Fiji Independent Commission Against Corruption v Bakani [2014] FJHC 567; HAC026.2009 (1 August 2014)

IN THE HIGH COURT OF FIJI
AT SUVA
CRIMINAL JURISDICTION
HIGH COURT CRIMINAL CASE NO: HAC 026 of 2009

BETWEEN:

FIJI INDEPENDENT COMMISSION AGAINST CORRUPTION
PROSECUTION

AND:

1. KALIVATI BAKANI
2. KENI DAKUIDREKETI

ACCUSED PERSONS

Counsel: Mr. Blanchflower M, Ms. Yang E.
and Ms. Puleiwai F for FICAC
Mr. Keene B QC, Ms. Cole Mand Mr. Clarke W for the Accused

Dates of Hearing: 23rd June 2014 – 28th July 2014
Date of Summing Up: 1st August 2014

SUMMING UP

1. ROLE OF THE JUDGE AND ASSESSORS
   

1. Madam Assessor and Gentlemen Assessors,

You would recall that this trial formally commenced in your presence on 25th June 2014. You have been witnessing the evidence, both oral and documentary, placed before you by the prosecution and defence along with their closing addresses for the last 5 weeks. It won't make you surprised if I say that the prosecution has tendered 270 documents, whilst defence submitted 37 documents in support of their respective arguments. The tape recorded court proceedings run into over 1049 type written pages. This background will no doubt demonstrate the exact parameters of the task that you are entrusted with. As I have already indicated to you, after my Summing Up, you will be asked to retire for your deliberations. Hence, at this last stage, I invite you panel of assessors, to extend the same co-operation and attentiveness you showed throughout this lengthy trial.

2. First and foremost, I would like to emphasis, Madam Assessor and Gentlemen assessors that you were chosen to be the judges of facts in this trial, as already indicated to you by the learned counsel, because you represent a live cross section of the pulse of this society. Your common sense and the experience in day to day life must come into operation when you deliberate this case. The common sense and the life experiences have to be utilized in deciding or assessing the truthfulness or honesty of witnesses and their credibility. In that task, you have the liberty to accept the whole version of a testimony of a witness or a portion of that testimony and reject the rest. Moreover, you can even refuse to accept the whole testimony of a witness.

3. You have to decide the credibility and truthfulness of each and every witness. In doing so, you can rely on not only what you heard, but what you saw as well. The way witnesses offered evidence from the witness box, how they faced the cross examination, were they firm on their stand or evasive, can be helpful in determining their demeanour and in turn to judge their credibility as well. In furtherance to assessing the trustworthiness of the witnesses, in this instance, you have to pay a considerable amount of attention to the set of documents tendered to court by the prosecution. This is a case basically depended on such documents.Apart from assessing the truthfulness and the credibility of the witnesses, you are supposed to follow the same procedure in respect of the documents as well.
   

4. The other most important factor is, when deliberating the matter before hand, you have to rely only on the evidence tendered in court, either oral or documentary, and nothing else. It is a fact that this trial attracted a considerable amount of media attention. You may have read or seen something regarding this case in media or elsewhere before or during the trial. You should simply disregard what you saw or heard from the printed or electronic media regarding this case or any related incidents alleged to have taken place in NLTB or VDCL or PCX before the trial. Any views or opinions expressed by your friends, family members, relatives or anybody, is not evidence. You, Madam Assessor and Gentlemen assessors, have to draw your own conclusions based on the evidence presented in court. It is your duty to apply the law and the legal principles, which I am going to explain to you in a short while, in respect of the evidence you have heard and saw within the four corners of this court house.

5. Let us now identify more precisely our roles to be performed at this last stage. You had the privilege of hearing all the evidence led in this trial. You have heard both the Learned Prosecutor and the Learned Defence Counsel making their closing addresses. The final step before you retire for your deliberations is the Summing Up from me. In my Summing Up, I will direct you on matters of Law, which you must accept as correct and act upon it. You must apply the law as I direct you, as throughout the trial, "the law" has been my area of responsibility.

6. In as much as I am entrusted with the responsibility of the area of "Law", Madam assessor and Gentleman assessors, you hold the responsibility of the "facts". That is how you become the Judges or masters of the facts. It is you who should decide whose evidence is to be relied upon, what evidence is to be accepted, what weight is to put on a particular piece of evidence, etc.

7. Therefore, if I express any particular view or opinion or if I appear to do so about the facts of this case in my summing up it is solely a matter for you to decide whether or not to accept what I say. You can either agree with my contention or ignore the same and formulate your own opinions. In the same vein, Counsel for the Prosecution and Defence have already addressed you on the facts, but once again, you need not adopt their views of the facts, unless you do agree with their contention and analysis. The Counsel have a right to make such comments when performing their roles and duties. If you strongly think that those comments and analysis do appeal to your common sense and judgment, you are free to use them as you see fit. But, when I direct you on the Law and legal principles, you have to accept that as true and accurate and should act upon that. In the same vein, I might overlook or omit certain evidence, which in your analysis, is important. You can formulate your own opinions by giving due consideration to any piece of evidence as you think necessary.

8. You will be given the opportunity to retire for your deliberations after my Summing Up. Once, each of you, madam assessor and gentlemen assessors, reach to a conclusion on your final opinion, the court will re-convene and your individual opinions will be asked. You will not be asked to give reasons for your opinions at any time. The opinions of you five need not to be unanimous, but of course, it would be desirable if you could agree on the final opinion. As the presiding judge of this case I am not bound by your opinions in delivering the final judgment of the court. Nevertheless, I assure you that due weight and recognition will be given to your opinions when I deliver the final judgment.

9. Madam assessor and gentlemen assessors, please recall the oath administered when you assumed duties as assessors; your true opinion to be given without any fear or favour or ill will in accordance with the evidence and the law. You are not supposed to be passionate towards anybody or any party. The prosecution says that millions of monies, which could have been used for the betterment of the native Fijians, were wasted. On the other hand, defence says that the accused is facing the loss of his liberty. You are not supposed to be carried away by any of these propositions. You need not to bother about the final outcome of the case. It is a concern of the court. The duty of you madam assessor and gentlemen assessors is to base your opinion on the evidence presented in court and nothing else. Please don't speculate or presume anything apart from the evidence what you saw and heard during the trial.

II. THE BURDEN AND STANDARD OF PROOF

1. When approaching the matter in hand, I would like to draw your attention madam assessor and gentlemen assessors, to certain basic rules which govern our criminal justice system. The accused is presumed to be innocent, though he is charged before this court with five counts of 'Abuse of Office', until he is found guilty by this court. Proving his guilt is the sole burden of the prosecution, as it was the prosecution, who accuses the accused of committing the said offences of "Abuse of Office". The duty of the prosecution to prove the case against the accused continues throughout the trial and it never shifts to the accused. The law does not impose any obligation or duty upon the accused to prove his innocence or otherwise.
   
2. When proving the case against the accused, the law expects the prosecution to prove it beyond reasonable doubt. That means the prosecution must prove the case for you to be 'sure' of the guilt of the accused and nothing else will discharge their burden. There is no specific formula where you can have a mathematical precision to be 'sure'. It is all about your day to day experiences and common sense come into play once again. The ultimatum is that you, madam assessor and gentlemen assessors, must be 'sure' of the guilt of the accused based on the presented evidence in court by the prosecution. If you have a 'reasonable doubt' over the guilt of the accused that benefit should immediately be awarded to the accused. Such a doubt, as stated, should definitely be a 'reasonable doubt'. A mere possible doubt or trivial and imaginary doubts will not create a reasonable doubt. It should be an actual or substantial doubt which shakes the foundation of the case of the prosecution. The doubts should stem out of the evidence what you saw and heard in court.
   
3. Before proceeding any further, I must remind you, though already directed you in my 'Opening Instructions', you have to look at each Count or Charge on the Information separately. There are five (5) separate charges of 'Abuse of Office' laid down against Mr. Keni Dakuidreketi (hereinafter referred as Mr. KD), the accused. Prosecution is expected to prove all five (5) beyond reasonable doubt or to your fullest satisfaction. That is to say that the prosecution has to produce evidence pertaining to all the charges separately and you have to assess the said evidence separately for each charge. Thus, it is practically possible for you to reach different opinions on different charges. In other words, if you find the accused guilty/not guilty for one charge does not necessarily mean that he is guilty/not guilty of other charges as well.
   
4. You are aware by now that at the end of the case of the prosecution, court decided to call for the defence and the accused opted to remain silent and not to offer any evidence on his behalf. That is his right. He is entitled to remain silent and say that the prosecution have not proved their case against him to the required standard. You must not assume he is guilty because he has not given evidence. Still the prosecution must have to prove for you to be sure that he is guilty of these crimes as charged.
   

You know that you are trying this case according to the available evidence. However you will have to appreciate that the accused has not given evidence at this trial to undermine, contradict or explain the evidence put before you by the prosecution.

Matters put to the prosecution witnesses in cross examination by the defence are not evidence until the witness agrees to those matters. You would recall, the learned defence counsel in his closing address to you (para 9.7 – 9.12) said that Mr. KD did not see him as a civil servant and much more likely reasons motivated him as a part of VDCL in dealings with PCX. Those are the 'propositions'of the counsel and not evidence. You have to base your opinions on evidence.

5. The evidence presented to you during the course of the trial, both oral and documentary, can be either direct or circumstantial evidence. The existence of Articles of Association or Memorandum of Articles of VDCL was produced with direct documentary evidence. When Mr. Boila and Mr. Saukawa said that they held the post of VDCL Board Secretary that is direct oral evidence.
   
6. There is some evidence in this case that could be referred to as "circumstantial evidence". That simply means the prosecution is relying upon evidence of various circumstances relating to the crime and the accused, which they say when taken together will lead to the sure conclusion that he committed these offences.
   

Circumstantial evidence can be powerful evidence, indeed, it can be as powerful as, or even more powerful than, direct evidence, but it is important that you examine it with care – as with all evidence and consider whether the evidence on which the prosecution relies in proof of its case is reliable and whether it does prove guilt or whether on the other hand it reveals any other circumstances which are or may be of sufficient reliability and strength to cast upon or destroy the prosecution case.

Finally you should be careful to distinguish between arriving at conclusions based on reliable circumstantial evidence and mere speculation. Speculating in a case amounts to no more than guessing or making up theories without good evidence to support them and neither the prosecution, the defence, nor you should do that.

7. The other important matter I want to make it clear is the appearance of Mr. Kalivati Bakani's name in the Information. You see that there are ten (10) charges reflectin the Information, five (5) against Mr. Bakani (odd numbers) and the other five (5) against Mr. KD (even numbers). Mr. Blanchflower, SC, in his opening address, told you that the prosecution is concentrating only on even numbered charges against Mr. KD. It was already published in media and you might or might not be aware that Mr. Bakani pleaded guilty to all the charges against him. This, you might have heard by now and I doubt that it could be a secret any more. At the same time, throughout this trial, Mr. Bakani's name was mentioned by almost every witness referring to various documents. The sole reason for me to mention you about Mr. Bakani's plea of guilt is to remove any question, doubt or speculation, if anything is left, in your minds as to why you are not trying him along with Mr. KD. Mr. Bakani's plea of guilt should not have any bearing on your decision in this case against Mr. KD. It is still the duty of the prosecution to prove its case against Mr. KD for you to be sure of his guilt, just as it would have to if Mr. Bakani had not pleaded guilty.
   

3. THE INFORMATION
   

1. The Fiji Independent Commission Against Corruption, on behalf of the

State has charged the accused for the following counts of "Abuse of Office".

Second Count
Statement of Offence (a)

ABUSE OF OFFICE: Contrary to Section 111 of the Penal Code Cap 17.

Particulars of Offence (b)

KENI DAKUIDREKETI between about 31st March 2004 and 21st September 2004, at Suva in the Central Division, while being employed in the Public Service as the Director of the Native Land Trust Board and Chairman of Vanua Development Corporation Limited, in abuse of the authority of his office, did an arbitrary act for the purpose of gain, namely, facilitated a loan of $2,000,000.00 FJD to be made by the Vanua Development Corporation Limited to PacificConnex Limited, which was prejudicial to the Native Land Trust Board and indigenous Fijians.

Fourth Count
Statement of Offence (a)

ABUSE OF OFFICE: Contrary to Section 111 of the Penal Code Cap 17.

Particulars of Offence (b)

KENI DAKUIDREKETI between about 16th November 2004 and 29th November 2004, at Suva in the Central Division, while being employed in the Public Service as the Director of the Native Land Trust Board and Chairman of Vanua Development Corporation Limited, in abuse of the authority of his office, did an arbitrary act for the purpose of gain, namely, facilitated a loan of $900,000.00 FJD to be made by the Vanua Development Corporation Limited to PacificConnex Limited, which was prejudicial to the Native Land Trust Board and indigenous Fijians.

Sixth Count
Statement of Offence (a)

ABUSE OF OFFICE: Contrary to Section 111 of the Penal Code Cap 17.

Particulars of Offence (b)

KENI DAKUIDREKETI between about 28th February 2005 to 28th April 2005, at Suva in the Central Division, while being employed in the Public Service as the Director of the Native Land Trust Board and Chairman of Vanua Development Corporation Limited, in abuse of the authority of his office, did an arbitrary act for the purpose of gain, namely, facilitated a Government Grant of $1,000,000.00 FJD disbursed to Vanua Development Corporation Limited through the Native Land Trust Board to be used as security for a loan provided to PacificConnex Limited by Dominion Finance Company Limited, which was prejudicial to Native Land Trust Board and indigenous Fijians.

Eighth Count
Statement of Offence (a)

ABUSE OF OFFICE: Contrary to Section 111 of the Penal Code Cap 17.

Particulars of Offence (b)

KENI DAKUIDREKETI between about 27th April 2005 and 3rd July 2007 at Suva in the Central Division, while being employed in the Public Service as the Director of the Native Land Trust Board and Chairman of Vanua Development Corporation Limited in abuse of the authority of his office, did an arbitrary act for the purpose of gain, namely, facilitated a Government Grant of $1,000,000.00 FJD disbursed to Vanua Development Corporation Limited through the Native Land Trust Board to be used as security for overdraft and loan facilities provided to PacificConnex Limited, later renamed PacificConnex Investment Limited, by the Australia and New Zealand Banking Group Limited, which was prejudicial to Native Land Trust Board and indigenous Fijians.

Tenth Count
Statement of Offence (a)

ABUSE OF OFFICE: Contrary to Section 111 of the Penal Code Cap 17.

Particulars of Offence (b)

KENI DAKUIDREKETI between about 23rd September 2005 and 29th September 2005, at Suva in the Central Division, while being employed in the Public Service as the Director of the Native Land Trust Board and Chairman' of Vanua Development Corporation Limited, in abuse of the authority of his office, did an arbitrary act for the purpose of gain, namely, facilitated a loan of $1,000,000.00 FJD to be made by the Vanua Development Corporation Limited to PacificConnex Limited, then renamed PacificConnex Investment Limited, which was prejudicial to Native Land Trust Board and indigenous Fijians.

IV ELEMENTS OF THE OFFENCE

(i) Section 111 of the Penal Code is as follows:

Any person who, being employed in the public service, does or directs to be done, in abuse of the authority of his office, any arbitrary act prejudicial to the rights of another, is guilty of a misdemeanor.

If the act is done or directed to be done for purpose of gain, he is guilty of a felony, ....

(ii) As the Charges are based on 'Abuse of Office' for the "purpose of gain", the Prosecution has to prove the following elements beyond reasonable doubt.

• The accused
• Being in the Public Service
• Did an arbitrary act
• In abuse of authority of his office
• For a purpose of gain and
• Such act was prejudicial to the rights of another
  

(iii) The offence, in simple terms is "Abuse of Office". It is extended when the alleged offence is committed for the purpose of gain. If there is no such gain averred or proved, the offence of "Abuse of Office" remains in its original context.

V THE EVIDENCE OF THE PROSECUTION WITNESSES

Prosecution Witness #1
Mr. Ratu Cokanauto Tu'uakitau

1. The first witness of the prosecution was Mr. Cokanauto Tu'uakitau. He was a member of the Native Land Trust Board (NLTB) and the Great Council of Chiefs (GCC) from 1999 to 2006. He said that the Native Land Trust Board was established under the Native Land Trust Act. He was the Chairman of the Standing Committee of the NLTB and the Review Committee of the Great Council of Chiefs. According to Mr. Tu'uakitau, the purpose of the NLTB, when it was formulated, was to administer for on behalf of all the native lands of Fijian land owners. He referred to these lands in Fijian as 'Qele Maroroi'. On behalf of the said land owners, NLTB administer the lands and collects the rents. Those funds are been held by the NLTB on trust for the landowners. Witness identified Mr. KD as a member of the Board of Directors of NLTB during the period of year 2001 – 2007. Mr. Kalivati Bakani had been the General Manager of NLTB from year 2003 – 2007.
   
2. Mr. Tu'uakitau described the process of a Board Meeting to court. Before a particular Board Meeting, the "Agenda" and the "Board Papers" would be circulated to the Board members. "Board Papers" would show the "items" or the topics scheduled to be discussed at the meeting. The "minutes" of the Board meeting would be kept by the Board Secretary with the assistance of his hand written notes and a tape recorder. Further, it would show at the very beginning the members who were present and absent. The said 'minutes', which contain the discussions of the Board members during the meeting, will be circulated by the Secretary before the next meeting, enabling the Board members to correct or amend those minutes whilst matters are still clear and fresh in mind, before the same is been ratified and signed by the Chairman. Witness went on to say that it is customary for the General Manager to make a Report to the Board and that would also be recorded in these minutes. Finally, on this issue, the witness said that the Board relies on the accuracy of the "minutes" and thus, part and parcel of NLTB.
   
3. Referring to the Standing Committee, of which Mr. Tu'uakitau was the Chairman, the witness said that whenever matters arose that the Board could not deal with or make a decision on a particular meeting, those were referred to the Standing Committee to look further into it and put recommendations to the Board. He confirmed Mr. KD; the accused was also a member of the Standing Committee for the period of year 2004 – 2007. The "minuting process" of the Board had been followed in the meetings of the Standing Committee as well.
   
4. Mr. Tu'uakitau referred to Exhibit No. 10. That is NLTB Board Paper NO: 30/2003 on "INVESTMENT (LENDING/BORROWING) OF TRUST FUNDS POLICY PAPER". Paragraph 2.1 (Background) of this says that:
   

"The Board does maintain excess funds in its trust accounts that are unpaid and uncollected at any given period. There are some invested funds that derive interest as shown hereunder from the 2002 Annual Report."

Witness explained "Native Owners equity" in 2.11 of the table as "the funds held in trust by the Board in its trust fund" and "Investments (held in Trust for native owners" in 2.14 as "investments made for an on behalf of native owners by the NLTB, would that be shareholding or otherwise and would be held by Board." He explained "Extinct Mataqali Funds" in paragraph 2.4 as "...mataqali's or landowners in which there is no living person to receive that money on behalf of that mataqali and those funds would be held by the Board."

5. This witness referred to paragraph 2.6 of Exhibit 10.
   

"The Board has also approved for the establishment of its commercial vehicle, Vanua Development Corporation Ltd [VDCL] to spearhead investment opportunities that would create more wealth in return for the financial viability of the Board leading to the possible reduction of the current 15% poundage."

He said the purpose of Vanua Development Corporation Limited was to look for investment opportunities for the utilization of investment funds to create an income stream back to the Board as it in return the flow of benefits would go to the native land owners.

6. Exhibit No. 11 Board Paper No. 31/2003 of NLTB in relation to the establishment of VDCL was endorsed by Mr. Tu'uakitau.
   

"The main objective of VDC is to invest the funds it receives from NLTB to generate additional revenue for the Board. Additional revenue is needed to, among other things, finance initiatives the Board wants to undertake for the benefit of landowners. They may include a reduction in poundage to increase distributable funds to landowners.

Also if well-endowed financially NLTB can enjoy greater autonomy in its operation. Another objective of VDC is to properly manage landowners' investments in the Trust Fund. Between $9-12m is usually in the Trust Fund at any time. If managed professionally, earnings on this Fund can increase."

The funds that VDCL was going to receive, according to this witness, included both 'Trust Funds' and 'Extinct Mataqali Funds'. He highlighted one of VDCL's expectations as the reduction in "poundage" to increase the distributable funds to the native land owners.

7. Paragraph 3 refers to the "Investments Fund" of VDCL. Paragraph 7 says that "As at 30 November 2003, the total investment portfolio of the Trust Fund was $6,957, 468. Coupled with a cash balance of $3 million, total funds in the 'Trust Fund is $9,957, 468. The investment is broken down as follows:
   

Native Owners Investments - $3,517,066

Other investments and General Term Deposits - $3,440,402"

This $3,440,402 is been acquired with the lease monies from 'schedule A' lands. Mr. Tu'uakitau said that 'Schedule A' lands means 'Extinct Mataqali Lands' and so refers to 'Extinct Mataqali Funds' (EMF). He confirmed the 2nd portion of paragraph 7 that these 'funds' are being held in 'transition' before going to the Central Fijian Treasury and therefore, if it is to be transferred to VDCL, the approval of the Fijian Affairs Board (FAB) is needed."

8. Finally, on Exhibit No. 11, witness referred to paragraph 11, the following recommendations among others in place.
   

"The Board is invited to approve the following recommendations:

1. Progress the establishment Vanua Development Corporation Ltd so that it is operational by 1 January 2004.
   
2. The principal activities of VDC shall be investment, and investment management of the Trust Fund.
   
3. Authorized capital to be $20m and the paid up capital to be $7.7m comprising:
   
4. That the following persons be appointed to the Board and the directors' fee shall be $10,000 chairman and $6,000 for Directors. Similar conditions currently applicable to NLTB Board members should also apply.
   

Chairman: Keni Dakuidreketi (NLTB Board)

Director: Nalin Patel (G Lal & Company)

Director: Daniel Whippy (Carpenters Fiji Ltd)

Director: Isoa Kaloumaira (Fijian Trust Fund)

Director: Kalivati Bakani (NLTB)"

9. Mr. Tu'uakitau confirmed the existence of a 'Common Seal' in NLTB. He said that for its use or for sealing, a Board resolution is required. He was not sure whether a member can use the said seal or it is something to do with the Chairman. The witness stressed that the Directors of VDCL have to come back to NLTB to vet all the investments and contracts and get the approval to the same as the Board vested the authority of the 'Trustee'.
   
10. Then Mr. Tu'uakitau referred to Exhibit No. 9. It is the 'Minutes of 363rd Meeting of NLTB held on 18th of December 2003. Paragraph 6 of the same says that Mr. Bakani, the General Manager led the discussion. Paragraphs 6.2 and 6.3 were on Deliberations and Resolutions of the Board. The attention of the witness was drawn to the following portions;
    

"6.2.5. Management to submit another paper detailing Authorised Trustee Investments. Further, all investment of Trust Funds must come to the Board because the Board is Trustee and cannot delegate that responsibility.

6.2.9Chairman clarified that recommendation 6.3 will have taken careof the point raised by Member Sadole and has been confirmed by DGM (O). Recommendation 6.1 to be amended slightly to the effect – "The Board notes and based on legal advice the Board is able to onlend Trust Funds. And that this authority to be able to onlend Trust funds shall only be exercised by the Board."

6.3(iii) that Management to formulate investment procedures and the appropriate regulations with the Ministry of Fijian Affairs."

11. Paragraph 7.0 related to VDCL Board paper No: 31/2003, which you saw as Exhibit No. 11. Finally, paragraph 7.10 reflects that the NLTB resolved that VDCL to commence its operations by 5th of January 2004 with the above mentioned Board of Directors with an authorized capital of $20 million and paid up capital of $7.7 million with the objective of investment and investment management of the Trust Fund. It was told by Mr. Tu'uakitau that Mr. Nalin Patel, Mr. Daniel Whippy and Mr. Isoa Kaloumaira, who were appointed to the VDCL Board of Directors, were not members of the NLTB. He confirmed that Mr. KD, the accused was appointed as the Chairman of VDCL by the NLTB and Mr. KD was expected to inform and recommend NLTB about the investment opportunities for vetting and approval of the same. He stressed that NLTB being the trustee of the funds, it was only the full Board of NLTB could approve the investments of such funds.
    
12. Pointing to the periods of year 2004, 2005 and 2006, Mr. Tu'uakitau said that Mr. KD, the accused did not make such reports of the investments of VDCL to NLTB. Had such a report been made, according to the witness, it would normally be recorded in Board minutes of NLTB along with the related discussions and resolutions.
    
13. This witness then referred to Exhibit No. 29, the NLTB Board Papers scheduled for 26th February 2004 and specifically spoke about Board Paper 004/2004, "Trust Funds Investment Paper" (page 91). He said the purpose of this paper was to provide a direction to NLTB's investment arm, the VDCL, what to be adhered to and followed when utilizing the funds.
    
14. NLTB Board Paper 005/2004 (page 99) is on "Evaluation of Solutions for the IT Roadmap". Witness said that there was a need for a new computer system as the existed system was not compatible and been outdated. The recommendation in paragraph 11 (i) is to engage the services of Tui Consulting to install MySAP, IXOS and ESRI as the preferred solution for the required specifications.
    
15. Then this witness's attention was drawn to Information Paper No:
    

001/2004. (page 116) It was meant to inform the NLTB members about the latest developments in respect of VDCL. Witness agreed that one business proposal which received to VDCL was to have 51% of shareholding from IT Company called PacificConnex Ltd, which involves in IT related work, both locally and overseas.

16. Exhibit No. 31, NLTB Board minutes dated 12th March 2004, was next shown to Mr. Tu'uakitau. This was an extra ordinary meeting to have a presentation of one Mr. Ballu Khan of Tui Consulting on his SAP Solution for the NLTB's IT "Road Map". It is in this meeting Mr. Bakani, being the General Manager, had informed the NLTB members that VDCL will be owned 51% of shares of PCX, which in turn will benefit NLTB. After a Power Point Presentation about the proposed IT system, the NLTB members had resolved to engage the services of PCX to install the proposed IT Solution. Nevertheless, the witness said that certain members of NLTB raised their concerns about the 'cash factor' of this IT solution, as it was informed that SAP project cost would be $4.6 million. (Paragraph 5.7). Further, it was confirmed by the witness the queries of the members on "who owns what out of the project". Mr. Ballu Khan's response to that is in paragraph 5.8.
    

"Member Buresova queried as to who owns what out of the project.

• Mr. Ballu Khan in response explained that the up-front cost would be borne by Pacific Connex that is to implement the solution for NLTB. PacificConnex would only get paid once the Solution is implemented.
  
• The terms and conditions of the contract between NLTB and Pacific Connex would be such that if Pacific Connex does not perform then NLTB gets redress.
  
• The $4.6 million is borne up front by Pacific Connex who in turn will recoup the amount over a period of time. Such deals are normally of 8 year terms, it is 11 years in this case."
  

17. Further to that Mr. Khan had made a presentation to the members and told "TUI Consulting was formed in 1997. The challenge then was to find something unique. TUI is a traditional name in New Zealand. It means Chief and signifies Leadership in Fiji. TUI consulting has no debt; always operated on its own cash flows. TUI Consulting is not a shareholder in Pacific Connex. Mr. Ballu Khan and Strategic Change Manager Mojito Mua left the meeting, after their presentation, as this stage."

18. Mr. Tu'uakitau said that the Board members wanted to know who were the shareholders of PCX over and above the 51% shares of VDCL as Mr. Khan told them that TUI Consulting is not a shareholder in PCX. But, he said that to date, he is not aware anything about the other shareholders who owned 49% as Mr. Khan or anybody else did not disclose that. And, the financial history of PCX, though requested by the NLTB, had not been provided to them either by Mr. Khan or Mr. Bakani or Mr. KD. Finally, Mr. Tu'uakitau said that had NLTB was aware of any financial problems of PCX during 2004, 2005 and 2006, it would be a matter of concern and should have been made aware of by Mr. KD and Mr. Bakani as they were a Director and the Managing Director of NLTB and held dual responsibility with their duties in VDCL as Chairman and a Director respectively. If such financial problems or difficulties of PCX have been made known to NLTB Board, he said those should have been recorded in the 'minutes' and members would have deliberated upon those issues.

19. Then Mr. Keene, QC, started the cross examination of Mr. Tu'uakitau. First, Mr. Tu'uakitau agreed that whenever the Board Papers or Board Meetings refer to "Management" that does not include the Board members. He said the 'poundage' or the amount charged by the NLTB to administer the lands of the native landowners was brought down to 25% to 15%. Referring to "Summary of Legal Opinions" in paragraph 3 of Exhibit 10, the witness said that the issues of responsibilities and powers, where the legal opinions sought were in respect of NLTB and that is not of VDCL. Mr. Keene, QC, pointed to paragraph 6.2.1, 6.2.5 and 6.2.9 of Exhibit 10 by stressing the usage of "Trust Funds" of the NLTB in those portions. In the 3rd bullet point of paragraph 7.2, "The Structure of the Corporation and its equity structure", the witness agreed that the 'word' 'corporation refers to 'VDCL'.

20. The term 'Special Fund' of $1,569,208 in paragraph 6 of Exhibit 11 (CURRENT NLTB INVESTMENT PORTFOLIO) explained by the witness as the fund which had been channeled from the 'Trust Fund' to NLTB with the approval of the Board and Great Council of Chiefs with the specific purpose of those funds been utilized or invested for the benefit of the Fijians. Witness agreed with the learned counsel that the NLTB investments or finance have restrictions for lending because they are Board funds and taking steps to spend those funds is not in breach of any trust. He said that the "paid up equity" or the 'share capital' of VDCL was proposed to be $7.7 million and "Transfer of investments in Trust Fund derived from income from Schedule A & B Land" in paragraph 8 (shareholding structure & capital) of $3,440, 402 means "Trust money". He confirmed this paid up equity of $7.7 million to VDCL was comprised of three different types of "money"; Government money, NLTB's own money and Trust money. Explaining the "authorized capital" of VDCL be $20 million, the witness said that with the opening capital of $7.7 million, the company had to create the balance capital with other investments.

21. Mr. Tu'uakitau confirmed that the five Directors (05) of VDCL, including one of NLTB's Directors (Mr.KD) and its General Manager, were appointed by the NLTB Board. Talking about Mr. Isoa Kaloumaira, an appointed Director to VDCL, the witness agreed that he was selected because of his background in banking and finance as VDCL was meant to be more entrepreneurial than NLTB. He went on to say that when he agreed with the recommendations and the Board Paper to establish VDCL it was done after reading the same and as in the case of other members, he also thought that VDCL will be another vehicle for Fijian investments.

22. Mr. Keene, QC referred to paragraph 11.4 of the Recommendations in Exhibit 11. It says:

"FAB to be requested to approve the transfer of funds in the Trust Fund which belongs to it as equity in VDC.Moreover that they be approached for a grant or interest free loan of $1m as additional equity for VDC."

Mr. Tu'uakitau said that "Trust funds" means the 'Extinct Mataqali Funds'. He elaborated that Extinct Mataqali Funds arise when there is no Mataqali in existence to claim the money which accumulates over a period of time. The procedure of releasing funds by NLTB is included a paper advertisement to make sure that no direct claimant to the said money misses out. Then only the said funds go to FAB. Therefore, the witness said that the above recommendation was to request from FAB that NLTB's desire of using that money to pay up the share capital of VDCL. Nevertheless, according to the defence exhibit, KD.1, paragraph 2 of page 85 (NLTB, Extinct Mataqali Funds, [Board Paper No. 016/2006], June 2006), the relevant FAB consent had not been obtained and it was recommended that NLTB retain that 3.36 million Extinct Mataqali Funds to be invested in VDCL as equity. In item 11 of Exhibit 202, Minutes of 378th NLTB meeting dated 22nd June 2006, the Board had resolved this recommendation of Mr. Bakani, the General Manager. Further, referring to pages 98 and 104 of Exhibit 142, witness said that it was further intended to request for 1 million interest free loan from FAB as additional equity for VDCL.

23. Then the learned counsel cited the following paragraphs from several Exhibits to say that NLTB had been updated or informed about the affairs of VDCL and PCX, even though this witness claimed negatively.

(i) Exhibit 42 – NLTB Board Meeting Minutes dated 6th May 2004.

• - Vanua Development Corporation & PacificConnex Ltd. – funding from Government still to be received. Amount reduced to $750, 000 instead of $1m originally approved.
  
• - VDCL has received quite a number of proposals for joint ventures.
  
• - The shareholders agreement for PacificConnex Ltd was finalized and signed.
  
• - Efforts of a joint venture between Vanua Development Corporation and Jacks Handicraft in a bid to operate from the Nadi Airport Complex were declined by the AFL Board despite the fact that all requirements were met. The Board of VDCL is considering taking the matter further.
  
• - Launch of PacificConnex and Vanua Development Corporation will now be held on 17th May, 2004."
  

(ii) Exhibit 48 – NLTB Board Meeting Minutes dated 24th June 2004.

16.2 Vanua Development Corporation [VDCL]

• - VDCL through its Chairman, Mr. Dakuidreketi sought the Board's support in its (VDCL) quest to request for Ministry of Finance approval to grant VDCL tax free status.
  
• - VDCL will be reporting regularly to this Board as it is wholly owned by NLTB.
  
• - Resolve
  

Members resolved:

• To support VDCL in its seeking Ministry of Finance approval to be granted tax free status.
  

(iii) Exhibit 67 – NLTB Board Meeting Minutes dated 26th August 2004.

• - 3.26. Vanua Development Corporation – General Manager made a short presentation on the company to Cabinet recently.
  

(iv) Exhibit 78 – NLTB Board Meeting Minutes dated 28th October 2004

- 8.0 2005 Budget (BP 036/2004)

Introduction

General Manager informed members of the Chairman's request that consideration of the 2005 Budget be deferred and to be considered in a special meeting in Suva in the next two to three weeks. The reasons behind the request are:

(i) To clarify the financial relationships between NLTB, Vanua Development Corporation and PacificConnex Limited.

(ii) The proposed budget only contains NLTB's budget without any input from Vanua Development Corporation or PacificConnex Ltd.

- 3.4 Vanua Development Corporation & PacificConnex Limited.

- 3.4.1 Aisake Saukawa has been recruited as a Research/Admin Officer for Vanua Development Corporation.

- 3.4.2 PacificConnex Limited continues to market its services.

