THE INDEPENDENT STATE OF PAPUA NEW GUINEA
PUBLIC ACCOUNTS COMMITTEE
FINAL REPORT
REPORT TO NATIONAL PARLIAMENT
INQUIRY INTO THE NATIONAL MUSUEM AND ART GALLERY
AND THE SALE AND EXPORT OF THE SWAMP GHOST AIRCRAFT
CONTENTS
CONTENT
PAGE
INTRODUCTION 4
EXECUTIVE
SUMMARY
5
CHRONOLOGY
18
LIST
OF ABBREVIATIONS
18
COMPOSITION
OF THE COMMITTEE
20
JURISDICTION
AND PURPOSE OF THE INQUIRY
21
PURPOSE 21
JURISDICTION 25
The Constitution Of The Independent State Of Papua
New Guinea 25
The
Public Finance (Management) Act
27
Permanent
Parliamentary Committees Act
27
THE
AUTHORITY TO REPORT
28
THE
AUTHORITY TO REFER 28
METHOD
OF INQUIRY
29
PRIVILEGES
AND PROTECTION OF WITNESSES
30
RELEVANT
STATUTES
30
Public
Finances (Management) Act 1995
30
Financial
Instructions
31
Organic Law on the Duties and Responsibilities
of Leadership 31
Investment Promotion
Authority Act 32
Audit Act 32
War Surplus Materials Act 32
National Museum and Art
Gallery Act 34
National Cultural Property
(Preservation) Act 35
THE SWAMP GHOST -
BACKGROUND FACTS 36
LEGALITY OF THE SALE,
REMOVAL AND ATTEMPTED
EXPORT OF THE SWAMP GHOST 42
THE FIRST DAY OF THE
INQUIRY 45
THE SECOND DAY OF THE
INQUIRY 63
OTHER AIRCRAFT WRECKS
EXPORTED FROM PAPUA
NEW GUINEA 84
FISCAL
RESPONSIBILITIES OF THE GOVERNMENT
105
RESPONSIBILITIES
OF THE AUDITOR GENERAL
105
OBLIGATIONS OF THE
NATIONAL MUSEUM AND ART
GALLERY TO THE PUBLIC
ACCOUNTS COMMITTEE 106
DUTIES OF THE DIRECTOR AND
MANAGEMENT
OF THE MUSEUM 107
LOSS TO THE STATE 108
REPORTING
OF THE INQUIRY BY HANSARD
109
RESOLUTIONS
OF THE COMMITTEE
110
FINDINGS
112
REFERRALS
117
RECOMMENDATIONS
120
THE
PUBLIC ACCOUNTS COMMITTEE
INQUIRY
INTO THE NATIONAL MUSEUM AND ART GALLERY
REPORT TO THE NATIONAL
PARLIAMENT
1.
INTRODUCTION
1.1.
On the 22nd
day of September 2004 the Permanent Parliamentary Public Accounts Committee
concluded a long running inquiry into the Papua New Guinea National Museum and
Art Gallery.
1.2.
On the 4th
day of July 2006, the Public Accounts Committee re-convened the Inquiry to
consider the circumstances attending the attempted sale and proposed export of
the wreck of a B17 aircraft Serial Number 41 – 2446 by Aero Archaeology LLC, an American
company. That sale and approval of the export was made by the National Museum
and Art Gallery of Papua New Guinea.
1.3.
The Public Accounts
Committee also considered the legality of past approvals by the National Museum
and Art Gallery permitting the export of War Surplus Materials from Papua New
Guinea by foreigners.
1.4.
As a result of
evidence taken in the Inquiry, the Public Accounts Committee made certain
findings which were highly critical of performance of the National Museum and
Art Gallery and, in particular, the performance and competence of present and
past Directors and Senior Officers of that Institution.
1.5.
The Committee found
widespread illegal practices and a failure to protect the property and monies
of the Independent State of Papua New Guinea extending over many years
1.6.
As a result of
evidence given and documents
tendered to the Inquiry, the Public Accounts Committee made certain referrals
of both management and staff of the National Museum and Art Gallery and of
foreign salvors for inquiry and possible prosecution for breaches of Law in the sale, removal, export and on
sale of War Surplus Materials.
1.7.
As a result of evidence
given and documents tendered to the inquiry, the Public Accounts Committee
unanimously resolved to make a full and complete report of its Inquiry and
findings to the National Parliament in accordance with Section 86 (1) (c) of
the Public Finances (Management) Act 1994.
1.8.
The Public Accounts
Committee now tables the report with its strongest recommendation that remedial
action be immediately taken by the National Parliament in accordance with
findings and resolutions of the Public Accounts Committee – in
particular, that the Swamp Ghost aircraft be retained in Papua New Guinea and
that all War Surplus Materials removed from Papua New Guinea be traced and
located and that State ownership of that material be reasserted.
2.
EXECUTIVE
SUMMARY
In summary the Committee finds:
2.1
The National Museum
and Art Gallery is incompetently managed and ineffective in carrying out its
statutory obligations to manage our Cultural Heritage and fails to protect and
further the property and fiscal interests of the State.
2.2
The Committee
concludes that the NMAG has failed to fulfil its statutory duties, failed to
comply with the Public Finances
(Management ) Act, failed to
act in a lawful manner when dealing with foreign “salvors” of War Surplus
Materials, failed to co-operate with the Office of the Auditor General, failed
to comply with its own Guidelines for the consideration of applications to
salvage war surplus, failed to protect State property at all, illegally
accepted money for the sale of State property, actively misled its own
Trustees, failed to assert State ownership of War Surplus Materials, failed to
comply with the National Museum and Art Gallery Act, failed to comply with the War Surplus
Materials Act, failed to
comply with Financial Instructions, failed to take reasonable steps to ascertain the bona fides of
foreign salvors, was subject to external influence and threats, failed to
account properly or at all for monies or “gifts” received from foreign
“salvors” and acquiesced in the on sale of State property by foreigners with no
concern for the interests of the State.
2.3
In summary, a Trustee
of the NMAG described the Museum to the Committee as a “national
disgrace”. This Committee is
inclined to agree.
2.4
The Director and
management of the National Museum and Art Gallery have, quite unlawfully,
assumed power to sell War Surplus Materials which are owned by the State. The
Museum has no right or ability to do so.
2.5
The Director and
management of the National Museum and Art Gallery have assumed an agency for
and on behalf of the State, which it does not have and has acted unlawfully in
negotiating and executing a contract of sale of State property – namely
the Swamp Ghost aircraft.
2.6
The Director and
management of the National Museum and Art Gallery have illegally entered a into
contract to sell State property to foreigners for no return or revenue to the
State.
2.7
The National Museum
and Art Gallery has for many years allowed the sale, removal and on-sale of
State property – namely War Surplus Materials - illegally and with no checks
or controls on dealing in State property by foreigners. There has been no
return or gain to the State from virtually any of these transactions.
2.8
The National Museum
and Art Gallery has no power to sell, approve removal or export or to collect
money from the sale, removal or on sale of War Surplus Materials.
2.9
The National Museum
has failed to implement and maintain competent or adequate systems of
accounting, control or monitoring of War Surplus Materials removed from Papua
New Guinea.
2.10
The National Museum
and Art Gallery has misused and misapplied a considerable amount of money
received by it from foreign salvors of State property.
2.11
The National Museum
has, in breach of the Public Finances (Management) Act, received money from the on-sale of War Surplus Materials
by foreigners. The Museum has
failed to properly account for or hold such monies in accordance with Section
16 of the Public Finances (Management) Act.
2.12
The National Museum
and Art Gallery has been and still is subject to the considerable and improper
influence of foreigners and foreign companies which unlawfully obtain, export
and on-sell War Surplus Materials from Papua New Guinea – which materials
are and remain, State property.
2.13
The National Museum
and Art Gallery illegally entered a contract of sale for the Swamp Ghost
aircraft and thereby breached the Public Finances ( Management) Act and the National Museum and Art Gallery Act and the War Surplus Materials Act.
2.14
The National Museum
and Art Gallery, in contracting to sell the Swamp Ghost aircraft, falsely held
itself out as representing the State and having power to sell State Property
– and its officers may thereby have breached the Criminal Code Act.
2.15
The National Museum
and Art Gallery, in entering a contract to sell the Swamp Ghost aircraft,
ignored legal advice from the Office of the State Solicitor to the effect that
it had no power to sell State property unless in accordance with the terms of
the Public Finances (Management) Act – i.e. by public tender - and that any
proceeds of sale were treated as Trust Funds belonging to the State.
2.16
The National Museum
accepted as independent, a valuation of the Swamp Ghost aircraft made by a
shareholder in the purchasing company who was the actual physical salvor
retained by and acting for and on behalf of the buyers of the wreck.
2.17
The valuation
accepted by the Museum was a fraction of the true market worth of the aircraft
and the entire valuation process was not independent or transparent. As a
result of this failure, the State was to be deprived of valuable State property
for no return.
2.18
The National Museum
had for years issued invalid and illegal “Permits” to salvage, remove and
export War Surplus Materials to foreign salvors who were themselves illegally
operating in Papua New Guinea.
2.19 The Acting Director and management of the National
Museum and Art Gallery intentionally misled the Board of Trustees as to the
nature and the effect of the “Contract” between the Museum and Aero Archaeology
LLC for the sale of the Swamp Ghost, in that the Trustees were told, inter
alia,:
(i)
That there was no
alternative to approving the Contract; and
(ii)
That the aircraft
would remain the property of the State; and
(iii) The aircraft would be returned to Papua New Guinea;
and/or
(iv) The aircraft would be and remain under the control
of the Independent State of
Papua New Guinea; and
(v)
That the Trustees
could impose conditions on the export of the aircraft; and
(vi) That the Trustees could impose the terms on which
the purchaser would hold the aircraft; and
(vii) The aircraft would be restored and exhibited at
March Field Museum in California; and
(viii) That litigation would issue against the Trustees
personally unless they approved the Contract.
Moreover the Trustees were intentionally misled in
that they were not told
by Museum Management, before the Board of Trustees approved the Contract for
sale of the Swamp Ghost that:
(i)
The Contract was one
of sale of State property The Trustees never understood the true effect of the
contract or
(ii)
The State lost all
rights, ownership and control of the aircraft thereby; or
(iii)
Provided with a copy
of the Contract; or
(iv)
Of the powers of the
Museum or the Board of Trustees to enter into or approve such a transaction
– which did not exist; or
(v)
That the Contract was
illegal, void and unenforceable; or
(vi)
That a previous
attempt to export the aircraft was refused; or
(vii)
That Museum
Guidelines had not been complied with by the Management of the Museum; or
(viii)
That the purchaser
was, literally, a back-yard operator with no ability to restore, house, exhibit
or preserve the aircraft; or
(ix)
That the Museum had
received an independent valuation from a Mr. Justin Taylan; or
(x)
That the valuation
relied on as “independent” by the Museum was in fact prepared by an individual
who was both a shareholder in the purchasing company Aero Archaeology LLC and
the person retained by Aero Archaeology LLC to recover the aircraft; or
(xi)
Any opportunity to
obtain any legal advice at all on the transaction; or
(xii)
Of legal advice from
the Office of the State Solicitor which would have led the Trustees to conclude
that the transaction was illegal; or
2.20
The Trustees were not
properly or adequately advised by Management of the National Museum and,
therefore, could not have reached an independent or lawful decision.
