Friday, 14 October 2016

A post-analysis of Singapore deal: Papua New Guinea Community College Trust scandal - Part 4


THIS is part 4 of a seven (7) part series of articles providing insight into the recent decision (1/9/16) by Singapore Supreme Court to imprison/jail former Chairman of PNG Community College Trust, American, Thomas Doehrman and his Singapore wife Lim Ai Wah for upto 5 years over fraud and money laundering offences.

In part 4 we will discuss the statements made during the record of interview that Singapore Public Prosecutor relied on to secure Doehrman and Lim's conviction (finding them guilty). We will also review their claims directly implicating Grand Chief Somare and his son Michael Somare Jnr

Lastly consider the reasoning why Doehrman and Lim insisted the invoice was for a commission even though the particulars of the invoice clearly stated it was for a contract of equipment.

Following arrest of Doehrman, Lim and Stephen Li Weiming on 25 July 2012 the Singapore Corrupt Practices Investigation Bureau (CPIB) subjected all three to further interviews.

It is normal practice for Police to arrest and charge a person after they believe they have reasonable grounds based on sufficient evidence to prove they committed an offence. They will first consider the circumstances (facts) and the evidence obtained during their investigations to determine which criminal law(s) were broken or offences committed. No person can be charged for an offence not prescribed (written) in law. So Police must be precise which section of the law was breached or offence committed.

In this case Doehrman, was arrested and charged for one count of abatment (the act of assisting someone to commit a crime) by engaging in the conspiracy (secret plan) with his wife Lim and Stephen an employee of ZTE Corporation to falsify a document (invoice) belonging to Questzone Offshore Ltd with the intent to defraud. An offence prescribed under Section 477A and Section 109 of the Singapore Penal (Criminal) Code.

He was also charged with allegedly committing five other money laundering related offences namely:

Two counts of abatment by engaging in the conspiracy with his wife Lim and Stephen to remit (transfer) two payments of $750,000 and $100,000 to an offshore account in Hong Kong, a company account owned by Stephen's wife. (Two counts means committing the same offence twice, one count for each time the same offence was committed, in this case making two unlawful payments to the same person).

He was also charged with three counts of abatment by engaging in the conspiracy with his wife Lim and Stephen to remit (transfer) three payments totalling $784,000 to Grand Chief Sir Michael Somare's Singapore Standard Chartered Bank Foreign Investment Cheque and Savings Account.

Lim and Stephen were also charged with allegedly committing the same six offences.

To prove these charges CPIB needed to establish or produce sufficient evidence beyond reasonable doubt that all three played a part in committing the six offences.

The main charge was abatement in the secret plan to falsify documents (invoice & sub-contract) with the intent to defraud.

So if the Police or Prosecution fail to prove the first charge then the remaining five charges in relation to remitting proceeds of crime would also fail because if you can't prove the proceeds were obtained from criminal conduct then you can't be charged for unlawfully transferring it.

To prove the first charge of falsifying documents they needed to prove the invoice was falsified with the intent to defraud.

A key piece of evidence was the invoice itself stated it was for "Contract for Supply of Equipment" for Community College Project. The second was the fact the invoice was apparently issued on the back of a sub-contract between Questzone Offshore Pte Ltd and ZTE entitled "Service Contract" Both the invoice and sub-contract were inconsistent.

So how do you prove whether an invoice and sub-contract are genuine or falsified?

Essentially whether the invoice was issued on the back of actual goods or services supplied or intended to be supplied.

When CPIB interviewed Doehrman and Lim's they insisted the payment was was for a 10% commission which was inconsistent with the invoice and sub-contract. This now provided three possible versions behind ZTE making $3.6 million payment to Questzone Offshore.

So why did they insist it was a commission?

There are two means to benefit from the awarding of a lucrative contract, the first being paid a commission for negotiating the terms on behalf of a party and the second being awarded a sub-contract to service it. Many corrupt deals are also facilitated through either method.

When a person or company wishes to sell a property or significant asset they typically engage a sales agent or professional firm to find a suitable buyer and facilitate the sale on their behalf. The agent will have years of experience and a proven track record to justify engaging their services.

The agent's primary role is secure a buyer and negotiate the terms of sale in the best interest/terms for their client. The client and agent will agree on a percentage of commission usually based on a fixed fee or percentage of the sales price. There are industry standards for commission rates so one can ensure the terms are fair and reasonable. The larger the sale the smaller the percentage of commission. A contract involving K120 million would usually involve a 1-2% commission which would still amount to K2.4 million. In this case the commission was said to be 10% US$3.6 million (K12 million) which was not in there interest of the parties involved in the awarding of the contract of $38.8 million contact to ZTE.

The same may apply in the awarding of major contract where an agent or third party plays a direct role in helping a company secure a significant contract and paid a commission or referral fee.

Now an agent or third party becomes unnecessary where parties are known to each other and already entered into formal discussions. No point paying someone a commission for doing nothing.

However when it involves public funds corrupt Government Ministers and officials will typically nominate a company owned by their family, friends or close associates to be appointed as an agent and made to seem like they took the lead in securing the sale or contract. Typically a shell company without any track record and setup for purposes of receiving the commission (kick back).

Once a commission is paid the funds are then laundered through the company and secretly paid to the parties involved. The funds are withdrawn in cash, placed in a bag or large brown envelope and delivered to the Minister or Government officials involved - making it untraceable.

The second method involves awarding a sub-contract to a company that will also be owned by their family, friends or close associates to service the main contract. Where the main contractor will be told in no uncertain terms that to ensure they are awarded the main contract a particular company needs to be awarded a sub-contract. The sub-contract company will then take steps to pay the Minister or Government official through secret payments.

