Public report into multiple breaches of the Leadership Code and other unlawful actions by Hon. Barak T. Sope – December 10, 1996 - Emalus Campus



Public report into multiple breaches of the Leadership Code and other unlawful actions by Hon. Barak T. Sope – December 10, 1996

96-14

This report deals with a number of unrelated complaints against the Hon. Barak Sope who was at all relevant times Minister of Finance.  The complaints deal with a number of matters, all occurring during 1996.

Duty exemptions:  While Minister of Finance, Mr. Sope exercised his discretion to over-rule and advisory committee and allow an exemption of duty for a vehicle belonging to The Hon W. Edgell.  The vehicle was the personal use of Mr. Edgell.  Mr. Sope also exercised discretion to grant a total exemption on liquor imported by the Hon. Willie, intended for sale to the public through the Numbawan Liquor Store, a business of Mr. Jimmy.  (See Public Report of August 20, 1996)  The grounds for granting the exemption was that ni-Vanuatu business should be supported.  The Ombudsman’s report notes that it is not in the interest to deprive the people of Vanuatu of the resources represented by duty on alcohol.  Further, the unfair competitive advantage given to Mr. Jimmy by the exemption was also noted.  The Hon. Maxime Korman applied, without specific grounds, for exemption of duty on an outboard motor.  The exemption was granted by Hon. Sope without reasons.  Two persons applied for a 50% exemption on vehicles for use in rural development were made.  Hon. Sope approved one and refused the other, acting inconsistently and against the advice of the advisory committee for reasons that were not apparent.  A prominent Vanuatu business, Laho Ltd applied for duty exemption on cigarettes that it had intended to export to Australia but which, due to a change in Australian regulations became impossible.  Laho decided to sell the cigarettes domestically.  Hon. Sope granted the duty exemption on the grounds that it was “in the best interest of this Government and Vanuatu to help private enterprise as much as possible”.  The exemption amounted to over 15, 000,000 vatu which the Ombudsman noted is over twice the annual budget of the Public Solicitor.

The duty exemptions granted by Mr. Sope breached the constitutional right to equal treatment under the law.

Attempt to purchase a 737 aircraft- 1996:  Hon. Sope, without authority and without the knowledge or consent of the Council of Ministers or Air Vanuatu authorized two Italians to negotiate the purchase of a Boeing 737 aircraft.  This was discovered and stopped by the Prime Minister after being alerted by Boeing before the sale could be completed.  Hon. Sope’s actions amounted to a breach of the Leadership Code.  These actions brought disrespect on Mr. Sope’s office and the Government.

Attempt to start a cruise line – 1996:  In 1996, Mr. Sope, without authority or the consent of the Council of Ministers, wrote to Tour Vanuatu Ltd indicating possible Government support of up to US$15,000,000 for the creation of a cruise line.  This was misleading and could have resulted in the expenditure of large sums of money based on the representation.  Mr. Sope’s actions brought disrespect on Mr. Sope’s office and the Government of Vanuatu.

Unlawful appointment of a private foreign firm, Consulting European Engineering, (CCE) to an exclusive mandate for developments:  Mr. Sope, acting without the consent of the Council of Ministers and therefore without authority to bind the Government, entered into an agreement granting to CCE the exclusive right to design and construct a 747 International Airport on Esprito Santo, hotels and resorts, hospitals dispensaries and secondary schools and infrastructure related to these.  The agreement stipulated that the Government of Vanuatu would be represented by Mr. Sope in relation to the ratification of the contract.  CCE was a newly incorporated company without any experience in development.  Mr. Sope had no authority to take such a position.

