Caretaker Cabinet decision fuels speculation that $140million for the buy-back deal was intended for the April 17 NGE
THE DECISION to raise $140 million for the Government’s secret buy-back scheme of prime land jointly owned by LSL and RIPEL is fuelling speculation the money was intended for the 2024 joint elections.
Two factors influenced those who are asking questions.
First, Cabinet made the decision in February this year only two months before the joint elections on 17th April. Secondly, the Democratic Coalition Government for Advancement (DCGA) was already in a caretaker mode.
Both the Office of the Prime Minister and Cabinet and the Attorney General’s Chambers have been silent on the matter.
By law, government in caretaker mode can only perform certain duties.
Insiders told Solomon Star that the real intention of the ruling government was to spend the $140 million on the joint elections in its effort to return. A large number of MPs lost their seats.
It is understood there are two parts to an arrangement to “borrow” $140 million offshore.
The second part is that the government would borrow the equivalent amount from local State-Owned Enterprises in exchange for the sale of Treasury Bonds. Under the domestic arrangement, the Solomon Islands National Provident Fund (SINPF) would lend the government SBD80 million.
Solomon Power and Solomon Ports would each lend $30 million in exchange for the sale of Treasury Bonds. The plan fell apart, when the offshore donor decided against lending such a huge amount of money without any collateral.
The entire scheme came undone when the Board of one of the SOEs decided against lending money to the government.
One senior SOE official speaking on condition of anonymity confirmed that government approached it for $30 million from last year.
“We have heard nothing more since the Board decided against lending the money to such a scheme. But also too, we have a large building program and we do not have that kind of money to go around,” the spokesman said.
Meanwhile, Hall Chadwick continues to insist the government has entered into a commitment to go through with the DOCA, threatening to sue if the Solomon Islands Government decided an Alternative Arrangement
A DOCA is a binding arrangement between a company and its creditors governing how the company’s affairs will be dealt with, including claims arising on or before the commencement of administration.
It is a mechanism available to a company only when it is in administration.
An investigation by Solomon Star indicates that the Solomon Islands Government under the leadership of then Prime Minister Manasseh Sogavare never prepared nor submitted a DOCA, the document which outlines among other things, details of how much it is paying and to whom payment is due.
The vacuum appears to have been exploited at additional cost to the Solomon Islands’ taxpayers by as much as SBD5 million for engaging a lawyer to prepare the DOCA document known as NOVA Solomons.
Under pressure, the government this year requested the Investment Corporation of Solomon Islands (ICSI) to engage an Australian legal firm, King &Wood Mallesons [KWM] to do a due diligence, which appears to have found there was no written agreement between Hall Chadwick and the Solomon Islands government.
ICSI, it is understood would be the vehicle to acquire LSL and RIPEL land on Guadalcanal and Russell Islands. Hall Chadwick and King & Wood Mallesons are reportedly engaged in a tit-for-tat over the matter.
It is understood Hall Chadwick stands to lose up to AUD5 million if the Government decides an alternative approach.
Speculation are also rife that some local individuals linked to the DOCA stand to gain as much a 10 per cent in commission of the settlement cost.
Solomon Star approached a prominent lawyer in Honiara about the decision by government to approve the $140 million for the secret buy-back plan of LSL and RIPEL land on Guadalcanal and Russell Islands.
“What the government has done is undue process. When a government is in a caretaker mode, it can do certain things but not all the things,” the lawyer said.
Hall Chadwick Liquidators have not responded to a series of questions raised by Solomon Star last week.
By Alfred Sasako