Now there will be occasions where the parties involved will nominate a genuine company who has years of experience and proven track record in providing such services. While it maybe owned by a family member or close associate it doesn't make it illegal provided any conflict of interest is declared and they secured the sub-contract based on merit, fair and reasonable commercial terms.

Section 9 of Community College Act states that a member of the trust who in any way directly or indirectly has an interest in a contract or proposed contract shall disclose the nature of his interest and be excluded from any discussion or decision in relation to the contract. Failing to do so would make them liable of fine not exceeding K500. Further any disclosure shall be recorded on the minutes of the meeting.

In this case Doehrman the Chairman of PNG Community College Trust, his wife and Stephen sought to benefit from the awarding of the contract to ZTE. Further Doehrman failed to disclose his interest or exclude himself from the discussion and decision in awarding the US$38.8 million contract to ZTE where his wife had an indirect interest.

So back to the issue why Doehrman and Lim insisted the $3.6 million was a commission, once a contract is awarded and commission paid there is no further obligation to service it thus the one off payment $3.6 million to Questzone Offshore could have been justified. However if it was paid on the back of a service contract and supply of equipment that was never actually provided, evidence to the fact the payment was fraudulent.

So to strike down or defeat the charge of falsifying documents Doehrman and Lim could have argued Lim's sister who raised the invoice made an honest mistake in issuing it for the supply of equipment when it was actually for a commission or referral fee. This issue would have caused doubt in the mind of the Court. With the main charge dismissed the remaining fives charges would have also failed.

What Doehrman and Lim were not aware of was that by insisting it was a commission they unwittingly provided actual details of their conspiracy and discussions to which parties were in agreement the proceeds of the commission would be distributed among themselves.

Further Lim disclosed she was acting on the advice of Stephen to setup offshore company in British Virgin Islands for the purpose of receiving the commission with instructions to remit funds to a company in Hong Kong (J&M International) set up under Stephen's wife's name including payments to Moox and Grand Chief Sir Michael Somare.

When questioned over the specific arrangements regarding $3.6 million commission she produced a diagram to explain the outcome of a discussion between her husband (Doehrman) and Stephen.

"I [Lim] should be given $950,000"..

.."$850,000 stated in the above diagram refers to an amount to be given to ZTE" Stephen had asked me to transfer $750,000 first to J&M International remaining $100,000 to be sent later.."

"3 payments labelled Housing in the diagram were made for purpose of PM PNG to pay for his house and his son to pay for a separate house."

"PM PNG had told me and my husband on a few occasions that he needed money to pay for his house and that he was planning to borrow money from banks for that reason" Hence the $280,000 and $244,000 stated in the diagram were meant for PM PNG's use housing loans."

"Sometime in 2010 I received a call from the son of PM PNG asking me to send money to him. I told him the amount set aside for him was $280,000 but since he did not have an account in Singapore, I wrote a cheque to PM PNG's bank account and told him to pass the money to his son."

Furthermore she also acknowledged no actual service or sub-contract existed between ZTE and Questzone to supply equipment or services.

During the course of the trial Doehmran submitted in his no case submission that the payment of $3.6 million by ZTE was indeed for commission paid to Lim to give up her business in Phase 1 of the Community College Project. With ZTE taking her place as the incoming main contractor for Phase 2. The Questzone contract was structured and prepared by ZTE and $3.6 million paid pursuant (according) to a legitimate purpose, which was made known and agreed to by all parties.

To refute this claim the Prosecution relied on the evidence submitted by Richard Robert Bussierre an American national who was Chief Technology Officer of U-Konekt Technologies Ltd. A PNG company that was contracted to carry-out similar work for ZTE on Community College Project. He testified Questzone Offshore and U-Konekt contracts were similar. However he never observed anyone from Questzone carry out any activity while he was working on the Project. He stated in no uncertain terms he believed the Questzone Offshore contract "was a fraudulent contract"

In part 5 we will finally discuss in some detail the many inconsistencies in the statements submitted by Doehrman and Lim. Whether the evidence implicating Somare and his son Michael Jnr (Moox) is credible and sufficient to bring criminal charges against them in Singapore. Lastly whether any criminal charges can be pursued against Somare in PNG in relation to Singapore Supreme Court ruling.

Photo: Doehrman and Sheppard meeting with Fr./Dr. Xavier Alphonse and ZTE officials in Singapore in 2012.
Note: There are seven (7) parts to this article.

Part One: Singapore Supreme Court sentenced former Chairman of PNG Community College Trust American Thomas Doehrman (Doorman) and his Singapore wife Lim Ai Wah to prison for 5 years 10 months and 5 years respectively after finding them guilty of conspiring with Chinese national Li Weiming to defraud US$3.6 million (K11.6 million) from the ZTE corporation - a Chinese company that is a global supplier of information, technology and telecommunications equipment that was awarded $35 million contract by the PNG Community College Trust.
It explains what is PNG Community College????   

Part Two: Provides insights into the decision by Singapore Supreme Court to convict (find guilty) and imprison former Chairman of PNG Community College Trust Thomas Doehrman and his Singapore wife Lim Ai Wah over fraud and money laundering offences.
It reveals how the deal was done to award the contract.?????? 

Part Three: A discussion on the extracts from the statements submitted by Doehrman and his wife, Lim during the course of the first police interviews which the Prosecution relied during the trial to secure their conviction's.
It shows what was done behind the closed doors????

Part Four:  A discussion on the statements made during the record of interview that Singapore Public Prosecutor relied on to secure Doehrman and Lim's conviction (finding them guilty). This part turns to review their claims directly implicating Grand Chief Somare and his son Michael Somare Jnr 


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