Tongasat case “of national importance” says judge as he declares payments were illegal

'Oku taupotu 'i lalo ha fakamatala faka-Tonga

Lord Chief Justice Paulsen has described the Tongasat case as a “matter of national importance.”

The judge made his comments in the Supreme Court when ruling in favour of Prime Minister ‘Akilisi Pōhiva and the Public Service Association (PSA) which had fought a five year battle against Tongasat over what it claimed were illegal payments to the company.

As Kaniva News reported last night, the Supreme Court ruled that the payment of the tens of millions of dollars of Chinese money to Princess Pilolevu’s satellite company was illegal.

The judge said five other cases had been held over waiting for his decision.

Hon Pōhiva began the case when he was in Opposition.

Tongasat was established to exploit the commercial possibilities of exploiting the right to place satellites in the orbital slot assigned to Tonga by the International Telecommunications Union.

It was 80% owned by Princess Pilolevu.

The government did not contribute any money to setting up Tongasat, but was to be paid half its net income for 15 years. This was later changed to a percentage of gross income.

In 2006 it was discovered that a Chinese state agency called China Electronic System Engineering Company had placed a satellite in the Tongan orbital slot.

Tonga sought to negotiate with the People’s Republic of China (PRC). After what the judge described as “long, difficult and frustrating” negotiations, Tonga effectively surrendered  its priority in the orbital position to China.

Tonga had expected to conclude a commercial agreement with China over the orbital slots, but at the last minute, China  announced it would pay a grant totalling USD$49.9 million. This sum was to be paid in two tranches.

During the  negotiations, a proposal was made on the Tongan side that a large portion of the grant would be used to cover moneys Tongasat owed the Tongan government.

In July 2008 and June 2011 China paid the Tongan government US$24,450,000 and US$25,450,000.

On June 24, 2011 the two governments signed a certificate stating that the payment of US$$25,450,000 was a grant to help the kingdom in its economic and social development.

However, almost all the Chinese money –  93% – from both tranches, was paid to Tongasat or used to pay money Tongasat owed the Tongan government.

The PSA and Hon Pōhiva argued that the payments were illegal because they were in breach of the Public Finance Management Act (PFMA).

Mr Justice Paulsen said the primary issue was whether the first and  second  tranche  payments  were  public money and therefore subject to the PFMA.

The PSA and Hon Pōhiva argued that the grants were public money and could not be spent unless authorised by an Appropriation Act and could not be used towards payment of any debt or liability of Tongasat

They argued that no contract, arrangement, or side agreement the Tongan government and Tongasat, could override or authorise a payment made without such statutory authority.

The government and Tongasat argued that the tranche payments were trust money as defined   in the PFMA and therefore excluded from the definition of   public money and not subject to the restrictions on expenditure in the PFMA.

The judge said the PFMA over-rode all other statutes apart from the Constitution.

Clause 19 of the Constitution said: “No money shall be paid out of the Treasury nor borrowed nor debts contracted by the Government but by the prior vote of the Legislative Assembly” except in special cases.

Mr Justice Paulsen said there were many instances of government documents circulated during the  negotiation period which referred to the Chinese money as grants.

The judge rejected a claim by Lord Sevele, who was Prime Minister at the time, that the Government act gave him the right to disburse the money without reference to Cabinet.

However, argument had been advanced that the Act also provided that the Prime Minister “shall not decide any grave or important matter without the consent of Cabinet.”

“I consider it beyond argument that the expenditure of almost US$50 million by the Government must be considered an important matter which would have required the consent of Cabinet,” the judge said.

The defence argued that Tonga had not asked for grants from the PRC which were paid  because the Chinese government did not want a record of the breach of Tonga’s orbital rights.

It said the payments could not be budgeted for by the Tongan government because they were not linked to a project or Ministry.

It also argued that the payments were to compensate Tongasat for its losses and that the government treated the money as trust money.

However, the judge said the defence had undermined its own argument by submitting that the first and second tranche payments were intended as a gift and that the government had a discretion on their use.

“If either of these matters is correct then there can be no suggestion that the PRC intended the tranche payments for Tongasat or that they were trust money,” the judge said.

The starting point must be that the PRC required the tranche payments to be made as grant aid and that the government accepted them on that basis, he said.

“The wordings of the first and second tranche agreements unquestionably brought both the first and second tranche payments within the PFMA definition of grants, namely as non-repayable receipts from another Government.

