Morauta: Telikom PNG Ltd on the verge of insolvency
Telikom PNG Ltd employees face an uncertain future warns Sir Mekere.
Picture courtesy of IPBC
State-owned telecommunications company Telikom PNG Ltd is on the verge of insolvency, State Enterprise Minister Sir Mekere Morauta revealed today.
The former Prime Minister, who holds the public enterprise portfolio in the cabinet of Parliament-elected PM Peter O’Neill, said questionable financial transactions totalling over K1 billion ($A400 million) is impacting on the company’s ability, to effectively management PNG’s core telecommunications infrastructure as well as pay its employees.
He said this when announcing the suspension of Telikom PNG Ltd CEO Peter Loko, pending investigations into the payment and receipt of contracts valued at over K1 billion ($A400 million). It is understood former Telikom PNG Ltd worker Charles Litau has been appointed acting CEO while the board chaired by Gerea Aopi has also been removed.
According to the Minister, an Independent Public Business Corporation (IPBC) audit had uncovered a trail of alleged illegal contracts and unauthorised payments by the company.
“Evidence obtained by IPBC during audits of all public enterprises indicates that Telikom illegally entered into numerous contracts involving the payment or receipt of more than K1 billion. Telikom was required by law to seek approval from the treasurer in accordance with section 46B of the IPBC Act. It did not do so. It is the CEO’s responsibility to ensure approvals are sought which is why he is suspended,” he said.
"The investigation will also seek to establish whether the Telikom board was aware that the requirement for ministerial approvals appeared to have been routinely ignored. These are very serious matters and require thorough investigation. People are entitled to know what happened to their money and I will provide details of the results of the investigation to parliament.”
Telikom’s failure to seek approvals and to advise the treasurer of its financial dealings has placed the company on the verge of solvency, requiring urgent government bailout, he added.
“Let us be very clear – the operation of the national telecommunication system and thousands of jobs have been put at risk.”
The alleged unauthorised borrowing of K340 million from two banks – of which K200 million has already been drawn down – is one example of the litany of alleged financial disrepancies that the audits have uncovered according to the MP.
“Telikom is unable to repay the capital (it is repaying on the basis of interest-only) and is asking the government to bail it out. The banks are also asking the government to guarantee the loan. Even worse, a Telikom document from some time ago states that the K200 million ‘...has not yielded enhanced revenues because the capex programs have not been taken to their logical conclusion’. In other words, K200 million of borrowed money has been spent, without the required approval, and without yet producing any revenue for Telikom.”
Sir Mekere, whose 1999-2002 government successfully privatised former government-owned bank PNG Banking Corporation (PNGBC), decried public enterprises that were “flouting the law with disasterous consequences for the nation” and warned public officials would be held responsible for their actions.