AG’s response to George Satu’s allegations - Solomon Star News

AG’s response to George Satu’s allegations

15 August 2017

I have read the articles by George Satu (“Satu”) published in the Solomon Star on Thursday 10th and Friday 11th August 2017 in which he has made certain allegations against the PS and the Minister for Communication & Aviation (“MCA”) as well as myself and my wife and son.

Those articles have prompted a lot of adverse and defamatory comments on facebook against me and my family. Even lawyers who should have known about the principles of natural justice (hear the other side) have been quick to jump in with their conclusions without “hearing the other side”. As Satu rightly said, every coin has two sides. As such, I am obliged to explain “my side of the coin”. I will respond only to those allegations that relate to me and my family.

1.               Civil Aviation Authority of Solomon Islands (“CAASI”).

To put readers in the right perspective, let me provide brief explanations about CAASI, the Aviation Fund, and, my position as chairman of CAASI.  CAASI has 3 Board members. They are the Attorney General (“AG”) who is also the chairman of CAASI by virtue of section 9(1)(a) of the Civil Aviation Act 2008 (the “Act”) (ex officio member); the PS/Ministry of Communication and Aviation (“PS”) by virtue of section 9(1)(b) of the Act (ex officio member); and the Director of the PNG Civil Aviation Authority (“PNG Director”) who was appointed by the Minister under section 9(1)(c) of the Act (Ministerial appointment). Satu was appointed by the then Minister (Commins Mewa) to act as Director of CAASI in April 2015. The acting appointment was backdated to 1st April 2013, which was the date Satu began performing the duties of the Director. When I got appointed as AG on 29 June 2015, no proper handover notes were given to me by the former Chairman. All he said was that I am the chairman of CAASI and a signatory to the CAASI Aviation Special Fund (“Aviation Fund”) and that the Aviation Fund had approximately $7million in it at that time. No one explained to me what the Fund is for or how it is to be used. No one told me that the use of the Aviation Fund is governed by law. All I knew at that time was the money in the Aviation Fund comes from fees collected by Australia from planes that travel through the Solomon Islands Air Space and that CAASI has control over the Fund. The amount paid by Australia into the Aviation Fund each year (after deducting their commission) is approximately $8 million (Solomon Dollars). I came in as AG and Chairman at a time when the DCC Government had just been formed and therefore I got bogged down with Government business and had no time to acquaint myself more with CAASI. I relied solely on the guidance and advice from Satu in regards to CAASI matters, especially in relation to the use of the Aviation Fund. I had no reason to suspect that Satu was doing things illegally or in any improper manner. I took it for granted that he, being the Director for the past years, was a genuine person and would not mislead me into doing things illegal. Also, I had no reason to disturb the status quo. I guess this is normal attitude by those taking over new positions in any company, organisation or department. On hind sight, I was wrong. I trusted Satu too much.