“The money was undoubtedly received by the Government and must be considered in their entirety as comprising public  money under the PFMA.

“There is simply no room to argue that the purpose of the tranche payments was anything other than grant aid.

“The plaintiffs have established that the payments to Tongasat were unlawful.

“The plaintiffs are entitled to declaratory relief. I formally reserve my decision as to the terms of the declaration and invite Counsel to submit memoranda within 14 days.”

For more information

PM Tu’ivakanō, Hon Edwards and Princess Pilolevu taken to court

Princess Pilolevu takes China’s $25.45 million grant for her private owned company

Reports say Pōhiva and PSA win against Tongasat US$25 million illegal transfer


  1. Kuo fakamatala’i ‘e he ‘Eiki Fakamaau Lahi’ e keisi ‘a e Tongasat ko ha me’a ‘oku mahu’inga fakafonua.
    Ko e lau ‘eni ‘a e fakamāu’ ‘i he Fakamaau’anga Lahi’ ‘i he’ene tu’utu’uni ‘o poupou’i ‘a e ‘Eiki Palēmia ‘Akilisi Pōhiva mo e PSA ‘a ia kuo ta’u nima ‘ena tau’i fakalao ‘a e Tongasat ‘i he’enau pehē ko e ngaahi totongi ki he kautaha’ ne ta’efakalao.

    Hangē ko ia ne ‘uluaki līpooti ‘e he Kaniva’ ‘anepoo’ na’e tu’utu’uni e Fakamaau’anga Lahi’ ko e ngaahi totongi ko ‘eni lau miliona mei Siaina ki he kautaha satelaite ‘a Pilinisesi Pilolevu’ na’e ta’efakalao.

    Na’e toe pehē ‘e he Fakamaau kuo ‘i ai ha ngaahi keisi kehe ‘e 5 heni kuo fakatatali ki ha’ane tu’utu’uni.
    Na’e fokotu’u e Tongasat ke fakahoko e ngaahi totonu ki hano fokotu’u e ngaahi sateliate’ ki he ngaahi tu’u’anga satelaite he vavaa’ ‘a ia kuo ‘osi vahe’i mai ‘e he ‘Iunioni Fakavaha’apule’anga ki he Fetu’utaki Fakatelefoni.
    Ko e pēseti ‘e 80 ‘o e kautaha’ ni na’e ‘o Pilinisesi Pilolevu ia. Na’e ‘ikai ke foaki ‘e he pule’anga’ ha pa’anga ki hono fokotu’u ‘o e Tongasat, ka na’e pau ke totongi mai ‘e he Tongasat e vaeuea e lahi ene pa’anga hū mai’ hili hono to’o e ngaahi tukuhau’ ki he pule’anga Tonga’ ‘i ha ta’u ‘e 15. Ne toe liliu ‘eni ki mui ki ha pēseti ‘o e pa’anga hū mai te’eki to’o e ngaahi tukuhau’.

    ‘I he 2006 na’e ‘ilo ai kuo fokotu’u ‘e ha kautaha Siaina ia ko e China Electronic System Engineering Company ha’anau satelaite ‘i he tu’u’anga satelaite ‘a Tonga’.

    Na’e feinga leva ‘a Tonga ke alea mo e Lepapilika e Kakai ‘o Siaina’ ki he me’a’ ni. Hili ha fetakai ne fakamatala’i ‘e he Fakamāu’ ne pehē na’e lōloa, faingata’a pea feifeiatamaki, ne iku holomui ‘a Tonga ‘o ne tuku ange ‘e ia ‘a e tu’unga satelaite’ ki Siaina.

    Na’e ‘amanaki leva ‘a Tonga ke aofangatuku ha alea fakakomesiale mo Siaina ki he ngaahi tu’u’anga satelaite ko ‘eni ka ‘i he mōmeniti fakamuimui’ ne fanongonongo ‘e Siaina ia te ne totongi ‘a e pa’anga ‘Amelika ‘e $49 miliona. Na’e pau ke totongi mai ‘a e pa’anga ko ‘eni’ ‘i ha konga ‘e ua.

    Lolotonga e ngaahi alea ko ‘eni na’e ‘i ai e fokotu’u atu mei Tonga ke ngāue’aki e konga ‘o e pa’anga tokoni ko ‘eni’ ke tāpuni’aki e mo’ua pa’anga ‘o e Tongasat ki he pule’anga Tonga’.

