TOP FLOOR, GOVERNMENT PRINTING OFFICE, WAIGANI, THURSDAY 8 SEPTEMBER 2011 AT A.M. (Continued from Tuesday 6 September 2011)

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1 TRANSCRIPT OF PROCEEDINGS Commission of Inquiry into SABL Department of Prime Minister & NEC P O Box 639 WAIGANI. NCD Papua New Guinea Telephone: (675) Facsimile : (675) COMMISSION OF INQUIRY INTO SABL MR JOHN NUMAPO MR ALOIS JEREWAI MR NICHOLAS MIROU THE CHAIRMAN& CHIEF COMMISSIONER COMMISSIONER COMMISSIONER TOP FLOOR, GOVERNMENT PRINTING OFFICE, WAIGANI, THURSDAY 8 SEPTEMBER 2011 AT A.M. (Continued from Tuesday 6 September 2011) SABL15 08/09/2011 1

2 THE CHAIRMAN: Counsel, you indicate to us as to whom you got for this morning and how do you intend to start. MR KETAN: Thank you, Chief Commissioner. We will start with the Secretary for the Department of Agriculture and Livestock, Mr Anton Benjamin. If I can call him into the witness box. THE CHAIRMAN: Mr Benjamin is still on oath, Counsel? MR KETAN: Yes. ANTON BENJAMIN (continuing) XN: MR KETAN THE CHAIRMAN: Yes? MR KETAN: Mr Benjamin, this morning, we will ask just some questions in relation to your affidavit. Have you got a copy of your affidavit there? A: Yes, Counsel, I do have a copy. Q: Just very quickly, if you look at paragraph 10 of your affidavit, you refer to you mentioned your department managing and facilitating many projects and in many of those projects, investors were either invited or expressed interest to invest and then you enter into Memorandum of Understandings with them. If I can just ask you, Secretary, to just elaborate on how that is done with the invitations to investors and if you can give an example of one or two projects in which this is being done, bearing in mind that we are dealing with the issue of such matter in the Inquiry as the SABLs? A: Thank you, Counsel. Basically, these are some of the big impact projects that we deal with and these are mainly agro-forestry projects yes, agriculture projects; and usually we get investors who are interested in investing agriculture, particularly for those large projects, who seek our assistance to assist them to develop the project proposals and eventually the project to a stage where it is supported by government and eventually implemented. These are projects which supports the National Agriculture SABL15 08/09/2011 2

3 Development Plan which we see as big impact projects that are in line with government policies. On the basis of that understanding we have with some of the potential investors, we enter into an understanding basically to lock these projects so that we can progress on that. So that is the reason why we enter into this arrangement with this project, and I can give you examples of such a project like the cassava project, and recently, the large commercial rice project that we have which Cabinet has recently endorsed. Those are the types of projects that we deal with. Thank you. [10.41 am] Q: Who provides the land, the land on which those projects for example in paragraph 11, you refer to projects, the cashew project at Launakalana and the cassava projects? A: The in particular the cashew project, it is the government that provides land; the government through its agency, Livestock Development Corporation that provides land but it is a partnership arrangement between government and the private sector. So on the basis of that PPP arrangement, the policy with the government, that we support that.the intention of that was for us to establish provide government land so that we can establish nucleus projects and from that we develop the project further by involving all growers, which involves smallholders, the landowners particularly. Q: The land, who provides the land, your department or? A: The land is State land. For that particular project, it is State land but because it is allocated for agriculture purposes and so we enter into a joint-venture arrangement with the company for that particular project. But for other projects, such as the rice project, it is mainly the landowners. So once we sign the MOU, then we work with the investor to assist them and also with the landowners to mobilize their land and eventually enter into a sort of lease-lease back arrangements which are then facilitated through an arrangement and understanding between the landowners and the company. Our role is basically to facilitate all these other arrangements for the projects to be implemented. So in most cases, Counsel, it is the landowners that are encouraged to be partners with the investor. Q: In the case where customary land is involved, you would require the land to be acquired or made available through the lease-lease back arrangement? SABL15 08/09/2011 3

