Tonga’s Ombudsman has told the country’s government-owned shipping agency that it must carry out due diligence on buying large ship.
His comment came after an investigation showed that the Friendly Island Shipping Agency paid almost three times the value of a 36 year old ship in 2014.
Ombudsman ‘Aisea H. Taumoepeau said at a press conference this morning that in February 2014, Pacific Royale Shipping sold the vessel to FISA for NZ$936,500. The vessel was then renamed MV Niuvakai.
In April 2017, three years after the purchase of the vessel, New Zealand Marine Brokers inspected and evaluated the MV Niuvakai as worth NZ$350,000.
The Ombudsman’s investigation into the purchase of the over-priced ship was part of a set of enquiries made into allegation made in Kele’a newspaper against the Boards of Directors of the Public Enterprises.
The claims were made in the newspaper on December 24 last year under the heading ‘Pau’u ‘i he ngaahi Poate, Ngaahi pisinisi ‘a e Pule’anga.’
The allegations about the MV Niuvakai was the only one of six claims to which the Ombudsman gave any credence. He found no evidence to support the newspaper’s other allegations:
Kele’a claimed that PE Boards did not follow the same procurement process as Government ministries and could spend more than TP$1million without using the procurement process.
The Ombudsman said public enterprises had the power to create rules and procedures to govern their own procurement processes pursuant to Regulation 3(3) of the Public Procurement Regulations, 2015. Carrying out their procurement processes according to their rules and procedures did not breach the Procurement Regulations.
The Ombudsman said Kele’a did not take up an offer to provide information to the investigation.
The newspaper also complained that board members were taking loans from Board funds.
The Ombudsman said Kele’a’s publisher, Siaosi Pohiva, confirmed the allegation was about an incident alleged to have occurred at the Ports Authority Tonga Ltd (PAT) in 2011 or 2012.
The Ombudsman told this morning’s press conference that PAT said no loans were granted to any Board members during the 2011-2012 financial year and there was no policy to allow for personal loans to be granted to any of its employees or Board members.
PAT said the claim might have referred to a TP$500,000 loan to Waste Authority Limited in that period. The loan account was audited and disclosed in PAT’s Annual Report. The Ombudsman said there was no evidence to support Kele’a’s claims.
The newspaper further alleged that Board members were being paid gratuities, with some bonuses being as high as TP$60,000.
The Ombudsman said there was no evidence to support the claim. He said Kele’a had been invited to supply information to help the investigation, but had not done so. Since mid-2018 board directors are only paid their annual director’s fees and meeting fees.
Kele’a complained that one member of the Board of Directors of a Public Enterprise had a Board meeting in Barcelona.
In 2017, a delegation of the Tonga Airports Limited travelled to Barcelona to attend World Routes 2017, and to finalise documentation and verification to complete the process for a security bank guarantee due to TAL for breach of contract by a Spanish contractor, GECI. The Ombudsman said the presence of the delegation in Barcelona was crucial.
Finally, Kele’a claimed some Board members of Tonga Power Ltd were paid overtime, when this was normally reserved for low wage earners.
The Ombudsman said that in 2018 the Board of Directors of TPL approved a sub-committee to carry out due diligence of its Enterprise Resource Planning System. The Board ordered the sub-committee to be chaired by Director, ‘Aisake Tu’iono and Director, Fuiva Kavaliku, to work with Mr. Tu’iono on identifying and solving problems for ERP system.
The Board approved payment to the sub-committee members by way of consultancy fees, rather than overtime. Because the work was outside their normal duties of Directors of TPL, it required special rates. The Ombudsman said the payment of special rates was not unreasonable.
The main points
- Tonga’s Ombudsman has told the country’ government-owned shipping agency that it must carry out due diligence on buying large hip.
- His comment came after an investigation showed that FISA paid almost three times the value of a 36 year old ship in 2014.
More stories on MV Niuvaka and FISA