(v) Exhibit 91 – NLTB Board Meeting to be held on 21st December 2004

- 7. Vanua Development Corporation & PacificConnex Ltd

• A separate paper on the relationship between the three organisations is part of the agenda.
  
• During the month, the Boards of VDC and PCX both endorsed that PCX seek a legal judicial review of the decision by the Ministry of Finance to award Government FMIS tender to an American Company called SSA Global Technology in association with Software Factory Ltd of Fiji.
  

The stand was taken on the following grounds:

• That the tender process was not completely transparent and proper procedures were not followed. It was also apparent that the process was loaded against PCX from the beginning.
  
• The terms of the Social Justice Act were not complied with in consideration of the tender. PCX as a 51% owned indigenous company should have received consideration under the terms of the Social Justice Act.
  

The case is to be heard on 14/12/04.

(vi) Exhibit 92 = NLTB Board Meeting Minutes dated 21st December 2004.

Starting from paragraph 4, it is an Information Paper to the NLTB Board on VDCL and PCX. Followings are some of the excerpts.

The General Manager before presenting the paper assured the Meeting that there will be a paper presented at every future Board Meeting to inform the Board on the progress of the two companies.

PacificConnex Ltd.

4.2 Following the early implementation of SAP:

• NLTB will make a saving of $2,859,134 over a period of 11 years.
  
• Total cost of the system to NLTB over the 11 year period will therefore be $16,040,856 to the original price of $18,900,000.
  
• PacificConnex had put this in writing to NLTB (copy of the letter was attached as attachment 2
  

4.2.2 Management will continue to look at cheaper funding sources to fund the re-payments to PCX and make some savings. E.g. Fiji Development Bank which is only charging a 5% interest on loans.

4.2.3 PacificConnex Forecast [was shown as Attachment 4]

• Budgeting Net Profit After Tax - $3,952,000 retained Earnings
• Transfer to Reserve - $ 988,000
• Available for Distribution - $2,964,000
• Budgeted Distribution to VDCL @ 51%- $1,512,000
  

4.2.4 PCX Sales Funnel(Shown as Attachment 5 of the paper)

Outlined the phases of discussion/negotiations and contracts between PCX and various companies/organisations and are summarised as follows:

• Contract signed – NLTB and SCA Hygiene Australasia
• To be signed in 2005 – Airports Fiji Limited, Air Terminal Services and Fiji Pine.
• High Level Discussions – Seven companies including Fiji Electricity Authority.
• The budgeted Net Profit After Tax of $3,952,000 as discussedin 4.2.3 will be from the most likely contracts signed with Air Terminal Services, Airports Fiji Ltd together with NLTB and SCA Hygiene Australasia.
  

4.3.1 Discussion on VDCL & PCX

Honourable Prime Minister and Chairman of the Board Mr. Laisenia Qarase advised the meeting that the Board had given its approval to the transferring of some assets from the Board to Vanua Development Corporation to assist in its establishment. Up to date there is no financial report submitted to Board and General Manager is requested to prepare once in the next Board meeting. This is to include income (if any) for 2004.

4.3.2 Hon. Prime Minister and Chairman, Mr. Laisenia Qarase showed his concern on the second paragraph of the letter from Mr. Ballu Khan. The mentioned paragraph stated that PCX funded NLTB's acquisition at SAP and Oracle licences. This was through an unsecured loan of $1,303,734 from PCX to NLTB.

The Chairman sought explanations on:

• Board's approval on the unsecured loan
• Terms and Conditions of Loan Agreement
  

The General Manager in his explanation advised as follows:

• The repayments to PacificConnex is as on the initial repayment schedule i.e. on $18,900,000 now reduced to $16,040,866.
• There was no other separate loan arrangement as stipulated in Mr. Ballu Khan's letter.
• A spread sheet to be prepared to show the repayments for the 11 years based on the initial figures. This is to be tabled in the next Board meeting.
  

4.3.3 Member Ratu Timoni Vesikula raised the Board's role as a Trust and its involvement in the companies Vanua Development and PacificConnex in particular the risk involved even though the Board owned the two companies.

The General Manager advised as follows:

• The Board is the Shareholder of Vanua Development.
• The Board appointed the Directors of Vanua Development.
• The Company operates strictly under the Articles of Association of the Company.
• It is advisable that the Board informs the companies it owns of the commercial developments it (Board) wants to pursue.
  

(vii) Exhibit 133 – NLTB Board Meeting Minutes dated 5th May 2005

21.3 PacificConnex Limited

• Two contracts have been signed i.e. NLTB and SCA Hygienic Australasia. Contracts with CJ Patel and Vinod Patel are about to be signed.
• Interest expressed by the private sector is most encouraging compared to the public sector.
• YTD loss of $230, 431 against a budgeted loss of $375, 819.

Projections for 2005 showed a profit.

• Recently applied for a loan of $7m, with FDB to refinance costs associated with development of the NLTB system. FDB has approved a $3.5m loan to PCX.
• Judicial Review sought by PCX against the Ministry of Finance Tender process still outstanding. Case to be heard on 27.6.05.
• 3G Licence submission made to the Minister for Information, Communications and Media Relations. A complete, detailed submission to be made before the end of June (details as shown on Appendix 10).
• The total cost of the NLTB system is $16.04 million. This is to be repaid over 11 years.
• An Attachment (appendix 11) detailed the implementation of the NLTB system.
  

21.4 Deliberations

21.4.1 The General Manager in reply to Members' query on Mr. Ballu Khan's share in PCX confirmed that Mr. Khan holds 49% and NLTB 51%.

21.4.2 The Chairman informed the Board that whilst information on VDCL was clear, PCX affairs seemed to be cloudy especially in the movement of huge sums of money.

He advised that Management to submit report every 3 months on both VDCL and PCX.

(viii) Exhibit 132 – NLTB Board Pack for the Meeting to be held on 5th May 2005

2.3 Funding

"PCX recently applied for a loan of $7m to refinance the costs associated with development of the NLTB system. This borrowing is to be secured by shareholders guarantees plus a personal guarantee from Mr. Ballu Khan secured by properties he owns in Fiji. This is to be backed by an assignment from the NLTB guaranteeing payment to the lender of the proceeds of the NLTB contract. FDB has approved a reduced amount of $3.5m but will reconsider the balance in May following a full presentation to be done to them by PCX."

Page 106 - Investment Register

Loan to PCX 1.297 million
Loan to PCX 702,000 }
Loan to PXC 900,000 } Extinct Mataqali Funds

Page 107 – VDCL Balance Sheet – item 4500
Loan to PCX – 2,900,000

(ix) Exhibit 156 – NLTB Board Meeting Minutes dated 26th August 2005.

Page 7 – VDCL & PCX, following completion of the Audit of the two companies, a full report will be tabled to the Board.

7.0 2004 Annual Accounts (Board Paper No. 016/2005)

The audited report was circulated.

The General Manager before inviting the Deputy General Manger to lead the discussion apologised for the delay in the tabling of the Audited Accounts for the following reasons:

1. That it was the first time, that audit be also made on the two Companies, VDCL and PCX. VDCL so far had shown a profit of $191,640 while PCX is still going through minor account adjustment. Audited accounts for both the companies will be tabled in the next Board meeting.
   
8. The migration of Accounts to the new LALI system also contributed to the delay.
   

(x) Exhibit 175 – NLTB Board Meeting Minutes dated 3rd November2005
"Vanua Development/PCX – The General Manger apologized for the delay in the Auditing of PCX accounts. The Auditors have completed the audits of VDCL. The delay is due to the following and is also raising concern to Management:

• The business relationship between NLTB and PCX is the first of its kind in Fiji. Most of the Accounting Standards and Treatment has to be referred back to Australia for confirmations.
  
• The Accounting Treatment on the initial set up cost of the new NLTB IT System i.e. whether it is an asset to NLTB or expense to PCX.
  
• PCX will show a loss in its 2004 operations due to the first $1million payment by NLTB in 2004 was treated as income for 2005 by the Auditors, Price Waterhouse Coopers."
  

(xi) Exhibit 187 – NLTB Board Meeting Pack to be held on 23rd

February, 2006
Pages 89 – 96 – Information Paper No. 002/006 – VDCL & PCX

(xii) Exhibit 188 NLTB Board Meeting Minutes held on 23rd February 2006.

VDCL & PCX LTD

(Information Paper No. 2/2006)

"The Paper was RECEIVED by the Board.

The Chairman thanked the Boards and Managements of the two companies for the detailed Paper submitted and urged Members to take time to read the Reports and Accounts."

(xiii) Exhibit 201 – NLTB Board Meeting Pack to be held on 22nd June 2006.
(Vanua Development Corporation Ltd. And PacificConnex Ltd.
The last comprehensive report was tabled during the February Board meeting when the 2004 Accounts for the two companies were finalized. The next full report to the Board will be tabled when the audit of the 2005 accounts are completed.

A development worth reporting is that PCX has been issued with a provisional approval to operate a mobile telephone network. However a second provisional approval has also been given to Digicel.

(xv) Exhibit 210 – NLTB Board Meeting Minutes dated 2nd November 2006.
Information Paper 014/2006 on VDCL and PCX.

(xvi) Exhibit KD2 – NLTB Board Meeting Minutes dated 24th August 2006.
Paragraph 5.2.8 – VDCL and PCX, focused on the developments relating to 3G Licence.

- Mr. Bakani requested the Board either to appoint a Group CEO or a Managing Director for VDCL as a separate entity and to step down from his position of Vice Chairmanship of PCX in the next PCX meeting. NLTB Board to avoid any conflict of interest in this subject area. His request regarding PCX was resolved by the Board.

24. In answering to Mr. Keene, QC, the witness once said that when the Board refers to 'Management', it means Mr. Bakani and his team. Whilst referring again to paragraph 21.4, Deliberations of Exhibit No. 133, witness admitted that there was no objection recorded from the NLTB about guaranteeing the payments in respect of computer implementation contract of PCX. Later the witness agreed that had PCX achieved a 3G license that would have been a big business for them.

25. Finally, Mr. Tu'uakitau agreed that the fifteen (15) instances he was cited by Mr. Keene, QC, there had been a report on VDCL and PCX in 13 times and the frequency of reporting and its contents and details were greater than he recalled during his evidence in chief. Referring to Exhibit 28, NLTB Standing Committee Meeting Minutes dated 19th February 2004; the witness said that its members resolved to enforce the Management's recommendation that Tui Consulting's presentation in relation to NLTB's IT Road Map be accepted and advice the NLTB main Board accordingly.

26. In re-examination, Mr. Tu'uakitau again explained the 'term' "Trust Fund" whilst focusing on Exhibit 11 paragraphs 2, 6 that a "Special Fund" of $1, 509,208 was created in 1999 with the funds transferred from the 'Trust Funds' after it was approved by the Board and the Great Council of Chiefs (Bose Levu Vakaturaga – BLV) as the 'Special Fund' was still meant to be used for the benefit of all Fijians.

27. Pointing to first (1st) entry of FHL "A" class shares in Table 2 of paragraph 6 of Exhibit 11, the witness said that it is the first bullet point of item 2 in paragraph 8 as NLTB resolved to transfer those FHL shares to VDCL. The "Other Investments & General Term Deposits" ($3,440,402) in paragraph 7, the witness said is been reflected in the last figure of paragraph 8 as "Transfer of Investment in Trust Fund derived from income from Schedule A & B land", which is Extinct Mataqali Funds (EMF). Mr. Tu'uakitau stressed that NLTB is still the Trustee of the 'Trust Fund' and was accountable to the native landowners and it was the NLTB who owned the VDCL.

28. Clarifying the issues arose pertaining to FAB's approval in Exhibit 132 (page 98 – Information Paper 06/2005), the witness said that had the said funds (EMF) been transferred to FAB from NLTB, that would have brought to the Board's attention through the management. But, the witness went on to say that according to Exhibit KD-1, NLTB Board Paper No. 06/2006 on EMF (June 2006), the NLTB Board has not received any response from FAB over this and the NLTB Board had approved the retention of $3.36 million of EMF to invest with its fully owned subsidiary company, VDCL as equity by the FAB. He said that even the EMF been transferred to FAB, it would still use the same for the benefit of the native Fijians.

29. Coming back to the "reporting to NLTB Board" by Mr. KD as the Chairman of VDCL, Mr. Tu'uakitau repeated that the NLTB Board expected him to advice and inform of investments and the details of investments that VDCL were to undertake as Mr. Bakani and Mr. KD had a "dual responsibility" being appointed to VDCL Board from the NLTB Board membership and management. He continued that that 'responsibility' extends to reporting of PCX matters as well as VDCL had 51% of PCX shares.

30. Finally, referring to the fifteen instances (15) pointed out in the cross examination stated in paragraph 24, Mr. Tu'uakitau agreed that in any of those occasions nothing has been mentioned about a request by PCX to VDCL for a 2 million loan (Exhibit 42) or VDCL lending 2 million to PCX (Exhibit48) or request of PCX to VDCL for a loan of $900,000 (Exhibit 67) or a request for 1 million and granting of loan to PCX by Dominion Finance (Exhibit 78) or in general, the financial situation or loans taken out from various banks and financial institutions including VDCL by PCX. The "no mention" list continued with the Government grant of 1 million been put on a Term Deposit with Dominion Finance as a security for PCX loan extension (Exhibit 133), or ANZ approving a temporary Overdraft facility of 1 million to PCX or the transfer of VDCL's 1 million Term Deposit facility with Dominion to ANZ as a security for the said ANZ overdraft facility to PCX or [VDCL's Term Deposit of 1 million with ANZ] or Credit Corporation loan of $500,000 to PCX in July 2005 (Exhibit 156) or PCX defaulting any loans of other institutions or it defaulting the interest payments to VDCL loans, and finally, PCX's failure to repay the Overdraft of 1 million to ANZ.

Prosecution Witness #2

Mr. Nemani Buresova

31. Mr. Buresova had been appointed to the NLTB as a Board member by the Fijian Affairs Board (FAB) in December 2001 and been there since 2006. He recalled that during the said period Mr. Laisenia Qarase, a former Prime Minister, was the Chairman and Mr. KD, the accused was a member whilst Mr. Kalivati Bakani being the General Manager of NLTB. He confirmed that his appointment was done by FAB pursuant to Native Land Trust Act. He had received a Letter of Appointment from the Ministry of Fijian Affairs (Exhibit 1) dated 17th December 2001 under the title; MEMBERSHIP: NATIVE LAND TRUST BOARD.

32. Mr. KD and Mr. Asesela Sadole had also been appointed as Board members of NLTB pursuant to section 3 (1) of the Native Land Trust Act by the Fijian Affairs Board by this same letter. The appointments were for a period of three (3) years with effect from 14th December 2001.

33. Whilst confirming the existed procedure of NLTB Board Meetings, recording of minutes and circulation of Board papers and Board minutes described by Mr. Tu'uakitau, this witness tendered Exhibit No. 7 and Exhibit No. 8, the NLTB Board Papers and Board Minutes dated 23rd October 2003. Board Paper No. 25 of 2003 titled "EXTINCT MATAQALI FUNDS" (Exhibit 07, page 67) was elaborated by Mr. Buresova. He said that the accumulated funds on leases over native lands deemed extinct were kept with NLTB Trust Department as "Frozen Funds" (paragraph 2) and the NLTB is obliged to transmit all Extinct Mataqali Funds kept 'frozen' by its Trust Department to FAB only after the Mataqali's extinct is statutorily declared (paragraph 10) [It is this interim period that the NLTB keeps the Extinct Mataqali Funds under its trusteeship] The following paragraph Exhibit 8 was highlighted by the witness in relation to initiation of VDCL.

3.26. "Vanua Development Corporation – The Company has been registered with NLTB Executives as initial Directors. A business plan is being prepared and the Chairman will be consulted on the appointment of Directors. Provisions have been made in the 2004 Budget for initial costs that may be incurred for the setting up of the Company."

34. Mr. Buresova pointed to certain important information in Exhibit No. 30, the NLTB Board Minutes dated 25th of February 2004.

8.0 Evaluation of Solutions for the roadmap – (BP No. 005.2004)

General Manger led the discussion.

8.1 The objective of the paper was to seek the Board's approval;

(i) To engage the services of TUI Consulting to install my SAP, IXOS and ESRI as the preferred solution to address NLTB's Requirements Specifications

(ii) To outsource NLTB IT functions

(iii) The cost of FD$1.8million per annum for 12 years.

8.2 Deliberation

• The system being proposed here is probably the best available in Fiji. Members could consider granting their approval in principle whilst final approval is to be subject to provision of all the necessary information as well as further negotiations of costs.
  
• A financial projection for NLTB to be provided incorporating the $1.8m. per annum payment.
  
• Also if there is available a financial projection for Pacific Connex, it is to be provided to this Board to assist Members' in their considerations.
  
• Detail background information of all those behind TUI Consulting to be provided.
  
• Once all these information are available, an extra ordinary meeting can be called.
  

Resolve

Members resolved;

• To approve the recommendations in principle subject to the following:
  
  • (i) Management to further negotiate cost of $1.8m a year downward with TUI consulting.
    
  • (ii) The reasons behind the 12 year period of payment to be clarified.
    
  • (iii) Once a final costs is agreed to with TUI Consulting, a financial projection for NLTB incorporating that agreed cost to be provided to this Board.
    
  • (iv) A financial projection for PacificConnex be also made available to this Board.
    
  • (v) Background information of all those who are behind TUI Consulting inclusive of their CV's, etc. to be provided to this Board.
    

The witness agreed that according to this material, NLTB has to pay $1.8 million per annum to Tui Consulting for over a period of 12 years. According to paragraph 12 of the Minutes, a $1 million interest free loan from the Government to VDCL "is still awaited".

35. Then Mr. Buresova focused to Exhibit 31, the NLTB Extra Ordinary Meeting Minutes dated 12th March 2004. It had been held with the purpose of evaluating solutions for the IT Roadmap and the engagement of Tui Consulting for that task. He said that the Strategic Change Manager Mr. Mua made a presentation to the members and during the deliberation, he queried the basis of the 12 year repayment period (paragraph 5.1) as his concerns were the length of the period, that NLTB have to be paying the $1.8 million annually and if NLTB sticked to this IT system for such a long period, it would not be changing according to the changes of IT systems, usually happens in every 2 -3 years. In general, he said that his concern was about the cost which had to be incurred by the NLTB in upgrading their computer system. Citing paragraph 5.6, the witness agreed that Director Ratu Varani expressed his reservations on the costs for this project. It was informed to the members, according to paragraph 5.7; the SAP project would cost $4.6 million.

36. Mr. Buresova's attention was then drawn to paragraph 5.8, one of the questions he himself posed 'as to who owns what out of this project' during the meeting. It is been reproduced in paragraph 16 of this chapter. The witness said that in the background of that they were not told about the 'set-up of PacificConnex" and the license for MYSAP is purchasing from abroad, he was worried about the 'ownership' of the 'data' generated in the NLTB system. He said that his understanding was that the owner of Tui Consulting was Mr. Ballu Khan as indicated to the Board during this presentation. Mr. Buresova said that Mr. Khan's representation that PCX would bear the upfront cost of $4.6 million had a big influence on the decisions of him and the Board in general.

37. The witness agreed that after the query, Mr. KD, the accused contributed to the discussion and said that one of the biggest problems in NLTB is its existing IT system and he appreciated the proposal and bold step taken by the management to resolve this issue. (paragraph 5.9) What Mr. Ballu Khan said about Tui Consulting and PCX (paragraph 5.11) after that is reproduced in paragraph 17of this chapter.

He said that Ballu Khan's assertion that Tui Consulting had no debts and operates on its own cash flow was important in making a decision to approve Tui Consulting. At last, the Board had resolved to engage the service of PCX to install the preferred IT Solutions to cater the NLTB's needs, to outsource NLTB's IT functions and the cost of the MySAP project to be $1.8 million per annum for 12 years.

38. In cross-examination, Mr. Buresova confirmed that he had been in the NLTB as a member since 14th December 2001 to 2007, for two terms, three years in each time. He agreed that the minutes of a previous meeting were available to the Board members along with the agenda papers for the next meeting and the amendments took place after about 3 months. Referring to paragraph 16 of Exhibit No. 9, witness endorsed that the Board resolved to endorse, ratify and adopt the "Sealing Register" from numbers 58451 to 58579, though he was absent on that day. Mr. Buresova could not recall the objectives or the process of members passing a resolution to ratify the "Sealing Registry" even after pointing to paragraph 9 of Exhibit 8, which refers to the ratification of sealing No. 58525 to 58450.

39. Paragraph 3.24 of Exhibit 8 denotes the appointment of Mr. Majito Mua as the Strategic Change Manger for 3 years. Referring to Tab 28, the minutes of NLTB Standing Committee Meeting held on 19th February 2004, Mr. Buresova said that the meeting was meant to evaluate the solutions to NLTB IT Roadmap where any member of the Standing Committee could inquire into more details before going to the full Board. He agreed that he did not raise some of the issues he raised at the NLTB Board Meeting when the Standing Committee met and in fact, joined the Standing Committee resolution to support the engagement of Tui Consulting. In both occasions, NLTB Board Meeting and its Standing Committee Meeting, witness agreed that despite he raised some questions, he voted with all the other members to adopt the recommended solution after considering the material provided.

Prosecution Witness # 03

Mr. Emosi Vitilevu Toga

40. Mr. Toga had been appointed the Secretary to the NLTB Board in July 2002 till October 2004, pursuant to the Native Land Trust Act. He described his responsibilities as preparing and compiling Board Papers, notifying members of Board Meetings, Attending Board Meetings, recording of those members who are present at meetings along with other officers of NLTB, recording meetings of the Board and NLTB's Standing Committee, prepare minutes of the said meetings and corresponding on behalf of the Board, Standing Committee and the Managers.

41. Mr. Toga said the NLTB Board was established under the Native Land Trust Act and the members were appointed under the same Act. He identified Mr. KD, the accused as a member of NLTB Board during his tenure, from July 2002 – October 2004. He said that the NLTB Common Seal was kept in Board Secretary's office and during his time it was kept with him. When NLTB signs a contract binding on the Board, the Common Seal needs to be affixed and the approval of the Board is required before the use of the seal. Witness said that at least one Board member has to signify the affix of the seal in his presence with his signature. If NLTB guarantees a loan for a 3rd party, the witness said that the Common Seal needs to be affixed. He confirmed that Mr. Bakani was the General Manager of the Board when he was the Board Secretary and he can identify the two distinctive signatures of Mr. KD and Mr. Bakani. The dates for the meetings, Mr. Toga said, are been fixed by the General Manager in consultation with the Chairman of the Board and it is normally a quarterly basis, but that period could be more shortened or lengthened. According to Mr. Toga, the 'Agenda' for a meeting is prepared by the General Manager with the Board Papers provided to him by respective Managers in various sections and those be circulated to the members along with the minutes of the previous meeting and the General Manager's Report at least 1 week before the meeting. With this arrangement, witness said that the members can make any corrections or amendments to the provided draft meeting minutes after bringing into the attention of the Board and then, first thing in a meeting is to approve the previous meeting minutes with the Chairman's signature. He said that he cannot recall Mr. KD asking to amend or include something he said or someone else told at a meeting. The witness had taken down minutes in "note form" with a backup tape recorder to ensure the accuracy.

42. Mr. Toga confirmed that he took the meeting minutes of Exhibit No. 8 and Exhibit No. 9, NLTB Board Meetings held on 23rd October 2003 and 18th December 2003 respectively. The 3rd document he produced was Exhibit No. 12, NLTB letter dated 23rd December 2003, signed by him to Mr. KD. It is to say that Mr. KD is appointed as the Chairman of VDCL by the NLTB under the Chairmanship of former Prime Minister Mr. Qarase. The appointment was for 3 years with effect from 1st January 2004 with an annual fee of $10,000.

43. He tendered the Memorandum of Association and Articles of Association of VDCL as Exhibit No. 3 and 4 respectively. Paragraph 2.1 of Exhibit 3, Memorandum of Association says that VDCL "to be the Commercial vehicle for NLTB as trustee for the Fijian landowners as stipulated under Native Land Trust Act Cap 134". He then submitted the "Particulars of Directors and Secretaries and of any changes therein", Form No. 263 of VDCL as presented by NLTB to Registrar of Companies marked as Exhibit No. 6. "Deed For Holding Shares in Trust" in VDCL, certified to be a true copy by Registrar of Titles was marked as Exhibit 6A. The Certificate of VDCL made under the Companies Act issued by Acting Registrar on 21st of October 2003 was tendered as Exhibit No. 5.

44. The following documents were tendered and marked through Mr. Toga.

(i) Exhibit No. 30 - 364th NLTB Board Meeting Minutes dated 25th February 2004

(ii) Exhibit No. 31 - NLTB Extra-ordinary Board Meeting Minutes dated 12th March 2004

(iii) Exhibit No. 36 - Business Solution Agreement between NLTB (Mr. Bakani signed) and PCX signed in March, 2004

(iv) Exhibit No. 40 - NLTB letter dated 26th April 2004 to Colonial First State requesting some of the NLTB Investments held in trust, $1.6 million, to VDCL, "a new and wholly owned subsidiary of NLTB"

(v) Exhibit No. 41 - NLTB Board Papers for the 365th meeting to be held on 6th May 2004

- The General Manager's Report (page 36) at page 49

(paragraph 6.0) talks about VDCL and PCX.

6.0 Vanua Development Corporation Ltd
&PacificConnex Ltd

A separate report is attached for the IT Roadmap upgrade. The following other issues are brought to the attention of Board members:

• Funding from Government is still awaited.

We have been informed of Cabinets approval.

• VDCL has received quite a number of proposals for joint ventures. These are being considered and appropriate action taken by the Board.
  
• The shareholders agreement for PCX is being finalized and should be signed soon. A joint venture proposal with Jack's Handicraft which put in a bid to operate from the Nadi Airport Complex was recently declined by the AFL Board, despite the fact that all requirements were met. The Board of Vanua is seriously considering taking the matter further even to the extent of a judicial review.
  

(vi) Exhibit No. 42 - 365th NLTB Board Meeting Minutes dated 6th May,

2004

(vii) Exhibit No. 47 - 366th NLTB Board Papers to be held on 24th June, 2004.

- General Manager, Mr. Bakani's Report starts at page 20.

- Paragraph 6 is as follows:

Vanua Development Corporation Limited

• Funding from Government has now being received although less than the $1 million originally promised. We note however Government's proposal to make a $5 million grant per annum over the next five years to fund investments by VDC.
  
• The shareholders agreement between VDC and PCX has now being formally signed. The gist of the agreement is as follows:
  
  • - VDC to own 51% of the shares – this will be Class A shares which are guaranteed a 10% minimum dividend every year.
    
  • - The paid up capital of the Company's $1 million Fijian which has being fully subscribed to by Mr. Ballu Khan's company.
    

The Board of VDC continues to meet regularly, and has quite a number of joint venture proposals on its plate.

(viii) Exhibit No. 48 - 366th NLTB Board Meeting Minutes dated 24th June 2004.

- Paragraph 16.2 is on VDCL and the relevant portion is reproduced in paragraph 23of this chapter.

(ix) Exhibit No. 66 - 367th NLTB Board Papers to be held on 26th August 2004.

- General Manager's Report for months of July and August 2004 (page 23)

- Paragraph 6 of page 28 – VDCL and PCX

6.0 Vanua Development Corporation & PacificConnex Ltd (PCX)

• The Board of VDC continues to meet on a monthly basis.
• It continues to receive a wide number of proposals which are being considered. VDC is looking forward to funding by Government in 2005, and beyond.
• The VDC Board is looking at recruiting and Administration/Research Officer.
• PCX is actively marketing its services and expects to hear the outcome of some of its tenders during the month of August and September. It held its first Board Meeting on 16/07/04. VDC is represented on PCX by KD, Isoa Kaloumaira and Kalivati Bakani.
  

(x) Exhibit No. 67 - 367th NLTB Board Meeting Minutes dated 26th August 2004

• - Paragraph 3.16 – Already cited in paragraph 23of this chapter
• - No mention of PCX.
  

(xi) Exhibit No. 77 - 368th NLTB Board Papers to be held on

28th October 2004.

- General Manager's Report for August and September 2004 at page 26
- Paragraph 5.2 of page 30 is on VDCL and PCX.

PCX continues to market its services and expects to hear some results of bids soon. According to press reports, PCX's bid for the Government IT Tender was unsuccessful. However, we have made representations and hope that the decision would be made in our favour.

(xii) Exhibit No. 78 - 368th NLTB Board Meeting Minutes dated 28th October 2004.

• - Paragraph 3.4 about VDCL and PCX has already reproduced in paragraph 23of this chapter.
  

45. Facing cross examination, Mr. Toga said that he never transcribed the tape recording though it was in his custody, but went through the tape recording for assistance when preparing the Board minutes. He told court that he feels that he captured all the important business of the meetings faithfully to be recorded in minutes.

46. Referring to paragraph 5.2 Exhibit 77, the witness said that all what he knows is that PCX's bid for Government tender was unsuccessful and had PCX succeeded the bid, it would have been a huge business for them. Comparing this paragraph (5.2) with paragraph 3.4.2 of Exhibit 78, the defence counsel suggested that the latter would not reflect that PCX's efforts to get a potentially millions of dollars' worth of business might not happen. Mr. Toga, in responding, said that he can't recall what transpired at that time. Then it was suggested to Mr. Toga that the 'minutes' are intended only to be a "Summary" of what being discussed during the meetings and that 'summary' is 'quite inadequate'. The witness did not accept this. Mr. Keene, QC further suggested that the General Manager's report based on the press information does not even refer in these minutes.

47. Answering the questions over the Common Seal, Mr. Toga said that it was kept with his Secretary under lock and key. He said that the Secretary had the keys and given instructions to provide the seal either to him or Mr. Bakani, the General Manager. Mr. Toga repeated what he said in his evidence-in-chief, a NLTB contract to be binding, it needs the common seal to be affixed and the Board's approval is required before the seal is affixed to the said document. He further agreed with the defence counsel that if a document is a contract and if it does not under the seal, it is not binding on in NLTB. He qualified his view saying that "any organization or company should always have its seal affixed to any document for that document to be legally binding". Mr. Toga confirmed that during his period in NLTB he acted according to the provisions of Native Land Trust Act and especially section 3 (6).

48. Mr. Toga agreed with Mr. Keene, QC that being the NLTB Secretary, for him to put the common seal on a document he must first have a Board resolution. Whilst admitting Exhibit 6A, (Deed For Holding Shares In Trust In VDCL) and Exhibit 36 (Business Solution Agreement between NLTB and PCX), being important documents for NLTB, signed without affixing the NLTB Common Seal, Mr. Toga went on to say that there are many other documents of NLTB, such as employment contracts, which were not signed under the common seal.

49. Mr. Toga recalled that he was the Board Secretary to VDCL as well while being the Secretary to NLTB. He said that he played a very little role in VDCL, particularly in preparation of documentation needed to set-up the company as Mr. Bakani and Mr. Tuinamuana handled that. Finally, he said that he cannot assist the court on the issue whether a 'consent letter' was obtained by Mr. KD to take-up the role of a Director as required by Section 183 of the Companies Act. He told court that he expect the company (VDCL) to run according to the rules laid down in its Articles of Association and the provisions of the Companies Act.

50. In re-examination, Mr. Toga said that no discussion took place about PCX's unsuccessful bid to government contract during the Board meeting as it was already in the Board Paper and had he omitted any material about PCX, it could have brought to his attention in the next meeting.

Prosecution Witness #4

Mr. Necava Bakaniceva

51. Mr. Bakaniceva had been appointed Board Secretary of the NLTB in November 2004 and served in that office until August 2006. He identified Mr. KD as a member of the NLTB Board during his period and said that he is familiar with Mr. KD's handwriting and signature. Referring to Mr. Bakani, the General Manager of NLTB, he took up the same stance. The Common Seal of NLTB, he said that it was not kept under lock and key but with his personal Secretary and it was only he had the access and authority to use it. He confirmed Mr. Toga's version, that the seal would be used or affixed together with a Board member and a resolution of the Board is required to do so.

52. Mr. Toga's narration about the role of the Board Secretary and the procedure of Board Meetings was almost endorsed by Mr. Bakaniceva as well. By the time he took over the office, the witness said that he knows about VDCL and Mr. KD was its Chairman and Mr. Bakani was a Director along with Mr. Nalin Patel, Mr. Daniel Whippy and Mr. Isoa Kaloumaira.

53. Then Mr. Bakaniceva was referred to the following documents.

(i) Exhibit No. 91 - 369th NLTB Board Papers to be held on 15th December 2004.

• - General Manager's Report for November 2004 (page 16)
• - Paragraph 7 on VDCL and PCX in page 19 is been reproduced in paragraph 23of this chapter.
  

(ii) Exhibit No. 92 - 369th NLTB Board Meeting Minutes dated 21st December 2004.

• - Paragraph 3.8 refers to VDCL and PCX's endorsement that PCX sought a Judicial review against the Ministry of Finance for awarding a Government FMIS tender to an American Company,
• - Paragraph 4 is an Information Paper of VDCLand PCX.
• - Paragraph 4.0 is reproduced in paragraph 1of this chapter
• - Paragraph 4.2, 4.3.1, 4.3.2, 4.3.3 of this Board Minutes were respectively reproduced in paragraphs 2 and 23of this chapter.
  

(iii) Exhibit No. 97- 370th NLTB Board Papers to be held on 24th February, 2005.

• - Page 25 starts with General Manager's Report for the month of January, 2005 and draft annual accounts for the year ended 31st December, 2004.
• - Paragraph 5 in page 31 is about VDCL and PCX
  
• - 5. Vanua Development Corporation & PacificConnex Ltd
  

A paper on NLTB/VDCL/PCX relationships as well as details of the financial relationships between the 3 will be tabled at the next meeting.

GENERAL

• We are happy with the performance in 2004, given all the extra load on stall as our new IT System was being implemented.
• Once our new system settles down, the full impact of the LALI System should be felt.
• There are a number of interesting developments on the horizon for VDCL and PCX which will allow the companies to achieve their aim without having to continually request for capital from government.
• The Review of NLTA which has commenced should also assist in developing a future vision not only for NLTB but for the Fijian people.
  

(iv) Exhibit No. 98 - 370th NLTB Board meeting dated 24th February 2005.

• - Paragraph 5.3 contains General Manager's Mr. Bakani's comment on VDCL and PCX issues.
  

VDCL and PCX Issues

In view of current developments critical to the Board affecting the subsidiary companies, the General Manager requested the Board if he could submit a report update on them at the next meeting.

