Ashika Report critical of failings in Cabinet and SCP [1]
Saturday, April 17, 2010 - 22:56. Updated on Monday, September 9, 2013 - 18:40.
The purchase of the MV Princess Ashika was a major acquisition for the Tonga Government but the Cabinet failed to ascertain that its decisions were implemented, and to allow its established institutions, the Procurement Committee and Anti Corruption Commission to operate effectively. This resulted in the purchase of an unseaworthy vessel that was ready for scrap and should never have been allowed to sail in Tonga, a Royal Commission of Inquiry has found.
The failure to conduct due diligence resulted in a compromise of safety.
The ferry on its fifth sailing in Tonga sank in Ha'apai waters on August 5 with the loss of 74 lives.
The Final Report of the Commission of Inquiry into the sinking of the MV Princess Ashika levels a fair measure of responsibility for the failings at the highest echelons of government. Nearly 150 pages of the 641 page document covers the evidence relating to the Tongan Cabinet's role in the disaster, including evidence given by the Prime Minister himself, as well as the former Minister of Transport and others. Another 134 pages cover the failures of the Shipping Corporation of Polynesia, a public enterprise, and its officials.
The report also stated that "it is clear on the evidence that the tragedy resulted in part, from a systemic failure in the Maritime industry in Tonga."
But although the awaited Final Report of the Commission of Inquiry was presented to the King, and made available to the Legislative Assembly on March 31 it has yet to be officially released to the public, in spite of assurances by government that it would be made available.
But there is little doubt the commission's findings as set out in Chapter 6 "The Cabinet", will be hard for the government to make public; and that the findings in Chapter 8 "The Shipping Corporation of Polynesia" are eye-opening and alarming.
Reaction
On April 9, the Prime Minister's Office, after reading the Final Report, reacted with a statement that the government had "cooperated with the inquiry in the face of extreme provocation by the Commission"; and accused the Commission of "permitting the introduction of politically-motivated irrelevances in its proceedings."
Meanwhile, unofficial copies of the Final Report are circulating freely in the community.
The Final Report should be read.
No follow-up
The Commissioners pointed out that, "The Prime Minister accepted that if thorough and proper due diligence was conducted, which it should have, the vessel should never have been purchased or operated in Tonga."
But they said that notwithstanding this, no report was tabled in Cabinet in relation to any due diligence that had been conducted.
"There was never any follow up for such a report to be tabled. No proper due diligence was, of course, ever conducted in relation to the MV Princess Ashika. These are both serious failures, that should never have been allowed to occur."
The Final Report noted that the Minister of Finance rightly accepted that Cabinet (including himself) did not have sufficient information before it to make an informed decision to purchase or recommend the purchase of MV Princess Ashika, right up to the time that the vessel sank.
"His frankness in this regard is to be applauded," stated the report.
Purchase
The MV Princess Ashika was purchased by the government because of a failure to properly maintain the 27 year old ferry MV Olovaha, over a number of years, such that it had become unreliable and very costly to maintain.
The ferry was run by the Shipping Corporation of Polynesia (SCP). On April 16, 2009, the Cabinet approved a recommendation for the then Minister of Transport, Paul Karalus, to present a plan to Cabinet for a replacement of the MV Olovaha, which had major mechanical problems, and had broken down at sea a number of times.
The Managing Director of the SCP, John Jonesse was reported to have visited New Zealand, looking for a temporary ferry to service the inter-islands until the arrival from Japan shipyards of the new Olovaha at the end of 2010. John informed Paul that a vessel had been identified in Fiji.
Paul drafted a Memorandum for Cabinet on April 20 that they had identified the MV Princess Ashika in Fiji. He stated that if they bought the Ashika before the end of the month it would cost FJD$600,000 (TOP$580,000). He stated that, "while the vessel is older than the Olovaha it has been very well maintained and has come out of a December 2008 survey. An Australian engineering company is preparing the vessel for sale to ensure full serviceability."
However, no survey was ever carried out and Paul had not seen a copy of the December 2008 survey that he mentioned in the Memorandum.
Paul signed the Memorandum, then later convinced the Minister of Finance Afu'alo Matoto to co-sign it - a decision that the Minister of Finance told the Commission of Inquiry was an "eternal regret".