2.               Use of the Aviation Fund.

It was when questions were raised in Parliament about MPs and their relatives being awarded contracts by MCA and CAASI to do cleaning work around Henderson Airport and being paid out of the Aviation Fund that I decided to research into the law governing the Aviation Fund. In my research, I found as follows:- that the current Civil Aviation Act 2008, which is the main Act governing civil aviation matters in the country, had said nothing about the Aviation Fund; that there was an amendment to the Civil Aviation Act 2008 by the Civil Aviation (Amendment) Act 2009 (“2009 Amendment”) which had revived section 24A to 24C of the Civil Aviation (Amendment) Act 2005 (“2005 Amendment”). Section 24A to 24C were the provisions which established the Aviation Fund, provided for the control and management of the Fund by the MCA; laid down the purposes for which the Fund were to be used; and, had provided that the source of the Aviation Fund to be the fees payable by aircrafts entering the upper airspace of Solomon Islands. Unfortunately, when the Civil Aviation Act 2008 (“2008 Act”) was passed, the 2005 Amendment was not saved thereby necessitating the enactment of the 2009 Amendment to revive sections 24A to 24C. Because the Aviation Fund is a Special Fund, I had also looked at the Public Finance and Management Act 2013 (“PFM Act”) which requires budgets for the use of Special Funds (including the Aviation Fund) be approved by the Minister of Finance and to be laid before Parliament. The PFM Act also imposes on Accountable Officers the obligation to be accountable for the use of funds forming part of Special Funds. In the case of the Aviation Fund, the Director of Civil Aviation under clause 10 of Schedule 1 to the 2008 Act has full control and oversight of the management and operations of CAASI. I therefore concluded that Satu was the Accountable Officer for the Aviation Fund and that all PVs and cheques must be authorised and signed by him. The first issue I raised with Satu was how was it that the Aviation Fund was being used for payment of Board allowances and fees, etc, in the light of the provisions of sections 24A to 24C. He produced to me a Civil Aviation instrument made by a former Minister for MCA, Hon. Varian Lonamei, (“Lonamei Instrument”) which has prescribed the kind of allowances and the rate of allowances payable to the members of the CAASI Board. I raised the question whether the instrument was valid in the light of the 2009 Amendment. Satu’s response was the SIG had never provided any budget for CAASI operations “for the last ten years”; that CAASI had been using the Aviation Fund to meet its own expenses, including the payment of Board allowances as provided for under the Lonamei Instrument; that there were two AGs who were there before me and they had been receiving the allowances and had never questioned the validity of the instrument; and, that the instrument was made during the tenure of one of the two AGs. I was not 100% satisfied with the answer, but I stopped questioning him again until the CAASI Board Meeting in Brisbane in January 2017 during which I again tried to raise the issue of the use of the Aviation Fund so the other Board members could express their views. Again, Satu gave us the same response he gave me earlier. We then suggested that Satu recruit an accountant to control the CAASI finance and to assist in producing monthly financial reports to the CAASI Board. Satu disagreed. He said he could handle the matter himself as he had been doing it “for the last ten years”. We were not satisfied. We then suggested that if he thought the recruitment of an accountant is not necessary at least he could enlist the services of MCA’s Financial Controller to assist him with preparation of budgets for submission to the Minister of Finance and to keep the accounting records of CAASI as well as provide financial reports to CAASI. Again, Satu dismissed the suggestion saying he was able to do it himself. We stopped pressing him on the point. The minutes of that Board Meeting should show those discussions. I concluded that Satu was used to having a free hand in spending the Aviation Fund and would not allow anything that would disturb him using the Fund the way he had been using it “for the last ten years”. I made up my mind to address the matter my way as chairman of the CAASI Board and to slowly make changes especially as to how the Aviation Fund is being managed and used. After that Brisbane meeting, I travelled to Sydney for a church conference and then returned to Honiara a week later. On my return, I found a copy of the Audit Report waiting for me. After reading the Report, I became more determined to start taking action. I made the decision that I would not sign anymore Aviation Fund cheques; that there would be no more Board meetings in Brisbane; that payment of monthly and sitting allowances to CAASI Board members would not be paid except for the sitting allowance payable to the PNG Director if there was to be a Board Meeting; that Satu has to be dealt with if we want to make improvements to the management of CAASI; and that the use of the Aviation Fund will have to be suspended until the recommendations in the Audit Report are sorted out. That decision still stands today. Despite the very clear findings in the Audit Report (which are based on documentary evidence), it is clear from Satu’s article that he still does not accept the findings in the Audit Report and he still maintains that he did nothing wrong.

3.               The PS/Ministry of Communication & Aviation (“MCA”) and AG lied to Cabinet that there was no funds in the Aviation Fund.