    ‘I Siulai 2008 mo Sune 2011 na’e totongi ai ‘e he pule’anga Siaina’ ‘a e pa’anga ‘Amelika lau miliona ‘e US$24,450,000 mo e US$25,450,000 ki he pule’anga Tonga’.

    ‘I Sune aho 24, 2011 na’e fefakamo’oni’aki ai ‘a e ongo pule’anga’ ‘i ha setifikeiti ‘o pehē ko e pa’anga ‘Amelika ‘e US$25,450,000 ko ha tokoni ‘ofa ia ke tokoni ki he pule’anga Tonga ‘i he’ene ngaahi langa fakalakalaka faka’ekonōmika mo fakasōsiale’.

    Neongo ia ko e meimei ko e pēseti ‘e 93 ‘o e pa’anga mei Siaina’, ‘i he ongo totongi ‘e ua ne fai’, na’e totongi ia ki he Tongasat pe na’e ngāue’aki ke totongi e pa’anga ne mo’ua’aki ‘e he Tongasat ki he pule’anga Tonga’.

    Na’e fakafekiki ‘a e PSA mo Pōhiva ko e ngaahi totongi ko ‘eni na’e ta’efakalao koe’uhī ne nau maumau’i ‘a e tu’utu’uni ki hono Leva’i e Pa’anga ‘a e Kakai.

    Na’e pehē leva ‘e Fakamaau Paulsen ko e ‘īsiu heni’ pe ko e ‘uluaki mo e ua ‘o e totongi mei Siaina’ ko ha pa’anga ‘a e kakai’, pea ‘i he ‘uhinga ko ia ‘oku fakamalumalu ai e pa’anga’ ni ‘i he lao PFMA pe ‘ikai.
    Fakafekiki ‘a Pōhiva mo e PSA ko e ngaahi tokoni ‘ofa ko ‘eni ‘ ko e pa’anga ia ‘a e kakai pea ‘e ‘ikai ngāue’aki kae ‘oua leva kuo fakamafai’i fakatatau ki he lao Appropriate Act pea ‘e ‘ikai lava ia ke faka’aonga’i ke totongi’aki ha mo’ua ki he Tongasat.

    Ne na fakafekiki foki na’e ‘ikai ha konituleki, pe fokotu’utu’u, pe ha alea he tafa’aki’ ‘a e pule’anga Tonga’ mo e Tongasat, ‘e iku ai ke fakata’e’aonga’i pe fakamafai’i e totongi ni ta’efakatatau mo e lau ‘a e lao’ PFMA.

    Na’e fakafekiki ‘a e pule’anga’ leva ia mo e Tongasat ko e ongo totongi ne fai’ ko e pa’anga talāsiti ia ‘o hangē ko hono faka’uhinga’i ‘e he lao PFMA pea ko ia ai ‘e tukutafa’aki’i leva ‘a e ‘uhinga ia ko e pa’anga ‘a e kakai’ pea ‘e ‘ikai ai ke fakangatangata hano fakamoleki ‘o na ‘o hangē ko e tu’utu’uni ‘a e lao PFMA.

    Na’e pehē ‘e he Fakamāu’ leva heni ‘oku mā’olunga ange ‘a e lao PFMA ‘i ha toe tu’utu’uni tukukehe ‘a e konisitūtone’.
    Kupu 19 ‘o e Konisitūtone’ ‘oku pehē: ‘E ‘ikai ha pa’anga ‘e totongi atu mei he Fale Pa’anga’ pe ‘e kole pe alea’i ha fakamo’ua ‘e he pule’anga’ ka kuopau ke ‘ave ia ke fakahāloto ki ai ‘a e Fale Alea’, tukukehe ‘i he ngaahi keisi makehe.

    Na’e pehē ‘e Paulsen na’e lahi ‘a e ngaahi fakatātā mei ha ngaahi tokiumeni ne tufaki holo ‘e he pule’anga’ ‘o nau lave ai ki he pa’anga mei he Siaina’ ko e pa’anga tokoni ‘ofa.

