Payments allowed on assumption due diligence was done [1]
Friday, February 19, 2010 - 23:30. Updated on Friday, May 9, 2014 - 20:53.
At the Royal Commission of Inquiry into the sinking of the Ashika evidence has established that Ministry of Finance's high-ranking officials ranging from the Minster of Finance to the Secretary and Deputy Secretary of Finance had proceeded to allow payments for the Princess Ashika, under a wrong assumption that due diligence was conducted.
The Secretary of Finance 'Aisake Eke in giving his evidence on the afternoon session of February 19, confirmed that he received on May 20 a circular sent to the Government Procurement Committee members dated May 13 for the approval of the purchase of the vessel.
He, as a member, signed the approval based on a Savingram from the Minister of Transport dated May 7, 2009, asserting that due diligence had been conducted.
Counsel Assisting the Commission Manuel Varitimos put to the Secretary that not one piece of evidence had been put to him to support the conclusion put forth by the former Transport Minister that due diligence had been conducted, and the Secretary agreed and added that they took the assumption that it was done.
"You have failed in your duty as a member of the Procurement Committee to obtain valuation that was done on the vessel," he said.
He answered that they took the assumption it was and added if he had know there was no survey, he would not have signed it.
Assumption
"But there was no mention of a valuation report by the Minister of Finance on the Savingram," said the counsel and the Secretary agreed and accepted it was a great danger to assume things, and that included an assumption that Cabinet resorted that due diligence was done, because it was wrong.
"The Cabinet decision dated April 23 did not state due diligence was conducted," said the counsel. The Secretary said yes, as he just assumed it was.
The counsel put to him that he proceeded to allow his department to release funds under the assumption that due diligence was done. The Secretary answered that it was based on the information at the time.
He asserted that he was only aware of the contract for the Purchase and Sale of the Ashika on May 20 when he received the circular from the Procurement Committee for approval. And he confirmed that the Solicitor General had raised concerns about due diligence not being done and emailed him and Acting Transport Secretary 'Eleni Mone.
However, he did not respond to the email from the Solicitor General because as he pointed out he attended a meeting on April 24 consisting of himself, the Minister of Finance, the former Minister of Transport and John Jonesse.
He recalled that the issued of due diligence was raised by his Minister and Karalus assured that it had been done and he was under that assumption when he received the Solicitor General's email of concern.
"But the Solicitor General was not under that assumption," said the counsel, and the witness agreed.
The Secretary accepted a submission that Government as the owner should have prior to purchasing the vessel conducted due diligence that included obtaining an independent survey and valuation and similarly the Shipping Corporation of Polynesia as operator should also have done the same.
"It is elementary as well as fundamental" said the counsel, and the Secretary agreed.
Funds
In continuing to the funds paid for the Ashika the witness was asked where the deposit came from.
He said that initial deposit of the FJ$90,000 was paid from a Government Fund and the balance of FJ$510,000 was paid from another fund that was paid to Government for its assets. He clarified that this fund held payments from China to TONGASAT, and asserted that it was not aid money.
"It was a payment to Government to consider providing something?" said the counsel, and the witness ageed. The total fund was at a total of $24 million and $15 million was taken to establish a relief fund and a remaining $9 million was left.