By Todagia Kelola
THE new Board of the Motor Vehicle Insurance Limited (MVIL) has been able to recoup only K9 million out of the K100 million that was [fraudulently] invested in Australia.
Chairman of the Board Bonny Igime in a statement said out of the fraudulent K100 million investment that the MVIL made with Woodlawn Capital Ltd of Lismore, NSW Australia was executed on July 22, 2009, my Board has manage to recoup only K9,187, 260 back into PNG. The money is now with the Gadens Lawyers Trust Account in Port Moresby waiting to be remitted back into MVIL.
“When the Government of Prime Minister Peter O’Neill appointed me as Chairman of MVIL I assured the nation that I will vigorously pursue the K100 million being siphoned off into Australia and bring it back into PNG. The money rightly belongs to the 7 million people of this country, who own MVIL through the government, and the people have the right to know what has happened to their money.”In late February this year Mr Igime took the Board and management to Australia and met with the executives of Woodlawn Capital Ltd in Brisbane.
“We asked Woodlawn executives where they kept the money and what is the current net asset value (NAV) of the investment. Woodlawn kept evading our questions and came up with an excuse that a substantial amount of MVIL investment was lost during the global financial crisis a few years ago. We didn’t buy into their argument. We suspected that something was seriously wrong with the investment and that we must independently investigate and find out soon. Coincidently, at about the same time the former CEO of MVIL John Mua called me on numerous occasions and begged me not to bring the money back to PNG. He said the money was safe in Australia and that MVIL has a lot of liquid cash sitting in the banks in Port Moresby and does not need the K100 million. That’s when my sensitive nature tells me that something is seriously wrong with the investment and we must investigate.”He said their forensic accountants conducted an audit into the frozen accounts and uncovered AUS$24 million being kept in those accounts, which is equivalent to K50 million. The K50 million plus the K9 million already brought into the country amounted to K59 million. The question is, what happen to the balance of K41 million?
The Board engaged Gadens Lawyers in Sydney and Price Waterhouse Coopers (PWC) accounting firm to conduct a thorough investigation into all the accounts of Woodlawn Capital in Australia and ascertain the net asset value of the investment. With our instructions Gadens Lawyers successfully obtained an interlocutory order in the New South Wales Supreme Court thus freezing all the accounts of Woodlawn. The Supreme Court order effectively froze all the accounts of Woodlawn being kept by various financial institutions in Australia.
The investigations have uncovered a shocking truth that Woodlawn Capital at the time it received the money from MVIL was not licenced to conduct business as a financial investment company. Woodlawn did not hold a valid Financial Services License (FSL) under the Australian Securities and Investment Commission (ASIC). This is indeed a serious crime under the Australian laws. ASIC is the Australian government watchdog that regulates, monitors and oversees all financial and investment activities in Australia. The K100 million investment was a fraudulent transaction between the executives of MVIL and Woodlawn with the intent to defraud MVIL because Woodlawn was not licensed to receive the money at the time.The investigations have uncovered another shocking truth that some people were using the K100 million like a petty cash. Numerous unexplained withdrawals were made on the K100 million over the entire period of the investment from July 2009 to as recent as January 2012.
For instance, the following withdrawals were made on MVIL accounts in Australia in 2011 and early 2012.
BANK ACCOUNT NO. DATE CURRENCY WITHDRAWAL AMOUNT
Westpac 467559 5/5/2011 AU$ 1,500,000
Westpac 467559 30/6/2011 AU$ 2,000,000
Westpac 467567 8/7/2011 AU$ 300,000
Westpac 467559 14/7/2011 AU$ 300,000
Westpac 467567 14/7/2011 AU$ 300,000
Westpac 467559 16/8/2011 AU$ 3,000,000
Suncorp 4157414 15/9/2011 PGK 24,872,335
Westpac 467559 21/9/2011 AU$ 1,000,000
Westpac 467559 27/9/2011 AU$ 1,197,540
Westpac 467559 14/11/2011 AU$ 227,000
Westpac 467559 13/1/2012 AU$ 440,142
BANK ACCOUNT NO. DATE CURRENCY WITHDRAWAL AMOUNT
Westpac 467559 5/5/2011 AU$ 1,500,000
Westpac 467559 30/6/2011 AU$ 2,000,000
Westpac 467567 8/7/2011 AU$ 300,000
Westpac 467559 14/7/2011 AU$ 300,000
Westpac 467567 14/7/2011 AU$ 300,000
Westpac 467559 16/8/2011 AU$ 3,000,000
Suncorp 4157414 15/9/2011 PGK 24,872,335
Westpac 467559 21/9/2011 AU$ 1,000,000
Westpac 467559 27/9/2011 AU$ 1,197,540
Westpac 467559 14/11/2011 AU$ 227,000
Westpac 467559 13/1/2012 AU$ 440,142
According to correspondences between the executives of MVIL and Woodlawn we have uncovered that the former CEO of MVIL John Mua was the only authorized representative of MVIL who can authorize or instruct Woodlawn for any transactions to be conducted on the accounts in Australia. And therefore, I am calling on John Mua to come out and tell the Government and the people of PNG about the irregular and unexplained withdrawals made on the K100 million being kept by Woodlawn. Our lawyers and forensic accountants are following the money trail and we will get to the bottom of the missing K41 million and the nation will know about it.