2.21
Had the Board of
Trustees been properly and fully advised, they would not have approved the
Contract.
2.22
Combining these
failures with the threat to Trustees of personal litigation unless they
approved the sale and export of the Swamp Ghost, a concerted subversion of the
Independent Board of Trustees becomes clear.
2.23
The Trustees were not
empowered to consider or approve the transaction at all, but even if they were,
the Board was robbed of the right and ability to act independently by the
failings that we have outlined.
2.24
This conduct by
Management has been referred to the Royal Papua New Guinea Constabulary for
full investigation and possible prosecution.
.
2.25
The Management of the
National Museum and Art Gallery failed to make any or any adequate inquiry
concerning the purchaser and in particular failed to discover that the
purchaser:
(i)
had no experience in
aircraft restoration; and
(ii)
had no experience in
historic aircraft curation; and
(iii)
had never owned an
aircraft; and
(iv)
had never restored an
aircraft; and
(v)
had no history in the
aviation industry; and
(vi)
had lied to the
Museum as to its intentions for the aircraft; and
(vii)
had no facilities to
restore the aircraft; and
(viii)
had no facility to
exhibit the aircraft; and
(ix)
did not own, operate
or have any institution, museum, hanger or other building suitable to store,
restore or exhibit the aircraft; and
(x)
was not a recognized
museum, collector, curator, restorer, preserver, historian or institution but
rather was a private individual with money necessary to buy and export the
aircraft; and
(xi)
had illegally
obtained an aircraft from Papua New Guinea in the past using a third party to
remove and export it; and
(xii)
had threatened the
Museum Board of Trustees with personal litigation unless they approved the sale
and removal; and
(xiii)
was not certified to
carry on a business in Papua New Guinea; and
(xiv)
had no permit or
legal right to remove or export War Surplus Materials from Papua New Guinea;
and
(xv)
had no agreement with
March Field Museum to store and restore the Swamp Ghost, as stated to the Board
of Trustees, the Minister, the NEC and the Prime Minister; and
(xvi)
had no apparent plan
for the aircraft other than to obtain it as his own personal possession; and
(xvii)
had no intention of
returning the aircraft to Papua New Guinea as stated to the Board of Trustees;
and
(xviii)
had no salvage permit
or authority from the Museum or anywhere else; and
(xix)
relied on a “middle
man”, Robert Greinert to obtain and export the aircraft – an agent who
personally had no approvals to remove and export War Surplus Materials from
Papua New Guinea; and
(xx)
had actively misled
the Museum, the NEC, the Prime Minister and the Board of Trustees into
believing, variously, that the aircraft would be owned or part owned by Papua
New Guinea and would be returned
to Papua New Guinea, whilst also asserting ( to the same persons) that the aircraft
would be housed and restored at March Field Museum in California; and
(xxi)
provided no or no
adequate Police clearance or reference material in compliance with the Museum
Guidelines; and
(xxii)
plainly saw an
opportunity to make a significant amount of money by obtaining State owned
property for no payment to the State and was prepared to make whatever
representation seemed likely to further that intention, irrespective of the
truth; and;
(xxiii)
had dealt directly
with Landowners in contravention of the War Surplus Materials Act; and
(xxiv) failed to provide any truthful, competent or
coherent proposal for the aircraft; and
(xxv)
changed statements of
intention and proposals for the aircraft according to the person or Office to
which the representations were made; and
(xxvi) failed to obtain or provide any evidence of
comparative sales or valuations of similar aircraft; and
(xxvii)
failed to disclose
that permission to export the aircraft had previously been refused by the
Government of Papua New Guinea.
2.26
The National Museum
and Art Gallery has failed to maintain any control or supervision of War
Surplus Materials after such material has left Papua New Guinea and has thereby
compromised the State’s ownership of such materials.
2.27
The National Museum
and Art Gallery had no interest in the fate of War Surplus Materials exported
from Papua New Guinea other than to collude in their on-sale and to demand and
receive money from those sales; and
2.28
The National Museum
and Art Gallery has misused Trust Funds under its control and has failed to
account properly or at all for “gifts” and payments of cash made to the Museum
and its staff by foreign exporters of War Surplus Materials.
2.29
The National Museum
and Art Gallery failed to comply with its own Guidelines when considering and
approving the sale, removal, salvage and export of War Surplus Materials.
2.30
The National Museum
and Art Gallery failed to make any or any sufficient inquiry into the history,
legality and intentions of foreign exporters of War Surplus Material before
entering into business with them.
2.31
The National Museum
and Art Gallery failed to establish whether foreign exporters of War Surplus
Materials were properly and lawfully registered or certified to carry on
business in Papua New Guinea.
2.32
The National Museum
and Art Gallery has failed to trace, register, inspect or monitor in any way
the War Surplus Materials removed from Papua New Guinea and has thereby failed
in its duty to protect and preserve the cultural and historical heritage of
Papua New Guinea.
2.33
Upon all the evidence
before the Committee, the Committee has referred the management of the National
Museum and Art Gallery to the Office of the Ombudsman and the Royal Papua New
Guinea Constabulary, for full investigation of the sale of the Swamp Ghost and
the export of other War Surplus Materials, to establish whether there is any
breach of the Criminal Law – and in particular, whether there is any
evidence of conspiracy to illegally obtain State property.
2.34
In this Inquiry, the
Committee sought but received no assistance from the Office of the Attorney
General.
2.35
The Acting Attorney
General failed or refused to action instructions from this Committee to obtain
Court Orders preserving the Swamp Ghost aircraft pending the completion of this
Inquiry. That Officer failed to make any adequate explanation to the Committee
for this failure despite being requested to do so.
2.36
Consequently, the
Committee has resolved to refer the Acting Attorney General Mr. Fred Tomo to
the Papua New Guinea Law Society and to the responsible Minister.
2.37
The National Museum
and Art Gallery has failed for years to maintain any or any competent systems
of accounts, accountability, control, transparency or governance over its
operations.
2.38
The management of the
National Museum and Art Gallery clearly saw the trade in War Surplus Materials
as a lucrative commercial opportunity. The Acting Director referred to
exporters as “clients” of the Museum.
2.39
Not once in the
entire Inquiry did any witness attempt to justify the trade on the basis that
the aircraft were exported for the purpose of restoration or preservation of
State owned property.
2.40
The National Museum
and Art Gallery has failed to comply with the terms of the Audit Act, the Public
Finances (Management) Act and
the National Museum and Art Gallery Act in that it has not, for six years, provided
audited accounts.
2.41
The management of the
National Museum and Art Gallery have refused and failed to assist and/or
cooperate with the Office of the Auditor General – to the extent of
refusing the Auditor General entry to the Museum premises.
2.42
The National Museum
and Art Gallery has failed or refused to render annual statements, accounts or
Reports as required by Law.
2.43
The Committee finds
that the National Museum and Art Gallery has actively misled the Minister for
Culture and Tourism and the National Executive Council in various submissions
designed to justify its actions in selling and approving the export of the
Swamp Ghost aircraft.
2.44
It is clear to this
Committee that the management of the Museum have a vested interest in the
successful completion of this transaction and were prepared to make any
representation that might attract favour at any time – regardless of the
truth or otherwise of the statement(s).
2.45
The Committee finds
that the Management of the National Museum and Art Gallery was prepared to
mislead this Committee and actively attempted to discredit a Committee Member
by false and concocted allegations of impropriety and illegal dealings in War
Surplus Materials. This appalling conduct has been referred to the Royal Papua
New Guinea Constabulary for full investigation.
2.46
The behaviour of the
foreign salvors involved in the sale and removal of the Swamp Ghost aircraft
and other War Surplus Materials from Papua New Guinea, has been a matter of
concern to the Committee.
2.47
Evidence of threats
to and assault of Museum Managers, lies and obfuscation concerning their
intentions for salvaged materials and threats to the National Museum and Art
Gallery Board of Trustees were received by the Committee.
2.48
How such persons
gained influence in the Museum is a matter of concern to the Committee. That
such conduct could occur in a scientific institution and be tolerated by its
Director and staff, is totally unacceptable.
2.49
The National Museum
and Art Gallery should never again deal with these persons or entities or with
any foreigner of similar dubious intent.
2.50
The trade in War
Surplus Materials is clearly big business. Equally clear is the fact that Papua
New Guinea is one of the last repositories of such material.
2.51
The Museum has
clearly colluded in this trade with no regard to its legality or to the powers
of the Museum. The resulting loss to the State is considerable.
2.52
The Committee has
traced 89 aircraft or parts of wartime aircraft into private hands all over the
world. The exporters operating in Papua New Guinea have sold and traded in
State property with no regard to the Law – and clearly assisted by the
Museum and its management.
2.53
Foreign exporters
have on-sold or traded this State property in blatant breach of their own
agreements with the Museum – which recognise and record the fact of State
ownership in wartime aircraft and parts.
2.54
Buyers have,
presumably quite innocently, paid and/or expended large amounts of money on
these wrecks believing that they would receive good title. The Museum has done
nothing to stop this trade.
2.55
The Committee
strongly recommends that State ownership of these aircraft or aircraft wrecks
be asserted with the assistance of International Law Enforcement Agencies,
International Cultural Protection Agencies and foreign Governments.
2.56
The Committee
recommends that the National Museum and Art Gallery be prevented from dealing
with, trading in, selling, approving for removal or export or in any way having
any power over War Surplus Materials and that managers who have entered illegal
contracts or arrangements, be held fully accountable for the loss to the State.
2.57
The Committee
disallows the contract of Sale of the Swamp Ghost aircraft and recommends that
the aircraft not leave the country unless on a State to State loan basis which
recognizes, preserves and protects the fact of State ownership and ensures the
restoration, preservation and curation of the aircraft by a reputable State
recognized museum or scientific institution.
2.58
The Committee finds
that the State has lost extremely valuable property as a result of the
incompetence and misconduct of the National Museum and Art Gallery and that the
Museum has no interest in rectifying that situation.
2.59
The Committee
recommends that all Agreements entered into by the Museum permitting the
removal and export of War Surplus Materials be immediately suspended as
unlawful and ultra vires the power of the National Museum and Art Gallery.
2.60
The Committee has
concluded that the National Museum and Art Gallery is the worst and most incompetently
run of any that have been before us.
2.61
Accordingly, the Committee has asked the
Office of the Auditor General to conduct a full review and investigation of the
Museum finances and Accounts for the last six years and will reconvene this
Inquiry when that material is available.
2.62
The National Museum and Art Gallery
requires urgent restructuring and this Committee recommends that competent and
professional managers be deployed to the Museum to commence that restructuring.
Clearly the current management should be removed from their positions.
2.63
The Committee detects
no will or ability in the current Management of the National Museum and Art
Gallery to effect any change – or even to understand that they have
misconducted themselves in any way.
2.64
A Member of the Board
of Trustees of the National Museum and Art Gallery described the institution to
this Committee as a “national disgrace” and we are inclined to agree. Urgent remedial
action is required if the Museum and Art Gallery is to fulfil its statutory obligations.