Satu said that I and the PS/MCA had lied to Cabinet that the Aviation Fund had no money and that the Director had not prepared a Budget. We have not lied to the Cabinet. It is Satu who is now lying to the public. First, the allegation that we told Cabinet that the Aviation Fund had no money is false. We never told Cabinet that there were no funds in the Aviation Fund. What we told Cabinet was that we had stopped the use of the Aviation Fund because of illegal use of the Fund as highlighted in the Audit Report. We then asked Cabinet to approve a contingency warrant for $6 million to enable CAASI to continue functioning until the problems highlighted in the Report are sorted out and measures are put in place for transparency and accountability purposes. Cabinet approved our request for $6 million but directed that the money remain under the control of the PS/ MCA. Second, the allegation that we told Cabinet that the Director had not prepared a Budget is not accurate. What we told Cabinet is that no CAASI budget had ever been approved by the Minister of Finance and laid before Parliament as required by the PFM Act and that any further use of the Aviation Fund without such approved Budget would be illegal. Satu did not agree with our view. In his view, his continued use of the Fund even without a budget being approved by the Minister and Parliament is perfectly okay because that’s how CAASI had been doing things “for the last ten years”. I have been reliably informed that while our Cabinet Paper was with the Cabinet office - waiting to be presented - Satu wrote a letter to the Cabinet office requesting Cabinet office not to present the Paper to Cabinet. He did not even copy the letter to us. He wanted to do it secretly. Luckily, Cabinet Office refused his request.


4.               Politically motivated to get rid of the Acting Director.

Satu said that his termination was politically motivated by me and the PS/MCA to get rid of him as acting Director. Again, Satu is lying to the public. We were not politically motivated as claimed. The findings in the Audit Report were the main reasons for Satu’s termination. Satu was merely acting in the Director’s position. He is not a substantive holder of that position. Therefore, his acting appointment can be terminated at anytime even without notice. That’s what happened.

5.               Chairman, Apaniai, got upset with Acting Director for sending him operational issues.

Mr. Satu claimed that I got upset with him for sending me operational matters. He was right. I got upset with him because of his immature and disrespectful behaviour. Here is the story. After I received the Auditor’s Report, I instructed Satu that from now on I would not be signing any Aviation Fund cheques, especially any cheque which is payable to me as Chairman. Satu had complied with my instructions but what I did not know was he had been going direct to the PS/Finance and the Accountant General (who are also signatories to the Aviation Fund Account) to sign cheques. I only became aware of that when I got a message that Satu had seen the PS/Finance to sign a Aviation Fund cheque for $30,000.00 payable to his (Satu’s) own daughter to travel to Munda Airport to carry out certain aviation tasks. I sent a message to the PS not to sign the cheque, the reasons being that, first, I am not aware what aviation qualifications the daughter had to justify her going to Munda to perform aviation tasks and what tasks was she going to perform. Second, my understanding is that the daughter was not a formal employee of CAASI because CAASI employees were still being appointed by Public Service Commission (“PSC”) and that the PSC had refused to appoint the daughter as an employee of CAASI. I therefore found it strange that Satu should be engaging his own daughter to carry out aviation tasks at Munda when she was not an employee of CAASI, let alone paying her $30,000.00. I have also just learned that Satu had also been sending his daughter overseas at CAASI expense on civil aviation courses despite knowing that his daughter was not an employee of CAASI. Unfortunately, my instructions to the PS Finance not to sign the cheque were late. The PS had already signed the cheque and given it to Satu. On learning about that, I immediately wrote to the ANZ Bank (on 25 May 2017) instructing ANZ not to honour any cheque payable out of the Aviation Fund with immediate effect until further instructions from me. ANZ accepted my instructions. The “stop payment” instructions commenced on 25 May and are still in force until now. A few days later (8 June 2017), Satu found out that I had instructed ANZ to put a stop to any payment out of the Aviation Fund. His reaction was swift. He sent me an email threatening to close down CAASI. He also accused me and the PS/MCA of micro-managing CAASI. He told me that all operational CAASI tasks would be forwarded to me for attention and action because he had no money to operate due to my closure of the Aviation Fund account. I responded by requesting him to continue carrying out his duties as Director and that if he needed money he should contact the PS/MCA who has custody of the $6 million approved by Cabinet. He did not accept my explanation. That same day (8 June 2017), he sent me a couple of administrative matters for my attention. I replied that those matters were administrative matters which he should attend to and if he needed funds he should consult the PS/MCA. He refused to listen. The following day or so he again sent me a couple of overseas invoices for my approval. I told him I had no idea what the invoices were about and that he was in a better position than me to verify the invoices and to deal with them. He replied that he would keep sending these operational matters to me because I had stopped the Aviation Fund account. I lost my cool. I told him that he was being disrespectful and warned him that he was creating a bad relationship between him as Director and me as chairman and that if he continued with that behaviour, one of us would have to go. It was then that he stopped sending me those operational matters.

