Public Report on the sale of M.V. Yasur - September 23, 1996 - Emalus Campus



Public Report on the sale of M.V. Yasur - September 23, 1996

96-05

This report deals with two major issues, the charter of the M V Yasur and its subsequent sale by the Government of Vanuatu.  The M V Yasur, was donated to Vanuatu in 1985 by the Japanese Government.  Its value at the time it was donated was approximately 34 million vatu.

Sale of the MV Yasar:  After several years of unsuccessful attempts to use the boat, the Department of Fisheries applied to the Ministry of Finance to sell the Yasur.  A decision to sell the boat was made by the Ministry of Finance and it was advertised for sale on a tender basis in January 1992.

No formal system of tender procedures existed at the time of the sale.  Sale by tender of the Yasur took place on an ad hoc basis.  No formal valuation of the Yasur took place before the sale.  A tender board was set up and met on March 16, 1992.   However, another group, headed by the Minister of Finance, Mr Onneyn Tahi, during one of its weekly meetings on May 18, 1992 conducted business relating to the tender of the Yasur.  Minutes of this meeting reveal that a decision on the sale of the Yasur was deferred to allow the Minister of Agriculture to talk directly with the tenderers.  No documentation of his negotiations exists.  The Yasur was sold by tender in June 1992 for 5.8 million vatu.

Charter of M V Yasur:  The Government of Vanuatu entered into an (undated) bareboat charter agreement with Sevan Fishing Co. (SFC) during 1990.  The spokesman of SFC was Mr Shem Rarua, was also serving at the time as Secretary General of the Council of Ministers.

Mr Rarua directed the transfer of two permanent public servants to SFC to work on the Yasur during the period of the charter.  These public servants continued to be paid by the Government.

SFC fell into arrears on the monthly charter payments for the boat.  The Minister of Fisheries retroactively cancelled the lease and wrote off 4 months’ of payments totaling 600,000 vatu.

Mr Rarua acted in clear conflict of interest when he, acting as both Secretary General of the Council of Ministers and an active partner in SFC.  He instructed the Director of Fisheries Mr Bakeo to release 2 employees to work on the Yasur at Government expense during the charter by SFC.

Apart from having a conflict of interest, the Secretary of the Council of Ministers is a political appointee whose function is to advise politicians.  It does not extend to giving directions to a head of department in the deployment of staff.  Mr Rarua, in giving these directions was in breach of the Leadership Code.

The direction of the Minister of Fisheries to write off a debt was made without authority and was therefore illegal.  Section 21(1) of the Public Finance Act provides that only the Minister of Finance has the power to write-off public monies.

The Director of Fisheries, in accepting the directions of Mr Rarua to transfer public service employees failed to ensure that proper administrative procedures were followed.  Only the Prime Minister (under Article 58 of the Constitution) or the Public Service Commission (under s10 of the Public Service Act) has power to transfer public servants and then only to other posts of equivalent rank within the public service.

The Director of Fisheries inexplicably delayed the collection of charter fees from SFC and thereby breached the Interim Financial Instructions of September 1985.

Despite the intention of the Ministry of Finance, as early as 1985 to do so, no formal tendering procedures were put in place until 1993.

The Minister of Fisheries, in engaging in direct negotiations (without disclosure) for the sale of the Yasur brought the integrity of the process into question.

It was improper for another group to meet and conduct business in relation to the sale of the Yasur when a properly constituted tender board was already dealing with the matter.
Recommendations

·        That professional valuation and overseas advertising be conducted for the sale of assets such as the M V Yasur.

·        That Public Officers not have outside private interest in conflict with their official duties, nor work on private matters during official time.

·        That the Public Service Commission and the Minister responsible for the Public Service should remind that public servants and political appointees of the preceding recommendation.

·        That the Prime Minister ensure that all Ministers and Political Appointees are fully aware of their duties and responsibilities.

·        That the Financial Regulations issued in July 1993 should be strictly followed.

(Note:  The Ombudsman made no specific recommendations in relation to wrongdoers in relation to the charter and sale of the Yasur due to the fact that they were no longer in position of responsibility when the report was made.)

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Written by Edward R. Hill
UNDP Governance and Accountability Project
January, 2001
Van/97/001
© Ombudsman of Vanuatu
Published here by University of the South Pacific, School of Law Web Site - www.vanuatu.usp.ac.fj






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