP Member representing the Electorate and a landowner by birth right did not give him the mandate to ignore the other landowning group within the Nungwaia Bongos project site. The Bassei Landgroup in my view deserved recognition from the Mr Aimo by the very fact that they had initiated a feasibility study
760

which obviously was used in the Nungwaia Bongos lease/lease back scheme. It would have been beneficial if all parties mediated and negotiated on the best way to develop the district through the project. IPA The Investment Promotion Authority (IPA) is a statutory organization, established by an Act of Parliament in 1992, to promote and facilitate investment in Papua New Guinea. The IPA does this through various programs including the establishment and maintenance of a company/business registry, certification of foreign enterprise and promotion of investment opportunities in PNG. Findings The formation of Nungwaia Rainforest Management Alliance Limited Nungwaia Rainforest Management Alliance Limited (NRMAL) is a limited liability company registered in the Registrar of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. The Company was incorporated on 8th October, 2010 and the current principal place of business is Section 49 Allotment 08, Kreer Heights, Wewak, East Sepik Province. As at 2nd August 2011 IPA records confirm that it is operating. The company number is 1-76013. The latest IPA Company extract dated 2nd August 2011 indicate Wawaka Agro Commodities Cooperative Development Corporation as the major sole shareholder of NRMAL. The Commission was unable to verify the registration

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and incorporation of the Corporation and summonsed Mr Aimo 26 to provide details on the formation of Wawaka. In his evidence on oath, Mr Aimo told the inquiry that WAMAKAAgro Commodities Cooperative Development Corporation (Wawaka incorrectly named in the IPA Register) was the acronym for all the ILG villages that came together to form certain cooperatives combined as WAMAKA. The table below indicates the affiliation of the four (4) Cooperatives to WAMAKA as the umbrella ILG Cooperative a major shareholder in NRMAL.
Acronym of WAMAKA WA ILG Cooperative Society WASO WASMAFOKO Villagers No villagers named Wasambu Masalaga Waimenokor Daina Kubriwat 1&2 Tau 1&2 Bongos Wahaukia Kwiowerso Mamsi Sermburombo

MA KA

MAGAMBA KAMBAMINJI

Nungwaia Rainforest Management Alliance Limited (NRMAL) corporate structure indicates one major shareholder WAMAKA Cooperative Development Corporation (WAMAKA). WAMAKA is incorporated under the Cooperative Society (Amendment) Act 1985 and registered A Certificate to that effect was issued by the Department of Commerce and Industry. The Cooperative Society Certificate No. is 1574 and is dated 23 August 2010. (Refer to Affidavit of Tony W. Aimo and Certificate attached to the Affidavit dated 8 th September 2011 tendered as Exhibit TA1) Despite Mr Aimos explanation to the Inquiry, there was insufficient information disclosed to the Commission as to the composition of the
26

Transcript of Proceedings SABL 4-Wewak 13 February 2012 @ pages 104-105.

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Directorship of the Cooperative, its shareholding and the purpose for its establishment. The Commission was unable to obtain further information from the Registrar of the Cooperative Societies. We understand that the incorporation of Cooperative Societies will empower rural communities involvement in high impact project, similarly for those incorporated as landowner companies under the Companies Act. We find that there was insufficient information on the formation of the Cooperative Society pursuant to Cooperative Societies (Amendment) Act 1985. There are no records produced on the composition of the Executives of the Society namely Directors and Shareeholders, the Address for service. The extract discloses that the Directors of NRMAL comprise of eleven (11) men resident in either Port Moresby NCD or East Sepik Province with one Director resident in Madang. The Directors whose residential addresses are at NCD include Tony Watarepu Aimo, Charles Kundi, Paul Asahand, Joseph Koi, Gabriel Yombonga Kwaato, Kepas Taloh, Herman Masimbor and Paul Asahand. The Directors resident at East Sepik include, Beno Patric (Waringeme village, Maprik), Alois Moilem (Tau One village, Drekikir), Issac Wrongkalm (Baklo village, Drekikir), and Herman Masimbor (Wewak). Mr Paul Adam resides at Madang. Mr Joseph is the Company Secretary and is also the company lawyer. NRMAL in its formation as title holder of the SABL may not truly represent the interest of the 30,000 landowners living within SABL Portion 55C. The table below indicate that the names of the Directors are not specifically stated in the relevant pages of the Land Investigation Report, rendering serious questions as to the shareholding and directorship of a landowner company.

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Table below indicates the current Directors of NRMAL and references to names appearing under the specific village/ILGs as shown in the LIR and the Lease/Lease Back Agreement executed between the landowners and the State on 3rd March 2010.
LIR (page 2 Para 4-Ownership) LIR (page 7 Declaration of Custom in relation to Land Tenure) LIR (pages 8-9This Form-After Declaration of Custom in relation to Land Tenure) Lease/Lease Back Agreement State & LOs (Agency)

Name

Village

Tony W Aimo Beno Patric Alois Moilem Issac Wrongkalm Paul Adam ito Charles Kundi Paul Asahand Joseph Koi Gabriel Yombonga Kwaato Kepas Taloh Herman Masimbor
Key

Waimenokor& ILGs as temporary Overseer Waringema, Maprik Tau One, Drekikir Baklo, Drekikir Bongos Aplatak, Drekikir Yubanakar, Drekikir WASO Musandal, Drekikir

Denotes name appears in either LIR or Lease/Lease Back Agreement Denotes name missing from LIR or Lease/Lease Back Agreement

Documentary Submitted to COI by NRMAL In documents delivered to the Commission on 26 September 2011 Nungawa

Rainforest Management Alliance Limited has made some submissions as to the procedures it has pursued to ensure the registration of the SABL. They submit the following: (i) that the SABL has effectively mobilised customary land through the title acquired by the Umbrella Landowner Company, being NUNGAWA Rainforest Management Alliance Limited. (ii) that the NEC recognizes Bassei Oil Palm Project in the Nukuma area is an integral part of the Nunwaia/Bongos Integrated Large Scale Agricultural Project

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(iii)

that a 1996 Forestry Management Act (FMA) did not adequately cater for the development needs of the majority of people and that the current project initiated did

(iv)

that through landowner consultation and compliance with Agriculture certification, Environmental permits applications process having been completed and permits issued the prerequisites for and Forest Clearance Authority have been completed.

(iv) (v) (vi)

however at this stage the Agriculture project can progress on savannah or grasslands that the Umbrella Landover company has shown its commitment by advancing K1,000,000.00 as seed capital to the company that an inaugural Board of Directors meeting was held on 13 August 2011 where in 9 directors were endorsed, 7 Board of Trustee members and other agendas for approval, a reminder that the company was incorporated 8 October 2010 and had been holding itself out as representing landowner interests up till that point, all this after the granting of the SABL before this inaugural Board meeting.

SPZ Enterprises Proprietary Limited of Australia SPZ Enterprises (PNG) Proprietary Limited is a company incorporated in Australia. On 14 December 2007, it was registered by IPA as an overseas company under the PNG Companies Act 1997. The company number is 361721. On 27 August 2008, IPA issued Certificate Permitting SPZ as a foreign enterprise to carry on business in the activities of Forestry, Logging and Related

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Services (IPA ISIC Code 0200). Its place of business on the Certificate is Section 49 Allotment 39 Kreer Heights, Wewak, East Sepik Province. The Commission notes that SPZ Enterprises (PNG) Limited was the preferred developer in a major government decision in 2008 on the Nungwaia-Bongos Integrated Agriculture Project over the SABL Portion 54C. The Company profile annexed to EIS submitted to DEC for environmental permit, SPZs previous work undertaken in PNG and elsewhere disclose its activities in PNG, Logging operations in Korombe Timber Area in East Sepik Province, done on harvesting of timber for construction of a road where 6,000 m3 of hardwood timber was harvested and shipped to markets, Ivanika Timber Area, Central Province project to begin 2010 Nungwaia-Bongos Integrated Large Scale Agriculture Project Yassip (ESP) Paup (Sandaun) Road Line Timber Permit for NungwaiaBongos Project. The SPZ Profile indicate that company has minimal or lack the experience and capacity of a reputable international company developer in the NungwaiaBongos Project and the role it played in entering into a major agreement with the State is questionable. The inquiry is very critical in the choice of the developer having the experience and funding capacity to fund the agriculture project. The Commission search on the SPZ Enterprises on Google fail to disclose any details on the operation and activities of the company in Australia. A search on the Geoff Palm Limited website http://www.geoffpalm.com refers to SPZ
766

Enterprises Limited as a subsidiary company of Geoff Palm Limited whose address is with very little information on the operations and activities of the company. The C.O.I notes that SPZ had undertaken the following 1. Payment of K1million advance rental to NRMAL 2. Road construction from Nahana junction to Masalaga grassland where the Nursery Oil Palm seedling is located. 3. Logging activity under Roadline TA approved by the Provincial Forest Board. GEOFF PALM LIMITED Mr Suriya Moorthy (SABL 5 Wewak-14/02/12 @ pages 51-), Chief Executive Officer of SPZ Enterprises Pty Ltd told the inquiry that Geoff Palm Limited acquired 100 percent shares of SPZ Enterprises Pty Limited in May 2011 The financial provider to the Nungwaia Bongos Project will be made by SIVA Group of Companies especially through its associate Biopalm Energy Limited. The SIVA Group website http://www,sivagroup.in/groupcompanies/biopalm-energy.aspx states the BEL has been focussing on developing green-filed oil palm projects and acquiring existing palm plantations in Africa [mainly Liberia, Sierra Leone, Cote divorie, Democratic Republic of the Congo, Cameroon and Mozambique], Asia [Indonesia and Papua New Guinea] and South Amercia. According to RSPO website details Geoff Palm Limited is involved as producer and exporter of oil palm and has acquired oil palm plantations in Sierra Leone, Democratic Republic of Congo, Cameroon, Indonesia and recently Papua New Guinea. The geographic ambition of the company will be

767

facilitated by the use of economies of scale, strong local partnerships,the local community. (see website http://www.rspo.org/en/member/1147). The following detail relevant to the Commission on Geoff Palm was obtained from the website, given the fact that the Commission was unable to confirm details of Geoff Palm in PNG through the Office of the Registrar of Companies. The companys registered address Tiara Labuan, Jalan Tanjung Batu, 87000 F.T. LABUAN, East Malaysia Communication ON 25, NORTH TOWER, SINGAPORE-048583 Malaysia. Geoff Palm has a number of holding and subsidiary companies namely; Holding Company: Broadcourt Investment Ltd Subsidiaries/JVs/has stake in Sier African oil Palm Limited, SPZ Enterprise Pty Ltd, Sierra Leone Agriculture Limited, Biopalm Energy Limited, PT Citra Palm Developments Ltd; Dekel Oil and Feronia Inc.) The Director is one Premalatha Chaderasekar who is the representative of the company. Roundtable Sustainable Palm Oil It is a member of the Roundtable Sustainable Palm Oil (RSPO) and our search on the RSPO webpage confirm that it applied for RSPO membership on 26th December 2012 and approval was granted on 8th February 2012 making it a full member of RSPO (Registration Number LL07798 and Membership number 1-016-12-000-00). The RSPO requirements can be applied only where there is a JV Agreement or an Agricultural Sub-lease agreement that will provide the landowners with the
768

right to terminate where there is a breach of the Sub-lease provisions or the project operator is unable to undertake its obligations under the Agreement. The RSPO requirement must become a prerequisite for any engagement of oil palm developers. (See Aimo and Moorthys evidence on this requirement) Advance of K1Million to NRMAL by SPZ An advance of K1 million was deposited by SPZ into the NRMAL ANZ Account as seed capital. The arrangement for the advance credit facility to NRMAL means that within 10 years, SPZ would recover that amount through annual rental and land utilised for agricultural activity. (See evidence of Moorthy) Department of East Sepik Province The Department of East Sepik Province is the bureaucratic arm of the East Sepik Provincial Government whose primary role it is to facilitate government policies and directives through the work of its divisions of which the Lands Division is an important one. In the issuance of the Nungwaia Rainforest Alliance Management Limited SABL a formal Land Investigation Report (LIR) conducted by the Lands & Physical Division of the Department of East Sepik Province. Findings Land Instruction No. 05/2010 was issued to Provincial Customary Leases Officer to conduct Land Investigation for NBILSP. Mr Lazarus P. Malesa, Manager Acquisitions issued the directive by way of letter dated 11 th

769

November, 2010. That letter was copied to the attention of Mr Aimo MP as Minister for Correctional Services. Mr Peter Yapog, the Senior Customary Lands Officer, DESP was directed by DLPP to confirm that no other leases existed over the subject land and was still a customary land covering an area of 110, 415 hectares; and to conduct awareness on lease/lease back process prior to conducting the Land Investigation. Mr Yapog in evidence said that the awareness and land investigation was conducted within a period of two weeks. The LIR was signed by Mr Yapog on 22nd November 2010. At the commencement of his investigation he put out a radio message which was relayed by Radio Central Sepik Station (Maprik) informing all the villages located in the Gawange LLG Area of Ambunti/Drekikir District, North Wosera LLG Area of Wosera/Gawi District and Bumbita-Muhiang LLG Area of Maprik District to attend to verify the ILGs and the land investigation at four central locations within the project site. By this he assumed that the majority consent required was confirmed The Land Investigation Report contained the following information The villages comprising Yumbagor 1&2, Apangai, Masalagar, Kubriwat 1&2, Wahaukia, Asanokor, Asa Kapa, Bongomasi, Tau 1&2, Waimenokor, Apos, Inokor, Apeku, Kuyor, Mamsi, Sermbuombo, Ujeli Sauke, Kuartengisi, Bongos, Daina, Musendai, Wasambu, Kuanga,Nungwaia, Jipako, Jambtanget, Apambi and Wapindua did not truly reflect other villagers/landgroups within the area. The Schedule of Owners, Status and Rights to the Land does not contain any names of landowners and agents.
770

 In terms of Alienation, the landowners were willing to lease the land for a period of up to 99 years. The Certification as to the agreement to sell/lease the land to the State is incomplete without any names of landowners but Mr Yapog certified. There are 58 people who have signed under the Declaration of Custom in relation to Land Tenure. This is far less than the estimated population of 30,000 people. In addition to the 58 people who signed the Declaration of Custom in relation to Land Tenure, a full page of names of Chairman representing the 304 ILGs is shown at pages 8 and 9 of the LIR agreeing to transfer their rights to the State. The certification by Yapog with reference to the signatures of the Chairman is misleading. The report only contains the names of the individuals and no signatures can be verified. Mr Yapog signed that declaration on 22nd November 2011. He later corrected it in evidence by stating that it was signed in 2010. Mr Yapog certified that he walked the entire 110,000 hectares in company with all the chairman and agents of the 308 ILGs on 22 nd November 2010. Even if Mr Yapog did process the investigation over a period of 10 days, it would be impossible to walk the entire land boundary in one (1) day. Mr Anisis evidence confirm that Mr Yapog failed to carry out the boundary walk, meaning he lied under oath The Recommendation as to Availability (sic) (should read as Alienability) was signed at Drekikir Station on 3 rd March 2011 by Mr Wandoi Sawang, District Administrator. There was no due diligence conducted hence, the LIR is incomplete and that the issue of majority consent has not been properly addressed.

771

 No reservation was made for customary rights to continue over the land. Mr Yapog forgot to include the provision for reservation. The Commission also notes that the Instrument of Lease for Customary Land under section 11 of the Land Act was also executed on 3 March 2011 by Mr Pepi Kimas as Delegate for the State and 10 purported landowners and Chairman of ILGs in the presence of Mr Peter Yapog According to Mr Yapog, the LIR was rushed because of the project agreement and the NEC Decision on the SABL process. The following is an extract of the evidence, A. It was- this report was done because we need to speed up because it was a NEC project and I was under pressure here to fast track these land investigation, THE COMMISSIONER: Under pressure by whom?

A.

It was a NEC approved project central project, that project up there. So I got instruction direct from the Department of Lands and that I have to---

INCORPORATED LAND GROUP Mr Yapog was supplied with the list of ILGs who consented to the Forest Management Authority Agreement in 2006. The original ILG list comprise 230 ILGs comprising Yabankor 2, Apangai, Nungwaia, Jipako, Jambitange, Apambi, Wapindumaka, Daina, Kuanga, Masalagar, Kubriwat 2, Whaukia, Pelinanou, Yakrumbok, Bongomasi, Moireng Bonahoi, AposInokor, Emul,

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Musumblem, ImBras Tumam, Musendai, Luwaite, Nyambole, Musingwik, Alawinge and Musenau. When the FMA Agreement was cancelled, a supplementary list of about 157 ILGs was added to the original list of 230 ILG totalling 287 ILG. That list was used by Mr Yapog as a means of completing his task with ease. He did not undertake any due diligence or independent assessment on the expectation and wishes of the people. If Mr Yapog had diligently performed his investigation without undue pressure from Waigani and political leaders, he would have identified the Bassei Landgroup scheme, Mapsera existing SABL lease and the objecting landgroups whose intention was for a proper awareness to be made prior to the registration and issuance of the SABL title. The FMA Agreement was cancelled and does not exist for the FMA surveyed area and the 157 ILGs that consented for the FMA in 2006. It was evident that the majority consent of the landowners obtained in 2006 adopted by Yapog to complete his report as to the majority consent for the Nungwaia Bongos Project. He did not conduct any independent verification on the individual ILGs but included the 2006 consent to facilitate statutory requirement pursuant to Section 11 of the Land Act. The evidence and records produced also indicate that that following villagers which was listed under the Nungwaia-Bongos SABL namely Apangai, Nungwaia, Jipako, Jambitanget, Masalagar, Apambi, Wapim Dumaka and Kuanga, have aligned themselves Mapsera Development Corporation, SABL Portion 54C. This means that the ILG verification exercise was misleading and did not fulfil the requirement for majority consent pursuant to section 11 of the Land Act.

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The evaluation of the processes and procedures for the registration of the customary land and the issuance of the Special Agriculture and Business Lease did not follow the due process. The provincial lands officer did not consult the various clan members and securing their consent to register the customary land. Two weeks is very limited time to cover the area and complete the tasks. The lands inspection report is financed by the open Member for Ambunti Drekikier Open Electorate and it is difficult to ascertain the integrity of the professional job against the influence of the interested party to conduct the free fair land owner consent to land registration. There is also lack of evidences of genealogy studies as the process of establishing the various clans and the agreements between clans for the registration of the Incorporated Land Groups (ILGs) which are conducted by different professionals than the lands officials. The clan land investigation and verifications reports conducted by the provincial customary lands registration officer in the province and his counterpart in Port Moresby are incomplete and suspects. There was no field survey conducted by the Division of Lands and Physical Planning in the East Sepik Provincial Administration to establish physical boundaries and demarcation marks between the various clans and villages .The Grade 4 surveyors advice is based on establishing coordinates from maps in the office without physical boundaries marks on site and therefore this procedure for establishing land boundaries between clans is flawed. Recommendation That the SABL be revoked pending a fresh LIR to be re-conducted by the Department of East Sepik Province with the walking of the boundaries and certification as to ownership by custom.
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That Mr Peter Yapog and Provincial Customary Lands Officer attend a training workshop to be run by the DLPP for the purpose, and Provincial Administrator be reminded as to their respective roles regarding SABLs and to be re-educated and reinforced as necessary regarding proper conduct of LIRs. DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) Findings No Certificate of Alienability was issued under the hand of the Custodian of Trust Land in accordance with section of the Land Act. Recommendation That freshly conducted LIRs be provided to the Secretary of Provincial Affairs as the custodian of customary land for issue of certificate of Alienability. DEPARTMENT OF LANDS AND PHYSICAL PLANNING The Department of Lands and Physical Planning processes SABLs under two main legal criteria prescribed under the Lands Act Chapter 5 (the Land Act). The relevant provision referred to are sections 10 and 11 of the Act and section 102 of the Act. REGISTRAR OF TITLES FILE There was no file produced however a title document was produced upon direction by the Commission. An SABL title document was produced signed on
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the 12 April 2010 by delegate of Minister Mr Romilly Kila Pat, Deputy Secretary Customary Lands Division. There are no record of subleases recorded on the reverse of the title document produced. Chronology of the NLD Volume 19 Folio 14 Files produced to C.O.I. The NLD file is incomplete to a certain extent; the following are on file; An Application form or Tender Form was completed and signed by one A Aimo and dated 02 March 2011. The Receipt Docket shows that the payment of the Application was made on 7 March 2011. The Commission is critical on the late receipt and endorsement of the application form by DLPP as it does not correlate to the administrative process for SABL. This is the very application that should form the basis for the SABL process. This application was submitted after the LIR was completed by Mr Yapog on November 2010, the lease/lease back agreement between the State and NRMAL and prior to the issuance of the Title to NRMAL on 19th April 2011. DLPP basically failed to insist on the Application as a means of processing and vetting the application prior to issuance of Land Instruction Number and the Land Investigation process Mr Lazarus Malesa, Acting Manager Customary Leases issued the Land Instruction Number by letter dated to Division of Lands and Physical Planning, Department of East Sepik Province. Correspondence dated 18 May 2010 referring to a supplementary ILG agreement signing from Member for Ambunti-Drekikir. In the letter he states that the project area has some 380 ILG Chairmen. In this letter the MP asks that the Forest Clearance Authority be granted to SPZ Enterprises (PNG) Attached are the signatures of what appears to be relevant ILG Chairmen.

