A LOCAL business man who lent more than $2 million to the cash-strapped Malaita Provincial government at 20 per interest rate claimed he did so to “save the province from sinking”.
Alick Butala, who is also a member of the provincial executive, stated this as the scandal surrounding the illegal borrowing the provincial executive has been entertaining since last year,deepens.
Records show Mr Butala has been lending money to the provincial executive since the formation of the current Peter Ramohia government early last year.
According to records the Solomon Star has cited, his latest lending was an amount of $2 million, which was made on 25 July 2016.
“…yes, I’ve lend out money to the province following requests from the executive,” Mr Butala, who operates a highly successful motel business in Honiara, told the Solomon Star on Friday.
“These are monies from my business, but because the province does not have money, the executive requested to borrow from me.
“If I don’t lend them the money, the province will sink down.
“It was money the province borrowed from me that enabled it to meet half of the ward grants to the 33 provincial members and staged a celebration to mark its second appointed day last month.
“I have lent out the money in good faith and because it is money from my business, I have to charge interest on it,” Mr Butala said.
He confirmed an agreement he signed with the provincial executive spells out the province paying 20 per cent interest rates on the borrowing.
According to other sources, this 20 per cent is calculated on a fortnightly basis, while interest on the $2 million he lent out in July is calculated on quarterly basis.
Others the provincial government borrowed money from this year are:
* 6/04/2016 – Geohen Retailing: $50,000
* 6/04/2016 – L.F.S Store: $20,000
* 01/06/2016 – Steward Mani: $20,000
* 01/06/2016 – John Laisy: $20,000
* 29/06/2016 – Aligegeo School: $60,000
* 30/06/2016 – John Laisy: $20,000
* Douglas Arui - $200,000
These borrowings also attracted 20 per cent interests, which are calculated on a fortnightly basis.
According to records, Mr Butala was the biggest lender to the province.
This year alone, he lent out more than $2.6 million.
Ironically, Aligegeo Provincial Secondary School, which faces an imminent closure due to its current water crisis, had seen it fit to lend out $60,000 to the province.
Under the Provincial Government Act, these borrowings are illegal.
Provinces, according to the Act, can only borrow money from the national government or an approved lending institution.
Despite widespread calls for Premier Peter Ramohia to explain the borrowings, he has not done so.
Provincial government insiders spoken to said Mr Ramohia has no explanation to offer other than to say the province has no money.
“He did what he did because he has no other options.
“The only way to keep the province going is to borrow from individuals. He knew it’s illegal but what else can he do?” an insider said.
Meanwhile, it has been speculated that a motion of no-confidence against Mr Ramohia is on its way.
The Provincial Assembly is expected to hold its meeting this month.
By LESLEY SANGA