(v) Exhibit No. 99 - A letter from VDCL (Mr. Bakani) to Mr. Qarase, Prime Minister dated 18th February, 2005 on Government Grant of $1 million on 2005 Budget.

"Dear Sir,

Re: Agreement between Government and Native Land Trust Board for Grants – 2005

Attached herewith please find 3 copies of Memorandum of Agreement for your approval and endorsement. This is for the annual grant of one million dollars ($1,000,000.00) approved in the 2005 Budget for NLTB's equity contribution to Vanua Development Corporation Ltd.

Submitted for your endorsement."

- The Memorandum made on 1st January, 2005 under the letterhead of NLTB signed by Mr. Qarase (Prime Minister and Minister of Fijian Affairs) and Mr.KD (NLTB)

- The background of the Memorandum

The Government of Fiji has expressed its desire to accelerate the participation of Fijian Landowners in business in Fiji by way of a one million dollars [$1,000,000.00] grant to the Native Land Trust Board to be utilized as paid up capital for Vanua Development Corporation Limited, a wholly owned subsidiary of the Native Land Trust Board.

- Objectives of Disbursement by VDCL (paragraph 5)

The main objective of VDCL will be to invest the Funds it will receive from NLTB to generate additional revenue for the Board. This fund will be needed to, among other things, finance initiatives the Board wants to undertake for the benefit of landowners.

- Under the heading of "Re: Investment of Funds" in paragraph 7, following is stated.

The disbursement of the grant to the Board shall be invested by the Board for purpose approved by the Government, through the Minister of Fijian Affairs, and may be subject to one (1) or more of the following conditions:

(a) The Board be required to obtain security for its investments in the form of a mortgage, charge, lien or otherwise;
(b) The Board must ensure that such security is to take priority over any other securities;
(c) The Board must take all necessary steps to perfect the security and enforce it when necessary at its own expense.

- The "Termination Clause" says the Government may at any time by written notice to Chairman of NLTB terminate its obligations under this Memorandum.

(vi) Exhibit No. 132- 371st NLTB Board Meeting Papers to be held on 5th May 2005. Board Paper No. 006/2005 on NLTB and PCX from pages 98 – 103

(vii) Exhibit No. 133- 371st NLTB Board Meeting Minutes dated 5th May 2005.

• - Paragraph 21 is on VDCL and PCX in General Manager's Report connected to Board Paper No. 006/2005.
• - Paragraph 21.2 – VDCL's operations since commencement.
  

VDCL's operation since commencement

• Investment portfolio has increased by 59.75% i.e. from $5,269,071.97 to $8,433,355 as at 31.3.2005.
• Average interest yield in 2004 was 2.69% compared to 7.54% in 2005.
• VDCL achieved an operating profit-after-tax of $204, 542.69 subject to audit.
• Nearing completion proposals are Victoria Wines and Spirits and Vinod Patel/BHP Lysaght. The Board of VDCL is acutely aware of the need to diversify.
• Count Action by James Ah Koy against VDCL still outstanding.
• Area of IT/Telecom is identified as the base from which the company will expand.
• Members' attention was directed to the Attachments.
  
  • - Paragraph 21.3 is Mr. Bakani, General Manager's comments on PCX. Already reproduced in paragraph 23 of this chapter.
    
  • - Paragraph 21.4 is also reproduced in Paragraph 23of this chapter, the Chairman's comments in respect of on PCX's affairs "especially in the movement of huge sums of money".
    

(viii) Exhibit No. 141- 372nd NLTB Board Meeting Papers to be held on 7th July, 2005. No mention or Reports of VDCL or PCX in General Manager's Report.

(ix) Exhibit No. 142- 372nd NLTB Board Meeting Minutes dated 7thJuly, 2005. No reference to VDCL or PCX.

(x) Exhibit No. 146- Deed of Assignment between PCX, NLTB and Credit Corporation Limited dated 22nd July, 2005.

- No Common Seal of NLTB affixed. Mr. Bakani, General Manager and Ms. Alanieta Vakatale, Acting Manager, Legal Services signed.

- Page 8, Notice of Assignment, NLTB is directed to pay all the payments that may derived by PCX under the Agreement to Credit Corp.

(xi) Exhibit No. 154 - 373rd NLTB Board Meeting Papers to be held on 26th August, 2005

• - Paragraph 8.4 refers to VDCL and PCX and says a full report will be tabled at the next meeting following completion of the audit of the companies.
  

(xii) Exhibit No. 156- 373rd NLTB Board Minutes dated 26th

August 2005.

- Paragraph 5.3.1 of General Manager's Report is a repetition of paragraph 8.4 of Exhibit 154 asstated above.

- Paragraph 7, subparagraphs 1 and 3 are already reproduced in paragraph 23of this chapter.

(xiii) Exhibit No. 163- Deed of Assignment between VDCL, NLTB and PCX dated 29th September 2005.

• - Now this Deed Witnesseth as follows:
  
  1. Pursuant to the said Agreement NLTB is to pay PacificConnex annual installments in varying amounts and at different intervals for the goods and services provided by it to NLTB.
     
  2. That Vanua Development has agreed to advance the sum of $1,000,000.00 (One Million Dollars) to PacificConnex.
     
  3. That certain payments due from NLTB to PacificConnex pursuant to the said Agreement and stated in the schedule therein is hereby irrevocably assigned to Vanua Development to the extent of $1,000,000.00 (One Million Dollars).
     
• - No NLTB Common Seal affixed; only Mr. Bakani, General Manager and Ms.Vakatale signed.
• - A copy of ANZ cheque No. 000154 dated 29th September 2005 of VDCL account to PCX amounting to $600,000, signed by Mr. KD and Mr. Bakani.
  

(xiv) Exhibit No. 164- Cheque No. 000201 of Colonial National Bank dated 29th September 2005 of VDCL account to PCX amounting to $400,000, signed by Mr. KD and Mr. Bakani.

(xv) Exhibit No. 174- 374th NLTB Board Meeting Papers to be held on 3rd November 2005.

• - No Board Papers or Information
• - Papers relating to VDCL or PCX.
• - Paper 24, item 5 says that the audit of PCX and VDCL is still to be finalized by PWC and it will be tabled at the December meeting.
• - Page 25, General Manager's Report for the month of September 2005 does not mention of VDCL and PCX.
  

(xvi) Exhibit No. 175- 374th NLTB Board Meeting Minutes dated 3rd November 2005.

• - Paragraph 5.5, the reference to VDCL and PCX, is been reproduced in paragraph 23of this chapter.
  

(xvii) Exhibit No. 177- 375th NLTB Board Papers to be held on 15th December 2005.

• - No Board Papers or Information Papers on VDCL and PCX.
• - Page 39, General Manager's Report for the month of November 2005.
• - Page 42; Paragraph 5 is about VDCL and PCX.
  

Vanua Development Corporation and Pacific Connex

Unfortunately a comprehensive report on these two companies is not available for this meeting. This is due to the fact that Price Waterhouse Coopers is still finalizing the audit for the two companies.

Vanua Development Corporation recently purchased a building from Mantra Limited for a total purchase price of $4.5m. This has been funded with a $3.5m facility provided by Colonial National Bank. The Building is on a complete lease back arrangement with the head lessee being responsible for all matters pertaining to the Building. Attachment 10 has the complete details.

PacificConnex Limited has been actively involved in pursuing its application to be a second provider of Telecom Services in Fiji. We are positive that a decision on the application will be forthcoming from Government very soon.

- Witness said that there is no mention in these remarks about the financial situation and problems, loan guarantees of VDCL and PCX.

(xviii) Exhibit No. 178- 375th NLTB Board Meeting Minutes dated 15thDecember 2005.

• - Paragraph 5.5.1 says a comprehensive report of the two companies was not available for this meeting due to the delay in finalization of audits of 2004 accounts.
• - Paragraph 5.5.2 and 5.5.3 are almost similar to General Manager's Report cited above.
• - Witness said that there was no discussion by the General Manager or Mr. KD of any matters relating to the financial situation or progress of VDCL and PCX to NLTB members.
  

(xix) Exhibit No. 187- NLTB Board Meeting Papers to be held on 23rd February 2006.

• - Page 89; Information Paper No. 2 of 2006 is on VDCL and PCX by Mr. Bakani, General Manager.
  

Overview of Vanua Development Corporation Ltd

The performance of VDCL for the year 2005 could be classified as moderate with a lot of proposals received and analyzed thoroughly by the Board. The capabilities of the current Board members should also be acknowledged because whilst there is the urge to have VDCL's existence felt in the market there is also the responsibility in and amongst the Board to protect the interest of the landowners as they are ultimately the shareholders of this company. This responsibility becomes paramount when proposals are analyzed.

- Page 91, paragraph 2 is as follows:

Overview of PacificConnex Ltd

There were mixed results in the PCX front as the delay in the issuance of the mobile wireless licence impacted a lot on the business decisions made by the PCX Board and management. PCX had to bear all the upfront costs of this major project.

- Page 102 to 122 is the Financial Statements of VDCL for the year ended on 31st December 2004.
- Financial Statements for the same period till 31st December 2004, of PCX is at page 123 to 143.
- Witness confirmed that the NLTB Board received these statements pertaining to 2004 in February 2006.

(xx) Exhibit No. 188- 376th NLTB Board Meeting Minutes dated 23rd February 2006.

• - General Manager's Report starts from Paragraph 6.
• - Paragraph 14 on VDCL and PCX is reproduced in paragraph 23 of this chapter.
  

(xxi) Exhibit No. 199- 377th NLTB Board Meeting Minutes held on 27th April 2006.

• - General Manager's Report begins from paragraph 5.
• - Paragraph 7 discussed about the "Policy on transfer of NLTB properties to VDCL" (Board Paper No. 006/2006).
• - Mr. KD's comments on this issue is in the 2nd portion of the 1stparagraph on "Deliberations".

- No reference or report or mention of PCX.

(xxii) Exhibit No. 201- 378th NLTB Board Meeting Papers to be held on 22nd June 2006.

• - Paragraph 6 of page 47 refers to VDCL and PCX. A portion of this is been reproduced in paragraph 23of this chapter.
• - Witness agreed that certain developments in PCX had been told but no reference to its financial situation, loans, guarantees or anything of that nature.
  

(xxiii) Exhibit No. 202- 378th NLTB Board Meeting Minutes held on 22nd June 2006.

• - Paragraph 5.5, the reference to VDCL and PCX resites the Board Paper cited above.
• - Paragraph 11 on Extinct Mataqali Funds (Board Paper No. 16/2006) is as follows:
  

NLTB currently holds just a little above $3.36 million of extinct Mataqali funds. The General Manager in outlining the paper highlighted the following:

• In line with the Board's resolution in its 363rd meeting in 2003, the fund has been invested in the Vanua Development Corporation (VDCL) which is NLTB's Commercial and Investment arm. VDCL was established in 2004.
  
• In line with above resolution, the Board was to formally submit a request to the FAB Board for the transfer of the funds as FAB's equity share in VDCL. This has not been done. Management will be preparing a paper to this effect and submit to the FAB Board.
  

- The recommendation and the resolution of the NLTB is reproduced below.

That the Board approves the retention of the $3.36 million Extinct Mataqali Funds now invested with VDCL as equity by FAB and that the FAB Board is requested at its next meeting to approve the same.

Resolved:

The Board resolved to endorse the above recommendation.

(xxiv) Exhibit No. 207- NLTB Board Meeting Minutes dated 24th

August 2006.

- Paragraph 5.2.8 is on VDCL and PCX's issues relating to Digicel and its approach for partnership with these two companies.
- NLTB Board had resolved Mr. Bakani to step down from the position of Deputy Chairman of PCX and participate only as a member.
- Witness said no reference made to PCX's financial situation, loans, indebtedness, guarantees or of that nature to the Board.

(xxv) Exhibit No. 210 - 380th NLTB Board Minutes held on 2nd

November 2006.

54. Mr. Bakaniceva, in cross examination accepted that whenever it refers to NLTB Management, it does not include the members of the Board. He agreed that his source of memory over the events which took place in the Board Meetings comes largely from the documents seen and shown to him. Witness said for him to affix the seal on a document, he must have the Board resolution to go ahead and if not he returns the document.

55. The Seal Register of NLTB was identified by this witness and tendered to court marked as 'KD – 4'. All the documents that had been sealed were entered in this Register. He explained the sub headings of the Register, Number, Parties (NLTB and Lessees), re-entry, Extension and Native Lease. The evidence confirmed that this is the only Seal Register maintained in NLTB and it relates to the entries on leases which are subsequently ratified by Board resolutions. He said that he never encountered during his time as NLTB Secretary where the Common Seal was affixed on a Commercial Contract or a letter. Referring to the NLTB Common Seal in Exhibit 40, NLTB Letter to Colonial First State to release $1.6 million to VDCL, witness said that such documents or letters never been presented to him to affix the seal during his time.

56. Then Mr. Bakaniceva admitted that NLTB had two arms, finance and trust and as the company Secretary he treated the two parts separately as NLTB always made a strict cut-off between these two. He went on to say that 'finance arm' was NLTB's own money and for instance, if NLTB is to refurnish its offices, it would use its financial arm, which monies were built up by the collection of poundage and some trust monies with the consent of the Great Council of Chiefs in 1999.

57. The witness agreed with Mr. Keene, QC that at the early stages of VDCL, when the question of VDCL share capital arose, there was an issue of $3.4 million, Extinct Mataqali Funds which needed FAB's consent as those funds sometimes called as "frozen funds" are directed to FAB after the confirmation of Mataqali been extinct, but not before. This witness tendered the "NLTB Policies" dated 7th July 2005 as Exhibit KD – 5 and the 341st NLTB Board Meeting Minutes dated 22nd June 1999 as Exhibit KD – 6. Section 8 of KD – 6 is as follows:

Extinct Mataqali Fund and the Establishment of a pool to be used for the benefit of all Fijians – Paper No. 5

Members were invited to consider the appropriate use of the sum of $1,479,732.82 held by the Board for Extinct Mataqalis. Under a previous resolution of the Bole Levu Vakaturaga, such lands have not been transmitted to the State and rents accumulated are held by the Board.

The Bose Levu Vakaturaga has also agreed, to the use by the Board of this money to benefit all Fijians.

Resolved; (i) that Extinct Mataqali Funds be transferred from the Trust Department to an appropriate investment account with Finance and operated for the benefit of all Fijians.

(ii)Interest received on investment of $1.479m be used towards repayment of loan for the upgrade and renovation of NLTB building.

58. Mr. Bakaniceva also tendered to court defence Exhibit KD – 7, the 359th NLTB Board Meeting Minutes dated 24th April 2003. He said he cannot recall sighting any letter of Re-appointment of Mr. KD to continue as a member of NLTB once his first term expired in December 2004. Then the witness was taken back to certain exhibits cited to him during his evidence-in-chief.

(i) Exhibit No. 92 - Paragraph 4.

- (This is been reproduced inparagraph 53 for this chapter). Witness agreed that the assurance of General Manager to NLTB Board to present a Paper at every future Board Meeting was his own offer but not because the Board demanded for it.

- Paragraph 4.3.3 is been reproduced in paragraph 53of this chapter. It says the General Manager advised to the Board that the NLTB is the Shareholder of VDCL, it appoints the Directors, VDCL operates strictly under its. Article of Association and if the NLTB Board wants to inform the companies it owns about the commercial developments that the Board wants to pursue.

- Witness agreed that General Manager's contention in paragraph 4.3.3 is to remind the NLTB Board that VDCL is a separate legal company and that separation needs to be respected and NLTB must have the comfort because it appoints the Directors to VDCL Board.

- Witness confirmed that VDCL Directors have operated according to its Articles of Association or VDCL's Rules, where the rights of the shareholders are defined by the Articles.

- The last bullet point, the witness agreed, is to say that if there is something that NLTB wishes to pass on to VDCL it should be in a formal way and Mr. Bakani is saying the NLTB Board that you have a 100% owned subsidiary company on its own rules to which shareholders are also bound.

- The witness endorsed the suggestion of Mr. Keene QC, that this discussion about VDCL happened on 14th December 2004, a year after its establishment, which says that "if you want we will give you a report and volunteered".

(ii) Exhibit No. 97 - Item 3 of "Matters Arising" – VDCL and PCX Issues; Paper to be presented at the next meeting.

- Paragraph 5 – A Paper on NLTB, VDCL and PCX financial relationship and details to be tabled at the next meeting.

- No complaint by any member for not gettingthe report as promised.

(iii)Exhibit No. 133 - Item 21 refers to Information Paper No. 066/2005, which goes for over 40 pages dealing with number of elements related to VDCL and PCX affairs.

- Witness agreed that General Manager fulfilled his offer to the NLTB Board for a full report on these two companies.

- Item 21.3 is on PCX and fully reproduced under the 4th point ofparagraph 53of this chapter.

- It says, PCX loss of $230, 431 against a budget loss of $371,891 and PCX had applied for a loan of $7 million with FDB to refinance its costs associated with development of NLTB system but approved only $3.5 million.

- Witness agreed that it is telling the Board that it was identified by PCX that they need for external funding of $7 million and they got only half of that amount.

- Referring to item 21.4, Deliberations, witness agreed that when the Chairman informed that the information on VDCL was clear and the affairs of PCX seemed to be cloudy especially in the movements of funds like $7 million and the Management to submit a report every 3 months, it means that the paid management staff led by Mr. Bakani, the General Manager is to do the reporting.

(iv) ExhibitNo. 156 - Paragraph 7, Annual Accounts – Board Paper 016/2005.

- General Manager apologized for delay in tabling the audited accounts, citing two reasons and informed the Board that audited accounts for the two companies will be tabled at the next Board Meeting – (Reproduced in paragraph 53 of this chapter)

(v) Exhibit No. 187 - Page 83 – VDCL and PCX Information Paper 002/2006.

- Page 93 – financial details of VDCL and PCX (Appendix 1)

- Page 107 – Financial Statement of VDCL – 31st December 2004.

- Page 107 – Price Waterhouse Coopers' Audit Report (PWC)

- Page 112 – Explanatory Notes to the Figures.

- No complains or questions about the completeness and accuracy of this information

- Page 121 – PCX Sales Report January 2006

- Page 122 – Sales Funnel

- Page 123 – PCX Financial Statement for 31st December 2004.

- Page 128 – PWC's Audit letter

- Witness agreed that supply of this sort of information is exactly the information that Shareholders are entitled to get under the Companies Act as the supply of PCX information effectively explains the relationship between PCX and VDCL. He repeated that there was no complaint from the NLTB Board members about the failure to get information raised by them and had they wanted to raise any concerns or complaints they could have done so under "Matters Arising".

(vi) Exhibit No. 99 - Mr. Bakani's letter to Mr. Qarase, Prime Minister as a Director of VDCL dated 18th February 2005.

- Regarding the $million government grant in 2005.

- Highlighted portions of the attached Memorandum are reproduced under paragraph 53(v)of this chapter.

- Witness claimed that he cannot recall whether this government grant was made subject to any condition or not and said the purpose of the said grant was for NLTB to buy some more paid-up shares in VDCL whilst that money goes into the books of VDCL as its working capital because it is not appropriate to have security from a company in relation to its own working capital.

- Finally, in cross examination, the witness agreed that there was a problem in LALI system or NLTB's Land Administration Software System because of dirty data going into it when it was supposed to go live.

59. In Re-examination, referring to Exhibit KD – 4, the Sealing Register, Mr. Bakaniceva said that it is necessary to affix the common seal on contracts, guarantees or loan documents as its purpose was to inform the NLTB Board the amount of transactions that has been sealed. The 'transactions' are mainly lease documents as the leasing lands within the Board's responsibility. Witness agreed with Mr. Blanchflower, SC, that the operating words in KD – 5 is "operated for the benefit of all Fijians". Talking on KD – 6, the witness agreed that both FAB and GCC make decisions for the benefit of all Fijians and that is the purpose of the said "Fund" as well. He further agreed that shareholders of VDCL were the employees of NLTB and the working capital of VDCL was not put up out of their own pockets.

60. Referring to the exhibits cited by the defence, Mr. Bakaniceva said following.

(i) Exhibit No. 91 (paragraph 7) & Exhibit 92 (paragraph 4) - No mention of $2 million loan by VDCL to PCX or $900,000 loan by VDCL to PCX.

- General Manager "assured the meeting that there will be a paper" means some form of confirmation or promise.

- Board member Mr. Vesikula expressed his concerns about "risk" of Board owned two companies, VDCL and PCX.

(ii) Exhibit No. 97 - Paragraph 5, page 31

- No information about loans made by VDCL to PCX or PCX's own financial situation.

(iii) Exhibit No. 133 - Paragraph 21 on VDCL and PCX

- No mention of the two loans from VDCL to PCX or PCX's financial situation or indebtedness to financial institutions or Notices of Assignment of loan proceeds from PCX to VDCL.

- General Manager replied to member's query that Mr. Ballu Khan holds 49% of PCX's share whilst NLTB has 51%. (paragraph 21.4.1)

- Mr. KD was present in this meeting when the Chairman's comment on PCX's "affairs seemed to be cloudy" and advised the Management to submit a report on VDCL and PCX every 3 months.

(iv) Exhibit No. 156 - The witness confirmed that though the members did not complaint, General Manager apologized for the delay in tabling the audited accounts relating to VDCL and PCX and no financial information, even unaudited, about PCX was not submitted to Board.

(iv) Exhibit No. 187 - Financial Statement of VDCL and PCX for the year-end 31st December 2004.

- Tabled on 23rd of Feb 2006.

- No audited Financial Statements for 2005 butProfit and loss statement for VDCL ended 31st December 2005 and no such statement for PCX.

(vi)Exhibit No. 98 - Memorandum of Agreement and VDCL letter by Mr. Bakani.

- Objective of $1million government grant is to generate additional funds to NLTB for the benefit of landowners. (Reproduced in paragraph 53 (v)point in this chapter)

Prosecution Witness # 5
Mr. Kolinio Boila

61. Mr. Boila had joined the NLTB as a Management Accountant on 15th December 2003. He was under the direct supervision of Mr. Joveci Tuinamuana, the Deputy General Manager of NLTB. Mr. Joveci was under Mr. Bakani, the General Manager of NLTB. Mr. Joveci is said to be deceased. Mr. Boila had been promoted to Manager, Finance of NLTB in April 2004 and resigned from the same in December 2006. Being the Manager, Finance, he said that he was responsible with the overall and direct supervision of the financial functions and activities of the financial arm of the Board.

62. Mr. Boila said that he was aware that NLTB had approved the formation of VDCL as its investment and business arm. When VDCL commenced its operations in January 2004, Mr. Boila had been the Acting Board Secretary of VDCL, more precisely, February 2004 to August 2004. There were no paid employees in VDCL at that time, Mr. Boila said. Identifying Mr. KD, the witness said that he was the Chairman of VDCL with Mr. Bakani, Mr. Patel, Mr. Whippy and Mr. Kaloumaira as other Directors.

63. Mr. Boila said that he took his shorthand notes of the Board Minutes without a back-up tape recorder and the draft minutes were first sent to Mr. Bakani and after the necessary amendments, those minutes were been circulated to the other members via e-mail. Once the Minutes are confirmed at the next Board Meeting, Mr.KD, the Chairman signed the minutes. He also confirmed that if any Board Member found out that if he had omitted something important discussed or needed any correction, they had the opportunity to do so at the next Board Meeting as draft minutes were circulated minimum 2 days prior to the next meeting. Apart from this responsibility, he said that he looked after petty cash, Cheque book and also the general ledgers of VDCL. After the appointment of Mr. Aisake Saukawa as the Secretary to the Board, Mr. Boila had been relieved from that position.

64. Commenting on transfer of funds from NLTB to VDCL, the witness said that Mr. Bakani instructed him to do so and the NLTB Board decided what funds and the amount of funds to be transferred to VDCL. He said that initially "two groups" of funds were transferred, first, the funds already confirmed by the GCC and handled under NLTB's finance side (around $3.5 million) and second the funds which were awaiting confirmation of Extinct Mataqali Funds. (more than $3 million) Prior to this transfer to VDCL, he said that those funds of both types were largely invested in shares, stock bonds and Term Deposits in various places, including Unit Trust of Fiji, Fijian Holdings Trust, Colonial Finance, ANZ, Merchants Finance and Credit Corporation. The "transfer of funds" had carried out by requesting various companies to transfer the shares or term deposits or stocks or bonds from NLTB's name to VDCL's name.

65. Mr. Boila said that he was not sure whether or not the FAB approval is required to transfer the EMF to VDCL and to his knowledge, FAB's approval was not obtained before the transfer of EMF to VDCL. Mr. Boila testified in respect of the following exhibits.

(i) Exhibit No. 15 - NLTB letter (Mr. Boila for Mr. Bakani) to General Manager, Credit Corporation Limited dated 4th February 2004, in respect of NLTB Term Deposit No: 94512 of $249, 998.95, to be transferred to VDCL.

(ii) Exhibit No. 16 - NLTB letter (Mr. Boila for Mr. Bakani) to Manager, Finance, Merchants Finance and Investments Limited dated 4th February 2004 in respect of NLTB Term Deposit No: 5583 of $250, 000 to be transferred to VDCL.

(iii) Exhibit No. 17 - NLTB's letter (Mr. Boila for Mr. Bakani) to General Manager, Fijian Holdings Trust Management Limited dated 4th February 2004, in respect of Certificate No: 5275 of 877,193 units of NLTB to be transferred to VDCL.

3rd paragraph: "We further confirm that theproceeds from these investments will solely be for benefit of the landowners" was written because this investment was specifically for Extinct Mataqali Funds.

(iv) Exhibit No. 19 - Fiji Stock, Transfer and Acceptance Form dated 10th February 2004.

• - Fiji Reserve Bank (RBF) Form for the transfer ofRBF Stock of NLTB to VDCL amounting to $424,000.
• - Transferor was Mr. Bakani and the Transferee was Mr. KD.
  

(v) Exhibit No. 23 - Credit Corporation letter dated 11th February 2004 to NLTB enclosing a new Certificate for VDCL to the amount of $249,998.95.

(vi) Exhibit No. 24 - Unit Trust of Fiji, Official transfer of $413,224 units from NLTB to VDCL to an amount of $483,422.08 of Extinct Mataqali Funds dated 18th February 2004.

• - Mr. KD and Mr. Bakani signed on bottom line.
  

(vii) Exhibit No. 25 - Unit Trust of Fiji Certificate N: 55925 for VDCL dated 24th February 2004 for 413, 224 units.

• - At a subsequent point of time this certificate had been cancelled or redeemed as shows with the stamps.
  

(viii) Exhibit No. 26 - Letter dated 20th February 2004 from the Reserve Bank of Fiji to General Manager, NLTB, confirming the investments of NLTB amounting to $424,000 transferred to VDCL.

(ix) Exhibit No. 27 - Fiji Stock Certificate No: 1674B for newly issued stocks under the name of VDCL in accordance with Exhibit 26.

(x) Exhibit No. 32 - Mr. Boila's (NLTB) letter to General Manager, Colonial First State dated March 19th March 2004 to transfer $1.3 million from the Extinct Mataqali Funds to VDCL. The balance with Colonial First State as at 29th February 2004 was $1,638,535.81.

(xi) Exhibit No. 40 - Another letter sent to General Manager,

Colonial First State dated 26th April 2004, on the same contents as the Bank requested the authorized signatories to sign the letter to move the funds to VDCL. This letter contains the NLTB Common Seal.

(xii) Exhibit No. 33 - A letter signed by Mr. Bakani addressed to General Manager, Fijian Holdings Trust Management Limited, dated 23rd March 2004, to transfer 877, 193 units held in FHL Unit Trust, Certificate Number 5275, to VDCL, a new and wholly owned subsidiary of NLTB.

• - Letter confirms that the benefits from these investments will solely for the benefit of the landowners as the investment specifically mentioned of Extinct Mataqali Funds.
  

(xiii) Exhibit No. 34 - Unit Trust Certificate No: 6946, under the Fijian Holdings Unit Trust for 877,193 units in the name of VDCL.

(xiv) Exhibit No. 38 - VDCL document on PCX's Loan Proposal for $2 million.

• - Unsigned PCX letter dated 31st March 2007, by Mr. Dario Jaeger, Director of PCX to Mr. KD, Chairman, VDCL.
• - The last page, VDCL Investment Register as at 31st March 2004 prepared by this witness.
• - Total NLTB equity is $3,108, 418.04
• - Total EMF is $3,434,876.05.
• - The total amount transferred to VDCL from NLTB was $6,543, 294.09. That is the total NLTB equity and total Extinct Mataqali Funds.
  

(xv) Exhibit No. 39 - VDCL Board Minutes of 7th April 2004

"Matter Arising":

PacificConnex Limited (PCX)
Agreement – to be finalized and forwarded to all directors for review and comments. It was agreed that the agreement be signed by Wednesday 14th April 2004, before the launching on the 19th.

The 51% VDCL share in PCX will initially be treated as a loan and then converted to grant later. Important to note this in the agreement before it is signed.

Correction to be made in Capital Fund for PCX from US$1m to F$1m.

- PCX was a system developer and won the tender to develop the IT System of NLTB.

(xvi) Exhibit No. 43 - VDCL Extra-ordinary Board Meeting Minutes dated 1st of June 2004 convened solely to discuss the PCX loan proposal.

• - Witness denied him preparing the Minutes, but possibly by Mr. Bakani as he did not attend any extra-ordinary meeting.
  

(xvii) Exhibit No. 44 - VDCL (Mr. Bakani) letter to CEO,

Ministry of Fijian Affairs, dated 8th June 2004, to acknowledge the receipt of the Government Loan (Cheque No. CNB 002520) amounting to $747,338 to VDCL.

(xviii) Exhibit No. 46 - VDCL Investment Policy

Introduction

The purpose of this document is to set the framework for the investment strategies the Vanua Development Corporation (VDC) should follow when making decisions regarding VDC's investment and achieving the stated objectives of the Corporation.

- Page 2, Strategic Asset Allocation

"VDCL is to maintain a Strategic Asset Allocation of approximately 60% in growth assets and 40% in income or defensive assets".

- Page 3; Exposure Limit

"VDCL's exposure in one company should not exceed 20% of the portfolio and not more than 10% to be invested in any one investment without specific Board approval".

(xix) Exhibit No. 45 - VDCL Board Meeting Minutes dated 23rd June 2004

• - Government grant received of $747.338 has been treated as a capital grant – (Exhibit 44)
• - Investment Policy Guidelines (Exhibit 46) circulated among members and to adopt at the next meeting.
• - Board approved the PCX loan request of $2 million for 2 years with a interest rate of 9% to be paid on a monthly basis with principal to be repaid at the end of the term. Security Assignment over NLTB's annual lease payment of $1.3 million.
  

(xx) Exhibit No. 51 - VDCL letter by Mr. Bakani, dated 25th June 2004 to PCX informing the approval of their $2 million request and conditions of the loan.

• - Establishment fee of $15,000, equivalent to 8.75% of the borrowing charged.
  

(xxi) Exhibit No. 49 - VDCL letter by Mr. Bakani to ANZ Bank dated 25th June 2004, requesting to withdraw VDCL's Term Deposit of $202,104.11 within next 5 working days.

• - Exhibit 38 – Investment Register under Extinct Mataqali Funds Table, 1st entry, ANZ IBD.
  

(xxii) Exhibit No. 50- VDCL letter by Mr. Bakani to Credit Corporation Limited dated 25th June 2004 requesting to withdraw the Term Deposit of $249,998.95 within next 5 working days.

• - Exhibit 38 Investment Register – Extinct Mataqali Funds; 2nd entry; CreditCorporation IBD (Interest Bearing Deposit)
  

(xxiii) Exhibit No. 52- Credit Corporation letter to VDCL dated 30th June 2004 with an enclosed cheque (26974) of $244,863.48, after deducting a penalty of $7,901.85 for early redemption.

(xxiv) Exhibit No. 55- VDCL letter by Mr. Bakani to Merchants Finance and Investments Limited dated 25th June 2004 requesting to withdraw the Term Deposit of $250, 000 within next 05 working days.

- Exhibit 38; Extinct Mataqali Funds; 3rd Entry; Merchant Investments IBD.

(xxv) Exhibit No. 58- Merchant's Finance Receipt dated 12th July 2004, amounting to $247, 577.03 after deducting a penalty for early redemption of about $2500.

(xxvi) Exhibit No. 59- Loan Agreement Between VDCL and PCX dated 14th July 2004 relating to an advance of $2 million signed by Mr.KD and Mr. Bakani from VDCL, with its Common Seal.

• - Interest payments of $45,000 on quarterly basis.
• - Last page contains a VDCL cheque of ANZ for $2 million to PCX dated 19th July 2004.
  

According to Mr. Boila since the withdrawals from ANZ, Credit Corporation Limited, and Merchants Finance and Investments Limited were not enough for $2 million, the Government grant of $747,000 (Exhibit 44) was also added.

66. Mr. Boila was then referred to the documents relating to Dominion Finance.

(i) Exhibit No. 70- 9th VDCL Board Meeting Minutes dated 15th September 2004

- Under "Matters Arising" (iii) Board members are to review Investment Policy Guidelines and comment through e-mail to Mr. Bakani to finalize by next meeting.
- [e] Other Matters

(i) PCX requested an amendment to loan condition to allow Dominion Finance Co Ltd (DFCL) first charge over NLTB contract proceeds. It was resolved that VDCL and DFCL would have equal ranking.

(ii) The financial reports for August 2004 were noted by members.

- In the earlier loan of $2 million to PCX by VDCL, there was a security assignment over NLTB's annual lease payment to PCX, in the event of default (Exhibit 45; page 2)

- witness said this purports that PCX took out another loan with Dominion Finance and it appears that affects the earlier Security arrangements of $2 million loan by VDCL.

67. The loan facility of $900,000 from VDCL to PCX was the next discussed topic with Mr. Boila.

(i) Exhibit No. 81- Loan Agreement between VDCL and PCX dated 18th November 2004 signed by Mr. Bakani as a Director with the VDCL common seal affixed.

• - The last page contains a VDCL cheque (000063) of ANZ amounting to $875,250 dated 29th of November 2004 to PCX; signed by Mr. Bakani.
  

(ii) Exhibit No. 107- Fiji Government Cheque dated 14th March 2005

paid to NLTB amounting to $1 million as a payment of grant.