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Land Investigation was conducted by Mr Peter Yapog and a report was compiled and submitted to DLPP for lease/lease back agreement, registration and issuance of SABL Title. The Certificate of Alienability wrongly worded as the Certificate of Availability (sic) was signed by the District Administrator on 03 March 2011. A Minute from Mr Andie Malo, Director Customary Leases to Secretary DLPP via Deputy Secretary (Customary Lands) states that the documents lodged have complied with DLPP requirements; the Minute was dated 24 March 2011. Mr Romilly Kila Pat sighted and agreed with contents on 29 March 2011 and Secretary signed on 04 April 2011. We however note the lack of due diligence and ignorance of DLPP in the preparation of the Lease/Lease Back Agreement Instrument of Lease/Lease Back Agreement includes a list of ILG Chairman and the appointment of Agents to sign on behalf of NRMAL/Landowners. We find that the consent of the landgroups/individuals within the clans/landowners in the normal process agree to and appoint an Agent in the Land Investigation stage. The inclusion of that list does not reflect the true consent of the people over the agents nominated to sign in their behalf. (Refer to Clause 2.0 of the Instrument of Lease/Lease Back Agreement dated 3rd March 2011 That is also a crucial lapse in the SABL process rendering the consent obsolete. We are critical on the misleading information presented to the delegate by Mr Malo resulting in the execution of the Agreement (section 11) and the gazettal of the Notice of Direct Grant (section 102). The Notice of Grant was then issued on 04 April 2011, signed by Pepi Kimas then Secretary of DLPP, with 10 men, only 2 of them being shareholders of Nungawa Rainforest Management Alliance Limited, its not clearly indicated which ILGs these men were representing although names and clans are, and it
777

appeared that Mr Noah Gremernge signed as Chairman for ILG 5684 Lah Ngaivgjnoh ILG and ILG 6327 Glemin ILG of Tumam Village indicating basically representing 2 villages and his signature appears against those two ILGs. The document was signed by Secretary Pepi Kimas and witnessed by Peter Francis Yapog, Andie Malo the other witness did not sign. The document was dated 03 March 2011. This is well before the s102 notice date, and the minute approving the issuance of the lease-leaseback instrument. It is however the same date as when the Certificate of Availability (sic) Alienability was signed by the District Administrator. We take note of a letter of Objection dated 05 April 2011, received 06 April 2011 by DLPP from Wesley Tiama Ward 12 Member Ambunti LLG, as well as 9 other individuals from various villages in Drekikir. They objected strenuously to the issuance of the SABL for various reasons the mainly being a lack of genuine landowner consent and awareness. At that stage a lease had been issued, however DLPP has been assured by Nungwaia that the landowner issues were being dealt with DLPP failed to take note and act on the objections by the landgroups. The details on the objections to the SABL is discussed in this report. Mr Pepi S. Kimas and Mr Simon Malu was not able to provide any further explanation of this aspect of the inquiry. Recommendation The procedures and processes for the issuance of the SABL to the customary landowner company are flawed because the land investigation and verification reports were carried out without due care and did not allow consultation and the
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consent of all the customary landowners. There is also lack of evidence of the ILG registration and verifications processes and procedures. DEPARTMENT OF AGRICULTURE AND LIVESTOCK Pursuant to Clause 3.2 (e) of the Project Agreement the obligation of the State to fulfil its obligation to SPZ was to "(e) application to the Department of Agriculture and Livestock for the written approval of Forest Clearing Authority (FCA) for large scale conversion of forest to Agriculture or other Land Use under section 90A and 90B of the Forestry Amendment Act 2007. Several documents tendered to the C.O.I by DAL were not sufficient to determine how DAL approvals were granted. Agriculture Sublease Agreement The decision to enter into the sublease agreement was not endorsed by the shareholders of NRMAL in accordance with the Companies Act/Cooperative Societies Act respectively. The terms and conditions of the Sublease Agreement tend to be most favourable to the Developer. The following condition on the lease deemed as unfavourable are, (1) The Agreement was signed between the parties at Port Moresby on 20 May 2011. The lease is for a period of ninety-nine years commencing 3rd March 2011 (Schedule Item 6) and
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(3) Advance rental of One Million Kina (PGK 1, 000,000) to be paid to the landlord within 15 days of the execution of the Agreement (Clause 2(c)) (4) o K 1,000,000 was paid to NRMAL by ANZ Bank Cheque # 0013354773 dated 8th June 2011 on account of SPZ Enterprises Ltd. Mr Moorthy told the inquiry that this was seed capital to assist the landowners. It is in fact advance rental for ten (10) years recoverable over the same period of time commencing first year of rent. o Schedule Item 7 (Rent for Term) of the Agreement stipulates that US$2.00 (United States Dollar Two Only) or the equivalent in PNG Kina per hectare per annum on Planted hectares27. (3) Clause 8 (Use of Land) - The Landlord (Landowners), its servants or agents interfere with the use and management or with any aspects of the land where the Tennant plants, grow and harvest oil palm. This is a restriction on the customary right of access to creeks, sacred burial sites, hunting grounds and so forth. (4) Ownership of Oil Palm remains the property of the Tennant. If the lease is to be terminated by the Landowners, then compensation for tenants loss will be borne by the Landlord including amounts made of Tennants projected profit from the harvest of oil palm for the duration of the agreement.
27

Planted hectares means that area of the Land within the Sub-leased portion, measured in hectares, on which the Tennant plants oil palm, builds roads, drains and construct buildings, facilities and residences necessary for the development of the plantation. Refer to Clause 21 (e) (Interpretation) of the Agreement.
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Certificate of Compliance for Large Scale Conversion of Forest (Form 235 of Forestry Act) The C.O.I sighted a Signed Certificate of Compliance for Large Scale Conversion of Forest to Agriculture in Form 235 dated 3 September 2009. This was followed by a public meeting held at Drekikier Station on 30 th October 2009 with the Provincial Administrator, DAL team and others where at least 25 persons spoke concerning the project. The draft Minutes of the Meeting fail to raise awareness with regard to the need for land to utilise customary land and resources for agriculture and business project. The only fact was that the meeting only endorsed the consent to terminate the FMA for FCA which would require the use of customary land, and that was not mentioned at that meeting. The Forest Participant has not been granted to the landowner company NBRMAL and the developer as yet. In a letter from PNGFA dated 8 February 2010, to Chairman of SPZ Enterprises (PNG) Ltd Mr Steven Mera asks that a Certificate of Compliance for Large Scale Conversion of Forest to Agriculture in Form 235 under the Forestry Act be provided under cover of letter. The Approval for Large Scale Conversion of Forest to Agriculture or Other Land Use Development was approved by the Secretary for the Department of Agriculture and Livestock on the 3rd of November 2009 without the detail development and a map of the proposed project area The C.O.I. is concerned SPZ failed to provide to DAL a detailed agricultural development and business plan, implementation schedule plan and the costs
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benefits analysis. The procedure referred to in the evidence of Francis Daink (--), Secretary (Anton Benjamin) and Leka Mou (SABL 29/02/12 at page 12), was not followed in the Certification for PNG Forest Authority to endorse FCA application. In fact the lease/lease back process was commenced by DLPP in November 2010 and the approval for FCA was made by DAL right after the public meeting. The C.O.I. has also sighted correspondence written on behalf of SPZ by DAL Secretary to Secretary, DEC to give favourable consideration to their application for environmental permit. (See letter dated 9 th September 2009 Anton Benjamin/Dr Wari Iamo) Mr Joseph Wohuinangu who was the C.O.I.Agriculture Advisor visited the project site on the 12th of February 2012 directed the investor and project proponents to submit the detail agriculture development plan and the investor did not comply. The evaluation on the agricultural and business component of the Oil Palm project on site raised a number of serious aspects to the approval process by DAL. There is no detailed plan for the palm oil palm production, proces sing and export with schedules for production, processing and the costs and return analysis with road and transport infrastructure to support the establishment of palm industry .These information are contained in Form 223 and submitted for approval and certification by the Secretary for the Department of Agriculture and Livestock under the Forestry Act 1991 with other relevant particulars prescribed within the Act. There was no application submitted to the Secretary for the Department of Agriculture and Livestock for evaluation and approval of the business plan for
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the development of agriculture project. A detailed development plans showing the precise areas and proposed rate of harvesting to be carried out to coincide with the rate of planting of the cash crops and successive land use with the startup and completion dates. In the plan there would be costs schedules for the development of the plantation with a guarantee from a bank or financial institution to ensure that the full costs of funding of the project will be available to the applicant. There will be a map with the description of the project area showing any areas of slope in excess of 30% or any areas which are unsuitable for agriculture or other land use development and any areas important for conservation. There will be a report verifying the ownership and the consent of each resource owning clans within the project area which has been signed in the presence of a village court magistrate in the prescribed form. That report was not submitted to the C.O.I and we are of the view that there no such report existed. There is an NEC Decision approving the importation of inputs without tax for the development of oil palm which sets bad precedents for development of agriculture projects in the country. Without detail agriculture development and compliance to the statutory requirements for development of the agriculture and forestry in this country creates suspicions about the integrity of the investor to develop the oil palm industry. No Land Use Plan for the Area Crop farming as business is firstly based on the land use plan which determines the potentials for crops and livestock for investment in a given area/district. There is no land use plan for the Ambunti /Drekikier District and the project area and therefore it is difficult to determine the areas that are suitable for crops and livestock production and processing.
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No Soil Suitability Assessment Soil Survey is a detail study to determine the plant nutrition requirements which would contribute towards the input costs for the agriculture investment plan .There is no soil suitability assessment report therefore it is difficult to assess the agriculture projects and plans, input requirements and the areas that would be planted with oil palm . Feasibility Study Feasibility study should be next step to confirm technical, economics and financial requirements for the establishment commercial farming business. Based on the outcome of the feasibility study an investment plan would be drawn and submitted to the government and a developer/investor. In the forestry projects this processes is undertaken through under the Development Option Study within the provisions of Section 62 subsection (2) and (3) of the Forestry Act 1991.There was no feasibility study cited in the information provided about the Nungwaia Bongos SABL to the COI. Therefore this project is being developed without technical scrutiny from the relevant processes and procedures established within the Department of Agriculture and Livestock and the related Government Statutory Agriculture Agencies in PNG. With the acquisition of SPZ Enterprises Limited by Geoff Palm Limited, there is a need to submit new agriculture plans for Oil Palm project. Francis Daink

784

Mr Daink was instrumental in facilitating the meeting at Nungwaia/Bongos knowing full well that the land was under a FMA Agreement and hence, the people present lacked understanding that the cancellation of the FMA automatically meant that their consent for FMA also terminated. What was found wanting was that the meeting failed to address the primary aspects of FCA required acquisition of customary land under an SABL for high impact agricultural project. The presentation made during that meeting failed to inform the landowners on the advantages and disadvantages of SABL and with the important stakeholder DLPP absence that meeting failed to achieve that intended purpose. All it created was state of confusion within the landowners of the project site. He played an integral role in the issuance of the certification for conversion of forest to high impact project to the developer SPZ without considering a detailed agriculture plan, implementation plan and the financial input from the Developer. The basis for the approval by DAL was the public hearing held at Drekikier Station in October 2009 which was co-chaired by Mr Daink. Mr Tony Hobiago, the Agriculture advisor to the Department of East Sepik Province also expressed grave concerns on the capacity of the developer on the project. These concerns were raised with the relevant authorities with no action taken. Recommendations There is no detail agriculture development plan and approval of the certifications processes by the Secretary for the Department of Agriculture and Livestock. Thus the issuance of the sublease to the SPZ Enterprises (PNG) Pty Limited is flawed. Therefore the SABL sublease to SPZ Enterprise should be
785

revoked and the processes through which the shares of SPZ Enterprise (PNG) Pty Ltd were sold to Geoff Palm should be investigate to direct the latter to comply with the government statutory requirements for establishing oil development project. After the completion of the above processes the agriculture investment company will hire a logging company to harvest the forest and clear the area that was proposed for large scale agriculture and other land use development projects. There are very good examples of customary land being used for the development of oil palm in West New Britain that the experience could be drawn from to facilitate the planning and development of agriculture business plan under the SABL. In PNG the logging companies have never developed large scale agriculture development project after the large scale forest clearance. Therefore the customary landowner companies should be negotiating the joint venture agreement with an investor that have the capital for financing and management expertise for developing large scale agriculture and other land use projects under the sublease agreement of the SABL. PNG FOREST AUTHORITY There was no PNG Forestry file produced, mainly due to the fact that there is no Forest Clearance Authority issued over this SABL. However there have been correspondences sighted on other interested persons documents submitted and the PNGFA will need to provide all relevant correspondence in the ongoing assessment of the FCA which is underway by them. SPZ Enterprises (PNG) Limited is recognised by PNG Forest Authority as a Forest Industry Participant. Certificate F102183 was issued on 8 July 2008, but there is no evidence of renewal of FIP with PNG Forest Authority.
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Licence to engage in forestry related activities in the East Sepik Province for a period of 12 months with effect 24th September 2008 to 23rd September 2009 was issued by PNG Forest Authority. No further evidence was produced to indicate whether any renewal was made for the period 2009 to present. RECOMMENDATIONS No Forest Development Plan There is no development plan for the harvesting of logs and either processing into timber and export as logs or utilization of the timber products. There appears to be lack of compliance to Section 90B for Forest Clearance for large scale agriculture and other land use development on the Nungwaia Bongos Agro-Forestry Project. There are no evidence of the five year and annual logging plans for the area. No FCA to be issued pending a complete review of the LIR and the ILG process. SPZ and Geoff Palm to submit detailed plans on the oil palm Plantation. DEPARTMENT OF ENVIRONMENT AND CONSERVATION All documents lodged before the granting of SABL, Ministerial approval in Principle was granted 11 March 2011, 8 days after the grant of the LeaseLeaseback document 4 March 2011 and the granting of the SABL proper on 19 April 2011. i) Initial step by the developer SPZ to issue a Notice of Preparatory Work for Level 2 and Level 3 Project document dated 19th July 2009 was lodged 9 September 2009. It was noted that Mr Mera stressed the importance of the NEC Decision and Project Agreement being the

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driving force behind the need for environmental permit to be issued to enable work to commence on the project site. ii) iii) iv) v) The proposal stated that it intended to log 10,000 hectares 5000 hectares of which would be developed for cocoa estates. The Environment Inception Report document dated January 2010 was lodged 23 March 2010 for assessment and consideration. The process of assessment led to the Environment Impact Statement (Level 2&3 Activity) dated 13 May 2010 being lodged 27 July 2010 The Environmental Council deliberated and recommended Approval in principle on 25 February 2011 The Documents submitted to DEC indicate that the logging component will precede the agriculture component within the forested area. (Refer to Environment Inception Report January 2010 and Environment Permit dated 25 th March 2011). The C.O.I is critical that this process was actively pursued by the SPZ before the granting of the SABL title proper on 19th April 2011. We also note that inter-agency coordination of major impact projects on customary land are completely non-existent resulting in the issuance of permits and other Certification, This project documentation and approvals requires collaboration with DLPP, DAL, PNG Forest Authority and DLPP. The environment permits were issues on the 29 April 2011 for waste discharge and water use. RECOMMENDATION The submission of all the application for Environmental Permit was done prior to the issuance of the SABL Title to NRMAL. It is highly unlikely that DEC

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conducted environmental assessment although it was obvious that the developer provided detailed submission to DEC. DEC should undertake a major review on the operations of SPZ in the Nungwaia Bongos SABL Project site to verify if any level 2 and 3 environmental impact concerns are present. No application for environmental permit should be allowed unless all prerequsitie and appropriate dialogue in terms of leased/lease back, detailed agricultural plan, business paln and costing and the implementation schedule are approved consistent with relevant legislation. DEC should liaise directly with other government agencies in this regard rather than basing their assessment on the documents submitted by the Developer. The environmental permit was granted to the developer SPZ Enterprises (PNG) Ltd, for Large Scale Forest Clearance and conversion of the land into large scale development of oil palm, cocoa and other commercial crops under section 90A of Forestry Act of 1991, on the 29th of May 2011 and will expire on the 26th of May 2061. A new oil palm development company Geoff Palm International bought out the shares of SPZ Enterprise (PNG) Pty Ltd in this project and the latter and will invest in the development of oil palm only in the same area within the vicinity of Nungawaia Bongos. There should be a separate environmental impact statement for the development of palm oil project. OBJECTIONS RAISED BY THE LANDOWNERS AND LANDOWNER CORPORATE ENTITIES The objections basically was for NRMAL to draw attention to the very fact that SABL Portion 55C overlapped into other existing landgroups customary land, the need for these groups to establish their own projects within their ILG groups
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and need for NRMAL. These objection are valid and need for collaboration and understanding was not reached by all concerned, hence the disputes. WESLEY TIAMA WARD 12 MEMBER AMBUNTI LLG FOR AND ON BEHALF OF VILLAGES OF HAMBUKEN, GUMANJUWI, HOLAMBOR AND AKAMAU VILLAGS OF AMBUNTI LLG Submission received by Commission, 23 August 2011, undercover of Statutory Declaration dated the same day signed by Wesley Tiama Ward Member of Ward 12 representing the Hambuken, Gumanjuwi, Holambor and Akamau Villages, Ambunti LLG. They made the following submissions:i) ii) iii) iv) v) vi) There was no proper landowner consultation and consent from them regarding the Survey Plan and the Land Investigation Report(LIR) That landowners that signed on the LIR were not representatives of their communities That objection had been raised at a DAL Public Hearing on 30 October 2009 to the project in writing but it had been ignored Makes claims of undue influence from sitting members of parliament and a Departmental Secretary That their land has been earmarked for the Bassei Oil Palm Project and the current survey plan encroaches onto that land A map detailing encroachment was attached clearly marking

The submission also attached a letter from Simon Pilak Ward One Councillor of Mowi Village, Burui Kunai LLG, Wosera Gawi District also objecting to the logging company

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These landowners state that they have interests in neighbouring Bassei Oil Palm Development Project and developer company Bassei Oil Palm Investment Ltd. Approximately 280 persons signatures have been attached to the letter. BASEI OIL PALM INVESTMENT LIMITED Under cover of Statutory Declaration a submission was received by Commission on 24 August 2011 from Basei Oil Palm Investment Ltd Chairman & CEO Roy Kenba Balagawi and Brian Casley Tapy Corporate and Marketing Manager. They recount the disputes and disagreements in the following submissions:i) That Forestry Management Agreement (FMA) entered into by traditional owners was still current at the time of granting of the SABL and hence was illegal as there was no valid agreement to deal otherwise from the landowners. ii) That there was a hijacking of development in that area at the National level via a NEC Policy Submission for a project known as Nungwaia Bongos Integrated Large Scale Agriculture Project dated 10 December 2008. iii) iv) That the Basei Oil Palm Development Project proposal document was plagiarised. That National Court proceedings are underway OS 258 of 2010 between Basei Oil Palm Investment Limited & the Company Chairman Roy Kenba Balagawi against Honourable Tony Aimo, Member of Parliament and five others including SPZ Enterprise Ltd. v) vi) Basei Oil Palm Investment Limited they contend is the preferred developer by the resource owners not SPZ Enterprise (PNG) Ltd A copy of a Petition relating to the Bassei Oil Palm project dated April 2011 was submitted to the Commission on 22 September 2011. It
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petitions against the involvement of National Politicians, alleging interference in their project. Importantly attached to this petition are copies of National Court proceedings OS 258 of 2010 commenced on 27 May 2010, between Basei Oil Palm Investments and Chairman against current Members of Parliament for Ambunti-Drekkikir and Maprik and others including the developer SPZ Enterprise Limited. Mr Roy Kenba Balagawi, CEO and Chairman of Bassei is an engineer by profession. He had been employed by CDC at Hargy Oil Palm and received all his training by CDC. He moved through the ranks from Oil Palm Processor Engineer by to Acting Chief Engineer. He left CDC and worked with Higaturu Oil Palm and left due to injury he sustained during a criminal attack. He joined Milne Bay Estates and returned to his home district at Ambunti in 2003 . In 2003 he was approached by the current resource owners of Ambunti who sought his advice on scoping out the oil palm project that could allow accessibility to good road network and generate income for the people. Mr Balagawi undertook seven months consultancy working through the entire land mass, assessing whether or not there was land available for project. According to Mr Balagawi, Ambunti is heavily populated but there was sufficient land to undertake the oil palm project. He states that he personally scoped the Bassei oil Palm Project basically informing the resource owners on the effects of oil palm, its advantages and disadvantages. They agreed to proceed with the project. At that time 4000 hectares of land was insufficient and that meant procuring more land within the District so that the entire population could benefit,

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Bassei Oil Palm Investment Limited was established as a landowner vehicle to drive the project. The company established two ILGs known as Masagna Clan and Windu Clan. The project was well received and endorsed by Grand Chief Sir Michael Somare and funding of almost K1million was endorsed for the project through NDAP. The Bassei landowners were grateful to the Mr Aimo for his support and in December 2008, they submitted the project documents to Mr Aimo for NEC submission. It was at that time that the Bassei Group learnt from Mr Aimo that the NEC Decision was for the Nungwaia Bongos Integrated Large Scale Agricultural Project and not Bassei. Bassei was to be part and parcel of NB Project as an outgrower. The major contention for Bassei is that the documentation on the feasibility study on oil palm was used by the political leadership in the area to create SABL 54C. They have also been awaiting K100,000 funding from the DESP Land and Physical Planning Division to conduct Land Investigation for the Bassei area which they content is SABL Portion 53C. Mr Balagawis extract of evidence on oath; We found through our findings that the name has changed from Bassei Oil Palm Project to Nungwaia Bongos Integrated Large Scale Agriculture Project. Then I realized we are in trouble because politics has taken its course and we will be fighting a battle because the intended project that we have - me and the people have mobilized - has gone. So that was when we resorted to legal clarification on that and legal -so after finding certain - we realized that funds were exhausted; some funds had been picked up after the NEC decision andwe have never received any funds from those funds that were taken out from the NADB and the
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other components. The only funding that was given was by the East Sepik Provincial Administration of 100,000 to do the Survey Plan and the LIR which I am still waiting for the LIR report from the East Sepik Provincial Administration. There is evidence that Bassei oil Palm Project is outside of Portion 55C and thus would not want to be considered as being part of the Nungwaia Bongos SABL Project. The Bassei area extends all the way along to the end of Sepik River The move to establish their own project is not in issue with SABL Portion 55C. There is a need for coordination and dialogue between the Bassei landgroups and Nungwaia Bongos in terms of the large scale agro-forest project. WAMAGIAN DEVELOPMENT CORPORATION LTD A letter of Submission was received by Commission on 25 August 2011 signed by the Secretary Moses Joshua of the Wamagian Development Corporation Ltd a proposed landowners company sighted as sworn before a Commissioner of Oaths. He sets out the following issues in his submission:I. II. Lack of widespread and majority land owner consent to the Nungwaia/ Bongos Integrated Large Scale Agriculture Project Confusion between the stakeholders as to the many projects, developers and landowner companies in the area:i. The terminated Nungwaia/Bongos Forestry Management Authority ii. Nungwaia/Bongos Integrated Large Scale Agriculture Project iii. Nungwaia/Sengo Project under Mapsera Development Corp. Ltd
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iv. Basei Oil Palm Investment Ltd v. Nungawa Rainforest Management Alliance Ltd vi. Nuwedu Investment Ltd a proposed landowner company vii. Wamagian Investment Ltd a proposed landowner company That the Nungwaia/Sengo Agro-forestry SABL issued to Mapsera Development Corporation also be investigated as both Bongos and it criss-crossed the electorates for Wosera/Gawi and Ambunti/Drekikir DON BAKAT of DITU LIMITED A former consultant of the developer company SPZ Enterprises PNG LtdMr Bakat submitted a sworn affidavit dated 29August 2011. He gave evidence to the C.O.I and restated in broad terms that there were significant improprieties with the acquisition of the SABL specifically:i) That current developer was illegally harvesting high value kwila logs along with an unwillingness to undertake genuine agricultural development which led to him resigning ii) That there was fragmentation of projects after the cancellation of a 1996 Forest Management Authority. This resulted in 5 related projects being initiated, the Nugwaia Bongos, Nungwaia Sengo, Bassei, Nuku (Portion 26C) Integrated Agro-Forestry Project, Nuku (Portion 59C) Integrated Agro-Forestry Project with encroachment as well as social issues iii) That the break-up of projects was highly politicised naming Enterprises PNG Ltd iv) Other allegations are made naming particular actions by the Members of Parliament however as these allegations are the subject of
795

National Members of Parliament and enabled the involvement of SPZ

proceedings involving Bassei Oil Palm Investment Limited in OS No 258 of 2010 submissions on those will be limited as the risk of being sub judice. v) vi) His affidavit continues by stating that legal requirements under the Forestry Act for FCA approvals have not been complied. That the Nungawa Rainforest Management Alliance Ltd is not a genuine landowner company as there are no Incorporated Land Group Chairmen involved he makes reference to the Nungawa Sengo Project landowner company Mapsera Development Corporation Ltd as a comparison where an ILG Chairman was the Chairman of the Company as decided upon a meeting of all relevant landowner ILG chairmen to decide. Late Mr Alex Anisi, Former Premier of ESP and Businessman (Transcript of Proceedings @ SABL 5Wewak 14/02/12 pages 162 For the record Late Mr Alex Anisi, former Premier and Businessman from Aimul Palandu village Drekikir presented himself to the C.O.I as a person who had an interest as a leader, businessman and landowner from the Drekikir District of East Sepik Province. The Commission was able to hear his views generally on all the SABLs in the province. He gave evidence to the Inquiry on Tuesday 14th February 2012 and as the C.O.I team departed Wewak on Saturday 18th February 2012 we heard of Mr Anisis untimely passing on arrival in Port Moresby Mr Anisis petitions the C.O.I in respect of what he observes to be fundamentally disturbing with respect to the four (4) SABLs located in ESP.

