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Further Public Report on the USD100,000,000 Bank Guarantees [1996] VUOM 10; 1996.08 (22 October 1996)

REPUBLIC OF VANUATU

OFFICE OF THE OMBUDSMAN

FURTHER PUBLIC REPORT

ON THE

US$ 100,000,000 BANK GUARANTEES

22nd October 1996

FURTHER REPORT

ON THE

US$ 100,000,000 BANK GUARANTEES

TABLE OF CONTENTS

1. JURISDICTION

2. FINDINGS OF FACT

3. FINDINGS OF MISCONDUCT

4. RECOMMENDATIONS

1 JURISDICTION

Article 62 of the Constitution states:

"The Ombudsman may enquire into the conduct of any person or body to which this Article applies:

a) upon receiving a complaint from a member of the public (or, if for reasons of incapacity, from his representative or a member of his family) who claims to have been the victim of an injustice as a result of particular conduct;

b) at the request of a Minister, a member of Parliament, of the National Council of Chiefs or of a Local Government council; or

c) of his own initiative."

Section 14 of the Ombudsman Act states, inter-alia: that the Ombudsman may also:

"a) enquire into, either on complaint of a person or body referred to in Article 62(1) (a) and

(b) of the Constitution or on his own initiative, any conduct on the part of:

(i) any state service, or a member of any state service;

(ii) any government body, or an officer or employee of a government body;

or

(iii) any other body.

(A) that is wholly or mainly supported out of public monies of Vanuatu; or

(B) all of, or the majority was recommenced on the Ombudsman’s own initiative."

2 FINDINGS OF FACT

2.1 It has come to the attention of the Office of the Ombudsman that on 2 October 1996 the Hon. Barak T. Sope Minister of Trade, Commerce and Industry sent a letter by fax addressed to the "Scotland Yard-Company Fraud Squad" in which he requested and directed the return of the ten Bank Guarantees to Barton, Jamison and McMillan Incorporated. Attached hereto is a copy of that letter.

2.2 The letter makes it obvious that it is intended that the Bank Guarantees should be released so that they may be traded. It also appears that The Hon. Minister Sope believes that there is nothing wrong with the matter when he writes "as a result of investigations I am unable to find any wrong-doing and or misrepresentation". This is at complete odds with advice given by, international experts to the Reserve Bank, and the Governor of the Reserve Bank of Vanuatu and the conclusions reached by the Public Prosecutor of the Republic of Vanuatu when he charged Peter Harold Swanson with misappropriation in respect to the matter. One must thus ask what investigations has the Hon. Barak T. Sope carried out that give such a different conclusion? And further why does he not take the advice of the Governor of the Reserve Bank of Vanuatu?

2.3 At no point before sending this letter by fax was the matter discussed or authorised by the Council of Ministers. Parliament has not authorised the issue of the Bank Guarantees pursuant to the Public Finance Act Cap 117, The Government Borrowings and Guarantee Act Cap 149 or the Reserve Bank Act as set out in the Report of the 3rd of July 1996. Reference is made to paragraph 7 of the Report of 3 July 1996. Thus the request to release these Bank Guarantees is entirely unauthorised and illegal. To be made legal it is necessary for the Council of Ministers and Parliament to consider this matter and for the appropriate motions to be put and passed. If the action is authorised then there can be no complaint, but this has simply not happened.

2.4 It is further noted that the fax transmission did not come from the Ministry of Trade, Commerce and Industry, but rather the office of "International Tuna Services". One must wonder why such an organisation would be sending such a fax and why it was not sent from a government fax machine?

2.5 A further point would appear to be that if there are to be any dealings in this area they should be handled by the Minister for Finance, as it has been asserted by Hon. Barak T. Sope that the Minister of Finance had been authorised to issue the Bank Guarantees. The Reserve Bank is within the responsibility of the Minister of Finance. Hon. Barak T. Sope is no longer the Minister of Finance and could not possibly be authorised to deal with the Bank Guarantees unless the Council of Ministers specifically so authorised him upon them being satisfied that all legal formalities had been completed.

2.6 Additionally I believe that the Bank Guarantees have been revoked and they are no longer valid instruments.

3 FINDINGS OF MISCONDUCT

3.1 I find that there has been no compliance with the laws of Vanuatu governing this transaction and I repeat my findings made in my earlier report on this matter on 3 July 1996.

3.2 I conclude that there has been a breach of the Leadership Code by the Hon Barak T. Sope in that he has all failed to comply with the Laws of the Republic of Vanuatu.

3.3 And I find the following GENERAL BREACHES OF THE LEADERSHIP CODE and PROPER GOVERNMENT PRACTICE have been made:

(i) Hon. Barak T. Sope has acted without the consent and authorisation of the Council of Ministers and Parliament as is required by law and in so doing has failed to demean himself and his high office. The Hon Barak T. Sope has chosen deliberately and forcefully to entirely disregard the Laws of the Republic of Vanuatu.

(ii) The Hon. Barak T. Sope has acted contrary to the Leadership Code by regarding himself as being above the Laws of the Republic of Vanuatu.

3.4 I thus conclude that there has been:

a gross breach of the Leadership Code by the Honourable Minister for Finance, Barak Sope in that by the actions referred to above he has, within the terms of Article 66(1) of the Constitution:

(i) demeaned his office or position;

(ii) allowed his integrity to be brought into question; and

(iii) endangered or diminished respect for and confidence in the integrity of the Government of the Republic of Vanuatu;

4 Recommendations

4.1 I repeat the recommendations made in the Report of 3 July 1996. I note that the conclusions reached are entirely inconsistent with Hon. Barak T. Sope remaining in his high office as he repeatedly ignores the Laws of the Republic of Vanuatu.

4.2. That Honourable Barak T Sope be directed by the Honourable Prime Minister to have nothing further to do with the Bank Guarantees and that he make no further contact with Scotland Yard or any other person concerning the Bank Guarantees unless expressly authorised by the Council of Ministers to do so.

PASA TOSUSU
(DIRECTOR OF INVESTIGATIONS)
Under delegated power from

Dated: 22nd of October 1996.

MARIE-NOËLLE FERRIEUX PATTERSON
OMBUDSMAN OF THE REPUBLIC OF VANUATU

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