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by PNGBLOGS STAFF WRITERS
AI YI YI YI! CHINESE AGENTS SLEEPING WITH PNG POLLIES, BRIBE-PAYING CHINESE GOVERNMENT OWNED COMPANIES WELCOMED TO PNG, NPF SCANDAL TAINTED AGENTS IN LINE FOR THEIR PAYOUTS, PAUL PARAKA AND MORE: UNPRECEDENTED SYSTEMATIC AND SYSTEMIC GOVERNMENT CORRUPTION IN PAPUA NEW GUINEA NOW CENTRES AROUND POWER GENERATION SCAMS
This story has been long in the making. PNG BLOGS rarely witnesses events that we report. We serve instead as a reporting body that does the job that the Post Courier, The National, and other PNG traditional media should be doing, but run away from, even though they operate with far greater resources than we will ever have. We do the best we can with very little so as to break open the secrets surrounding government corruption. Contact us on Facebook or e-mail us on pngblogs@gmail.com if you can provide evidence, firsthand detailed accounts and the like to expand the peoples knowledge on this and other government corruptions. As you know from our 8 years of existence, we protect our sources even when we are threatened. You can always set up a fake e-mail account and interact with us through that.
INTRODUCTION
We stitched the story of what is going on behind Ramu 2 Hydro from many sources, each of whom fed us pieces of information. Only as we put the pieces together was an overall picture revealed that is distressing, ugly, and profoundly suggests how corrupt Papua New Guinea has become under the current government. All indications are that Peter O’Neill’s ministers are out of control in a way that has occurred before Every time a government has been able to stay in power a full 5 year term, it has provided time enough for government ministers and other parliamentarians to conceptuale and implement scams that end up costing PNG dearly. The implications of the Ramu 2 Hydro expansion project for Papua New Guinea’s financial health are major. The particular activities of our Ministers and departmental heads makes our claim that PNG is a Christian nation, led by those who practice the morals that they preach, into a laughingstock.
DORA LU AND THE CHINESE INFILTRATION OF THE PNG GOVERNMENT
We previously reported (http://www.pngblogs.com/2016/12/hosting-peoples-rights-to-reliable.html) that Minister William Duma is demanding a US $10 million upfront payment, plus a provided long-term mistress, from the Chinese government business arm company known as SinoHydro, before he will carry out what should be his normal duty as Minister of State-Owned Enterprises. Without the money and the mistress he is demanding, Duma says he will not bring to NEC for approval the proposal that gives the massive contract for expansion of the Yonki Dam hydro capacity to SinoHydro Corporation.
A Chinese agent by the name of Dora Lu (also known as Dora Ru) is the go between person linking SinoHydro representatives with William Duma and other PNG government officials. The disturbing track record of SinoHydro in overseas projects appeared on Niugini Outlook this weekend (https://web.facebook.com/niuginioutlook/photos/a.155100324834490.1073741828.154029881608201/376289306048923/?type=3&theater). They have been implicated in massive cost overruns, in bribes/kickbacks, and in delivering finished products that were not up to the expected specifications, which resulted in the projects being a failure.
Niugini Outlook has also come up with an interesting observation that the amount of bribe money that Duma is demanding now from SinoHydro is exactly what SinoHydro provided to a corrupt politician in Botswana (Africa) for facilitating SinoHydro getting a contract in Zimbabwe, home of the famously corrupt dictator Robert Mugabe.
Very disturbing are the overall number of contracts Dora Lu has been the negotiator for to get the jobs for Chinese companies (http://www.pngblogs.com/2016/12/who-is-dora-lu-chinese-mistress.html). She seems to go all the way to the top in the PNG government to do her lobbying (note the official photo of her with Prime Minister Peter O’Neill). Text messages from her own hand confirm sexual relationships with Minister Nixon Duban and Treasury Secretary Dairi Vele (http://www.pngblogs.com/2016/12/chinese-mistress-takes-on-2-state.html). It goes beyond stupidity that these government officials would be so careless to sleep with a foreigner who clearly represents the interests of a foreign government. Dora Lu clearly represents Chinese government interests. Nixon Duban and Diari Vele were nothing short of fools when they thought having sex with Dora Lu could not lead at some point to blackmail attempts against them.