6.               “YOU ARE NOT A LAWYER”.

Yes, I told Mr. Satu that he is not a lawyer and should accept my legal advice whenever I expressed one in relation to CAASI issues. Satu is an arrogant person. Whenever I expressed a legal view in regards to CAASI matters which does not align with his views, he would dispute my opinion. The first legal issue we argued about was the payment of Board sitting allowances. He brought a cheque to me to sign for Board allowances for the Brisbane meeting in January 2017. His style of making me sign cheques was strange. He would come in (unexpectedly on many occasions); sits in front of me and take out the cheques and request me to sign while he sits there until I sign. Most of the time he would also bring a copy of the PV while on some occasions there was no PV. In January this year, he brought me some cheques to sign for the January Board meeting in Brisbane. He sat there waiting for me to sign. I signed all the cheques to allow him to leave. Those cheques included two cheques payable to himself as Director and another for the Board Secretary. After he left, I realised that I should not have signed those two cheques. I emailed him and told him not to cash the two cheques. I told him that he and the Board Secretary were not Board members and were not entitled to Board sitting allowances. He argued that according to the Lonamei instrument, he and the Secretary were Ex Officio Board members and were entitled to Board sitting allowances. I explained to him what ex officio meant; that the AG and the PS/MCA were the only ex officio members of the Board. He refused to accept my advice. Our arguments became heated again during our email exchanges regarding the use of the Aviation Fund after I issued the “stop payment” instructions to ANZ in May this year. I told him that the use of the Aviation Fund is illegal because no CAASI budget had been approved by the Minister of Finance and laid before Parliament as required under the PFM Act 2013 and that the Fund must be used only for the purposes prescribed in the 2009 Amendment. He refused to accept my advice and continued to argue saying they have been doing it “for the last ten years”. I told him that they have been doing it illegally “for the last ten years” and now is the time to do things legally. He still would not accept my view. It was then that I told him that he is not a lawyer and that he is bound by my legal opinion and therefore he better accept my legal advice.


7.               AG staff are scared and started moving away.

Satu said that my style of management is making the AG staff scared and are starting to move away. That is simply a lie. Apart from one senior officer who has left to join the PM’s office, no other officer has resigned from the AG Chambers. However, if any of my officers want to resign because he or she has found “greener grass” somewhere, I would not stop him or her. Right now, I am not aware of any officer who wants to leave.

8.         A company owned by the AG’s wife supplied toilet paper and other items to the Airport Management.

The company that sold toilet paper to the Airport Management referred to by Satu was First Fruit Company Limited. My wife is only one of the shareholders. There are other shareholders. My wife does not own the company by herself as Satu appears to have suggested. The company was registered in 2011. Its company registration number is 2114645. It was formed by a group consisting mostly of women from our church who decided to band together and venture into business. We try to encourage women to rise in business and it is good to see them doing something. In compliance with the law, the company has a TIN number 1036703 for the tax purposes and has a Honiara City Council Wholesale & Retail Business Registration (Licence) number 20114645 which is current. For my part, I had declared my wife’s shareholding in the company to the LCC as required by law. The company has been doing business since 2012 in paper products. It started off with toilet paper products. The company has an agent in Malaysia and orders its products from Malaysia. Its initial customers then included SINPF, Rock Haven Motel, St. Agnes Hostel and a few other shops in Honiara. Thank you all for supporting this local indigenous company. In 2015, the company decided to venture into the Jumbo (very large) size toilet paper. The reason I am giving out the above information is to clear the air that First Fruit Company is not a “con” company nor is it a company which has just recently been formed for the purpose of supplying toilet paper to the Airport management. It is a genuine company which has existed since 2011. First Fruit’s selling of toilet paper to the Airport Management is not similar to the case of Gibsons Communication (a business found by the Audit Report as owned by Satu’s wife (or son – for the name of Satu’s son is Gibson)) to which Satu himself, the Acting Director of CAASI, has given Cleaning and Printing contracts worth $301,994.40 in 2014 without going through the necessary SIG procurement processes. I am reliably informed that Gibsons Communication has no TIN number, is not registered with CompanyHaus, is not on the CompanyHaus website, and has no HCC Business Licence. Yet Satu has given to Gibsons Communication contracts worth $301,994.40 (paid for by CAASI from the Aviation Fund which was under his control) and then complains about First Fruit being allowed to sell to the Airport Management a few cartons of toilet paper worth less than $10,000.00. First Fruit is a local company whose shareholders are all indigenous Solomon Islanders. Are they not entitled to get even $10,000.00 out of the Government’s $4 billion dollar Budget? After all, this is not a free handout to the company. It was a business transaction. However, the point is that Satu’s article, which appears to suggest that the company is solely owned by my wife, is a lie and one of the many lies about me that can be found in his articles.