2.65
The National Museum
and Art Gallery management and, in particular, the Acting Director Mr. Simon
Poraituk obstructed the Inquiry by the Public Accounts Committee by failing to
produce documents when ordered to do so, with the intention of using
information to discredit the Committee at a time of his choosing. This
Committee has referred him for investigation.
2.66
The National Museum
and Art Gallery has failed in its duty to protect and secure State property and
has acted in an illegal manner in dealing with State property by assuming a
power that it did not have.
2.67
The Committee has
received full co-operation and assistance from the Investment Promotion
Authority and the National Cultural Commission in the course of this Inquiry.
We acknowledge that assistance .
2.68
The Committee makes
referrals and recommendations at the conclusion of this Report.
3.
CHRONOLOGY
3.1.
The Public Accounts
Committee commenced its Inquiry into the National Museum and Art Gallery on the
22nd September 2004 and then adjourned generally.
3.2.
The Inquiry
reconvened on the 4th of July 2006 and continued on the 12 and 13th
day of September 2006 when the Inquiry was adjourned to a date to be fixed.
3.3.
Notices to Produce
evidence and documents were given to the Acting Director of the National Museum
and Art Gallery on the 23rd September 2005 and in June, July and
September 2006.
3.4.
These Directives were
complied with adequately.
3.5.
Interim findings were
made on the 13th day of September 2006 and sent to all interested parties. Those Findings gave
all parties seven days to make any response or to produce any further evidence
to the Committee.
4.
LIST OF
ABBREVIATIONS
4.1
PF(M)A Public
Finances (Management) Act
4.2
PAC Public
Accounts Committee.
4.3
NMAG National Museum and Art Gallery
4.4
The Constitution
The Constitution of the Independent State of
Papua New Guinea
4.5
The National Court
The National Court of Justice of Papua New Guinea
4.6
The Committee
The
Permanent Parliamentary Committee on Public Accounts.
4.7
The Chairman /
Acting Chairman
The
Chairman or Acting Chairman of the Public Accounts Committee.
4.8
The Museum
The National Museum and Art Gallery of
Papua New Guinea
4.9
The Swamp Ghost Boeing B 17 SN 41 – 2446.
4.10
The Director or
Acting Director
The Director or Acting Director of the National Museum
and Art Gallery of Papua New Guinea
4.11 The Trustees
The Board of Trustees of the National Museum and
Art Gallery of Papua New Guinea.
4.12
The Board
The Board of Trustees of the National Museum and
Art Gallery of Papua New Guinea.
4.13
The President
The President of the Board of Trustees of the
National Museum and Art Gallery of Papua New Guinea
4.14
The NEC
means the National Executive Council.
5.
COMPOSITION OF
THE COMMITTEE
5.1
The Public Accounts
Committee which made inquiry into the National Museum and Art Gallery was
constituted as follows:
5.2
22nd September
2004:
Hon. John Hickey MP (Chairman)
Hon Ekis Ropenu MP (Member)
Hon. Dr. Bob Danaya MP (Member)
Hon. Dr. Allan Marat MP (Member)
Hon. Michael Mas Kal MP (Member).
5.3
12 September 2006.
Hon Chris Haiveta MP (Acting
Chairman).
Hon Dr. Bob Danaya MP (Deputy Chairman).
Hon.
Ekis Ropenau MP (Member).
Hon
Michael Mas Kal MP (Member)
Hon
Sasa Zibe MP (Member).
Hon
Mal Smith-Kela MP (Member).
Hon
Tony Aimo MP (Member).
5.4 13
September 2006.
Hon.
Mal Smith-Kela MP (Temporary Chairman).
5.4 The Chairman, Deputy Chairman and Members
of the Committee were properly and lawfully appointed and empowered to sit as a
Public Accounts Committee.
6.
JURISDICTION
AND PURPOSE OF THE INQUIRY
PURPOSE
OF THE INQUIRY
6.1
The National Museum
and Art Gallery is the entity charged with the protection , preservation and
management of the historical, cultural and scientific heritage of Papua New
Guinea.
6.2
The National Museum
and Art Gallery is responsible, inter alia, for specimens, collections and
exhibits of National importance from both historical and pre-historical times.
The Committee finds that the NMAG is responsible for the curation and
protection of items of significant value and rarity.
6.3
The NMAG should be a
competently managed custodian of the National heritage. The nature of the
organization requires competent staff and managers and a Board of Trustees
strong and independent enough to resist political and other pressure which may
be brought to bear on the Museum by persons or organizations seeking to obtain
valuable or rare items of National Heritage.
6.4
The purpose of the
Inquiry conducted by the Public Accounts Committee was to make full and
complete examination of the manner in which the National Museum and Art Gallery
in all its aspects, and officers of the Museum, controlled transactions with or
concerning public property and
accounted for monies and property, protected the position of the
Independent State of Papua New Guinea, collected revenue, controlled and
monitored expenditure and protected the position of the State and the security
and integrity of property, assets and money of the State.
6.5
The purpose of the
Inquiry was not to improperly pursue or criticize any person or company, but to
make a constructive and informed Report to the Parliament on any changes which
the Committee perceives to be necessary to any item or matter in the accounts,
statements or reports or any circumstances connected with them, of the National
Museum and Art Gallery and any matter considered by the Committee to be of
national importance.
6.6
Further, the
intention of the Inquiry was to enable the Committee to report to the
Parliament in a meaningful way on alterations that the Committee thinks
desirable in the form of the public accounts as manifested in the National
Museum and Art Gallery, in the method of keeping them, in the method of
collection, receipt, expenditure or issue of public monies and/or for the
receipt, custody, disposal, issue or use of stores and other property of the
State by the National Museum and Art Gallery and in particular the custody,
preservation and protection of War Surplus Materials.
6.7
The Public Accounts
Committee has conducted ongoing Inquiries into the National Museum and Art
Gallery for at least three years.
6.8
Throughout this
period the Committee has been concerned at the apparent failures by that
organisation to carry out many of its functions with any degree of competence
or legality.
6.9
The Committee has
been particularly concerned at the apparent inability of the museum to protect
and manage State owned property, to maintain accounts and records, to make
Reports as required by Law and to manage our National heritage free of
influence and pressure – particularly from foreigners.
6.10 By the War Surplus Materials Act 1953, the State owns all War Surplus Materials left in
Papua New Guinea at the end of the Second World War. The National Museum and
Art Gallery “administers” that Act. The term “administration” has an unclear
meaning. No delegation to approve removal or export of War Surplus Materials
appears to have been given to the Museum or its Trustees. That power remains
with the Head of State. The Committee accepts that the Museum may be charged
with accepting and assessing applications to remove War Surplus and advising on
the merits of an application, but not selling or dealing in War Surplus
Materials.
6.11 The Committee became increasingly concerned by a
media report in 2006 that the NMAG had sold the wreck of a B17 wartime aircraft
known as the Swamp Ghost to an American company owned by a private individual
with no apparent ability to restore or exhibit the aircraft.
6.12 How the Museum had the power to sell the Swamp
Ghost and how it made the decision to sell this very valuable piece of State
property to a foreigner with no experience or ability to preserve the wreck and
who, moreover, was prepared to mislead the Museum as to his true intentions for
the aircraft, became the core issues in this Inquiry.
6.13 Further Inquiries revealed that the NMAG has
permitted the export of at least 89 other wartime aircraft wrecks and parts to
foreign interests with no record of the current whereabouts of those aircraft
or parts maintained by the Museum and therefore no ability to protect this State
property or the fact of State ownership.
6.14 The Committee resolved to make an Inquiry into the
legality of these exports and sales and establish precisely the quality of
management, accountability and transparency exhibited by the NMAG and its staff
both in respect of those exports and the accounting for and use of monies
received by the NMAG from those exports or sales.
6.15 The Committee resolved to establish the precise
circumstances attending the sale of the Swamp Ghost aircraft and all other
aircraft and the degree to which the NMAG had preserved State ownership of
those aircraft or parts.
6.16 Information received by the Committee showed that
there had been a thriving trade in on-selling wartime aircraft and parts
exported from Papua New Guinea despite the fact that the State owns them. This
practice had occurred with the full complicity of the NMAG – which had
absolutely no intention to interest in tracing or asserting State ownership of
these aircraft after they left Papua New Guinea.
6.17 The Committee resolved to inquire as to why such a
trade was allowed to occur with no protection given to the fact of State
ownership.
6.18 The Committee resolved to establish whether the
NMAG had fulfilled its legal obligations to any degree when approving the
export and on-sale of these aircraft and what, if anything, should be done to
trace and reassert State ownership of these wartime relics – wherever
they may now be located.
6.19 The Museum had apparently assumed an authority to
supervise and approve each step in the process of sale, removal and export of
this State property by foreign interests – at no financial benefit to the
State – and on no apparent legal basis. This Inquiry was intended to
establish the source of that power.
6.20 Further, the Committee was informed that the NMAG
had not made any accounts, audits or reports for six years. This allegation combined with the allegations of sale and export of
State property with active participation of the NMAG, persuaded the Committee
that a full and complete Inquiry into the management and activities of the NMAG
was justified.
6.21 The Committee concluded that corrupt practices and
inept management by the NMAG have existed for some years and continue with
impunity and immunity.
6.22 In respect of the sale or export of War Surplus
Materials, the Committee concluded that the NMAG has no power to act as it has
in approving and assisting in the salvage and export of very valuable items.
The Museum itself could not show the source of power to justify its actions.
6.23 The Committee finds that the NMAG have been
overborne by foreign “salvors” who had no other agenda than to access and take
possession of War Surplus Materials that were and remain the property of the
State of Papua New Guinea – property of considerable value – for on
sale to wealthy collectors with no return to the State. This is not acceptable.
6.24 The Committee has received evidence of threats to
the Trustees, Management and staff of the Museum by these foreign “salvors”
– who seem to be mere “middle men” serving the interests of wealthy foreign
collectors.
6.25
The Committee
resolved to Inquire into the management of all exhibits and material in the
custody of the NMAG since Independence. The Committee is concerned to establish
that the same practices of selling or giving away historical heritage has not
occurred in other areas of the Museums operations.
6.26
The Committee further
resolved to ask the Office of the Auditor General to conduct a full and
complete audit into the NMAG and to reconvene the Inquiry at a later time.
6.27
At all times, the
Committee has taken great care to enable witnesses to make full and complete
representations and answers to any matter before the Committee – in
particular those matters about which the Committee may make adverse findings
against individuals or companies.
6.28
The Public Accounts
Committee has taken care to give careful consideration to all responses and
evidence given before the Committee.
6.29
All evidence was
taken on oath and full and due inquiry was made of all relevant State Agencies
where the Committee considered those inquiries to be necessary.
7.
JURISDICTION
OF THE COMMITTEE
THE
CONSTITUTION OF THE INDEPENDENT STATE OF PAPUA NEW GUINEA.
7.1 The Committee finds its jurisdiction firstly, pursuant to
Section 216 of the Constitution of the Independent State of Papua New
Guinea. That Section reads:
“216. Functions of the Committee
(1) The primary function of the Public Accounts
Committee is, in accordance with an Act of the Parliament, to examine and
report to the Parliament on the public accounts of Papua New Guinea and on the
control of and on transaction with or concerning, the public monies and
property of Papua New Guinea”.(our
emphasis).