GOVERNMENT IMBECILES JUST BEGGING TO BE BLACKMAILED
The people of PNG should bless God right now that PNG Blogs is exposing their adulterous relationships with Dorah Lu before these corrupt PNG government officials found their pockets drained through blackmail. We pray that the Prime Minister has not been secretly sleeping with Dora Lu in a mistress style relationship he has long been rumoured to enjoy with Luciano Cragnolini’s wife, Ni Cragnolini. Lu would never divulge such a relationship to lower ranking government officials as she appears to be much too smart for that. But the Prime Minister has been reported on the internet for years to have a track record of extramarital affairs, a Cragnolini love affair first being reported on Anthony Smare’s PNG Scape forums and later elaborated on in the anonymous PNG Exposed Blog. Even if an alleged relationship between Peter O’Neill and Dorah Lu never became public, that still makes for perfect blackmail material. All the Port Moresby hotels that have been used by Lu (including the Rimbunan Hijau-owned Stanley Hotel, as well as the Airways and Lamana hotels, both owned by the Constantinou family, of which Sir Kostas is a long time Peter O’Neill crony) could include a room set up with a hidden camera put up by any one of the possible candidates who would see the blackmail opportunity, including Chinese government owned business arms eager to get more lucrative contracts from Papua New Guinea. The point is that only idiots take such risks.
RAMU 2 JOINS THE LIST OF PNG POWER ODDITIES OCCURRING SINCE PETER O’NEILL TOOK POWER
Within PNG Power, trained planners and electrical engineers who make decisions based on information and not politics, previously concluded that the proposed Ramu 2 hydro expansion project delivers far more additional power capacity than what PNG needs in the medium term, especially at this time in our country’s history when the country’s collapsing government budget can ill afford any more foreign currency loans or hefty infrastructure expenditures. Since Peter O’Neill took office, there has been a fixation on delivering foreign built or procured power supplies that are never fully explained to the public, until pulled out through leaks and whistleblowers.
The love affair between PNG government officials and power generation projects started with the Prime Minister’s interactions with the Israeli retired military officer owned LR Group, whose expertise is agriculture but who offered to procure 2 General Electric generators. Procurement was achieved by bypassing tenders. It has resulted today in the highly priced generators arriving in PNG, but being mainly offline, thus close to useless in contributing to the nation’s power availability.
Then there is the oddity that occurred 2 years ago when then State Owned Enterprises Minister Ben Micah declared a state of emergency, ostensibly to get debtors to PNG Power to pay up what they owed on their power bills. Anyone within the system knew without thinking that declaring a state of emergency for such a purpose was ludicrous. In fact, the bigger purpose was to suspend the rules involved in giving out power generation contracts. At the time, Micah was intent on fast tracking approval (getting around tendering processes but all deviously legal, thanks to his state of emergency declaration) to get the South Korean Daewoo Corporation permission to build a power generation plant outside of Lae to serve the power needs of that city. Very odd, being that there is already a large Oil Search investment project called PNG Biomass near Nadzab Airport that is on target for its own power generation plant to serve Lae’s needs. There was no room for both PNG Biomass and Daewoo to serve the Lae market.
Suspicion arose immediately that Ben Micah’s real motivation for declaring the state of emergency was that he was in line to get a handsome kickback prize from Daewoo if they were granted permission to build another exorbitantly priced electricity generating power plant in Lae. Daewoo E&C already runs the privately owned generators in Port Moresby (operating as Hanjung Power Pty). Because the government allows it to sell the power it generates at high prices, the company wants to invest more in PNG. To quote their own company statements: “Daewoo PNG Power Plant, built by Daewoo Corporation in the tough times of the financial crisis in the late 1990s, has grown to become an important ‘cash cow,’ accounting for over 40 percent of the total electricity of the capital area of Papua New Guinea. Now in its eighth year of operation, the power plant already retrieved its investment in 2003 and has recently been earning about $5 million (4.6 billion won) in net profits annually.
There are more stories. The Israeli LR Group attempted to expand its initial success getting Peter O’Neill to by the two GE generators. LR Group’s long standing and close relationship with the corrupt government of Angola (Africa) and its generals is well documented on the internet, as well as its interests in other countries that are resource rich (thus money rich) and have authoritarian governments that are easy to work with, and are especially receptive to bribes. PNG is little different than Angola in these features.