The Memorandum was presented to Cabinet on April 23, and Cabinet responded with decision No. 300 on the same day. It directed for the Minister of Transport to be assisted by the Attorney General and Minister for Justice to make arrangement for the purchasing of the Princess Ashika. It stressed that because of the urgency of the need for a replacement of the Olovaha, necessary deposits and other financial agreements to be finalized by the Minister of Finance, "who is hereby authorized to endorse or otherwise the proposed transaction, and a report be later tabled in Cabinet."
Facilitated
In an overview of the evidence given by the Prime Minister to the inquiry, the Commissioner's believed Dr Sevele had played a role in facilitating the purchase of the MV Princess Ashika and in the failure of due diligence.
Initially, although the Prime Minister expected that due diligence had to be carried out before the vessel was purchased, they found that no report was ever tabled into Cabinet in relation to any due diligence that had been conducted, and there was never any follow up.
The report stressed that the Prime Minister should have insisted that reports were tabled in Cabinet in relation to the MV Princess Ashika addressing what due diligence had been conducted.
"Thus, even if due diligence had been conducted and reported to Cabinet up to just prior to departure on 5 August 2009, Cabinet could have taken steps to prevent the vessel from sailing and averted the tragedy."
"The Prime Minister accepted that there were e-mails sent to him or by him of direct relevance to the MV Princess Ashika, which he failed to produce in response to the summons served on him. These emails indicated that Dr Sevele played a role in relation to facilitating the purchase of the MV Princess Ashika."
Defensive
The commissioners noted that the Prime Minister was defensive in many of his responses and had "refused to accept the obvious".
"For example, the Contract signed on 8 May 2009 [by Paul Karalus and 'Eleni Mone] for the purchase of the MV Princess Ashika was a cash unconditional contract which required the Government to pay the FJD$600,000 for the purchase of the vessel irrespective of any recommendation from the Government Procurement Committee; the condition or the value of the MV Princess Ashika."
"He also refused to accept that there was a systemic failure that was the cause in any way of the disaster," stated the Commissioners, but, "There was clearly a systemic failure which, had it not occurred, would have resulted in the MV Princess Ashika not having been purchased and not operated in Tonga."
However, the report noted that the Prime Minister had correctly accepted the deaths were senseless and that tragically, the deaths could have been very easily avoided. He also accepted that there had been failings at various levels in government and government-owned enterprises and at the end of the day they must accept responsibility in part for the disaster.
Minister of Transport
The Final Report stated that the former Minister of Transport, Paul Karalus, misled not only the Prime Minister and Cabinet but also the King. "We found Mr Karalus in many respects to be an untruthful witness. His evidence often lacked any credibility or plausibility."
The Final Report pointed that Mr Karalus played a pivotal and personal role in relation to the purchase of the vessel, with Mr Jonesse.
On May 8, 2009, Paul Karalus signed the contract for the purchase of the MV Princess Ashika by the Government of the Kingdom of Tonga. He crossed out the reference to the signature for Secretary for Finance and inserted Acting Secretary for Transport. He asked the CEO for the Ministry of Transport, 'Elei Mone to sign, and it was witnessed by John Jonesse.
The contract was a Cash Unconditional Contract. "In other words the contract signed by Mr Karalus required the Government to pay $600,000 irrespective of the condition, merchantability, fitness for purpose and state of repair."
On about May 10 Paul Karalus sent an e-mail to King George Tupou V falsely stating that "we have completed due diligence on the technical aspects of the vessel" and that "the vessel is very well maintained."
The Final Report summarized that, "Regrettably, the evidence establishes that Mr Karalus committed to purchasing the MV Princess Ashika and allowed it to operate in Tonga irrespective of the condition or suitability of the vessel. He made unsubstantiated and inaccurate statements to His Majesty, the Legislative Assembly, Cabinet, the Prime Minister, the Minister of Finance, the Solicitor General and the Media in relation to the vessel. He was aware that many of the positive statements and representations he made in relation to MV Princess Ashika were obviously false.
"If Mr Karalus had properly carried out his duties and responsibilities as the Minister of Transport, the MV Princess Ashika should never have been purchased. Having arrived in Tonga on 1st July 2009, if Mr Karalus had acted responsibly, the MV Princess Ashika should never have been allowed to sail. Mr Karalus cannot avoid his duties and responsibilities as Minister by simply saying that Mr Jonesse misled him or that he relied on others."
