Transport minister agreed to F$600,000 for Ashika purchase [1]
Thursday, February 11, 2010 - 22:45. Updated on Friday, May 9, 2014 - 20:39.
The Sale and Purchase Agreement for the MV Princess Ashika signed on May 8, 2009, was unusual because the Government of Tonga was required to pay the full F$600,000 dollars regardless of the condition of the vessel, the Royal Commission of Inquiry into the Ashika learned on February 10.
The Purchase Agreement (contract) signed by the former Minister of Transport Paul Karalus had initially provisioned for the Secretary of Finance to co-sign it.
The inquiry learned that the former Minister then changed the provision for the signing from the Finance Secretary to the Transport Secretary 'Eleni Mone and told her to sign it.
'Eleni Mone in evidence confirmed that on May 8, 2009 she was called by Karalus to his office and he told her to co-sign the Purchase Agreement.
On being questioned by Counsel Assisting Manuel Varitimos she confirmed that Karalus had already signed the document before asking her to sign it.
"You signed the agreement trusting him that it was alright for you to sign it?" said the counsel.
'Eleni said yes, but she could not recall whether anything was said but she asserted that she briefly looked and read the document for about five minutes before signing it.
She had not seen any documents on the Ashika and did not know of any surveys or if due diligence ever conducted.
'Eleni said that she assumed that the due diligence was conducted given that the former Minister had told her that everything was fine.
Procurement
"In the case of the Ashika, you were aware that the Procurement Committee was there to consider, hence determine, whether the price was fair and that Government was not ripped off?" and she said, yes.
The witness agreed that Government did not follow proper procedure by seeking advice of the Procurement Committee and recommendation prior to signing the contract.
"I suggest that if the proper process was carried out and advice was sought from the Procurement Committee then the vessel would not have been purchased?" said the counsel.
The witness agreed.
'Elenei said she was aware of the recent evidence given by a New Zealand Marine Valuer stating that the Ashika was of nil value. And she was also aware of Acting Marine Director Viliami Tu'ipulotu's stating in evidence that the Ashika was unseaworthy and that it should never have sailed.
She agreed that she did not have any experience in drafting the contract sale or purchase of a vessel, and had not asked whether any advice was sought before signing it.
"Do you accept you should have asked?" said Varitimos, and 'Eleni agreed.
F$600,000
The counsel put to her that the Contract was unconditional requiring Government to pay F$600,000 pa'anga regardless of the condition of the vessel, and the witness agreed.
She also agreed that the contract also provided for the Government to pay the entire F$600,000 dollars on the same day it was signed on May 8.
"And government can be sued by the vendor [Patterson Brothers] if it breached the contract?"
'Eleni said, yes.
The counsel then read out the Payment Obligation that stated;
"A sum of FJ$90,000 shall be paid on or before May 8, 2009 representing the deposit and part payment of the price; the balance sum of $510,000 shall be paid on the same date."
She agreed with Counsel's suggestion that this was an unusual obligation for a purchaser
"Did Karalus raise any concern?" askd Varitimos, and the witness said, no.
Signed
She also agreed that the contract was provided to be signed by the Government of Tonga, by a representative,and that it had a provision for the Secretary of Finance to also sign it.
She agreed with counsel's suggestion that the Secretary of Finance was provisioned to sign the document so as to ensure that obligation placed on Government could be met.
"Because I suggest you did not know when you signed the contract if Government had enough funds to meet the obligation?" Varitimos said.
'Eleni said, yes, and agreed that she was aware that the Secretary of Finance was a member of the Procurement Committee.
"I suggest that if Karalus has asked him (Finance Secretary) to sign it, he would not have signed it because it was not inappropriate?" Varitimos said, and the witness agreed.
She confirmed that Karalus crossed out the provision that was originally assigned for the signature of the Secretary for Finance and asked her sign it instead.
The counsel put to her it was clear that, if a member of a Procurement Committee were to sign they would not sign because proper process was not done; and she agreed.
"Karalus knew you were not a member of the procurement committee?"
'Eleni agreed but also agreed that it seemed to her to be urgentand that she signed under the assumption that the Minister was responsible in his dealing with the purchase.
She never spoke to Jonesse or Johnson about this, and she agreed that she never advised for any surveyors to be sent to Fiji to survey the vessel.
The change was made before she signed it and she confirmed that it was Karalus who made that change from Secretary of Finance to her.
CEO
The witness accepted that she had failed in her duty as Secretary and CEO of Transport to request that surveyors be sent to Fiji to survey the Ashika hence ensure that the survey was conducted.
She also agreed with counsel's suggestion that sheu also failed in a duty to ensure that proper due diligence was conducted as she was under the assumption that it was done, but it was not.
"As part of your duty you should have advised the Minister that due diligence was to be conducted . . . You had failed in assuming something that was not done," said Varitimos, and the witness said yes.
Hands on
'Elenei also asserted to the inquiry that the Minister was hands on the Ashika from day one, and that she was not advised on any dealings with Ashika nor was she asked for her advice.
She now accepted that the deficiency list concludes that the Ashika was unseaworthy and that it should never have been allowed to sail.
"Despite this Tu'ipulotu certified it was seaworthy on July 3 yet it wasn't?" said Varitimos.
'Elenei agreed and said she had recommended to the new Minister of Transport Nuku that he [Tu'ipulotu[ be suspended.
"What did the Minister say?" said the counsel.
'Elenei said that he did not approve and said they needed Tu'ipulotu. She said she had approached the Transport Minister twice and now Tu'ipulotu had taken 65 days leave, which he accumulated.
"But he will come back?" asked the counsel, and 'Elen said yes.
She said there is no Acting Director but there is an Officer in charge of the Marine, namely 'Ofa Finau.