796

In evidence he is forthright and critical of the line Departments inability to carry out their statutory functions and responsibility diligently. He states as follows; It was the fault of the government and the fall back to the line departments which include Commerce - if it wants to get involved - and the Lands people. These are specific departments that have got to deal with it with diligence. If that has been done, we will not face this problem. Of course, we need development. We do not have money; we need investors to come, but if the people were told that our land would be given to foreigners like the one that is happening with the Nungwaia Bongos lease arrangement now. He was critical of the period of ten (10) days spent by Mr Yapog to conduct awareness on the SABL, verify and confirm ILGs (FMA consents) and the boundary walk to ascertain whether or not the villagers are willing to be part of the SABL. There was more time required to complete the land investigation and not under any pressure politically. The road construction costing the Developer US$4,000,000 (PGK12, 000,000) to construct was not a new road but an existing road he built when he was the Premier of the Province. And by way of assisting the Commission Mr Anisi reflected on two most important aspect of this SABL, firstly He comes from Aimul Palandu village located in very mountainous region of the Drekikir District. He recommended that the project site should concentrate on the lower region of the District where Hon. Tony
797

Aimo comes from down to the Sepik Plains connected to Bassei Oil Palm. The Project does not require the entire Drekikir District especially the mountainous region which makes it difficult for oil palm Plantation. And secondly he recommends I will say that this lease-lease agreement must be revoked and be given back to the specific area. Whoever the landowners who particularly want to entertain this and their grandchildren, and their great great grandchildren who might turn out to defraud others, then you do it; some of us will not. It has to be revoked. The title must be cancelled and rearranged in a proper way. We are not against investors; take my point clear. I want the Member for Ambunti-Drekikir to take my point clear. I am saying that, do it right for the people, not for you and I, for the people; for the people. RECOMMENDATION There was widespread confusion and lack of dialogue between NRMAL and the ILGs within what was an FMA concession area. The lack of understanding and coordination continued due the lack of proper Land Investigation, proper boundary walk, and awareness with the majority of landowners, the Bassei land group, Nungwaia/Bongos Integrated Large Scale Agriculture Project, Nungwaia/Sengo Project under Mapsera Development Corp. Ltd, Bassei Oil Palm Investment Ltd, Nungawa Rainforest Management Alliance Ltd and Nuwedu Investment Ltd a proposed landowner companyWamagian. Mr Peter Yapog of the Provincial Lands Office, Mr Simon Malo including Mr Romilly Kila Pat failed in their responsibility to undertake a coordinated due diligence on the SABL Portion 55C and suspend the gazettal of the SABL
798

because project caused so much confusion amongst all the landowners within the Drekikir/Maprik/Ambunti/Wosera District. OVERALL RECOMMENDATION FOR SABL PORTION 55C TO NRMAL Lack of Transparency in the Nungwaia Bongos Large Scale Integrated Agriculture Project to develop Oil Palm Plantation The C.O.I recommends that the SABL Portion 55C to be reduced to the Oil Palm Nursery Seedling Site, Sepik Plains and Ambunti for the very reason of encroachment on an existing SABL Portion 54C in the name of Mapsera Development Incorporation Limited on the land known as Nungwaia Sengo. Mapsera was issued the title on 31 April 2010 a year earlier than Portion 55C held in the name of NRMAL. ILGs linked to Mapsera initially supported the Nungwaia Bongos FMA until it was cancelled and the manner in which the developer was brought in to develop the large scale agricultural project on the cancelled FMA surveyed land with continued illegal logging without any Forestry permit and illegal shipment of Kwila through Hawain on the North Coast of ESP. (See Don Bakats evidence) The Land Investigation Report to be reactivated and proper procedures be completed taking into account the consent pre-requisite including Social mapping of all landgroups/clans/villages in the Districtgenealogy study, identify clan members for purpose of verification on the ILG register that was used in the FMA Agreement and cancellation.

799

 Consultation and meeting between NRMAL/Bassei/Mapsera/Nuku landgroups over misunderstanding/confusion/ caused over cancellation of the FMA and issuance of title to NRMAL irrespective of the objection. Objections was basically over the choice of the developer SPZ Enterprises and the lack of consultation over what was political muscle. Survey and boundary walks to identify those willing to allow a portion of their land towards the project and those not willing to allow land for SABL. Authorisation and consent on appointment of Agent for each ILGs Other Landowning corporation and entities, landgroups who have expressed objection due to the confusion over cancellation of FMA and SABL need to meet and settle any disputes and if needed to consolidate or pursue its own project. SPZ through its parent company Geoff Palm to reapply for new Environmental Permit consistent with the Oil Palm Plantation. Including other such as IPA Act Companies Act Forestry Act Land Act DAL (s 90A & 90B of Forestry Act) DEC permit (Level 2&3 Activity)

800

The SUB Lease to be renegotiated or JV Agreement be executed between NRMAL and SPZ over the agriculture project. Project Agreement to be rescinded and Joint Venture Agreement encouraged. The Agreement is inconsistent with the enabling legislation of respective agencies of government. Department of Commerce has links to investors BUT need to be proactive in bringing reputable investors with both financial, resources, equipment and skilled personnel to under high impact projects. Need to collaborate with Landowners, IPA, DEC, DAL, DLPP and respective Provincial Administration and Governments. The National Department of Commerce and Industry must also have a national presence and not confined to selected project sites in the country. Their involvement in the following large scale agro-forest projects is indicative of isolating other disadvantaged provinces through political muscle and dealings. Rescind Project Agreement State Contracts & Elements-consensus ad idem The arguments made before us raise a threshold fundamental procedural issue on the jurisdiction of the court to summarily enforce a Deed of Release on a pending action in circumstances where the validity of the Deed is contested on substantive grounds. A Deed of Release constitutes a settlement or compromise of a pending action. It is a contract which is enforceable on its own force. Its validity and enforceability is dependant on the existence of essential elements of ordinary contracts such as the legal capacity of the contracting parties, the intention of the parties to create legal obligations, valuable considerations offered by each party and in cases where these elements are regulated by
801

statute, compliance with any statutory requirements imposed on contracting parties. This last requirement is particularly significant in relation to "public contracts" transacted on behalf of public institutions or authorities or even public corporations established by statutes. Unlike contracts involving private contracting parties, these kind of contracts are not entirely dependant on the free-wheeling actions of entrepreneurs motivated by desire to maximize profits at minimum expense. The terms of the contract are subject to rules and guidelines prescribed by statute. When a party to a public contract or a third party having public interest in the contract contests the validity or enforceability of "public contracts" on substantive grounds such as fraud or illegality, then courts must take great care to ensure that parties are facilitated with a fair and full opportunity to contest the contract, and after having heard the matter, the court then determines the merits of the case. The higher the public office involved, the greater the amount of public money involved, the greater the public interest, and therefore the greater the onus on the courts to facilitate a full, fair and proper hearing and decision made on the merits. As part of the courts constitutional duty and mandate as the guardian of the laws of the State, the court has a public duty to protect the public interest sought to be protected by relevant statutes; by ensuring that contracts entered into involving a public body complies with the relevant statutory requirements. It is not proper for the merits of a disputed "public contract" to be summarily and pre-maturely determined, based purely on the untested affidavit evidence of witnesses and submissions of counsel.28 The C.O.Is reference to those principle enunciated by the Courts are open to the State to deal with the State Contracts that have executed based on erroneous assumptions and self interest.
28

NCDC v Yama Security Services Ltd SC 707 (6 June 2003) per Injia CJ at page 9[2003] PNGLR 1 Jack Livinai Patterson v National Capital District Commission (05/10/01) N2145; Minister for Lands v Frame (1980) PNGLR 433 at 476-477 (Pratt J)

802

1. COI Inquiry File No for Special Purpose Agricultural and Business Lease over Portion 54C Volume 18 Folio 06 Milinch: Masalagar, Kubalia, Chambri and Yambon East Sepik Province in the name of Mapsera Development Corporation Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the Mapsera Development Corporation Limited SABL. These were: 1.2.1 Department of East Sepik Province, (DESP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGFA) 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.

803

No

Name and Position Mr Peter Yapog, Acting Provincial Customary Lands Officer, Division of Lands &Physical Planning, DESP Mr Richard Kali, Provincial Forest Officer DESP Hon. Mr Gabriel Kapris MP & Minister for Commerce & Industry, Division of Agriculture & Livestock Mr Steven Mera Secretary, Department of Commerce and Industry, Hon. Mr Tony W. Aimo, MP, Landowner. Mr Suriya Moorthy, CEO, SPZ Ltd Mr Sugunarao Subramanian, General Manager-, SPZ Ltd Mr Andrew Sapuko, Landowner Mr Alex Anisi, Former Premier of ESP, Businessman & Landowner Mr Don Bakat, Consultant & Landowner Mr Roy Kenba Balagawi CEO, Basse Oil Palm Ltd & Landowner, Ambunti Mr Mose Joshua, Landowner Mr Augustine Kaugen, Landowner Mr Sam Akike, Landowner

Pages 101-147

Day 5

Date 14/02/12-SABL 5 WEWAK

18-35 3-19 53-68

2 4 4

09/02/12-SABL 2 WEWAK 13/02/12-SABL 4 WEWAK 13/02/12-SABL 4 WEWAK

69-100

13/02/12-SABL 4 WEWAK

101-137

13/02/12-SABL 4 WEWAK

51-92

14/02/12-SABL 5 WEWAK

92-100

14/02/12-SABL 5 WEWAK

8 9

149-161 162-171

5 5

14/02/12-SABL 5 WEWAK 14/02/12-SABL 5 WEWAK

10 11

10-42 65-87 43-51

6 6 6

15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK

12 13 14

51-62 64-65 88-100

6 6 6

15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK

15

Mr Michael Caypah, Landowner

116-122

15/02/12-SABL 6 WEWAK

804

16 17

Mr Michael Koimo, Landowner Mr Francis Daink, Deputy Secretary (PATS), DAL Mr Leka Mou, Agriculturalist, DAL Mr Pepi Kimas, Former Secretary, DLPP Mr Simon Malu, DLPP

122-123 12-26 2-33 1-33

15/02/12-SABL 6 WEWAK 05/09/11-SABL13 (Waigani) 06/09/11-SABL (Waigani)

18 19 20

29/02/12-SABL8 WEWAK (Waigani)

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel. The following were granted leave to be represented by counsel No representation by lawyers Exhibits and documents There were Twelve (12) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1 2 Item Petition to C.O.I SABLNRMAL NEC Decision No. 8 of 2009 Nungwaia Bongos Integrated Large Scale Agricultural Projects (2 pages) NEC Decision No. 288 of COI COI/NRMAL/SPZ Interested Party Date received 13/02/12 13/02/12 Exhibit Number NRMAL 1 NRMAL2

Nil

COI/NRMAL/SPZ/Commerce
805

13/02/12

NRMAL3

2008 Nungwaia Bongos Integrated Large Scale Agricultural Projects 15 December 2008 4 Affidavit of Hon. Tony Aimo, MP dated 8th September, 2011 Letter to the PresidentRoadline Construction dated 14 October 2011 Affidavit of Mr Suriya Moorthy -CEO of SPZ Affidavit of Mr Sugunarao V. Subramanian, Plantation General Manager, SPZ Affidavit of Mr Don Bakat, Background to the Project and his concerns over the acquisition of SABL Submission by Moses Joshua-Secretary, Wamagian Development Corporation Limited Letter by Sam Akike dated 8th February 2012

& Industry

COI

13/02/12

TA 1

COI

13/02/12

TWA2

6 7

COI COI

14/02/12 14/02/12

Exhibit 3 Exhibit 4

10

COI

15/02/12

NRMAL8

11

COI

15/02/12

NRMAL9

12

COI

15/02/12

NRMAL10

Timeline of events of note surrounding Mapsera Development Corporation Limited SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution Proponent/Applicant Respondent Entity/Respondent

Incorporation of Mapsera Development Corporation Ltd

7th June 1995

Mapsera Development Corporation Limited

C.O.I

806

2 3

Certificate of Recognition of ILGs FMA Agreement between State and 230 ILGs Formalization of Project Agreement between State and SPZ Enterprise (PNG) Ltd Consent of 230 ILGs to terminate NBFMA Agreement NEC Decision 08/2009 re Proposed Project for NBIntegrated Large Scale Agricultural Project (NBILSA Project) Public Hearing on the Proposed NBILSA Project

22/11/2000 2006

230 Land Group Chairman 230 ILGs and PNG Forest Authority State and SPZ Enterprises (PNG) Ltd

C.O.I C.O.I

16th April 2009

C.O.I

29th June 2009

2009

PNG Forest Authority and 230 ILGs (Supplementary of 157 ILGs also added to the list) Hon. Gabriel Kapris MP, Hon. Tony Aimo, MP

C.O.I

C.O.I

30 October 2009

9 10 11

Certificate of Compliance for large scale conversion of Forest to Agriculture or other land use development FMA Agreement terminated Environment Impact Statement Supplementary ILGs comprising 157 Landgroups added to the 230 ILGs for NB confirmed Land Investigation Report x 43 ILGs

3rd December 2009

Drekikir Station, Hon. G. Kapris MP, Ronald Asik MP & T. Aimo MP, Mr Samson Torovi, Mr Daink, Mr Mera, Mr Hobiago, Mr George Gua, Mr Tom Peni, Mr Swong, Mr Failau, Mr Aulem, & Mr Buruka including Chairman of ILGs present. PNG Forest Authority/DAL/SPZ Enterprises (PNG) Ltd.

C.O.I

C.O.I

18 November 2009 13 May 2010 15-16th May 2010.

Hon, Belden Namah, Minister for Forest SPZ/DEC Hon Tony Aimo present/ All 157 ILG Chairman confirming and signing the ILG application for Registration. Mr Yapog/Mr Simon Malu/Jack Wani/Mr Augustine Kaugen and ILLs

C.O.I C.O.I C.O.I

12 13

Two weeks commencing 21/03/10 and ending on 31/03/10

C.O.I C.O.I

807

14 15

16 17 18

19

Survey of Portion 54C Masalaga, ESP Instrument of Lease/Lease Back Agreement between State and MDCL Notice of Direct Grant SABL Title issued in the name of MDCL Agriculture Sublease Agreement between MDCL and GOLD WORLD RESOURCES CO (PNG) LTD Forest Clearance Authority

15/04/10 13 April 2010

Completed and certified by Surveyor General MDCL & State

C.O.I C.O.I

23 April 2010 26th April 2010 UNDATED

State/MDCL MDCLL-99 year lease/lease back MDCL/Gold World Resources Co. Limited

C.O.I C.O.I C.O.I

Completed and registered but not issued to date

C.O.I

FINDINGS The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Mapsera development Limited. It is also important to state at the outset that the land is also the subject of the our inquiry into SABL Portion 55C held in the name of Nungwaia Rainforest Management Alliance Limited that is also relevant for the purpose of this report. Any materials, documents and evidence received arising out of the inquiry into SABL Portion 55C relates directly and affects the inquiry into SABL Portion 54C. Mapsera Development Corporation Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette No. G83 dated 23rd April 2010 for Portion 54C Masalaga, Kubalia, Chambri and Yambon Land.The Land is known as Nungwaia Sengo The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 26th April 2010 by the Department of Lands and Physical Planning to the holder Mapsera Development
808

Corporation Limited SABL(MDCL). Mr Pepi S. Kimas, OL signed as delegate of the Minister for Lands. The detail of the SABL is shown below:
Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease Portion 54C 3/657 Mapsera Development Limited 26th April, 2010 Ninety-nine (99) years 54, 384.0 hectares

Corporation

Background The initial involvement of Mapsera Development Corporation within the Nungwaia Bongos consisted of Ambunti/Drekikir and Wosera/Gawi Electorates under the 2006 FMA Agreement. When the FMA Agreement was cancelled following the majority consent of all the 230 ILGs in 2009 in favour of the Nungwaia Agro-Forest Large Scale Agriculture Project objections was raised over the appointment of SPZ as the project developer and the conversion of FMA surveyed area into Portion 55C and 54C SABLs. According to Mr Bakats sworn statement and evidence to the Inquiry (Exhibit) MDCL is the landowner company representing the people of Wosera/Gawi and is located in the Sepik Plains and the Sepik River, fertile land for agricultural crops such as Oil palm. teak plantation, jetropha and cocoa. The logging component would require the developer to clear fell forested areas to establish the plantation on the land. Minutes of Meeting of MDCL held at Ugutakwa village, on Sunday 18 th October 2009 comprising the Executives of MDCL (Augustine Kauken as Chairman, Raphael Lakops, Vincent Sitban, Chairman representing 43 of the 47
809

ILGs of Mapsera and Don Bakat (PNG Forest Authority Representative) were present. The Meeting confirmed Mr Kaugen as the Chairman and Mr Lakops as Deputy Chairman. The meeting endorsed Nungwaia-Sengo as the name of the project and the break away from Nungwaia Bongos due to the following factors (1) That the Member of Ambunti Drekikir appointed SPZ as there developer of the project, and it was common knowledge that the company has a record of harvesting timber illegally in an number of locations throughout East Sepik Province,. (2) The company failed to consult and produce any development proposal for the ILGs consideration in relation to land dealings and resources therein. (3) The company failed to comply with statutory requirements in the development of large scale agricultural projects pursuant to section 90A and 90B of the Forestry Act 2007 as amended. The company failed to secure land tenure under the Land Act, formulate agricultural proposal for approval by DAL and formulate the EIS consistent with the requirement pursuant to the Environment Act 2000 and submit for approval. (4) Logging activity was undertaken by SPZ without any approval. Mr Kaugen also in evidence said that SPZ was conducting illegal logging in the Forombe, Keneyambu, Moiyok School and Mangara. The actual logs are transported to a log pound located at Hawain, North Coast, Wewak ESP. (Page 72 of SABL 6 15/02/12)

810

MDCL and its 47 ILG affiliates agreed at that meeting to seek approval of a new boundary to include new areas of Mowi, Manje, Sengo, Jama and other new areas depending on the wishes of the people. The Meeting also resolved based on the consent of all ILG Chairman present (signatures obtained) for DJC & L Limited as the new Developer for the Nungwaia Sengo project. We note that the meeting resolved to send three (3) people to attend the public hearing at Drekikir on 30th October 2009. (Refer to Annexure 0 in the Affidavit of Don Bakat dated 29 th August 2011Exhibit NRMAL 8) Mr Kaugen, the current Chairman of Mapsera also said in evidence that the Nungwaia Bongos nursery and plantation site located at KUWANGA Settlement actually lies in the Wosera/Gawi Electorate meaning that the issue of encroachment and overlapping with regard to boundaries has not been resolved. (See his evidence at page 70 of the Transcript-SABL 6 15/02/12) IPA COMPANIES REGISTRY RECORDS Mapsera Development Corporation Limited Mapsera Development CorporationLimited (MDCL) is a limited liability company registered in the Registrar of Companies of the Investment Promotion Authority of PNG under the Companies Act 1997. The Company was incorporated on 87th June 1995 and the current principal place of business is Nuigo, Lease Number 9 (P.O. Box 199, Wewak, ESP), Wewak, East Sepik Province. The company number is 1-23886.

811

As at 2nd August 2011 IPA records confirm that it was deregistered on 21 January 2009 due to failure to file company returns as required under the Companies Act 1997. As previously stated the SABL was granted on the 26 April 2010 and as such was not legally obtained. The company was not in existence at the time of the granting this means that it cannot be a valid and legal SABL granted. The latest IPA Company extract dated 2nd August 2011 indicate both shareholder and Directors of MDCL as Bruno Kanawi, Augustine Kaugen, and Vincent Sitban all resident at Wewak and Raphael Lakops resident at Wosera. The extract shows that 1000 ordinary shares have been issued but it does not disclose the number of shares held by each of the four Shareholders. The Secretary to the company is Vincent Sitban. The Developer Gold World Resources Company (PNG) Ltd The Certificate of Incorporation for Gold World Resources Co. (PNG) Ltd was issued by the Registrar of Companies on 19th January 2010. The company was initially operating in PNG under the name of D,J,C AND L Limited and incorporated on 1 July 2008 and on 18 January 2010 changed its name to GWRCL, The company number is 1-64071. IPA records and extracts were not availed to the C.O.I hence we are unable to ascertain the corporate structure and composition and the shareholders and directors of GWRCL. THE AGRICULTURE SUB LEASE AGREEMENT (Refer to the Affidavit of Don Bakat dated 29th August 2011, Annexure EExhibit NRMAL 8)
812

The C.O.I notes that an Agricultural Sub-Lease Agreement was executed between Mapsera DCL and Gold World Resources Co. (PNG) Limited. The Agreement was for a period of fifty (50) years commencing on a date that is not specified in the Agreement. The Agreement is undated and the signatories to the Agreement are as follows; Messrs Augustine Kaugen, Raphael Lakops and Cherubim Thomas signed on behalf of Mapsera and Mr Tam Ho Ting, the Managing Director signed for Gold World. The Agreement was registered with IRC Stamp Duties Office The pertinent issue concerning this sub-lease agreement is whether or not the landowners were aware of their obligations under the agreement. It was highly likely that no proper advice was obtained prior to the execution of the agreement and the liabilities created can be detrimental to landowners and Mapsera. An example of an unfair transaction is Clause 9 of the Sublease agreement where the landowners would have to pay compensation if they wrongly terminate the sub-lease. The compensation would be paid out of the tenants/landowners protected profit from subsequent harvest of the cash crop for the term and costs incurred by Gold World in constructing buildings, roads and drainage on the land. (Reference to clause 9 of the sublease and also Refer to evidence of Kaugen at pages 82 to 86 of the Transcript of Proceedings SABL 6 Wewak 15/02/12)
813

In addition the binding effect of the sublease agreement is in doubt due to the fact that Mapsera was a deregistered company and creates serious liabilities for the landowner company. Department of East Sepik Land Investigation Report The land investigation and compilation of the Report was conducted jointly by Mr Jack Wani, the District Lands Officer for Wosera/Gawi District and Mr Samson Torovi, the Provincial Administrator. It was not known as to why the Provincial Administrator was involved in the land investigation into Nungwaia Sengo SABL process. The C.O.I was unable to verify from Mr Torovi at the time due to his attendance on very important issues concerning East Sepik Provincial Administration in Port Moresby. Mr Peter Francis Yapog is named but he played a very minor role in the investigation due to the fact that he was involved in the Nungwaia/Bongos SABL process. Mr Kaugen also confirmed in evidence that Mapsera DCL procured payments from Goldworld Resources to assist the three (3) persons involved in the land investigation. The officers were paid K3, 000 each amounting to K9, 000.00, in addition to payments for accommodation (Refer to his evidence at page 80-81 SABL 6 Wewak 15/02/12) Table below indicates the majority consent of all the 44 ILGs that agreed to allow their land for the large scale agro forest project at Nungwaia Sengo. The 44 ILGs will also appear in the ILG consent for the Nungwaia Bongos SABL Portion 55C we consider is misleading because SABL Portion 54C was issued on 26th April 2010.

814

N o.