Unlawful appointment of agents of the Government – 1996:  Two Italians, associated with CCE and the purchase of the Boeing 737 mentioned above were personally appointed by Mr. Sope to represent Vanuatu.  Mr. Alessandro Parravicini, was to negotiate the development of the Santo Airport to International standards.  Mr. Jimmy Giovanni was to Act as investment consultant and investor representative of the Vanuatu Government.  This was done without the authority of the Council of Ministers and therefore was unlawful.  Further, there was no apparent budget set aside for these appointments or the appointees’ activities.  Disrespect was brought on the Government and Mr. Sope’s office.

Interference with National Bank of Vanuatu:  Mr. Sope, as Minister of Finance wrote to the National Bank of Vanuatu on March 29, 1996 requesting a bank draft be issued to Mr. Peter Swanson in the sum of A$50,000.  He pledged repayment of the money by the Government when the 1996 budget was passed.  Further advances were made to Mr. Swanson on a similar basis.  A total of 8,177, 530 vatu was due to be repaid on Mary 31, 1996.  Nothing was repaid at the time of the Ombudsman’s report although the budget had been passed.  Mr. Sope acted without the authority of the Council of Ministers in requesting the loans on behalf of the Government.  (see Public Report dated July 3, 1996)

Bank Guarantees US$100,000,000:  Mr. Sope became aware that the US$100,000,000 bank guarantees (dealt with in the Ombudsman’s Report of July 13, 1996) were being dealt with in the market.  Although he knew or should have known of the great concern about these guarantees in relation to the financial wellbeing of Vanuatu, he did not alert the Prime Minister or any member of Government, thereby putting his personal interests ahead of those of the Government.  (See Public Reports dated July 3, 1996, October 22, 1996 and November 28, 1996)

Cybank:  Mr. Sope’s involvement in the inception of Cybank is dealt with in the Ombudsman’s report of October 16, 1996.  The present report of December 10, 1996 reveals that Cybank is involved in internet pornography which Mr. Sope would or could have known by making inquiries or checking the Cybank website.

Issuance of dishonoured cheques:  Mr. Sope wrote several cheques totaling CFP3,662,202 to a supplier in New Caledonia of his business, the Talimoru Hotel.  These cheques were dishonoured.

Unlawful interference with Vanuatu Commodities Marketing Board (VCMB):  The VCMB holds a statutory monopoly on the export of Copra.  Despite this Mr. Sope, as Minister of Finance granted an export license to Carmille (Vanuatu) Ltd, (Carmille).  Carmille’s annual report shows a Hon Sato Kilman, MP for Malekula to be a beneficial owner of the company.  Mr. Kilman was an MPP party colleague of Mr. Sope.  Further, despite legislation giving VCMB Board exclusive authority to manage the VCMB, Mr. Sope directed the “loan” of copra worth US$712,500 by the VCMB to Carmille on inadequate security.  The loan was not repaid by the date of the Ombudsman’s report.  Mr. Sope also purported to accept the resignation of a senior employee of the VCMB and hire a replacement.  This was within the exclusive authority of the VCMB Board.  However, Mr. Sope who, as Minister of Finance was responsible for appointing a the Board of VCMB had not done so.

Non-payment of debt to “grass roots” Ni Vanuatu:  Mr. Sope purchased 10 bags of potatoes from a supplier in Tanna but failed to pay for the potatoes despite repeated attempts in person and in writing to collect the debt.

The report concludes that Mr. Sope has by reason of illegal conduct in 1996 cost Vanuatu a “fortune” and that he is a danger to the country.
Recommendations

·        That duty exemptions granted (as set out above) but not yet used be revoked.

·        That the Duties Consolidation Act be amended to eliminate absolute discretion on Minister to grant exemptions.

·        That all letters of agency signed by Mr. Sope without authority of the Government be revoked.

·        That the Prime Minister instruct Ministers, politicians and appointees not to interfere in matters beyond their authority.

·        That Mr. Sope not be considered for a Minsterial post or any other position of public responsibility.

·        That the VCMB and its Board not be subjected to political interference.
That criminal prosecution be considered against Mr. Sope for his involvment in the US$100,000,000 bank guarantee matter.

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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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