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September 21, 2020
News Papua New Guinea Real Estate Southern

Kramer says non-renewal of lease is a good decision

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Police Minister, Bryan Kramer has commended Police Commissioner, David Manning, for refusing to renew a three year lease for the Internal Affairs Directorate office space in Koki, Port Moresby, by paying the rent for the three years in advance.

Kramer said the K705,000 per annum rental was the highest in the constabulary.

Commissioner Manning refused to renew the lease, saying it was a waste of police funding.

Manning added that this funding would be better spent on renovating its own office buildings and improving the welfare of its officers.

According to Minister Kramer, the RPNGC Finance Audit section made the following observations after reviewing the directorate’s expenditure over the past three years:

1) Why would Internal Affairs occupy a building that was so unsuitable for its needs that it needed to spend so much to modify the building?

2) Before proceeding with the lease at Koki, were other office locations explored that were cheaper and more suitable?

3) There is no copy of the last lease agreement-and why did the rental payments increase every year?

4) In excess of K118,000 was spent on billboards. What were the original specifications for the billboards?

5) K200,000 was spent on an electronic file system and K152,000 on ICT. A substantial amount of money was spent on electronic capacity-what has this done for output of Internal Affairs?

6) Six new vehicles were bought by Internal Affairs costing K1m. Who were they allocated to, and how have these contributed to improved performance, if any?

What is yet to be established is what other costs, including levies and utilities, were paid over the three years, Kramer said.

He said in June 2019, the landlord, Peter Kumara of Maharage Investments Ltd, a Sri Lankan national and principal owner of PASS Security Company, wrote to the Police Commissioner saying the office lease would expire in November 2019 and asked him to endorse the renewal of a further three-year lease.

In October 2019, Fiocco Nutley wrote to RPNGC to advise they act for Maharage Investments Ltd, and provided a new three-year lease.

In May 2020 Mr. Kumara again wrote to the Commissioner saying the lease had lapsed in November 2019 and the rental was now six months in arrears. He requested that the Commissioner endorse the renewal for a further three years to allow the continued operation of Internal Affairs.

“This is where it gets rather interesting. I reviewed the lease document and confirmed the lease area was 902 square metres, the annual rental being K735,000, subject to 7% increase each year. The security bond was K2.1 million, which was equivalent to three years rental inclusive of GST.

“Included with the lease agreement was an invoice for K2.6 million, representing 3 years rental in advance, including 7% increase each year and GST.

“This would make RPNGC the best tenant in the world, were it foolish enough to agree to pay three years of rental in advance inclusive of 7% increase every year.

What started as K726,000 rental (including GST) in 2017 ends up being K925,663 in 2021.

“No rental company would be stupid enough to invoice a client three years in advance and expect to be paid unless it had a special arrangement/relationship with those within the organisation.

“In my one year in office as Minister, I have received countless calls from family members of officers killed in the line of duty, who have passed on from an illness or retired, all waiting on their outstanding entitlements.

I’ve had to explain to them that, due to lack of funding, the RPNGC is unable to assist. When in reality it’s due to the reckless spending by those in executive positions in Port Moresby.

“Fortunately, the new executives of RPNGC are committed to putting the welfare of their officers ahead of enriching those with whom they have special interests.

“I’m sure a forensic audit of the K3.2 million spent by Internal Affairs will provide some interesting findings as to who was paid and for what,” Kramer said

 

 

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