(2) Sub-section (1) extends to any accounts,
finances and property that are subject to inspection and audit by the
Auditor General under Section 214 (2) … and to reports by the Auditor General
under that Sub-section or Section 214 (3)…”.(our emphasis).
7.2
The Committee has
taken care to restrict its Inquiry to an examination of the control of and
transactions with or concerning the public monies and property of Papua New
Guinea by the National Museum and Art Gallery of Papua New Guinea and it’s
officers.
7.3
War Surplus
Materials are rare and valuable State property and the Committee has
jurisdiction to consider the standard of management and control exercised over
that asset by the National Museum and Art Gallery, on behalf of the State
– particularly when a decision has been made by the Museum to sell State
property for no revenue to the
State, with no agreement from Government and no regard to the Law of disposal
in the Public Finances (Management) Act or the Financial Instructions promulgated thereunder.
7.4
Whilst considering
the relevant provisions of the Constitution, the Committee has had regard to
the Final Report of the Constitutional Planning Committee 1974 and been guided by or applied the stated
intentions of that Committee wherever necessary.
7.5
The Public Accounts
Committee has had due regard to reports by the Auditor General made pursuant to
audit inspections of the National Museum and Art Gallery but has conducted an
Inquiry into matters deemed by the Committee to be of National Importance or
which arise naturally from primary lines of Inquiry and which are within the
jurisdiction and function of the Committee as set forth in the Constitution.
7.6
Whilst engaged in the
Inquiry the Committee was guided by two definitions contained in Sch 1.2 of the
Constitution, which are directly relevant to Section 216 of the
Constitution. They are:
“Public Accounts of Papua New Guinea” includes
all accounts, books and records of, or in the custody, possession or control
of, the National Executive or of a public officer relating to public property
or public moneys of Papua New Guinea;”
and
“Public moneys of Papua New Guinea” includes
moneys held in trust by the National Executive or a public officer in his
capacity as such, whether or not they are so held for particular persons;”
8.
THE PUBLIC
FINANCES (MANAGEMENT) ACT.
8.1.
The Public Accounts
Committee also finds its jurisdiction to Inquire into the National Museum and
Art Gallery in Section 86 of the Public Finance (Management) Act. That Section empowers the Committee to
examine accounts and receipts of collection and expenditure of the Public
Account and each statement in any Report of the Auditor General presented to
the Parliament.
8.2.
The Committee has
considered both accounts and receipts as they have been made available by the
National Museum and Art Gallery and such statements and reports of the Auditor
General as may have been presented to Parliament.
8.3.
The Committee has
further considered reports of the Auditor General which have not yet been
presented to the Parliament, on the basis that that evidence was tendered by
the Auditor General for the consideration of the Committee and on the basis that
such material is within the purview of the Committee as a matter of national
importance. (See Para. 9 infra).
8.4.
Power to refer
matters for investigation and possible prosecution is granted to the Committee
by Section 86A of the Public Finances (Management) Act.
9.
PERMANENT
PARLIAMENTARY COMMITTEES ACT:
9.1.
The Committee
received very serious allegations of misconduct, maladministration and illegal
dealing by Officers of the National Museum and Art Gallery – particularly
concerning the attempted sale of the Swamp Ghost aircraft and the export of
other War Surplus Materials.
9.2.
The Committee
resolved that a full Inquiry into the actions of the National Museum and Art
Gallery was a matter of National importance and found further jurisdiction for
the inquiry in Section 17 of the Permanent Parliamentary Committees Act.
9.3.
That Section provides
that the Public Accounts Committee can consider any matter to be of national
importance. The Committee, as we
have stated, considers the actions of the National Museum and Art Gallery in
selling the Swamp Ghost and allowing the export of other War Surplus Materials,
to be such a matter.
10. THE AUTHORITY TO REPORT
10.1. The
Public Accounts Committee finds authority to make this Report in Section 17 of
the Permanent Parliamentary Committees Act and Section 86(1) (c) and (d) (i), (ii), (iii) and (iv) and (f) of the Public
Finances (Management) Act 1995.
11. THE AUTHORITY TO REFER
11.1. Where satisfied that there is a prima facie case
that a person may not have complied with the provisions of the Constitution
of the Independent State of Papua
New Guinea and / or the Public
Finances (Management) Act in
connection with the control and transaction with and concerning the accounts of
a public body or the public moneys and the property of Papua New Guinea, it may
make referrals of that person to the Office of the Public Prosecutor in
accordance with Section 86A of the Public Finances (Management) Act.
11.2. The Public Accounts Committee is not a true
investigatory body capable of investigating and/or prosecuting persons for
breaches of the law. The Committee
is required to refer such matters to the appropriate authorities and may make
such recommendations as it thinks fit in relation to any referral made pursuant
to Section 86A.
11.3. The Committee is also empowered to refer for
prosecution, any witness who fails to comply with a Notice to Produce any
document, paper or book and / or any person who fails to comply with a Summons
issued and served by the Committee. See Section 23 Permanent
Parliamentary Committees Act 1994.
11.4. Further, Section 20 of the Parliamentary
Powers and Privileges Act
permits the Committee to refer for prosecution any person who, inter alia,
fails to comply with a Summons to produce books, papers or documents specified
in the Summons.
11.5. The Committee has made referrals of the now
Director of the National Museum and Art Gallery Mr. Simon Poraituk, four
foreign “exporters” of War Surplus Materials and the principals of those
companies or entities, the Acting Attorney General Mr. Fred Tomo for investigation
and one Robert Greinert upon an allegation of assault of an employee of the
Museum.
11.6. Those referrals were made after anxious
consideration of the evidence and explanations given by the Director and the
Acting Attorney General. All persons and companies liable to be referred were invited to make any response or
show any reason why they or it should not be referred, but made no or no adequate response to the
Committee in this regard.
11.7. The Committee is cognisant that to make referrals,
particularly of a senior public servant is a very serious matter which will
adversely reflect on the individual concerned. These referrals are not made lightly but only after careful
consideration of all the evidence and unanimous resolution by the Committee.
12. METHOD OF INQUIRY
12.1. The Inquiry by the Public Accounts Committee into
the National Museum and Art
Gallery was a public hearing at which sworn evidence was taken from a
small number of witnesses.
12.2. Assistance was obtained from representatives of the
Office of the Auditor General and the Investment Promotion Authority,
Legislative Counsel, the Government Printer, the Parliamentary Library and the
Office of the Governor General.
13. PRIVILEGES AND PROTECTION OF WITNESSES
13.1. The Public Accounts Committee has taken care to
recognise and extend to all witnesses the statutory privileges and protection
extended by the Public Finances (Management) Act 1995 and the Permanent Parliamentary Committees Act 1994 and the Parliamentary
Powers and Privileges Act 1964.
14. RELEVANT STATUTES
14.1. The Committee was required to consider the
following Statutes during the course of the Inquiry:
15. PUBLIC FINANCES (MANAGEMENT) ACT 1995.
15.1. The Public Finances (Management) Act prescribes the applicable methods and standards
for the administration of and accounting for public monies, public properties
and assets by State entities in Papua New Guinea.
15.2.
Further, the Act imposes certain
obligations on Public Servants for collection of State revenue and disposal and
sale of State property.
15.3.
Relevant sections of
the Act which were considered by the Public Accounts Committee during the
course of the Inquiry into the National Museum and Art Gallery are:
(i)
Section 5 – Responsibilities of Heads of Department
This Section prescribes the duties, powers and obligations
of Head of Department.
(ii)
Section 3 – Responsibilities of the Minister
This Section prescribes the obligations and duties
of relevant Ministers of State.
(iii) Part X
- The Public Accounts Committee
This Part empowers and imposes functions and
obligations on the Public Accounts Committee. In particular, the Committee was required to consider
Section 86 (A) – power to refer officers of the Department to the Office
of the Public Prosecutor for investigation and possible prosecution relating to
breaches of the Public Finances
(Management) Act 1995 and/or the Constitution.
(iv) Part XI - Surcharge
This Section prescribes personal liability for
certain public servants who fail in their obligations to collect and protect
certain public monies and property.
(v)
Section 112 – Offences
This Section prescribes disciplinary action which
may be taken against certain public servants or accountable officers who fail
to comply with the terms of the Public Finances (Management) Act 1995.
(vi)
Part VIII
– State Tenders and Contracts
This Part prescribes the processes for, inter alia,
selling or disposing of State property. These procedures apply to both the
National Museum and Art Gallery and to State property as constituted by War
Surplus Materials.
16. FINANCIAL INSTRUCTIONS
16.1. Section 117 of the Public Finances
(Management) Act enables the
promulgation of certain Financial Instructions which establish detailed
procedures for the handling, collection, expenditure, disposal and accounting
for public monies, property and stores.
16.2. The Public Accounts Committee had regard to these
Financial Instructions or Directives when considering the performance of the
National Museum and Art Gallery and its relevant responsible Officers.
16.3. In particular, the Committee had regard to Part
6 Division 1 Para. 2.1– Accountable
Officers. That paragraph reads, in
part:
“…..the Departmental Head is liable under the
doctrine of personal accountability to make good any sum which the Public
Accounts Committee recommends should be “disallowed”.
16.4 The Committee also had regard to
Appendix 3 entitled “Guidelines for Procurement of Stores or Supply of
Capital Works and Disposal of Government Stores and Property”, Part 9 entitled “State Tenders” Part 10 entitled “Government Contracts” and Parts 25 and 26.
17. INVESTMENT PROMOTION
AUTHORITY ACT
17.1 The Committee had regard to the Sections of this
Act which deal with the
registration and certification of foreign enterprises which carry on business
in Papua New Guinea.
18. AUDIT ACT
18.1 The Audit
Act establishes and empowers
the office of the Auditor General to carry out its work of overseeing and
supervising the handling of public monies, stores and property by all arms of
the National Government. The
Public Accounts Committee had regard to the terms of this Act during the course
of the Inquiry into the National Museum & Art Gallery.
18.2 The Committee received considerable assistance from
the Office of the Auditor General
in the course of this Inquiry.
19. WAR
SURPLUS MATERIALS ACT 1953
19.1 This Act was first passed in 1953 to control the
salvage and export of war surplus material.
19.2 The administration of this Act is of the core of
this Inquiry.
19.3 The Committee has had particular regard to Section
2 – Ownership of War Surplus
Material. This Section deems all
War Surplus Material be the absolute property of the State.
19.4 The Committee also had regard to Section 3 –
Determination of War Surplus Material.
This Section states that in any
civil proceedings to which the State is a party and in any criminal proceedings
in which the question arises as to whether property is or is not War Surplus
Material, the property shall, until the contrary is proved, be deemed to be War
Surplus Material.
19.5 This Section then establishes that all War Surplus
Material – including the Swamp Ghost and all other aircraft wrecks
– were the absolute property of the Independent State of Papua New Guinea
– and remain so.
19.6 Section 4 was considered by the Committee – Search etc by Officer. This Section provides that an Officer or person “…..authorized
in writing by the
Head of State acting on advice….” (our emphasis) to do so may search for, collect and remove War
Surplus Materials the property of the State.