Paul Karalus resigned his position on August 10, 2009.
SCP
The inquiry, at length, documents the role of the SCP in the tragedy.
"John Jonesse the CEO and Managing Director of SCP clearly misled the Board and Company Secretary as to the condition of the MV Princess Ashika, as he did others. His conduct and actions were deplorable," it stated.
The report was also highly critical of Lord Dalgety QC who had been the SCP company secretary since about 2003, stating that he was "highly evasive during the course of his evidence and a most unimpressive and unreliable witness."
The Final Report noted that, "The Company Secretary was trying to, as many persons were seeking to do, "pass the buck".
"SCP were the operators of the MV Princess Ashika up to the time of the sinking. They have contested the fact that they were the owners. This was principally one of the "defences" of Lord Dalgety QC, who in attempting to absolve himself from any responsibility for this tragedy, claimed that any responsibility lay solely with the owners, namely the Government. But for a person who said he knew his way round admiralty legislation, he had a poor knowledge of the Shipping Act." it stated.
"What is alarming is that the Board of SCP would recommend the purchase of MV Princess Ashika to the Government without any proper due diligence, surveys, inspections, valuations, documentation or proper inquiry having been completed. That is, of a vessel that they were to operate," the Final Report stated.
"It was apparent during the course of the evidence by Lord Dalgety QC that he had no serious regard to ensure SCP complied with the law. For example, SCP failed to lodge tax returns as required; failed to provide reports to the Minister of Public Enterprises as required by the Public Enterprises Act; failed to lodge return to the Companies office under the Companies Act; lost important company records; failed to keep proper financial records; failed to ensure that the MV Princess Ashika was registered under the Shipping Act (even by the time that the vessel sank); failed to ensure that the MV Princess Ashika had a licence to enable it to operate under the Shipping Act (even by the time that the vessel sank)."
"We conclude that if Lord Dagety QC had properly carried out his duties as Company Secretary the vessel should never have been purchased or operated in Tonga," the Commissioners stated.
The inquiry also investigated Lord Dalgety QC's activities as company secretary of Ocean Pacific Ltd, established in 2003, in which SCP has a 40% shareholding; and an associate company Ocean Royal Shipping.
Marine
If the whole process of spending government money to buy and unseaworthy vessel was sadly odd, even more outrageous was the fact that after the MV Princess Ashika was inspected by Tonga's own Marine and Port Division and found it to be unseaworthy, the Marine then turned around and issued the vessel with a certificate of seaworthiness and allowed it to leave port.
MV Pulupaki
The commissioners went further stating the Prime Minister had continued to allow unseaworthy vessels to sail.
They said that the Prime Minister was also aware, as Chairman of the Ports Authority of Tonga, that vessels were allowed to depart without departure clearances in defiance of the law.
"Even after the Princess Ashika sank, it is troubling to note that vessels have been allowed to depart Nuku'alofa without departure clearances in defiance of concerns raised by General Manager Commander Lupeti Vi."
They cited the case of the other inter-island ferry MV Pulupaki, which was allowed to enter port after Cabinet was informed on December 22 that the Ports Authority had advised the public that it was not safe to travel on this vessel and that it would not be allowed to berth in Nuku'alofa. The ferry was detained but then it had left port again in January.
"The Prime Minister's condoning of approval by the Ministry of Transport for the vessel to sail over 250 miles to tow an oil tanker is most disturbing," stated the commissioners. "If such an attitude is taken it gives no one confidence that a maritime disaster will not inevitably happen in Tonga in future.
Liability
The Commissioners stated that it was not necessary for the Commission to ultimately determine, under its term of reference, any civil liability or responsibility for the disaster. "It is only required to consider the evidence leading to any civil responsibility leading to the disaster. The Courts, in the exercise of civil jurisdiction will ultimately need to determine civil liability."
The report was signed by the Chairman Mr Justice Warwick Andrew C.B.E., C.R.H, and the commissioners Richard James a Naval architect and Michael Handfield a master mariner, who have heard 54 days of evidence since the inquiry opened on 1 October 2009 in Nuku'alofa.
Meanwhile, the Government, "is satisfied that all the recommendations of the report should be addressed as soon as possible by the appropriate agencies and that the law should be permitted to take its course with regard to the issue of criminal and civil liability," the Prime Minister's Office stated on April 9.