    Neongo ia ne toe ‘i ai mo e fakafekiki ia ‘o pehē ‘oku toe ‘oange ‘e he tu’utu’uni’ ki he ‘EIki Palēmia ke ne lava pe ‘o tu’utu’uni ‘iate ia pe ‘i ha me’a mātu’aki mahu’inga ta’ekau ki ai ‘a e kapineti’.

    Ka ‘i he lau ‘a e fakamāu’ na’a’ ne pehē ko e fakamole ‘eni ia ‘a e pule’anga, tokoni ‘ofa mei Siaina’, mei ofi he $50 miliona ‘Amelika’ pea ko e me’a mahu’inga ia pea kuopau ai ke fiema’u e loto ia ‘o e kapineti’.

    Na’e toe fakafekiki ‘a e fa’ahi ‘a e Tongasat mo e pule’anga ‘o pehē na’e ‘ikai kole pa’anga tokoni ‘a Tonga ia ki Siaina koe’uhi he na’e ‘ikai loto ‘a Siaina ia ke lēkooti na’a nau maumau’i ‘a e totonu ki he tu’unga’anga satelaite’.

    Na’a’ nau toe taukapo ‘o pehē ko e pa’anga ko ‘eni’ ‘e ‘ikai lava ia ke fakahū he patiseti’ ‘e he pule’anga Tonga’ koe’uhi he na’e ‘ikai ‘ai ia ki ha polōseki pe ki ha Potungāue.

    Na’a’ nau toe fakafekiki ko e ngaahi totongi ne fai’ ko e huhu’i ia ki he mole ‘a e Tongasat pea ke lau ‘e he pule’anga’ ‘a e pa’anga’ ni ko e pa’anga talāsiti.

    Kaekehe ne pehē ‘e he fakamāu’ kuo toe fakafepaki’i pe ‘e he fa’ahi ‘a e pule’anga’ ia mo e Tongasat ‘enau kikihi ‘oku fai’ ‘aki ‘enau fakahā ko e totongi hono ‘uluaki mo hono ua’ na’e taumu’a ia ko ha me’a’ofa pea ‘oku ‘a e pule’anga’ ko e hā hono loto ki hano ngāue’aki.

    Kapau ‘oku tonu ha taha he ongo me’a ko ‘eni pea ‘ikai lava ia ke fokotu’u mai na’e loto e pule’anga Siaina’ ke totongi e pa’anga ki he Tongasat pe ke ‘ai ko ha pa’anga talāsiti, ko e lau ia ‘a e Fakamāu’.

    Ko hono mo’oni’ na’e fiema’u ‘e he pule’anga Siaina’ ke omi ‘a e totongi kongokonga ko ‘eni ko ha pa’anga totongi me’a’ofa pea tali ia ‘e he pule’anga Tonga’ ‘i he ‘uhinga ko ia’.

    Ko hono fakalea ‘o e alea ki he totongi ‘uluaki’ moe ua’ ‘oku ta’etoefehu’ia ‘a e mahino na’e fai ia ‘i loto ‘i he ‘uhinga ‘o e lao ki he pa’anga ‘a e kakai (PFMA) fekau’aki mo e pa’anga tokoni ‘ofa, ‘a ia ‘e ‘ikai malava ke toe totongi atu hili hano ma’u ‘e he pule’anga’, ko e Fakamāu’ ia.

    Na’e ‘ikai toe veiveiua ko e pa’anga’ ni na’e tali ia ‘e he pule’anga pea kuopau ke fakakaukaua kakato ia ‘aki ‘a e lao ki he pa’anga ‘a e kakai PFMA.

    ‘Oku ‘ikai ha toe ‘uhinga ia heni ke fai ai ha fakafekiki na’e toe taumu’a kehe mai ‘a e pa’anga ka ko e taumu’a pe ko e pa’anga tokoni ‘ofa ki he pule’anga’.

    Kuo lava ke fakamo’oni’i mai ‘e he PSA mo e ‘Eiki Palēmia ko hono totongi ‘o e pa’anga ki he Tongasat ne ta’efakalao.

    Na’e tali ‘eni ‘e he Fakamāu’ ‘o ne fakahā ko e ngaahi makatu’unga ki he’ene tu’utu’uni ‘oku ta’efakalao ‘a e pa’anga’ ni ‘e tuku mai ia ‘a mui pea ‘oku’ ne fakaafe’i e loea’ ke ne fakahū ange pepa ki hono fakamanatu’ ‘i ha ‘aho ‘e 14.


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