19.7 Particularly pertinent to this Inquiry was Section
5 – Search etc by Purchaser.
This Section provides that subject
to any conditions imposed by the Head of State acting on advice, a purchaser
may upon written notice to the occupier of the land, search for, collect and
remove from any land War Surplus Material in which he has acquired a right,
Title of interest entitling him to its possession.
19.8 The position and entitlements of Landowners are
addressed by Section 7 – Compensation by the State. This Section provides that a claim by any owner or
occupier of land who suffers loss or damage as a result of the exercise of any
of the powers conferred by the Act, shall receive compensation from the State.
19.9 This Inquiry was concerned with the effect of
Section 10 – Delegation This
Section provides that the Head of the State acting on advice, may, by notice in
the National Gazette,”….delegate to an Officer all or any of his powers
under this Act….” (our
emphasis)
19.10
This Section may have
enabled the Museum to approve the collection and removal of the Swamp Ghost and
other War Surplus Material, if a delegation had ever been made.
19.11
However, it would not
have entitled the Museum to have sold State Property as it purported to do.
19.12
This Committee could
not identify a delegation or authorization and neither did the Museum claim the
benefit of one.
20. NATIONAL MUSEUM & ART GALLERY ACT 1992:
20.1
The Committee had
regard to Section 3 which charges the National Museum & Art Gallery with
its responsibilities and duties.
Amongst those duties are to:
·
Protect and conserve
cultural heritage;
·
Administer the
War Surplus Materials Act;
The Committee gave close consideration to this section and its meaning.
·
Identify, document
and monitor the condition of objects of National Cultural significance and
record their proclamation as a national cultural property and keep a register
of cultural property;
·
Monitor the
collection and export of artifacts, issuing permits under National
Cultural Property (Preservation) Act;
·
Manage and preserve
objects of cultural significance as required by the National Cultural
Property (Preservation) Act;
20.2. The
Committee considered Section 15 – Vesting of Property. This Section provides that the Minister may
transfer to Trustees any exhibit that is the property of the State. This word
“exhibit” includes “specimen” which is defined as including war relics. The Committee sought legal advice on
the effect of this term.
20.3.
Subsection 2 of this
Section provides that the Trustees may “…with the approval of the Minister….” the objects. However, no such power had been given
and it would not apply to War Surplus Materials in any event.
20.4.
Section 24 provides
that the Public Finances
(Management) Act applies
to the Museum in accordance with Schedule 1 of this Act.
21. NATIONAL CULTURAL PROPERTY (PRESERVATION) ACT CHAPTER NO. 156.
21.1 The
relevant Sections of this Act are
21.2 Section 1 – Defines “National Cultural Property”
to include any thing, object or thing of a class declared to be national
cultural property under Section 4.
21.3 Section
4 states that the Head of State may declare by notice in the National Gazette
any thing or object to be National Cultural property. There is evidence that this was not done for the Swamp Ghost
or any other wartime aircraft wreck.
21.4 Section
5 – The Head of State may after receiving advice from the Council declare
in the National Gazette any national cultural property to be proclaimed
cultural property. There is evidence that this has not been done in the case of the Swamp Ghost
or any other wartime aircraft wreck.
21.5 This
Act might allow the sale of the Swamp Ghost if it had ever been declared a piece
of national cultural property. The
National Museum & Art Gallery does not rely on this Act and it does not
seem to validate the actions of the National Museum & Art Gallery which in
any event can only sell State property in accordance with the Public Finances
(Management) Act
22. THE SWAMP GHOST - BACKGROUND
FACTS.
22.1
The Committee finds
the following facts:.
·
On the 23rd February
1942 - B17 E 41-2446 crashed in Agiambo Swamp, Oro Province
·
In 1953 the wreck is
declared to be property of the State by the War Surplus Materials Act.
·
In 1972 the wreck is
rediscovered by the RAAF
·
In 1997 the National
Museum & Art Gallery decided to draw and consider Guidelines for
considering applications for salvage, sale, export and restoration of War
Surplus Material.
·
In 1992 the National Museum & Art Gallery
pronounces a moratorium on all salvaging and export of War Surplus Material
·
In 1996 the Board of
Trustees directs that Guidelines for the Consideration of applications for the
salvage, removal, export and restoration of war surplus material be prepared
·
In 1997 the Board of
Trustees again directs that Guidelines for the consideration of applications to
deal with War Surplus Material be promulgated.
·
On the 19th November
1997 – The State Solicitor’s Office advises the National Museum & Art
Gallery that the
proposed Guidelines do comply with requirements of law but the National Museum & Art Gallery Act applies the Public Finances (Management) Act 1995 to the Board of Trustees – subject to a few modifications which
are not relevant to this Inquiry
The State Solicitor further correctly pointed out
that disposal of State property can only be made by the Museum in accordance
with the terms of the Public Finance (Management) Act – Section 40. This Section basically requires a full public tender for the
sale of the property.
The State Solicitor further, correctly, pointed out
that contracts of salvage and restoration( and, the Committee finds, of sale)
must be made pursuant to Section 61 of the Public Finances (Management)
Act – but that this
could be bypassed by the Minister certifying that such a public tender was
impractical or inexpedient.
Further, the State Solicitor,
correctly, pointed out that any money received as a result of the sale of State
property belongs to the State. The
State – through the Department of Finance – is responsible for
paying compensation to landowners pursuant to War Surplus Material Act and that the proceeds of any sale should be
deposited in an approved Trust Account.
Pursuant to Section 15 and 17 of the Public
Finances (Management) Act such
monies cannot be dealt
with by the National Museum & Art
Gallery as its own money.
·
Comprehensive
Guidelines for the Consideration of Applications to Deal In and With War
Surplus Material were promulgated
by the Museum.
·
In the period 1999
until 2005, the National Museum and Art Gallery entered into a series of
agreements with foreign interests permitting the removal and export of wartime
aircraft wrecks.
·
Those agreements were
made with:
Historic Aircraft Restoration Society (HARS) – a group of aircraft enthusiasts and
collectors based in Sydney.
This entity is represented by Mr. Robert Greinert
who personally salvages aircraft in Papua New Guinea and who allowed his or
HARS permit to be used by Aero Archaeology LLC to remove and export the Swamp
Ghost.
Mr Greinert appeared at the Inquiry but did not
answer adequately or at all, queries put to him both at the Inquiry or at a
later date in writing.
The Committee finds that HARS and Mr. Greinert have
acted as agents and facilitators for wealthy foreign collectors and that the
demarcation between Greinert’s personal interests and HARS are unclear.
75th Flying Squadron Museum, based in Victoria, Australia. Despite its name,
this entity has no links with any Defence Force interests that the Committee
could identify.
Indeed the museum does not seem to exist at all. It
is not a registered company or a legal entity in Australia or PNG, so far as
the searches of the Committee could identify.
The Committee could not identify any premises,
history of collection, actual collection of aircraft or restoration or capacity
to restore or curate aircraft.
The two Australian individuals representing this
entity are Mr Bruno Carnovale and Mr Ian Whitney. The Museum seems to be
nothing more than a facilitator for wealthy American collectors and, the
Committee finds, has illegally on-sold War Surplus Materials removed from PNG
with no regard to the ownership of the State and in breach of its own Agreement
with the Museum.
The Committee wrote requesting information and
co-operation 75th Flying Squadron Museum, but that entity presented
no evidence,was not represented at the Inquiry and did not provide any
information sought by the Committee.
Classic Jets Museum in South Australia. This entity seems to be a genuine Museum, the management of which
were helpful to the Committee. The
Committee makes no adverse findings against this organization.
· There appears to be competition with these entities
to obtain wrecks and each clearly regards PNG as its own hunting ground.
· In 1999, upon a date uncertain,
a Memorandum of Agreement was entered into between Military Aircraft
Restoration Corporation (“MARC”) a Californian based company, and the National Museum & Art
Gallery for the sale and purchase of the Swamp Ghost, its removal to the United
States of America and certain attendant matters.
Relevant parts of that Agreement
were:
§
Clause 2 –
acknowledges that the Independent State of Papua New Guinea is the sole owner
of the wreck;
§
Clause 3 – The
State gives MARC approval to remove and
“… the assignment and conveyance of
merchantable title”…
to the aircraft on condition that:
(i)
MARC pays all costs; and
(ii)
The State may be
represented at the removal of the aircraft, should it wish;
§
Clause 3 - renders
the Contract valid for 5 years and automatically renews the contract for
another 5 years, unless it is earlier terminated;
§
Clause 5 - the
primary goal of removal and export is stated to be for the purpose of display
in or outside USA;
§
Clause 8 – MARC agrees to pay US$50,000 to the National Museum
& Art Gallery and US$50,000 to landowners. This would appear to be the purchase price for 100%
ownership of the wreck;
§
Clause 11 - the Title
to the aircraft conveys to and vests in MARC at the date of the signing of the Agreement;
·
The Memorandum of
Agreement was signed by the then Director of the National Museum & Art
Gallery and a representative of MARC.
·
The Director clearly
assumed the right to unilaterally decide to sell the aircraft to a buyer of his
choosing.
·
Apparently the
Tourism Development Corporation objected to the removal of the Swamp Ghost and
the aircraft remained at Agiambo Swamp.
There was some dispute as to the bona fides of the certain officers of MARC.
Permission to sell and export was denied .
·
In November 2001 the
National Museum & Art Gallery claimed to have received a proposal from a
company called “Aero Archaeology
LLC”, a company registered in
Pennsylvania. The Committee asked for a copy of that proposal, but it was not
produced by the National Museum.
·
On or about the 2nd
November 2001 the entire contract and thereby (if the original Agreement with
MARC was lawful) ownership of Swamp Ghost was assigned by MARC to Aero Archaeology LLC.
·
On the 20th February
2002 Trustees of the Museum gave approval for the sale, removal and export of
the Swamp Ghost to Aero Archaeology LLC. Upon what basis
the Trustees considered this matter or gave those approval is wholly unclear.
·
22 August 2003
– A submission was made to the National Executive Council by the Minister
for Tourism Hon. Nick Kuman MP seeking approval to sell and export the aircraft
·
On the 24th October
2005 a company named Aero Archaeology Limited was
incorporated in Papua New Guinea. No certification to carry on business in
Papua New Guinea was obtained from the Investment Promotion Authority.
·
A valuation of the
Swamp Ghost aircraft was made in 2004 and presented by the Director to the
Trustees of the Museum as an independent valuation. It was, in fact, made by a
shareholder of Aero Archaeology Limited and the agent of that company, Mr.
Robert Greinert. The value of the wreck was estimated at USD 12,000 and,
unsurprisingly, Greinert commended the offer of Aero Archaeology LLC as fair
and reasonable.
·
On the 10th November
2005 – Mr. Simon Poraituk signed and issued Export Permit No. 05007 to
one Mr Fred Hagan to export B17 E Aircraft Serial No. 41-2446
·
On the 28 April 2006
– A Sub-committee of the present Board of Trustees of the National Museum
& Art Gallery purported to endorse the decision of an earlier Board of
Trustees that the Swamp Ghost be sold and its export be permitted.
·
Contrary to the terms
of the Memorandum of Agreement, MARC deposited a sum of US$160,000 in an escrow
account at Westpac Bank in Port Moresby.