LR Group knew the big money that could be made in providing privately owned electricity to uneducated consumers who have no idea how excessive an amount of money they end up paying for their electricity. LR has next to no corporate capacity to take on mammoth hydro projects in PNG, even though danced around Latin America trying to take over the national power grids. In PNG, LR Group’s strategy was to recruit short term contractors to provide all the expertise needed to build the large hydro generation operation in Hela Province. That strategy is an almost certain pathway to disaster. Late Hela Governor Anderson Agiru, who long had his hands into government funds pilfering in order to develop personally owned businesses to supply the needs of the LNG project, pushed hard for the hydro project hard before he died. Why so motivated?
HYDRO PROJECT PRONE TO CORRUPTION IN DEVELOPING COUNTRIES
It turns out that hydro projects in developing countries are particularly prone to corruption, because they have such high price tags, which can result in high affordable bribes, kickbacks, agent fees, and contract arrangement fees (http://www.u4.no/publications/corruption-in-the-hydropower-sector/downloadasset/352). It is through “contract arrangement” fees that Dora Lu can make her big money. Hydro power is the latest gold mine that Papua New Guinea’s politicians and departmental heads can tap into to make themselves filthy rich off the wealth of the citizens of Papua New Guinea.
Dora Lu is at the centre of the negotiations for Ramu 2 Hydro. While apparently warding off the sexual advances made towards her by William Duma, Duma knows about Duban’s and Vele’s success with Dora Lu in bed and jealousy has reigned. He wants his own mistress, with SinoHydro footing the bill.
THE OLD NPF CORRUPTION SAGA REARS ITS UGLY HEAD
Negotiations over the schedule for the Ramu 2 hydro project has been between Dora Lu and Ken Yapane. Ken Yapane is an alumnus of the infamous NPF scandal of the late 1990’s, as are Peter O’Neill, Jimmy Maladina, Minister Rimbink Pato, Minister Fabian Pok, and MP Mao Zeming.
The NPF scams involved much less money than is ‘normal’ today for stealing or demanding bribes in PNG. However, the tricks today were perfected back then. Through the NPF scandal network, a number of white collar criminals began to develop and partner to continue scams up to the present.
In regard to NPF, Ken Yapane’s role was to come up with a registered company that was employed by NPF to refurbish an office at NPF’s head office. Not only was the contract not tendered as the law demanded, but Yapane was paid K40,000 in advance without doing any work. He immediately paid K20,000 of this amount to Jimmy Maladina in a classic kickback scheme.
Ken Yapane was also involved in the NPF Tower fraud, a separate scam. In that, Jimmy Maladina utilised Mr Yapane as a national contractor and laundered money through his bank account to transfer money from Kumagai Gumi first into Yapane’s account, who then paid it into into Carter Newell’s John Losuia account, from which the money was transferred into the account of Maladina’s company Kuntila No. 35 Pty Ltd. Mr Maladina paid Mr Yapane a generous commission for the money laundering service.
Like nearly all those implicated in the NPF scandal, Ken Yapane was never prosecuted, never penalized, never sufficiently shamed, and continues to find lucrative work. Small wonder that he would be involved in negotiations between William Duma and SinoHydro, with Chinese agent Dora Lu as intermediary, and negotiations taking place both in “out of sight” Singapore as well as Port Moresby.
Ken Yapane was Jimmy Maladina’s puppet in the late 1990s. We are told that the relationship remains secure. It would not be surprising to learn that Jimmy Maladina is involved in the Ramu 2 hydro expansion scam in one way or another.
ROLE OF TREASURY SECRETARY DIARI VELE
Diari Vele is Patrick Pruaitch’s Secretary of the Treasury Department. Mr Vele first became involved with Dora Lu as an agent of the government, before irretrievably compromising himself as an Agent of the State by sleeping with the Chinese Agent. Vele’s government role was to negotiate a Sovereign Guarantee between HydroSino and the PNG government.
A sovereign guarantee is a government legally binding promise that is provided when an undertaking such as Ramu 2 hydro expansion is directly linked to an underlying loan. The sovereign guarantee commits the government to honour the payment obligations of the borrower (the beneficiary) in the event that the beneficiary goes into default.
Sovereign guarantees put all the ultimately obligation to pay off loans that a private business fails to pay off straight into the hands of the citizens of a country. Because sovereign guarantees represent contingent obligations, they do not need to be placed on the government’s balance sheet. In plain English this means that the PNG government can hide money that it is, in effect, borrowing, so that the citizens do not see what is going on.