4 A: Exactly. Counsel, we work very closely with the Lands Department in that regard. The Environment office of Environment, and all the intergovernments sort of support to facilitate that arrangement. So it goes through a rigorous sort of kind of a process. Eventually, when the landowners agree to free up the land for investment, then that is when the final arrangements are made in terms of lease-lease back arrangement and the company actually commences the project. Q: Thank you. In relation to paragraph 13 of your affidavit, we heard evidence from your Deputy Secretary that most of the commodity boards facility and extension type with licensing, what are the roles do some of the Commodity Boards play, from your experience and from your position, for example, in relation to monitoring of the agro-forestry projects and the conditions? A: Thank you, Counsel. The Commodity Boards, by virtue of the Act, perform regulatory functions. They regulate the industry and they work very closely with the private sector. Many of thoseinvestment into large scale agriculture projects are those that comes under their respective responsibility, whether it be coconut, it comes under KIK; cocoa, it comes under the Cocoa Industry Board, et cetera. Have I responded am]q: Yes. With this particular, the issue that we are concerned with here, do any of them play a role in the process, again, with clearing of, for example, the oil palm projects or the cocoa projects on --- A: Yes, Commodity works very closely with the department in this regard, in terms of assisting to provide relevant information insofar as potentials are concerned. Because eventually, once projects are established they then take over the, as far as regulating that --- Q: Are they involved in the assessment and the project evaluation and the assessment process to the monitoring, and if you like, auditing of the compliance of conditions of the approvals? A: They would be to some extent involved. But I am not aware of their direct involvement insofar as some of the project that we dealt with over the years. Q: In paragraph 15, if you look at paragraph SABL15 08/09/2011 4

5 COMMISSIONER JEREWAI: Counsel, just back up a bit to your last question. If I can just get some examples from Secretary Benjamin. MR KETAN: Yes. COMMISSIONER JEREWAI: For instance, Cocoa Board, in relation to licensing of fermentaries. That would be one example of their involvement in issue of licenses? A: Yes, Commissioner, yes. Q: Spice Board? A: Spice Board, because they regulate the whole, the industry and in relation to qualities so it is quality controlled, directly responsible for that and that they issue license in regards to that. So in the event that companies or operators are not complying, we do not recall, then the board have the power to remove or revoke the licenses until they conform to those requirements or agree to work with the board to ensure that those necessary requirements are met. Q: What would oil palm, which board will be the regulatory authority responsible over the oil palm industry? A: Thank you Commissioner. The oil palm industry is an exception. In that we have the Oil Palm Industry Council that is mainly responsible for small holder developments. But we have large operators in the country and as you would know New Britain Palm Oil, isone of the major monopolies in the oil palm industry. But they sit on the board of OPIC and basically address some of the issues in relation to, particularly small holder and block holder development. But you know, oil palm is an exception, unlike the other crops where you need to look at large areas for it to become an economically viable industry. So yes, in regards to that,the representative of the whole procession; oil palm procession, are on the OPIC board and their main role is to basically look at assisting; providing advice to the board insofar as small holder development is concerned in the oil palm industry. Q: Thank you, Counsel, go ahead. SABL15 08/09/2011 5

6 10.51 am] MR KETAN: Thank you. In paragraph 15, you referred to the investors who wish to invest in the government or aid agency identified projects. If you could give an example of a project where we heard evidence yesterday, if I can put you in the background from your Deputy Secretary, Mr Daink.that usually people want to participate in the industry come from the Forestry service or other sources other than it is usually through your department. Now, you may have different experience. So you can give an example of a project in the country where an investor had come directly to your department as the lead agency in agriculture wanting to invest and developer in major project in which land and availability of land and other facilitation was indicated in which you needed to be involved. A: Thank you, Counsel. I think where we are directly involved is if the project is more related to agriculture. And as you would have known that if it is a Forestry project then of course, you know, one of the requirements in the amended Forestry Act is that you must have an agriculture plan. Therefore, in that regard we are directly responsible for ensuring that the agriculture plan is in line with government policies and it meets all the requirements for it to become a viable investment. This is where we come into it to make sure that and we tick off all the requirements insofar as the agriculture component is concerned. So these are projects that eventually come through from the Forestry for us to check that and then once we sign off then it goes back to Forestry for their final endorsement. But for those projects which are directly dealing with agriculture commodities, that is where we are directly responsible for that. COMMISSIONER JEREWAI: Counsel, if I can --- MR KETAN: Is there an example, example of project? A: Well, some example would be the oil palm project like the Victory, I think, Victory plantation. There is another project in Popondetta, which is, yes, I think it is Victory plantation. I can give you an example of that. SABL15 08/09/2011 6

