Chan, In the matter of [1988] PGLawRp 10; [1988] PNGLR 260 (1 July 1988)

Papua New Guinea Law Reports - 1988-89

[1988] PNGLR 260 - Sir Julius Chan, In the matter of

[1988] PNGLR 260

PAPUA NEW GUINEA

[LEADERSHIP TRIBUNAL]

IN THE MATTER OF A REFERENCE BY THE ACTING PUBLIC PROSECUTOR PURSUANT TO THE ORGANIC LAW ON THE DUTIES AND RESPONSIBILITIES OF LEADERSHIP AND IN THE MATTER OF SIR JULIUS CHAN

Port Moresby

Hinchliffe J (Chairman) Pitpit Iramu (Members)

20-22 June 1988

1 July 1988

PARLIAMENT - Members - Duties and responsibilities of leadership - Misconduct in office - Duty to reveal “interest” in matter in which has to deal in “official capacity” - Nature and scope of interest required - When interest required to be held - Organic Law on the Duties and Responsibilities of Leadership (Ch No 1), s 6.

PARLIAMENT - Members - Duties and responsibilities of leadership - Misconduct in office - Reference to Leadership Tribunal - Costs of hearing - No statutory provision for - No power to recommend - Organic Law on the Duties and Responsibilities of Leadership (Ch No 1).

COSTS - Leadership Tribunal - No statutory power to order - No power to recommend - Organic Law on the Duties and Responsibilities of Leadership (Ch No 1).

The Organic Law on the Duties and Responsibilities of Leadership (Ch No 1), s 6(1), provides:

N2>“(1)    A person to whom this law applies who fails to reveal to the Ombudsman Commission and the appropriate authority the nature and extent of his interest, or the interest of an associate, in a matter in which he has to deal in his official capacity is guilty of misconduct in office.”

Held

N1>(1)      For the purposes of s 6(1) of the Organic Law on the Duties and Responsibilities of Leadership:

N2>(a)      an “interest” must be real and substantial: a mere expression of interest is not sufficient;

N2>(b)      the “interest” must arise or be held by the person at the time at which he deals in his official capacity with the relevant matter;

N1>(2)      Accordingly, where the former Minister for Finance in the National Parliament who was responsible in his official capacity for the allocation of shares to Papua New Guinea in Placer Pacific Ltd, applied with associates for a share allocation in Placer Pacific Ltd, some five days after ceasing to act in an official capacity, there had not been any misconduct in office.

N1>(3)      In the absence of any statutory provision relating to costs in respect of a hearing of the Leadership Tribunal, the Tribunal should decline to “recommend” payment of costs.

Cases Cited

In re James Eki Mopio [1981] PNGLR 416.

Reference

This was a reference to the Leadership Tribunal from the Acting Public Prosecutor, under s 6 of the Organic Law on the Duties and Responsibilities of Leadership (Ch No 1) on allegations of misconduct in office by Sir Julius Chan, being a person to whom Divn 2 of Pt III of the Constitution [The Leadership Code] applied. For earlier proceedings see Chan v Investigating Authority into Placer Pacific Ltd Share Issue [1988] PNGLR 43.

Editorial Note

For earlier proceedings see Chan v Investigating Authority at 43 infra.

Counsel

B Emos, for the Acting Public Prosecutor.

P Donigi and P Menzies, for Sir Julius Chan.

1 July 1988

HINCHLIFFE J PITPIT IRAMU: (read by Hinchliffe J.) The Acting Public Prosecutor has referred to this Tribunal a matter of alleged misconduct in office namely between 1 July 1986 and 31 August 1986, Sir Julius Chan being a person to whom the “Leadership Code” applied, and his associates, namely, his wife, Lady Stella Chan, and his companies, JST Pty Ltd, Chin Pak & Company Pty Ltd, Misimuk Distributors Pty Ltd, Vanmak Toby Pty Ltd and Islands Helicopter Services Pty Ltd, in which he had a complete or substantially controlling shareholding, had an interest in a matter with which he had to deal in his official capacity namely the allocation of shares to Papua New Guinea by the underwriters of Placer Pacific Ltd; and that he did in fact deal with the matter by:

N2>(a)      as the Minister responsible, being directly in charge of the decision making and policy implementation generally relating to the allocation of Placer Pacific Limited shares to Papua New Guinea and specifically:

(i)       in obtaining from the underwriters a greater allocation of shares to Papua New Guinea than they would otherwise have given, and;

(ii)      directing the Governor of the Bank of Papua New Guinea to relax the foreign exchange control rules to allow a greater transfer of funds out of Papua New Guinea for the purpose of purchasing shares in Placer Pacific Limited.