9.         Use of power and influence to enter into contract.

Satu’s article stated that the company had sold toilet paper and other items to the Airport Management. Again the company that sold toilet papers to the Airport Management was First Fruit Company Ltd. The company had sold only jumbo roll toilet papers. It did not sell any other item to the Airport Management. I did not influence the Airport Management to buy toilet rolls from the company as suggested by Satu. CAASI, of which I am chairman, is not part of the Airport Management. I have no influence over the Airport Management and I take no part in the Airport Management’s decision-making process. The Airport Management is the Operator of the Henderson Airport. CAASI is the Regulator of airports. CAASI’s role as Regulator is to ensure that Airport Operators comply with relevant laws and the ICAO (International Civil Aviation Organisation) Rules governing the operation and management of airports. As such, CAASI has no role in the internal management affairs of the Henderson Airport Management and has no influence over the Airport Management team. I did not initiate the sale of toilet paper to the Airport Management. I was in my office when a lady from the Airport Management rang up and said that they had ran out of toilet paper and wanted toilet papers immediately for the airport toilets. She said she had raised the concern about the immediate need for toilet papers with the PS who told her that I was involved with a company that sells jumbo toilet papers. She said the PS asked her to find out if that company still have jumbo toilet rolls in stock. I told the lady that the company has stock available and further asked her how many cartons she wanted. She said any amount worth $10,000.00 or less. I told her that would be 9 cartons. She said she wanted them delivered as soon as possible. I told her I would pass her request to the right people. I contacted the chairperson of the company and the 9 cartons were delivered later that day. It was a one-off transaction to address an immediate need and it happened in around June or July 2016. The company did not sign any contract with the Airport Management for the supply, or continuous supply, of toilet papers nor did it continued to supply the Airport Management with toilet papers since that sale in 2016. Apart from the jumbo toilet papers, the company did not sell any other items to the Airport Management as alleged by Satu. The Airport Management can confirm all that I am saying. So, Satu’s allegation that I used my influence and power to sell toilet paper to the Airport Management and that the company had signed a contract to sell toilet paper to the Airport Management is another lie.