7 COMMISSIONER JEREWAI: Counsel, if I can just take on from where you are, a couple of things that needs to be clarified. Although, we have already heard from Mr Daink, the Deputy Secretary to --- MR KETAN: Yes. COMMISSIONER JEREWAI: Mr Benjamin, Special Agriculture Business Leases primarily involves customary land. You agree? A: Yes. Q: Where it involves State land, it is usually dealt with under Special Purpose Agriculture and Business Leases. So that is the distinction. A: Yes. Q: Now, having stated that, I want to make this statement so that you either agree or disagree, that Special Agriculture Business Leases are primarily for agriculture development purposes and there are few other kind of businesses involved, involving customary land. That would be the case in your experience so far, Secretary, that most of the SABLs primarily involve agriculture or proposal of agriculture development rather? A: Yes. Those projects that we have dealt with mainly to do with agriculture am]q: Yes. In fact, your Deputy Secretary, Mr Daink, annexed to his affidavit, annexure J, a list of SABLs involving development of agriculture and the number he also indicated in the pipeline, so to speak, being processed at various stages leading to approval or declining to approve. But primarily they are agriculture orientated - these SABLs? A: Yes Commissioner. Q: Therefore, we pose the question, and I just need to pose it to you as well. We posed the question to Mr Daink, your Deputy, and I would like to pose that question to you as well. Would you not consider that because of the predominantly agricultural development proposal involving these kinds of leases that your department ought to take the lead role. Do you think your department should take the lead role wherever SABLs are proposed because SABL15 08/09/2011 7

8 they primarily involve proposals for agriculture development. What is your view of this kind of an approach? A: Thank you Commissioner. That would have been a convenient sort of arrangement that we, the department will take charge or responsibility of those projects. But then of course there are cross-cutting issues that requires --- Q: Of course, leaving laws aside, for instance a proposed SABL may comprise of large forest tracks but what I am saying that rather than Forestry taking the lead or the Department of Lands and Physical Planning taking the lead to consider whether or not to issue a Special Agriculture Business Lease, that Department of Agriculture ought to really be the lead agency in considering and recommending if that needs to be whether an SABL be issued or not? A: I agree, Commissioner. The Department should take full responsibility of those projects which are Agriculture related. Q: Because, if I may, just for the record, and invoke some or provoke some comments from you, because for instance Mr Daink indicated that nearly 26 plus or minus SABLs records are not among the records you maintain in your department in relation to SABLs and I am not saying that this is a fact but it may well be that Forestry operations realizes that the easiest way to get to harvesting merchantable forest, is to go down the SABL track so that they have access to the forest. And if that is the case, your department should be the principal agency to determine if the conversion, for instance from a timber authority or a timber permit, may be merely to go via SABL, merely for the purpose of harvesting the forest. Would that be a fair comment in many cases? A: Commissioner, that would be fair to some extent but our it is very difficult in the initial stages to actually determine that some of these projects are genuine, in that they are agriculture or forestry until you find out later that and this is where the problem is - and that they are not complying with some of the requirements and you often find that some of those investors are, in terms of nursery development, they complain that they are not able to establish nurseries because of so and so, they are unable to get the seeds and so in many cases, you find that they do come up with excuses. And so the fact that they would have logged 500 hectares and they wanted to get approval from Forestry, while waiting for the nursery to be established, that SABL15 08/09/2011 8

9 they want to stackanother 500 and I think that is not quite genuine to us and so we do not actually find out whether they are forestry projects until after they have actually gone in and a.m.]q: Secretary, if I may rephrase the question so that I am a bit more clear and you will be able to comment and response. Let me put it this way. Direct agriculture proposal that proponents may want to seek to have SABL titles issued so that they can proceed with the agriculture developments that they propose are no problems. They are really not a problem at all. But particularly those who have been which have been forestry operations - and then they see the way out to access the forest and seek to convert to an SABL, perhaps they are the ones to be treated with a little bit more caution and approval should not be given readily? A: I agree, Commissioner, that should be the way we approach it. In fact we have found that those forestry projects do not have the expertise, although they provide a good agriculture plan, they do not have the expertise to actually implement the agriculture plan. I can recall there were a number of projects where they advised that part of their requirements to ensure that they have agriculture expertise, who can actually implement the agriculture plan, and this is an issue that we are concerned about and we have taken we have been cautioned in terms of approving or giving the approval for those projects to proceed without first meeting those requirements, forestry requirements. Because as I said, Commissioner, they look for excuses to ensure that the Government considers some their requests and eventually issue approval for them to extend. But at the same time we are mindful of the fact of the delayed implementation of the agriculture plan so I fully agree with what you are saying, Commissioner. Thank you. Q: Thank you. Mr Daink, your Deputy also gave in his evidence an indication that large scale genuine agriculture projects sometimes are not or in most cases are not feasible or not viable because of the maximum of 500 hectares being conditioned to be being a condition that 500 hectares must be developed agriculturally before you proceed to the next coop so if the progress in that particular agriculture development for a particular SABL is to progress in that order. And he indicated that that may not be viable because, for instance in relation to oil palm, you need to plant a larger area, up to 4,000 hectares to be able to justify a mill, capital expenditure on the mill, so that when it begins operation, it can turn over viably, whereas under the current regime or regulations, you are limited or rather the proponents SABL15 08/09/2011 9