N2>(b)      determining and implementing policy in respect of the priority list for the allocation of shares amongst competing Papua New Guinea applicants,

and that he did not previously declare his, or his associates interest to, or obtain authorisation from, the Ombudsman Commission or the National Executive Council or Parliament as required, thereby breaching s 6 of the Organic Law on the Duties and Responsibilities of Leadership (Ch No 1) (the Organic Law).

Section 6 of the said Organic Law provides, inter alia, as follows:

N2>“6.      Personal Interest

(1)      A person to whom this law applies who fails to reveal to the Ombudsman Commission and the appropriate authority the nature and extent of his interest, or the interest of an associate, in a matter with which he has to deal in his official capacity is guilty of misconduct in office.

(2)      A person to whom this law applies:

(a)      who, or an associate of whom, has an interest in a matter which he has to deal with in an official capacity; and

(b)      who does deal with that matter (whether by voting on a question concerning it or otherwise), is subject to Subsection (3), guilty of misconduct in office.

(3)      Subsection (2) does not apply if the person concerned dealt in good faith with the matter:

(a)      under compulsion of law; or

(b)      in case of urgent necessity, if he:

N5>(i)       has revealed his interest in accordance with Subsection (1); or

N5>(ii)      does so reveal his action as soon as practicable; or

(c)      after he has revealed his interest in accordance with Subsection (1) and under authorization by the appropriate authority.

(4)      In this section, “the appropriate authority” means:

(a)      in relation to the Prime Minister and each Minister — the National Executive Council; and

(b)      in relation to each member of the Parliament (including the Prime Minister, a Minister, the Leader of the Opposition and the Deputy Leader of the Opposition) — the Parliament; and ...

(c)      ...

(d)      ...”

It is clear that the standard of proof in an allegation of this type is a high one although it does fall short of the standard of proof required in a criminal charge. In re James Eki Mopio [1981] PNGLR 416, five judges in the Supreme Court, when asked the question, “... then what standard of proof should the Tribunal apply?” answered (at 421):

“There is no absolute degree or standard of proof to be applied by the Leadership Tribunal. The Tribunal must be reasonably satisfied of the truth of the allegations and it must give full weight to the gravity of a charge of misconduct in office by a person subject to the Leadership Code, to the adverse consequences which may follow and to the duty to act judicially and in compliance with the principles of natural justice. Such satisfaction in matters so grave can never be achieved on a mere balance of probabilities.”

At 421 of the report their Honours said:

“... In practical terms the standard is not as high as the criminal proof beyond reasonable doubt but in our opinion, the very nature of the offence of misconduct in office created by the Constitution and the Organic Law on the Duties and Responsibilities of Leadership, will require a higher standard of proof than that ordinarily applicable in civil cases, namely proof on a balance of preponderance of probabilities. In matters involving accusations amounting to criminal conduct, the standard must be close to that applicable in a criminal trial.”

The consequences of a finding of guilt are indeed grave in that this Tribunal could recommend, pursuant to s 27(5)(a) of the Organic Law, that Sir Julius Chan be dismissed from office. In short, therefore, the standard of proof is a high one.

At all times Sir Julius has claimed his innocence and has so stated to the Parliament, the National Executive Council, the Authority set up to investigate the Placer shares issue, to the public generally and also on his oath to this Tribunal. We are of the view that the oath of a person of Sir Julius’ standing and reputation in the community cannot be taken lightly.

There is no dispute that Sir Julius as the Deputy Prime Minister and the then Minister for Finance is “a person to whom this law applies”. It is also uncontested that an “associate” (see s 6 of the Organic Law) includes, in this matter, Lady Chan and companies in which Sir Julius had a shareholding.

Generally speaking, Sir Julius’ defence is that it was not necessary to reveal to the Ombudsman Commission, the National Executive Council or the Parliament the nature and extent of his interest, or the interest of an associate, in a matter with which he had to deal in his official capacity, because, when an interest had in fact arisen he was no longer acting in his official capacity. The prosecution does not agree with that and argues that Sir Julius did have an interest when dealing in his official capacity.

In the course of the Tribunal hearing a number of application forms for shares in Placer Pacific Limited were tendered (see exhibits numbered 3, 4, 5, and 6) and they were dated from 15 July 1986 to 17 July 1986. Sir Julius swore that it was not until the afternoon of 14 July 1986 that he decided that his wife and companies should apply to purchase shares in Placer Pacific Ltd. We consider that times and dates are very important because Sir Julius states that as far as he was concerned his dealings in an official capacity had ceased on 11 July 1986.