(iii) Exhibit No. 108- ANZ Cheque (016187), of NLTB dated 15th March 2005 amounting to $1 million payable to VDCL.

• - This cheque relates to Exhibit 107, the Government grant of $1 million to NLTB, was given to VDCL by another cheque.
  

(iv) Exhibit No. 109- NLTB's Remittance Advice related to the $1million ANZ cheque payment to VDCL which relates to the Government grant of $1 million dated 3rd March 2005 and a memo written by Mr. Bakani saying "$1m payable to VDCL" also contains in this.

(v) Exhibit No. 110- VDCL Cheque No. (000098) amounting to $1million dated 16th March 2005, payable to Dominion Finance, signed by Mr.KD and Mr. Bakani.

(vi) Exhibit No. 125- Guarantee dated 26th April 2005 relating to FijiDevelopment Bank (FDB) by NLTB as the "Guarantor" for the obligations incurred by or at the request of PCX, the 'Debtor' for a $3.6 million.

• - Mr. Bakani signed as General Manager, NLTB, without the seal.
  

(vii) Exhibit No. 132- NLTB Board Meeting Papers to be held on 5th May 2005.

• - Page 105 is the same last page of Exhibit 38.
• - Page 106 is VDCL's Investment Register as at March 2005.
• - Page 107 VDCL's Balance Sheet as at 31st December 2004.
  

(viii) Exhibit No. 157- E-mail from Mr. Boila to Mr. Aisake Saukawa, the next witness, who was the Secretary to VDCL at that time, 23rd of September 2005; regarding the additional PCX loan.

"Subject: Additional PCX Loan

Aisake, As per our discussions on the above topic, from NLTB's point of view, further loan to PCX will increase exposure to VDC.

Auditors normally conduct impairment loss assessments in order to evaluate returns on current investments. Further loan to PCX can increase provisions of "loss on investments". In NLTB's books if assessment of investments in PCX at the end of the year is not in NLTB & VDC's favour. We are talking about more than $3m loss adjusted against NLTB's 2005 surplus.

Also important to note that it is not wise to keep assigning PCX contract with NLTB as security over the loan. Profit margin to PCX on NLTB project was not much and assigning future funds against current loans will affect operational cashflows for PCX, which in turn affect PCX's support for NLTB SAP system.

For Considrations.
Vinaka.
Boila."

- Mr. Boila had not copied this email to anybody else and did not recall any response from Mr. Saukawa.

(x) Exhibit No. 180- VDCL Investment Register as at 31st
December 2005.

68. At the commencement of the cross examination, Mr. Boila said that he has some recollection on some of the events apart from the documents, such as movements of funds from NLTB to VDCL, initial portion of funds moved to PCX from VDCL, financial statements of VDCL, some major transactions took place and some important documentation including Mr. Bakani's signature.

69. Witness agreed that his appointment and employment contract was with NLTB but involved in providing NLTB accounting services to VDCL. He said that for NLTB matters he took direct instructions from Deputy General Manager of NLTB, Mr. Joveci Tuinamuana, but on VDCL matters, directly from Mr. Bakani. But, Mr. Boila said that 95% of his work was in NLTB, whilst the rest with VDCL. Mr. Boila recalled that it was one Mr. Vitusagavulu was the Consultant who made the proposal to the NLTB Board to have a separate commercial investment arm. He agreed that the idea behind VDCL was it to be able to go out and make investments that the NLTB itself could not do and that is the reason for VDCL to be a separate corporation.

70. Then the attention of the witness was drawn to the following Exhibits.

(i) Exhibit No. 11- Paragraph 6; current NLTB Investment Portfolio talks about NLTB own funds.

• - Paragraph 8; $1 million Interest free loan from Government to NLTB; is a Capital grant. But, actually received amount was around $747,000.
• - Transfer of current NLTB Investments; $1,684,853 is mentioned in Table 2 of paragraph 6 as Fijian Holdings Limited "A" Class shares.
• - $1,569,208 is mentioned in paragraph 6 as the amount of 'Special Fund' created in 1999.
• - These are NLTB's own money and some of its income was to help the payments of the renovations of its head office.
• - Transfer of Investments in Trust Fund; $3,440,402 is reflected in paragraph 7 under "Other investments and General Term Deposits".
• - Witness agreed that $1,684, 853 and $1,569, 208 are "NLTB's own funds" and $3,440,402 is "Trust Funds".
  

(ii) Exhibit No. 9 - Paragraph 7.4 is the reflection of what discussed under Exhibit 11.

• - Clarifies how the initial paid up capital of $7.7 million made up of (Total is $7,694,463).
• - Paragraph 7.10.1; VDCL is to commence operations by 1st January 2004 as 31st of December 2003, the financial year of NLTB ends.
• - Paragraph 7.10.4 (Resolved) as follows:
  

FAB to be requested to approve the transfer of funds in the Trust Fund which belongs to it as equity in VDC.Moreover that they be approached for a grant or interest free loan of $1m as additional equity of VDC.

Witness said that FAB's approval was never sought according to his recollection, but probably the Management was confident that they will be able to get the process through. He further said that the Board paper recommended to ask FAB to use that $3.4 million as FAB's equity in VDCL to earn more interests but the approval was not obtained at that point of time. "In contrary, Mr. Boila said the first three figures, $1 million Government loan, Class "A" shares of FHL and investments done with the 'Special Fund' were NLTB's own money. (paragraph 7.10.3)

- He recalled that according to this resolution, VDCL's Authorized Capital is to be $20 million and paid up capital is to be $7.7 million. He said that $3.4 million of Extinct Mataqali Funds were not treated as 'capital' of VDCL, but an advance or loan VDCL as a borrowing from NLTB. It was suggested to Mr.Toga that subsequently, notwithstanding the lack of consent of FAB, the funds were treated as equity by FAB.

- (Paragraph 11 of Exhibit 202 is reproduced in paragraph 53in this chapter)

- Mr. Boila maintained that $3.4 million of Extinct Mataqali Funds cannot be considered as VDCL 'paid-up capital' and in fact agreed that, in that event there won't be a paid-up capital of $7.7 million as the NLTB Board resolved on 18th December 2003.

- Mr. Boila went on to say that there was a "Trust Deed" signed by NLTB confirming "that the funds transferred to VDCL in its hands its holding in trust on behalf of NLTB". He identified Exhibit 6A, DEED FOR HOLDING SHARES IN TRUST IN THE VDCL dated 19th of March, 2004, as the "Trust Deed" he referred to and in support of his contention by citing its 3rd paragraph of the 1st page.

Whereas the parties to this Deed are desirous that the beneficial interests of the VDCL Shareholders in the dealings of the property in the new Company and the proceeds derived thereof shall remain the property of the Board in the hands of the VDCL shareholders. And that the properties of the company shall not be assigned, transferred or dealt with in any way except as hereinafter provided.

He agreed with Mr. Keene, QC, that the "proceeds derived" shall remain in the hands of 'VDCL Shareholders but not VDCL itself. But, Mr. Boila said that though VDCL was not a party to this Trust Deed, three persons from VDCL had been signatories to it. He further said that it was his personal opinion at that time that the 'Trust Deed' permitted NLTB to lend trust funds to VDCL and therefore not be in breach of its obligations relating to the trust funds.

(iii) Exhibit KD 9 - This contained 5 e-mails exchanged between Mr. Boila and Mr. Bakani on the issue of $3.4 million Extinct Mataqali Funds transferring to VDCL pending FAB approval.

• - Mr. Boila said he proceeded to transfer the Extinct Mataqali Funds as instructed by Mr. Bakani, though he understood the accounting implications.
• - Then he agreed if that $3.4 million Extinct Mataqali Funds was not the capital of VDCL where VDCL is going to be the trustee for that loan, part of the resolution, the paid-up capital of VDCL to be $7.7 million, was not met and he cannot recall whether the NLTB Board members knew these things at that time as he has no evidence to say whether Mr. Bakani relayed that information to the Board.
  

(iv) Exhibit No. 38- Witness agreed that the three withdrawals from ANZ ($202,104.11), Credit Corporation ($248, 998.95) and Merchant Investments ($250, 000) were a part of monies consisted of $2 million loan to PCX and that is out of the Extinct Mataqali Funds transferred to VDCL.

(v) Exhibit No. 45- [c] VDCL Board approved the $2 million loan request of PCX on 23rd June 2004.

Witness confirmed that though he was present in this meeting, he did not pass the information to the Board that the PCX loan money is not only the own capital or equity of VDCL.

- But, he said that he is not sure whether the Board asked for the source of the $2 million. Nevertheless, he said that the information was provided to Mr. Bakani.
- Witness could not confirm whether the real reason as to why the information was not provided to the Board was Mr. Bakani did not want to do so. But, he admitted that he and the NLTB treated this money as "NLTB Trust Money".
- Referring back to Exhibit 38, the Investment Register of VDCL as at 31st March 2004, Mr. Boila said that he could have taken money from the 1st cage, "NLTB Investments Transferred to VDCL" or NLTB's own funds, but because of the urgency of the request, he was asked about the funds which can be redeemed within 5 working days and he answered to Mr. Bakani accordingly.
- The total sum that can be redeemed within 5 working days, according to the above Investment Register was $3,153,220.97. Answering the counsel as to why he did not focus only on their own capital in the 1st cage, Mr. Boila said that there were insufficient funds in that pool as FHL "A" Class will take time to redeem and there is no point of exchanging a 20% dividend to 9%.
- Mr. Boila agreed that $200, 000 (ANZ, Credit Corporation and Merchant Finance withdrawals) of Extinct Mataqali Funds went into the $2 million PCX loan as Mr. Bakani's view was, to which he also had to agree because Mr. Bakani was his boss, that VDCL could do whatever it liked whether its NLTB's own funds or Trust Funds. But, he said, that he would "probably disagree" to lent $700,00 of NLTB's Trust money for a term of 2 years being the trustee of the funds.
- Mr. Boila told that to lend the said $700,000, NLTB Board approval is needed and that would have been his answer had any Board member raised that issue at that meeting. If something had happened to the finances of VDCL or the company, Mr. Boila agreed that the trust funds could have got back because they are trust funds. Yet for all, the witness volunteered to say that he has no experience on proper risk assessment of investments and corporate governance at that time.
- Basically what Mr. Boila said was that NLTB had its own money in its finance section and trust funds of various categories of people in its trust section.

(vi) Exhibit KD-8 - NLTB's Annual Report for year 2004.

• - Page 43 – witness said $5,526, 374 under "Receivable from related parties" in "Current Assets" includes "Extinct Mataqali Funds". This figure is cross referenced to 6 (b) at page 45. The figure there $3, 369, 848, according to Mr. Boila is $3.4 million of EMF and the difference is due to the changing values of investments. 6 (b) is cross referenced to 6 (e), where it says "The funds advanced to VDCL relates to income on unallocated vacant lands. The Board, from its own funds, has guaranteed the repayment of all monies advanced to VDCL". Mr. Boila said that he understands that to be the interpretation of the Auditors according to their knowledge of "Trust Fund" and "Trust Deed".
  

(vii) Exhibit No. 45- Mr. Boila was referred to this exhibit for the 2nd time. He agreed that the $2 million PCX loan was for the interest rate of 9% and the funds that reflect were earning much less than that. With the improved return for VDCL, witness agreed that an Assignment of NLTB Annual lease payment of $1.3 million was taken as security. Mr. Boila said that he did not have a view, whether that was a sensible business or not as he did not have any knowledge of the formal approval of the NLTB.

(viii) Exhibit No. 51- Loan Offer from VDCL to PCX for $2 million loan.

• - Establishment Fee was $15,000 (equivalent to 0.7% of the borrowing)
• - Witness confirmed receiving that amount.
• - Witness then agreed that $15,000

Establishment Fee is more to the total amount of two break fees or penalty charges for early redemption ($7,900 and $2,400) by Credit Corporation and Merchant Finance.

(ix) Exhibit KD – 10- PCX Financial Statements - Year ending

31st December 2004.

71. Answering the questions of Mr. Blanchflower, SC in re-examination, Mr. Boila said in NLTB there were only two types of funds in one bank account, but for the accounting purposes, it was divided into different sub accounts based on different categories of assets, liabilities and equity. But, he said that they all were NLTB Funds.

72. Then Mr. Boila was taken again through several exhibits.

• Exhibit No. 11- Citing paragraph 2 (already reproduced in paragraph 6 of this chapter) Witness said the main objectives of VDCL were to invest the funds it received from NLTB to generate additional revenue for the NLTB, enjoy a greater autonomy in its operations and to properly manage landowner's investments, which is between $9-12 million at any time, in the Trust Fund.
  • - Referring to figures in paragraph 7, Mr. Boila said that the Special Fund of $1,569,208 (paragraph 6) along with Native Owner's investments, other investments and General Term Deposits and the Cash Balance of $3 million are included in the "Trust Fund" of $9,917, 468. He further explained that $3, 440,402 in paragraph 8 as "Transfer of Investments in Trust Fund derived from income of Schedule A& B lands" also included in this $9.9 million "Trust Fund".
    
• Exhibit KD – 8 - NLTB's Annual Report for 2004.
  
  • - Page 4 – Reflects a photograph of Mr. KD in Board of Trustees.
  • - Page 5 – The names of Mr. Nemani Buresova, Mr. Asesela Sadole and Mr. KD as the nominees of FAB to NLTB.
  • - 1st paragraph says the Board Membership of the 3 nominees of FAB renewed for another 3 year term with effect from 14th December 2004.
  • - Page 28; witness agreed that the Special Fund, $1,569,208 reflect in paragraph 6 and 8 of Exhibit 11 (NLTB Board Paper NO: 31/2003) is been reproduced under "Reserves" of NLTB with a cross reference to 5 (c), where it says "The special fund is to be used for the benefit of all Fijians in accordance with the recommendation of the Bose Levu Vakaturaga. This has been invested in Vanua Development Corporation Ltd."
  • - Talking about Mr. Bakani, the witness said he got instructions from Mr. Bakani as the General Manager of NLTB and Director of VDCL. He said he was the Board Secretary of VDCL and was responsible of taking minutes of the meetings that he attended and did not have any decision making responsibility or requiring to give advice to VDCL Board. Pointing to 6 (a) (Government Grants – other) the witness endorsed that the owners of a company are Shareholders and the Directors have a duty to act in the best interest of that Shareholders. In this case, Mr. Boila confirmed that VDCL Shareholders (3) were employees of NLTB.
    
• Exhibit No. 6A- Trust Deed.
  • - Going back to paragraph three (3) of its 1st page(reproduced inparagraph 70of this chapter)Mr. Boila admitted that it has not distinguished the "types of property", but refers to "all the property".
    
  • - Page 2, Defines what "Trust Property" is.
    

"Trust Property" shall mean the said real, personal or intellectual property aforesaid and the goodwill, equipment, stock in trade and all other assets and moneys hitherto used in carrying on the business of VDCL at the premises under the name and style of "VDCL" and all moneys, investments, interests, securities and property paid or transferred to or accepted by the Trustees in the course of the business of the Company upon the trusts and subject to the powers and provisions of this Deed and moneys, securities, investments, interest and property from time to time representing the same or part or parts thereof.

- Witness said the above definition refers to all monies and properties and the VDCL Shareholders shall stand possessed of the trust property upon trust either to retain the same in the form of property, monies, investments, interests and securities. (paragraph 5).

Prosecution Witness # 06
Mr. Aisake Semisi Talakula Saukawa

73. Mr. Saukawa was the 6th prosecution witness. He had been appointed to VDCL as Research/Administration Officer/Company Secretary, with effect from 20th September 2004 and continued to be in the said office till 2010.(Exhibit 69 – Letter of Appointment). Page 2 under the heading of "NLTB ROLE DESCRIPTION", the following key accountabilities and outputs were highlighted.

• Preparation and Circulation of Board Papers for monthly Board Meetings.
• Assisting in the conduction of Board Meetings.
• Preparation and Circulation of Board Minutes.
• Attending to all business meetings on behalf of VDCL.
• Preparation of all payments to VDCL creditors.
  

74. He said that he was interviewed by Mr. Bakani, and he knew that Mr. Bakani was the General Manager of NLTB. When he joined VDCL in 2004 and even till 2007, according to Mr. Saukawa, there were no paid employees in VDCL, other than him. Recording of Board Minutes in VDCL meetings was done with the handwritten notes without having a tape recorder. The procedure adopted next, draft minutes first been given to Mr. Bakani, then circulated among other Directors for any comments, corrections or additions before the next meeting and finally confirmed by the Chairman, Mr. KD, is almost the same as narrated by the two previous Board Secretaries.

75. Mr. Saukawa identified the accused as Mr. KD and said being a long standing employee of VDCL, he can recognize the distinctive signatures of Mr. KD, Mr. Bakani and Mr. Isoa Kaloumaira. He confirmed his knowledge of Mr. KD called the Board Meetings to order and led the discussions and he had the influence over the meeting, but decisions were made after the discussions with other Board Members. He had observed a good working relationship with Mr. KD and Mr. Bakani.

76. According to Mr. Saukawa, he was then verbally appointed Board Secretary to PCX by Mr. Bakani and his duties and the followed procedures were similar to those of VDCL's. PCX, he said was a company involved in consulting on MYSAP IT system, the system used by NLTB. 51% of PCX shares were held by VDCL, whilst the balance 49% was by Pacific Contract Management Services Limited (PCMS) owned by one Mr. Ballu Khan.

77. Mr. Saukawa said that Mr. Khan was also connected to "Tui Consulting" company. He could not recall when he assumed duties in PCX as the Board Secretary, but said it was after Sep 2004. Mr. Ballu Khan (Chairman), Mr. KD, Mr. Bakani, Mr. Isoa Kaloumaira, (from VDCL Board) and Mr. Dario Jaeger were the Directors of PCX at that time. The witness claimed that Mr. Jaeger apart from being a Director, held the position of Chief Financial Officer of PCX, but resigned on 31st December 2004 and he is familiar with the signatures of Mr. Khan and Mr. Jaeger as well. Mr. Bakani had been the Deputy Chairman of PCX after resigning as Board Secretary once Mr. Saukawa assumed duties of the position on 31st of December 2004. (Exhibit 230 – Particulars of Directors of "PacificConnex Investment Limited" dated 13th September 2006)

78. The PCX Board Meetings, according to Mr. Saukawa, were on monthly basis, but when matters of urgency came up, it was on ad hoc basis. He recalled that it was Mr. Khan who would present the financial matters relating to PCX, including any Reports prepared by the Chief Financial Officer, during the Board Meetings and the other members were free to ask any questions on those financial matters, such as loans, revenues losses, financial accounts etc. He said that Mr. KD and Mr. Bakani were present in such meetings and recalled Mr. KD discussing business and financial situation of PCX in the course of discussions, including the decisions to request loans from VDCL.

79. The 1st document in relation to VDCL and PCX affairs shown to witness was Exhibit 37.

(i) Exhibit No. 37- CONSULTING AND MANAGEMENT

SERVICES AGREEMENT between PCX and PCMS (Pacific Contract Management Services Limited) dated 31st of March 2004

- Scope of Services

PCX contracts PCMS to implement a SAP system for the Native Land Trust Board (NLTB) hereby referred to as ("the NLTB Contract")

PCMS subcontracts TUI to perform recruitment and resource management and resource management, financial and pricing analysis, contract preparation and complete contract negotiations on its behalf.

- Obligations
(a) PCMS

PCMS shall be responsible for providing the required resources at the request of PCX to ensure the specific deliverables assigned to PCMS by PCX within the NLTB Contract are delivered within a timely manner and the satisfaction of the External Client.

(b) PCX

PCMS shall be responsible for preparing the deliverables Schedule in the NLTB Contract and ensuring the specificdeliverables of the External Client are delivered in a timely manner.

- Table 3 in page 14 is on the Consulting fees

and expenses to be paid to PCMS by PCX from May 2004 to January 2005.

Month	Total Consulting Fees and Expenses
May	872,727
June	654,545
July	654,545
August	654,545
September	654,545
October	654,545
November	218,183
December	218,183
January	218,182
TOTAL	$4,800,000

- Mr. Khan had signed on behalf of PCX as the Chairman and CEO whilst Mr. Dario Jaeger signed for PCMS as CFO.

(ii) Exhibit No. 68 - PCX – Certificate of Shares dated 1st September 2004.

• - Authorized Capital of $1 million divided into 1 million ordinary shares of $1.00 each.
• - Signed by Mr. Bakani, Mr. Saukawa and Mr.Khan with the Common Seal of PCX.
• - VDCL held 510,000 'A' Class ordinary shares.
  

(iii) Exhibit No.72 - PCX, Extraordinary General Meeting Minutes dated 21st September 2004 to approve Dominion Finance loan proposal for $1 million.

• - Witness had not prepared this but recognized.
• - Board members (all 5) resolved the Dominion Finance $1 million loan proposal and further resolved to negotiate a further $1 million loan on similar terms and conditions.
• - Defence consented to produce this document.
  

(iv) Exhibit No. 73- PCX Board Meeting Minutes dated 24th September 2004.

• - Witness had not prepared this though he was the secretary during this time, but recognized kept in his custody.
• - Paragraph 2 (c), The Board (all 5 Members) ratified to purchase of software on behalf of NLTB for US$180,000 and (d); Ratification of purchase of NLTB hardware for US$180,000.
• - The Extra ordinary Board Meeting Minutes on 21st September 2004, in respect of accepting Dominion Finance $1 million loan proposal, were accepted and signed.
• - Following are some excepts what witness pointed to from this meeting.
• - Paragraph Business Unit Reports
  

3.1 Corporate

The CFO noted that despite raising $1m from Dominion Finance, ongoing funding of PCX continued to be a concern.

The Chairman noted that a further approach had been made to the ANZ General Manager suggesting the ANZ took a long term view on PCX and given the project was almost completed, risks were limited. He also stated that the additional information requested earlier by Barry Snowman was released by the CFO. Mr. Bakani confirmed an earlier phone call had been made lobbying on behalf of PCX. A decision was expected by Tuesday 28 September 2004.

3.2 Sales and Marketing
Discussion focused on the political issues at FIRCA and how to overcome them. Mr. Dakuidreketi undertook to call and meet the FIRCA CEO and the Minister of Finance.

(v) Exhibit No. 74- VDCL Board Meeting Minutes dated 13th

October 2004

- Mr. KD was absent.
- [b] Matter Arising; {iii) Members agreed to adopt the circulated VDCL Investment Policy Guidelines in Exhibit 46.
- [c] New Business; (iv) Members agreed to approach Dominion Finance and Credit Corporation for short term investments
- [d] Other Matters; (iv) Members agreed to get a clarification from the Government on its funding to VDCL, whether it's a loan or grant for equity purposes.

80. The witness was shown several exhibits in respect of $900,000 loan to PCX by VDCL.

(i) Exhibit No. 75- Letter to Mr. Bakani, Director, VDCL from Mr. Jaeger, CFO, PCX, dated 16th November 2004 requesting a loan of $900,000.

• - The following portions were read by the witness.
  

Re: Loan Facility

1. Background

PacificConnex has almost completed the NLTB implementation due to go live on 6 December 2004. PCX does not see any risks to a successful go-live but requires further funding to complete the project and grow and close deals in its pipeline.

2. Financing Strategy

The following funding strategies are either in progress, recommended or have been secured:

(a) Immediate Financing

(i) Westpac Funding

PCX has secured a further $450,000 from the Westpac bank secured by a personal guarantee of the Executive Chairman.

(ii) Vanua Financing

PCX requests that Vanua consider advancing a further amount of $900,000 at the same terms and conditions of the existing loan.

(b) Short/Medium Term Financing

(i) Yasana Convertible Note

PCX is currently in discussions with Yasana Holdings Limited for a state in PCX. This was outlined this afternoon by the Executive Chairman, whereby Yasana would be offered a convertible note of $5-$7 million, converting to a 10% stake in PCX. These funds will be used to repay the existing TUI Consulting debt and also fund new project growth. We are attempting to finalize this deal by the end of the month.

(ii) Exhibit No. 79- VDCL Internal Memo dated 17th November 2004 regarding the $900,000 loan proposal from PCX.

PCX Offer Additional funding of $900,000.00 [0.9m] is required for PCX's infrastructure and operational costs. [as per attached letter from PCX dated 16/11/04].

VDCL has been approached to lend $900,000.00 [0.9m] @ 9% for a term of 2 years.

Exposure

	Current Amount	% Exposure	With Additional grant from Govt and % exposure
VDCL Total Portfolio	$7,298,855.00		$8,298,855.00
Current exposure with PCX	$2,000,000.00	27%	24%
Proposed exposure	$2,900,000.00	39%	34%

This proposal will get VDCL an annual return of 9%. This is $36,000.00 more than the current investment with Colonial, which is at 5%. The total average yield will increase from 6.49% to 7.54%. [Refer attached Inv. Register Oct & Nov [proposed]

- The witness admitted that he prepared this with Mr. Bakani's instructions and sent to the Directors for their comments. Mr. Bakani, Mr. KD and Mr. Kaloumaira had supported the proposal in the following terms.

• Mr. Bakani - 1. The initial request was for $500,000.00 but because we had to prepay this Term Deposit of $900,000.00, further discussions resulted in the increase amount. This is of benefit to VDCL as the returns will be higher.
  

2. Whilst the exposure to PCX is beyond the limits set in the policy guidelines, we should be adequately covered with the assignment over funds due to PCX from NLTB. With the additional funding from Government of $1m our exposure to PCX will be 34%. [On the basis that the full $1m is received]

• Mr. KD
  • - "The proposal has my support. The risks that PCX of not completing the NLTB contract is now diminished with the project coming live on December 6th. I am comforted with the knowledge that the assignment of NLTB payments offers adequate security"
    
• Mr. Isoa Kaloumaira
  

- "Breaking of Colonial Income fund has my support since it does not cater for growth. The exposure of 39% though is a concern but short term nature of the request shall see this corrected. I support the proposal."

- Mr. Saukawa said that Mr. Nalin Patel did not participate to the decision after declaring a conflict and Mr. Daniel Whippy requested further information and he did not make any comments.

• Mr. Nalin Patel
  

- "I have discussed with Chairman (Mr. KD) on the potential conflict issues arising from our firms role in providing certain professional services to PacificConnex. Accordingly, I would not participate in this decision."

(iii) Exhibit No. 83- E-mail chain between Mr. Saukawa, Mr. Jaeger and Mr. Daniel Whippy, dated 18th and 19th of November 2004.

• - Witness said that the 1st email from him to Mr. Jaeger was sent requesting the Balance Sheet, Audited Accounts, Cash flow for 2005, Capital Expenditure Projection and Source and Application of funds as Mr. Whippy requested for those. It was written that "Once this is received we will then be able to finalize the deal".
  

- The response of Mr. Jaeger was as follows:

"Subject: Re: PCX Loan Proposal

Aisake, here are numbers 1 (Balance sheet) and 3 (forecasted financial statements). On number 2, PCX does not have any audited financial statements. It has not been trading long enough.
On ...capex is driven from user numbers. Could be between $500k to $1,000. The majority of capex will be leased.
On 5, funds will be used for operating activities.

Cheers

Dario

p.s. Ballu and I have signed the loan agreements. Please send the letter to me at Clark street."

- The 3rd email was from this witness to Mr. Whippy saying that requested documents of PCX are attached for his comments. That was on 19th of November 2004.
- Mr. Saukawa admitted that whilst Mr. Whippy was waiting for more information, the 18th November 2004 email of Mr. Jaeger says that "Ballu and I have signed the loan agreements" and the VDCL Investment Register as at November 2004 reflects $900,000 loan to PCX under the 2nd box of Extinct Mataqali Funds transferred to VDCL.
- The following items were highlighted in the Balance Sheet (October 2004)

1. LIABILITIES
   • - Related Party Payables
2. Loan from Tui Consulting - $535,202
3. Loan from Dominion - $1,000,000
   
4. SHARE CAPITAL AND RESERVES
5. Shareholders loans - $2,000,000
6. Current Period Earnings – ($1,082,751) minus/negative
   • - Revenue Statement
   • - Net profit after Tax in June 2004 – ($290,000) September 2004-($542,000)December 2004 - ($410,000)
     

CASH FLOW STATEMENT

7. CASH FLOW FROM INVESTMENT ACTIVITIES
8. In flows (Money flowing into PCX
9. Westpac Loan – $450,000
10. Shareholders loans – $5,000,000
11. Cash inflow from Operating Activities till December 2004 is "zero"
    

BALANCE SHEET
LOANS/FUNDING

12. Dominion - 1,000,000
13. Westpac - 450,000
14. Institutional leases - 557,000
15. VDCL loan - 2,000,000
16. Tui Consulting - 433,000

- Mr. Saukawa agreed that all the above documents attached to the email of Mr. Whippy were sent to him by Mr. Jaeger.

(iv) Exhibit No. 80- A letter dated 18th November 2004 from VDCL, (Mr. Bakani) to Manager, Colonial First State to withdraw $900,000 invested in this institution and transfer the same to ANZ.
- This $900,000 is been reflected in item 4 under Extinct Mataqali Funds transferred to VDCL (2nd table) in VDCL's INVESTMENT REGISTER as at 31st March 2004 of Exhibit 38.

(v) Exhibit No. 84- A letter dated 19th November 2004 from VDCL (Mr. Bakani) to Directors of PCX about the loan of $900,000.

• - It says "This is to advice that the Board of VDCL at a meeting on 18th November 2004 approved a loan of Nine Hundred Thousand Dollars..."
• - The loan is for a 2 year period (fully paid on 19th November 2006) with an interest rate of 9% per annum, payable in quarterly installments on the security of proceeds due to PCX by NLTB.
• - Establishment fee was $24, 750.
• - Mr. Bakani for VDCL and Mr. Khan and Mr. Jaeger for PCX had signed the letter.
  

(vi) Exhibit No. 81- Loan Agreement between VDCL and PCX dated 18th November 2004, in respect of an advance loan of $900,000.

• - Mr. Bakani and Mr. Kaloumaira signed for VDCL with its common seal whilst Mr. Khan and Mr. Jaeger signed for PCX with its Common Seal.
• - ANZ Cheque dated 29th November 2004, drawn out of VDCL's account to PCX after deducting the Establishment fee, (900,000 – 24,750 = $875,250) signed by Mr. Bakani and Mr. Kaloumaira is at the last page.
• - Witness said that he believes that this loan was defaulted, but did not know how much of the loan was actually paid back by PCX.
  

(vii) Exhibit No. 82- "Deed of Assignment and Irrevocable Authority" dated 18th November 2004, signed between VDCL, NLTB and PCX.

• - This is in respect of the security, NLTB to pay VDCL to the extent of $900,000, in case of default.
• - Mr. Kaloumaira and Mr. KD for VDCL;
• - Mr. Bakani and Mr. Bukarau for NLTB; and Mr. Khan and Mr. Jaeger for PCX signed at the last page.
  

81. Then Mr. Blanchflower, SC, took the witness through several PCX Board Meeting Minutes.

(i) Exhibit No. 89- PCX Board Meeting Minutes dated 14th December 2004.

• - Mr. Bakani had been appointed Deputy Chairman of PCX and to assume the role of Executive Chairman in Mr. Khan's absence.
• - Mr. Saukawa appointed Company Secretary for PCX by formalizing his informal appointment.
• - The fees for the Directors were approved as follows:
  
  1. Chairman -$15,000 per annum
  2. Deputy Chairman - $10,000 per annum
  3. Directors - $6,000 per annum
     
• - These fees to be payable from the date of appointments.
• - The Board had resolved to enter into an agreement with NLTB to advance unsecured loan of $1,303.734 for being acquisition of ownership of SAP and ORACLE license.
  

(ii) Exhibit No. 90- A Minute extracted from the PCX Board Meeting dated 14th December 2004 in respect of the Directors fees.

• - The amounts are stated above.
• - Mr. Saukawa said that he was not paid any fees for his role as Company Secretary.
• - Attached is two (2) e-mails exchanged between twoTUI Consulting employees, who were handling finances, over the issue of paying Director's fees.
  

(iii) Exhibit No. 96- PCX Board Meeting Minutes dated 26th January 2005.

• - Mr. KD, Mr. Bakani and Mr. Jaeger were absent.
• - Paragraph; CEO, Mr. Khan's Report on the updates of NLTB system.
  
• - 4.4 Corporate/Finance Report [BP No...003/05]

The Chairman presented the corporate report on behalf of the Chief Financial Officer. The Board noted that 2004 was PCX's development year. The % loss at 13% is quite good taking into account the development stage. Also the unbudgeted donation of $140K was actually business expenses.

The Board agreed to accept the Finance Report and looks forward to a good year in 2005.

(iv) Exhibit No. 100- PCX Board Meeting Minutes dated 23rd February

2005

- Paragraph 5.1 Sales and Marketing

Report[BP No....005/05]

The Board noted the Sales & Marketing report presented by Mr. Naulago who also advised the Board that February has not been a very good month for PCX. The Chairman advised that the deals with Vinod Patel & CJ Patel are almost closed. These are to be finalized before the end of next month.

Director Mr. KD also mentioned about the prospect of approaching USP. SN to follow up.

The Directors agreed to accept the Sales & Marketing report.

- Paragraph 5.3 is Corporate/Finance

Report [BP No....003/05]

The Chairman presented the corporate report on behalf of the Chief Financial Officer. The Board noted that 2004 was PCX's development year. The financial statements will now change slightly with a positive inflow from the new contracts to be signed. PCX will be looking at an average of $300,000.00 net surplus per month beginning June 2005.

The refinancing proposals have been given to Colonial who are currently analyzing it. Results should be available within the next week. The other commercial banks will also be approached and PCX is anticipating deals to be signed within the next month. The Secretariat to follow up.

The Board agreed to accept the Finance Report.

- Witness said that "refinancing proposals" with "Colonial" meant that to refinance PCX's debts with Colonial National Bank as at that time there were none with Colonial.
- Referring to paragraph 6.1, Mr. Saukawa said that with the direction of the Chairman, Financial Statements of PCX were provided to the Directors along with the Board Papers/package material for them to be updated their knowledge of PCX on monthly basis.

82. The following documents shown to Mr. Saukawa were in relation to the transaction with Dominion Finance.

(i) Exhibit No. 99- Mr. Bakani's letter to Mr. Qarase, PM, on 2005 Government grant of $1 million to NLTB. (Reproduced in paragraph 53 (v))

(ii) Exhibit No. 101- PCX letter from Mr. Bakani to R. Patel & Co. dated 28th February 2005, about Dominion Finance Loan to PCX.