10 and the developers of agriculture and SABLs are limited to only 500 hectares and that is not viable. You agree with your Deputy on that? A: Yes, I agree, Commissioner. It depends on the commodity; because oil palm you definitely require large area, even cocoa but anything less than that, that 500 would be quite --- Q: In other words that regulation relating to that maximum limitation of 500 hectares or clearance of an area should really be reviewed and altered? am] A: It should be reviewed, correct. Q: It should be increased? A: Yes, Commissioner. THE CHAIRMAN: Secretary, I have got a question to also ask with respect to the 500 hectares. There is also a suggestion that, one of the other reason apart from the fact that it is not viable with only 500 hectares for agriculture development as of long term planning and financial implications and so forth, there is also a suggestion that one of the reasons why developers continue to log in the other coop, whilst not doing any development work on the first 500 hectares was because they would require the finances from the logging in order to fund the agriculture project, in the first 500 hectares. And that appears to be the landowners equity participation because the landowners do not have the financial capacity to come up front with the funding in order that they would support and sustain the agriculture project in the first 500 hectares. Would that be also the other reason? Would that be correct? A: Yes, that is usually the reason given by investors that they need the money to invest back for the agriculture project. And I think that is sort of, one of the reasons that that sort of approval is supported to facilitate that arrangement. I think the problem is, Commissioner, a lot of those forestry project, they do not have the initial funding directly. And so it is quite a concern when they come and they request that they want to initially log to get that money to invest in agriculture and I think to us it is not quite genuine. It is obvious that they are more interested in logging than agriculture. And Commissioner, one of the problems that we had is, it is really our ability to SABL15 08/09/

11 actually supervise some of these logging operations and I do not know if it is forestry or agriculture, but if we had the capacity to actually supervise from the initial establishment of the project until the end then we would know actually what is happening with those projects in terms of how they operate so that we can actually control that. But in most plantations it is unsupervised logging and the fact that we are not able to monitor some of those operation whether at the national departmental level; at the provincial level is an issue and I think that needs to be addressed as well. THE CHAIRMAN:Secretary, is that the role of the PNG Forest Authority to supervise logging, would you say? A: I would think so. Our responsibility would be the agriculture component of that to ensure that they are implemented; the agriculture plan. COMMISSIONER MIROU: I am just going back to your answer to Commissioner Jerewai s question, that if any review was to be taken as to the limit to 500 hectares, if any, would that be only confined to oil palm and cocoa projects? The 500 hectares or 2,000 hectares, if any review was to be taken in relation to the limits that are placed on --- A: Yes, I think, Commissioner, as part of the government s Vision 2050 the corridor project, which the government is proposing, we are looking at big impact project. As you know there are some success stories in other province like the East New Britain, West New Britain where SABL has been very sort of successful in terms of bringing about or transforming some of the rural areas in those provinces. I think there is a need for us to review that; making sure that things are done properly and that it is aninvestment is part of the overall provincial agriculture development plan to district agriculture development plan so it is in line with government policy and government strategy. So we are in the process of doing that, identifying projects which are beneficial, will contribute to development am] I think this is one of the issues that would have to be reviewed as well to ensure that we are able to facilitate some of these big impact projects that are going to be to be identified or that are currently being implemented, by making sure that it is aligned with overall, our development strategy. SABL15 08/09/