Name of Land

Hectares

Electorat e

Clan

Officer conducting LIR

Date of LIR

Period of lease (Years )

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43

Sapauli Namuko Kamabu Juwinbuk Amase Warendu Dakurat Wapinumbu Hambul Wasakua Walagu Walmakual Kiyau Niaurinji Walose Urangu Mangijibi Namnbako Mawi Wanko Nuklugu Guarik Uram Aurumbu Walir Kagui Ilimi Kolau Kararuai Haukiti Alkui Awal Wiwai Goyambu Aigil Kambiga Raibais Waliyir Takusapu Wambmo Gilgu Pulmi Aulawaku Kamara Araraku Mangien Kualiya Nuklugu

20 61 20 9 6 18 10 200 16 11 96 98 100 200 16 248 8 200 12 300 160 10 10 7 10 18 100 200 19 29 14 190 9 8 145 9 10 24 500 7 9,180 120 12

Wosera Gawi

Mikim (Ura) Gukuarwi Sipmoiko Minjiki Saun Wasak Yatnabut Flying Fox Akilanguli Bambuk Ura Black Koki Lakawa Muikim Humun Ura Niauru (Sengo) Gianura Kwanjin Kokomo Ura (Mowi Village) Arumbu Saiki Nurgoi/Nun gwaia Balembo/S engo Maka/Nubg waia Gian/Mowi Ura/Kuaige Kulups/Nu ngwaia Makapat Wama Ura Ura/Kalge Mui/Waipi ndumaka Maka Wapindiki Mandiko Habundu Yambundu Kumun Muruk Gawi Guat Kuaru Ravuwaiya Kwanjin

Jack Wani Samson Torovi Jack Wani Samson Torovi Jack Wain & Samson Torovi Jack Wani o o o o o o Samson Torovi

31/10/10

99 o 99 2 7

Schedule of Owners, Status and Rights to land tenure (Number of People who consented) 19 11 19 19 20 19 46 19 19 19 19 19 9 19 19 13 75 25 25 32 24 49 25 25 46 25 31 28 32 o

No of Agents (Number of People who nominated)

20 4 6 5 6 6 13 13 13 13 13 9 9 13 6 13 6 26 13 13 13 6 o o o o 13 13 13 o

19/03/10

30/03/10

30/03/10 31/03/10 o 30/03/10 31/03/10 o o o 30/03/10 31/03/10 30/03/10 31/03/10 27/3/10 26/3/10 27/3/10 -/3/10 27/3/10 26/3/10 27/3/10

815

44

Mangaul

150

Kaus

31/3/10

The Land Investigation Report was conducted for all the fourthly four (44) ILGs and the following highlights deficiency that arise in the conduct of the LIR as follows; o The involvement of Mr Samson Torovi in the land investigation process may compromise his position as the Provincial Administrator in the Recommendation of Alienability. He also would not have conducted any due diligence with respect to the land boundary and disputes that may arise. o Mr Jack Wani the Officer conducting the Land Investigation is a landowner and member of the LAKAWA Clan and his involvement in the land investigation may place him in a potential conflict of interest position. He did sign as a landowner in the Land Investigation Report for the NIAURINJI Land in relation to the Declaration of Custom and as to the land boundary. It is not disputed that he has a right as a landowner, but it is relevant on the credibility of the report on his involvement. o It is evident that Mr Jack Wanis name appears as Landowner/Agent to the LIR Report on the land referred to as AURUMBU o It is also evident that no boundary walk was undertaken, though it was certified by Messrs Wani and Torovi respectively. o The names of the villages along the boundary of Portion 55C does not appear in the report, hence those person affected were not consulted during the investigation process and captured in the Report. o A recommendation as to alienability with reservation for customary rights to be preserved was signed by the Provincial Administrator but is undated.

816

DEPARTMENT OF LANDS AND PHYSICAL PLANNING REGISTRAR OF TITLES The file provided by the Registrar of Titles contains the SABL title document alone which confirms the grant of the SABL to Mapsera Development Corporation Limited. An Agriculture sublease to Gold World Resources that we have sighted was not registered with theOffice of the Registrar of Titles file as well as the NLD file. CUSTOMARY LAND DIVISION /NATIVE LAND DEALINGS FILES The file reveals that the landowner company was deregistered yet the SABL was granted to Mapsera Development Corporation. The files contain Forty Four (44) Land Investigation Reports from land owners along with related Incorporated Land Group certifications. A minute dated 21 April 2010 on file from Simon Malu Manager Leases to the Secretary via Deputy Secretary-Customary Lands recognises the ongoing issues with all the relevant portions in the Wosera/Gawi District of East Sepik Province and Nuku District of both East and Sandaun Provinces where 5 integrated projects are vying for development. He states in that Minute that Nungwaia Sengo is one project that broke away from the Nungwaia Bongos project and that due to the involvement of the developer then D.J.C & L Limited now GoldWorld ResoursesPNG Ltd there was support and endorsement from the Provincial Forest Management Committee for the large scale agro forest agricultural project to proceed hence approval of lease/lease back instrument.Mr Andie Malo, Director Leases endorsed the Minute and submitted documents to Secretary for his endorsement and approval.

817

It appears in my view that Consent was largely sought and determined in the Land Investigation Report. The inclusion of the ILG certificates seems to indicate a genuine correlation between the ILG consent and the agreement with the State. Mapsera may very well be a genuinely landowner representative company. All relevant ILG Chairmen it appears have signed the S11 Land Act Leaseleaseback instrument dated 13 April 2010. DLPP failed to undertake due diligence during the Land Investigation stages largely on the fact that Mapsera was deregistered, the overlapping and encroachment issues concerning other adjoining project sites namely Bassei (Proposed SABL Portion 53C), Nuku (Portion 56C), Nungwaia Bongos (Portion 55C)and Nungwaia Sengo (Portion 54C). The boundary walk and meetings was necessary to alleviate these pressing issues. DEPARTMENT OF AGRICULTURE AND LIVESTOCK One of only 2 documents received by the Commission of Inquiry office on 13 September 2011 was an Agro-Forestry Project Proposal over portion 54C, Wosera-Gawi District was lodged with DAL on 30 August 2010 There was a completed Forestry Act Form 235 Certificate of compliance for a Forest Clearance Authority for Large Scale Conversion of Forest to Agriculture or other Land Use Development signed off by the then acting Secretary for DAL Francis Daink on 03 January 2011. There are no other documents to explain the approval process taking place within 5 months by DAL.
818

There was no detailed agriculture development plan with costs schedules and a feasibility study carried out for the issuance of Forest Clearance Authority for large scale conversion of Forest to Agriculture and other land development plan. PNG FORESTRY AUTHORITY No file was provided by the PNG FA. As such no forest clearance authority has been granted over the land portion or to the Developer as yet however as per the DAL document a Form 235 Certificate was signed by the DAL acting Secretary Francis Daink and would have been forwarded to PNGFA in order to trigger the Forest Clearance Authority granting process Certificate of Registration as Forest Industry Participant was granted to MDCL on 25th May 2009. DEPARTMENT OF ENVIRONMENT AND CONSERVATION The Environmental Permit processing is still being undertaken by the proponent/developer Goldworld Resources Ltd On the 1st September 2010 a Notice of Intention to Carry out Preparatory Work was submitted to the DEC, the cover letter is only on file not the document itself On the 9th September 2010 and Inception Report was then submitted however once again merely the cover letter is on file no report has been sighted An Environmental Impact Statement was submitted under cover of letter dated 20 December 2010; the EIS document is on the file forwarded to the Commission. It mentions urgency for the EIS as there is a moratorium on FCAs hence their use of this as leeway to submit the EIS.

819

 Of note and interest in the EIS is a copy of the Agricultural sublease signed off by Mapsera Development Corporation Ltd Directors and Goldworld Resources Co (PNG) Ltd. The sublease has not been sighted on the DLPP file forwarded to the Commission. Also of note is the IPA certification of Goldworld Resources CO (PNG) Ltd as a section 29 of IP Act certified company. Requirements of this were to receive DEC permit approval within 6 months of the grant of the certificates, which was obtained 24 November 2010. Also of note is the change of name of the developer from D,J,C and L Ltd to GoldWorld Resources (PNG) Ltd on Also of note is a record of a DAL sponsored Public Hearing on 30 December 2009at Drekikier Station, Ambunti-Drekikier District. In attendance were relevant Government leaders both national Provincial and District as well as DAL representatives, unknown is the number of public that attended although some 25 different community representatives did speak and appeared to be largely in agreement with the project proceeding. The C.O.I. was not able to ascertain from the stringent process used by DEC as to how permits were granted upon land that did not appear to have secure land tenure through a registered landowner company.

820

RECOMMENDATION SABL Portion 54C will be retained subject to the following issues be verified, corrected and completed as a matter of urgency. 1. We recommend that Mapsera Development Corporation Limited ensure that the company returns for the periods leading to deregistration be submitted and rectified. 2. The SABL Portion 54C should not be revoked but requires that the encroachment issues involving Portion 55C to Nungwaia/Bongos be resolved with the assistance of DLPP and the Provincial Lands Office. 3. The Agriculture Sub lease agreement to be reviewed and new agreement executed due to the fact that Mapsera was deregistered at the time it signed the agreement. 4. That the Developer/Investor prepare and submit a comprehensive business plan with financial capabilities to develop the cocoa, rubber and teak plantations along with crops such as Jatropha, Rice, Crocodiles and Fish to comply with Section 90 A and 90B of the Forestry Act 5. The investor Gold World Resources Co. (PNG) Ltd is responsible for the logging component and Mapsera need to identify an agriculture development partner. The project involves selective logging and salvage logging to clear the forest and develop cocoa, rubber and teak plantations concurrently after forest clearance.

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1. COI Inquiry File No.36 for Special Purpose Agricultural and Business Lease over Portion 54C Volume 15 Folio 52 Milinch: Tring East Sepik Province in the name of Sepik Oil Palm Plantations Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the Sepik Oil Palm Plantations Limited SABL. These were: 1.2.1 Department of East Sepik Province, (DESP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGFA) 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings (in alphabetical order), including titles, are set out in the schedule below. For ease of reference, the schedule also lists the transcript pages at which the person commenced giving evidence against the name of the witness.
No
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Name and Position 1 Mr Peter Yapog, Acting Provincial Customary Lands Officer, Division of Lands &Physical Planning, DESP Mr Richard Kali, Provincial Forest Officer DESP Mr Michael Caypah, Landowner Mr Michael Koimo, Landowner Michael Marmer Gabriel Dagun Michael Sau Mr Godfried Raushem Mr Martin Shukwei Deputy Chairman, Limawo Holdings Ltd Augustine Mondo Clement Dadama Gabriel Molok, Landowner & NGO, Cape Turubu Will Nelmo, Secretary, Limawo Holdings Ltd David Dausik Mr Francis Daink, Deputy Secretary (PATS), DAL Mr Leka Mou, Agriculturalist, DAL Mr Pepi Kimas, Former Secretary, DLPP Mr Simon Malu, DLPP

Pages 02-38

Day 6

Date 16/02/12-SABL 7 WEWAK

18-35 3-19 116-122 122-123 125-127 128-132 138-158 45-79 90-117

2 4 5 5 5 5 5 6 6

09/02/12-SABL 2 WEWAK 13/02/12-SABL 4 WEWAK 15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK 15/02/12-SABL 6 WEWAK 16/02/12-SABL 7 WEWAK 16/02/12-SABL 7 WEWAK

3 4 5 6 7 8 9

10 11 12 13 14 15

118-127 128-137 143-155 156-170 170-174 12-26 2-33 1-33 68-78

6 6 6 6 6

16/02/12-SABL 7 WEWAK 16/02/12-SABL 7 WEWAK 16/02/12-SABL 7 WEWAK 16/02/12-SABL 7 WEWAK 16/02/12-SABL 7 WEWAK 05/09/11-SABL13 (Waigani) 06/09/11-SABL (Waigani) 29/02/12-SABL8 WEWAK (Waigani) 18/01/12-SABL 77 (Waigani)

16 17 18

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that:

823

Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel. The following were granted leave to be represented by counsel
Peter Kuman of Kuman Lawyers Hubert Wally of Jaminan Lawyers SOPPL & Limawo Holdings Limited Objecting Landowners

Exhibits and documents There were Twelve (12) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1 2 Item Petition to C.O.I SABLSOPPL Affidavit of Mathew Koimo dated 4 December 2011 Affidavit of Michael Marmber dated 4 December 2011 Affidavit of Gabriel Dagun dated 4th December, 2011 Statutory Declaration of Michale Sau dated 25 August 2011. Submission by Michael Sau dated 25 August 2011 Letter by Mr Yapog to Mr Joseph Tan dated 16 May 2008 re: SABL high impact project COI COI Interested Party Date received 13/02/12 15/02/12 Exhibit Number SOPPL 1 SOPPL2

COI

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SOPPL3

COI

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SOPPL4

COI

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SOPPL5

COI

15/02/12

SOPPL6

COI

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SOPPL7

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9 10

11

12 13

14

15

16

17

18

19

20

Internal report-10 February 2012 to IBWAN HOLDINGS Submission by Provincial Liaison Officer Agreement signed by Mr Pepi Kimas and Mr Aron Malajiwi. Mapi In Relation to First 10,000 hectares of Land at Samoia Near Marting Shukweis village Ibwan Holdings Pty Ltd Project Documents Logging and Marketing Agreement between IBWAN Holdings and Wewak Agriculture Development Ltd Letter by Augustine Mondo dated 29th August 2011 Bounded Documents from IBWAN Holdings Ltd received 15 September 2011 under the hand of Mr Clement Dadama Copy of letter by Mr Clement Dadama with attached Annexure of the letter from Surveyor General in relation to the Title for the Project. Turubu Local Level Government, Wewak, ESP-Compensation Schedule for Damaged Trees and Plants Turubu Oil Palm Project Valuation report Summary of Clans and ILG Areas Compensation Schedule For damaged Trees and Plants Undated letter for Mr

COI

16/02/12

SOPPL9

COI COI

16/02/12 16/02/12

SOPPL10 SOPPL11

COI

16/02/12

SOPPL12

COI COI

16/02/12 16/02/12

SOPPL13 SOPPL14

COI

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SOPPL15

COI

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SOPPL16

COI

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SOPPL17

COI

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SOPPL18

COI

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SOPPL19

COI

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SOPPL20

COI
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SOPPL21

21

Gabriel Molok to the C.O.I. Statement of Mr Kausik

COI

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SOPPL22

Timeline of events of note surrounding Mapsera Development Corporation Limited SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution 10th January 2007 8th March 2007 and 17th July 2007 13 September 2007 Proponent/Applicant Respondent Entity/Respondent

Incorporation of Limawo Holdings Ltd (LHL) Formation of Limawo Holdings Ltd and awareness of its existence. Mr Yapog refers Application by 19 ILGs of LIMAWO Clan to ILG Registrar. Incorporation of Wewak Agriculture Development Corporation (WADCL) Incorporation of Sepik Oil Palm Plantation Limited (SOPPL) Land Investigation Report (LIR) in the name of LHL Recommendation for Alienability

Limawo Holdings Ltd

Limawo Holdings

Executive of Limawo HL/East Sepik Provincial Administration 19 ILGs and DLPP/Registrar of ILG

Limawo Holdings

Limawo Holdings

16th January 2008

IPA/Investor Company

Limawo Holdings

23rd April 2008

20th May 2008

IPA/JV CompanyWADCL holds 80% shares and LHL holds 20% share (Foreign owned Company) Mr Peter Yapog/DLPP Waigani

Limawo Holdings

Limawo Holdings

29th May 2008

Mr Samson Torovi/DLPP

Limawo Holdings

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8 9

10 11

Lease/Lease Back Agreement Notice of Direct Grant National Gazette No 145 Consent/Undertak ing by LHL Notice of Direct Grant National Gazette No. 154

29th July 2008 14 April 2008

DLPP/LHL/56 ILGs DLPP/LHL

Limawo Holdings Limawo Holdings

02 August 2008 02 August 2008

LHL/DLPP LHL/DLPP/WADLAdditional Covenant re: Consent & Undertaking

Limawo Holdings Limawo Holdings

FINDINGS The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Sepik Oil Palm Plantation Limited (SOPPL). Sepik Oil Palm Plantation Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette No. G145 dated 4th April 2008 for Portion 144C TRING Land.The Land is known as Turubu The term of the lease was for ninetynine (99) years. A Special Agricultural and Business Lease was registered and issued on 4th April 2008 by the Department of Lands and Physical Planning to the holder Sepik Oil Palm Plantation Limited SABL(SOPPL). Mr Pepi S. Kimas, OL signed as delegate of the Minister for Lands. The detail of the SABL is shown below:
Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease Portion 144C 3/624 Sepik Oil Palm Plantation Limited 14h April, 2008 Ninety-nine (99) years 116,840.0 hectares

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An amended Notice of Grant was published in G154 on 2 September 2008 wherein two covenants were amended and added in addition to the four that have been typical of standard SABLs specifically that the lease shall take into consideration the Consent/Undertaking signed by the agents/representatives of the landowners in the event the vesting of the lease to a company is in issue There was in my view no apparent mistake in the initial August Gazettal Notice, though it is quite evident that the September Gazettal Notice reflects the actual Notice of Direct Grant issued under the hand of the delegate. The land description and locality in the September 2008 Gazettal Notice also reflected in the lease-leaseback instrument Schedule is Portion 144C part Milinch of Wombun NW & NE, Tring NW & NE & SW & SE, Musehu SW & SE, Fourmil of Ambunti & Wewak in the Wewak & Ambunti District in the East Sepik Province. We however are concerned that two (2) Gazettal Notices apply to the same SABL and apparently there was no amendments made with respect to reservation for customary rights existing over the current term of the lease. OVERVIEW The Project Site The Wewak-Turubu Large Scale Integrated Agriculture Project is the proposed Agricultural purpose for which some 116,400 hectares of land has been acquired. The environment setting for the SABL project for logging and subsequently oil palm consists of undulating plains that are covered with a mixture of small828

crowned lowland forest and a mosaic of grassland except for the narrow saddle formed by the Alexander Range near the coast. The project site is relativelydeveloped road network that link up most of the villages in the project area. The existing Wewak- Angoram road traverses the major part of the project area while the Maprik-Timbungke Road also provides access to the villages in the northern part of the project area. The coastal villages are serviced by the Wewak-Cape Turubu Road.29 Site Visit The C.O.I team visited the Project Site on Wednesday 8 th February 2012 between the hours of 2.30 pm and 0935 pm. The team comprised Commissioner Nicholas Mirou, Counsel Assisting Mr Simon Ketan, Counsel Miss Mayambo Peipul, Mr Joseph Wohuinangu Agriculture Advisor to C.O.I, Administrative and Security Personnel Messrs Adolfo Horus, Ben Kaiah, Patrick Debesa. The route taken by the COI team to conduct site inspection was about 60 kilometre. Mr Kuman of Kuman Lawyers representing the Developer and Landowner company representative and supporters was present at the Nursery Site located at Malabo grassland, Turubu Inland Mr Hubert Wally of Jaminan Lawyers representing objecting landowners from Saussa LLG (Nagam through to Japaraka vilages and Tring including nearby villages towards Angoram) to the SABL travelled with the C.O.I team. The C.O.I team followed the route from Nagam (turn off along Maprik Highway) through the old cattle Ranch at Urimo villages within the Japaraka
29

Extract from Executive Summary of the Environment Impact Statement on Turubu Integrated Agriculture Project , prepared and submitted by Wewak Agriculture Development Limited to Department of Environment & Conservation.
829

Ward, Inland Turubu and the Logging Wharf at Nightingale Bay. We observed the following along the route taken from Nagam through the Urimo grass plains towards Turubu Coastal. There were signs of logging activity a few kilometres from the Nagam. A makeshift campsite with local hands was noted and confirmation that the company was logging the forested area within the whole SABL project site extending from Sausso to Turubu inland and Turubu Costal. An SDA High School was also noted a few kilometres from Nagam. Urimo cattle ranch took up much of the travel inland towards Japaraka which is a vast area of grassland extending towards Angoram and Turubu LLG. Japaraka village (Sausso) is also located along the road towards the Nursery. An Airstrip and Army training area was also noted. C.O.I noted a log pound with Kwila timbers ready for transportation to Cape Turubu harbour. Clearly there was evidence of clearance of forest and logging of merchantable timber. We also met the employed Forester for the company, a Papua New Guinean national who confirmed that they were undertaking selective logging within the SABL project site. This also indicated a lack of monitoring activity by the Provincial Forest Office. The Oil Palm Nursery and Estate at Malabo Grassland (Turubu Inland) that is still part of the Urimo Cattle Ranch and located within the Kinare, Sereng, Iari and Nungawa villages. These villages constitute the Limawo clan and the

830

landowner company under the chairmanship of Mr Malajiwi. We observe the following, The Oil Palm planting program is developing at a very slow rate without management expertise and accommodation for housing the staff.. We observed o The oil palm planted on plots surrounding the nursery was done recent indicative of an attempt by the project investor that the oil plam project is been developed. o There was no proper office or housing facility except for few makeshift houses. o There was no sign of a water sprinkler system and no water pump at the nursery. o There was no green house to indicate that seedlings in polly bag and signs of oil palm trees ready for planting we assume was procured from other source. The logging wharf at Forok (Cape Turubu) was also a makeshift wharf built on logs and soil, There was ominous signs of environmental damage to the sago and mangrove palms along the seashore, part of the mountain cut to extract stones and soil was subject to erosion and created very serious environmental concerns. There was no strict adherence and policing done by DEC on the environmental damage to the coastline where the logging wharf was erected. The Incident and related Petition against the Commissioner It is well publicised that the Commissioner and his team was harassed by Mr Malajiwi, the Chairman of Limawo Holdings and his supporters at the nursery in the presence of their counsel Mr Kuman and the Developers including Mr
831

Wally and objecting landowners. Mr Malajiwi and Mr Francis Yabarisa, the Public relations Officer for Limawo was charged with contempt of the Commission. Messrs Malajiwi and Yabarisa publicly apologised and the Commission discontinued proceedings. This led to the attempt by the landowners to petition the Commission to disqualify itself from proceedings with the hearings on SOPPL. The Commission continued with its inquiry on the premise that there was no superior court order in place to restrain the Commissioner and lack of evidence on the allegation of conflict of interest either for personal or professional grounds. (Refer to Transcript of Proceedings.) INQUIRIES INTO RESPECTIVE INSTITUTIONS OVER SABL

PORTION 144C TO SEPIK OIL PALM PLANATIONS LIMITED COMPANIES/IPA FILES SEPIK OIL PALM PLANTATION LIMITED According to a Companies Registry current extract produced 05 August 2011 Sepik Oil Palm Plantation Limited was incorporated and registered on 23 April 2008. The Company number is 1-633177 and it is operating. There are 2 shareholder companies;- a Limawo Holdings Ltd incorporated and registered on the 10 January 2007 and Wewak Agriculture Development Ltd incorporated and registered on 16 January 2008. Wewak Agriculture Development Company There are three directors of Sepik Oil Palm Plantation Ltd, Hui Teck Lau a Malaysian national resident in Port Moresby, Nyi Then also a Malaysian
832

national, resident in Port Moresby and PNG citizen Aron Malijiwi resident in the East Sepik province. The shareholding structure is as follows; Hui Tech LAU and NYI TEN both hold 8,000 shares and Aron Malijiwi holds only a minority share of 2,000 ordinary shares. SOPPL is a foreign owned company. In a 20% and 80% split of landowner company and developer have ownership of the SABL grantee company as a possible result there is no sublease of the SABL to a developer company. LIMAWO HOLDINGS LIMITED Limawo Holdings Ltd, IPA registered 10 January 2007, holds some 2000 ordinary shares in Sepik Oil Palm issued on 23 April 2008. Company number is 1-58546. The Shareholders are Samson Kuarumb, Aron Malijiwi, Malcolm Nambon, Greg Shukwei, Martin Shukwei and Willy Yaparuwi all of Samowia village. They all hold 1000 shares in the company. Limawo Holdings Ltd appears to have six shareholders all male citizens residing in the Samowia Village in the Turubu LLG and Turubu District. With 2000 shares of a total 10,000 issued in Sepik Oil Palm Plantation Ltd it owns 20% of the company. The Directors of the Company from the IPA Extract confirm fourteen male persons. They are as follows
No 1 2 3 4 5 6 Name of Director Aron Malijiwi Francis Yabarisa Michael Sino James Dawa Henry Areg David Simok Village Chairman, Munjun Wewak Kinare, Turubu LLG Kinare, Turubu LLG Parua,
833