(iii) Exhibit No. 106- Payment Voucher of $1 million from the Department of Fijian Affairs dated 14th March 2005.

• - Witness had uplifted this cheque on behalf of NLTB.
  

(iv) Exhibit No. 107- The Government cheque dated 14th March 2004, related to the above payment voucher of $1 million.

(v) Exhibit No. 108- NLTB cheque dated 15th March 2004 to VDCL amounting to $1 million.

(vi) Exhibit No. 112- VDCL Board Meeting Minutes dated 16th March 2005
- Only Mr. KD, Mr. Bakani and Mr. Kaloumaira were present fulfilling the number for a quorum.
- [b] Matters Arising
(i) Directors acknowledged the receipt of $1million Government funding
- [c] New Business

Paragraph 1.2 Investment in Dominion Finance.

Investment in Dominion Finance
The documents being already submitted in the Board meeting of 3rd November 2004 was recommended for short-term investment once funds from Government was received.

Resolution
The Board resolved to invest the $1,000,000.00 received from Government into Dominion Finance on a monthly rollover rate of 5.5% p.a.

- VDCL Board Meeting Minutes dated 13th October 2004 is at Exhibit 74 also speaks about this Short Term Investments.

(vii) Exhibit No.110- VDCL Cheque dated 16th March 2005 to Dominion Finance amounting to $1 million, signed by Mr. Bakani and Mr. KD.
- Mr. Saukawa did not recall that PCX had a $1 million loan with Dominion Finance during this time.

83. Mr. Saukawa tendered Exhibit 113, the confirmation of his Appointment, dated 17th March 2005, to the position of Research/Administration officer for VDCL including the additional responsibilities of being the Company Secretary for PCX as well. This was with effect from 1st of March 2005 with an increased salary of $22,000 per annum.

84. The next area prosecution touched was the PCX loan obtained from Unity Finance.

(i) Exhibit No. 103- Deed of Assignment between PCX and Unity Finance Limited, dated 15th March 2005, to provide financial accommodation of $1 million from Unity Finance to PCX.

• - PCX assigned its rights in favor of Unity Finance to receive payments from Vinod Patel under their Business Solution Agreement.
• - Mr. Khan and Mr. Bakani had signed this Deed by affixing PCX Common Seal.
• - Mr. Saukawa confirmed that this document was to borrow $1 million to PCX from Unity Finance.
  

(i) Exhibit No. 114- PCX Board Meeting Package for 23rd March 2005.

- Page 2; item 4; Mr. Saukawa was assigned to attend the Refinancing Proposals of PCX. He admitted that PCX had lot of debts and that is at least for a year.

- Board Paper 008/2005, prepared on 18th March 2005, 5 days before the Board Meeting.

- Page 1; paragraph 2 – Financial.
(a) Results of Operations; 2nd paragraph
The net profit before tax is negative $397m on a year to date basis compared to a budget of negative $542m. The limited loss is encouraging given significant fraction has already been achieved in the local market. The month shows a loss of $199k compared to a budget of $256k. The results for January and February were closely mirrored; similar results are expected until Sales reach a level that can cover the given level of overheads. The break-even sales level is estimated to be $400k per month, this level is budgeted to be achieved by April.

- Page 3, (b) Balance Sheet

(vii) Creditors and Accruals

These represent standard operating expenses of $152k, $310k in motor vehicle loans financed by Merchant Finance and $392k in hardware leases also financed by Merchant Finance. There is also $4.8 million in accrued but unpaid system development expenses due to Pacific Contract Management Services Limited (PCMS) for services performed from 1 April 2004 to 31 December 2004 by TUI Consulting and $915k in Management Fees accrued to date. PCMS has effectively capitalized PCX by this amount by not enforcing the terms of its contract and amounts to an interest free loan to PCX.

- Page 4; (viii)Other Payables

TUI has paid additional expenses on behalf of PCX and is due this amount. A loan of $2,900,000 is due to Vanua and a loan of $1,000,000 to Dominion Finance has been used to repay TUI Inc for SAP and Oracle Software licenses and maintenance, SUN hardware and fund some of the PCX operating expenses.

- Mr. Saukawa agreed that the above two paragraphs reflect the owing of PCX to:

1. PCMS [$4.8 million (System development expenses) [$915,000 (Management fees)
2. VDCL $2.9 million (loans)
3. Dominion Finance - $1 million (loan)
   

- Page 4; 3FUNDING CASH FLOW

The proposed NLTB refinancing deal will assist PCX greatly with being able to pay off its debts and maintain a reasonable capital reserve. Corporate positions are being held back to ensure sufficient operating cash flow is available to fund revenue generating activities into the future.

- Witness said that he was not aware of any employee leaving PCX without the payment of their salary.

Witness was referred to the facts that the loan of $1 million from Dominion Finance been used to repay TUI Consulting for SAP and Oracle software (page 4, vii) with the cross reference to Exhibit 89 (paragraph 3.4), the PCX decision to grant an unsecured loan to NLTB for an amount of $1,303, 734 for being acquisition of ownership of SAP and Oracle License. He is not sure how and from where PCX got money to advance NLTB.

(ii) Exhibit No. 115- PCX Board Meeting Minutes dated 23rd March 2005.

• - Page 2; Para 5 – Corporate/Finance Report refers to Board Paper 008/2005 of Exhibit 114 cited above.
  
• - The Chairman presented the Corporate report on behalf of the Chief Financial Officer. The Board noted that 2004 was PCXs development year. The financial statements will now change slightly with a positive inflow from the new contracts to be signed. PCX will be looking at an average of $300,000.00 net surplus per month beginning June 2005.
  
• - Witness said that the Board agreed to accept

the Finance Report with no dissenting directors and no comments from Mr. KD and Mr. Bakani.

- Paragraph 5.1; Operations Report.

(Board Paper 009/2005) says "...The project team load by George Ratawa is making a good progress with NLTB's critical issues. These issues are expected to be resolved by mid-April. NLTB is still experiencing trouble with the wireless network. A proposal has been given to NLTB regarding leasing an Internet Line".

- Directors had agreed to accept this Operations Report.

- Paragraph 5.2; Sales and Marketing Report (Board Paper 010/2005) "...Mr. Nailago who also advised the Board that March has not been a very good month for PCX. The Chairman advised that the deals with Vinod Patel and CJ Patel are almost closed."
- The Directors agreed to accept this report as well.

86. The next topic pursued by the prosecution was the FDB loan to PCX.

(i) Exhibit No. 116- VDCL Board Papers for the Meeting on 13th April 2005

• - Board Paper 003/2005 – VDCL Guarantee over PCX Loan form FDB (AGENDA – Item 5)
• - FDB's letter, dated 11th April 2005, to Managing Director, PCX to inform that the Bank has approved a loan of $4.6 million.
  

- Paragraph 2; Purpose shows;

1. Implementation and Creation of database - $2.4 million
2. Refinance Dominion finance - $1 million
3. Working Capital requirements -$1.2 million
4. Total - $4.6 million
   

- Paragraph 3; Security

5. (c) Assignment over contract with NLTB
6. (d) Joint and several guarantee by the Shareholders of the company of total liability (e) Guarantee by NLTB to the extent of annual repayments only for the entire term of the loan

- Mr. Saukawa, referring to (d), said that VDCL was a shareholder of PCX's 51% of shares.

(ii) Exhibit No. 117- 16th VDCL Board Meeting Minutes dated 13th April 2005
- [c] New Business,

1.3 – VDCL Guarantee over PCX loan from FDB

PCX has been approved refinancing from FDB and one of the security requirements is for the shareholders in PCX to provide guarantee for this facility. VDCL being 51% shareholder in PCX is therefore requested to guarantee this loan.

Resolution

The Board resolved to guarantee the PCX Loan facility.

- witness said that there was no any disagreement from members to this proposal and had there been any, it was recorded. But, he said that if a majority of Directors voted in favor of a resolution, it would be indicated as the Board resolved it.

(iii) Exhibit No. 118- PCX Special Board Meeting dated 14th April 2005.

- Page 2, Paragraph 3.2 says:

Refinancing approval of $3.6m from
FDB
The FDB Board has finally approved this request. The security requirements are being finalized and any amendments/changes will be advised in due course.

- Mr. Saukawa could not recall as to how the initial loan amount of $4.6 million was brought down to $3.6 million.

(iv) Exhibit No. 123- FDB letter dated 21st April 2005 to Managing Director PCX approving a loan of $3.6 million.
- (3) Security

1. (e) Guarantee by NLTB with the extent of annual repayments.
2. (f) First ranking assignment over Contract proceeds with NLTB.
3. (g) Joint and several guarantee by the Shareholders of the company for the total liability.

- These conditions are almost similar to FDB letter dated 11th April 2005, contained in Exhibit 116, except "First Ranking Assignment" over proceeds with NLTB. This means, FDB will get the priority over other financial institutions in respect of the NLTB contract proceeds, in case of default of payments.
- Mr. Saukawa had signed the document, without the common seal and 'Director's signature.

(v) Exhibit No. 125- Guarantee, dated 26th April 2005 in respect of FDB Loan. This is already described by Mr. Boila (In paragraph 67 of this chapter). Mr. Khan had signed with this witness for PCX.

(vi) Exhibit No. 126- Debenture between PCX and FXB in relation to PCX loan of $3.6 million.

- Witness and Mr. Khan signed for PCX with the Common Seal on 26th of April 2005.

(vii) Exhibit No. 127- Particulars of the Mortgage dated 26th April 2005, registered with the Registrar of Companies, signed by this witness and Mr. Khan for $3.6 million.

(viii) Exhibit No. 135- VDCL Board Meeting Minutes dated 11th May 2005

- VDCL Guarantee over PCX Loan from FDB Concerns were raised at the manner in which the VDCL and PCX dealings have been conducted, and in particular guarantees provided by VDCL for PCX borrowings without prior board approvals.

It is also noted that VDCL will need to consolidate the accounts of PCX, and accordingly borrowings by PCX would get reflected in the group accounts of VDCL.

The directors agreed that the arrangements between VDCL and PCX and the accounts of PCX needs to be urgently reviewed to assess the current position, its implications and to determine how it can better manage the financial transactions of the two entities.

- Witness did not recall the Directors who raised those concerns as he had not recorded in the minutes.

(ix) Exhibit No. 136- PCX Package of Board Papers for 26th May 2005.
- Information Paper No: 001/005; $2.2 million out of $3.6 million received from FDB had transferred to TUI Consulting.
- $0.5 million to Merchant's Finance for PCX loan, which needed repayment.
- Another $0.5 million to Westpac Bank. Witness was not sure whether PCX had any loan with Westpac.
- The balance $400,000 was cash flow.
- Witness admitted that apart from $400,000 used for Cash flow, the balance $3.2 million was used to pay the existing loans of PCX.
- Page 1 of Corporate Finance Report of May 2005 (Results of Operations – 2nd paragraph) shows a loss of $194,000.

(x) Exhibit No. 137- PCX Special Board Meeting Minutes dated 26th May 2005.
- Board noted the payments done from $3.6 million FDB loan.

(xi) Exhibit No. 138- VDCL Board Meeting Minutes held on 15th June 2005.
- [b] Matters Arising

(vii) VDCL Guarantee over PCX Loan from FDB "As to obtain a draft accounts for the Directors to discuss. This is to be attended to ASAP"

- Witness recalled Directors, Mr. Patel and Mr. Whippy were concerned about the exposure of VDCL to PCX.

87. The next topic discussed with Mr. Saukawa was the ANZ Overdraft facility for PCX.

(i) Exhibit No. 128- ANZ letter, dated 27th April 2005, addressed to PCX offering a temporary Overdraft facility of $1 million to PCX.

- Page 5; FACILITIES SCHEDULE

1. Facility to be expired on 31st July 2005 when full clearance is to be effected.
2. Purpose is to refinance the advance provided by Dominion Finance.
   

- Witness admitted that PCX had a loan of $1 million with Dominion Finance at that time and VDCL had $1 million Term Deposit with Dominion Finance as a security for PCX loan.

- Page 6; SECURITY SCHEDULE

3. Guarantee limited to $1 million given by VDCL
4. Letter of charge over Term Deposit Funds of $1 million in support of Guarantee.

- Page 7; Acceptance, by Mr. Khan and Mr. Saukawa for PCX with the affix of the Common Seal.
- Page 8; Surety Acknowledgement by Mr. Bakani and Mr. KD for VDCL with the Common Seal.

(ii) Exhibit No. 130- GUARANTEE to ANZ Bank at the request of PCX (the Customer) signed on 28th April 2005 signed by Mr. Bakani and Mr. Saukawa with the Common Seal for PCX.

(iii) Exhibit No. 131- CHARGE OVER TERM DEPOSIT, dated 28th April 2005, over VDCL's Term Deposit of $1 million in ANZ.
- Expiry date, 1st August 2005
- Mr. Bakani and Mr. Saukawa had signed with VDCL Common Seal affixed.
- Witness said that effect of this "CHARGE " is that VDCL's Term Deposit was provided to PCX.
- Witness was referred again to Exhibit 135, the concerns of some Directors over VDCL guarantees to PCX loans without prior Board approvals.

(iv) Exhibit No. 147- ANZ "Variation letter", dated 1st August 2005, to inform the temporary Overdraft facility expires on 30th September 2005 when full clearance is to be effected.
- Mr. Khan and Mr. Saukawa had signed for PCX with its Common Seal for acceptance while Mr. Bakani and Mr. Saukawa agreed for VDCL with its Common Seal for "Surety Acknowledgement"
- Page 7; security Schedule; Guarantee Limited to $1 million given by VDCL (existing security) and Letter of Change over Term Deposit and Funds of $1,005, 936.42 in support of guarantee (security to be taken).
- Charge over the Term Deposit of $1,005, 936.42 for a term of 95 days, to be expired on 4th November 2005 signed by Mr. Bakani and Mr. Saukawa for VDCL with its Common Seal.
- Witness recalled that the signing and sealing of these documents took place in Mr. Bakani's office in the presence of ANZ representative and Mr. Khan.

(v) Exhibit No. 148- A letter from Mr. Daniel Whippy to Mr. KD, dated 9th August 2005, attached with chain of e-mails and Profit and Loss Statement of PCX for year 2004.
- 1st email, from Mr. Whippy to Mr. Saukawa.

"In our last board meeting you were supposed to organize copies of Mr. Bakani's submission to the NLTB Board about PCX. Can you please advise status of this as soon as possible". 5th July 2005

- Mr. Saukawa had responded that it is been compiled right after the meeting and with Mr. Bakani.

- 4th e-mail; the response to the above copied to Mr. Bakani, is below:

"Thank you for your prompt response to my email yesterday.

It was minuted in our last meeting, although still in draft form, that Mr. Bakani's submission to the NLTB Board about PCX was to be circulated to members to keep them informed about PCX's financial status and to remove the stigma about its viability as a going concern. The stigma was in reference to profitability and in particular the effect of borrowings against equity, net assets and future income streams and its impact on consolidation with the holding company, VDCL. However the Board approved the circulation of the NLTB submission and therefore it is incumbent upon you to action these requests. Can you please confirm today that this will be circulated.

I would like also today answers to the following questions:

1. Has Vanua Development Corporation Ltd provided guarantees or securities to ANZ Bank for a loan of $1.0 million by PCX. If yes, under what authority were these issued, when were they issued and why has this not been ratified by the Board yet.
   
2. Has Vanua Development Corporation Ltd provided guarantees to Credit Corporation Limited for a loan of $600,000 by PCX? If yes, under what authority was this issued and if it was after our last Board Meeting when the matter was declined, why was it provided.
   
3. Has Vanua Development Corporation Ltd provided guarantees to support a PCX $1.0 million loan from Vinod Patel. If yes, under what authority was this issued and when was it issued. Why has the Board been kept in the dark about this transaction.
   

- 3rd e-mail; Mr. Whippy to Mr. Saukawa dated 26th July 2005 reads as follows:

"Mr. Whippy

Thank you for your concerns. May I answer in the sequence that the questions were raised:

1. I will circulate the NLTB submissions once Mr. Bakani gives me the OK since it is with him.
2. The Vanua guarantee to ANZ was circulated and approved by 3 Board of Directors. Copies of their approval is in file.
3. There was a request to guarantee this Loan to Credit Corp but this is no longer needed as Credit Corp has approved the loan on the basis of an assignment over the NLTB proceeds to PCX. They are to be ranked second to FDB. This arrangement has nothing to do with VDCL.
4. The $1million loan from Vinod Patel is an arrangement between PCX and Vinod Patel and has nothing to do with VDCL.
5. As for the cross guarantee to Vinod Patel, this is new to me and was never arranged.
6. I hope that answers your concerns, but please let me know if there are other areas that needs clarifications and I would most certainly attend to them promptly.
   

(vi) Exhibit No. 149- VDCL Board Meeting Minutes dated 10th August 2005.

- Board paper No. 008/2005 is "Variation Letter "dated 1st August 2005" from ANZ to PCX you saw in Exhibit 147.

(vii) Exhibit No. 176- CHARGE dated 10th November, 2005 over VDCL's $1 million Term Deposit with ANZ, which provided security for the Overdraft facility of PCX Loan of $1 million.

• - Scheduled Amount was $1,007,291.33 for a term of 95 days, to be expired on 7th February 2006.
• - Mr. Bakani and Mr. KD had signed for VDCL with its Common Seal.
  

(viii) Exhibit No. 200- ANZ letter of offer dated 10th May 2006 to PCX over the Temporary Overdraft facility of $1 million.

• - Expires on 31st July, 2006 by full clearance is to be effected.
• - Security of VDCL's Guarantee Limited to $1 million and Letter of charge over VDCL's Term Deposit funds of $1 million.
• - Accepted by Mr. Bakani and Mr. Saukawa for PCX with its Common Seal.
• - Surety Acknowledgment by Mr. KD and Mr. Saukawa for VDCL with its Common Seal.
• - Witness said, that again these documents were signed and sealed in Mr. Bakani's office in the presence of Mr. Khan and Bank Officer and then taken up to Mr. KD's office for his signature.
  

(ix) Exhibit No. 205- ANZ Letter of offer, dated 15th August 2006, to PCX over the same Overdraft facility of $1 million to PCX.

• - Page 3: Extension is on the condition of VDCL's Term Deposit of $1,010,035 is invested for further 5 months to 14th January, 2007.
• - Page 5: Temporary Overdraft facility to be expired on 31st December 2006 by when full clearance is to be effected.
• - Witness agreed that PCX has not been able to clear the Overdraft facility by this time.
• - Mr. Khan and Mr. Saukawa had signed for PCX with its Common Seal for acceptance.
• - Mr. Bakani and Mr. Saukawa had signed for VDCL with its Common Seal for surety.
• - The security is the same as Exhibit 200, ANZ's Letter of Offer dated 10th May, 2006.
  

(x) Exhibit No. 211- PCX letter dated 21st December 2006 written by Mr. KD to ANZ.

• - The full letter is reproduced below. "Dear David
  

NOTICE OF EVENTS OF DEFAULT

Your letter of 20th December, 2006 refers.

The Board of PCX and Vanua Development are both concerned at the latest developments as mentioned in your letter. After thorough discussions we are proposing the following as remedial for the above:

1. That ANZ reclassifies the Overdraft Facility into a term loan for a period of 48 months from January 2007.
   
2. Repayment of $25,000.00 per month for the next 3 months beginning January 2007. FDB has approved waiver of PCX's loan repayments for the next 3 months to be interest only. The total contractual proceeds that is assigned to FDB is $108, 333.33 per month i.e. $1.3m p.a. [Copy of the payment schedule is attached]. This is to be reviewed in the next 3 months whereby an undertaking will be sought from NLTB with FDB's approval to assign $25,000.00 per month to ANZ as loan repayment.
   
3. The security remains as assignment over Term Deposit of $1m which is full cash cover but the cover to be on a reducing basis as the debt is reduced.
   

We hope that you understand our position in this difficult times that we are encountering and our outmost efforts to try and find an amicable solution that is favourable to both the Bank and PCX.

Your concurrence will be much appreciated."

- Witness agreed that this letter was sent 10 days prior to the last extension till 31st December 2006.

(xi) Exhibit No. 213- Note of Events of Default by ANZ to PCX dated 2nd January 2007 saying that Temporary Overdraft limit of $1 million expires on 31st December 2006 and the current balance is $1,011,045, 87 Debit.

- The contents of the letter are as follows:

"Dear Aisake

NOTICE OF EVENTS OF DEFAULT

Temporary Overdraft Limit $1,000,000 – Expires 31st December 2006. Current Balance: $1,011,045.87 Debit.

We refer to our Letter of Offer dated 15th August 2006 and subsequent Notice of Default letter dated 20 December 2006.

Monthly interest and fees totalling $11,045.87 for the month of December 2006 is now due. This amount was to have been settled at the end of December as per our terms of agreement and its now 2 days in default. Pacific Connex is, therefore, in breach of clause 10 (1) (a) of our General Conditions.

Whilst we have approved to refinance your company's OD limit of $1,000,000 to a temporary term loan facility (Letter of offer dated 2 January 2007, being delivered) you will need to remedy the default before we can extend the new facility.

Whilst at the present time we do not propose to take any action in respect of the event of default, we reserve our rights to take action at any future time.

This letter does not affect any other rights that we may have."

- Witness admitted that this letter was copied to VDCL as well. He said that he received the letter and he forwarded it to Mr. Khan and Mr. Bakani for their comments. He had paid $11,045.87 (interest) on 5th January 2007 from PCX funds.

(xii) Exhibit No. 212- Letter dated 2nd January 2007 from ANZ to PCX.
- The 'Facility' wordings of "Overdraft Facility (Temporary) is now been changed to 'Variable Rate Fully Drawn Advance" of $1 million.

- Page 04; Conditions precedent

1. Extension of Term Deposit security till at least 30th April 2007, with Guarantor acknowledgement required as surety;
   
2. Any default in loan repayments will trigger call-up of the entire debt at that time; via prepayment of Term Deposit funds;
   
3. Fiji Development Bank to provide written confirmation by 30th April 2007 of an undertaking to assign $0.025m per month to ANZ.
   

- This 'Advance Facility' to be terminated on 30th April 2007.
- Security Schedule in page 6 is similar to the previous instances.
- Mr. Khan and Mr. Saukawa had signed for PCX with its Common Seal on 30th January 2007.
- Mr. Bakani and Mr. KD had signed for VDCL for surety Acknowledgment with its Common Seal on the same date.
- Witness said that PCX was not able to pay their loan of $1 million with ANZ and VDCL's Term Deposit of $1 million with ANZ was converted into an advance and used to pay off the debt of PCX.

88. Then Mr. Saukawa was shown the documents alleged to have been connected to Credit Corporation Loan to PCX.

(i) Exhibit No. 140- Credit Corporation letter to PCX dated 6th July 2005 in relation to a loan of $208, 196.84 to purchase of 9 vehicles (6 Honda CRV, 1 Toyota RAV 4 and 2 Nissan X-trails)

(ii) Exhibit No. 145- PCX Resolution dated 21st July 2005 resolving a Bill of Sale in favour of Credit Corporation signed by Mr. Bakani and Mr. Saukawa with PCX seal.

(iii) Exhibit No 146- Deed of Assignment dated 22nd July 2005, between PCX, NLTB and Credit Corporation.

• - Mr. Khan and Mr. Saukawa signed and sealed on behalf of PCX.
• - Mr. Bakani and Acting Manager Legal Services had signed and sealed for NLTB.
  

(iv) Exhibit No. 143- VDCL Board Meeting Papers for 13th July 2005.

• - Board Paper NO: 005/2005 – Guarantee Over PCX loan with Credit Corporation for $350,000.
• - Security: 1. Bill of Sale over NLTB and PCX Hardware.
• - 2.Guarantee by Shareholders of VDCL.
• - PCX has requested VDCL to guarantee the Credit Corporation loan, which is been sought for Operational Expenses.
• - All of PCX facility will be cleared off once equity has been raised from Overseas investors who will have a stake at the PCX 3G wireless network.
• - VDCL Exposure in PCX
  

VDCL Total Portfolio	Exposure in PCX	% Exposure in PCX	Inv Policy %
$8,298,855	$2.9 Loan $1m lien over T/D $3.6m Gtee to FDB Total $7.5m	91.46%	20%

- $1 million Lien over T/D" above refers to the ANZ Term Deposit.
- This witness was asked to compare the

"Security" portion of the Credit Corporation letter dated 6th July 2005 in Exhibit 139 (in respect of $350,000 loan) and the letter attached to the Board Paper No: 005/2005 regarding the same transaction of $350,000. Witness admitted that apart from 1st item, Bill of Sale as described in the attached schedule, the other three items in Exhibit 139,

(ii) Deed of Assignment/Guarantee of NLTB
(iii) Personal Guarantee of Ballu Khan,
(iv) Deed of Collateralization

are not to be seen in the Board Paper, though all the other contents in other pages are similar.

- Witness could not offer any explanation for this difference.
- Further to that witness admitted that there is no reference in these Board Papers to Exhibit 140, the loan proposal amounting to $208, 196.84.

(v) Exhibit No. 144- VDCL Board Meeting Minutes dated 13th July 2005

• - [d] Other Matters

Directors agreed to have a look at the comprehensive report on VDCL and PCX compiled by Mr. Bakani for the NLTB Board before any decision is made. KB & AS to attend.

- Witness said that there was no purported mention of anything relating to PCX's financial situation, outstanding loans or problems with operating expenses.

(vi) Exhibit No. 151- Internal Memo from Mr. Bakani (GM, NLTB) to Chairman and Directors of VDCL, dated 10th August 2005; titled PCX Queries Raised by Dan Whippy.

• - Witness said this letter was circulated among all the Directors of VDCL.
  

(vii) Exhibit No. 150- VDCL Board Meeting Minutes dated 10th August 2005
- [b] Matters Arising
(v) VDCL Guarantee over PCX loan – This is no longer required.

[c] New Business
(3) Directors had agreed to formalize the variation of ANZ Term Deposit for the next 2 months, till the end of September 2005.

- Witness said no Director disagreed to this and said that when he recorded "Directors Agreed", it would be at least the majority of 5, three Directors agreed on that issue, though not recorded the number.

- Further he agreed that there was no reference at all to PCX financial situation, loans, etc during this meeting.

(viii) Exhibit No. 152- VDCL letter dated 13th August 2005 signed by Mr. Boila to Reserve Bank of Fiji to deposit the matured investment in VDCL's ANZ Bank account.

89. The VDCL Loan to PCX amounting to $1 million was the next topic discussed with Mr. Saukawa.

(i) Exhibit No. 169- PCX Board Meeting Papers for 20th October

2005.

- Purpose of this meeting was to confirm the Board Meeting Minutes of 27th July 2005 and 12th September 2005 (Special Board Meeting)
- Board Meeting Minutes dated 27th July 2005.

1. Page 3; Paragraph 7 – Information Papers
2. Corporate Report (Information paper

005/2005)

The Directors noted the Corporate report as presented. The revenue level remains below Budget and PCX entirely depends on the NLTB contract. The Directors were advised that cost cutting measures were being implemented to reduce the overheads.

3. Sales and Marketing (Information

Paper 007/2005)

The Directors noted the Sales & Marketing report as presented. The merits of the proposal are very good with affordable prices. Unfortunately PCX's competitors network is very strong. The presentations to different institutions and companies were also noted. VDCL's assistance in to this regard is very critical.

The Directors agreed to accept the Sales and Marketing Report.

- Special Board Meeting dated 12th September 2005

4. Paragraph 3.1 says that Chairman re-affirmed the need for more lobbying from the Board of Directors and that has to be undertaken at the VDCL level. A meeting with the Prime Minister has been scheduled for 21st September 2005 at 11.00am.
   
5. Witness said that this "lobbying" was to do with the 3G licence.
   
6. Paragraph 3.2 – PCX Funding Arrangements

The Chairman mentioned that this has come to a critical stage as the refinancing of the NLTB costs has not been complete. This has resulted in constraints on PCX's operating cash flow. The 3G upfront costs needs to be shared between the shareholders of PCX. Details of this will be submitted to the VDCL Board.

Directors agreed to get the audits completed immediately before any decisions could be finalised if VDCL a major shareholders is to assist.

7. Board Paper 017/2005
8. March 3004 – loss of $348.000
9. June 2004 – loss of $259, 000 (forecast)
   

(ii) Exhibit No. 159- VDCL Board Papers for 28th September 2005.
- Board Paper NO. 014/2005, PCX Loan Request Proposal for $1 million
- Witness admitted preparing this Paper and given a draft to Mr. Bakani to look at it before the final draft is done.

"PCX has for the year and a half signed 3 major deals basically with NLTB, SCA Hygiene and currently Vinod Patel. PCX offered NLTB substantial savings in their contract by drastically reducing it by $2.9m from the initial $18.9m to $16.040m. This arrangement was offered to NLTB subject to NLTB assisting PCX on the refinancing of the implementation costs of the NLTB system to a tune of $7.5m. Unfortunately this did not transpire as FDB only refinanced $3.6m leaving a balance of $3.9m outstanding. It is because of this reason that PCX had to resort to acquiring funds from other sources like Dominion Finance [$1m] then ANZ and Unity Finance [$1m] to be able to finance the NLTB implementation costs.

Unfortunately this has led to another problem whereby Vinod Patel has held back payment due to PCX for the implementation of their system to a tune of $0.5m. This funds were meant for operational costs and has forced PCX to a critical situation."

- Currently available funds was $1.1 million in account that has been yearmarked to purchase a property for Mantra Holding Limited Project.
- In approval, money would have got from Unit

Trust ($500,001.04) and FHL Unit Trust ($508,771.95.

- Page 5 Recommendation

"As clearly outlined this request is outside the approved investment guidelines for VDCL as the exposure will now sit around $7.75m. This is 88.6% exposure into PCX including the FDB guarantee.

However given the fact that it is a majority owned subsidiary, the assistance is warranted. Additionally given the substantial interest gain of 10%, the guaranteed principal repayment from the NLTB contract and the undertaking that all debt will be cleared first once the recapitalisation of the wireless business takes place including the considerable contribution of $1.0m by the minority shareholder, this facility is recommended for approval subject to:"

- According to the Westpac letter dated 20th September 2005 to Mr. Khan, $25,000 been transferred to PCMS and $300,000 to PCX from Mr. Khan's personal account.

- PCX letter dated 22nd September 2005 to Price Waterhouse Cooper, $750, 000 Management fees due to PCMS from PCX had been waived off.

- Profit and Loss Statement of VDCL for August 2005 shows (6th item) no entry of PCX dividend to VDCL, and the witness said that implies no dividends has been received from PCX.

- Later, Mr. Saukawa, referring to Exhibit 125 agreed that VDCL was not a Guarantor to PCX loan of $3.6 million from FDB and his entry including this transaction in "VDCL Exposure in PCX' (page 4) was a misjudgement. However, he said the Board approved this loan analysis paper.

(iii) Exhibit No. 160- VDCL Board Meeting Minutes dated 28th September 2005.
- [c] New Business, PCX Loan Proposal (Board paper 14/2005)

Directors agreed for VDCL to lend PCX $1m to pay their debt with Vinod Patel provided Vinod Patel paid $900K which represented billings to date in respect of SAP work in progress. This is to be done before the end of the month.

- Witness could not recall the discussion on this issue and who dissented or disagreed to this, but said no mention about PCX's financial situations, its critical situations or loans outstanding.

(iv) Exhibit No. 161- VDCL (Mr. Bakani's) letter dated 29th September 2005 to PCX informing the approval of $1 million loan to PCX.

(v) Exhibit No. 162- Loan Agreement between VDCL and PCX dated 29th September 2005.

• - Mr. KD and Mr. Saukawa signed with Common Seal for VDCL.
• - Mr. Khan with another signed with the Common Seal for PCX.
  

(vi) Exhibit No. 163- Deed of Assignment and Irrevocable Authority between VDCL, NLTB and PCX, dated 29th day of September 2005.

• - Mr. Kaloumaira and Mr. Saukawa for VDCL, Mr. Bakani for NLTB and Mr. Khan for PCX had signed with their respective Common Seals, except NLTB's.
• - Last page contains a ANZ Cheque drawn on VDCL's account, dated 29th September 2005, to PCX in the about of $600,00, signed by Mr. KD and Mr. Bakani.
  

(vii) Exhibit No. 164- Colonial National Bank Cheque drawn on VDCL's account to PCX in the amount of $400,000, dated 29th September 2005, signed by Mr. KD and Mr. Bakani and Mr. Kaloumaira.

• - Witness said that two cheques were honoured because the funds were available in those accounts.
  

(viii) Exhibit No.180- VDCL Investment Register as at 1st January 2004 showing how $600,000 and $400,00 were withdrawn from respective accounts.

(ix) Exhibit No. 157- An e-mail from Mr. Boila to Mr. Saukawa dated 23rd September 2005 on the additional PCX Loan of $1 million

• - This mail is reproduced in paragraph 67 (viii) pointof this chapter.
  

(x) Exhibit No. 170- VDCL Board Papers for 21st October 2005.

• - Board Paper No. 0013/2005; VDCL Audited Accounts from PWC for year-end 31st December 2004.
• - Board Paper NO: 014/2005, PCX Audited Accounts from the same Auditors for the same period.
  

(xi) Exhibit No. 171- VDCL Board Meeting Minutes dated 21st October 2005.

• - The Board had agreed to get the auditors PWC to finalize the audit and then present their reports in relation to VDCL and PCX to a Special Board Meeting to be convened once the Auditors are ready.

(xii) Exhibit 173- A cheque dated 25th October 2005, from Fijian Holdings Unit Trust to VDCL amounting to $526,315.80

• - Witness said that this is one of the amounts redeemed to organise the $1 million loan to PCX.
  

(xiii) Exhibit No. 179- VDCL Internal Memo dated 16th December 2005 over the request of PCX for an additional loan of $100,000 to meet the legal cost for its upfront cost of 3G mobile wireless licence.

• - This is annexed with Mr. Khan's letter dated 15th December 2005. Following are some of the excerpts of it.

Our current liabilities for December and residual from November is approximately $500,000. Our Creditors list to the end of December was $461,953.48 excluding Directors Fees. This has now been reduced and reflected in the Westpac O/D figure. Some creditors invoices have only arrived recently and go back months.

Managing PCX's cash flows is very challenging task and is taking its toll on my health and I need help with this.