The National Museum & Art Gallery advises this Committee that that
money represented the purchase price of the B17 Aircraft and was to be divided
between the State (50%), Oro Provincial Government (25%) and the landowners
(25%).
·
Upon an unknown date,
Aero Archaeology LLC deposited
US$100,000 in an escrow operating account at Westpac Bank in its Port Moresby
Branch. Fifty-Percent was to be
paid to the State and the remaining half was to be divided equally between the
Oro Provincial Government and the local landowning clan at the site where the
aircraft was wrecked.
Why the National Museum & Art Gallery settled
for less than the amount deposited by MARC, is unknown, but was presumably
based upon the “valuation” of Robert Greinert – that is to say, the
valuation of the buyer or its agent.
·
On the 19th May 2006
the National Museum & Art Gallery wrote to the exporter
directing that the Swamp Ghost not be exported until after the Inquiry by the
Public Accounts Committee.
·
On the 23rd May 2006
the National Museum & Art Gallery wrote to the Commissioner General
Internal Revenue Commission agreeing that the aircraft should not be exported
pending the outcome of the Inquiry by the PAC.
·
In early 2006 the
aircraft had already been lifted from Agiambo swamp and is currently in Lae.
·
The Public Accounts
Committee instructed the Office of the Attorney General to take such action as
it deemed appropriate to restrain the export of the aircraft.
·
On 26 May 2006 a
letter was received from the Acting Attorney General seeking further
instructions. These instructions were given by letter from the PAC on 7 June
2006, but no action was commenced for at least six months.
·
The Public Accounts
Committee has written to the Controller of Customs and the National Museum &
Art Gallery seeking to prevent the export of the aircraft pending the
resolution of this Inquiry.
·
The aircraft remains
in Lae.
23.
LEGALITY OF
THE SALE, REMOVAL AND ATTEMPTED
EXPORT OF THE SWAMP GHOST.
23.1
The principal issue
for the Public Accounts Committee is whether the National Museum and Art
Gallery can, of its own volition, act as an agent of the State or, in its own
right, sell and approve the export of State property in the form of War Surplus
Materials without complying with the terms of the Public Finances
(Management) Act – or at
all.
23.2
The Committee met for
two days and received sworn oral evidence from the Acting Director of the
National Museum and Art Gallery Mr. Simon Poraituk, the Chairman National Cultural
Commission, Mr. Robert Greinert, the Acting Attorney General Mr Fred Tomo, the
Investment Promotion Authority and Mr. Justin Taylan, an American citizen who
made his own way to Papua New Guinea to attend the hearings of the Committee.
23.3
Mr Taylan has
maintained an interest in wartime aircraft wrecks salvaged from Papua New
Guinea and the Swamp Ghost in general and his evidence was of great assistance
to the Committee.
23.4
The Committee
received into evidence a number of documents. They were:
·
A short Brief on the
salvage of the American B17 E Flying
Fortress Bomber Aircraft (Swamp Ghost) dated the 17th of May 2006
from the Acting Director - PNG
National Museum & Art Gallery;
·
Letter from the
Auditor General’s Office dated the 3rd of July 2006;
·
A Status Report on
the salvage of the Swamp Ghost dated the 24th of May 2006 being a
Policy Submission to the National Executive Counsel by the Minister of Culture
& Tourism and
attached documentation under cover of
letter from the PNG National Museum & Art Gallery dated the 19th
of June 2006;
·
Information Paper for
the Right Honorable the Prime Minister concerning the salvage and export of
World War II aircraft relics by 75th Squadron Flying Museum from the
Minister for Culture & Tourism dated the 28th of July 2005;
·
Research Report on
the Swamp Ghost Aircraft by Justin Taylan;
·
A valuation or report
on the Swamp Ghost aircraft by Robert Greinert and/or HARS
·
Letter from Robert
Greinert to the Public Accounts Committee dated the 23rd of June
2006;
·
File of
Correspondence from the Public Accounts Committee to various addressees and
witnesses and interested parties.
·
A letter from
Narokobi Lawyers to the Public Accounts Committee dated the 11th of
August 2006;
·
Facsimile
Transmission from Robert Greinert to the Public Accounts Committee undated but
received on the 12th July 2006;
·
All documents
produced by the PNG National Museum & Art Gallery in response to Notices to
Produce issued and served from the Public Accounts Committee;
·
Minutes of Meetings
of the Board of Trustees of the PNG National Museum & Art Gallery;
·
Search of Historical
Aircraft Restoration Society from the Australian Securities & Investment
Commission;
·
Search of 75th
Flying Squadron Museum from the Australian Securities & Investment
Commission;
·
Submission to the
Public Accounts Committee on behalf of landowners concerning the Swamp Ghost;
·
Review and Internal
Audit of the PNG National Museum & Art Gallery by Mal Nuka, August 2005;
·
Reports on the
activities of 75th Squadron Flying Museum;
·
Statement by Mark
Katakumb.
·
Letters from Narokobi
Lawyers.
·
Legal opinion from
O’Briens Lawyers on the legality of the sale and proposed export of the Swamp
Ghost aircraft.
24. THE
FIRST DAY OF THE INQUIRY:
24.1 Sworn oral evidence was received from Mr. Simon
Poraituk, then the Acting Director of the National Museum and Art Gallery ( now
confirmed in that position).
24.2 The Committee was concerned to establish from Mr.
Poraituk, the precise legal basis for the Museum to sell, approve the removal of and grant an Export Permit
for the Swamp Ghost aircraft.
24.3 The Committee was concerned to identify the precise
source of the legal power in the Museum, to sell State property in apparent
breach of the Public Finances (Management) Act. The Committee asked for submissions and
assistance from the Museum on this matter, but received no conclusive material
on this central issue.
24.4 The relevant evidence from Mr Poraituk is
summarized below:
·
Mr Poraituk was
appointed as Acting Director of the NMAG in September 2005.
·
No delegation under
the War Surplus Materials Act had been given to the Museum or its management to permit the sale or
removal of the Swamp Ghost aircraft from Agiembo Swamp. This is a crucial concession.
·
Mr. Poraituk could
not identify any statutory power in the Museum to sell the Swamp Ghost
aircraft, but relied upon the War Surplus Materials Act as the source of his power to approve removal of
the wreck. He was, however, unable to direct the Committee to any particular
Section of that Act which granted such power.
·
When asked about the
precise source of power to sell and approve export Mr Poraituk gave conflicting
evidence. He clearly did not know and had not considered the matter.
·
When questioned about
the seeming reservation of power to approve removal of War Surplus Materials to
the Head of State acting on advice, Mr Poraituk testified that the Board of
Trustees were the Head of State – a novel proposition not accepted by
this Committee.
·
Mr Simon Poraituk,
the Acting Director of the National Museum & Art Gallery, gave oral
evidence that he was familiar with the terms of the War Surplus Materials
Act, the National Museum
& Art Gallery Act and the National
Cultural Commission Act. He also stated that he was familiar
with the terms of the Public Finance (Management) Act and the Financial Instructions promulgated under that Act.
·
This Committee
considers that, on his own evidence, Mr Poraituk understood generally the
specific provisions of the Public Finances (Management) Act relating to the disposal or sale of unwanted
property, the payment of money into established Trust Accounts and the
requirements for accounting for monies received, but could not tell the
Committee specific statutory requirements.
·
On the 9th
of June 2006 a Notice to Produce was issued and sent to Mr Poraituk seeking,
inter alia, to obtain copies of any delegation given to Officers of the Museum
which would permit the Museum to approve the removal, sale and export of the
Swamp Ghost. He was also asked
whether there were any conditions imposed by the Head of State on the sale on
collection and removal of the
Swamp Ghost.
Mr Poraituk did not know of any such delegation and
did not claim that any delegation had been made.
Evidence given on this subject was as follows:
“Honourable Acting Chairman
–
Just hold it it Mr Poraituk. We have asked you to write to us and
tell us what Statutory provisions and power the Board of Trustees? Under which Act? What I am saying is that you didn’t
tell us what provisions of the Act.”
Mr Simon Poraituk
It’s the National Museum & Art Gallery
Act of 1992.
Acting Chairman:
But what Statutory provisions that we
ask? You’ve not complied. Is it true you didn’t comply? Just say yes or no.
Mr Simon Poraituk
No
………………………….
Acting Chairman;
Is there any delegation from the Head of
State relied upon by the Museum for the export of the Swamp Ghost? Did the Head of State authorize you to
do so?
Mr Simon Poraituk;
No sir
………………………….
Acting Chairman
“In paragraph 13 – 14 can you also
conclude that you didn’t put any public tender for the wreck of the Swamp
Ghost?
Mr Simon Poraituk
No sir.”
·
Mr Poraituk stated
that the Swamp Ghost aircraft was not transferred to the NMAG, nor was it
declared as national cultural property. Therefore, no power over the wreck was
given under the National Cultural Property Preservation Act
·
The witness failed to
produce and did not rely on any Ministerial authority to sell or export the
wreck, nor could he produce any statement of reasons or conclusions by the
Board of Trustees approving the sale and removal.
·
Mr. Poraituk could
not produce and did not rely on any decision or directive from any authoritative quarter
permitting or directing the sale of the Swamp Ghost aircraft.
·
Mr Poraituk could not
direct the Committee to any statutory basis for the issue by him of an Export
Permit to Aero Archaeology LLC for the Swamp Ghost aircraft, neither was the
Schedule to the Permit issued by him ever produced to the Committee despite a
Directive that it be produced. It is notable that the Permit itself states that
it is issued under an Act and a Section which no longer exist – and did
not exist at the time of the issue of the Permit.
·
Mr Poraituk stated
that the Museum had sold the State’s ownership of the Swamp Ghost aircraft by
the Agreement with MARC, later assigned to Aero Archaeology LLC but told the
Committee that no public tender (as required by the Public Finances
(Management) Act) was called
for the wreck as …” we do not do that”.
·
Mr Poraituk was
unable to direct the Committee to any legal basis for the National Museum and Art
Gallery to act as an agent for or on behalf of the State in the sale of the
Swamp Ghost aircraft.
·
Mr Poraituk stated
that the National Museum and Art Gallery was subject to the terms of the Public
Finances (Management) Act, but
clearly did not understand the process of disposal of unwanted or obsolete
State property under that Act and the Financial Instructions. He was unable to
tell the Committee what a Board of Survey was or whether any assessment had
ever been performed by such a Board before the Swamp Ghost aircraft was “sold”.
·
Mr Poraituk
continually referred to the foreign exporters with which the Museum dealt as “clients” and the Committee concludes that in this
terminology lies the truth of the export of a great deal of the wartime history
of Papua New Guinea. Clearly management of the Museum (both past and present)
saw the Museum as being engaged in a business of exporting State property and ,
in the case of the Swamp Ghost, of selling it for reward - not the State but to
the Museum for the use of its staff.
·
The Committee
extended time to Mr Poraituk and every other interested person including the
legal advisers to Aero Archaeology LLC to show how and from where the Museum
derived the power to dispose of State property other than in accordance with
the Public Finances (Management) Act and the
source of the power in the Museum to act as it had in its dealings with the
Swamp Ghost. No assistance or submission was received. Indeed, Aero Archaeology
LLC and Mr. Fred Hagen through their Lawyers, refused to assist the Committee.