7 8 9 10 11 12 13 14

Andrew Winkune Ronald Tekis Martin Nagua Ambrose Walindu Ronald Kausie Charles Warakau Robert Numbi Willie Nilmo

Putandau Kapore Block, NBPOL, WNBP Kubalia, Saussa LLG Yari, Turubu LLG Nungawa. Turubu LLG Nungawa, Turubu LLG Samowia Secretary, Kapore Block, NBPOL, WNBP

The Directorship does not include those 56 ILG Chairman so that this company can hold itself out as a umbrella landowner company for the project site. Wewak Agriculture Development Ltd Wewak Agriculture Development Ltd IPA registered 16 January 2008 holds some 8000 ordinary shares in Sepik Oil Palm Ltd issues on 23 April 2008 upon the incorporation of the company. Wewak Agriculture Development Ltd had one initial shareholder of 10,000 ordinary shares, Hui Teck Lau, a Malaysian resident in Port Moresby. He then transferred 9000 shares in the company, to one Ching Ming Ting, a Malaysian and 800 shares to Nyi Then also a Malaysian, 200 shares appear to have been retained by Hui Teck Lau himself. IPA CERTIFICATION OF FOREIGN OWNED COMPANIES No IPA Certification under Investment Promotion 1992 Act Part IV Certification to Carry on Business in an Activity as well as Part IVA Certification to Participate in a National Enterprise appear to have complied with by either Sepik Oil Palm Plantations Limited and Wewak Agriculture Development Ltd. The IPA and companies will have to confirm this as the result is under s 41A of the Investment Promotion Act 1992any resulting

834

contracts between the foreign enterprises and the other enterprise may be declared unlawful and void. Department of East Sepik Province The Department of East Sepik Province is the bureaucratic arm of the East Sepik Provincial Government whose primary role it is to facilitate government policies and directives through the work of its divisions of which the Lands Division is an important one. In the issuance of the Sepik Oil Palm Plantation Limited SABL a formal Land Investigation Report (LIR) conducted by the Lands & Physical Division of the Department of East Sepik Province. Land Investigation Report Land Investigation was conducted by Mr Peter Yapog of the Lands and Physical Planning Office, DESP on instructions of late Mr of DLPP and Mr Simon Malu. He conducted the land Investigation and compiled a report for Limawo Holdings Limited on 20th May 2008. There was no Application or Tender form sighted on file to indicate that Limawo or SOPPL did apply for SABL. It also meant that no due diligence was carried out by DLPP to determine any existing State Leases within the SABL project area. C.O.I. on its site visit confirm the existence of a cattle ranch, a military training area, an airstrip, district offices, high school and other leases. There was no survey carried out of the area and it does affect the existence of other State Lease within the SABL area. There was no survey map even produced at the time the land investigation was conducted. This was confirmed by Mr Yapog in evidence.
835

Mr Yapog relied entirely on the ILG information provided to him by the Mr Aron Malajiwi, Chairman of Limawo Holdings and his executives. The 56 ILG are provided below does not in fact cover the majority of landowners within the SABL Portion 144C as was evident by the objections and petitions by the affected ILGs/Villagers/Landgroup corporations from Turubu inland and coastal and villages within Kubalia District.
No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 ILG Name Mujin 1 Mujin 2 Suanum Seri Taul Sinamblai 1 Bungain Mandi Maur Kaupari Mundangai Harikwen Yaugibe Muari Namarep 1 Samap 1 Namaper 2 Kamasau Waibap Turubu Ples Mambe Parpur Yari Kambarika Putanda Kinare Nugawa Yambin Manuara Wamangu Kowiru Parua Samowia Serenge Wawat 1 Wawat 2 Tumeri 1 Sinemblali Forok 1 Forok 2 Kandai ILG Clan Munjin Bali Suanim Sisida Yangahanna Moror Mukaiya Taku Tangana Meggi Tekera Harigen Wining-Awa Sieri Muidrawa Wayar Haramutha Kamasau Waibap Koron Mambe Mamutika Yari Kualmu Muru Bonga Bormange Marngupli Tukauri Kumbungre Wandibu Ulimurakwa Tangu Tinomb Bako Kuilem Wawat Irwoma Sinemblai Wasusasu Doum Dubawa Kandai
836

Chairman Freddy Durin Jefry Wulubut Campbell Woruba Samson Mari Aron Saniwa Bernard Kawan Martin Takoin Leo Balthazar Mamia Mathew Albet Tamange Alex Kwarire Raymond Nombe Steven Mambahar Jimmy Kalebe Carl Reha Anton Wambu John Yakuma Raphael Barewoi Gabriel K. Gemes Herman Maragum Sixtus Suau Paul Bina Ambrose Walndu Daniel Matu Peter Yunora Robin Iru Daniel Spone Lusian Uropo Bonny Laio Alphonse Mali Joachim Yombi Deniel Jumour Nickson S Greig Thomas Binson Peter Kumerin Cleofas Rawina Ambros Jomb Joseph Dayamba Philip Dagun Redish Yuon Steven Mataken

42 43 44 45 46 47 48 49 50 51 52 53 54 55 56

Musagun Tring Timaru 2 Japaraka 1 Japaraka 2 Japaraka 3 Kusaun Porombe Weigembi Haniak Suandogum Wiamungu Mandowe Rabiawia Tuonumbu

Wulumaiya Tring Nauri Huiwani Huiwani Japaraka 3 Kusain Huonju Sausenien Haniak Kisihre Nuamberi Mandowe Sayawia Kisihri

Bonnfas Kamaru Teddy Atbo Andrew Ikwane Chris Mereng Florian Sapma Isaac Micah Thomas Polly Aron Wara Ryan Rakhua Joe Wundongu Piusk Suanga Francis Wiho Tony Sumboe Moses Wurifau Alois Ningi

The highlighted names of the clan indicated above reflect that these ILGs originate from one source and grouped within the LIMAWO Clan. The source of this reference is founded in the letter dated 13 September 2007 where Mr Peter Yapog submitted a list of 19 ILGs under the letterhead of LHL to the Registrar of ILG. From the original 19 ILG, Mr David Sponse was then Chairman of Marngupli (No 27), Mr Terence Mundako was then Charman of Wandibu (No 30) and Peter Mungori was then Chariman of Ulimurakwa (No. 31).

Genealogy inquiries Mr Yapog states in the LIR, Not relevant as members of these four landowning groups have agreed to give their land for the oil palm project development.(Paragraph 4 (g)-Ownership at page 2). That basically implies that Mr Yapog fail to conduct the social mapping to ascertain the clan ownership of land within the SABL. Certificate of Agreement to Sell/Lease Land Mr Yapog certified without any reference to Schedule of Owners as NOT APPLICABLE.(page 4 of LIR)
837

No survey was conducted at the time of the land investigation. (page 8 of LIR) Declaration of Custom in relation to Land Tenure Mr Yapog basically relies on the 56 ILGs as noted above and obtained signatures of the ILG Chairman. He also made a false declaration as he did not conduct social mapping within the villages/clans in the area known as Turubu/Sausso (pages 6-7). Certificate in relation to Boundaries Mr Yapog admitted that he did not walk the boundary. The Certification at page 9 of the LIR where he indicated walking the boundary with fifty six ILG Chairman over 123, 200 hectares on 4 February 2008 is false. Recommendation for Availability (sic) meaning Alienability was signed by Mr Samson Torovi, Provincial Administrator on 29th May 2008. This was for the land known as Turubu/Sausso for 123,000 hectares C.O.I also notes from the LIR that a further Recommendation for Alienability for land known as Jamawia/Parua/Kiniari situated at Turubu Inland for 123,000 hectares was also signed by Mr Martin Maingu, Acting District Administrator for Wewak District on 30th May 2008. Mr Yapog confirmed in evidence that it was mistake and that the Certificate signed by Mr Torovi was relevant to the SABL issued to SOPPL. This is reckless and can be inferred to mean that the LIR process was procured with constructive fraud on the part of Mr Yapog and does affect the certification for alienability at the Provincial Level. No reservation was made for customary rights over the land as the very paragraph providing that option was omitted.
838

We also note from the Report, that a letter written under the hand of Mr Dau S. Waskiay, Acting Advisor-Lands (ESPA-Division of Lands) to the Surveyor General indicated the existence of State Leases Portions 140 and 141 at Urimo (Catalogue Plan No, 3/435) in relation to Cattle Farming Project (5,409 hectares) and Military Training Area (589 hectares). The letter informed the Surveyor General to excise those land areas thus reducing the size of the SABL to 122,116 hectares from the original 123, 200 hectares. The letter is dated 18thJune 2008. However that information does not indicate any changes when the Title was issued to SOPPL. Mr Peter Yapog Conducted Land Investigation based on 56 ILGs excluding areas where the major objections are been noted, because the SABL covers the land over which the objections are been raised. Conducted investigation within a week because he had all available information including information that awareness meetings were organised with no input from Lands Office. Acted under instruction of late Mr Jacob Wafinduo from DLPP, Waigani He was incompetent simply because he wanted to Like I have already said, this is a blanket ILG for the purpose of securing this SABL. We would go into detailed LIR and survey as soon as we progress-this work progresses within this project area.(page 16 @ SABL Wewak 7 16/02/12) Page 12-This is only a blanket LIR. We will go into detailed LIRs and surveys when the project progresses. The local landowner company has that
839

in place. We would progress. We will conduct a detailed survey of clan boundaries and LIRs as work progress into each particular area, but this only a blanketHe disregarded Land boundary walks No survey conducted including map for the area Relied on the information provided by Limawo on the 56 ILGs. Lacked information on the population growth within the SABL project site Page 5 of LIR (Comments and Recommendations), Since this project has taken almost 11 years to come to fruition, it is hereby recommended that the application for lease-lease back be fast trekked (sic) fastracked to enable the investor-developer to commence development. This entails that all the relevant consideration for LIR process be ignored and work on what has been the basis for the application for SABL. The Recommendation for Alienability was signed by the PA Samson Torovi on 29th May 2008. This was 9 days after Mr Yapog completed the report and signed on 20th May 2008. No due diligence was conducted. Reservation for customary rights was considered as it was omitted from the LIR. It does raise very serious problems for landowners accessibility to land in terms of villagers, waterways, cemeteries, hunting, burial sites, water, gardening and use thereof of various other activities associated with the land. No proper survey plan and map

840

 Wrote a letter to Wewak Agriculture Development Limited giving assurance that the LIR has ben completed. This indicates collusion and goes to the credibility of Mr Yapog going an extra mile to provide an assurance to the developer. He writes the letter whilst he was conducting the LIR.(SOPPL 7) Threatened the investment would be lost if the process was not fast trekked according to Mr Dau Waskia the Acting Adviser. Relying on information provided by the landowner company showed no need to go each of the villagers to conduct the LIR Richard Kali and Aron Malajiwi (Summons) failed to appear as anticipated and their evidence was not received. It indicates the extend by which Mr Malajiwi had played an integral role in the acquisition and alienation of land in the name of the Lanco. His absence does reflect poorly on his actions from the very first day that the Commission visited the project site at Turubu and the continuing contempt to appear and give evidence. Mr Kali, a Provincial Forest Officer likewise failed to turn up to assist the Commission with information on why the logging continued to operate whilst the nursery was actually located on grassland before the saddle of ridges and forested areas near Cape Turubu and Turubu villages. Mr Peter Yapog to be reprimanded for basically acting on the advice of the LANCO and Investor and compiled a sloppy and unreliable LIR. PA who was also not available for hearing failed to undertake a comprehensive due diligence blinded by the projected development of the Sepik Basin and failed to acquire majority consent of the villagers/landgroups/ located within the SABL Project site.

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DEPARTMENT OF PROVINCIAL AFFAIRS AND LOCAL LEVEL GOVERNMENT (DAPLLG) Findings No Certificate of Alienability was issued under the hand of the Custodian of Trust Land in accordance with section of the Land Act. Recommendation That freshly conducted LIRs be provided to the Secretary of Provincial Affairs as the custodian of customary land for issue of certificate of Alienability. DEPARTMENT OF LANDS AND PHYSICAL PLANNING FILES THE REGISTRAR OF TITLES A title has been produced by the Registrar of Titles and there are no dealings recorded on the title document, although no file has been produced to date. The title enumerates that following improvement covenants:The lease shall be under bona fide for the purposes specified in the Schedule

The Lease shall be for a term specified in the Schedule commencing from the date when the land was leased from the customary landowners to the State under Section 11 of the Land Act 1996. The lease shall be rent-free for the duration of the lease

842

The lessee shall be responsible for the provision of any necessary easements for electricity, water, power, drainable and sewage reticulations The lease shall take into consideration the Consent/Undertaking signed by the agents/representatives of the landowners in the event that vesting of the lease to a company is in issue. Covenant five brings into issue the implications of landowner ownership and hence landowner consent on the lease. CUSTOMARY LANDS DIVISION HELD NATIVE LAND DEALINGS FILE There was no survey plan on file and the one provided from the Surveyor Generals office remains unexamined. There is no land investigation report on the file provided and hence no recommendations as to alienability are found on file A lease-leaseback instrument dated 29 July 2008 was signed by some 56 land owner representatives who all appear to be the Chairmen of ILGs along with State representatives. A search of the ILG Registry will need to be conducted but there is no Land Investigation Report on file to confirm ownership and consent by the customary landowners. It appears that Limawo Holdings Ltd has been spearheading the SABL application. On file in chronological order are the following documents:-

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 Letter dated 8 March 2007 from Turubu Local Level Government where in then President and Project officer of the Turubu ILG sign off on a letter informing of the formation of Limawo Holdings A similar letter of support from the Sausso Local Level Government is on file dated 17 July 2007 A letter pertaining to the registration of some 52 ILGs from the Turubu Inland, Wewak District originates from the East Sepik Provincial Administration Lands Division to the Registrar of Incorporated Lands and copies attached to it appear to be landowner consents on Limawo letterhead. In a handwritten memo dated 5 June 2008 from Ms. Vahine Gure the ILG Registry Manageress indicated that not all the necessary requirements have been provided for the registration of the ILGs. Including a family list, property list and covering letter to support the application. Limawo Holdings Ltd has provided a list of some 56 ILG names however no confirmation of their registration with the ILG Registrar, although numbers are listed next to names of ILGs on the lease -leaseback instrument. This will need to be confirmed with the ILG Registrar. Documents provided by Limawo Holding Ltd to the DLPP outline the reasons behind a 20% - 80% shareholder split ownership of the SABL grantee company and a resulting Consent/Undertaking document by Limawo Holdings Limited the one referred to in improvement covenant five of the lease.

844

 In a letter dated 10 July 2008 on Limawo Holdings letterhead recounted a Resolution of a Limawo Board of Director meeting held on 20 April 2008. In it they resolved to have SABL granted to Sepik Holdings Plantation Limited as a joint venture company with investor Wewak Agriculture Development Ltd. In the resolution the 5 of the 6 directors irrevocably agreed to do so on behalf of the 56 ILGs, of which ILG Certificates and consents have yet to be sighted. As noted in the IPA files Sepik Oil Palm Plantation Limited was actually incorporated just 3 days after the Board Meeting, on 23 April 2008. A company that is 80% owned by non-citizens. Consent/Undertaking Document as a Joint Venture Agreement A Consent/Undertaking document was also provided by Limawo Holdings Limited. In it they signed away their rights of objection to the granting of the SABL to the 20%-80% owned Sepik Oil Palm Plantation Limited. To that effect a Joint venture agreement is referred to. Mr Pepi Kimas the then Secretary for Department of Lands and Physical Planning signed off on the Agreement. Mr Kimas in brief explained that it was efficiency on the part of DLPP to deal with the Undertaking/Consent which he said was a protection for the landowners in a joint venture agreement. In addition he did not see anything wrong with executing the Consent/Undertaking and the Notice of Direct Grant on the same day i.e., 2nd September 2008. (Refer to his evidence at Transcript of Proceedings SABL 77 Waigani at pages 68-80)

845

We are critical of the manner by which Mr Kimas on the advice of his officers proceeded to accept the instrument of consent/undertaking when it was officially gazetted on 14 April 2008. It was highly irregular and even though we have had no evidence to the effect as to who prepared the document, it was highly likely that DLPP may have drafted the document. The signatories to the Consent agreement are the late Jacob Waffinduo according to Mr Yapog was instrumental in the issuance of title to SOPPL. The Mr Ian Kundin, Legal Officer for DLPP also witnessed the signing of the Consent and Undertaking. That practice is a contrary to the adopted administration of the SABL process where the LIR is the only process by which consent is regularly obtained. In addition, the Notice of Direct Grant signed on 2nd September 2008 gave very little opportunity for other affected landowners to present their views on the changes that were been made to the previous Gazettal. The Joint Venture agreement between Limawo Holdings Limited and Wewak Agriculture Development Limited was signed on the 18th April 2008. In the Joint Venture agreement there was also a Limawo Holdings Limited Directors Resolution dated 18th February 2008 agreeing to the shareholding arrangement between Limawo Holdings Ltd and Wewak Agricultural Development Ltd. An undated 69 page proposal document titled Wewak Oil Palm Plantation Development Proposal is also on DLPP file. It was prepared by Wewak Agriculture Development Ltd. DEPARTMENT OF AGRICULTURE & LIVESTOCK FILE

846

From the documents produced by DAL relate to the three requirements of pursuant to the affidavit of Francis Daink Deputy Secretary of the PATS dated 30th August 2011. In it he swore that the processes to approve an agricultural project for the purpose of issuing of a Forest Clearance Authority were a three step process. These are specifically assessment or evidence of: - (i) land capability and suitability (ii) the land use (or estate) development plan and (iii) public hearing(s) conducted for the stakeholders affected by project development. Land Capability and Suitability: - An incomplete proposal document was produced by DAL, merely the attachment to a main proposal was provided. It appears to be part 2 of the proposal produced on the DLPP files. From this we were unable to determine how the DAL could assess land or soil suitability and capability in terms of topography. There appears to be some assessment in a site visit by Mr Daink and the Land Use Advisor P&ISSS, Mr Mai Baiga dated 27 June 2008. In it there are references to historic assessments from 1987 and 1992. In their conclusion as to general suitability in this report they conclude that it is moderately suitable for oil palm growing. It stated that soil depth and drainage are the major limiting factors. Land Use Development Plan: - As stated earlier we have received incomplete documents from DAL and are unable to establish whether there has been one provided for assessment. What has been forwarded to this office is the 2010 2011 Forest Clearing and Agriculture Development Plan (Coupe 1 Carried-Over Areas) for Wewak - Turubu Large Scale Integrated Agriculture Project (FCA No 11-01) prepared by Wewak Agriculture Development Limited. The developer has asked for an extension to its clearing plans. It is eager to clear
847

some 8472 hectares of forested area however only willing to plant in grassland areas 4044 hectares. There is no mention of the 500 hectare clear & plant legislative requirement in the revised plan. This plan though has met with the approval of DAL and the PNGFA with unreserved endorsement in a memo dated 05 July 2010 Richard Kali, the Wewak-Turubu Project Supervisor for the PNGFA in East Sepik Provincial office was summonsed (Summons 292) to give evidence. On the afternoon of Thursday 16th February 2012, the Commission was unofficially advised through Counsel Assisting that he had left suddenly for Port Moresby on official business. The logging activity on the SABL site required some answers especially whether the Provincial Forestry Office was monitoring logging activity of the SABL Grantee especially if the forest clearance was related to the planting of oil palm. The C.O.I made specific direction for his attendance at the hearings of the COI on either 27th or 28th February 2012. The Commission was also fully aware that at the relevant time, there was issues relating to the impasse in government and Wewak was embroiled in some political controversy hence disruption to the normal flights into Wewak from Port Moresby. The same applied equally to Mr Malajiwi, Chairman of LHL and Messrs Hui Tech Lau and Joseph Tan of WADCL (Investor/Developer) regarding the export of logs. (See Transcript SABL 7 Wewak dated Thursday 16th February, 2012 at pages 39, 80, 83 and 126)

In addition the report does say that the oil palm seedlings will be ready for planting in the grasslands in October 2011. Our assessment was that it was only recently planted and that there was no existing infrastructure to satisfy the C.O.I that work was progressing since the SABL was issued on April 2008.

848

Public hearing(s) conducted for the stakeholders affected by project development:- With the third requirement there is evidence of a public hearing being conducted on 25 July 2008 Tumurau Primary School, Turubu. In attendance was Provincial Deputy Administrator, Deputy Secretary for DAL, Transport Dept and PNGFA representative. Most attendants appear to be in agreement with the project however only 18 different people spoke representing 9 different ILGs. Under cover of letter dated 30 October 2008 DAL Deputy Secretary Francis Daink informs Secretary Benjamin of DAL to sign the Form 235 Certificate of Compliance for Large Scale Conversion of Forest to Agriculture. He says that attached to the letter is a Submission Report the PNG FA, Minute of the Public Hearing and a Copy of the land use report was granted on 26 November 2008. The Submission Report which appears to have been revised several times must be produced by DAL as it is not on file. This same submission was not produced on the PNGFA file provided to COI. The PNGFA was informed by DAL in a letter dated 12 November 2008 a revised submission is included for the next Board meeting for approval of granting of FCA to Wewak Agriculture Development Limited. On 26 November 2008 the Form 235 Certificate of Compliance for Large Scale Conversion of Forest to Agriculture was signed by Secretary Benjamin. On 26 November 2008 a letter of congratulations informing Wewak Agriculture Development Limited of it being granted the Certificate of Compliance was sent.

849

On 27 November 2008 a letter to PNGFA was sent conveying DALs satisfaction that the requirements of compliance have been met for the issuance of the Certificate of Compliance and that PNG Forest Board would issue the Forest Clearance Authority. The latest document on file is an unsigned NEC Submission dated January 2010 regarding the project seeking approval of a 5-year funding plan for landowner company Limawo Holdings Ltd. No other documents was submitted and filed with the COI.

