K2.7m fraud uncovered in MBPG business arm

Entire board sacked, ex-board members, managers, governor and administrator implicated in high level embezzlement.
 
A MAJOR case of fraud and embezzlement of K2.7 million belonging to the business arm of the Milne Bay Provincial Government has been uncovered.
Base on a 1,350-page investigation report, Governor Tim Neville and his provincial executive council met in Alotau yesterday and terminated the entire board of Milne Bay Properties Ltd (MBPL) – the province’s business arm.
The report, along with documentary advice and affidavits, contained explicit – amongst others – details of fraud and embezzlement and defraying of finance and other assets in MBPL implicating the directors of the MBPL board, MBPL’s former general manager Jerry Bagita, the former provincial administrator Hau’ofa Sailaisa and former Milne Bay regional MP and governor Titus Philemon.
The report covered the years from 1998 to 2003, during most of the term that Mr Philemon, Mr Sailaisa and Mr Bagita were the governor, administrator and MBPL general manager, respectively.
The damning report was the result of six months of investigation conducted by a private investigation firm – Quest Investigation International Ltd – engaged by the provincial government.
The probe was concluded on April 26, 2005 but only made public at the PEC meeting yesterday.
Mr Neville, in presenting the report, outlined major blunders in the operations of MBPL which included, among others:
n During Mr Philemon’s term as governor, the disposal of Oregon Ltd “blue chip” shares held by MBPL took place, as well as the subsequent purchase of one million Alotau International Hotel Ltd (AIHL) shares at an inflated price of K1.30 per share. The actual share value of each AIHL share was K0.73, which resulted in an excessive payment of K564,000 to AIHL;
n The outsourcing of in-house accounting work to Guinn PKF Ltd, which had misrepresented financial statements such as rounding off toea to the nearest kina and recording them, did not account for depreciation in 2003, prepared false VAT returns to the company, treated expenses as assets, falsely concealing the accounting fees they received, as well as an array of accounting anomalies and concealment;
n Defraying, stealing and embezzling of MBPL monies and properties amounting to hundreds of thousands of kina by Mr Bagita. The report also implicated Mr Bagita and the board of colluding in the various transaction that took place; and,
n The setting up of a company by Mr Bagita and cohorts known as Kumpa Resources Ltd (KRL) to which they transferred certain MBPL monies and properties, assets as well as used monies belonging to MBPL to pay for forestry and copra licences for KRL totalling K8,275.
The report has recommended that the former governor, the former administrator and chairman of the MBPL board, the former general manager and the directors be referred to the various law enforcements agencies for further investigation and possible prosecution for misappropriation totalling K2.7 million of Milne Bay people’s money, Mr Neville said.
A committee has been set up to peruse the report and make final summary of recommendations to the provincial government.
He said based on the submission from the committee, those criminally implicated would be referred to the police fraud squad.
The accounting firm would also be referred to the Accounting Registration Board and the Auditor General’s Office, he added.