- Mr. Khan had set out advances to a total of $940, 000 that he made to PCX
- The Board Members had commented on this additional $100,000 request of PCX

1. Mr. KD – Approved. Please read my comments
2. Mr. Bakani – Recommendation to assist PCX is endorsed
3. Mr. Kaloumaira – Raised concerns on Governance issues.
   

- Wanted a full and complete detailed financial forecast for next 24 months before making a decision.

4. Mr. Whippy did not approve any cash advance, borrowings or guarantees until PCX can demonstrate certain requirements.
5. Mr. Patel requested more information beforemaking a decision.

All the three dissenting comments were dated 20th December 2005 and 20th January 2006.

(xiv) Exhibit No. 185- VDCL Board Minutes dated 15th February 2006

[b] Matter Arising

7. VDCL and PCX Audits have been finalized.
PCX Board has already approved PXC audit.

[c] Action Papers

1. PCX Audit 2004: Board agreed to accept
2. VDCL Audit 2004: Consolidation of PCX and VDCL accounts to be addressed before the approval.

- Witness agreed that there is no mention of PCX financial situation, financial problems, outstanding loans, inability to meet operating expenses or anything of that sort.

(xv) Exhibit No. 192- VDCL Board Papers for 15th March 2006.

Information Paper 005/2006 – VDCL Profit and loss Statement for month ended 28th February 2006.No dividends received from PCX.Board Paper 006/2006 – VDCL Investment Register as of 31st December 2005.
Witness could not explain why $3,975,180.38 is reflected at the bottom under PCX, when the total amount of PCX is $3.6 million. Further he could not recall whether PCX paid the interests for these loans and if so, the amounts.

(xvi) Exhibit No. 193- VDCL Board Minutes dated 15th March 2006.

Directors agreed to accept the Financial Report and Investment Register as presented.
Witness confirmed that there is no mention of any PCX financial situation, loans, debts or difficulties in operating expenses.

(xvii) Exhibit No. 194- VDCL Memo to all the Directors by Mr. Saukawa dated 3rd April 2006 with the title of "Request for Shareholders Advance to PCX"

This is connected to Board Paper No. 016/2005 regarding PCX request for $100,000.
Mr. Kaloumaira's comments dated 7th April 2006, approved the proposal of $100,000 request of PCX whilst no further comments from Mr. Patel and Mr. Whippy.

Witness agreed that PCX did not pay the earlier loans of $2 million, $900,000 or $1 million due to VDCL.

(xviii) Exhibit No. 203- VDCL Investment Register as at 30th June 2006 confirms $3.9 million loans in three different items.

90. After two full days of Evidence-in-chief, Mr. Saukawa's cross examination started on 7th of July 2014. At the very beginning, Mr. Saukawa agreed with Mr. Keene, QC, that he did not go through all the documents, Board Papers, Minutes, e-mails shown to him by the prosecution and if he says 'no' in respect of any issue pertaining to a document, that means it does not reflect on it. Further he said that he cannot say what is on the minutes he has not read and he did not have any access to NLTB material or documents when preparing to give evidence.

91. Mr. Saukawa said that he is not confident that he handed over all the documents of PCX that existed to the prosecution as some of the documents were taken by the lawyers of R. Patel & Company and some by the Military after December 2006 coup. Referring to Exhibit KD-8, witness said that "All the original minutes were taken by FICAC through RMF (Tom) on 21/01/2008. Documents have yet to be returned to the office." He explained that all the originals of Board minutes, 2005, 2006, 2007 were all stuck together in the file for the minutes and those documents did not come back to him.

92. The signing of documents in PCX and VDCL, witness said that most were done by Mr. Bakani, himself and Ms. Alanieta as staff members, but when a document needed a signature outside the staff, they took it to relevant Directors office to be signed, whoever available on that day and there is no real significance who this outside signatory was.

93. Mr. Keene, QC, drew the attention of Mr. Saukawa to Exhibit 37,Exhibit 68 and Exhibit 242 to clarify Mr. Saukawa's comment in his evidence-in-chief that Pacific Contract Management Services Limited (PCMS) as being a Shareholder in PCX. Exhibit 68, PCX Certificate of Shares, shows 490, 000 'B' class ordinary shares were owned by PMSIL (Pacific Management Services International Limited) which is a registered company in the British Virgin Islands. (Exhibit 242). Mr. Saukawa admitted that it was PMSIL who owned the shares in PCX with VDCL, but not PCMS.

94. Mr. Saukawa was then taken through his letter of appointment, Exhibit 69. He agreed that he commenced work on 20th September 2004 as a Research Administration Officer for VDCL. He admitted that he was paid by NLTB, though he was involved in VDCL work. He described how he engaged with the accountabilities stated in his letter of Appointment. VDCL's Investment Policy is one instance he had assisted in documenting company's management policies. Witness agreed that "conducting analytical research work" is to do with investments and whenever he prepares investment papers and make recommendations, he gave effect to this obligation under his employment contract. Mr. Saukawa said that he, without any debate, did allow things to be put in by Mr. Bakani, though he himself disagrees, as Mr. Bakani was his superior.

95. Witness said that VDCL office was situated in the NLTB Building and all the VDCL documents were held in his office. He explained that "preparation of payments to all VDCL creditors" was partly kept with Manager Finance, of NLTB Finance Unit. Mr. Saukawa agreed that what he did in VDCL applied for PCX as well when he was appointed as its Secretary. Referring to the contractual obligation of "preparation of all payments to creditors" of PCX, witness said that it was handled by PCX finance team and not by him.

96. Mr. Saukawa said that his first Board Meeting as VDCL Secretary was on 13th October 2004 (Exhibit 74) and the Investment Policy was adopted by the members on that day. Whilst admitting that as VDCL company Secretary his office was in the premises of NLTB, he said that he never took part in any of the NLTB Meetings, but went to Mr. Bakani if something is to be done in NLTB. Witness refused any involvement of him in preparation of audited financial statements, apart from giving documents, and said preparation of VDCL's financial statements was done by Mr. Boila. Flying minutes or minutes by e-mail, according to the witness, were sent out through Mr. Bakani's office, under his instructions. But, after sighting Exhibit KD-13, an e-mail chain, to which Mr. Saukawa and the Directors involved, dated 27th and 28th of April 2005, witness admitted that there were instances where he communicated with the Directors through e-mails, especially after the military coup in 2006.

97. Speaking of the other VDCL Board Members apart from Mr. KD, witness said Mr. Nalin Patel, Mr. Daniel Whippy, Mr. Isoa Kaloumaira and Mr. Bakani were senior business figures in Fiji community with a lot of business experience. Amongst them, Mr. Saukawa said that Mr. KD was the least experience out of the lot and he got the minutes of the past meetings approved; put Board Papers/Administration issues, which were prepared by the management, including Mr. Bakani, to the Board, allowed debate on the individual issues among the Directors, would summarise what he undertook to be the view of the people around the table and resolved or passed the issue.

98. Witness agreed that Mr. Bakani's role of being the Managing Director was open to debate. (Exhibit 112; VDCL Board Minutes dated 16th March 2005, [b] (vii) Appointment of Managing Director – Directors noted the paper that was tabled and agreed to have the Chairman and Director Nalin Patel reassess it.) Then, Exhibit 113, the Confirmation of Appointment Letter to Mr. Saukawa by Mr. Bakani dated 17th March 2005, the following day to the 16th Meeting, Mr. Bakani had signed as the Managing Director of VDCL. Exhibit 117, VDCL Board Minutes dated 13th April 2005, [b] (v) also repeats the issue of "Appointment of Managing Director" in the same way like Exhibit 112, that the Chairman and Mr. Patel to reassess it. Witness agreed Mr. Bakani signing Exhibit 113, on 17th March 2005 as Managing Director is premature and he is not sure whether Mr. Bakani became the Managing Director of VDCL or not.

99. Mr. Saukawa said the VDCL Directors who got appointed as PCX Directors got their Director's fee in PCX. But, he said that according to his understanding, though the Confirmation of Appointment Letter (Exhibit 113) says "this will include the additional responsibilities of being the Company Secretary of PCX", the increased $4000 in his salary from $18,000 to $22,000 per annum, was because he was confirmed after being on probation. So, he denied that he got any extra payment for PCX work.

100. Mr. Saukawa was shown the "Sealing Register" of VDCL, which was marked as Exhibit KD-12. Referring to Exhibit 171, the VDCL Board Meeting minutes dated 21st October 2005, witness said that Directors agreed to ratify the 'Sealing Register' as presented from 2004 to that date and that is the reason for 21st October 2005 to appear in the 'Date of Ratification' column. Witness agreed that the single page (KD 12) shown to him is the beginning and end of the "Seal Register". (The original of this document was tendered and marked as Exhibit KD-12A).

101. Entry No. 05/2004 and 06/2004 in KD-12 was agreed to be in relation to PCX loan of $900,000. In 2005 entries, Nos. 03/2005, 04/2005, 05/2005, 06/2005 and 07/2005 was agreed by the witness to be related to VDCL Term Deposit Guarantee of ANZ over PCX loan of $1 million. The date seen to be in entry No. 03/2005 was said to be 27th of April 2005.

102. Recognising Exhibit KD-14, Deed of Assignment and Irrevocable Authority between VDCL, NLTB and PCX over the $2 million loan to PCX, Mr. Saukawa said that one VDCL signatory was Mr. Patel and he is not sure whether the other signatory was Mr. Kaloumaira or not. He added that this is an example of whoever Director is available signing documents. (Refer to paragraph 92of this chapter)

103. Mr. Saukawa agreed that he told in his evidence-in-chief that when the Directors passed resolutions, there could be dissenting Directors and his practice was not to record the dissent. But, he said that he cannot recall any occasion during the meetings where Directors raised their dissent or contacting him later asking that his dissent to be noted in minutes or before the confirmation of minutes asking his dissent to be recorded as Board Resolutions, as far as he could recall, were the view of all the Directors. Referring to his comment that Mr. Bakani appeared to have a good relationship with Mr. KD, witness said that it was simply a "good business relationship".

104. Witness was then referred to $900,000 loan of PCX.

(i) Exhibit No. 75- PCX request for the loan, dated 16th November 2004. (Reproduced in paragraph 80 of this chapter)

- Witness said that he did not see anything unusual or difficult about this request.

(ii) Exhibit No. 79- VDCL Internal Memo, dated 17th November 2004, sent to the Directors with Mr. Saukawa's analysis of availability of funds. Exposure, Security and Recommendation, followed by the comments of Directors.

(iii) Exhibit No. 83- Email chain between Mr. Saukawa, Mr. Dario Jaeger and Mr. Whippy along with several attachments.

- Referring to the attached VDCL Investment Register as at November 2004, witness said it shows what would have happened if this $900,000 was approved.

- After Mr. Saukawa sent the requested information to Whippy provided by Mr. Jaeger, he said that he cannot recall him receiving any response from Mr. Whippy. (Cross reference to paragraph 80 of this chapter). He added that PCX loan request of $900,000 was approved by the majority of Directors, (Mr. Bakani, Mr. KD and Mr. Kaloumaira) without Mr. Whippy and Mr. Patel, but Mr. Whippy was a party to the Board Resolution ratifying the relevant entries of the 'Seal Registry'. (Exhibit 171)

(iv) Exhibit No. 170- VDCL Financial Statement, 31st December

2005

- Page 2 – Basis of Accounting

The directors believe that the basis of the preparation of accounts is appropriate and that the organisation will be able to continue its operations for at least 12 months from the date of the statement. Accordingly the directors believe the classification and carrying amounts of the assets and liabilities as stated in these accounts to be appropriate.

- Page 3 – Statement by Directors

The accompanying balance sheet of the company is drawn up so as to give a true and fair view of the state of affairs of the company and of the group at 31 December 2004.

- Page 6 – Balance sheet – 31st December 2004

Non-current Assets
Receivables – 2,900,000
Cross reference (6) to "Receivables" is at
Page 14 shows the two (2) loans given to PCX, $2 million and $900,000.

Mr. Saukawa told court that when he recommended granting the loan of $900,000 to PCX (as per Exhibit 79, the VDCL internal memo dated 17th November 2004) he did not believe that anything was been done wrong as he believed the recommendation was for the best interest of VDCL because the loan gave a better rate of return than the replaced investment.

105. The next topic that Mr. Saukawa cross examined was the Investment Policy Guidelines, Exhibit 46. When referred to Exhibit 74, VDCL Board Minutes dated 13th October 2004 where the Board agreed to adopt the Investment Policy Guidelines, witness agreed that Mr. KD was not present in that meeting. Mr. Keene, QC, drew the attention to 2nd paragraph of the 'Introduction' of Investment Policy Guidelines to point out that it offered flexibility to the Board and Management when making investment decisions. (1st paragraph is already reproduced in paragraph 66 of this chapter)

"The Investment Policy Statement is promised on performance measures used by a number of progressive investment funds in Fiji and Australia. It provides investment requirements that are quite general and offers flexibility to the Board and Management in making sound investment decisions on a case by case basis."

He then highlighted that the exposure limit (already reproduced in paragraph 65 of this chapter) is not to be exceeded without Specific Board Approval.

106. Mr. Saukawa admitted that he pointed out these exposure guidelines in his Internal Memo (Exhibit 79) and a specific Board approval was taken to grant the PCX loan of $900,000. He went on to admit that the VDCL Board could decide to set new guidelines if it wanted to do so and the clauses mentioned by the counsel give the board to override the guidelines in specific cases, as they were only guidelines.

107. The next topic discussed with Mr. Saukawa was the Dominion Finance loan.

(i) Exhibit No. 74- VDCL Board Meeting Minutes dated 13th October 2004

• - [c] New Business

(v) Members agreed to approach Dominion Finance and Credit Corporation for short term investments.

(ii) Exhibit No. 112- VDCL Board Meeting Minutes dated 16th March 2005

• - [c] New Business

1.2 – (Already reproduced in paragraph 82 (vi)in this Chapter)

• - Witness agreed that there is nothing in the above Resolution about being any surety or any other arrangement.
  

But, Mr. Saukawa said that there was another Resolution that made the $1 million VDCL Term Deposit in Dominion Finance to be treated a Security for something else and that Resolution was not produced to the court. He ultimately agreed with Mr. Keene, QC, that he was wrong when answered to Mr. Blanchflower, SC that there was a VDCL Term Deposit in Dominion Finance which was used as a Security for PCX loan facility of $1 million.

108. Mr. Keene, QC then passed on to ANZ Loan by PCX.

(i) Exhibit No. 150- VDCL Board Meeting Minutes dated 10th August 2005.

[c] New Business

3. Variation of VDCLguarantee over PCX O/D facility with ANZ; Directors agreed to formalize the variation for the next two months till end of September 2005.
   

- Referring to series of other extensions of this particular ANZ Term Deposit, Mr. Saukawa said that the signing and sealing in number of documents were done as directed by Mr. Bakani.

(ii) Exhibit No. 159- VDCL Board Papers for 28th September 2005.

Board Paper No. 014/2005.

Background

PCX has for the year and a half signed 3 major deals basically with NLTB, SCA Hygiene and currently Vinod Patel. PCX offered NLTB substantial savings in their contract by drastically reducing it by $2.9m from the initial $18.9m to $16.040m. This arrangement was offered to NLTB subject to NLTB assisting PCX on the refinancing of the implementation costs of the NLTB system to a tune of $7.5m. Unfortunately this did not transpire as FDB only refinanced $3.6m leaving a balance of $3.9m outstanding. It is because of this reason that PCX had to resort to acquiring funds from other sources like Dominion Finance [$1m] then ANZ and Unity Finance [$1m] to be able to finance the NLTB implementation costs.

Unfortunately this has led to another problem whereby Vinod Patel has held back payment due to PCX for the implementation of their system to a tune of $0.5m. This funds were meant for operational costs and has forced PCX to a critical situation.

- Pointing to the last sentence of the above paragraph, 'This funds were meant for operational costs and has forced PCX to a critical situation", witness said that words "critical situation" are actually in this Board Paper and therefore he was wrong when answered Mr. Blanchflower, SC that there was no reference to PCX critical financial situations.

109. Mr. Saukawa said that PCX was a "starter" and was entering into business from afresh with its main business exploitation of an exclusive licence for MYSAP. The successful implementation of the NLTB contract was critical to PCX and though there were some technical problems, this system worked inside of NLTB to produce desired effects. He agreed that PCX put some weight on the fact that government got MYSAP licence and with NLTB started moving live there were some optimism that the other government departments will follow the course. But, the witness said that event did not happen.

(i) Exhibit No. 132- NLTB Board Papers to be held on 5th May 2005
(ii) Page 101 – 2.1 Sales Funnel

This company was incorporated in March 2004. Its main activity is in the introduction of the new SAP IT system into Fiji over which it has exclusive rights. Appendix 6 of the paper shows the sales funnel. The following points will be apparent:

Two contracts have been signed and are now being attended to. These are NLTB and SCA Hygiene Australasia. The contracts that are about to be signed are C J Patel and Vinod Patel. Other companies and institutions that are being followed up are given on the list.

One of the main difficulties the Company has experienced is processing business from within the civil service and the public sector generally. Decision making is delayed and uncertain. The interest expressed by the private sector (Vinod Patel & C J Patel) is most encouraging. The perception in the market place is that SAP is expensive. There are now available new versions which are suitable for the business sector.

Whilst sales have not progressed as earlier expected, there is a lot of optimism for the second half of 2005.

Page 109 – VDCL Proposal Pipeline Diagram shows what contracts or proposals are in the pipeline what are high level discussions and where certain proposals being evaluated to indicate what the future business is.

110. It was agreed by Mr. Saukawa that when PCX was getting into the 3rd quarter of 2005, the expected Government businesses were not turning up except two sign ups with Vinod Patel and SCA Hygiene, while still servicing the NLTB contract. Then, he said that PCX had to look for other prospects and the issue of "3G wireless Licence", Mr. Saukawa said that after a research by PCX, it was decided that Vodafone had a monopoly on the system and there is a gap PCX could go in to have another service provider, probably another international telephone operator to come to Fiji market to provide the mobile phone services. He said that PCX thought of "Alcatel", a French company to be the right partner and had it worked out, it would have been a very big opportunity to a company like PCX.

111. Mr. Saukawa said that the later part of 2005 and throughout 2006, '3G Licence' became the main business focus of PCX and he himself involved in trying to bring this opportunity to a finality. He referred to a court case and said that as a result of running the court case, the government believed that Vodafone did not have a monopoly.

(i) Exhibit No. 159- VDCL Board Paper No: 014 of 2005

PCX Mobile Wireless Business

• Meetings between the Prime Minister and Mr. Ballu Khan took place last week on the PCX's proposed mobile licence. This was followed by a meeting between the Prime Minister and Mr. Kalivati Bakani together with Mr. Isoa Kaloumaira. Both the PCX and VDCL Board have been advised that the PCX mobile wireless licence will be issued soon and with this licence the re-capitalisation of PCX will result hence the full payment of all debts to VDCL including the FDB, ANZ, Credit Corp etc.
  
• PCX has been in close contact with identified overseas investors who are apparently just waiting for the license to be issued and are looking at investing approximately $50.0m which will recapitalise PCX.
  
• VDCL will be a major shareholder in this project and will own a very significant asset base. Mr. Ballu Khan has undertaken if required to dilute his share so that VDCL maintains majority shareholding and does not fall below 40%. This is a very significant concession in favour of VDCL.
  
• PCX recapitalisation will commence in approximately 4-6 weeks.
  
• Mr. Khan has also indicated making available USD $1m in about the next 6 weeks.
  

Witness said that at one stage he believed that PCX will be granted the mobile licence as the government even asked PCX to draft the licence. He said though it did not happen, PCX continued to administer the NLTB contract. He agreed with Mr. Keene, QC, that VDCL was keen to make sure that PCX survived to get the licence signed and get this major injection of money.

112. The 'Military Intervention" in November, December 2006 was put to Mr. Saukawa as the next topic. Witness said it was one out of nine (9) demands by Commodore Bainimarama prior to the Military coup to shut down VDCL and that had "very drastic measures" on VDCL. After that demand, witness said that there was no VDCL Board constituted and by 2007 it was planned to get rid of the existing Board and appoint a new one. After the said demands, the witness said that the Directors were reluctant to move forward.

113. Speaking of 'PCX' Mr. Saukawa said that after the coup military officers armed with riffle and dressed in armoured compact arrived and raided the PCX office for several times and took all the documents whatever they can get from the office along with the server for the NLTB system, the main frame data processor that ran the MYSAP system, personal computers and his paper records and closed down the office. He said that he along with other staff, were scared of this development and was a frightening experience.

114. With these events and departure of staff, Mr. Saukawa said that PCX could not service the NLTB contract over the months of January, February and March of 2007. He said Mr. Bakani was put on indefinite leave from February 2007 whilst some others like Mr. Mua and Mr. Khan were banned from entering into NLTB premises. An expert from India had visited Fiji to reset the system with the expenses of Mr. Khan.

115. Referring to KD-15, the VDCL Board Minutes dated 12th July 2007, Mr. Saukawa said that the previous Board members were replaced by new set of Directors under the Chairmanship of Mr. Tu'uakitau. KD-16, the VDCL Board Meeting Minutes dated 19th July 2007 had confirmed the Minutes of 18th October 2006 Minutes. Witness said that between 18th October 2006 and 12th July 2007, there were no VDCL Board Meetings.

116. KD-17, Minutes of NLTB, PCX and VDCL dated 12th April 2007 says that Mr. Khan reiterated as the status of PCX's SAP support for NLTB and the presence of the Indian expert. Witness said that this time PCX was trying to get the system running to its former capability. It says that a total of $6.9 million cost had incurred and paid by PCX over the NLTB SAP system. Mr. Khan had told that PCX is losing $500,000 annually over the SAP deal with NLTB. It is recorded that VDCL paid $50,000 (last week) as shareholder advance to help in the situation. Finally Mr. Khan had re-iterated that "PCX's POSITION IS NOW NOT NEGOTIABLE". He had told that his financiers, Westpac and Colonial are cutting off all his credit lines and "PCX has carried the burden on behalf of NLTB which is of our own making therefore need to solve it collectively". Mr. Khan had 'demanded' a decision to be made no later than the end of that week. Mr. Saukawa recalled that the MYSAP system used by NLTB was closed down a while back.

117. The last defence document through this witness was a letter dated 2nd February 2007 by Prime Minister Bainimarama to Minister of Fijian Affairs, Mr. Ratu Epeli Ganilau.

118. In Re-examination, Mr. Saukawa agreed that most of the Deeds of Assignment or documents of that nature were only signed by Mr. Bakani, Mr. KD and Mr. Kaloumaira. Then Mr. Blanchflower, SC, drew the attention of the witness to Exhibit 242, Ext 240, Exhibit 239. Witness admitted that the name of 'Tui Management Services Limited' was changed to "Pacific Managements Services International Limited". He further admitted that PMSIL was the shareholder of PCX and Pacific Contract Management Services Limited. (PCMSL)

119. Mr. Saukawa said that Mr. KD was the owner of a valuation company. Witness admitted that there are no entries in the VDCL Sealing Register in relation to $2 million loan to PCX or $1 million loan to PCX or the Surety Acknowledgment executed by VDCL with ANZ or Deed of Assignment and Irrevocable Authority between NLTB, VDCL and PCX (KD-14).

120. Referring to Exhibit 59, Exhibit 81 and Exhibit 162, Mr. Saukawa agreed that the $2 million loan was to be expired in July 2006, $900,000 loan on 19th November 2006 and $1 million loan was monthly roll over with a repayment on 30 days' notice.

Prosecution Witness # 7
Mr. Jese Tabuatamata

121. Mr. Jese is presently serving as the Manager Corporate Banking for ANZ. He agreed that VDCL had a Term Deposit Account at ANZ Suva Branch, which was opened on 28th April 2005. He confirmed that the said Term Deposit was been produced as guarantee to the temporary Overdraft facility of PCX. Guarantee or Sureties, in Banking Terms, he said, is a promise of a third party to the transaction to pay the money owed by the borrower in case of default. Then the witness was taken through the following exhibits.

(i) Exhibit No. 128- Letter of Offer from ANZ to PCX, dated 27th April 2005, offering a temporary Overdraft facility of $1 million, to be expired on 31st of July 2005, when full clearance is to be affected.

• - Witness said it was negotiated with the customer (PCX) to take over the debts from Dominion Finance with the purview that PCX would engage another financier to pay ANZ back by 31st July 2005.
• - He said the purpose of this Overdraft was to refinance advances provided by Dominion Finance to PCX.
• - The security was a guarantee of $1million given byVDCL and a Letter of Charge over Term Deposit funds of $1 million in support of the said guarantee. Witness explained the "Letter of Charge" was in support of the Guarantee, so that "this transaction is fully cash covered" or having the effect of "locks" the Term Deposit for the duration of the facility.
  

(ii) Exhibit No. 130- "Guarantee" made by VDCL as Guarantor.

(iii) Exhibit No. 131- "Charge Over Term Deposit"

(iv) Exhibit No. 147- ANZ "Variation Letter" dated 1st August 2005.

PCX had not paid the Overdraft by 31st July 2005 and VDCL's Term Deposit continues.

(v) Exhibit No. 166- ANZ "Diary Note" dated 18th October 2005, reflecting what is being discussed between the customer and ANZ. This has approved the Overdraft extension till 31st December 2005 with a fresh Letter of Offer while the Securities remained unchanged.

(vi) Exhibit No. 176- Charge over the VDCL Term Deposit of $1 million according to the new offer till 31st December 2005.

The Term Deposit reflects as $1, 007,291.33 with its accrued interest and to be expired on 7th February 2006.

(vii) Exhibit No. 182- ANZ Diary Note, dated 6th January 2006, says that "The Facility was initially granted in April 2005 and has been extended on 2 occasions, supposedly awaiting refinance expected from a restructuring of the Group")

• - Further down, it goes on to say;
  

"On balance, we would prefer to exit this relationship. In seeking to address the current access/repayment. I have been forced to contacting KD (Director of PCX & Chairman of Vanua – Mobile [phone], email: [e-mail]).

We subsequently receive a call from Aisake Saukawa, who advised that the interest arrears would be paid by tomorrow 6/1. Also advise they were in discussion with Colonial regarding refinance and were hoping this would be concluded as early as next week. On this basis, I am prepared to support extension of facility until 16/1/06 pending further update being advised."

(viii) Exhibit No. 183- ANZ Diary Note, dated 19th January 2006, says thatMr. Saukawa has sought time till 23rd January 2006 to clear the facility while ANZ's strategy remains to exist this relationship.

- The following factors were highlighted in the note:

• Management has confirmed refinance with Colonial National Bank is being arranged and they anticipate completion by 23/01 by when settlement should conclude.
  
• Since inception, we are aware that PacificConnex (PCX) has struggle to develop core cash flows associated with establishment of its operation, and this is evidenced via continued default in arrangements.
  
• The company has continued to seek financing on an ad hoc basis from various sources and we estimate current borrowing to be circa $6m, majority arranged via Fiji Development Bank.
  
• In the absence of cash flow, our principal reliance has been in respect to the cash cover provided, in support of the Guarantee provided by Vanua Development Limited (100% owned by NLTB).
  

- The facility was extended till 31st January 2006.

(ix) Exhibit No. 191- ANZ Letter to PCX dated 3rd March 2006, extending the existing Overdraft facility of $1 million until 15th March 2006, subject to the initial terms and conditions.

(x) Exhibit No. 198- ANZ Letter to PCX, dated 20th April 2006, extending the facility till 30th April 2006 subject to same Terms and Conditions.

(xi) Exhibit No. 197- ANZ Diary Note dated 13th April 2006 states the following:

"We are disappointed that clearance of this arrangement has been delayed, however, given the nature of the full cash cover held has security in support of Vanua's Guarantee, our overall position remains safe. We confirmed that our charge over the deposit remains enforceable until 15 May 2006."

(xii) Exhibit No. 200- ANZ letter of Offer to PCX, dated 10th May 2006 to recognise that PCX had been with ANZ for 1 year.The following new condition is been added.

Extension is on the condition that the term deposit security of $1,008,648 provided by Vanua Development Corporation Limited is invested for a further 3 months to 15th August 2006. This will be effected and conveyed in writing upon receipt of guarantor acknowledgment to this Letter of Offer.

- Witness said that the VDCL Term Deposit was a "critical security and important one for ANZ to continue with " this facility to PCX.

(xiii) Exhibit No. 205- ANZ letter of Offer to PCX dated 15th August 2006, extending the facility till 31st December 2006 as it is not been paid by 31st July 2006.

(xiv) Exhibit No. 211- Mr. KD's letter (as a Director PCX) to ANZ dated 21st December 2006, about the "Notice of Events of Default". (This letter is reproduced in paragraph 87 (x)in this chapter)

• - Witness said that "Notice of Events of Default" means a fore warning given to PCX that if they do not pay, ANZ will take further action and likely to call up the security that is been given to them .
  
• - Witness said if the Overdraft converts into a Term Loan, there will be a monthly repayment schedule for the debt to reduce on monthly basis.
  

(xv) Exhibit No. 213- ANZ Notice of Default Notice dated 2nd January 2007 to PCX. (This is been reproduced in paragraph 87 (xi)in this chapter)

(xvi) Exhibit No. 212- ANZ Letter of Offer dated 2nd January 2007, to PCX changing the Overdraft facility to a Term Loan of $1 million.

(xvii) Exhibit No. 214- ANZ Notice of Demand dated 14th May 2007, to PCX, the final notice of ANZ to PCX and VDCL that if the loan is not paid, within 14 days, the bank will recover their exposure from the security that they were holding with VDCL Term Deposit.

(xviii) Exhibit No. 215- ANZ 'Diary Note' dated 2nd July 2007, says that ANZ is to set off VDCL's Term Deposit to clear the loan of PCX.

The total outstanding debt of PCX at that time was $952,203. VDCL was given the surplus of their $1 million Term Deposit after reducing this amount.

122. In cross examination, Mr. Jese agreed with Mr. Keene, QC that what they did in this instance was not a "set off" as it happens when a client has two funds, one on credit and the other on debit, they 'transfer' or 'set off' within the same client. He admitted that under the provisions of the Companies Act in Fiji, the "letter of Charge" has to be registered with the "Registrar of Companies" within 42 days.

123. Exhibit KD-19 is an email chain exchanged between this witness and a Solicitor about the 'Charge' over Term Deposit of VDCL. Referring to this, witness admitted that the 'Charge' in issue was not registered as suggested by Mr. Keene, QC, and they relied on their legal advice provided by the bank solicitors. The defence suggested that if the 'Charge is not registered as provided; it is void against the liquidator and any creditor of the company. Witness said that there was no notice provided to ANZ whether PCX was closed down from early December 2006 by military intervention. They considered PCX was still operating as the Bank communicated with the board Secretary during that time.

124. Then Mr. Jese was shown KD-20 and KD-21, two email chains exchanged between VDCL/PCX staff and the Bank. He admitted been a party to these mails and said that there was a close down of PCX and a communication breakdown in December 2006. Another set of exchanged emails between the Bank and the NLTB officials were marked through this witness as KD-22. A Diary Note dated 8th May 2007 (which the witness claimed he did not receive) was tendered as KD-23and another Diary Note, dated 15th May 2007 was marked as KD-24. Witness said that the Bank took action in terms of the Demand Notice given to PCX and ANZ kept NLTB informed of what was happening in relation to its action against VDCL and PCX. Finally he confirmed that he never spoke to Mr. KD during the course of this recovery of money process.

125. Answering questions of Mr. Blanchflower, SC, during the Re-Examination, Mr. Jese endorsed that they relied upon the legal advice provided by the Bank Solicitors in respect of the 'charge' and according to the said advice, this seems to be an 'uncertain area' of law but at that time, the bank believed that it is acting lawfully. He further confirmed that Mr. KD and Mr. Bakani signed in "Surety Acknowledgment" (Exhibit 212, page 8) with the VDCL Common Seal as the duly authorised officers of the company empowered to execute the document.

126. Referring to Exhibit 211 (Mr. KD's letter to ANZ, dated 21st December 2006), witness said that it was send two weeks after the military coup and nothing is been mentioned that PCX has ceased to operate. Pointing to ANZ letters dated 2nd January 2007 (Exhibit 212 and 213), KD-20, KD-21, KD-22 and KD-23, witness said that the Bank will not offer a loan facility of $1 million to a company that ceased to operate and there was no reference in these documents to say that PCX had closed down and ceased to operate.

Prosecution Witness# 8
Mr. Ramesh Chand

127. Mr. Chand testified in relation to PCX's loan facility of $3.6 million from FDB. He recalled the request from PCX around March 2005 for a loan of $7 million. He said when assessing this request, they referred to the "Business Solution Agreement" between NLTB and PCX and obtained information regarding PCX's financial situation in 2004. Exhibit 123 is the FDB Loan Offer to PCX, dated 21st April 2005 to an amount of $3.6 million. Witness said the initially requested amount was brought down as PCX could not fulfil the requirements. Among other conditions over the loan security, witness pointed to the following. (page 2)

(e) Guarantee by NLTB with the extent of annual repayments

(f) First ranking assignment over contract proceeds with NLTB.

(g) Joint and several guarantee by the Shareholders of the company for total liability.

Witness said that one shareholder was VDCL, who held 51% of PCX shares and if PCX defaulted on FDB loan, with term (g), VDCL is liable to pay the PCX loan.

128. Exhibit 125 is the 'Guarantee', dated 26th April 2005, to FDB by NLTB, for the obligations incurred by or at the request of PCX. He agreed that NLTB Common Seal is not affixed. He said that the legal effect of this guarantee is if PCX does not pay the loan, NLTB is liable to pay FDB an amount of $3.6 million. PCX was supposed to pay $1 million in January 2006, $1.25 million in January 2007 and balance $1.35 million in January 2008.

129. Mr. Chand then referred to Exhibit 134, PCX letter to FDB, dated 11th May 2005, requesting a further advance of $3.4 million. Since there was no material change on the financial status PCX submitted earlier, witness said FDB declined this request. He recalled that PCX paid some part of this $3.6 million loan, the rest was never paid.

130. In cross examination, Mr. Chand accepted that the last payment from PCX to FDB was $108, 333 and it was on 23rd March 2007 and thereafter no payments as reflect in Exhibit KD-25.