·
Mr. Poraituk could
give no explanation for ignoring the advice given by the Office of the State
Solicitor to the NMAG on the 19th November 1997 concerning the
applicability of the Public Finances (Management) Act to the sale, salvage and removal of wartime
aircraft wrecks.
·
Mr. Poraituk could
not direct the Committee to any decision of the State to sell or dispose of the
Swamp Ghost
·
Mr Poraituk was
questioned by the Committee on the detail of payments by salvors and exporters including
Aero Archaeology LLC, the maintenance of Trust Accounts, the accounting for and
handling of monies received, dealings with the Landowners and other peripheral
but important matters attending the sale of the Swamp Ghost aircraft.
·
The Committee derived
virtually no assistance from the Director in these matters and the clear
conclusion was that Mr Poraituk had not directed his mind to the legality of
the attempted sale and export, the receipt of monies therefrom or his actions
in facilitating that transaction. On the best view of the evidence, he assumed
power to so act, because that was what his predecessor had done.
·
The Director could
not explain why the National Museum and Art Gallery accepted or accepted as
independent, a valuation of the Swamp Ghost from a person who was a shareholder of the purchasing company and
the salvor acting for and at the direction of the purchaser.
·
Mr Poraituk could not
explain why this “valuation” was put to the Board of Trustees or why he relied
upon it at all, while no attempt was made at all to obtain an independent
valuation or show the Trustees a truly independent Report and evaluation of the
Swamp Ghost which was in the possession of the Museum.
24.5
Mr Poraituk was
questioned about conflicting representations concerning the Swamp Ghost made in
submissions to this Committee, the Office of the Prime Minister and the National
Executive Council.
24.6
Those documents were
written by him, but were contradictory between themselves and, in some cases,
self contradictory. Mr Poraituk was unable to explain representations that the
Committee concludes were false and designed to mislead.
24.7
Examples of these
misleading representations are:
·
A statement to the
Board of Trustees that the aircraft would, after export, be jointly owned by
the State and Aero Archaeology LLC. Clearly this was known to be false as the
witness had acknowleged that the contract sold all the States right, title and interest.
There could be no joint ownership.
·
In a Submission to
the NEC dated the 24th May 2006 it was falsely stated in Para 4.8:
“….. Trustees further noted that upon completion
of the restoration, the ownership of the B17 E should be shared between Aero
Archaeology and the Independent State of Papua New Guinea”….
·
Mr. Poraituk prepared
this document and could not explain how ownership could be shared if the
ownership of the State had been sold.
·
By Para 4.8 of the
same document, the Minister stated:
“The locations of display be worked out at
the National Museum and March Field Museum in California over an agreed period
of time”.
Mr Poraituk prepared this document, but the
representation was entirely false.
The Committee checked with March Field Museum and
was informed that there was, to the knowledge of its Management, no such
arrangement. Management of March Field Museum had never heard of the Swamp
Ghost or Aero Archaeology LLC.
Mr Poraituk could not explain why he had not made
any similar checks and could not tell the Committee where the aircraft was
actually going, where it would be stored, if, when or where it would be
restored, where it would be exhibited or anything at all about the future of
this valuable piece of State property. Nor did the Museum management seem to
have any interest in the matter.
Further, the aircraft had been sold. The State had
no interest or involvement in the wreck and and no power or right to “work out”
anything at all in relation to the Swamp Ghost.
·
By Para. 78, Options
2 and 3 of the same Submission, the NEC is told that either the wreck should
not leave Papua New Guinea or that both parties are to agree to restore and
display the wreck in Papua New Guinea and the United States.
This is clearly untrue. The State has lost all
rights and interest in the aircraft. There were no such options for the NEC to
consider.
·
By Para. 7 (j) of the
same submission, the NEC were to be advised that:
”The
aircraft presumably remains the property of the United States Air Force”
The NEC was not told the true situation, viz. that
the wreck was the property of the State of Papua New Guinea or that it had been
sold. Co-incidentally, the Trustees were similarly not informed.
Mr Poraituk prepared this document but could not
explain how or why these material and basic misrepresentations were made.
The Committee considers that the statements were
made to conceal the fact that the aircraft had been sold.
·
By the same
Submission, in Para 7 Option 3 (a) the NEC were advised:
“ It will require substantial financial
support to enable a traveling exhibition for both countries through the Tourism
Inc.(sic) although the
tourism impact will be great.”
and further:
“It can be self financing through exhibitions
however will require logistical support and initial cost to generate funds”.
and further
“…. both countries must be prepared to meet
costs associated with those arrangements such as insurance cover and others
depending on a new legally binding MOA.”
This incomprehensible submission was prepared by Mr
Poraituk for the NEC. He was unable to explain its meaning or purpose to the
Committee. There was no “arrangement” as suggested in these paragraphs and that
fact was well known to the National Museum and Art Gallery.
These representations were made with the intention
of obscuring the fact that the wreck had been sold and that the State no longer
had any ownership of the aircraft.
The only reason which would explain such conduct is
that the Museum management knew, but had ignored the fact, that they had no
power to sell State property and wished to hide its actions.
·
The same submission falsely states
that there were several Options open to the Independent State of Papua New
Guinea insofar as the future of the Swamp Ghost was concerned. Each of those
involved active participation of the State as an owner or co-owner of the
aircraft.
Mr. Poraituk was unable to explain how this
statement could be correct when the Museum had apparently sold ownership of the
aircraft or why the NEC was given such advice.
·
By Para 8.2 of the
same submission, it is stated:
“ The aircraft should be leased for 99 years
as soon as it leaves the shores of Papua New Guinea”.
Mr Poraituk was unable to explain what this
statement meant and how it was possible for the State to negotiate a lease over
an aircraft wreck that it did not own or why the new owner would give any
consideration to such an arrangement.
·
Further, in the same
submission at Para 8.3, it was stated:
“ The Government should stress only that the
completed aircraft should not be sold and the ownership remains the sole
property of the State of Papua New Guinea”
This statement is a clear untruth. The aircraft had
been sold. The State had no interest or right in the wreck at all, yet the NEC
was being led to believe the contrary. Misleading the NEC in this way is a very
serious matter.
·
Further, at Para 3.6
of the Submission, the Minister states:
“ ….the actions of the Board of Trustees were
within the legal framework consistent with the National Museum and Art Gallery
Act 1992 and the War Surplus Materials Act Chapter 331 of 1952 as amended”….
and further
“….the approval granted to Aero Archaeology
to purchase, salvage, export and restore the B17 aircraft must be treated as
legal and binding”.
This statement is false and in making it the Museum
ignored advice received from the Office of the State Solicitor which correctly
stated that the Public Finances (Management ) Act applied to the Museum and to the disposal, salvage
or sale of War Surplus Materials.
Mr Poraituk told this Committee that no legal
advice was sought on the transaction. How an assurance of legal compliance
could be given to the NEC in such circumstances is unclear.
It is further notable that at the end of this
submission, the Minister acknowledges that the Swamp Ghost was sold –
which contradicts other statements put to the NEC which suggest that ownership
remains with the State.
24.8 The Committee concludes that these submissions are
a few examples of many deliberate, intentional but false statements designed to
obscure the true effect of the Agreement with Aero Archaeology LLC and to
obtain whatever consent was required irrespective of the truth of information
and advice tendered.
24.9 The Committee questioned Mr Poraituk as to whether
the NMAG, in approving the sale and removal of the Swamp Ghost, complied with
its own Guidelines for considering such applications.
24.10
The Guidelines
require:
·
The Salvors must
be of good repute.
The evidence showed that no inquiries were made and
no reports were produced in this regard.
·
Wherever possible,
the proposal should involve restoration within Papua New Guinea or repatriation
of objects to Papua New Guinea after restoration;
Upon the evidence no such proposal was required or
made.
·
Wherever possible,
agreement for restoration or export should preserve State ownership;
No attempt was made to explore this requirement.
The NMAG actively participated in the sale of the State’s interest with no
attempt to consider alternatives.
·
The price of sale
of an artifact should be at least 50% of the value of the item after
restoration;
No attempt was made to ascertain the restored
value. The Committee notes that its own inquiries suggested a current value
between USD 3 – 5 million and the purchaser is now threatening to sue the
State for USD 14 – 25 million – presumably representing the
post-restoration value of the aircraft This claimed loss was stated in the
evidence of the Acting Attorney General to the Committee.
Clearly the NMAG has failed to comply with this
requirement.
Indeed the Committee notes that the State (as
opposed to the Museum) was to receive nothing for the aircraft wreck.
·
Proceeds of sale
should go to a facility for restoring war surplus material and other
objects.
This requirement conflicts with the Public
Finances (Management) Act –
as the Museum had been advised by the Office of the State Solicitor.
Mr
Poraituk was unable to assure the Committee that any money received would be
used for this purpose. In light of the clear misuse of monies received from
earlier sales of War Surplus Materials discovered by the Committee, there can
be no confidence that the National Museum and Art Gallery would comply.
Mr Poraituk was granted 48 hours to produce
relevant evidence, but
nothing was delivered to the
Committee.
·
The application
should be addressed to the Director of the National Museum.
The Committee granted 48 hours for the document to
be produced. No proposal was produced
·
The application
should contain at least:
(i)
A clear
statement of the number and types of objects for which permission to salvage
and export is being sought; and
(ii)
A clear
statement of the location of the objects in question;
(iii)
Information about the Organisation
which is seeking to salvage and export the war surplus material including
annual reports, audited financial statements, bank statements to verify the Organisation’s
financial capacity to carry out the work, articles of association or
incorporation, a list of current members and employees of the organization and
descriptions of previous salvage and restoration project in which the
Organisation has been involved;
(iv)
A list of people including names,
addresses and facsimile numbers who can provide character reference;
(v)
The name of a
recognized scientific organization in the applicant’s country of origin which
is willing to comment on the applicant and the proposal;
(vi)
Name and
address of the nearest Police Station to the applicant’s residence or place of
employment;
(vii)
The benefits
to the Independent State of Papua New Guinea; and
(viii)
The benefits
to the people on whose land the objects are located.
No such material was produced despite the Committee
being told that it did exist and extending 48 hours for production.
·
The application
should be accompanied by a fee of K1,000.00. That fee is non-refundable.
The fee was paid.
·
The application is
lodged with the Chief Curator; and
·
The Chief Curator
writes to the referees to obtain references.
So far as the Committee can deduce, there were no
such Inquiries made.
·
The Chief Curator
writes to obtain a Police Reference.
This Guideline was not complied with. The Committee
granted 48 hours for the production of the document, but nothing was received.
·
The application is
viewed by the Director and the Assistant Director for Science and Research; and
then
·
If the Director
and Assistant Director are satisfied with the supporting material, a compulsory
meeting is held with the Director, Assistant Director for Science and Research,
the Chief Curator of Modern History
and the applicant. The purpose of this meeting is to discuss the
application and clarify any issues which are not clear.
The Committee cannot establish if these Guidelines
were complied with.
