MRDC investigates Mineral Resources Star Mountains

Tony Stone | PNG Echo

Mineral Resources Development Company (MRDC) has begun investigations into allegations of corruption by the management of its subsidiary Mineral Resources Star Mountains (MRSM).

MRDC’s action was in response to a PNG Echo story exposing alleged financial mismanagement of MRSM companies which include Fubilan Catering Service (FCS), the Tabubil caterer that provides meals for the now 100% state-owned Ok Tedi Mining Limited.

MRDC Managing Director, Augustine Mano, replied to PNG Echo’s allegations in an email, this week:

We have taken the allegations (raised by PNG Echo) seriously and are taking appropriate action to address the issues. We have engaged KPMG to audit FCS accounts and (are) also doing our own investigations..

CEO Mano added that the task would be a challenge for MRDC who could only act within its jurisdiction.

Audits

Paul Povey , Chairman of MRSM Group of Companies

Mr Mano’s assurances notwithstanding, it is the information of PNG Echo that auditing of MRSM accounts is habitually late.

The 2012 accounts, which should have been signed off within the first half of 2013, are still with the auditors Deloitte Touche Tohmatsu.

The 2009 accounts were audited in 2011 by KPMG who in the process observed a serious lack of basic book keeping including inadequate acquittal of expenses by the corporate credit card-holder Paul Povey.

It was a lack of sound financial accountability by the current MRSM management since 2008 that has led to a number of employees quitting MRSM.

A former expatriate employee said he had to leave because he could no longer be part of decisions and actions that were anti-corporate governance.

Of the auditing process, a former employee remarked:

It was interesting that Paul (Povey) was never around to answer questions. He seemed to be out of town every time the auditors arrived in Tabubil.

He told PNG Echo that even Povey’s fellow management colleagues at Tabubil Engineering and the Weigh Inn Hotel (two other of MRSMs investments) did not have the answers for the auditor.

“This of course resulted in huge gaps in the company’s accounts and incomplete and untidy audit process.”

This year nothing has changed.

When auditors from Deloitte Touche Tohmatsu arrived in Tabubil on the 29 September this year to audit MRSM, its Head, Paul Povey, was away, as he’d been in preceding years –  a fishing trip with Ok Tedi Mining Ltd (OTML) managers to Suki in the Middle Fly, then on to Cairns and Singapore. The auditors left on 26 October.

We’ve had enough and we’re not taking it anymore

The PNG Echo story has sparked spirited discussion among Tabubil residents with readers sharing their views on social media. Some reactions:

“There is no smoke without fire.”

“Shareholders and the FCS and MRSM boards should start asking questions as to why whistle blowers are making noises about this.”

“MRDC must not let the Ok Tedi landowners down by not doing its job. Something is definitely going on within these (MRSM) companies.”

“With the help of social media, PNG is finally standing up to corrupt leaders, managers and employees. We say no to corruption.”

“I appeal to the people of the Star Mountains to ask their board members why the media is publishing such stories about their companies.”

“OTML’s Nigel Parker’s ‘don’t care’ attitude must be seen by Ok Tedi landowners and the PNG mining industry as totally irresponsible and dangerous.”

“Tabubil township knows Nigel is as close to Paul Povey as Alan Breen was,” so Nigel’s position is already compromised.”

Another former Tabubil resident and employee of OTML took the opportunity to warn corrupt managers and employees to take heed of PNG’s fight against corruption.

Ok Tedi Landowner company rorted: Mangi Mining with Tony Stone

PNG Echo

Power tends to corrupt, and absolute power corrupts absolutely.  Lord Acton

As Peter O’Neill seeks to gain absolute power and control over revenues from Ok Tedi Mining Limited (OTML), another power hungry man, Paul Anthony Povey, rises to fame and fortune through mismanagement and corruption of the mine’s umbrella landowner company, Fubilan Catering Services (FCS).

Paul Povey

The power monopoly was established on the arrival of the new incumbent to the job of CEO of Ok Tedi, Alan Breen, in 2007, when he removed the reputable international caterer, Eurest South Pacific, as managers of FCS and appointed a single person, Paul Povey as Manager.

Observers attribute the start of Povey’s rise to fame, fortune and power to the very close personal relationship he established with Breen between 2007 and 2010.

With this appointment, Povey gained control over the company’s management, it’s finances and overwhelming influence over the ill-educated, ill-informed and ignorant local directors who represent the shareholders in the investment company Star Mountain whose investment (FCS) Povey was managing.

Serious allegations of corruption against Paul Povey and Fubilan Catering Services

Favours for friends and living the high life

Despite criticism from the OTML community, Breen, compromising the integrity of the office of the Managing Director, pursued the relationship with Povey to the point of using his position to influence decisions in Povey’s favour.

A Tabubil resident said at one stage, Povey asked Breen to instruct managers of OTML’s chartered airline service, Asia Pacific Airlines, where Povey’s wife Samoa works as a flight attendant, to immediately raise her wages.

The Povey-Breen relationship also saw Breen’s stepdaughter, Jessica Waller, obtain a work permit and visa to replace a national and work under Povey as Manager of the Tabubil Golf Club.

Povey’s FCS-funded hospitality extended to a close circle of expatriate OTML employees and their spouses who enjoyed weekly parties filled with fine food, endless alcohol supply and music.  And they’d still be going on, if not for Povey’s recent hospitalization for a sciatic complaint.

Counted amongst Povey’s regular guests from OTML are current Managing Director of OkTedi, Nigel Parker (Breen’s successor) and wife Pakki, Security manager Trevor Green and his wife Rowena, Ok Tedi Development Foundation CEO Ian Middleton and Human Resource manager Brad McMahon – the names supplied by another invited guest.

In fact, an Australian woman who lived in Tabubil for over six years told PNG Echo that Povey made life in Tabubil bearable for OTML expatriate employees and their families.

Considering the remoteness of Tabubil, those of us who were friends of Paul and Samoa were eating and drinking like kings and queens. We had great meals on their verandah and partied every weekend at their music den under their house.

Fubilan Catering: their genesis, their raison’d’être and their assets

With offices in Tabubil and Brisbane, the FCS group is currently valued at over K11 million. Its most successful revenue earner is its K5 million per annum catering contract with OTML.

Its other businesses include an engineering and hardware venture in Tabubil and Kiunga and the Weigh Inn Hotel in Konedobu.

FCS was established under Mineral Resources Star Mountain (MRSM) – a subsidiary of the Mineral Resources Development Company (MRDC) – for the sole purpose of investing Ok Tedi mine-derived royalty and compensation payments and dividends for long term benefits of shareholders from traditional villagers that own the land on which Ok Tedi mine and Tabubil are built.

A final word

Current Managing Director of OTML, an alleged recipient of Povey’s hospitality, commented:

OTML values transparency and accountability, but neither would be promoted by commenting on or contributing to anonymous rumours. You should note that FCS is an independent corporate contractor with its own shareholders and governance overseen by MRDC. It is incorrect and patronising to suggest that OTML is the ‘custodian’ of FCS.

But is it only MRDC that should bear any responsibility?  Surely OTML have a moral obligation?  Ensuring future good governance seems to have been the intention of BHP upon its exit in 2001/2002 when it had OTML put in place internal controls and governance programs to help FCS and other landowner companies maintain best practice in their operations – why were they removed?

 Next week, auditors’ observations, details of cash allowances for FCS board and management staff and their spouses and an email from former MRSM company secretary Aleena Bird alleging abuse of office by Povey.