PNG FORESTRY AUTHORITY FILE The file was produced by the PNGFA 28 August 2011. It contains the joint venture agreement between Limawo Holdings Ltd and Wewak Agriculture Development Limited. A minute dated 16 December 2010 and a letter dated 06 December 2010 to Wewak Agriculture Plantations Limited confirms PNGFA approval of the Revision plan per paragraph 24 above. There is no mention of the 500 hectare fell and plant requirement This is despite numerous letters on file of selective logging with no work done to clear land for oil palm planting. An inspection was carried out 12 March 2011 which showed that 120 km of road have been constructed. 98,000 seedlings were awaiting planting although survey and demarcation work for sub-dividing the plots was yet to commence. The first lot of seedlings should have been or about to be planted.
850

East Sepik Provincial Forestry Management Committee (PFMC) submission was prepared 4 March 2009 but attachment documents are in draft form. In a letter from the East Sepik Provincial Administration Wewak District Administration to Customary Lands Division of Land Administration signed by District Lands officer, an undertaking that the 56 villages or landowning groupings or ILGs in the Turubu LLG area are committed to the project. This letter is copied to the Chairman of Turubu Incorporated Land Groups care of Division of Lands PO Box 475 Wewak. This will need to be clarified as this is the first reference in any of the files of a Chairman for the ILGs of the Turubu LLG area. On the PNGFA file are letters of support from Provincial Administration, fron Local Level Government and the DAL. One letter dated 14 May 2008 from the East Sepik Provincial Administration supporting the Turubu project assuring Wewak Agriculture Development that the project has been integrated into Provincial Development plans and policies. There is a Notice to Undertake Environmental Impact Assessment on the PNGFA file dated 2 July 2008. A draft submission to the Provincial Forestry Management Committee dated for sometime in March 2009 is on file. However it is simply a draft with attachments missing. A completed submission along with the Notice of Decision will need to be sighted. The Provincial Forest Management Committee will need to provide this. DEPARTMENT OF ENVIRONMENT AND CONSERVATION

851

An environment permit was issues under Section 65 of the Environment Act 2000 issued on 5 December 2008 to commence 2 January 2009. This was as a result of what appears to be the rigorous permitting process all Integrated Agriculture projects go through as sworn to by the affidavit of Michael Wau Director Delegate of the DEC. Steps 1, the Notification of Preparatory Work has been done by Wewak Agriculture Step 2 sees a Submission of an Environmental Inception Report which is also in the DEC file forwarded. Step 3 sees a Submission of Environmental Impact Statement completed, also on file. Step 4 is an assessment of the EIS by the Director DEC, however this assessment for this project EIS appears not to be on file. Step 5 is the Public Review and Submissions on the EIS. This was conducted with key agencies consulted via mail and public hearings were conducted on the 24 & 23 September 2008 at Yamungun and Balik Villages Turubu respectively. There were 26 attendees from the local community. Many expressed environmental damage concerns but were positive about the opportunity this development gave to them. Step 6 would entail DEC acceptance of the EIS through a letter to the proponent. There is no record of this on file.

852

Step 7 is the Referral of the EIS to the Environmental Council appears to be an Agenda Paper to the Council dated 4 November 2008. Steps 8 & 9 sees the Council making positive recommendations leading to the granting of the Ministerial Approval in Principle. This docume nt is on file signed by then Environment Minister Benny Allen on 19 November 2008. The final step is the developer/proponent applying formally for an Environmental permit which appears to have happened as no letter has been sighted on the DEC file.2 Environmental Permits were issued on 5 December 2008 to commence on 2 January 2009. Term of both permits being 25 years to expire on 1 January 2034. One for general work of the Project & waste discharge and the other for water extraction. There are broad terms governing the work under the Permits, as a guide to the COI, the permit requirements should be observed when conducting the site visit to get a first-hand account of compliance and further understanding of the intention of the SABLs; customary landowner economic benefits via agriculture and business on their traditional land and how this intersects with environmental impacts on a previously subsistence life on that same land.

853

Objections and Petitions of the Landgroups associated with SABL 144C Objecting Landowners The following landowning groups objected to the blanket SABL issued to SOPPL. The objecting parties comprise landowning groups, ILGs, Landowning companies, NGOs and interested parties. Landgroups from Saussia, Kubalia Station consisting of Rokumdokum vllage, Swandukum village, Haniak village, Wirkambi village, Korumbu village and Chabaraka village, Passam Angoram within Turubu inland and LLG and Tring LLG were represented by Mr Hubert Wally, lawyer with Jaminan Lawyers and provided both Affidavit and oral evidence to the COI at Wewak. The objections related to Some of the villagers gave their consent based on a purported ILG Letter that substantially promoted development for their land and its vast resources. They also did not consent to convert their land to SABL. Lack of awareness by Division of Lands and Physical Planning within the ESP over the land investigation process No awareness on the environmental impact statement which is crucial to the preservation of the flora and fauna within the project area. The meeting or awareness that was held was only confined to two specific places and the majority of landowners from Saussia and Turubu was unable to attend and provide their views on the agriculture project

854

 The actual land investigation focussed on the 52 ILG which only related to a small portion of the entire land. Wewak Agriculture Development Limited and landowner company Limawo Holdings Limited obtained consent by fraud without consideration on the customary ownership that clan and families own land. Certain ILG Chairman did not represent the interest of the majority of landowners. They heard of the SABL grantee during the SABL Inquiry hearing at Wewak. Existing State Lease, High School, District Services, High School, Airstrip. The evidence was confirmed by Mr Michael Caypah from Bungan village, Turubu and current Chairman of Bungain Bagloise ILG, the overall landgroup of Bungain village. He gave evidence as an elder on behalf of 600 people from his village. The ILG is YAMBUNGAIN. Their general objection was the construction of a road through their land. o Not shareholders of Limawo Holdings Ltd o No knowledge of Mr Yapog and the land investigation Mr Mathew Koimo from Nungawa village, Saussia LLG in the Kubalia District Mr Michael Marmber from Pangkor village, Turubu inland and represents about 200 people from his village. Need proper negotiations and awareness for SABL. Mr Gabriel Dagun from Forok, Tuturbu coats in Wewak District

855

Mr Michael Sau Chairman of Katnimber ILG, Kambaraka village, URIMO station. ILG was registered prior to the SABL No proper LIR Oil Palm Project was a rushed project with no proper assessment ILGs forms were not done properly and a villager distributed the forms and noninput from Lands Office. His ILG is KATNIMBER INVESTMENT (ILG 9551)covering Yari, Nungawa and Kambaraka in the vicinity of the Saussia LLG.covering 4,500 hectares. Cant progress with their project because of the SABL. They do not want oil palm development but would opt for another project. Public Meeting held at Tumura Primary School on 16 October 2008, the presenters and organizers never mentioned SABL. Mr Daink was present, ESP Officials and National Government officers. The ILG forms were also conducted (see page 30 of the Transcript SABL Wewak 7) Limawo Holdings hijacked the process and he stated his reasons at the meeting of February 2008 Not signed the Lease Lease Back Agreement-been a vital part of the SABL did not consent to the SABL. AUGUSTINE MONDU FOR AND ON BEHALF OF SENGI LAND OWNERS Representing villagers in Tring, Yulao Kamasau and Murai, the letter is signed off by 17 people. He provided a comprehensive submission letter to the Commission dated 29 August 2011, although unsworn it makes allegations and
856

relays grievances that the Commission should note for further investigation and possible examination. These are: that there was limited awareness and notification of the project and its impacts to the majority of affected landowners of the project; that there were ongoing landowners disputed prior to the project development and now during however developer has failed to take note and instead exacerbates landowner tensions with the allure of hard cash Land Group known as Limawo Incorporated Land Group ILG Reg No 13993 has held itself out as the sole representative of 56 villages, he says this is incorrect and it has led to a single family group from one village to incorporate Limawo Holdings Limited. A search of the ILG Registry will need to be conducted ILG Certificates for many landowner groupings applied for have yet to be released Major concern in manner of logging timber which they believe is indiscriminate and wasteful and venturing onto land not covered by the SABL and then not compensating the landowners for that mistake The logging and road construction has destroyed sacred sited reportedly the logging road through Urimo land. That the shipping berthing area is also causing marine environmental damage to land and fish stocks.

857

 Questions why logging continues when the road to the oil palm planting area has been constructed and the COI continues (he believes moratorium stops ongoing SABL based logging projects) Limawo Holdings Directors have committed fraud by selling shares in Limawo for K500 each; that there appears to be no returns for the investors. Continued landowners grievances have been ignored by the developer. SPENCER POLOMA CURRENT ACTING CHAIRMAN OF LIMAWO HOLDINGS LIMITED In a sworn statement dated 18 August 2011 Mr Poloma claiming to represent the current interests of the Company, states the following: That the previous founder of the company one Aron Malijiwi has been sidelined and he claims in court for corrupt practices, that Malijiwi was more aligned wih the Developer than looking out for the interests of the landowners that he reportedly represented. Mr Poloma says that he therefore speaks for Limawo, this must be further investigated. Described SABL grantee Sepik Oil Palm Plantation Limited as a ghost company That the developer Wewak Agriculture Development Limited has breached the Joint Venture agreement and Log Marketing Agreement as of 13 July 2009 when machines first landed at Turubu Bay.

858

 Makes bribery and collusion claims against the local Police, Provincial administration staff and provincial PNG Forestry Authority officers as well as the Turubu LLG President with the Developer. Bribery allegation are made against the Chair of the Environment Council, that he received K10,000.00 from the developer on 3 November 2008 A disregard of the sacred sites by the developer is an ongoing concern Multiple claims of fraud have been levelled against Aron Malijiwi and that he as well as the developer used the SABL title as security to secure a Maybank (PNG) Bank loan in April/May 2011 Much social upheaval due to the presence of the project MICHEAL SAU, CHAIRMAN OF KATNIMBER ILG No#9551 KAMBARAKA VILLAGE URIMO YANGORU SAUSSO DISTRICT Under cover of a Statutory Declaration dated 25 August 2011 Mr Sau makes initial reference to the lack of proper site inspection when conducting the survey mapping of the land area. He also spoke at the DAL Public Hearing, a copy of his speech was on the DAL file on 25 July 2008. On 28 July 2008 the LeaseLease back was signed without Mr Saus signature with no reference to his ILG. Says that the process of landowner consultation was flawed OF

859

 Claims that he discussed the matter with then Chairman Aron Malijiwi, who clearly stated he did not have landowner consent and once he secured investors he would sort out the landowners. Claims that his own ILG was not consulted. From cross checking with ILG Chairs that signed the Lease-Leaseback instrument ILG numbers do not correlate and Mr Saus own village as it appears to have 2 ILGs the other one of which signed on the Lease. Another claim that K500 membership was collected from 2000 to 3000 landowners each by Limawo Holdings Ltd with the promise that blocks of land would be offered to the person paying the K500 Indicated at the end of his submission his availability to give evidence to the Commission. CENTRE FOR ENVIRONMENTAL LAW AND COMMUNITY RIGHTS INC (CELCOR) SUBMISSION Submissions received by the Commission on 6 September 2011, via affidavit sworn by Joseph Lai employed lawyer of CELCOR representing clients within the Tring/Turubu District of East Sepik Province. Specifically highlighting the Department of Environment and Conservation permitting concerns They claim that much of the statements made in the Environment Impact Statement which they have appended to the affidavit, the same EIS contained in the DEC file referred to earlier in this address, are false and misleading namely:

860

Requirements under the Lands Department processes for SABL registration were not carried out as no Land Use survey per paragraph 2.9 of the Environmental Impact Survey Report were conducted. The Landowners claim they were never visited by the Lands Department or PNGFA representatives. Therefore no confirmation of ownership and consent per relevant sections of the Forestry Act Pursuant to paragraph 5.1 of the EIS there is reference to the company being a newly registered company. As such it has no way to confirm its economic viability for the development of the project, the permits appear to be granted virtue of its parent companies although no profiles of this are included in the EIS The Executive Summary of the EIS claiming benefits will be maximized for landowners is misleading and false as only a few selected landowners benefit. One of CELCORs recommendation is that provincial level government stakeholders be looked at closely, specifically the Provincial DAL, Lands and Provincial Forest Management Committees. There is some doubt as to the Provincial Forest Management Committee approval. This is in line with the mere draft document sighted on the PNG Forestry Authority file that had yet to be submitted to the PFMC. IBAWAN HOLDINGS LIMITED A letter of complaint dated 17 August 2011 briefly detailing the lack of landowner consent of the people of Trin, Wau, Kamasau, Ibab and Wandimin. Also that trees had been harvested on their land but were not compensated for.
861

Previous letter of complaint to the Surveyor General was attached dated 10 December 2010 detailing the lack of consensus for determining the land boundaries. They expressed concerns for their own project and land boundaries. A full submission was received on 15 September 2011 detailing the Jetropha Bio Fuel project in the Ibawan Wandimi area of East Sepik Province and the encroachment issues. It provides details of the encroachment in detailed maps, these will need to be explained and more carefully mapped by technical person. There appear to be approvals of the project itself from the Department of Agriculture & Livestock. As the required DAL stakeholder meetings which is a necessary part of the assessment process there would be much debate on the encroachment issue and should have influenced approvals. The Evidence of Godfried Raushen Mr Godfried Raushen, Caretaker Manager of IHL and Provincial Liaison Officer (PLO). Current Public Servant and seconded to the Company.From Yumungu village within the project site.District Administrator for Yangoru Saussia from 2003,2004 and 2005. Consent Forms signed after issuance of SABL Title in 2008. It was signed on 2009.Blanket Consent Forms used by the company to obtain agreement for villagers within the SABL to plant oil palm in their land. Q. What about the consent process before the SABL title was granted?

862

A.

These ones are blanket ones. I have got a copy here with the copy of ILG Certificate. Those are the blanket consent forms signed by the ILGs. These are blanket consent forms. And also after the blanket consent forms that actually the company went in there and asked clan by clan, if you agree for the company to come and plant oil palm on your parcel of land, they also design and issue the consent form.

(Transcript SABL Wewak 7-16/02/12 p50) The Executives of the Developer sought through Mr Kuman of counsel to give evidence in Port Moresby. MARTIN SHUKWEI of IBWAN HOLDINGS. Formed ILGs and landowner company and to acquire first 10,000 hectares within the SMOIA AND BARUA Village where the current estate is. Internal differences when Malajiwi failed to conduct meetings and sided with INVESTOR. R Joseph Tang.(Page 97 @ SABL Wewak 7) IBWAN Is name of the clan where all the Directors come from namely ARON MALIJIWI, MALCOLM NUMBON,GREG SHUKWEI, MARTIN SHUKWEI and WILLIE YAPARUI.-name originated from their clan name. A: So, counsel, without knowing that this whole land-the entire land of Turubu and Saussia had gone to SABL. We all did not know, even myself.

863

A.

To the best of my knowledge, the Deputy Chairman is the one to start the project. Peter Yapog did not go out to hold meeting at a particular place at any one time, nothing.(page 98)

IBWAN was the major driver of the ILG application and registration. There is evidence that the lands officer did not go from village to village from Kubalia down the Sepik Plainsand conducting public hearings to gauge views of the people. (99-100) RECOMMENDATION 1. The Land Investigation Report was flawed because it failed to ascertain the majority consent of the whole landgroups within Turubu inland, Turubu coastal, Sausso, and Tring. 2. The Consent/Undertaking signed on 2nd September 2008 subsequently Notice of Grant issued by the Delegate was highly irregular and must be nullified, as there is in existence a Gazettal of 14 April 2008. 2.1. The Gazettal of 14 April 2008 is not supported by a Notice of Grant issued by either the Minister or his delegate. 3. Limawo Holdings Limited and the 52 ILGs does not reflect the true landgroups from within the SABL Portion 144C. The land area must only be confined to the Nursery at Malapo Grassland and must include those villages aligned to Limawo HL. 4. There is justification in the revocation of this SABL and for new Land Investigation process to be convened. A proper awareness including the
864

need to walk the boundary and undertake social mapping must be coordinated. 4.1. SOPPL is a foreign owned company and the Joint Venture Agreement has not been adopted between the parties except for the Consent/Undertaking between LHL and the State. 4.2. SOPPL is not IPA compliant in terms of the activities it conducts within PNG. 4.3. SOPPL does not have the managerial, nor the capacity to undertake large scale agriculture activity and is a logging company. 4.4. The lack of infrastructure at the Nursery and Oil Palm Estate indicates that SOPPL lacks capacity both financially and experience in the agriculture sector. 4.5. 5. The soil is not suitable for oil palm estate

The Objections raised by the majority of landowners indicate that the line agencies linked to SABL process have not coordinated well enough to educate the villagers on SABL and its impact on their customary land and development prospects for the landowners.

6.

Revoke the SABL title to SOPPL.

865

MADANG PROVINCE

866

COI Inquiry File No.74 for Special Purpose Agricultural and Business Lease over Portion 16C Volume 18 Folio 22 Milinch: Savai & Annaberg (Ne & SE)Madang Province in the name of Urasir Resources Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the Urasir Resources Limited SABL. These were: 1.2.1 Department of Madang Province, (DMP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGForest Authority) Witnesses and Summonses 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings are set out in the schedule below.

867

No 1

Name and Position Rodney Robin Bakou, Acting Manager, Continental Joint Venture (CVL), Developer/Investor Mr Bernard Lange, Provincial Administrator, Madang Provincial Administration, MP Mr Emeterio Lujero, Consultant (Agriculture) to CVL, DD Lumber Ltd NCD Mr Micar Mer, (Summons 316 dated 15/02/12) A/Provincial Customary Lands Officer, Provincial Lands and Physical Planning Branch, DMP Ms Christabel Maino Remi, Lands Officer, Customary lands Section, Provincial Lands and Physical Planning Branch, DMP Mr Zerenius Sokrim, (Summons) Landowner, & Fmr Chairman of Urasir Resources Limited, Ulis Village, Josephstal, Middle Ramu District Mr Stanley Harringgu, Former Director, UDL,Landowner, Ulis Village, Josephstal, Middle Ramu District Mr Mathew Ware, Landowner but outside SABL project site Mr Michael Hardibua, Landowner, Current Director and Treasurer of UDL Mr Alfeus Sakiku, Chairman of Shareholders, Kaniku ILG Mr Simon Malu, Director, Customary Lands Division, DLPP Mr Francis Daink Deputy Secretary (PATTS),

Pages 44-47 58-81 1-35 47-58

Day 2 2 3 2

Date 23/02/12-SABL 2 Madang 23/02/12 SABL 2 Madang 24/02/12 SABL 3 Madang 23/02/12-SABL 3 Madang

35-52

24/02/12 SABL 3 Madang

53-72

24/02/12 SABL 3 Madang

72-81

24/02/12 SABL 3 Madang

82-115

24/02/12 SABL 3 Madang

115-134

24/02/12 SABL 3 Madang

8 9

134-140 140-143

3 3

24/02/12 SABL 3 Madang 24/02/12 SABL 3 Madang

10 11 12

143-147 15-41 12-26

24/02/12 SABL 3 Madang 09/01/12-SABL 71 Waigani 05/09/11-SABL 13 Waigani

868

DAL

2-33

06/09/11-SABL 14 Waigani 11/01/12-SAB: Waigani

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel. The following were granted leave to be represented by counsel
Mr Peter Kuman Kuman and Associates

Exhibits and documents There were sixteen (16) documents tendered as evidence before the Commission at the public hearings. A list of the Exhibits is shown below.
No 1 2 Item Copy of Land Investigation Report, URL Instrument of Lease/Lease Back Agreement Between the State and Customary Land Owners of the land known as Urasir Agency Agreement Plus Other Declaration in Relation to land Tenure C.O.I C.O.I Interested Party Date received 09/01/12 09/01/12 Exhibit Number URL 1 Simon Malu URL 2 Simon Malu

C.O.I

09/01/12

URL 4 Simon Malu

869

and all other documents that are usually appended to the LIR a) Letter to the C.O.I dated 22/02/12 By Mr Bernard Lange, PA. (b) Letter by Mr B. Lange, PA to DLPP Secretary dated 8 March 2011; and (c) Copy of Daily Appointment Register from Mr B, Lange, PA from Z. Sokrim and Mr Sakauvi together with two letters dated 3 Feb_12 and 2 Feb_12 which Mr Lange claim he did not sign Recommendation as to Alienability signed by Mr Lange, PA for Madang on 10 March 2012 Urasir Rural Development Project Pertinent Documents with regard to COI submitted by Landowner company URL and Developer CDL. Land Investigation Report-A brief Report of the Lands Investigation for Urasir Resources Ltd to C.O.I for SABL from Acting Provincial Customary Lands Officer, Mr Micah Mer dated 22 Feb_12 Written Statement of Mrs Christable Remi, Lands Officer, Customary Lands Section on the Trip to Ulis Village between 1214 December 2010 by herself and officers from DLPP, Port Moresby Minutes of First AGM of URL 5/2/11 Statutory Declaration of Mr Z. Sokrim with Attachments to letters and correspondence and other Company Documents

C.O.I

23/02/12

URL 1 Bernard Lange

C.O.I

23/02/12

URL 2 Bernard Lange URL 4 Micah Mer

C.O.I

23/02/12

COI

23/02/12

URL 5 Micah Mer

COI

23/02/12

URL 6

8 9

COI C.O.I

23/02/12

URL 7 URL 8

870

10 11 12

13

14

15

16

Letter to the Chairman, C.O.I dated 23 August 2011 by Mr Sokrim Letter under URL dated 22 Sept_11 addressed to Minister for Lands Letter dated 26 Sept_11 to Chairman, C.O.I by Mr Sokrim expressing his complaints about the Developer Documents to Chief Commissioner of the C.O.I dated 29 September 2011 by Mr Sokrim. Statement made to Police Fraud Squad and AntiCorruption Unit by way of a letter dated 3 September 2011 by Mr Sokrim with other relevant documents bound together including leases, SABL title and copies of ILG Certificates. Minutes of the Shareholders Meeting of 8 December 2011 with Attachment of Other Miscellaneous Documents Complaint Statement dated 10 October 2011 by Michael Handibua, Director and Traesurer, Urasir Resources Limited.

COI COI COI

23/02/12 23/02/12 23/02/12

URL 9 URL 10 URL 11

COI

23/02/12

URL 12

COI

23/02/12

URL 13

COI

23/02/12

URL 14

COI

23/02/12

URL 15

Timeline of events of note surrounding Urasir Resources Limited SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution 13 August 2010 Proponent/Applicant Respondent Entity/Respondent CVL

Incorporation of Continental Venture Limited

CVL

871

2 3

Incorporation of Urasir Resources Limited Land Investigation Report (Undated and Blank signatures and No Recommendation for Alienability signed) Lease-Lease Back Agreement (undated) Gazettal Notice of Direct Grant issued to URL-Gazettal No 967 Agriculture Sublease Agreement Between CVL and URL SABL Lease Title

24th September 2011 Undated but according to evidence of Cristobel Maino 12-14 December 2010 13 December 2010 14 March 2011 14 March 2011

URL/CVL C.O.I

URL/CVL C.O.I

C.O.I C.O.I

C.O.I C.O.I

C.O.I

C.O.I

16 March 2011

C.O.I

C.O.I

FINDINGS The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Urasir Resources Limited. Urasir Resources Limited SABL A Notice of Direct Grant under Section 102 of the Land Act was made in the National Gazette No. G967 dated 14th March 2011 for Portion 16CUrasir Land.The term of the lease was for ninety-nine (99) years. A Special Agricultural and Business Lease was registered and issued on 16 th March 2011 by the Department of Lands and Physical Planning to the holder Urasir Resources LimitedSABL(URL). Mr Romilly Kila Pat, signed as delegate of the Minister for Lands. The detail of the SABL is shown below:

872

Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease

Portion 16C 7/230 Urasir Resources Limited 14 March 2011 Ninety-nine (99) years 112,400.00 hectares

Location According to the Land Investigation Report, the proposed project area is located north west of Madang near Aiome and Josephstal Government Station in the Middle Ramu District of Madang Province. That SABL is approximately fifty (50) kilometres from Josephstal Government Station and means of access is very difficult and the only means is by foot using local bush tracks otherwise using helicopter from Madang Airport. Site Inspection Due to difficulties encountered due to logistical, terrain and time allocated to the C.O.I. Inquiry team, the C.O.I was not able to travel to Urasir Project Site and undertake inspection and talk to the landowners over the inquiry into SABL Portion 16C to Urasir Resources Limited. The only accessibility was by way of helicopter and the limited funding availed to the C.O.I was insufficient to undertake the visit a requirement under the TOR. IPA COMPANIES REGISTRY RECORDS URASIR RESOURCES LIMITED Urasir Resources Limited was incorporated on 24 September 2011, company registration number 1-75759. According to the Certificate of Incorporation and its registered office is at section 215 allotment 2, Unit 1, Mage-Mage Street,

873

Gordons, National Capital District, and its postal address is PO Box 567, Waigani, National Capital District. This information is from current companys extract as at 30 June 2011. URL has issued 10 ordinary shares which are issued to the following people: Michael Ambidua of Pamin village; Mathew Auri of Ulis village; Dominic Aguhai of Ulis village; Stanley Kari Hirringgu of Maumiku village; Leslie Kasuran of Katiati village; Pias Kubuguli of Kamambu village; Lukas Sakam of Niksapai village; Kivens Sakua of Sereven village; Joe Sikum of Sereven village; and Serenus Sokrim of Ulis village. That is a total of 10 shareholders. All of the shareholders are from Middle Ramu District. Their postal address is PO Box 1336 Madang. These shareholders are also Directors of the company and Mr Serenus Sokrim appears to be the Chairman. The companys returns are made up to 15 September 2010. Landowner Disputes The project in itself created divisions between the landgroups of Urasir. One faction was led by Sokrim, the Chairman of URL, and other group under the leadership of Mr Stanley Harriggu These group are the new Executives of URL was installed after CVL initiated and funded the meeting to appoint Chairman and new Directors to the company. It was suggested at the hearing that Sokrim spent more time at Port Moresby and that there was a need to appoint a new Chairman. Whilst it was clear that misunderstanding was evident over the custody of the ILG certificates, SABL Title, The Project Agreement and The Agriculture Sub-lease was in the custody of CVL, Mr Harriggu who was the vocal agitator of the group realised that Mr Sokrim was not keeping any of the

874

documents the subject of their suspicion and eventually the illegal meeting procured by CVL to remove Mr Sokrim. We find that the Development Partner in this case CVLK failed completely to ensure transparency and good governance in its dealing with the landowners of the SABL project area. The C.O.I says this for the reason that it is evident that CVL procured signatures of individual landowners for instance during 13 th December 2010 at Ulis village at night which we extract from Mr Sokrims evidence on oath as follows; Q: The Land Investigation, if I can take you to that, to the land investigation. You heard the Land Officers, you also heard the questions we asked of the developer. We need to hear from you as to how you guys conducted the land investigations. How you achieved to obtain the consent of the people.