While useful under the right circumstances, sovereign guarantees are another legal mechanism that can be easily corrupted (https://openknowledge.worldbank.org/bitstream/handle/10986/7451/wps4271.pdf?sequence=1) (http://guardian.ng/infrastructure/sovereign-guarantees-in-infrastructure-finance/).
SinoHydro was delighted that Vele did his part for the Chinese and provided the sovereign guarantee to SinoHydro. This allows them to obtain a loan that the PNG government can hide from its financial accounting statements, but which SinoHydro in the end doesn’t even have to pay back, dumping the obligation onto the laps of PNG taxpayers. So delighted was SinoHydro that a few weeks ago they gifted Vele, who prides himself on sharp dress and fine living, with a USD $3,000 Mont Blanc pen with Vele’s name engraved on it. Vele is in high style while the majority of the people he supposedly serves, have been screwed over once more.
It is hardly surprising to find that Vele would do this. Only last year he was in line to be arrested for his role in allegedly illegal procurement of the 2 generators by the LR Group that the Prime Minister commissioned. Controversy seems to be the name of his new game. Unfortunately, those who earn this reputation are too frequently found later to be habitually engaged in shady deals.
ROLE OF GARRY HERSEY?
Garry Hersey is the Managing Director of Kumul Consolidated Holdings. Kumul Consolidated is the government legal entity that the O’Neill government established to hide the individual accountings of all the State Owned Enterprises. Before the people of PNG could see which company’s accounts were up to date in their audits and which were not, or which entities made money and which did not. All this information is now hidden from the people of Papua New Guinea, who are then subjected to public relations displays, such as the recent K20 million payment of Air Niugini to Kumul Consolidated to cover up all the hidden details. The people can no longer see if money is being drained out of the profit earning companies and if so, where that profit is going. Kumul Consolidated is the ultimate cloak of secrecy that allows corruption to flower and spread. Private deals can all be worked out without the public ever finding out.
Hersey, in his capacity overseeing PNG Power as one of PNG’s State Owned Enterprises, has been mentioned by more than one source as having been involved in the negotiations of a payment schedule. He is also storied to be responsible for pushing John Mangoes out at PNG Power.
Because all the relevant financial information is now hidden from the eyes of the public, we can only guess what the size of the loan involved is, but certainly over K1 billion. Because a sovereign guarantee is needed, this is clearly not a government to government concessionary loan, but more likely to be a loan carrying a high commercial bank rate of interest.
BOND BROTHERS WILLIAM DUMA AND PAUL PARAKA
William Duma and Paul Paraka are bond brothers, going back to high school days or before. Paul Paraka wants to get into parliament and join the scammers who are already there, including Duma. But Paraka is in serious financial trouble, being that he has been unable to scam the government for money to subsidise his money losing operations. Last week Nambawan Super, claiming that Paraka owed over K5 million in back rent, locked Paraka employees out of the Paraka Port Moresby office at Mogoru Moto building.
Obviously if Paraka can’t even pay the rent on his offices, he won’t be able to fund his upcoming campaign to enter Parliament and tap into the really big money. It wouldn’t be much of a stretch to speculate that a good chunk of William Duma’s USD $10 million bribe money from SinoHydro could end up in Paul Paraka’s hands to fund his campaign for parliament.
IS A PRIVATISATION OF RAMU 2 HYDRO BEING PLANNED?
It is a common scam to privatise government service providers solely with the objective to get the enterprises in the hands of corrupt cronies or government officials themselves. The government sells off government assets at a very cheap price in the process. This is what is suspected to be the medium term plan with Air Niugini as it currently pumps up its plane stock at government taxpayers expense. There is suspicion that the Ramu 2 Hydro, once completed by SinoHydro, will also be privatized, with corrupt PNG government officials becoming the new owners. When the privatized entities and government sign agreements allowing the privatized entities to make whatever profit they want, it is the people of PNG who suffer. This is exactly what is happening today in Port Moresby, where power outages are common, yet Daewoo of South Korea crows about how much profit they’re making off their Moresby generators.
It would be a remarkable business setup if taxpayers money were used to build a large infrastructure, which is then sold by the government below cost to a group of corrupt government business partners, who then proceed to charge outrageous prices for the power they generate.
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