Govt determined to pursue missing Woodlawn millions
Statement by Minister for Public Enterprises Rt Hon Mekere Morauta, KCMG MP
Mr Speaker, when the O’Neill-Namah Government was
elected on the floor of Parliament last year, we faced a tremendous
task of reconstruction and reform after 10 years of waste, neglect and
lost opportunity.
I have spoken previously about the areas where this waste and
neglect, and indeed corruption, was most prevalent and caused the most
damage – in the State Owned Enterprises supervised by the Independent
Public Business Corporation under the stewardship of the suspended
Member for Angoram and his outrigger Mr Glen Blake who during that time
claimed to be (and probably still is) the Somare family financial
adviser.
Since we were elected in August last year, much of the focus of my efforts, as Minister for State Enterprises, has been on finding out how big a mess the State Owned Enterprises are in; and where they have lost money, how that money was lost, where the money went to, and to try to get as much of that lost money back as we can.
Mr Speaker, this is public money we are talking about, which should have been used for the benefit of all Papua New Guineans, building roads and bridges, schools and hospitals, but which instead has been frittered away, wasted, lost through incompetence, or in some cases, simply stolen.
We quickly discovered that one of the worst State Owned Enterprises in this respect was Motor Vehicle Insurances Limited, which we all know as MVIL. Mr Speaker, MVIL has a vital function within government and as the third party motor vehicle insurer, it must maintain large financial reserves in order to pay out insurance claims for years into the future.
This made MVIL a tempting target for highly dubious so-called “investment managers” from overseas to extract a large slice of MVIL’s investment funds, 96 million kina, and place that money at the disposal of these “investment managers”, initially in a bank account in a New South Wales country town. Regrettably, Mr Speaker, the “investment managers”, Woodlawn Capital Pty Ltd, appear to have been ably assisted by the then Managing Director of MVIL, Dr John Mua, in their endeavours to extract money from MVIL.
When this 96 million kina was “invested” with Woodlawn in July 2009, Woodlawn Capital Pty Ltd had been incorporated for only a few weeks; it was a classic “two dollar company” – that is, it has a paid up share capital of only two, one dollar shares; it did not hold any financial services licence which, under Australian law, every such investment manager must have; and it had no other funds under investment.
It would seem ridiculous for any rational businessman to invest any funds, let alone 96 million kina, with such a company with no history, no backing and no licences, but that is what Dr Mua and MVIL did in 2009.
Mr Speaker, this has not been an easy task, but we are not giving up. And unfortunately, in this we have not always been assisted by everyone at MVIL.
We required Woodlawn to repatriate the total funds to PNG and terminate the investment arrangement, but we received nothing but obfuscation, delay and a refusal even to give us the most basic information about how much of the original investment of 96 million kina is left, or where the funds may be held.
We have complained to the corporate regulator in Australia, ASIC, about Woodlawn’s actions in claiming to hold an Australian Financial Services licence when it did not, and dealing with investment monies when unlicensed. These are clear breaches of Australian securities law.
Mr Speaker, we had been most concerned that all or nearly all of the 96 million kina invested with Woodlawn over two years ago may have been lost. A couple of months ago it appeared that Woodlawn was suggesting it would return only a few million dollars, perhaps only 10 or 15 percent of the original investment , to MVIL. It would be a sad day for Papua New Guinea if we were to lose about 80 million kina to crooked investment advisers overseas – money which should be available for the benefit of the people of PNG and improving their living standards. This is the sad legacy of the Somare regime’s years of waste, neglect and corruption.
However, Mr Speaker, there is some light at the end of the tunnel. With the totally un-cooperative approach from Woodlawn, we had no option but to instruct our legal advisers in New South Wales to commence legal proceedings against Woodlawn and its two directors, McNamara and Breen, to recover the money they had illegally obtained.
Following the institution of legal proceedings, I have now been informed that the New South Wales Supreme Court ordered the remaining MVIL investment portfolio frozen, so Woodlawn and its directors cannot deal with those funds, and Woodlawn has been required to give full information about the current value of the MVIL investments managed by Woodlawn.
While this may sound positive, it is not all goods news. Legal action is expensive, and it is possible, or likely, that more legal action will need to be taken before we get our money back. Also, while we do not yet know precisely how much money is left, it seems that it could be somewhat less than 30 million Australian dollars, which would mean a loss of about one quarter of the original investment two and a half years ago, since 96 million kina then equalled about 40 million Australian dollars.