The Officers from Port Moresby, Mr Simon Malu and Lands Officer, Mrs Maino as she then was, Mr Robin Buck and

A:

And another officer, Mr Sumali.

Q:

Who?

A:

Another Lands Officer, Manager to Mr Simon Malu.

Q:

They came to your village at Ulis.\

A:

Yes.

875

Q:

Yes, for the ILG awareness?

A:

Land investigation.

Q:

And land investigation. And in the evening what happened?

A:

At about 9.50 pm he was given a piece of paper to sign under the

torch light.

Q:

Do you know the date for that? When was this?

A:

The same date they did the land investigation. Would it be the 12th or 13th December 2010?

Q:

A:

It was around the same time when the land investigation was being

conducted.

Q:

You heard that the Customary Lands Officer, she said they were

there between the 12th-14th December 2010. Commissioner, it was 13th of the month 2010.

A:

Q:

But tell us about how your sign the paper?

A:

He was given couple of cigarettes, then he was told to go upstairs.

At the top of the house they had discussions and he was told to sign a piece of paper. Before the signing the paper, his Vice approached him and told him to see the developer quickly, in a hurry so he went along
876

Q:

Year, and what happened? ---

You got to speak quickly.

A:

When he arrived at the scene, the Secretary, already read the

contents of the letter or the paper so he was briefed about the contents of the paper and then he said he already sign it so he advised him to sign also. While with the developer in the house, he was really forced to sign that document quickly. He asked the developer if he could give him time so that he will really read the contents of the paper and he will sign. He was forced and told to sign that time at that instance. So onto of that he was told that whatever they had gathered, like pigs and other funds or money to prepare for that day, he will be given the money to sort the outstanding amount of money for the food and the pigs they prepared for the day.

Q:

Well, did you not refuse to sign in the night?

A:

He refused. Even though he refused, He was forced to sign also by

his secretary and he did sign the paper.

Q:

What paper was this?

A:

He did not see the cover of that letter.

Q:

Was it a Land Investigation Paper or was it the Agriculture

sublease?
877

A:

He says he does not know what sort of paper he signed.

Q:

Anyway whatever it was, when you say you had signed by force,

what happened, did he hold the gun against your head or did he threatened you with some issues of threats. What do you mean you were forced to sign?

A:

He was told that the day had already lapsed and by tomorrow they

have to return so he had to sign.

Q:

Yes. And he signed?

A:

Yes.

Q:

Did they offer you any inducement?

A:

He gave them K900.00 in the meaning that that was to pay for the

pigs and food and the ladies who prepared the meals for that day.

THE COMMISSIONER: Was Mr Simon Malu present when discussion took place? During the signing Mr Malu was not there.

A:

(Refer to pages 96-97 of Transcript SABL3-MADANG 23/02/12)

878

In relation to submissions and evidence from persons of interest, the Chairman of Urasir Resources Limited Mr Serenus Sokrim has made submissions by way of letters and has also put on a statutory declaration saying basically; that URL is a landowner company incorporating the landowner based 52 ILGs. that URL no longer has any relationship with any other entities, agents or otherwise, let alone foreign investors. (iii) (iv) That URL has not received the SABL title over Portion16C. That it wants the Commission of Inquiry to instruct the and Physical Planning to release the title to it as the legitimate grantee of it. The Department of Lands and Physical Planning had wrongly given the SABL title to the developer CVL and Singaporean Investor without URLs consent and authority. That the 52 ILG certificates are also being illegally kept by CVL. There is no cooperation or transparency in the dealings and activities between the parties. From the other information supplied by URL, copies of the various ILG certificates are noted and letters to the Provincial Forest Management Committee and PNG Forest Authority requesting for a FCA but the status is
879

Department of Lands

sketchy and given the lack of production of a PNG Forest Authority file, we are basically in the dark as to the status of that. Given the lack of relevant state agency cooperation and production of information pertaining to this project we are unable to ascertain the current state of affairs other than to note and rely on information provided by Department of Environment and Conservation. Apart from the Chairman for JRLs complaint, no one else has made any submissions; and therefore we cannot confirm those allegations. They remain mere allegations and I say this, given that Mr Sokrim is a signatory to all of these agreements that I referred to in my statement including the project development agreement. What does appear to be the case is that CVL or Continental Venture Limited has collected the SABL title and ILG certificate from the Department of Lands and Physical Planning and is actively pursuing the necessary approvals from the DAL, DEC and PNGFA. This is consistent with public review advertisement by DEC the time period in respect of which expires today as I have mentioned earlier. It appears that the project is a genuine project and the SABL grantee is a genuine landowner company but the twist appears to have occurred when the sub lease was issued or granted whereby CVL was given absolute power and rights to the exclusion of the landowner company except for the benefits from the business opportunities in dividends, royalties and levies or what have you. Control of operations was vested in CVL by virtue of both the project development agreement and the sublease agreement of the SABL. As to the

880

nature of the conflict or the extent of it, we do not know. The C.O.I has received submissions from Mr Sokrim, the Chairman of the Urasir Resource Limited CONTINENTAL VENTURE LIMITED-THE DEVELOPER OF THE PROJECT Continental Venture Limited (CVL) is a registered company under the IPA Act 1992 and owned solely by Malaysian nationals. It was duly incorporated on 13 th August 2010 and holder of Certificate to Carry Out Business as a Foreign Enterprises under the provisions of the Companies Act. (Certificate No. 00012807158). It had recently registered and established itself in the country, the companys shareholders are former Executives of Malaysian companies doing logging and subsequent oil palm estate and rubber tree plantation development in Malaysia and Indonesia and with its ample experience of doing business in these countries.(Extracted from CVL Detailed Agriculture Development Plan-Exhibit ) The area covered by the SABL of 112,400 hectares proposed for agro-forestry oil palm development is leased to URL, a landowner company and is located within Josephstal Rural Local Level Government area of Middle Ramu District in the Madang Province. The developer is Continental Venture Limited, Company registration number 1-75153 (CVL), and will undertake salvage logging and agricultural development of oil palm on 75,520 hectares of the area covered by the SABL. That is the 112,400 hectares in development of rubber trees on 18,880 hectares of the land and other agricultural development. The area is mainly described as lowland rainforest of which 36 per cent is secondary forest and grassland. Forest clearance will be required for oil palm planting.

881

CVL is owned by Mr Hien Ming Wong, who was not available at the time the hearing was conducted at Madang. His most trusted aide Mr Robin Bakon was available and was examined by the Commission. Mr Wong also had the assistance of Mr Kuman, a private practitioner who represented the interest of the CVL, He was granted leave by the C.O.I to appear as counsel. Mr Bakon appeared as Acting Manager of CVL in the absence of Mr Wong, he gave evidence which we summarise below as follows; (1) The shareholding and Corporate structure of CVL There are two shareholders, Giant Kingdom International Limited who has 10,000 ordinary shares issued on the 13th of August 2010. Continental Venture Limited is owned by Corporate shareholders and the Principal Stakeholder is Mr Hieng Ming Wong. Akara Building, Castra Street, Wecam Sky 1, Raul Town, Totola Bridges, Virgin Islands United Kingdom. and their address is in Hong Kong.the director is Mr Hieng Ming Wong address is Section 215, Allotment 2, Magemage Street, Gordons, National Capital District. (2) Signing of the Project Development Agreement at Ulis Village on 28th August 2010. The Agreement was signed between CVL and ten Land Owner group representatives at Madang in the presence of Mr Darren Kaman acting as lawyer for CVL. Mr Bakon signed as the Managing Director of CVL (12 September 2010 and witnessed by Mr Kaman. In another instance he signedthe Agriculture Sub Lease Agreementas the Secretary to CVL. He was not an official of CVL but an employee of the Company. The actual signing took place before a practising lawyer, who could have adviced Mr Bako that he was not authorised to commit the company without the company officials signature. This action is
882

very devisive and Mr Bako should be investigated if he has breached any laws with respect to employment and residency permit. (3) The landowner dispute over CVL involvement in the Project. The C.O.I has noted that there was two factions created since CVL was allowed to negotiate with the landowner on large scale agro-forest project in one of the most remote and least developed areas of Madang Province. The dispute was basically over the custody of all the ILG Certificates and the State Lease Title which was held by CVL for safe keeping. Mr Bakon response was for security or mortgage over the project. The C.O.I find it hard to be convinced with CVls Bakon evidence in totality as the manner of speed to sign the two most important document was essentially to fast track the process so that CVL will have access to the blanked SABL land area of 112,000 hectares to conduct the supposed project. He was the main driver behind the split between the Landgroups basically for keeping custody of the SABL Title and ILG Certificates. Department of Madang Province Land Investigation Report The project area covered by the SABL portion 16C is said to be owned by 11 landowning groups consisting of about 500 members and those clans are namely; Wamer clan, Ambos clan, Karait Igir clan, Mou clan, Kupiakir clan, Karait-Maipot clan, Muan clan, Seiwaki clan, Berwet clan, Waen clan and Lou clan. These clans own the said 112,400 hectares of customary land on which an agro-forest project is proposed and according to the LIR, the land is generally
883

undulating in nature with some level lands at random locations. But most of the land is covered with tropical rainforest containing rich brown soil that is suitable for agriculture. The LIR stated that the landowners were willing to lease the land for 99 years to the State so that it can then be leased back to them under a SABL in the name of their landowner company being URL or Urasir Resources Limited who can then sublease to potential developers as partners of the landowners. The LIR is unsigned but contains a Schedule of Owners which has not been signed either. The only documents that have been signed, although not by everyone, are the Agency Agreement and the Declaration as to Custom in relation to Land Tenure that was signed by about 52 ILG members and/or executives. There are said to be about 52 incorporated land groups representing the clans in the project area. The other documents that have been signed are the Declaration of Recognition of Custom and Certificate in Relation to Boundaries for each of the 52 clans in the proposed project area. A Schedule of Owners, Agency Agreement, Declaration of Custom in relation to land tenure, Declaration of Recognition of Custom and the Certificate in Relation to Boundaries were done for each of the clans in the proposed project area. That information was sighted on a letter dated 8 March 2011 written by by Micah Yer, acting Provincial Customary Lands Officer (Provincial Land OfficeMadang Provincial Administration) to the Assistant Director Customary Land Acquisition, National Department of Lands.

884

Evidence at the conduct of the Land group Incorporation registration and the Land Investigation From documents sighted on file, the LIR was undertaken by Simon Malu, acting Manager Customary Land Acquisition; Mr Simon Holis, acting Manager Customary Land Acquisition; and Ms Christabel Maino, Lands Officer. The investigation was carried out in the name of Urasirk Resources Development Limited which is the grantee company or URD. The evidence of Mr Micah Mer Divisional head for the Provincial Lands and Planning Branch was that he instructed Ms Cristobel Maino Remie to attend to the Land Investigation process. He was on official duty at Karkar and on return reviewed the LIR. He found that the LIR was not conducted for each of the 52 ILGs listed and he raised concern as to why there was only one LIR in the name of Urasir Resources Limited. Mr Malo advised that The request to mobilize land was made after a successful lodgment of 52 Incorporated Land Groups applications by the landowner company Chairman. Continental Ventures Limited funded the trip for me as Acting Director Acquisition with Acting Manager, Leases to assist in mobilizing the land for the purpose stipulated in the request letter. We were

accompanied by your officer, Cristobel Maino to the project area of which Manager, Leases, with the assistance of your officers spent time with the landowners to conduct land investigations. All data collected was brought back by the two officers and a Land Investigation Report was compiled for all clan owning groups. The two officers adopted a technique used in West and East Sepik Provinces as well as East and West New Britain Provinces whereby one report is compiled for all landowning groups and it has proven to have no discrepancies.
885

The Land Investigation Report based advice offered by Mr Simon Malo, Acting Manager, Customary Leases, DLPP was in my view reckless, negligent, that behaviour unbecoming of a senior officer entrusted with the responsibility to ensure that the process is adequately completed. We consider this to be in breach of the Code of Conduct of public servants evidently compromising the integrity of the SABL process. We make adverse findings against Mr Simon Malo for been so reckless in his handling of the Land Investigation Report. He should be disciplined for the role played in preparing a blank LIR bearing no signature and including the Recommendation for Alienability with no reservation made for the customary rights over the land to continue. This finding is consistent with his evidence to the C.O.I on 9th January 2012. He was not able to provide sufficient explanation for the blank LIR basically which ultimately nullifies the SABL lease issued in the name of Urasir Limited. Mrs Maino (as she was) confirmed that she accompanied Mr Simon Malo, Mr Simon Holis (DLPP) as directed by her superior on the chopper hired by CVL. Mr Robin Buck also travelled with the team, evidently fully funded and paid by CVL. We find that Mrs Maino was on the job for the very first time and her inexperience is excused. She diligently registered the ILG and commendable on her part to discharge that duty. The Recommendation as to Alienability On 10 March 2011, the Provincial Administrator of Madang, Mr Bernard Lange endorsed the LIR by signing the Recommendation as to Alienability recommending a 99 year lease to be granted to URL. The SABL Title is dated
886

16 March 2011. Mr Lange (Summons 217) gave evidence that he signed the Recommendation as to Alienability dated 10 March 2011 because he was assured by Mr Mer that the documents required by the landowners was in order. He did not conduct any due diligence on the report as he was only provided the page with the Recommendation to sign on and return to DLPP for their action. The C.O.I does not intend to make any adverse findings against Mr Lange in this regard. DEPARTMENT OF LANDS AND PHYSICAL PLANNING On 13 December 2010, a Lease-Lease Back Agreement under section 11 of the Land Act was signed and witnessed by Simon Holis, Manager Leases, Simon Malu, the Director Acquisition and Micah Yer, Provincial Lands Officer in which URL was nominated in this schedule to the Agreement as the Lessee or the preferred Lessee of the landowners, and the purpose of the lease was stated in the Schedule as agricultural business purpose with the potential of commercially cultivating oil palm development and other agricultural crops and their products for export purposes. The agreement was executed by the fifty two (52) ILG Chairman and Romilly Kila Pat [as a delegate of the Minister for Lands]. DEPARTMENT OF PROVINCIAL GOVERNMENT AND LOCAL LEVEL GOVERNMENT The Land Investigation Report and the Recommendation for Alienability was not referred to the Custodian of trust Land for due diligence. There was also no Certificate of Alienability issued by the Custodian of Trust Land to allow for the registration and issuance of SABL Title to Urasir Development Limited.

887

DEPARTMENT OF AGRICULTURE AND LIVESTOCK The Department of Agriculture Livestock (DAL) submitted to the Commission of Inquiry a bound volume of documents titled Detailed Agricultural Development for Urasirk Rural Development Project with Continental Venture Limiteds name and address on it, apparently submitted to DAL by Continental Venture Limited. Company. The only other information we have received from DAL is a copy letter dated 25 September 2010 to a Mr Wong Heing Ming. He is the General Manager of CVL of PO Box 1226, Boroko, National Capital District. That letter was addressed to Mr Wong by Mr Francis Daink, then Acting Secretary of the DAL and also copied to Mr Kanawi Pouru of the Papua New Guinea Forest Authority (PNGFA). In that letter Mr Daink acknowledged receipt of the detailed Agricultural Development Plan for the project submitted by CVL under cover of a letter dated 20 September 2010 and advised CVL of the following: 1. As requested by CVL, DAL will engage staff to assist URL conduct assessment which process Mr Daink estimated would take more than four weeks to complete. 2. CVL needed to do a detailed project development plan supported by the maps. Continental Venture Limited, we note and understand is the developer or development partner of Urasirk Resources

888

3. 4.

CVL needed to submit an implementation schedule for six years. CVL was to be prepared for landowners consent and public hearing to be formally conducted by DAL, PNGFA, DEC and other key government agencies.

We deduce from the DAL letter that the detailed Agricultural Development Plan for Urasirk Rural Development Project submitted to DAL on 28 September 2010 was insufficient for DAL purposes given that the project was for oil palm plantation and rubber development and also involved forest clearing. According to the documents submitted by CVL to DAL, CVL was incorporated on 13 August 2010; Certificate of Incorporation number 75153 was noted and the company was also certified as foreign enterprise by IPA, Certificate number 00012807158. The company is fully owned by Malaysian nationals and is a foreign company. The Company was currently undertaking preliminary ground work for three major activities being: 1. Road and basic community infrastructure to harvesting of commercial trees to pave the way for the development; and 2. 3. Oil palm and rubber tree plantation (nucleus estate); On the initial scoping by Continental Venture Limited such project was feasible but needed confirmation from DAL for which purpose the detailed agricultural development plan being oil palm and rubber tree plantation was submitted to DAL for its assessment and evaluation with a
889

request for site suitability assessment as to the oil palm and rubber tree agronomic requirements. 4. The Agriculture Development Plan for Urasirk Development Project involves: (i) (ii) application for Forest Clearing Authority or FCA; conversion of logged-over and cleared areas to agriculture plantation development; (iii) establishing nucleus type oil palm and rubber plantations mixed with other suitable agro-industrial crops that are economically viable planted as buffer and livelihood of the local communities; (iv) (v) Continental Ventures Limited as project proponent development; Customary landowners through landowner company Urasir Resources Limited; (vi) Gross area of 112,400 hectares over which the SABL was granted of which 20,570 as unproductive, 91,830 hectares as productive forested area with 94,400 hectares available for planting. (vii) 20 years duration of project; (viii) Project site located in the Josephstal LLG, Middle Ramu District, Madang Province

890

(ix)

Mr Hieng Ming Wong, General Manager, for Project Proponent; and Mr Serenus Sokrim as Chairman and Resource Director of Urasir Resources Limited; and

(x)

Of the 94,400 hectares net plantation area, 75,520 hectares will be for oil palm and 18,580 will be rubber tree growing.

PNG FORESTRY AUTHORITY There are no agricultural considerations so PNG Forest Authority has no involvement in this SABL. DEPARTMENT OF ENVIRONMENT AND CONSERVATION The Commission received from the Department of Environment and Conservation (DEC) and Conservation an arch-lever file labelled Urasirk Rural Development Project, Middle Ramu District, Madang Province, File No. 34. The following documents, amongst others were sighted; (i) notification of preparatory works submitted by Continental Venture Limited pursuant to section 48 of the Environment Act 2008 dated 26 October 2010; (ii) notice to undertake Environmental Impact Assessment (EIA) issued by DEC under section 50 of the Environment Act 2008 dated 26 October 2010; (iii) Environment Inception Report (EIR) dated 4 March 2011 submitted by CVL under section 52 of the Act;
891

(iv) (v)

letter from DEC to CVL dated 8 April 2011 approving the EIR; Environmental Impact Statement submitted on 24 June 2011 by CVL under section 53 of the Environment Act 2008;

(vi)

copy of public notice for public review and submissions on an Environmental Impact Statement as published in the Port Courier issue of 20 September 2011 which notice gives 20 days which period lapses on 7 October 2011.