11.       Trip to Taiwan.

Satu said I accompanied the PS and Minister for MCA to Taiwan to sign a Air Services Agreement (“ASA”) with Taiwan in May this year. Yes, I was on that trip, but the trip was in June – not May. The Post Master of SI Postal Corporation was also on the team because the team was also going to visit the Taiwanese postal authority to see how it works. I was on annual leave at the time so I did not mind travelling to Taiwan. Taiwan met my travel expenses (airfare, living allowance, accommodation, meals, etc). So Satu had lied when he said we waisted public money. The main purpose for my travel with the team was to take part in the signing of the ASA. However, while in Taiwan I had the opportunity to also meet with the Justice Minister and his senior officials and discussed matter of mutual interest, eg, Judicial e-filing system, Anti-money laundering issues, etc. Furthermore, it was not me who asked to be on the team. According to the Taiwane embassy officials who arranged my trip, it was the PM who suggested that I be included on the team because I am the chairman of CAASI. Satu said that it was not necessary for me to travel and instead reps from MF&ET, CAASI and Solomon Airlines should have been part of the team. Satu is contradicting himself. For instance, in February 2016, an ASA was signed in Singapore between Singapore and Solomon Islands. I vetted the ASA and said ok to it before the Solomon Island team left for Singapore. I was part of the team which consisted of the current Minister and PS as well as Satu as Director of CAASI. No rep from MFA&ET and Solomon Airline was on the team. No request was made by Satu for the team to include reps from MFA&ET and Solomon Airlines. My inclusion on the team was on the invitation of none other than Satu himself. After all, it was a trip to sign an agreement so why should a legal officer be not on the team. In any event, it was good that I was on the team to Singapore because just before the signing, Singapore was a bit hesitant to sign the ASA because of some representational technicalities on the part of the Solomon Islands delegation. Singapore only signed because I assured them that it was legally ok for them to sign despite their concern. That’s one example of why it is important to have legal representation on board when teams go out to negotiate or deal with agreements. It is ironic for Satu to now say that I should not be on the team to Taiwan for the signing of the ASA between Taiwan and Solomon Islands. Satu further alleged that I know nothing about civil aviation and therefore I should not be on the team to Taiwan. This is another indication of Satu’s mindset that he knows better than everyone else in all things. For my part, I say that ASAs are simply agreements between states that deal primarily with granting of air navigation freedom rights between the parties to the agreement. I have attended an Air Navigation Workshop in Singapore in 2016, along with Satu himself, during which these freedom rights were one of the main subjects covered in detail at the workshop.  As a result of that workshop I had gained more detailed knowledge about air navigation freedom rights and I believe I can provide competent advice regarding ASAs.

12.       Travel to Sydney and accommodation for my wife and son during the CAASI Board meeting in Brisbane in January 2017.

This Board meeting occurred before I received a copy of the Audit Report. It has been normal practice for Satu to arrange CAASI Board meetings in Brisbane at the end of each year – usually in late November or early December. For 2016, the meeting was supposed to have been held in December. However, that was not possible for me because the Parliament Budget meeting started on 5th December 2016 and went on until a week or so before Christmas. Our PNG Director was also not available in December. We therefore agreed that January 2017 would be a convenient month for all of us to have the meeting. By then I and my wife and son had already paid our registration fees for a church conference which would take place in Sydney starting Thursday 12th to Saturday 14th January 2017. I therefore suggested that, since I will be attending the conference in Sydney starting on Thursday 14th January, the Board travel to Brisbane on Sunday 8th January, meet on Monday 9th or Tuesday 10th then we all check out on Wednesday 11th for the Board members to return to Solomon Island and PNG while I and family travel on to Sydney for the church conference. Everybody agreed to my suggestion as the most convenient arrangement for us all. There was no manipulation involved. I do not understand why Satu is now complaining since he also agreed to the suggestion. There was no manipulation involved. We all agreed to the arrangement. If Satu thought that the arrangement was not proper, he should have said it and I would have agreed that they proceed with the meeting on another date in January and even if held on another date, CAASI would still have incurred the same expense. In regards to the accommodation, yes, my wife and son stayed with me at the same executive room that Satu normally booked for every Brisbane meeting. The hotel did not charge CAASI was any extra cost as a result of my wife and son staying with me in that room. I hope Satu is not suggesting that my wife and son stayed somewhere else while I stayed at the hotel. After all, it did not cost CAASI one extra cent when my wife and son to stayed with me in that hotel room.

13.       Action by the AG (in closing down the Aviation Fund account) was illegal.

Satu said that my action in closing down (stopping) the Aviation Fund account with ANZ was illegal. The Aviation Fund was under the control of CAASI and all CAASI Board members agreed with my decision to stop the use of the Aviation Fund. Only Satu (who is not a Board Member) disagreed. Of course, we now know why he opposed the closing of the account. This is another example of Satu’s mindset. Any action that that is not in line with his thinking is always illegal.

14.       Call for me to be suspended and investigated.

Satu is a wounded man and is very bitter against those who have brought him down. He has tailored his articles in a way that appears very damning against those of us who are responsible for his demise. People have read “his side of the coin” and have been quick in passing judgement on us without hearing “our side of the coin”. I have presented you with “my side of the coin”. Now you can pass your judgment on me.

Thank you.

By James Apaniai
AG & Chairman/CAASI