Public Report on the abuse of VNPF tendering procedures by VNPF Board and management – June 19, 1997 - Emalus Campus



Public Report on the abuse of VNPF tendering procedures by VNPF Board and management – June 19, 1997

97-05

In 1993, the Vanuatu National Provident Fund (VNPF) had a new building in Port Vila constructed to accommodate its offices.  The furniture in the previous offices of the VNPF was considered inadequate for the new offices.  Prior to the completion of the new building, the Chairman of the VNPF Board, Mr. Josias Toara and the General Manager of the VNPF, Mr. Samson Moli entered into negotiations with Snoopy Stationary and Office Supply (Snoopy) a Port Vila retailer for the purchase of furniture for the new VNPF building.  During these negotiations, Snoopy learned that the trade-in of existing VNPF furniture would be a factor in the awarding of a contract to purchase new furniture.  The negotiations with Snoopy took place without the approval of the Board and without any tendering process having been initiated.  Subsequently, it was agreed that furniture for the new building be purchased by tender.  On November 26, 1994, the VNPF published a tender notice in the Vanuatu Weekly.  The notice did not mention that the trade-in of the existing VNPF furniture was a factor which would be considered in offering the contract to supply furniture.

Several tender bids were submitted.  Snoopy’s bid of 16,395,500 vatu was the second highest bid.  Better Price, another Port Vila merchant submitted alternative bids, one for 12,507,716 and one for 10,975,840 vatu.  These were the two lowest bids submitted.  Better Price was also prepared to store and sell the existing furniture for a 5% commission.  On February 1995, the Board of VNPF considered the bids.  No decision was made pending a check with Better Price on the quality of the chairs included in its bid and whether it would accept the existing furniture on a trade-in basis.  These checks were never made despite the fact that the premises of Better Price were located approximately 2 minutes’ walk from the VNPF offices.

The Snoopy bid included an all expense paid trip for 2 senior officers of the VNPF to travel to Brisbane for approximately a week to inspect the furniture included in Snoopy’s bid.  This was later extended to 3 senior officers.  In March 1995 the General Manager, Mr. Moli, the Operations Manager, Mrs. Aiong, and the VNPF Board Chairman, Mr. Toara took this trip to Brisbane.  During the trip, Mr. Moli and Mr. Toara ordered furniture for their personal use in the sums of 39,940 vatu and 257,100 vatu respectively.  These purchases were financed by loans from the VNPF.

The contract to supply the furniture was awarded to Snoopy.  The Ombudsman found that the process for awarding the contract to Snoopy was not transparent.  It further concluded that the process had been deliberately abused to favour Snoopy and that this was done on the basis of personal interest and gain.  The VNPF Board should have had but lacked a standard written tendering procedure.  The Board members were in breach of their duties as trustees in allowing unnecessary expenditure of the members trust funds by not accepting the lowest bid and by allowing “housing” loans to the Chairman and General Manager to purchase furniture for their own personal use. The purchase of the furniture by the Chairman and General Manager was wrongful and was in breach of the Leadership Code.  The General Manager was found negligent and disobedient in not following the instructions of the Board to check with Better Price concerning their bid.  The Leadership Code was also breached by these men in personally gaining from their office by accepting the free trip to Australia.
Recommendations

·       That a standard set of financial regulations be put in place to govern the expenditure of VNPF money.

·       That the Board of VNPF comprise independent and technically competent directors.  This should take the form of a professional trustee corporation.

·       That the General Manager, Mr. Josias Moli and Mr. Samson Toara should not be appointed to a position where they would be responsible for handling public monies or making decisions about their use.

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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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