Reverend forgets public service obligations [1]
Tuesday, February 2, 2010 - 09:33. Updated on Thursday, May 1, 2014 - 11:04.
Rev Dr Tevita Haukinima a Director of the Shipping Corporation of Polynesia Ltd. accepted that the Board and Company Secretary failed to conduct proper due diligence of the Ashika, prior to their recommendation for purchase. He also admitted to the Ashika Inquiry that he had long forgotten his obligations as a director under the Public Service Act.
But at the same time he asserted that they trusted Government who was purchasing the vessel, would do their duty and comply with regulations and procedures.
The Reverend, an accountant, has been the Financial Secretary of the Free Wesleyan Church of Tonga since being ordained as Minister in 1987.
On being questioned by Assisting Counsel Manuel Varitimos on January 29, he accepted the evidence by SCP Chairperson 'Alisi Taumoepeau that the board failed because they did not realise at the time that the SCP Managing Director John Jonesse was withholding vital information and giving them wrong information.
He also agreed that because Jonesse in many of the papers provided insufficient detail and that it was prudent for the board to make an informed decision. He also agreed in part that if they were aware of that, it should have put them off from their decision to recommend to Government to buy the vessel.
The Reverend elaborated that in relation to Princess Ashika they knew the information but they trusted that Government who was purchasing the boat.
"At one time Jonesse showed us some nice photos so we were so happy to get a new boat to replace the Olovaha but, the thing is, we trusted Government to do her duty and comply with the regulations and procedures and so forth", he added.
The counsel put to him that as operator of the vessel, both the Tongan Government and, Shipping Corporation as separate entities, should have conducted separate due diligence, and he agreed.
"And, of course, you know that neither the Government nor Shipping Corporation conducted due diligence. So I suggest that one of the many shortcomings in relation to this tragedy included the failure of the board and company secretary of SCP to conduct proper due diligence. Do you agree with that?"
Rev Haukinima said he agreed that they failed in some part.
Devastating financial impact
The Reverend accepted that, as Board Directors they were and are required to exercise reasonable care, diligence and skill. He confirmed that by mid-2008, it was very clear that the vessel Olovaha was unseaworthy, unreliable and too costly to maintain so they decided there was an urgent need for a replacement vessel to be sought.
"Do you accept that in the case of Ashika, because it sank, it has had a devastating financial implication on the company and that nearly all the staff of Shipping Corporation have been retrenched since the sinking, is that right?"
Rev Haukinima agreed.
Forgotten obligations
The Director said he knew that SCP is a Public Enterprise but the last time he looked at the Public Enterprises Act was in the 1990's.
"Do you understand that the Act places certain obligations on public enterprises. And do you know what those obligations and duties?" asked the counsel.
Rev Haukinima said he had forgotten them.
"Well, could I suggest if you haven't read the Act, you don't know what the duties and obligations are, do you agree with that?" asked the counsel.
Rev Hauminima said he could recall that they can act on good faith.
He also agreed with the counsel's suggestion that in the minutes kept by Lord Dalgety, apart from recording who attended and the resolutions made, often there was very little else included.
"And do you agree that the minutes that were provided and prepared by Lord Dalgety are inadequate?"
Rev Haukinima answered it was not inadequate, but in some cases like this he thought it was inadequate. He agreed that he does not have any experience in relation to maritime industry or shipping area.
"Why were you appointed to the board?" asked the counsel.
Rev Haukinima said that was a hard question as he just got an invitation letter, from the then Minister for Public Enterprises Siosiua 'Utoikamanu for his accounting expertise.
Late tax returns
Varitimos put to the witness that Jonesse had given evidence that the audit committee met about every two months, and Rev Haukinima said that was false.
But accepted that he was the Chair of the committee and that the company had not been lodging its company tax returns, and consequently an income tax penalty amounted to over $214,000.
"Do you accept that it is, in fact, that the last income tax returns were lodged on 24 August 2007 for the end of December 2008?"
Rev. Haukinima agreed.
"Do you accept any responsibility for the failure to lodge tax returns?"
Rev Haukinima said they were addressing the problem now.
Due Diligence
The Reverend agreed with the counsel's submission that prior to Government purchasing Ashika as part of proper due diligence it should have conducted an independent survey of the vessel and that there must be a government policy and they should have abided and complied with it.
"I suggest that any prudent and responsible purchaser, such as the
Government, would not only obtain an independent survey but also have a look at the results of the survey. You agree with that because if they saw the independent survey, it might lead them to the position that they should not buy it?" put the counsel.
Rev Haukinima agreed.
"And I suggest that any responsible prospective purchaser of a vessel such as Ashika should, prior to purchase, have conducted a valuation of the vessel. Because I suggest that in the case of Ashika, FJ$600,000 was a major investment for the Government to make?"
Rev Haukinima agreed.
He also agreed that as part of the proper due diligence, the Government, as the prospective purchaser should have organised to have a look at appropriate documents in relation to the vessel such as certificates of survey. These actions, as revealed in the inquiry, were not conducted at all in relation to the sunken vessel.
Rev Haukinima understand that the Government did not conduct any valuation in relation to Ashika nor sought to obtain copies of relevant documents in relation to Ashika.
"And I suggest it was clear to anyone that chose to look at
Ashika in Tonga that it was severely rusted?" said the counsel.
Rev Haukinima said he saw the boat once on July 3 on its first sailing but he didn't identify those defects and rust.
"I saw Princess Ashika once and I was standing maybe seven metres away and he did not go onboard because I was weak at sea," he said.
Failures of governance
The Reverend agreed with the statement that the vessel sank because of failures of governance at all levels and agreed that with the SCP Chairperson's proposition that the Government failed to carry out proper due diligence and that the Ministry of Transport responsible for safety issues failed in issuing a seaworthy certificate for a ship that was unsafe.
He also accepted that the captain and crew failed to stand up and say that they would not sail a ship because it was unsafe
The counsel asked the witness if he accepted the conclusion of the Chairperson where she stated: "I believe there is a culture of fear in Tonga to stand up for what is right in the public sector because one may be forced to retire early, go on leave or be sidelined."
The Reverend answered that he accepted it because the same thing happened to one of his close friends who was working for a government department and he make a decision and he was sidelined.
The Reverend also agreed with another statement by the SCP Chairperson that we need to ensure that a tragedy such as Princess Ashika where so many people failed to stand up does not happen again.
Responsibility
"Do you accept that Shipping Corporation and the board need to take some responsibility for sending this vessel to sea? In an unseaworthy condition, do you accept that?" asked the counsel.
Rev Haukinima said that he does.
"Could you offer your opinion, please, on what you consider to be the cause or causes of this disaster?" said Counsel Varitimos.
Rev Haukinima said it is poor governance in different levels, including SCP, which includes the board and company secretary.
"My view is that government and all related avenues should act accordingly; according to the law, according to the Acts, according to the procedures," he added.