It is of interest to note that in the material tendered to the Tribunal, are letters from banking institutions declaring that Lady Chan and various relevant companies had loan applications approved to purchase Placer Pacific Ltd shares, if available. At no time were the said institutions asked when the loan applications were in fact made. Sir Julius was not asked the question in cross-examination at either this hearing or it seems before the Investigating Authority. Obviously if the loan applications had been made prior to 11 July 1986 then it could be argued that Sir Julius did have an interest when dealing in an official capacity. But it is not for us to guess the answer to that question and it may well be that the loan applications and approvals were made and obtained on very short notice. We are of the view that that is quite possible when considering Sir Julius’ standing in the community and also his own evidence that he has a good reputation for meeting loan commitments on time. It is also clear from the material in evidence that he had adequate security to back the loans. In short there is no evidence as to the date of the loan applications.

There is no evidence before this Tribunal to suggest that Sir Julius or an associate had an interest prior to 11 July 1986. It would be parting company with reality to suggest that it did not pass through Sir Julius’ mind that the Placer shares might be a good investment but we are not satisfied that that creates an “interest” as far as s 6 is concerned. An interest is more along the lines of actually applying for the shares or even forming a definite intention to apply for the shares. We are inclined to agree with Sir Julius when he stated that if his interest had arisen earlier then he would have applied for the shares at an earlier date. The prospectus was dated 16 June 1986 and on p 30 of the prospectus it states, inter alia, “Transfer lists will open at 12 noon (EST) on 4th July, 1986. ... Application forms may be lodged prior to the opening of the transfer lists.” Later, on p 30, it states, “up to 12,854,400 shares (being no more than 10 per cent of the shares offered for sale) may be allocated to individuals, companies and institutions resident in Papua New Guinea”. Clearly Sir Julius’ associates did not apply until at least 15 July 1986.

We are fully aware it could be argued that s 6 of the Organic Law could be applicable to Sir Julius up until at least 18 July 1986. That is the closing date for share applications. If that was the situation then Sir Julius should have revealed his interest on 14 July 1986, to the relevant bodies. But we are not attracted to that argument because all the official duties that Sir Julius was required to accomplish by the National Executive Council were so accomplished by 11 July 1986. At that time he handed all matters over to the officers of his Department. In the week following 11 July 1986 there were sundry matters attended to by Sir Julius but we are of the view that they took the matter no further than what had occurred up until 11 July 1986 and in effect could not be described as “dealing in his official capacity”. To find that he was “dealing in his official capacity” in the week commencing 14 July 1986, would be placing a very wide interpretation on s 6 of the Organic Law and because of the grave consequences of a breach of the section, we are of the view that it would be unfair to give it that wide interpretation.

After reading the rather large amount of material tendered in evidence it is clear that there was a strong suggestion that Sir Julius did have an “interest” at the material time and that much of the effort exerted by him in relation to the matter was for his own gain. We are unable to agree with that suggestion. There is ample evidence to suggest that Sir Julius was working only in the interest of Papua New Guineans and taking every step possible to ensure that Papua New Guinea benefited from the share float. Indeed he was acting on the instructions of the Prime Minister and the National Executive Council. It was a joint decision of the National Executive Council and we are satisfied that Sir Julius was not in a position to come to any agreement with the person or persons representing the underwriters or Placer without the authority of the National Executive Council. To suggest that there was something improper in placing Papua New Guineans and National companies at the top of the priority list of persons to be allocated shares to our mind is unfounded. It seems to us that if the priority had not been in that order then there would have been a public outcry. The question was also raised as to why the various Papua New Guinea institutions were placed at the bottom of the list. We accept the reasons given, in particular the fact that this was a speculative purchase and therefore it was proper that citizens and companies embark on that speculative course rather than institutions that could quite easily have lost a considerable amount of their members money. It does not leave much to the imagination to speculate as to how members of the various purchasing institutions would have reacted had the share float been unsuccessful.

We are unanimously of the view that Sir Julius Chan was not in breach of s 6 of the Organic Law on the Duties and Responsibilities of Leadership and, therefore, we are satisfied that he is not guilty of misconduct in office.

COSTS — 8 AUGUST 1988

Mr Donigi, who appeared for Sir Julius Chan, asked the Tribunal to consider making a recommendation that the State pay the costs of his client in this matter. Mr Emos, for the State, opposed any such recommendation.

The Organic Law on the Duties and Responsibilities of Leadership does not provide for costs to be awarded at the conclusion of a Leadership Tribunal hearing and hence the request by Mr Donigi that this Tribunal makes only a “recommendation”.

We are of the view that as the Organic Law does not provide for an award of costs then it is not the duty of this Tribunal to recommend such payment. It is probable that the question of costs was considered when the Organic Law was being drafted but for reasons unknown to us the matter of costs was not included in the final draft. The request is refused.

Reference dismissed

Lawyer for the State: Acting Public Prosecutor.

Lawyers for Sir Julius Chan: Warner Shand Wilson Donigi Reiner.