Findings The application for Level three (3) and four (4) Environment Permit was submitted on 26th October 2010. This is well before the SABL title was issued to Urasir Development Limited and we find this practice to be highly irregular and inconsistent with the process under Section 90B of the Forest Act 2000, the requirement for an application for Forest Clearance Authority should first be approved by the Department of Agriculture and Livestock. The SABL was issued to URL on 14 March 2011. The C.O.I is also critical on the role of the Director of Environment in not conducting any due diligence on whether the SABL title has been issued and also if there was DAL approval to the Board of PNG Forest Authority to approve FCA for the project. Other Matters Relating to CVL and DEC In the DEC file are other copies of other documents and some of which we note

892

The first one is a letter of invitation as development partner from URL Chairman Mr Serenus Sokrim, to a Robin Buck, General Manager of CVL. The Project Agreement between Resource Owners Company being URL and Developer CVL dated 12 September 2011 covering amongst others, the following: logging and log marketing; road construction and commercial agriculture provided for, amongst others, oil palm project or any other commercial development will be the final development project after the salvaging of the timber; all monies advanced to URL shall be reimbursed gradually out of the eventual proceeds from the sales of timber harvested from the land or area; upon successful completion of the initial feasibility study of the Urasirk Rural Development Project which includes logging operations, road construction and commercial agriculture project, URL shall grant to CVL exclusive rights for logging and marketing of timber and development of agriculture plantation in the land; URL to allow entering onto the land by CVL officers and employees; URL to assist CVL in the LIR process or Land Investigation Process;

893

 URL agrees that the lease title be granted to the joint venture company which will be formed later; CVL to pay royalty fee in the manner prescribed by section 120 of the Forestry Act 1991; to pay levies; road and agriculture project development; URL to assist CVL to obtain the necessary permits, approvals and licences; CVL to provide one Lucas Sawmill; the agreement also provides for variation of the Terms of the Agreement; dispute resolution;termination;Governing Law; andalso provides that any variation of the terms shall be by mutual consent and any dispute is to be resolved by mediation. The Project Development Agreement was signed on behalf of URL by Serenus Sokrim, the Chairman, and Lukas Sakam, the Vice Chairman, and Director Stanley Hiringgu and representatives of the various villages or ILGs. The DEC file also has a current required forestry project payment, or project monetary benefits of royalty project development benefits on log export, cash premium, project area development fund and domestic processing benefit, log expert development levies, mandatory levies based on production, non-

894

monetary levies based on log exports; project bio-diversity assessment report, check-list of birds, mammals, aquatic flora and reptiles. Agriculture Sub Lease Agreement We found amongst the DEC files a duly executed copy of a standard Agriculture Sublease between Urasir Resources Limited and Continental Venture Limited. On the Sub-lease we took what we consider to be worthy of note the following stipulations and clauses within the agreement; (a). In the sublease, rent and royalties are to be paid. It also provides a holding over clause, the use of land, land rights, statutory approval, default and termination. An interesting clause is clause 20 which provides for assignments and mortgages and for subleases to be given by the lessee being Continental Venture Limited without prior written consent of the landlord being Urasir Resources Limited. (b). Clause 24 of the Sub lease relates to Special Conditions which states, amongst others, that within 60 days of the execution of the sublease, plantation activities shall commence and the tenants are allowed exclusive rights to harvest, transport, market and sell all forest produce, inclusive of industrial timber currently on the land and shall collect, own and use all revenues for the sales of this forest produce under its own discretion under the sublease. (c) The DEC folder also disclosed a photocopy of the Owners sublease which was endorsed by IRC following compliance with Stamp Duty by IRC and DLPP. It is dated 14 March 2011 and was signed by Serenus Sokrim and Stanley Hirringgu, Chairman and Secretary respectively of
895

URL and CVL under respective company common seal. It appears that directors Mathew Auvri, Michael Ambindya and Lesley Kasuran also signed the deed. (d) The sublease is for a period of 66 years commencing 17 March 2011 at a rent of K2 per hectare per annum, payable annually with the first payment due on 1 January 2012. The lease provides for payment of royalty and is subject to the tenants obtaining environmental approvals. (e) Approval letter from Department of Agriculture and Livestock under the hand of Francis Daink, Deputy Secretary to Mr Hieng Ming Wong, General Manager, Continental Ventures Limited dated 31 March 2011 in which he made reference to his previous letter of 28 September 2011 which I refer to earlier in this statement and which states that, The Department is grateful that you have responded promptly to this request. We have undertaken a thorough assessment of the agriculture project proposal and are quite satisfied with the details of the project proposal. Therefore, I am pleased to advise that Urasirk Agriculture Development Plan is approved. I guess the matter still outstanding is the public hearing to be conducted at or near the project site. This should complete the entire process prior to issuing of the certificate of compliance for a forest clearance for large scale conversion of forest to agriculture. Please contact this office to prepare arrangement for public hearing. This letter was copied to Kanawi Pouru, the Managing Director of the PNG Forest Authority. (f) The detailed Agriculture Development Plan was not produced by either DAL or by DEC. But the DEC file has one of its attachment (Refer to
896

Attachment 8), an Agriculture Development Plan and map which we note it to be the detailed Agriculture Development Plan that is referred to by Mr Daink in his letter referred (e) above. (g) Attachment 9 is the Agricultural Sublease of the project area to the developer Continental Venture Limited. The DEC file has a photocopy of the owners copy of the SABL to URL for 99 years dated 14 March 2007 signed off by Romilly Kila Pat as the delegate of the Minister. (h) There is a photocopy of project development agreement dated 27 September 2010 but that appears to be a replica of the one that is dated 12 September 2010. (i) There is also a copy of the letter of invitation dated 28 August 2010, URL The DEC file appears to be quite comprehensive, almost complete. Unfortunately, DLPP and Department of Agriculture and Livestock do not have those records but somehow the Department of Environment and Conservation provided copies of some of the very vital documents that actually should be in the possession of the Department of Agriculture and Livestock and the Department of Lands and Physical Planning. THE AGRICULTURE DEVELOPMENT PLAN The Detailed Agriculture Development Plan for Urasirk Rural Development Project was prepared by Mr Emeterio Lujero, Consultant and employee of DD Lumber Limited. According to Mr Lujero, DD Lumber is a Malaysian Company, a company that is linked to project sites in the Central Province. Mr Lujero was summonsed and gave evidence at Madang. He is a Business
897

to CVL.

Management Graduate from a University in the Philippines and has very little experience in high impact agriculture development projects. In his 2 year employment in PNG, he was engaged by Mr Wong, CEO of CVL to prepare the Agriculture Plan as well as all the Environmental Submissions to DEC. It took Mr Lujero three (3) months to prepare the Development Plan. He said in evidence that he never visited the site, but obtained all the information from Mr Wong, including conducting other research. The C.O.I is very critical of CVLs behaviour in preparation of the Plans, undoubtedly APPROVED as Mr Daink said in his own evidence. This Plan in itself was not prepared in consultation with relevant authorities and lacks quality in terms of its overall implementation schedules and if Lujero conducted this plan, the difficult terrain and lack of road infrastructure was a major feat for CVL to conquer. I find that Mr Daink should be held accountable for approving a plan that is not feasible to implement in so far as 112,000 hectares are concerned. There should be a reasonable size of the area that is considered arable for commercial crops and not in the way this Desktop document was designed to fool state agencies responsible for proper vetting, and in this case DAL failed in its duties to carefully evaluate the project document. RECOMMENDATION The C.O.I recommends revocation of SABL Portion 16C issued in the name of URASIR RESOURCES LIMITED because the fundamental requirement of the Land Investigation Process, the grant under Section 11 of the Land Act and subsequently the registration and the Issuance of Title under Section 102 of the Land Act was fundamentally flawed and is null and void.

898

Since the grant of SABL Title on 4 March 2011, no agro-forest activity has commenced on the project site. We however recommend that the Landgroup through Urasir Resources Limited should proceed with development on their land but under a revised land dealing process. We recommend that the Landgroup engage a reputable and transparent Developer/Investor that has the agricultural capability and the financial resources to develop commercial crops within a reasonable and sizeable hectare of land conducive to yield better crop which will bring tangible economic development to the most neglected and undeveloped community.

899

MOROBE PROVINCE

900

COI Inquiry File No.9 for Special Purpose Agricultural and Business Lease over Portion 79C Volume 13 Folio 232 Milinch: OngaMorobe Province in the name of Zifasing Cattle Ranch Limited. 1.1 In accordance with the powers given to the Commissioners pursuant to section 7 of the Act, the Commissioners have summoned numerous witnesses to produce documents and be further examined on oath or affirmation. 1.2 Witnesses were called from the six government agencies involved in the issuance and operation of the Zifasing Cattle Ranch Limited SABL. These were: 1.2.1 Department of Morobe Province, (DMP) 1.2.2 Department of Lands and Physical Planning, (DLPP) 1.2.3 Department of Provincial Affairs and Local Level Government, (DPALLG) 1.2.4 Department of Agriculture and Livestock, (DAL) 1.2.5 Department of Environment and Conservation, (DEC) 1.2.6 PNG Forest Authority (PNGForest Authority) Witnesses and Summonses 1.3 The names of the persons who have been summoned to appear and who have in fact appeared in the public hearings are set out in the schedule below.

901

No 1

Name and Position Mr Simon Dhase, Chairman, Zifasing Cattle Ranch Ltd (ZCRL) & Landowner, Mr Abel David, Director, ZCRL & Land Owner Simon Etong, Ologwaning Clan, Agu Family Group Mr Paul Boi, Director, ZCRL

Pages 2-24

Day 2

Date 23/02/12-SABL 2 Madang

2 3 4

24-36 3642-45

2 2 2

23/02/12-SABL 2 Madang 23/02/12 SABL 2 Madang 23/02/12-SABL 3 Madang

Parties represented by counsel Section 8 of the Act relates to the appearance of counsel before the Commission on behalf of interested parties. It provides that: Subject to Section 2(5), a person who satisfies the Commission that he has a bona fide interest in the subject matter of an inquiry under this Act, and any other person by leave of the Commission, may attend the inquiry in person or may be represented by counsel. The following were granted leave to be represented by counsel
Mr Kenneth Aisi Manesh & Co. Lawyers & Associate

Exhibits and documents There were no documents tendered as evidence before the Commission at the public hearings.

902

Item None None

Interested Party

Date received None

Exhibit Number None

Timeline of events of note surrounding Zifasing Cattle Ranch Limited SABL Title The timeline showing important events concerning the SABL is shown below in chronological order of their happening:
No Milestone Dated of Completion/G rant/Issue Execution 9th June 1979 10 August 2005 21 September 2005 26 September 2005 Proponent/Applicant Respondent Entity/Respondent C.O.I C.O.I

1 3

Incorporation of Zifasing Cattle Ranch Limited Land Investigation Report (Conducted by Mr Lawrence Billy) Gazettal Notice of Direct Grant issued to ZCRL-Gazettal No 183 SABL Lease Title

C.O.I C.O.I

C.O.I

C.O.I

C.O.I

C.O.I

FINDINGS The findings follow the chronology of table of notable events above surrounding the SABL lease title held by Zifasing Cattle Ranch Limited. Zifasing Cattle Ranch Limited SABL By notice published in National Gazette No G183 dated 21 September 2006, P S Kimas, the former Secretary for Lands as delegate of the Minister for Lands, granted a SABL for 50 years to Zifasing Cattle Ranch (ZCR) over the abovementioned land pursuant to section 102 of the Land Act, which land is
903

located 17 kilometres from Erap Agriculture Station in the Markham Valley in the Morobe Province and it is about 68 kilometres west of Lae city. The Notice of Direct Grant is dated 21 September 2006 as well and the title is dated 26 September 2011, five days prior to the notice of grant in the National Gazette. The Notice of Grant published in the National Gazette name the grantee as ZCR or Zifasing Cattle Ranch whilst the title from the Titles Office named is as Zifasing Cattle Ranch Limited, ZCRL for short. We are unable to ascertain as to how this anomaly occurred and as to who signed off on it. The detail of the SABL is shown below:
Legal Description Registered Survey Plan Catalogue No SABL Holder Date of Registration of Lease Period of Lease Land area of lease Portion 79 1/61 Zifasing Cattle Ranch Limited 26th September 2005 Fifty (50) years 8374.23 hectares

Location The SABL covers all that piece of land known as Sirimoaze, Ngarogawan, Unarium, Ngarongafan Orots, Ngaronifun, Abunizen, Agu Zif, Kararak, Ududumpur, Ngarosala, Reanzon, Azaz, Furif, Ziafimururan and Waifaupes as being Portion 79, Milinch of Onga, Fourmil of Markham, Morobe Province, covering an area of 8,374.23 hectares as registered on Survey Plan Catalogue Number 1/61. Site Inspection The C.O.I had very limited time to conduct the site visit of Zifasing Cattle Ranch located in the Morobe Province. We however satisfied that cattle breeding program is the main activity on this SABL Portion and it has always remained that way and the C.O.I would like to see more input from both the
904

National Government and the Provincial Administration in assisting the landowners in this worthwhile project. IPA COMPANIES REGISTRY RECORDS ZIFASING CATTLE RANCH LIMITED The Commission received documents from the Investment Promotion Authority (IPA) in relation to Zifasing Cattle Ranch Limited formerly Zifasing Cattle Ranch Propriety Limited, comprising of Company Extracts (Current and Historical) and Returns. The company is operating. Zifasing Cattle Ranch Limited is an old company having been incorporated on 9 June 1979. From the current extract as at 1 August 2011, the companys registered office is at the Office of KPMG, Peat Marwick, first floor IPI Building, Lae, Morobe Province, and its postal address is P O Box 1226, Lae, Morobe Province. Shareholding Structure of ZCRL Zifasing Cattle Ranch Limited has 137,606 issued ordinary shares, the current shareholding being; (1) (2) (3) (4) Peter Dari, with a share of 9,829; Steven Efron who holds in trust for the Poareng family, similar amount of issued share; Apollo Engkang who holds that in trust for Jeagoran family, similar amount of shares; Jeagoran Engkam, trust for the Jeagoran family, similar amount of
905

shares; (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) Tafin Gat, the fifth shareholder, who holds in trust for his family, same amount of shares; Yatap Gong who holds in trust for the Joseph family same amount of shares; Enchen Gong who holds the shares in trust for the Rupen family; Agu Joseph who holds in trust for the Joseph family; Yatol Kipitas who holds the shares in trust for the Mofos family; John Mini who holds in trust for the Mini family; Waro Mofos who holds in trust for the Mofos family; Jessy Morris who holds the shares again similar amount of shares, again that should be in trust for his family; Nongot Steven who holds in trust for the Nups family; Yasang Topias who holds the shares in trust for Kepia family; Tom Waeng who holds in trust for the Mgebengeb family; and Yadsab Business Group Incorporated who holds the shares again, for the family business group, the family by that name. The Directors are; 1) 2) 3) 4) 5) 6) 7) 8) Steve Efron, Apollo Engkang, Abel Engkang, Darryl Edward Byronsey, Gagar Borowang, Noel Kolo, Noah Waraf, Gagar Tafin,
906

9) 10) 11) 12) 13) 14) 15) 16)

Yatap Gong, Oabung John Luke Kifas Jessie Morris, Darius Ken, Joseph Yetang, Andrew Kuvia; and Moru Yafol

All of the Shareholders and Directors are said to be from Zifasing village. The Secretary is a Tony Mark Leff, a New Zealander, who is also said to be from Zifasing village of P O Box 1252, Morobe Province. On 2 September 1998, a Certificate of Incorporation was issued to Zifasing Cattle Ranch, originally Zifasing Cattle Ranch Propriety Limited and obviously, this is after the current Companies Act came into operation. The 1998 returns were lodged by Agriculture Bank employees. The current returns are made up to 14 July 2007. There exists floating charges and a deed of equitable mortgage including floating and stock mortgage in favour of Westpac Bank (PNG) Limited and a floating and a equitable mortgage in favor of Papua New Guinea Development Bank by way of a fixed and floating charge and is stated to be worth about K180,000.

907

The land covered by this SABL is a developed cattle ranch with permanent buildings, other fixed assets and stock and cattle. It is in the vicinity of other similarly developed land, Portions 60, Portion 12 and Portion 13. Portion 13 is the one on which the Erap Agriculture station is located. By way of history, the SABL was granted after the previous Special Agriculture Lease known as portion 68 and 69 expired on 26 April 1999. The land is owned by six clans from Zifasing village who back in 1978 agreed to lease the land to the administration to develop a cattle ranch under a project initiated by the Department of Primary Industry and financially backed by the Papua New Guinea Development Bank. In June 1978, an application on tender form was made by Zifasing Cattle Ranch Propriety Limited for a Special Agriculture Lease but pending the approval of that application an application for license was made on 28 May 1979 by PNG Development Bank to allow for the commencement of the development program prior to the lease being finally approved. The license was to be cancelled automatically on the day the lease was granted by the Land Board. It appears that the company was being incorporated simultaneously, consisting of the PNG Development Bank and the landowners of the Zifasing village people and actively supported by the Department of Primary Industry. On 25 October 1979, a six months licence, licence number 2323 pending Land Board consideration of a formal lease was granted to Zifasing Cattle Ranch to commence from 29 October 1979. To facilitate for the lease of the land on 25 April 179, a lease leaseback agreement was signed between representatives of Zifasing village and Tarakau
908

village as lessors on the one part and the Independent State of Papua New Guinea on the other part as lessee. The landowners were identified and listed in the schedule to the list comprising of four clans, namely, Owangompen, Orogwangin, Onogazog, Zeaganzon, Zuwaif and Ferep and was evidenced by a Declaration of Custom and other related similar Deeds. The landowners agreed to lease the land to the State for 20 years from 25 April 1972 at a rental of K137,600 payable in advance which was paid as appears on record. The Land Investigation was carried out and certified by a Jesiri Sasa Inkung, an officer of the administration of Papua New Guinea at Zifasing on 13 January 1979. He appears to be the Patrol officer of the area. A Certificate of non-requirement of land by the customary owners was signed by a Helel Dickson on 10 April 1979. He appears to be an Administration Officer based in Lae. The Recommendation as to Alienability was issued by an Edward Middleton Guise on 21 February 1979. The Certificate of Alienability was signed by a John Desmond Fitzer, First Assistant Secretary of the Department of Decentralization Division of Provincial Affairs, dated 5 March 1979 stating that the customary owners were willing to lease the land for 20 years pursuant to section 85 of the Land Ordinance of 1962; that legislation being one of the predecessor legislation to the current Land Act.

909

The lease was pursued by the company and the PNG Development Bank but was not issued or granted until 24 August 1984, under section 70 of the Land Act for a period of 18 years 25 days commencing from 13 April 1981. Notice of grant of Special Purpose Lease was accepted by Zifasing Cattle Ranch on 26 November 1981. An annual rent was set at K7, 420 and was paid for the years. The lease was granted by the Land Board on 28 November 1980. The lease was granted well after the licence expired on 29 March 1980. Notice under section 37A of the Land Act 1962 to Zifasing Cattle Ranch Proprietary Limited naming it as successful applicant was published in National Gazette dated 30 April 1981 which lease was to expire on 24 April 1999. The lease in fact expired on that date on 24 April 1999, but the company continued to operate without any disruptions after that and maybe due to the fact that the landowner themselves are owners of the company. THE EVIDENCE OF LANDOWNERS The evidence for the landowning group of Zifasing village was provided by Mr Simon Dahse, Chairman of ZCRL and Mr Abel David, Director. The evidence basically confirms the major aspects of documentary evidence that was evaluated by the C.O.I team. The evidence confirms that there is no actual dispute between the landgroups and that they have all agreed to continue the operation of the Cattle Ranch under the SABL process. Mr David confirms that the Land Investigation and awareness was conducted by Mr Lawrence Billy, Provincial Lands Officer.

910

They stated that the company earned its revenue from selling cattle. The impetus for the Company was to become a Model Breeder Cattle Farm, of which cows, bulls and heifers will be sold to other projects in the Momase and Highlands Region. Whilst that was the case, the evidence suggests a dire need for expert and technical management to oversee the continued success of the project. The project did not have a fulltime Cattle ranch Manager and other technical and financial support. In contrast, Messrs Simon Etong and Paul Goi, were more concerned about matters concerning their customary land issues with Markham Farming, who currently hold leasehold title over the land. The C.O.I clearly informed them that the C.O.I had no jurisdiction because it was not listed amongst the 75 listed SABLs subject of the inquiry. The C.O.I is concerned that Mr Etong falsely misrepresented the C.O.I in its proceedings at Madang to Markham Farming. A letter was addressed to the presiding Commissioner by Waner Shand Lawyer, acting for Markham Farming insinuating that C.O.I had made certain comments about the lapse of leasehold title to the Company, which was erroneous. The C.O.I referred the author of that letter to the transcript of proceedings which clearly indicated that the C.O.I made no such remarks nor did it make any damaging comment about the land leased to Markham Farming. At the time of this report, the lawyer in the employ of Waner Shand Lawyers has not apologised to the Commission of this allegation and we deem that to be contemptuous and without basis. DEPARTMENT OF MOROBE PROVINCE

911

THE STATUS QUO OF THE SABL Between 2005 and 2006, discussions were held between the 14 landowner clans. The then local Member Hon. Mr Zasa Zibe who was the then Minister for Agriculture in 2006, the Department of Agriculture and Livestock, the Morobe Provincial Administration, the Rural Development Bank and the Lands Department with a view to revitalizing the cattle ranch or company. These discussions resulted in a government supported project for establishing a model breeder farm at Zifasing to raise cattle in conjunction with the Livestock Development Corporation or LDC for distribution to cattle farmers in Momase and the Highlands. The 14 landowner clans were happy to enter into similar arrangement for 20 years and on 22 February 2006, Zifasing Cattle Ranch Limited lodged an application or tender form for a SABL for portion 79 which is formally portion 68. This change may be due to a re-survey of the land. A Land Investigation was carried out and certified by a Lawrence Billy, Provincial Program Adviser Lands, on August 10, 2006 on the application of Zifasing Cattle Ranch Limited and on 30 November 2005, the landowning clans unanimously agreed or resolved to renew the lease over the land. A Schedule of Owners was attached to the Land Investigation Report. The Recommendation for Alienability was signed by Mr Manasupe Zurenuoc, the then Provincial Administrator for Morobe, on 15 August 2006. DEPARTMENT OF LANDS AND PHYSICAL PLANNING There was no documentary evidence provided by DLPP to assist in this inquiry
912

DEPARTMENT OF PROVINCIAL GOVERNMENT AND LOCAL LEVEL GOVERNMENT The Land Investigation Report and the Recommendation for Alienability was not referred to the Custodian of Trust Land for due diligence and approval. There was also no Certificate of Alienability issued by the Custodian of Trust Land to allow for the registration and issuance of SABL Title to Zifasing Cattle Ranch Limited. DEPARTMENT OF AGRICULTURE AND LIVESTOCK Zifasing was established under the concept of larger Cattle Ranch in the 1980s. The Cattle Ranch was a successful venture and it was able to pay of Agriculture Bank of PNG (ABPNG) shares and dividends to shareholders in the 1990s. In the evidence of the Chairman, Zifasing is now facing serious Management problems, since the landowners have now taken over management of the Ranch without fully understanding the ethics of Business management and animal husbandry (breeding program). Despite this aspect, there is no involvement from DAL in terms of providing sound advice and expertise to the landowners. The C.O.I has not received any documents nor information on this SABL, which is Cattle Breeding Business. PNG FORESTRY AUTHORITY There is no files or documents since there is no application for FCA. DEPARTMENT OF ENVIRONMENT AND CONSERVATION No documents sighted.

913

914

COMMISSIONS FINDINGS 1. The matter for the SABL that we are concerned with here appears to be a genuine initiative of the landowners with the support of Department of Primary Industry and the Papua New Guinea Development Bank or the Rural Development Bank, as it is now called, to promote land development of their customary land commercially especially in view of the fact that we have not had any competing interest claims. 2. It however appears that in the haste to get the SABL issued, some procedural requirements may have been overlooked resulting in; i. The lack of a Certificate of Alienability by the Custodian of Trust Land. ii. 3. The lack of a Lease-Lease Bank Agreement.

The discrepancy in the name of the grantee in the Notice of Direct Grant to Zifasing Cattle Ranch dated 21 September 2006 had the title document or SABL title dated 26 September 2006 issued, this time, to Zifasing Cattle Ranch Limited.

4. 5.

The land appears to be customarily owned by Zifasing villagers. Zifasing villagers are happy for the land to be leased to Shareholders and Directors of Zifasing Cattle Ranch Limited who are members of the Zifasing village clans and hold the shares in trust for the clans.

915

6.

Apart from the above, it seems that this SABL was genuinely applied for and granted to a landowner company which seems to be operating.

RECOMMENDATION The C.O.I. RECOMMENDS AS FOLLOWS 1. SABL Portion 76 in the name of Zifasing is not revoked. However there is a need to ensure from DLPP, the need to regularise the Lease/Lease Back Agreement based on convincing reasons as follows; 1.1. There are no ongoing disputes and all the landgroups of Zifasing village have given the majority support for the project. 1.2. There are no on-going disputes between other landowners outside of the SABL boundary. 2. The Zifasing Large Scale Ranch must be supported by the National Government and the Morobe Provincial Government in terms of technical, management and financial resources. This is based on the premise that in PNG Beef Cattle is an exotic animal species and Papua New Guineans have limited experience in cattle raising ass Africans and therefore requires a number of key variables to measure the effectiveness of a cattle ranch namely ; (1) Biological Efficiency in terms of the crossbreeding Drought Master and Brahman; (2) Animal Husbandry and Animal Feed-Markham Valley experiences extended dry season, supplementary feeding coupled by improved pastures would improve productivity of the hed and so forth. That basically provides an insight on
916

the demand for such assistance to be accorded to the landowners of Zifasing Cattle Ranch Limited.

917

Appendix 2 The following documents referred to under Appendix 2comprise relevant instruments published in the National Gazette regarding C.O.I. SABL. These documents (copies) arereproduced at pages 196-204 1. Terms of Reference National Gazette No. G198 published on Friday 22nd July 2011 2. Statement of the Case National Gazette No. G198 published on Friday 22nd July 2011 3. Instrument(s) of Appointment National Gazette No G198 published on Friday 22nd July 2011. National Gazette No G 203 published on Thursday 28th July 2011. National Gazette No G 213 published on Monday 8thAugust 2011. National Gazette No G 203 published on Tuesday 18th October 2011.

918

919

920

921

922

923

924

925

926

927