Prosecution Witness# 9
Mr.Karl Smith

131. Mr. Smith is the General Manager and the owner of Dominion Finance, which provides financial services, almost identical to a bank, except having foreign exchange facilities or cheque books. Dominion Finance is said to have a licence of a credit institution with special exemption from the Ministry of Finance. He said that he knows Mr. KD in both personal and business levels. He had used Mr. KD's valuation company Rolle Valuation, in his business matters around 30 years, where they came closely acquainted. Witness claimed that Mr. KD's company is at the top of the list or one of the most reputable entities in Fiji.

132. Witness confirmed lending $1 million to PCX of which, Mr. Ballu Khan was the proprietor. He was aware that Mr. KD and Mr. Bakani were Directors of PCX.

(i) Exhibit No. 71- Dominion Finance Letter of Offer to PCX, dated 20th September 2004, approving $1 million loan facility with following securities.

• (a) First Registered Mortgage Debenture over the assets, undertakings etc of PacificConnex Limited.
  
• (b) Lien over the cash flow from the PacificConnex Limited/Native Land Trust Board (NLTB) contract.
  
• (c) Guarantee given by Ballu Khan f/n Amir Khan
  

- Facility was given for the purpose of "Working Capital Requirements" and to be repayable in full on 31st January 2005, 4 months' time.

- Witness said that 15% interest was charged for this loan and it is higher than the mainstream banks, but generous when compared to other lending institutions.

- Charged an Approval fee of $20,000.

(ii) Exhibit No. 93- Letter from PCX to D/F, dated 5th January 2005, asking for an extension to roll over settlement of the loan till 28th February 2005.

(iii) Exhibit No. 101- PCX Letter to R. Patel & Company, the Solicitors of Dominion Finance, dated 28th February 2005, signed by Mr. Bakani saying that PCX will repay the $1 million loan before April 2005 and there will be a deposit in Dominion Finance.Witness had agreed to the proposal for a fee of $40,000. (This letter is been reproduced in paragraph 82 (ii) of this chapter)

• - As a result of this arrangement the loan facility had been extended, upon the payment of $40,000 fee.
  

(iv) Exhibit No. 102- Letter from Mr. Smith to R Patel & Co. dated 7th March 2005, acknowledging the extension till 15th March 2005, subject to NLTB placing deposit funds with Dominion Finance on the same day and the payment of $40,000 Extension fee.

• - Dominion Finance was to review the facility on 15th March 2005 and inform the outcome to its Solicitors.
• - Witness had expected $1 million deposit from NLTB.
  

(v) Exhibit No. 110- ANZ cheque of $1 million made out to Dominion Finance from VDCL, dated 16th March 2005.

(vi) Exhibit No. 111- Deposit Confirmation Advice of VDCL's $1 million Term Deposit, dated 16th March 2005.

(vii) Exhibit No. 120- PCX letter to Dominion Finance, dated 20th April 2005, by Mr. Khan, requesting Dominion Finance to extend the loan facility till 30th June 2005 by keeping VDCL's Term Deposit until such time.

• - Witness said it was important for Dominion Finance to keep the VDCL $1 million Term Deposit.
  

(viii) Exhibit No. 121- VDCL letter to Dominion Finance, dated 20th April 2005, by Mr. Bakani, agreeing to extend the $1 million Term Deposit with Dominion Finance until 15th July 2005.

(ix) Exhibit No. 124- Letter of Dominion Finance to Mr. Bakani (Director PCX and VDCL), dated 26th of April 2005 confirming the settlement of PCX debt and releasing VDCL security simultaneously.

(x) Exhibit No. 129- Dominion Finance Cheque to VDCL, dated 28th April 2005, of $1,004,583.33. (Deposit & Interest)

133. Mr. Smith was not cross-examined by the defence.

Prosecution Witness # 10
Mr. Nalin Patel

134. Mr. Patel confirmed that he was appointed a Board member of VDCL in December 2003. He said that VDCL was established by NLTB with the principle objective of "investments" of the funds provided by NLTB. VDCL was wholly owned by or VDCL's shareholders were NLTB. Witness identified Mr. KD as the Chairman of VDCL and a Board member of NLTB. Then he was referred to several documents.

(i) Exhibit No. 14- 1st VDCL Board Meeting Minutes dated 21st January 2004.

• - Mr. Bakani was appointed the Company Secretary for the time being.
• - A separate bank account to be opened at ANZ and all 5 Directors are to be signatories with any two to operate.
• - Investment Policy Guidelines to be drawn up in due course.
• - Mr. Bakani to ensure that a declaration was executed by the current shareholders confirming that they held the shares in trust for NLTB.
  

(ii) Exhibit No. 21- 2nd VDCL Board Meeting Minutes dated 11th February 2004.

New Business

1. Pacific Connex Ltd (PCL) – Mr. Ballu

Khan (Chairman & CEO) of this company has made an offer for a joint venture partnership to Vanua Development Corporation. PCL will be involved in IT development locally and offshore. The offer involves the following.

• A 51% stake in PCL;
• The appointment of two Directors on the Board of PCL;
• Capitalization of the Company to the tune of US$1m.
  

The Board resolved to approve in principle the offer of a joint venture with PacificConnex Ltd.
Further discussions are to be carried out by KD & NP. KD & IK are to be Directors on the Board of PCL, representing VDCL.

NP, KD and KB declared their interest prior to discussions of this offer.

135. Before discussing about three loans to PCX from VDCL, Mr. Patel said that as a Board Member of VDCL, he relied upon the information that was provided to him as true and complete to make an investment decision. Following exhibits are related to the $2 million PCX loan.

(i) Exhibit No. 38 - PCX letter dated 31st March 2004 to VDCL (Mr. KD) requesting $2 million loan.

(ii) Exhibit No. 39 - [b] Matters arising –

(iii) (iv) Joint Venture with PCX; Agreement to be signed why 14th April 2004, before the launching on 19th (This portion is been reproduced in paragraph 64 in this chapter) [c] (ii) Loan of $2 million to PCX to be considered at a later date.

(iv) Exhibit No. 43 - VDCL Extra ordinary Meeting Minutes dated 1st June 2004 convened solely to discuss the issues of $2 million PCX loan.

• - No decision was taken in view of following concerns.
  

• The absence of an investment policy guideline for VDC;
• The need to comply with trusteeship requirements with regards to the investment of fund;
  
• The need to take account of current political commentary on PCX;
  
• Whether other securities such as a bank guarantee could be provided by PCX;
  
• The need to look at a higher interest rate for the advance;
  
• It was noted also that the funds were to be tied for two years with no capital gain to be attained from the investment.
  

(v) Exhibit No. 45 - VDCL Board Meeting Minutes dated 23rd June 2004.
- Investment Policy Guidelines were circulated and the members to discuss and adopt at the next meeting.
- Board approved the PCX loan request of $2 million.

(vi) Exhibit No. 46- VDCL Investment Policy Guidelines.

The Introduction Strategic Asset Allocation and Exposure Limit are been reproduced in paragraph65of this chapter.

- Witness said that 20% exposure limit was put to ensure that they are "not putting all investments in one basket" and meant to be diversification.

(vii) Exhibit No. 60- VDCL Board Meeting Minutes dated 14th July 2004.

- PCX accepted the $2 million loan offerand Agreement is yet to be signed. Funds are to be released after signing of Loan Agreement and Security documents.

136. PCX loan of $900,000 was discussed next.

(i) Exhibit No. 79- VDCL Internal Memo by Mr. Saukawa dated 17th November 2004 regarding PCX loan proposal for $900,000 for their Infrastructure and Operational costs. (Refer to paragraph 80of this chapter for Exposure table and Mr. Bakani's documents)

• - Mr. Patel had not participated in this decision.
• - Mr. Bakani, Mr. KD and Mr.

Kaloumaira agreed.

(ii) Exhibit No. 83- E-mails exchanged between Mr. Saukawa and Mr. Whippy in November 2004.
- Mr. Patel said that he would have showed the similar concerns.

137. The next set of exhibits are related to VDCL Term Deposit with Dominion Finance.

(i) Exhibit No. 112- VDCL Board Meeting Minutes dated 16th March 2005.

• - Mr. Patel and Mr. Whippy were absent.
• - Board (3 members) resolved to invest $1 million government grant with Dominion Finance on a monthly roll over of 5.5.% per annum. (Refer to paragraph 82(vi)of this chapter)
• - Witness said that his understanding was just a deposit with Dominion Finance.
  

(ii) Exhibit KD-13 - Chain of e-mails between Mr. Patel and Mr.Saukawa in April 2005.

• - He said that his recollection is that the whole email was not making any sense to him. Mr. Patel went on to say that he did not believe that there was a security on Dominion Finance fixed deposit.
  

(iii) Exhibit No. 117- VDCL Board Meeting Minutes dated 13th April 2005.

- Board resolved to guarantee PCX loan of $3.6 m from FDB. (Refer to paragraph 86 (ii)of this chapter)

- Mr. Patel was absent.

(iv) Exhibit No. 135- VDCL Board Meeting Minutes dated 11th May 2005.

- Concerns were raised about the manner in which the VDCL and PCX dealings were conducted without Board approvals. (Refer to paragraph 86 (viii) of this chapter)

- Witness confirmed the concerns would have been on ANZ Term Deposit based on his email as the company funds need to be properly organized and acted upon.

(v) Exhibit No. 138 - VDCL Board Meeting Minutes dated 15th June 2005.

• - A draft accounts of VDCL guarantee over PCX loan from FDB given to the Directors for discussion. It says "This is to be attended ASAP"
• - Witness said that it was important to see PCX's accounts to monitor the company's operating results.
  

(vi) Exhibit No. 143 - VDCL Board Papers for 13th July 2005.

• - Board Papers No: 005/2005 was on PCX loan request for $350,000 to Credit Corporation.
• - Exposure 91.46% (Refer to paragraph 88 (iv) 4th point in this chapter)
• - Directors agreed to look at the comprehensive report on VDCL and PCX compiled by Mr. Bakani for NLTB, before any decision is made. (Refer to paragraph 88 (v)point).
• - Witness said the reason why he wanted to have these information is to be better informed about the operations of PCX as he had concerns about PCX's borrowings. He continued that VDCL having 51% of PCX shares would require their finances to assess.

(vii) Exhibit No. 148 - E-mail chain between Mr. Whippy and Mr.Saukawa in July 2005. (Refer to paragraph 87(v) of this chapter)

• - Mr. Patel said that he also shared the concerns of Mr. Whippy expressed in his memo to Mr. KD.
  

(viii) Exhibit No. 151- Mr. Bakani's Internal memo to VDCL Directors dated 10th August 2005.

• - Mr. Patel told that he assumed that what Mr. Bakani set out in this memo was correct on NLTB and PCX. He said that he was not aware of any of NLTB's pledge to PCX.
  

138. VDCL loan of $1 million to PCX was the next subject area.

(i) Exhibit No. 159 - VDCL Board Papers for 28th September 2005; Board Paper 14/2005.

• - PCX requesting $1 million to take over the $1 million debt from Vinod Patel.
• - Total exposure is 88.06% . (Refer to paragraph 89 (ii)of this chapter)
  

(ii) Exhibit No. 160 - VDCL Board Meeting Minutes dated 28th September 2005.

• - Directors agreed to lend PCX $1million to pay their debt to Vinod Patel.
• - Mr. Patel said that though he was concerned about the 88% exposure, he approved this $1 million loan on the basis of the assurances given by the General Manager that this particular loan was to recover $900,000 from Vinod Patel.
• - Witness was not aware whether the loan was used to pay for that loan or not.
  

(iii) Exhibit No. 170 - VDCL Board Papers for 21st October 2005.

- Board Paper 13/005 and 14/05 were VDCL and PCX Audited Accounts, prepared by Price Waterhouse Coopers.

(iv) Exhibit No. 171 - VDCL Board Meeting Minutes dated 21st October 2005.

- Board agreed to get the Auditors to finalize the VDCL and PCX audits and then present their report to a Special Board Meeting.

(v) Exhibit No. 179 - VDCL Internal Memo dated 16th December 2005 over PCX request for a loan of $100,000 to pay the legal fees incurred by PCX.

• - Mr. Patel had deferred his decision until he receiving certain information about the 3G License of PCX. He said that the request was to be better informed and make an informed judgment.
  

(vi) Exhibit No. 185 - VDCL Board Meeting Minutes dated 15th February 2006.

• - Board agreed to accept the PCX Audit for 2004 as presented.
• - Mr. Patel wanted the VDCL and PCX accounts to be consolidated before the final audit is approved and
  

(vii) Exhibit 192 and Exhibit 193

• - VDCL Board Meeting Minutes dated 15th March 2006.
• - Directors agreed to accept VDCL Investment Register as at 31st December 2005 as presented.
• - Total VDCL Investment Fund was $5,043,501 transferred from NLTB.
  

(viii) Exhibit No. 194 - VDCL Memo to Directors (Same Memo at Exhibit 179)

- Mr. Kaloumaira given his approval on 7th April 2006 as against his earlier minute dated 20th December 2005.

- Mr. Patel said that he cannot recall him receiving this memo.

139. In cross examination, Mr. Patel agreed that a corporation is a separate legal person or an entity and one part of that entity is company shareholders. He said that there must be more than one shareholder to form a company and shareholders of VDCL were three employees of NLTB. He endorsed that there is a 'capital structure' in a company to differentiate the monies of shareholders and monies came in some other ways like borrowings. He then differentiated the "authorized capital" and paid up capital", commonly known as company's equity. In case of profit or loss, he said that the equity changes, but not the paid up capital, until it is been changed by a resolution.

140. Mr. Patel identified Directors as another part of the company structure. He said that Directors either appointed by the shareholders or through the Articles of the company. Witness said that it is the Directors who run the company and make decisions for the benefit of the shareholders and in doing so they have number of obligations that they must meet. He admitted that the "management" includes the "paid staff", who gives effect to the decisions of the Board and provide information to the Board to make governance decisions as the Board governs the company.

141. Explaining what good governance is, Mr. Patel said that "generally as a Board, the Board would be responsible to ensure that the shareholders interests are protected and enhanced in terms of creating shareholders values. The Board would be responsible to ensuring the company has got business strategies and strategic directions. The Board would be responsible for monitoring the company's operations and profitability and...for risk management. In terms of governance itself there would be a code of conduct whereby the Board would be required to work within those code of conducts and best practices in those areas."

142. He said the 'Articles of Association" sets out the rules which govern the shareholders, Directors and Management. He agreed with Mr. Keene, QC, that it is a collective responsibility of the Directors to make decisions as a Board as it then becomes the decision of the company. When the requisite majority of Directors makes a decision or passes a resolution, whilst some other members abstain or dissent, it becomes Board determination. In such a situation, Mr. Patel said that the Directors are expected to do everything for the management to give effect to the Board's resolutions. Speaking on conflict or interest situations, witness said either a Director can declare the conflict, but nonetheless vote or refrain from voting. What option a Director takes depends on his own judgment.

Finally, on the composition of a company, witness said that company secretary is also a 'position' in a company and he is an officer of the company, who is also bound to give effect to the resolutions as other officers.

143. Mr. Patel was then questioned on the integrity and business experience of fellow VDCL members.

(i) Mr. Isoa Kaloumaira - Vastly experience banker

- Competent gentleman

- CEO, Fijian Trust Fund

- Headed various Boards

- Rate him very high of his Board skills and business accruement

- Very good integrity

(ii) Mr. Daniel Whippy - Accountant by profession

• - Executive of Carpenters Company
• - Very competent gentleman with vast experiences
  

(iii) Mr. Bakani - has a Banking background

• - General Manger NLTB
• - Very experienced Executive
• - A man of integrity
  

(iv) Mr. KD - Rate him very high in terms of Competence

• - Worked with him in various valuation exercises and with Rugby Union
• - Held him in very high status.
  

Mr. Patel said that Mr. KD is an expert in the valuation area of lands and would rank him equally with the other VDCL members as far as his business experience is concerned.

144. Answering to Mr. Keene, QC, Mr. Patel said that he would make a decision on the best information available to him in a given time. He was reluctant to accept that he was more particular about certain things than his fellow members and said all the other members were just as equally particular over things. The witness agreed that had he wanted to know something about PCX as a Board member of VDCL, he could have approached anyone of three (3) VDCL members. He further agreed that VDCL owned class 'A' shares in PCX, which had a first right to dividend attaching term and the different classes of shares have different rights.

145. Then the witness was taken through the following exhibits.

(i) Exhibit No. 14 - (6) Other Matters.

"Kalivati Bakani to ensure that a declaration was executed by the current shareholders confirming that they held the shares in trust for NLTB".

- Witness said that such a declaration of the trust in favor of NLTB would imply that the shares belong to NLTB.
- Agreed that shareholders cannot control the assets of a company, but, it is the Board.
- Appendix 1 (NLTB Board Meeting Minutes dated 18th December 2003)
- Referring to FAB approval (4), witness said that the transfer of Trust Funds money was intended to be the capital of VDCL whether the paid-up capital of $7.7. million, cash or assets, and trust money or NLTB's own funds, according to Mr. Patel, the money is capitalized or its been transferred for the purpose of capitalization and it becomes an issue for the VDCL Board rather than NLTB, as at that point it is been converted into equity and where it came from would not a matter. He confirmed that VDCL Board was dealing with a capital fund of $7.7 million.

(ii) Exhibit No. 21- New Business (1) [Refer to paragraph 132 (ii) of this chapter]

Mr. Patel recalled having discussions through e-mails with Mr. Dario, of PCX about the VDCL joint venture proposal with PCX.

(iii) Exhibit No. 39 - [b] Matter Arising.

Refer to paragraph 64.

(iv) Exhibit KD-26 - VDCL Board Meeting Minutes dated 12th May 2004
[b] (v) Agreement with PCX has now been signed and VDCL officially owns 51% of the shareholding.

- witness agreed with the defence suggestion that PCX was a startup company, which involved with the implementation of SAP system, and its business prospects look good.

(v) Exhibit 38 - Witness concurred with the suggestion that PCX being a startup, there would be initial significant starting cost before going live with SAP for NLTB and during its 1st year, it would be in need of funding. He further agreed that in the 1st year PCX would suffer losses because they were spending money in the operations without receiving any revenues till the year end.

(vi) Exhibit 45 - A capital grant of $747,338, instead of $1 million received by VDCL.

• - Witness confirmed getting a 9% interest for the 1st PCX loan of $2 million is a sufficient overall return. He went on to say that the resolution to approve the PCX loan request of $2 million was unanimous and when it appears in Board minutes that "Board approves the request", it was "generally unanimous".
  

(vii) Exhibit 59 - Mr. Patel's signature representing VDCL in ANZ Cheque to PCX and "Deed of Assignment and Irrevocable Authority" relating to $2 million PCX loan.

• - He agreed that these are examples of him giving effect to Board resolutions.
  

(viii) Exhibit 74 - Page 2, (iv) – Mr. Patel agreed that Credit Corporation and Dominion Finance were to be approached to find out best interest rates better than the banks.

(ix) KD-27 - VDCL Board Meeting Minutes dated 3rd November 2004

• - [B] (viii) Money is coming through equity contribution to VDCL.
• - New Business.

Dominion Finance is the suggested best place by the management for the spare monies that VDCL is going to have time to time and such action was put on hold until funds were made available.

PROPOSAL ON DOMINION FINANCE
[BP No. 001/004]

1. Introduction

1.1 Administration Officer introduced the paper. The subject was part of item [c] 4 considered by the Board in its October meeting.

2. Deliberation

2.1 The Chairman moved that the proposal be put on hold until Government announces its 2005
Budget this Friday to see if VDCL is allocated its $1m as promised.

3. Resolution

3.1 Directors resolved that the proposal be put on hold until funds were made available.

• - [D] (ii) Company's file for PCX had been missing for some time.
  

(x) Exhibit KD-28 - VDCL Special Board Meeting Minutes dated 25th November 2004 held over proposed PCX legal action against the government regarding the awarding of Financial Management Information System.

• - Witness did not fully agree with the suggestion that since government had already purchase SAP licence, the prospect of it giving computer work to PCX looked strong.
• - VDCL had fully endorsed the Resolution of PCX with regards to the legal action on FMIS tender.
• - Prior to legal action Prime Minister, Minister of Fijian Affairs and NLTB Chairman to be informed about this action.
  

(xi) Exhibit KD-29 - VDCL Board Meeting Minutes dated 4th December 2004.

• - Dominion Finance proposal was put on hold until the government grant of $1 million is received.
• - 2005 Government Budget allocated further $1 million to NLTB as equity contribution to VDCL. Mr. Saukawa to attend to the early release of funds and all its documents.
• - VDCL Budget for 2005 was resolved and approved by the Board subject to PCX forecast to be included.
• - Directors noted the PCX Budget forecast for 2005 and took up the view that it will have an effect on the VDCL.
• - Directors agreed for the VDCL to bid for all Government tenders and then establish relevant strategic partners of each tender.
• - Director agreed to consider appointing Mr. Bakani as VDCL Managing Director. A paper was to be prepared by Mr. Bakani and Mr. Saukawa.
  

(xii) Exhibit 117 - VDCL Board meeting Minutes dated 13th April 2005.

- Managing Director's appointment is not yet finalized.

- VDCL guarantee over the PCX loan from FDB was approved by the Board on the basis that VDCL being holding 51% shares of PCX. (Refer to paragraph 84 (ii) of this chapter)
- Chairman and CEO for PCX had attended this meeting. They informed VDCL that their application for a license to the mobile phone market is been approved in principle by the government and VDCL pledged its support to PCX for this new developments, being its subsidiary.
- Mr. Patel agreed with that getting the 3G license is a significant and multimillion dollar business.

(xiii) Exhibit 138 - VDCL Board Meeting Minutes 15th June 2005, Mr. Saukawa to obtain a draft accounts for VDCL Directors to discuss as soon as possible.

(xiv) Exhibit No. 144 - (Referred to paragraph 86 (v) of this chapter)

• - Witness said the consolidation of PCX accounts with VDCL was a concern at this time as VDCL owned 51% shares of PCX. He said that this will provide VDCL 'a bird's eye view' of the financial structure of the two organizations. But, he agreed PWC, the auditors opinion was different.
  

(xv) Exhibit 150- Referring to the Director's decision to formalize the variation of VDCL Guarantee with ANZ over PCX Overdraft facility for next two months, Mr. Patel said that best of his recollection, the decision was unanimous.

(xvi) Exhibit 185- VDCL Board Meeting Minutes dated 15th February 2006.

• - The Board agreed to accept the PCX audit report as presented.
  
• - Board agreed that issues raised on consolidation of accounts need to be addressed before the final audit report is approved.
  
• - Board ratified the endorsement of MOU between VDCL and NLTB.
  

(xvii) Exhibit KD-12 - VDCL Sealing register 2004.

• - The above Memorandum of Understanding reflects in the last line.
  
• - Date of affixing the seal is 24th of January, 2006.
  
• - Date of ratification is 15th February, 2005.
  
• - Mr. Patel agreed that Exhibit 185, page 3 reflects the Directors agreed to ratify the Sealing Register as presented and the figure 2005 should be read as 2006.
  

(xviii) Exhibit KD-30 - VDCL Board Meeting Minutes 17th May 2006.

• - PCX license for mobile, telephone services been approved by the government in principal.
  

(xix) Exhibit KD 30(A) - Information Paper No. 10 of 2006.

- Letter from Minister for Information to PCX dated 27th April, 2006 informing the cabinet has approved the granting of mobile license in principal subject to the outcome of VDL –v- MICMR. and AGMG court case.

- The letter dated 9th May, 2006 from Minister for information, Communication and Media Relation to PCX to confirm that PCX has satisfied government's requirements with regard to local ownership and shareholding strength and related agreement.

- Mr. Patel admitted that he thought that the 3G license opportunity was a very real one for PCX.

(xx) Exhibit 189/KD10 - PCX Financial statement as at 31st December, 2004.

- PWC signed their independent audit report for year 2004 on 28th February 2006.

- Page 1, Trading Results – net loss after income tax for year ended 2004 was $844,227.00.

- Current assets – Directors took reasonable steps before the financial statements were made out to ascertain that the current assets were shown in the accounting records at a value equal to or below the value that would be expected to be realized in future.

- Mr. Patel agreed that so far as current assets are concerned, the numbers shown in the financial statements show a time and fair real of those values. He further agreed that the current assets are to be paid within a year, there is nothing known to the Directors that made them doubt that these will be paid and the Directors believe that the company will be able to continue on for the next period of 1 year.

- Page 2, basis of Accounting – the Directors believed on reasonable grounds that the company will be able to continue with its operators for at least 12 months of this date of statements and will be able to pay its debts as and when they fall due.

- Other circumstances, the Directors were not aware of any circumstances not otherwise dealt with in this report on accounts which would render any amounts stated in the report misleading.

- Related party transaction – have been adequately and correctly disclosed in the financial statements.

- Mr. Patel agreed that after the Directors made this statement, it is the task of the auditor to test and verify those statements and to say whether he agrees or not with them.

- Page 4, PWC declared that they have conducted an independent audit in order to express an opinion on the financial statement to the members of PCX.

- Mr. Patel said that the purpose of an audit is to reassure the company shareholders, that the directors have got the things right and that is what auditors are supposed to do for the benefit of the shareholders.

- Page 6, Balance sheet, liabilities – owing to related parties $4,501,721 reflects the sum which related parties owe to PCX.

- Then Mr. Patel explained various figures reflecting in the financial statements and confirmed that the 2 loans given by VDCL to PCX in the sums of $2million and $900,000 fairly and truly show as a liability of PCX.

(xvx) Exhibit 170 - VDCL Board Papers for 21st October 2005. Board Paper 13 of 2005

- VDCL financial statements as at 31st December 2004.

- Mr. Patel said that the Board would have considered this account but he did not involve personally to compile or construct the accounts.

- Page 6 Basis of Accounting (refer to paragraph 102 (iv) in this chapter)

- Mr. Patel confirmed the areas that he discussed about PCX are reflecting in this document as well.

- Page 6, Non-current Assets, (Receivables) $2,900,000 (refer to paragraph 102 (iv))

- Then Mr. Patel said the wording "receivables" says the loans and advances are recognized as recoverable as there was no reasonable doubt about the repayment of those.

- Page 14; 7 (c) – Payable to related parties:

NLTB – Finance - 137,284

NLTB – Trust - 3,506,428

3,643,712

- Mr. Patel said that at the first VDCL Board Meeting he believed the share capital of the company was $7.7 million and that opinion did not change.

- Finally, Mr. Patel said that he was ceased to become a member of VDCL Board in December 2006 and there was a public announcement that VDCL was to be closed down during that time.

- Page 1, principal activities of VDCL shows it is the investment and management of funds for the benefit of Native Land Owners and Fijian.

146. In re-examination Mr. Patel said that even though a collective responsibility is there among the Board members, if the majority of the Board passed a resolution that was outside the objects of a company or causes the company to do any illegal act, dissenting Board members need not to carry out the resolution into effect. Mr. Patel went on to say a Board member of integrity will ensure that his fellow members are informed of all true and complete facts and will not suppress the material information. Therefore, he told court that he thought the 3 VDCL Board members who sat in PCX Board would inform him any material information required for his decisions.

147. Mr. Patel's position on the following exhibits was then clarified by prosecution.

(i) Exhibit 14 - Witness said that he was not provided with any of the NLTB Board Minutes, relating to NLTB Trust Funds over the establishment of VDCL.

(ii) Exhibit 170 - Referring to Exhibits 171 (VDCL Board Minutes 21st October 2005) Exhibit 185 (VDCL Board Minutes 15th February 2006), Exhibit 196 (VDCL Board Minutes 12th April 2006), Exhibit 246 (VDCL Board Minutes 16th August 2006) Mr. Patel said that no Director expressed a view or surprise as to how PWC treated the capital in the VDCL audited accounts. He said he was not shown the contract between PCX and PCMS, but he knew that PCX and TUI Consulting were owned by Mr. Ballu Khan.

(iii) Exhibit KD-30(A)- Mr. Patel agreed with the prosecution that the letter dated 9th May 2006 to PCX by the Minister says, PCX has satisfied the government requirements, ownership by Fijian citizens and shareholding strength. He admitted that Mr. Bakani's letter to the Ministry of Information dated 12th May, 2006 appears like a complaint with strong allegation against the cabinet and the Government.Mr. Patel quoted from his letter, that PCXhad to wait to get 12 months to get a reply to its application, whereas DIGICEL'S got theirs within 1 day.

(iv) Exhibit No. 189 - Mr. Patel agreed that the auditors are relying on the accuracy and the completeness of the information they receive from the board of Directors and the management in preparation of the financial statements and this PCX financial statement was produced in February 2006, after 14 months of the relevant period.

148. Revisiting the question of the public announcement made in the wake of Political events in 2006 that VDCL will be closed down, Mr. Patel said it would not be proper for a company to be a guarantor to guarantee a loan on behalf of a Third Party with a bank if the guarantor believed that the company is going to close down.

Prosecution Witness # 11
Mr. Daniel Whippy

149. Mr. Whippy started his evidence saying sometime in December 2003 he was approached by Mr. Bakani to be a Board member of VDCL, a government owned company that they were going to form to operate like Fijian Holdings and invest in blue chip companies. He said that VDCL was a fully owned subsidiary of NLTB and there were some Extinct Mataqali funds that they wanted to invest in various investments in Fiji to reap high returns. He confirmed Exhibit 12, his letter of appointment to VDCL dated 23rd December 2003. He told that Mr. KD was the Chairman of the board and his role was to lead board minutes, ensure the discussions on the papers by each board member and take opinions from each member. He claimed that he knew Mr. KD in the business circles in Fiji and contracted Mr. KD's valuation company, ROLLE Valuations in his business dealings for around 20 years. He went on to say that Mr. KD was also a former Minister for Sports, Chairman of Fiji Rugby Union, member of the NLTB Board and got involved in Natadola Hotel Development Project with FNPF.

150. Referring to Mr. Bakani, another VDCL Board member, Mr. Whippy said that he was the Deputy Head of the National Bank of Fiji and later joined Carpenters as a Deputy Managing Director and General Manager for NLTB. Mr. Kaloumaira, according to Mr. Whippy, was mostly very quiet during the board meetings and would agree to approving of the loans in agreement with Mr. KD and Mr. Bakani.

151. Whilst citing paragraph 2of the VDCL MOA (Exhibit 3), Mr. Whippy said that he understood the purpose of VDCL to be the commercial vehicle of NLTB as trustee for the Fijian land owners as stipulated under NLTA Cap 134.

"ACKNOWLEDGING AND RESPECTING FIJIAN CULTURE, CUSTOMS AND TRADIONS, the prime object for which the Company is established is to engage in the facilitation of the investment of native land in Fiji for projects, businesses and enterprises and, in support of this object, to facilitate the investment of income trust, development, erection, construction, management and/or operation of projects, businesses and enterprises, to be pursued singularly and/or in partnership or in joint venture with, and/or for and on behalf of individuals, partnerships, other companies and/or other entities, either as partners consultants, advisors, managers, agents, brokers or otherwise and in this regard and without limiting the generality thereof the Company shall either singularly or otherwise.

Establish the broad planning guidelines and parameters consistent with the development philosophy of the Company.

Explore the possibility of establishing banking and credit facilities for landowners.

Do all and any other things for the benefit of the commercial development of native lands in Fiji for related projects, businesses and enterprises and/or the ownership and/or management of related projects, businesses and enterprises.

Do all such other things as are incidental or conducive to the attainment of the Company's objects and the exercise of the powers of the Company, or which may be done conveniently in connection therewith, or which may be calculated directly or indirectly to enhance the value of or render profitable the whole or any part of the undertaking, assets and the businesses of the Company."

152. Then Mr. Whippy spoke about PCX. He said, he became aware of PC X as a vehicle for providing computer services to NLTB and its owner Mr. Ballu Khan had offered 51% shares to VDCL as a gift. He recalled asking Mr. Bakani what is Mr. Kahn's "catch" with this gift, to which Mr. Bakani replied that there is no catch but Mr. Khan wants to help the Fijians. Then, Tui Consulting, according to Mr. Whippy was a management services company fully owned by Mr. Ballu Khan. Mr. Whippy could not recall showing him any agreement between NLTB and PCX or PCX and PCMX.

153. Referring to Exhibit 21 (reproduced in paragraph 134 (2)of this chapter), Mr. Whippy said, that 3 VDCL members were appointed as members of PCX. From those members he expected to inform him any important information on PCX's finances, give copies of minutes of discussions of PCX and specifically the funding issues faced at PCX. He continued with Exhibit 38, the $2million loan proposal from PCX and said the fact that Mr. Ballu Khan on behalf of PCX had promised NLTB to pay $4.6 million upfront cost for the implementation of NLTB's computer system, would have been a matter of importance to take his decision on this loan request and the VDCL board should have been informed of it.

154. Then Mr. Whippy was taken through the following exhibits.

(i) Exhibit No. 43 - VDCL Extraordinary Board Meeting Minutes on 1st June, 2004 (refer to paragraph 135 (3))

• - He said that there was a "trusteeship requirement" with regards to the investment of funds as VDCL was responsible to follow and be consistent with NLTB's trust guidelines.
  
• - He further clarified that when making investments VDCL first have to be consistent with VDCL's Investment Policy and secondly with NLTB's policy on investments.
  

(ii) Exhibit No. 46 - VDCL Investment Policy (refer to paragraph 65).

155. The next topic discussed with Mr. Whippy was the $900,000 loan to PCX.

(i) Exhibit No. 79 - VDCL Internal Memo – PCX Loan Proposal (refer to paragraph 80 (2)

• - Mr. KD, Mr. Bakani and Mr. Kaloumaira supported
  
• - Witness said that since three members had already agreed, he thought not to comment as there would be no point in doing so.
  

(ii) Exhibit No. 83 - E-mail chain between Mr. Saukawa and Mr. Whippy (Refer to paragraph 80 (3) of this chapter.

• - Witness said that he asked for the financial statements of PCX to understand how their business was performing, as he did not receive those, despite several requests by himself and Mr. Patel.
  

(iii) Exhibit No. 112 - VDCL Board Meeting Minutes dated 16th March 2005

• - Witness was absent
• - Investment of $1m Government grant in Dominion Finance. (Refer to paragraph82 (v) of this chapter)
  

(iv) Exhibit No. 116 - VDCL Board Papers for 13th April 2005

• - Board Paper 003/2005
• - Letter of FDB, dated 11th April 2005, approving PCX a loan of $4.6 million.
• - Refinancing $1m Dominion Finance loan was one purpose.
• - Security – (d) Joint and several guarantee by the shareholders (inclusive VDCL) of the company for total liability.
• - Witness said that he was concerned about this move as VDCL had invested a lot of money in PCX and it was not performing as expected.
  