Of course we are not conceding that this money is necessarily lost – we will do everything we can to pursue Woodlawn for the full value of our investment and the damages we have suffered, but we obviously do not know yet how successful we will be.
This MVIL saga is, Mr Speaker, another example of the Somare regime’s scandalous misuse of public funds – not as newsworthy, but just as bad in its own way, as the Falcon jet fiasco. The people of Papua New Guinea deserve better, and we are making sure they get better than that, by making these most strenuous efforts to get back this money which has been extracted from the public purse.
Since we were elected in August last year, much of the focus of my efforts, as Minister for State Enterprises, has been on finding out how big a mess the State Owned Enterprises are in; and where they have lost money, how that money was lost, where the money went to, and to try to get as much of that lost money back as we can.
Mr Speaker, this is public money we are talking about, which should have been used for the benefit of all Papua New Guineans, building roads and bridges, schools and hospitals, but which instead has been frittered away, wasted, lost through incompetence, or in some cases, simply stolen.
We quickly discovered that one of the worst State Owned Enterprises in this respect was Motor Vehicle Insurances Limited, which we all know as MVIL. Mr Speaker, MVIL has a vital function within government and as the third party motor vehicle insurer, it must maintain large financial reserves in order to pay out insurance claims for years into the future.
This made MVIL a tempting target for highly dubious so-called “investment managers” from overseas to extract a large slice of MVIL’s investment funds, 96 million kina, and place that money at the disposal of these “investment managers”, initially in a bank account in a New South Wales country town. Regrettably, Mr Speaker, the “investment managers”, Woodlawn Capital Pty Ltd, appear to have been ably assisted by the then Managing Director of MVIL, Dr John Mua, in their endeavours to extract money from MVIL.
When this 96 million kina was “invested” with Woodlawn in July 2009, Woodlawn Capital Pty Ltd had been incorporated for only a few weeks; it was a classic “two dollar company” – that is, it has a paid up share capital of only two, one dollar shares; it did not hold any financial services licence which, under Australian law, every such investment manager must have; and it had no other funds under investment.
It would seem ridiculous for any rational businessman to invest any funds, let alone 96 million kina, with such a company with no history, no backing and no licences, but that is what Dr Mua and MVIL did in 2009.
Mr Speaker, this has not been an easy task, but we are not giving up. And unfortunately, in this we have not always been assisted by everyone at MVIL.
We required Woodlawn to repatriate the total funds to PNG and terminate the investment arrangement, but we received nothing but obfuscation, delay and a refusal even to give us the most basic information about how much of the original investment of 96 million kina is left, or where the funds may be held.
We have complained to the corporate regulator in Australia, ASIC, about Woodlawn’s actions in claiming to hold an Australian Financial Services licence when it did not, and dealing with investment monies when unlicensed. These are clear breaches of Australian securities law.
Mr Speaker, we had been most concerned that all or nearly all of the 96 million kina invested with Woodlawn over two years ago may have been lost. A couple of months ago it appeared that Woodlawn was suggesting it would return only a few million dollars, perhaps only 10 or 15 percent of the original investment , to MVIL. It would be a sad day for Papua New Guinea if we were to lose about 80 million kina to crooked investment advisers overseas – money which should be available for the benefit of the people of PNG and improving their living standards. This is the sad legacy of the Somare regime’s years of waste, neglect and corruption.
However, Mr Speaker, there is some light at the end of the tunnel. With the totally un-cooperative approach from Woodlawn, we had no option but to instruct our legal advisers in New South Wales to commence legal proceedings against Woodlawn and its two directors, McNamara and Breen, to recover the money they had illegally obtained.
Following the institution of legal proceedings, I have now been informed that the New South Wales Supreme Court ordered the remaining MVIL investment portfolio frozen, so Woodlawn and its directors cannot deal with those funds, and Woodlawn has been required to give full information about the current value of the MVIL investments managed by Woodlawn.
While this may sound positive, it is not all goods news. Legal action is expensive, and it is possible, or likely, that more legal action will need to be taken before we get our money back. Also, while we do not yet know precisely how much money is left, it seems that it could be somewhat less than 30 million Australian dollars, which would mean a loss of about one quarter of the original investment two and a half years ago, since 96 million kina then equalled about 40 million Australian dollars.
Of course we are not conceding that this money is necessarily lost – we will do everything we can to pursue Woodlawn for the full value of our investment and the damages we have suffered, but we obviously do not know yet how successful we will be.
This MVIL saga is, Mr Speaker, another example of the Somare regime’s scandalous misuse of public funds – not as newsworthy, but just as bad in its own way, as the Falcon jet fiasco. The people of Papua New Guinea deserve better, and we are making sure they get better than that, by making these most strenuous efforts to get back this money which has been extracted from the public purse.
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