Public Report on the improper sale of Government houses by the office of the Prime Minister under the former Prime Minister Maxime Carlot Korman - March 3, 1998 - Emalus Campus



Public Report on the improper sale of Government houses by the office of the Prime Minister under the former Prime Minister Maxime Carlot Korman - March 3, 1998

98-07

In 1994, the Council of Ministers decided to sell 71 residential properties belonging to the Republic of Vanuatu.  These properties had been acquired from the former colonial powers at the time of independence.  The sale of the properties was handled by the office of the Prime Minister.  Financial regulations governing the sale of Government property were not followed.  No tender board or board of survey was established.  The properties were valued by Mr. Emil Olsen, of the Department of Survey.  Mr. Olsen had no qualifications in the valuation of real estate but had been employed by the Government in that capacity for some years.

The Ombudsman found that the properties were valued by Mr. Olsen at between 200 and 800 vatu per square metre, a fraction of their real market value. In respect of certain properties, Mr. Olsen applied 1989 figures which were lower than the 1993 figures applied to the rest of the properties.  The National Housing Corporation (NHC) which owns a number of residential properties used 1,375 vatu per square metre for properties in less desirable locations than most of the 71 properties in question.  A private valuation of the land only (excluding the values of the houses) was commissioned by the Ombudsman.  It revealed values even higher than the NHC rate and several times the values of the land and houses reached by Mr. Olsen.  In one case, a person (a secretary in the Prime Ministerís Office) who had been allocated a house complained that Mr. Olsenís value was too high and it was reduced by 4.5 million vatu.  The total amount by which the properties were undervalued using the purchase price as determined by Mr. Olsen compared with a private valuation of the land only was 136,216,890 vatu.

The Prime Minister selected those eligible to purchase the properties.  These included himself, his cabinet, selected party supporters, selected heads of departments and public servants.  Also, the Prime Minister verbally promised to specific Department Heads in the Public Service who were involved in the sales that they would be able to purchase houses, in return for their help in expediting the sales.  Mr. Olsen was one of these individuals along with Mr. Edwin Arthur, of the Department of Survey, Mr. Roger Tary, of the Department of Lands and Mr Reuben Tamata of the Department of Lands Records.  These persons breached the provisions of the Staff Service Manual in misusing their administrative powers for personal favour, and in doing so, also breached the provisions of the Leadership Code.  Mr. Olsenís role in the valuation of the properties amounted to corruption.

Persons who were occupying the houses and paying rent to the Government were not given an opportunity to purchase the houses and were forced to vacate the properties in favour of the new owners.  The Principal Lands Officer, Michael Mangawai segregated the files relating to the sale of the properties.  In cases where monies were not paid for the houses, the Land Office took no steps to obtain them in accordance with its responsibilities.  No reports were forwarded to the Ministry of Finance in relation to the outstanding debts.  Employees in the Lands Office, Messrs. Mangwai, Malvanu and Mrs. Tensley breached the Finance Regulations and engaged in maladministration in relation to the transfers and the non payment for some of the properties.  The former Director of Lands, Roger Tary assisted those who became owners of the properties without paying.  He engaged in misappropriation when he processed his own transfer without paying.

The Ombudsman found that the Prime Minister and the Council of Ministers were in breach of the Leadership Code of the Constitution in that they acted in a clear conflict of interest in relation to the sale of houses and engaged in a discriminatory scheme.  They should have obtained advice from the Attorney General before the sales but failed to do so.  The method of selling the land was without any legal basis.  The former Minister of Lands, Paul Telukluk and former Director of Lands Roger Tary were in breach of the Leadership Code after receiving and ignoring legal advice (which was inconsistent with the scheme) from the Attorney General part way through the sales.
Recommendations

∑       That the houses be returned to the Government or their true 1993 value be paid.

∑       That Mr. Maxime Carlot Korman not be considered for Ministerial post in any future Government or placed in any position where public assets are at stake.

∑       That Mr. Paul Telukluk not be considered for ministerial post in any future Government or placed in any position where public assets are at stake.

∑       That Mr. Jack Kallon (Secretary in the Prime Ministers Office) not be considered for the position of Political Secretary in future Government or to a post of public responsibility.

∑       That Mr. Tary not be accepted as director of any Government department or Government statutory body.

∑       That Mr. Mangawai face a Public Service Disciplinary Hearing within 30 days.

∑       That Mr. Olsen be suspended by the Public Service Commission and face a Public Service Disciplinary Hearing within 30 days.

∑       That the Lands Department recruit and train qualified valuers.

∑       That Mr. Tamata and Mr Arthur be suspended by the Public Service Commission and face a Public Service Disciplinary Hearing within 30 days.

∑       That Mrs. Tensley and Mr. Arthur to obtain copies of Government Financial Regulations and that steps be taken to recover all outstanding debts in relation to the sale of houses.

∑       That the Council of Ministers that made the decision to sell the properties not be chosen for high positions of responsibility.

∑       That the Public Prosecutor and Police consider criminal charges against Mr. Tary for misappropriation.

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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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