·
Within two months
of that meeting, Officers from the Department of Modern History will visit the
area where the item is located to assess the feasibility of the proposal, to
clarify who owns the land on which the objects are located and to hold
preliminary discussions with the landowners
·
Under no
circumstances will the applicant make direct contact with the landowners or
enter into direct negotiations with them concerning the War Surplus Materials
which are the property of the State.
·
If the applicant
wishes to visit the area, he or she must be accompanied by Officers from the
Department of Modern History at the applicant’s cost.
The Committee is satisfied that visits did occur,
but the Landowners were also contacted directly by the purchaser or its
representatives.
·
Within two weeks
of the site visit the Officers from the Department of Modern History will
produce a report on the visit including their views on the feasibility of the
proposal and the expressed concerns of the people on whose land the war surplus
materials are located; and
·
Following the site
visit and completion of the report by Officers from the Department of Modern
History, the application will again be reviewed by the Director, the Assistant
Director for Science and Research, the Chief Curator of Modern History and
Officers of the Department of Modern History who have carried out the site
visit. That review will take place
within one month of the completion of the site visit. The purpose of this meeting is to recommend to the Board of
Trustees that the application be approved or rejected; and
·
A formal
submission including the recommendation will then be prepared for the Board of
Trustees by the Chief Curator of Modern History; and
·
If there is a
need, and within the resources of the National Museum, a physical inspection of
the applicant’s facilities may be required; and
·
The submission
from the Chief Curator of Modern History will be included in the agenda of the
next meeting of the Board of Trustees; a
The evidence shows that these reports were either
not made or were sparse and inadequate. Mr. Poraituk stated to the Committee
that the material was not placed before the Board of Trustees on any occasion.
This evidence was corroborated by the Trustees to the Committee.
·
The decision of
the Board of Trustees is communicated to the applicant.
This was apparently done.
·
All applications
are to be registered by the Chief Curator of Modern History in a Register Book.
The Committee gave the NMAG 48 hours to produce the
Register Book, but it was not produced.
24.11
At the end of the
first day of evidence, it was clear that Mr. Poraituk had assumed an authority
to sell State property that he did not have and could not justify. Equally
clearly, foreign dealers in and salvors of aircraft wrecks encouraged this
assumption.
24.12
The Committee heard
evidence from the Board of Trustees of the National Museum and Art Gallery.
24.13
Members of that Board
gave frank and helpful evidence.
24.14
That Board were
clearly of the view that the Swamp Ghost aircraft was still owned by the State
and that, in some unspecified way, Aero Archaeology LLC were lessees or were
trustees of the aircraft on behalf of the State. They were (quite incorrectly)
told this by the Management of the Museum.
24.15
The Trustees were not
informed that Aero Archaeology LLC was not a Museum or capable of storing or
restoring the aircraft. Neither were they told that the company is owned by a
foreign individual with no experience, ability or expertise in aircraft
restoration.
24.16
Further the Trustees
were not told that Aero Archaeology LLC, HARS and Mr. Robert Greinert were not
certified to carry on business in Papua New Guinea.
24.17
Indeed, neither the
Trustees nor the Museum management carried out any competent inquiries or
assessment of the buyer at all. They should have done so.
24.18
The Trustees were
clearly not properly briefed by the Director and were presented with an
incorrect version of the facts upon which to make their decision.
24.19
Further, the Trustees
neither sought nor received any independent legal opinion, nor were they ever
told of the legal basis upon which the transaction was supposedly based or by
which they were required to approve the transaction.
24.20
The evidence clearly
showed that the Trustees were overborne as a result of threats made to them by
or on behalf of the buyer and/or by its agent Mr. Robert Greinert to the effect
that unless the export of the Swamp Ghost was approved, litigation would be
commenced against the Trustees personally.
24.21
This type of threat
by foreigners to a statutory Board of Trustees is utterly
unacceptable and was clearly intended to intimidate the Board. The evidence
from Board Members showed that the threat was effective. It robbed the Trustees
of the opportunity for any independent deliberation and decision.
24.22
The Trustees were
asked by this Committee whether they would have made the same decision if they
had known the true nature of the Contract with Aero Archaeology LLC and/or the
true requirements of Law concerning the sale of obsolete State property.
24.23
The Trustees
unanimously advised the Committee that they would not have approved either the
export or sale of the aircraft had they been so advised.
24.24
The Committee finds
that the misleading facts placed before the Trustees were deliberate and were
intended to mislead and to force a decision favourable to the buyers.
24.25
Further, the Trustees
were mislead by omission of information, as much as by positive
assertions of fact made by the Director and the agents of Aero Archaeology LLC.
24.26
The Management of the
Museum had a duty to advise the Board of Trustees fully, honestly and
correctly. Certainly the Museum Director could advise a certain course of
action to the Trustees, but not fabricate, obfuscate and mislead to obtain a
particular decision or course of action.
24.27
Further, this
Committee finds that the Trustees had no power or need to consider or approve
the sale and export of the aircraft. As we have stated (supra) the sale of
State property is a matter governed by the Public Finances (Management)
Act and Financial
Instructions and does not
require the approval of the Trustees of the Museum.
24.28
So far as this Committee can ascertain,
the removal and salvage of War Surplus Materials remains a matter for decision
by the Head of State acting on advice – not the Museum and therefore, not
the Board of Trustees of the Museum.
24.29
The Public Accounts Committee gave
Directives to the Museum to co-operate with its Board of Trustees –
particularly in the area of budgeting and preparation of Budget
Statements. There appears to be
very clear conflict between Management of the Museum and the current Board of
Trustees.
24.30
This Committee
concludes the current Board of Trustees are intent on reforming the National Museum
& Art Gallery and in ensuring that the Management of the Museum acts in all
respects, in accordance with law.
24.31
The Management of the
Museum seem to have no clear idea of the role of the Board of Trustees –
and the Board also seems to have a little idea of its powers, immunities or
responsibilities.
24.32
This Committee
concludes that the Board of Trustees should retain expert legal advice in order
that it can learn the true nature of its role, which, like all Trustees,
carries onerous duties of care.
24.33
The Committee issued
a number of Directives at the conclusion of the first day of the Inquiry. These
were designed to preserve the Swamp Ghost aircraft in Papua New Guinea and to
discover the extent of dealings with War Surplus Materials by the Museum.
25 . THE SECOND DAY OF THE INQUIRY
25.1
The Committee
reconvened this Inquiry on the 12th
day of September 2006.
25.2
The Committee had
sought further information from the National Museum and Art Gallery by Notice
to Produce dated the 27th June 2006 and the 9th July 2006
25.3
The Museum cooperated
by producing some records and documents but there was still no evidence on
which the Committee could find that the Museum had any power to sell State
property – or approve the removal or export of War Surplus Materials at
all.
25.4
At the conclusion of
the first day of the Inquiry, the Committee had received no assistance from any
witness in establishing the precise legal basis upon which the Museum sold,
approved the removal of and approved the export of the Swamp Ghost Aircraft.
25.5
Further, the
Committee had received evidence of a large number of other aircraft wrecks and
parts exported from Papua New Guinea over a very long period, with the full
assistance of the Museum.
25.6
A very few of these
aircraft went to reputable restorers for the purpose of restoration and return
to Papua New Guinea. This Committee has identified four aircraft in that
category.
25.7
Overwhelmingly, they
passed into private hands and are worth a considerable amount of money. The Committee has identified another 85
aircraft and parts which have ended up in private hands – sometimes resold
a number of times after they had been exported from Papua New Guinea.
25.8
The Committee
continued its attempt to find the legal basis for the Museum to sell the Swamp
Ghost and to approve the export and removal of this and other aircraft from
Papua New Guinea.
25.9
To this end, the
Committee sought and received independent legal advice concerning the Agreement
with Aero Archaeology LLC, the power in the Museum to sell State property and
the effect and validity of that agreement from Messrs O’Briens Lawyers.
25.10
The following advice
was received:
(i)
The Swamp Ghost
aircraft was and remains the property of the Independent State of Papua New
Guinea.
(ii)
The Agreement with
Aero Archaeology LLC was intended to be a Contract for the sale of the Swamp
Ghost and to provide evidence of transfer of title to the aircraft.
(iii)
The Agreement with
Aero Archaeology LLC is not effective as a contract of sale or to pass title to
the aircraft, for the following reasons:
a)
The Museum does not
have contractual authority to bind the State. The Museum is established
pursuant to the National Museum and Art Gallery Act 1992. Section 7 of that Act provides that the Museum is a corporation.
Accordingly it has a legal personality separate from the State; and
b)
The Swamp Ghost is
the property of the State and not the Museum; and
c)
The Museum can
acquire things described as “exhibits” which are defined as including “antiquities,
utilitarian objects, natural history specimens, objects of antiquity or works
of art”.
A
specimen can include a “war relic” within the meaning of the War Surplus Materials Act Ch. 331”. No such thing as a “war relic” is known under the War Surplus Materials Act so that part of the definition of “specimen” is a nonsense.
Further,
if War Surplus Material can be established as constituting an “exhibit” under Section 15 of the National Museum and
Art Gallery Act 1992, the Minister may “transfer to the Trustees
any exhibit that is the property of the State and the exhibit vests in the Trustees.”
The
Committee requested the Museum to produce a statement of all Ministerial
transfers of items formerly owned by the State but which were now vested in the
Museum or the Trustees. No such material was produced and
Mr. Poraituk gave evidence that no such transfers had occurred.
Therefore,
upon the evidence before this Committee, the Swamp Ghost was and still is, the
property of the State.
(iv)
The Museum is not an
agent of the State.
Section
247 of the Constitution of the Independent State of Papua New Guinea provides that the State may hold, dispose of and
contract in accordance with an Act of Parliament.
The
Public Finances (Management) Act
and the delegated legislation which goes with that Act, is the Act implementing
Section 247.
That
Act requires that State property can only be sold in a particular manner
– and then by public tender unless exemption is given. Further, a
contract for the sale of the aircraft, if the value was less than USD 5
million, requires Ministerial approval by the Minister for Finance.
The
contract records that the aircraft
is the property of the State, but it is signed in the name of the Museum, by
the former Director, Mr. Seroe Eoe.
The
Museum had no proprietary interest in the aircraft and no power, right or
entitlement to sell it – and therefore, nothing to sell. It follows that,
as a seller can give no better title or more perfect interest to a buyer than
it has at law, the Contract with
Aero Archaeology LLC is ineffective and unlawful. Aero Archaeology LLC has no
enforceable contract at all.
(v)
The Contract is
further ineffective because it is not dated. The Contract records that title to
the aircraft will pass on the date of execution, but no such date exists. Title
would not and could not pass to the buyer.
(vi)
The fact of
Assignment of the Contract from MARC to Aero Archaeology LLC is ineffective to
change the position of either the State or the buyer. MARC had an unenforceable
and ineffective contract and Aero Archaeology LLC has received the same by
assignment.
(vii)
Further, there is no
consideration expressed in the Contract to support the document as a Contract
of Sale. It can be challenged on that ground alone. The attempted sale would give nothing to the State at all.
(viii)
The Agreement provides for the giving of a donation
to the Museum and for that institution to receive further monies as a
Constructive Trustee for the Landowners of the Agiembo Swamp, the disbursement
of that money is to be managed by the Museum.