Statement to Parliament
By
Grand Chief Rt. Hon. Sir Michael Somare GCL GCMG CH CF KStJ
Prime Minister
On the
INTERIM REPORT OF THE COMMISSION OF INQUIRY INTO DEPARTMENT OF FINANCE
Mr Speaker
In view of the misleading media coverage that my actions on the Commission of Inquiry into the Department of Finance has had, and given the erroneous imputations that the Opposition continues to perpetrate over my decision to suspend the Inquiry after receipt of the Interim Report, I feel compelled to make a statement to Parliament to clear any misconceptions.
In doing so I wish to make it clear that I am not obliged under law to table the Interim Report to Parliament. However, in the public interest, I will be revealing the salient features of the Interim Report.
The intention is basically to assure members of this House that money spent so far on the Inquiry has not been wasted, as some have suggested, and that I am committed to see the Commission of Inquiry complete its task and deliver to me a final report which will be tabled here in Parliament for all to see.
Mr Speaker
Authority and purpose of the Commission of Inquiry
The Inquiry was initially established on 11 August in 2006 under the Commission of Inquiry Act (Chapter No.31). It was set up for the purpose of enquiring into the management of public monies by the Department of Finance.
The Terms of Reference spell out the essential task of the Commission.
Basically, the task is:
- To inquire into the existence and extent of illegal, false or improper claims for payment made to the State and approved or paid by the Department of Finance in the period 2000 to 1 July 2006.
- In complying with the Terms of Reference to consider all payments made by the Department of Finance in excess of K300,000.00 during the period in question and identify those payments that are illegal, fraudulent or otherwise improper.
It is the task of the Commission to find the facts and report.
Problems encountered by the Commission of Inquiry
The Interim Report of the Commission suggests that from the very beginning it has encountered both administrative and financial difficulties.
This has greatly frustrated its work.
The Commission of Inquiry had no funds budgeted for its operations in 2007 and had to rely on savings elsewhere to try and make ends meet.
Funds located by Treasury subsequently were required to meet overruns and excess spending in the set up period of 2006.
Furthermore, when funding was identified it was released in dribs and drabs thus making it very difficult to operate.
The Commission from its establishment never had control over its finances. The Department of Prime Minister and NEC managed the funding and released them on the basis of invoices and requests.
The Interim report also states that the stop-start, stop-start work of the Committee as a result of the issuance of different Instruments on matters such as the composition of the Commission staff has not been helpful in its smooth operations.
As at January 2007 the Commission has spent approximately K7 million.
Mr Speaker
Why I suspended the Commission of Inquiry
Concerned at the slow progress of the Commission’s work and anxious to see some tangible results, I issued an Instrument made on 28 February 2008, where I directed the Commission to render to me an interim report by 31 March 2008.
In compliance with this directive, the Commission submitted an Interim Report to me to consider.
To allow me time to peruse the Report thoroughly and form a considered view as to how best to move forward, I decided it was better to temporarily suspend the Commission of Inquiry.
Unfortunately, my intentions were misconceived by the bureaucracy and letters and instruments prepared for my signature to effect this suspension did not reflect this.
I erroneously signed these documents during my haste preparing to go to Wewak.
My regret is having placed too much trust in the professionalism and accuracy of the public service.
I know that the Opposition would want us to believe otherwise but it was never my intention to terminate the Commission of Inquiry.
I have nothing to fear or hide from the work of the Commission and I will ensure that it completes its task without further hindrance.
Mr Speaker
Initial findings of the Inquiry
The main findings contained in the Interim Report are not only staggering but frightening.
The Interim Report does not discuss specific cases because, at the time of writing, the Commission had not called those individuals or companies affected to come before it and be heard. This is a legal right that must be accorded to them.
But, while the Interim Report does not discuss specific cases it does highlight certain anomalies that should be of concern to all of us.
The Finance Department records for the period from year 2000 to year 2006 show that a total of 382 claims against the State in excess of K300,000 as Court Orders and Settlements were registered and paid by the Department.
Records held by the Solicitor General’s Office, through the Electronic Case Management System, for the same period reveal a total of 8,519 files created and registered against the State under the Claims By and Against the State Act.
Analysis of the record shows that 390 out of the 8,519 cases were settled by the Solicitor General’s Office during the relevant period. From the 390 cases settled, 61 claims were valued at K78, 971,969.88 out of which K20,143,565.88 has already been paid.
The most disconcerting part of the findings is the discrepancy between the figures supplied by the Department of Finance and the Solicitor General’s Office in relation to the payment of the sum of K300,000.00 and over between the period 1 January 2000 and 1 July 2006 in Court Order payments.
Solicitor General’s Office records show that only 61 cases of K300.000.00 or more totaling K78,971,969.88 were settled through either a Court Order or a Deed of Release and submitted to the Department of Finance for the period in question.
However, the Department of Finance records indicate that 382 claims totaling K359,430,135.00 were registered and paid during that period.
The difference between the figures is 321 claims totaling K280,458,167,12 settled by the Department of Finance.
Mr Speaker
The way forward
As members of the House will discern from the interim findings of the Commission of Inquiry, there are many cases of questionable claims against the State worth millions of kina.
I am reliably advised that there is potential to recover a substantial portion of this money. This is worth pursuing.
Given this scenario, I am left with little option but to reconstitute the Commission of Inquiry to complete its task.
To help speed up the process, I have decided to appoint two additional Commissioners to the Inquiry.
On the advice of the Chairman of the Commission, I have agreed to increase the ceiling of the staff and given a nine month deadline for the Commission to complete its inquiry and submit a final report to me.
I have signed the necessary Instruments to reconstitute the Commission and when all the requisite consultations with those affected are completed these will be Gazetted.
I have given the assurance that necessary funding for the Commission to complete its work will be secured.
Funds will be released to the Commission under new funding arrangements that avoid the hiccups of the past and permit it to operate smoothly.
Mr Speaker
May I say by way of conclusion that the Commission of Inquiry was established to help us identify weaknesses in our systems and procedures in relation to processing of claims against the State and make recommendations to address them.
It was not established to usurp the statutory responsibilities of the other law enforcement agencies.
I have every confidence that the reconstituted Commission of Inquiry with the two additional Commissioners, increased staff and better funding arrangements will accomplish its task within the timeframe given.
All of us should look forward to its findings and recommendations. Hopefully they will assist us refine our systems, procedures and regulations to avoid illegal claims made against the State.
Thank you.
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