The Company Secretary of the Shipping Corporation of Polynesia Ltd Lord Dalgety is under fire at the Royal Commission of Inquiry into the sinking of the MV Ashika on February 25, after evidence revealed a "scandalous contract" of employment and possible use of public funds to finance personal and first class travels in his other role as Chairman of the Electricity Commission.

Electricity Commissioner, Tapu Panuve, who appeared in the inquiry and gave evidence, broke down in tears after evidence revealed the alleged misuse of public funds by the Chairman and Commission Secretary Lord Dalgety and General Administrator Mele Folau.

The evidence, in his view, had tainted the credibility of the commission itself and he then considered resigning.

Panuve asserted to the inquiry that he was kept in the dark with regards to the financial aspects of the commission and he was not a signatory to its bank accounts held with the MBF Bank.

He stated he was only aware of the travel by Mele Folau to Los Angeles, after he read it in the Matangi Tonga when they put the report up online after Lord Dalgety gave evidence to the Ashika Inquiry on 22 January.

The inquiry had learned from Dalgety's own evidence that he traveled up to five times a year, financed by the Electricity Commission, and how it was his habit to travel first class.

It was also revealed yesterday, from a minutes of meetings of the Electricity Commission, that Mele was advanced the money to travel and was required to pay it by February 2010 but then under the Employment Code for her contract it effectively did not provide for any advance to staff.

It was also revealed that the particular cheque that paid for the air fares was only signed by the secretary herself, but Panuve confirmed that standard practice was that two signatories were required. He had no explanation as to why Lord Dalgety did not sign the cheque.

Overdraft

Counsel Assisting Varitimos also told Panuve that the Electricity Commission went into overdraft in November 2009 that coincided with a trip to Vietnam by Dalgety, another Commissioner Kahu Afeaki and the secretary.

Panuve said he knew of the trip to Vietnam on the same month and to his knowledge that it was for some training but he was not aware that Dalgety went to Singapore first.

"You see around the time of the trip to Vietnam the Electricity Commission went into overdraft that escalated to $93,000 pa'anga by November 11, 2009 and fluctuated. The last reference was January 12, 2010 where it was around $94,000," said the counsel.

Panuve agreed.

The counsel assisting went on to reveal that within a period of 12 months a total of $1.2 million pa'anga was spent or went out of the commission's account. This was from January 2009 to January 2010 in which its account showed total debits of $1,226,591 and total credits of $1,090,250.78.

"So I suggest that for every many, woman and child in Tonga, the Electricity Commission managed to spend about $11," Varitimos said.

"And is the main task of the Electricity Commission to be the regulator? Can you explain why the Electricity Commission would spend so much money?" asked the counsel assisting.

"No, sir, I can't. I'm lost for words," said Panuve, who was surprised by this revelation, and agreed that it was very much excessive.

He confirmed he never saw the bank statements provided to him at the inquiry and accepted a submission that he was largely kept in the dark in regards to the financial situation of the commission.

Minutes of meetings in November 2009, confirmed that Lord Dalgety and Mele Folau resolved to authorise the commission to open an overdraft of up to $100,000 pa'anga. And Panuve confirmed that he recollected that this was brought up in one of their meetings.

"I was concerned about the legal implication of the commission entering into overdraft so I sought legal advice and I was told that it was unlawful," he said.

The counsel put to the witness that it was totally unsatisfactory for a regulatory body funded by public funds to go into overdraft, and Panuve agreed.

"I suggest it is totally unacceptable for an Electricity Commission to go into overdraft to fund the trip to Vietnam," counsel said.

The witness said that was absolutely right.

"What was the commission's benefit for attending this meeting?' said the counsel.

Panuve answered there was no reason and he could not recall whether or not Lord Dalgety presented a report upon his return to Tonga.

Public Funds

"How is the commission funded?" asked the counsel.

Panuve answered that it was funded from tariff rates charged to electricity consumers in Tonga, which was one cent per unit. He confirmed this amounted to about $40,000 pa'anga a month and added there were also other sources of funds to the commission.

"So the commission used public funds to operate?' said the counsel.

Panuve agreed and said although he has not been able to raise this with Dalgety because he never got hold of him, but he intended to.

Panuve also asserted that it was not good and it was utterly inappropriate that public funds were used to pay for personal travels.

Resignation

"Have you considered resigning from the commission," said the counsel.

The witness agreed and said he absolutely did not support the first class travels paid by public funds.

He written to the Minister of Finance in January 2010 about his concern over whether it was appropriate for him to continue as commissioner, but the Minister was at that time due to travel abroad and he said he would follow it up with him.

"Why did you consider resigning?" asked counsel.

The witness who was silent for a few seconds broke down in tears and said, "I thought I had failed the people of Tonga."

On being re-examined by counsel Soane Foliaki, Panuve was asked whether he had any regret as a commissioner, and he answered he felt like he had failed and added he should have been stronger in presenting his views.

"I think this has tainted us and we should take a backseat," he said, referring to resigning. But he added he was speaking only for himself on the issue of resignation as for the others it was up to them.

"The integrity of the commission has been undermined and it happened on our watch," said Panuve.

Contract

Evidence showed the contract of employment for Dalgety, was signed between the employer, the Tonga Electric Power Board, and himself dated July 21, 2008.

It read that the employers and employee had agreed that salary was to be paid monthly in accordance with the Employer's Employment Code at a rate to be advised from time to time in writing . . . with salary paid in addition to any directors fees earned.

The Employer's Code, however, stated that the employee shall be entitled to the salary from "time to time" fixed by the employer and salary is reviewed periodically.

Panuve who was given a copy of Dalgety's contract was asked whether he agreed that Dalgety was basically given control as to the amount to be paid to himself in the contract.

Panuve agreed and said that is what it appears to be.

"This is rather a unique contract in that the rate can change from time to time under the Employment Code?" said counsel.

Panuve agreed and said he had never come across such a document nor he had any experience in drafting of contracts.

"Dalgety would be able to fix his salary at a rate he determined,' said the counsel assisting.

Panuve agreed and said that was correct.

"Could I suggest that the provision of such a contract and the signing of such a contract is, in fact, a scandal?" said the counsel assisting.

"Yes, sir, I would - yes, yes," said the witness.

Signed each other's contracts

The inquiry learned that Secretary Mele signed under the provision of employer for Lord Dalgety's contract and, similarly, he signed her contract under the employer's provision.

Panuve was then given the contract for Mele that had similar format to that of Lord Dalgety's. It was revealed that Dalgety signed under the employer provision and her contract stated the rates were to be advised from time to time.

The witness who after giving evidence in the afternoon was thanked by the Commission Chairman for his time and honesty.