(v) Exhibit No. 117 - VDCL Board Meeting Minutes dated 13th April 2005. (Refer to paragraph 86 (2) of this chapter)

- Witness said though the Board approved the FDB Guarantee, he would not have agreed to that.

- With this guarantee, witness said that FDB will get the first priority over VDCL and in case PCX breached their loan conditions or defaulted the loan, that would affect the first two VDCL loans given to PCX.

(vi) Exhibit No. 135 - VDCL Board Meeting Minutes dated 11th May 2005.

• - VDCL Guarantee over PCX loan from FDB.(refer to paragraph 86 (viii)in this chapter)
• - Concerns were raised over providing guarantees without prior Board Approvals.
  

(vii) Exhibit No. 138 - VDCL Board Meeting Minutes dated 15th May 2005

• - Draft accounts to be obtained for the Directors to discuss FDB guarantee.
• - Witness said he made this request to understand how PCX was performing financially. Up until June 2005, he said that he was not provided the financial statements.
  

(viii) Exhibit No. 143 - VDCL Board Papers for 13th July 2005

• - Board Paper NO. 005/2005 – Proposal to Guarantee PCX Facility with Credit Corporation for $350,000.
• - Refer to paragraph 88 (iv) of this chapter)
• - Witness said that this made him concerned as by then the VDCL exposure in PCX was 91.46% whilst the guideline was 20%.
  

(ix) Exhibit No. 144 - VDCL Board Meeting Minutes dated 13th July 2005

• - Credit Corporation Guarantee –

Directors wanted to see the comprehensive Report of Mr. Bakani prepared for NLTB. (Refer to paragraph 88 (v)of this chapter)

- Witness said the reason for his concerns was that he was not informed about the financial performances, yet they were approving several loans and guarantees to PCX.

(x) Exhibit No. 148 - Mr. Whippy's letter to Mr. KD, dated 9th August 2005 and e-mail chain with Mr. Saukawa.

- E-mails are reproduced in paragraph 87 (v) of this chapter.

- Following are some excerpts of his letter.

"In PCX's first year of operation the loss is incredible which cast doubts about our ability to recognize opportunities and manage investments. What corrective measures, if any, are being suggested? What are the goals of PCX? Are these achievable? What are we doing about it? More importantly, if we continuously do not question on-going requests for additional borrowings in relation to achieving realistic objectives, the integrity of the Board will be brought into question. The credentials of our Board is impeccable and it will certainly be embarrassing to see this tainted.

It is a possibility that external auditors may question the viability of PCX as a going concern in view of unfavourable debt ratios and the extent of its borrowings. At its present rate assuming that the level of income and expenditure does not change, this could become a likely event. What is our contingency plan if this becomes real?

Normally 70% debt and 30% equity is industry average but depending on market value of assets, 1 to 1 is the highest any lender would lent at. If PCX needs cash the shareholders should contribute more capital instead of borrowing. If Tui Consulting believes in this business then they must put the money in.

We still have not received PCX reports compiled by NLTB for the NLTB Board meeting last month despite the assurance by the Board it would be circulated. Further all loan documents that have been entered into was also supposed to be circulated and this still has not been done yet. Given the exposure by PCX clearly the board of VDCL must be concerned given that the priority over income have been given to some other institution."

- Witness said he expressed his concern that VDCL should not be lending or guaranteeing any loans for PCX because its viability was a growing concern.

- Witness confirmed that he was not an approving member of VDCL guarantee to ANZ, as it was approved by 3 Directors.

- Witness said that VDCL's poor investment decisions will change its Balance Sheet dramatically and it would have reflected in NLTB as well.

- Mr. Whippy confirmed that Mr. KD did not respond to his concerns he expressed.

(xi) Exhibit No. 151 - Mr. Bakani's Internal Memo, dated 10th August 2005, responding to Mr. Whippy.

• - Mr. Bakani had asked to have faith in their counterparts representing VDCL in PCX.
  
• - Witness recalled that he received this memo during the scheduled VDCL Board meeting for the day. He said that he was surprised over Mr. Bakani's position, but then that was his position.
  

(xii) Exhibit No. 150 - VDCL Board Meeting Minutes dated 10th August 2005.

• - Formalising the variation of VDCL guarantee with ANZ.
• - Witness said that he would have disagreed withthis decision, as this decision was taken after he sent his letter (Exhibit 148) to Mr. KD.
  

(xiii) Exhibit No. 159 - VDCL Board Minutes dated 28th September 2005.

• - Board Paper No. 014/2005 – PCX loan proposal for $1 million.
  
• - Directors agreed to lend the amount to PCX to pay their debt with Vinod Patel. (refer to paragraph 89 (ii) of this chapter)
  
• - Witness said that he would have agreed with the other Directors to lend $1m to PCX because $900,000 will come back from Vinod Patel to PCX.
  
• - He went on to say that he was not aware that under the PCX loan with FDB for $3.6m, since April 2005, NLTB's annual payment to PCX went directly to FDB and that would have been an important factor for him to know when making business decisions.
  

(xiv) Exhibit No. 170 - Board Paper 14/2005. PCX Financial Statements for 2004.

• - Witness claimed that it was the first time he saw a draft PCX financial statement.
  

(xv) Exhibit No. 179 - VDCL Internal Memo – PCX's request for $100,000 to pay their legal fees.

• - Mr. KD and Mr. Bakani approved the request whilst Mr. Patel and Mr. Kaloumaira deferred their decisions for want of further information.
  
• - Mr. Whippy's response dated 20th January 2006 is as follows:
  

"All cash advances, borrowings and guarantees should not be provided until PCX can demonstrate the following:

(i) PCX is a profitable business and able to generate positive cash flows on existing business assignments.

(ii) PCX provide audited financial statements for 2004.

(iii) PCX provide financial statements for 2005 plus minutes of Board Meetings.

(iv) Are other shareholders providing similar advances."

(xvi) Exhibit No. 194 - Mr. Kaloumaira had given his approval on 7th of April 2006 for the above request.

156. Finally, Mr. Whippy said, that there was a time that he wished to resign from the VDCL Board, after his memo to Mr. KD as he was concerned at the level of PCX borrowings and could not understand the mindset of its principal owner. He said he knew from the market place that Mr. Ballu Khan was very extravagant in his spending and he suspected that the monies so used were going from PCX. But Mr. Whippy said that the Directors did not seem so and he did not want to get up in this mess. Mr. Whippy had decided to continue in VDCL after Mr. Patel told him that they should remain as independent members and the Prime Minister wanted them to stay.

157. Then Mr. Whippy was cross examined. Referring to VDCL's Memorandum of Association witness agreed that VDCL's objects included "market, promote, and advertise the company's development of land in Fiji, for related project, businesses and enterprises and raise secure money, finance, debt, equity and or capital" (para 2 (xii, viii). Next he was referred to para xx)

Invest and deal with the monies of the Company not immediately required upon such securities and investments including government loans, shares in, or securities of other companies or deposits with any bank, financial institution, company, firm or individual at interest and to vary from time to time such investments and generally in such matter as may from time to time be determined by the Directors.

158. Witness agreed that the objectives of VDCL are very broad and did not restrict the board in decision making. He further agreed that the investments in PCX by VDCL would not qualify as a blue chip investment as he thought. As Exhibit 21 reflects, VDCL board meeting minutes 11th February, 2004 (refer to paragraph 134(ii) witness confirmed that he voted to approve the PCX offer for a joint venture partnership in principal.

159. When the first loan request from PCX for $2m came up to VDCL, Mr. Whippy admitted that it contained the IT solution agreement between NLTB and PCX and he studied the said agreement as his commercial justification is based on that. He considered that he voted in favor of this loan request and in fact signed the Deed of Assignment (KD-14)on behalf of VDCL as the other Directors were not available. The signing process was extended by the witness saying that the signing of documents in VDCL was done by whoever available at a particular time.

160. Talking on the VDCL Investment Policy Guidelines, Mr. Whippy said the maximum investment limit of 20% was a decision approved by the board and the board could have varied the guidelines and review periodically. When the $2m loan was lent to PCX, VDCL guidelines had not been adopted. Mr. Whippy agreed that this $2m loan to PCX breached the 20% exposure guideline, and said the point of setting up VDCL is to have more freedom to invest funds than NLTB enjoyed.

161. The next topic where Mr. Whippy was cross-examined was the $900,000 loan. The statement Mr. Whippy made to FICAC was shown to him by the defence to clarify the non-availability of his comments in Exhibit 79. Mr. Whippy said that it happened a long time back and he might have received this internal memo but may have not commented because others have already made their comments. He agreed that it follows that he cannot say differently whether he voted for the request or voted against the request.

162. On the issue of placement of the Government grant of $1m with Dominion Finance, Mr. Whippy confirmed that it was the VDCL Board view that the best return came from Dominion Finance and that was what he would have been expected to happen with that money.

163. The next topic questioned was the VDCL guarantee to FDB for $3.6m PCX loan. Mr. Whippy admitted that the VDCL Board resolved to guarantee the PCX loan facility but could not recall either the discussions of the Board meeting or whether he voted for or against the resolution. He went on to say that he had concerns about this FDB guarantee but it was later and not at the time and therefore, he did not express his concerns at the relevant time.

164. Pointing to VDCL Board Meeting Minutes dated 11th May 2005, (Exhibit 135) VDCL Guarantee over PCX Loan form FDB, Mr. Whippy said that there was a prior Board approval to the FDB guarantee and the issue in this Board Meeting was raised by Mr. Patel.

165. On ANZ Term Deposit of VDCL, Mr. Whippy agreed that even though he emailed to Mr. Saukawa that he was not aware of VDCL's guarantee/security to ANZ for PCX loan, according to Exhibit KD-13, he had received an email from Mr. Saukawa that both VDCL Term Deposit and PCX loan be shifted to ANZ for a better interest rate.

166. Witness said the purpose amongst other things of his letter to Mr. KD, dated 9th August 2005 (Exhibit 148) is to clear up the transactions related to Vinod Patel and Credit Corporation. Mr. Whippy was satisfied that Mr. KD had taken steps to circulate his letter immediately after he received the same on 10th of August 2005 and the result was Mr. Bakani's Memo dated 12th August, 2005.

167. Mr. Whippy recalled that, Mr. Ballu Khan approached Carpenters Fiji for the implementation of MYSAP IT system and in fact did a good presentation as well, but he said the quoted cost was far beyond their budget, so he said that he "took that as he is pitching for business and setting his goals up there and got the Board thinking like that. So everybody is just being sort of strung along. I wanted to understand what the strategies were but I didn't get any feedback".

168. The witness was questioned that PCX had to spend at least $4.8m by end of December 2004 to put the NLTB MYSAP system into place and would not get any revenue at all until its first payment from NLTB from January 2005. While agreeing with this Mr. Whippy said that the PCX operating expenditure was quiet high and that was his concern. Defence suggestion that he should not be surprised or disappointed at a $1.4m loss to PCX in the first year of a startup project as it would be better in time to come, Mr. Whippy said that he would expect losses but not to that tune. But, at one point Mr. Whippy conceded that the catastrophe in profitability figures of PCX comes when compared to a business in ordinary operation but not a startup company.

169. Witness agreed that though Mr. Patel was of the view that VDCL and PCX financial statements should be consolidated, the auditors, PWC, said that the consolidation can't be done because VDCL does not have the management control of PCX (Exhibit 206).

170. Then Mr. Whippy had to admit that as in the Dominion Finance facility, he cannot recall whether he voted for or against the resolution in relation to the extension of the term deposit with ANZ bank.

171. Mr. Whippy concurred with Mr. Keene, QC, that once he sent his letter to Mr. KD, he was satisfied that he said whatever he wanted to say and made aware to the Board about his concerns.

172. Referring to Exhibit 159, VDCL Board Papers for 28th September 2005, witness agreed that there were expectations of financial arrangements for PCX, but because Vinod Patel was not paying it, PCX was in critical financial situation (Refer to paragraph 89 (ii)of this chapter).

173. Mr. Whippy produced Exhibit KD - 31, VDCL Board Meeting Minutes dated 18th October 2006. By that time it was finalized that the accounts of PCX for 2004 and 2005 will not be consolidated with VDCL accounts. Directors resolved the following on draft 2005 audited accounts

"Draft 2005 Audited Accounts [PB No. 018/06]

Chairman took the Board through the draft 2005 accounts. Director NP raised the issue of the income recognition whereby all income is to be booked first at VDCL level. The issue of dividing the income into NLTB Trust, Finance and the poundage will need to be addressed after the income is recognized. The auditors are to be advised to incorporate these changes.

Directors resolved the finalizing of the non-consolidated 2004 & 2005 accounts subject to the changes as mentioned."

174. Citing Exhibit KD 16 Mr. Whippy said the VDCL Board Meeting dated 19th July 2007 had confirmed the last meeting minutes, which was Exhibit KD - 31. Mr. Whippy said that he ceased to become a Director of VDCL by a written notification dated 30th June 2007 from the Ministry of Fijian Affairs that he was been replaced with effect from 25th June, 2007. He recalled that there was a public announcement after their last VDCL Board Meeting that VDCL is going to be continued or not and after the said letter he was not communicated on any further replacement or removal of his Directorship in VDCL. He said that his recollection was that "term is expired. You finished. Gone. You might get a letter or don't get a letter, but that's how I saw it. I assume I had completed my term." Exhibit KD – 32, letter to Mr. Whippy from the Interim Minister for Fijian Affairs Board to the effect that his Directorship in VDCL is replaced by the interim board was marked as KD – 32.

175. Finally, in re- examination, Mr. Whippy agreed with the mathematical calculation of the defence about $47625 inExhibit 189, the PCX audited financial statements and said that amount was not due on 31st of December 2005 to VDCL but rather payable.

176. The prosecution sought certain clarifications from Mr. Whippy in re-examination.

(i) Exhibit No. 14 - Witness said his understanding as to the principal activities of VDCL was to invest and investment management of trust funds.

(ii) Exhibit No. 79 - He said that in the normal course had he voted for the $900,000 PCX loan proposal, he would have endorsed it in writing, here it shows a blank under his name.

(iii) Exhibit No. 144 - VDCL guarantee over PCX facility with Credit Corporation was deferred until the Directors have a look at the comprehensive report of Mr. Bakani to be submitted to NLTB but not declined. Mr. Whippy clarified his answer in cross examination "at a later date" saying that it was a time when this matter was still being before the Board.

(iv) Exhibit 148 - Witness recalled that when he wrote this letter to Mr. KD in August 2005 which was circulated among other members, nobody said to him that his calculations were wrong.

(v) Exhibit No. 206 - Witness confirmed that by August 2006 the topic of consolidation of VDCL and PCX accounts was not a discussed issue.

(vi) Exhibit KD – 31 - Witness said that on the proposal on Yatu Lau Capital Raising the Board resolved to acknowledge the proposal and to advice the Issue Manager that VDCL is not in a position to participate in this investment at the moment over to the unavailability of the surplus funds as all funds are committed at the moment.

• - Mr. Whippy confirmed that at the time of this meeting October 2006, VDCL had lent a total of $3.9m of loans to PCX and tied up $1m in a term deposit with ANZ as security for PCX overdraft facility.
  

177. Finally, Mr. Whippy noted that Exhibit KD – 32, the letter informed him about his replacement in VDCL was not only to him but for all 5 members of the VDCL Board and the public announcement over the continuation of VDCL came after the military coup of 6th December, 2006.

Prosecution Witness # 12
Mr. Abhi Ram

178. He confirmed of having signed and certified copies on a number of original documents filed and kept in the company registry.

(i) Exhibit No. 3 - Memorandum of Association, VDCL.
(ii) Exhibit No. 4 - Articles of Association, VDCL
(iii) Exhibit No. 5 - Certificate of Incorporation, VDCL dated 23rd October, 2003.
(iv) Exhibit No. 6A - Particulars of Directors and Secretaries of VDCL, dated 29th September, 2003, presented to the registry by the NLTB.
(v) Exhibit No. 6B - Particulars of Directors and Secretaries of VDCL again presented by NLTB dated 23rd December, 2003.
(vi) Exhibit No. 6C - Particulars of Directors and Secretaries dated 19th October, 2004.
(vii) Exhibit No. 219 - Incorporation of SASHA Ltd dated 29th February, 2000.
(viii) Exhibit No. 220 - Particulars of Directors and Secretaries of SASHA Ltd dated 7th of February, 2000.
(ix) Exhibit No. 221 - Particulars of Directors and Secretaries of SASHA Ltd dated 18th of December, 2003

Mr. Ballu Khan appears as Chairman and CEO, appointed on 18th December, 2003 and Mr. Dario Jaeger as Chief Financial Officer.

(x) Exhibit No. 222 - SASHA Ltd changed its name to PacificConnex Ltd on 14th January, 2004 by a special resolution.
(xi) Exhibit No. 223 - Particulars of Directors and Secretaries of PCX as at 24th March, 2004.

Mr. Ballu Khan and Mr. Dario Jaeger remains as Exhibit 221.

(xii) Exhibit No. 224 - Particulars of Directors and Secretaries of PCX as at 25th March, 2004.

_ Mr. Ballu Khan and Mr. Dario Jaeger remains at Exhibit 223.

(xiii) Exhibit No. 225 - Return of Allotments of PCX as at 24th March, 2004.

• - Tui Management Services Ltd – 9,899 shares and Mr. Khan 99 shares.

(xiv) Exhibit No. 226 - Notice of Resolution passed by PCX to increase its share capital to $1 million pursuant to Shareholders Agreement between VDCL and PCMS, dated 27th May, 2004.
(xv) Exhibit No. 227 - Notice of Increase in Nominal Capital of PCX from $990,000.

• - Dated 27thMay,2004.

(xvi) Exhibit No. 228 - Particulars of Directors and Secretaries as at 2nd July, 2004.

• - Mr. KD, Mr. Bakani and Mr. Kaloumaira been included.

(xvii) Exhibit No. 229 - PacificConnex Ltd changed its name to PacificConnex Investment Limited on 6th October, 2005 by a Special Resolution.
(xviii) Exhibit No. 230 - Particulars of Directors and Secretaries of PacificConnex Investment Limited as at 13th September, 2006.

• - Three members of VDCL continues to remain.

(xix) Exhibit No. 231 - Particulars of Directors and Secretaries of PacificConnex Investment Limited as at 6th August, 2007.

- Those members of VDCL continues.

(xx) Exhibit No. 232 - Particulars of Directors and secretaries of PacificConnex Investments Ltd as at 22nd August, 2007.

- Mr. KD and Mr Bakani were terminated.

- Mr.Buresova and Mr. Tuinamuana were appointed.

- Mr. Khan and Mr. Kaloumaira continuing.

179. Mr. Ram was cross examined onExhibit KD 33, 33.1, 33.2, 33.3.

(i) KD – 33 - No. 9 refers to KD.1 and KD 33.2, the Particulars of Mortgage or Charge of VDCL made out to Colonial Fiji Life Limited.

• - Witness confirmed that it is the only charge mentioned in KD-33, documents been received by Registrar of Companies on VDCL.
• - No. 23 refers to KD 33.3, Voluntary winding Up of VDCL.
  

180. In re-examination, Mr. Ram, referring to KD 33-3, Liquidators Statement of account, said that it is a document dated 5th April 2013 as oppose to KD 33 .2, Deed of Charge is dated 22nd of November 2005.

181. The end of Mr. Ram's evidence, marked the end of prosecution list of witnesses as well. Nevertheless, you would recall that the prosecution with the agreement of the defense read out eight statements of the witnesses and three Banker's Affidavits. You are provided with the copies of those statements. Thus, I see no purpose of reproducing the contents of those exhibits as I am pretty much sure you have already gone through them.

182. After the prosecution declared of closing their case, you witnessed the court decided to call for the defence from the accused. He opted to remain silent without calling any witnesses on his behalf to testify. I have already told you that to remain silent is his right.

ANALYSIS OF LAW AND FACTS

1. I have already mentioned to you briefly in Chapter IV "Elements of the Offence", what elements are contained in the offence of "Abuse of Office". Now you have to see whether the evidence led by the prosecution in relation to each element of each count proves the five (5) separate counts beyond reasonable doubt or for you to be sure of the guilt of the accused. First, I will direct you on the legal background of the elements of the offences. You will have to accept and act upon those directions.

2. The 1st element is whether the accused was employed in the "Public Service" or not. This with the agreement of both counsel, I consider as a pure question of law. Thus, I relieve you from deliberating this issue. After having considered the following exhibits and legal provisions, which I am going to elaborate more descriptively in my judgment,
   
   • (i) Section 111 of the Penal Code;
   • (ii) Section 04 of the Penal Code;
   • (iii) Public Service Act
   • (iv) Exhibit 1 – Mr. KD's first appointment to NLTB from 2001 – 2004
   • (v) Exhibit 252 (i) to (vi) – Mr. KD's reappointment to NLTB from 2004 – 2007;
   • (vi) Exhibit 09 – Mr. KD's appointment of Mr. KD to Chairman VDCL by NLTB;
   • (vii) Exhibit 12 – Letter of Appointment of Mr. KD to Chairman VDCL by NLTB;
   • (viii) Exhibit KD 32 – Letter dated 25th June 2007 from Interim Affairs Minister for Fijian Affairs to Mr. KD;
   • (ix) Exhibit 4 – Articles of Association of VDCL, Articles 72,73,75,93 and 97;
   • (x) Exhibit 6, 6A, 6B,6C – Particulars of Directors and Secretary of VDCL and;
   • (xi) Section 182 of the Companies Act.
     

I direct you that the accused, Mr. KD, was "a person employed in the public service" at all material times to the charges. The remaining elements, of course depend on the facts that you have to deliberate. But, to do so, you have to adopt the legal background now I am going to tell you.

3. The 2nd element is "did an arbitrary act". The term "Arbitrary Act" is an act of omission or commission of one's own free will without been guided by the rules and regulations, but by his own whims and fancies. Here, in the five charges (5) against the accused, 'arbitrary act' denotes to 'facilitation' of loans to PCX, either directly from VDCL or through Dominion Finance and ANZ. The word 'facilitate', as the word speaks for itself, means to make the commission of something easier.
   
4. (i) The next element is whether 'arbitrary act defined above, was done in abuseof the authority of the office the accused held. When a person

actsunder the colour of his 'office' or 'position' for some illegitimate agenda without a proper or reasonable justification, either with the intention of causing loss or harm to another or conferring some advantage or benefit to another, is said to have acted in abuse of the authority of his office. In such a situation, irrespective of the final outcome, he is acting in a "bad faith" or with a "improper motive". A mere act of 'negligence' would not suffice to justify a charge of "Abuse of Office".

(ii) Therefore, it is essential to find out or satisfied whether the accused possessed any "improper motive" at the material times of the charges. None of us would be able to say what exactly went through the accused's mind during that time. But, you can consider all the direct and circumstantial evidence led before you, through oral and documentary evidence, to have your conclusions about his motives and state of mind. This is where you have to follow the direction given on circumstantial evidence. This conclusion will answer whether the accused abused the authority of his office or not.

5. The next element is whether the 'act' in issue is prejudicial to the rights of another, here in this case, to NLTB and Indigenous Fijians. A 'misconduct by partiality', such as favouring friends, family members, relatives or even total outsiders and corporates could prejudice the rights of other concerned persons. These 'rights', need not only be 'Constitutional rights' or 'legally defined rights'. It is simply used in 'generic terms' and it is sufficient to prove that any general right of NLTB or Indigenous Fijians is been prejudiced.

6. Finally, the element of 'gain'. Prosecution alleges that the 'arbitrary' acts they claim were done by the accused were for the purpose of gain. The gain is an increase of something in amount, degree or value. It can be in different types, may be financial or political or some other thing depending on the circumstances. The beneficiary could be the accused himself or a family member, a friend, a total outsider or a business entity. The benefit could be direct or indirect.

7. Madam assessor and gentlemen assessors, It is needless to say that this trial is against Mr. KD. The five charges you concentrated throughout the proceedings focus only this accused. Therefore, it is not open for you to speculate the involvement or contribution of the others to the alleged circumstances. The issue before you is to deliberate whether Mr. KD committed the alleged offences as charged. The issue before you is whether the prosecution managed to prove to your fullest satisfaction all the elements of charges against Mr. KD. I direct you that it is not your concern whom to be charged or who else to be charged. Your concern should be on the law, elements of the charges, the evidence you witnessed and the accused.

8. In respect of Count No. 8, VDCL Term Deposit of $1 million in ANZ, defence argued that there was no prejudice to Indigenous Fijians as ANZ taking of VDCL's $1 million was illegal without a 'valid charge' and ANZ could be required to pay the money to the liquidators. Defence argument arose in a context where the 'charge' over VDCL's Term Deposit kept as a security to PCX overdraft and loan facilities was not registered at the Registrar of Companies within the required time of 42 days and when executed it is been expired on 1st of August 2005. By proper process, they said that the money would have been recovered into VDCL and back to government.

As a matter of law I am directing you that in terms of section 98 of the Companies Act, a 'Charge' is void unless the prescribed particulars of charge been registered with Registrar of Companies within 42 days of its creation. The prosecution said that ANZ had the 'Guarantee' of VDCL's $1 million Term Deposit apart from this 'Charge' and the bank legal advisor was not certain whether the Charge to be registered or not. They argued that the Term Deposit was enforced 2 years later and the failure of ANZ to register the Charge over Term Deposit does not affect the accused's approval to provide such security. According to the prosecution, it is crucial that neither the accused nor the VDCL made any complaints about the enforcement. The law and facts relevant to your opinion are made available to you now. You can now decide whether there could be no prejudice, as defence suggested to NLTB and Indigenous Fijians, if the proposed cause of action over the 'Charge' was taken.

9. Madam assessor and gentlemen assessors, I hope that the closing
Addresses of the counsel are still fresh in your minds. I paid more attention to the evidence tendered to court by the parties as it was somewhat complicated with the number of documents involved and the length of the period the trial continued. I am confident that with the detailed summary of evidence, you would recall what exactly took place in court for the last six weeks. Now your task is to apply the law as I directed to you and deliberate the facts to see whether or not the prosecution is successful in proving the charges against Mr. KD.

10. I do not intend to talk much about the arguments raised by the counsel
during their closing address. Both the counsel, as you know, took one full day each for their oral submissions, with copies to you as well, which contained their arguments in full. If I am to analyse those arguments which run over 200 odd pages, you will surely get exhausted. That is why I provided you the opportunity (on 30th August 2014) to go through the respective written submissions and exhibits once more for you to be more conversant and familiar with the arguments of the parties. I warned you to maintain an open mind until my summing up, as without the applicable legal principles, you should not come into conclusions. Now you are fully equipped to formulate your opinions.

11. In a nutshell, the case of the prosecution is that the accused being a Director of NLTB, the Chairman of VDCL and a Director of PCX had a duty to report back to NLTB Directors about all VDCL investments and contracts and the affairs of PCX and its financial issues. At the same time, being the Chairman of VDCL, he had the same duty towards VDCL Board to inform other Board members, at least Mr. Patel and Mr. Whippy about the PCX's operations and financial situations as they expected him to provide true and complete information to take their Board decisions. Prosecution claims that the accused, whilst knowing 'PCX's financial situation, like loans and revenue, as those were regular topics discussed at PCX Board meetings, did not provide those information, either to NLTB or VDCL. The result of the acts of Mr. KD, according to the prosecution was a gain to PCX in various financial capacities and in return, prejudiced the rights of the NLTB and Indigenous Fijians. They argued that this case is not about what Mr. KD said to NLTB and VDCL, but what he did not tell.

12. For each count, prosecution points out to certain acts alleged to have done by the accused to facilitate the loans and securities to PCX. Most of those acts if not all, were not disputed by the defence. They elaborated, according to their case theory, how the accused abused the authority of his office and secured a gain to PCX causing prejudice to NLTB and Indigenous Fijians. For instance the 1st count, prosecution argues that when Mr. Ballu Khan promised the NLTB Board on 12th March 2004 that PCX would bear the NLTB MySAP upfront cost, the accused was present at that meeting and while knowing this undertaking, he did not disclose this undertaking either to VDCL when $2 million loan proposal was made and approved between March to July 2004 or to NLTB about the loan request, its nature, VDCL approval and NLTB's proceeds been assigned to VDCL as security.

13. The written submission of the prosecution provides you all the evidence that they rely on, with reference to the relevant exhibits, in respect of each element of each count. Now it is left to you madam assessor and gentlemen assessors to decide whether the contention put forward by the prosecution in respect of all five charges against the accused is to be accepted or not.

14. The defence in contrary, argued that you are not being asked about whether you agree or disagree with the decisions of NLTB or VDCL Boards nor the actions of Mr. KD. They say the issue there is not about the wiseness or foolishness of those decisions or acts, but whether Mr. KD honestly believed what he did was for right reasons and whether he had a bad or improper motive when doing so. The defence answer to these questions is 'no'. It was said to you that a mere mistake, even a serious one or a failure is not enough to say that Mr. KD acted with an improper motive. Defence continued to argue that as long as the Board believed what it decided to spend the money will be of benefit to Ingenious Fijians, that is enough. It was pointed out that if they buy a building as a recreation centre and later on find the building has to be demolished, that does mean the decision to buy the building was wrong. The conclusion is that they believed they were doing something that would be beneficial to the concerned parties, but it turned out to be a bad decision. Madam assessor and gentlemen assessors, you can now weight both contentions of the prosecution and the defence and decide whether the acts of Mr. KD were done with any improper motive in abuse of authority of his office in arbitrary manner or not.

15. The decisions made by Mr. KD as the Chairman of VDCL Board, according to the defence, were not individual. Even the last $1 million loan requested by PCX was approved by the entire VDCL Board, as they saw PCX as still a live business opportunity. They argued that those decisions are rational business and investment decisions made by a Board which is empowered to make those decisions. Further, it was said that those were not 'arbitrary acts' emerged from his whims and fancies, but done after following good process.

16. Then the defence pointed out that none of the gains alleged by the prosecution is not of personal gain to Mr. KD or anyone associated with him, such as family member or business venture with interests, but for PCX. They questioned as to why Mr. KD would want to act criminally for the purpose of granting a gain to a business in which he had no financial interest. Defence said that it is even more curious as the gain claimed by the prosecution is to a business which is majority owned by VDCL. As you know by now, 'gain' is a distinct element in all five charges. It is your task now to decide whether the prosecution has proved this element beyond reasonable doubt or not.

17. A considerable amount of attention was drawn by the defence through certain witnesses about the military coup alleged to have taken place on 6th December 2006. It was argued by the defence that the said military intervention which demanded the close down of VDCL and carried out raids on PCX, caused PCX to be unable to repay its debts out of the funds going to be generated from its business. Further they said that with this political development, NLTB ceased to pay their dues to PCX and it aggravated the background. But, the prosecution argued that it is not relevant to this instance as the granting of loans or securing bank facilities to PCX took place in 2004 and 2005. The three loans given to PCX by VDCL were due before the so called 'military intervention', the prosecution argued. They went on to say, apart from two weeks (2) where ANZ could not contact anyone in PCX office, nothing showed that PCX seized its operations indefinitely and in fact Mr. KD's letter to ANZ dated 21st December 2006, does not indicate anything of PCX ceasing its operations. You can now assess both sides of this argument and decide what you are going to accept and relied upon.
    
18. During the closing submissions, defence raised concerns of FICAC placed selected evidence before court with the intention of winning the case. They questioned the reason for them to produce 33 extremely material documents, whilst prosecution tendered over 250 documents, and asked why those could not be produced by the prosecution itself. The argument was extended to say that some of the witness like Mr. Kaloumaira, a VDCL director, Mr. Kolinio Boila or Price Waterhouse Coppers Auditors were not called to share the great deal of knowledge they had over the contested issues. In the same vein, defence raised issues about the credibility of Mr. Tabuatamata and Mr. Whippy.
    
19. As a matter of law, I am directing you that as much as the defence is allowed to criticise the strategy of the prosecution, the prosecution has a right to decide what witnesses are to be called and documents to be produced. But, the prosecution has a continuing duty to disclose all the material to the defence, whether favourable or not for their case. There is no allegation of prosecution not doing so. At the same time, you would recall that the accused was given an opportunity to call any witness on his behalf. Had he wanted to call any witness, he would have done so. Therefore, the matter rests with the quality, not the quantity of evidence. If you are satisfied beyond reasonable doubt about the credibility and truthfulness of the witness and documents, matter ends there. But, if not, the benefit of such doubts should benefit the accused.
    

7. SUMMARY

(i) I remind you once again that the accused need not to prove anything to show his innocence. The prosecution must prove the charges beyond reasonable doubt or to your fullest satisfaction over the guilt of the accused. If you have any reasonable doubt on the case of prosecution, you have to find the accused 'NOT GUILTY' to five charges.

(ii) Finally, I recall the instruction I gave you in my opening address. I hope you approached this case with an open mind. The accused is presumed to be innocent until proven guilty by a court of law. Thus, if you are satisfied beyond reasonable doubt or for sure that the prosecution has proved its case, you must find the accused guilty to all the charges. If you are not sure of the guilt of the accused after having analysed the evidence of the prosecution, you must find him 'NOT GUILTY' to all five charges. Charges are based on totally independent incidents and you can conclude differently.

(iii) You are aware that Count 1 is Abuse of Office for the purpose of gain. I have directed you on what abuse of office is and also what for the purpose of gain is. If you think that he has abused the authority of his office, and for the purpose of gain that you will find him guilty as charged. However, it is nevertheless open to you to find that he has abused the authority of his office, but not for the purposes of gain in which case you will find him not guilty as charged but guilty of the alternative charge or guilty of abuse of office. If you think that he has not abused his office, then gain is not relevant and you will find him not guilty.

When you are asked your opinion of this charge you will say guilty if you think he has abused his office for gain. You will say not guilty if you think he has not abused his office or he has abused his office but not for gain. If you say not guilty you will be asked if you find him guilty of the alternative offence of abuse of office.

(iv) You may now retire to deliberate your opinions. When you are ready with the opinions, I will reconvene the court and ask your individual opinion. You are at liberty to peruse any of the documents tendered to court as exhibits when deliberating the issues.

(v) Any re-directions or additions to what I said in my summing up Mr. Blanchflower M and Mr. Keene B?

Janaka Bandara
Judge

At Suva
Office of the Fiji Independent Commission Against Corruption for the State
Howards Lawyers for the Respondent