12 Q: And would that also relate directly to the ability of the national department, including those provincial governments in relation to capacity, having the experts, people who are able to monitor or consult. Would that also be part of that strategy? A: That is right Commissioner. Commissioner, without focusing on the agriculture in the provinces, in the district, more responsibilities should be given to the provinces now to take ownership, to take full responsibility of those activities that are being implemented those respective provinces. I think that would be the way forward so that, yes at least you have people on the ground for those particular projects which are until they have the capacity, the resource to be able to oversee the implementation and progress of those projects. So that would be the way forward for us in that regard. Q: Thank you Secretary. A: Thank you, Commissioner. THE CHAIRMAN: Secretary, I got one more question to ask you and that is probably the last question I will ask. Mr Daink, your Deputy Secretary tendered to us a copy of the Minutes of a resolution passed in Madang on 27 March I am talking about this document and I do not know, Secretary, if you have got it. In that resolution the recommendations are, a number of recommendations were made in that meeting and one of the recommendation was that FCA or Forest Clearance Authority project approval and monitoring guideline is to be put in place and an appropriate or a site committee be established comprising of key players from your department, DAL, PNG Forest Authority, Department of Environment and Conservation and Department of Lands and Physical Planning and Transport. I believe there is a Transport Department. Has there been any progress on that? Has there been a committee established following that resolution in Madang? A: Thank you Commissioner. Formally not yet but we have been consulting, exchanges of communication between the respective agencies to establish that. After that the department has taken the lead in terms of establishing that. But we are asking cooperation from the other agencies so that we can establish that committee and that committee and as far as this is concernedhas a bigger role to play and we thought that that would be the SABL15 08/09/

13 way forward for us. But we have been talking but we have not formally established that committee and I hope that we can do that soon. THE CHAIRMAN: Thank you. COMMISSIONER JEREWAI: Mr Benjamin, among the Terms of Reference for this Commission of Inquiry is to consider appropriate recommendations in relation to the policy and administrative structure at present and also restructuring so that SABLs are far more efficiently managed from the time of approval. So I need to ask this question or pose this statement to rather, so that you can respond. Would it be more precise process if any proposal for agriculture development, where it involves your development, but where it does not involve your department in relation to any other business, perhaps Trade and Industry or Commerce, be presented to those agencies; yours in relation to agriculture, other businesses perhaps to Commerce or Trade and Industry. And based on your assessment and recommendation alone, then should the Department of Lands and Physical Planning in case of issuing of title, and then process to issue, and on your recommendations, in relation to particularly agriculture, thenpng Forest Authority consider issuing the relevant permit, FCA, in other words, Forest Clearance Authority and not before them. Would that help a lot to bring a greater integrity and business ethics into this process? [11.16 am]a: Commissioner, I totally agree with your comment. That would be the way forward to address all these issues that are now being addressed here. Having the Committee at least we can be able to touch on many of those issues and although initially all these other line agencies may not be involved but as we go down there, processing down their value chain, they will be involved, and therefore, it is important that we have this committee. So any project proposal that come through must be subject to that process; it must be properly scrutinized before we finally give the appropriate licenses and that would be the way forward for this. COMMISSIONER JEREWAI: Thank you Secretary. One more very pertinent point, because among the Terms of Reference of this Commission of Inquiryalso, is to determine if there have been irregular corrupt practices, particularly corrupt practices in securing various approvals throughout the various agencies, mainly the SABL15 08/09/

14 four major agencies involved in this SABLs. So I need to pose this, either question or statement there to which I would like your response.currently, we see, in various processes, you might call, the highway of processes and a great amount of discretion is placed in the individual public officers, such that, and I will coin this phrase, which can become a phrase to be used in future, such that along that highway of processes you have these tollgates. And through each of these processes, the developer or joint venture, including the landowners, come to paying thesetolls before they move onto the next step. And so there is a whole range of tolls that is payed in this highway of processes up to the final approval when they get on with their agriculture project or whatever other business. Would it be fair to suggest that if we could remove these discretions vested in individual public officials, we will be able to remove these tolls? THE CHAIRMAN: Counsel--- MR KETAN: Thank you. Secretary, in relation to that particular project that you have mentioned in Oro, Victory Plantation, that is a tree farming project, it is not a oil palm there is another one in Tufi, Wanigela Integrated Agriculture project. Would you have referred to the Wanigela Integrated Agriculture Project? Victory Plantation is a tree farming project? A: Victory Plantation is, yes, it isa tree farming, it is in the forestry; it is agriculture related. Q: Assuming that - you were referring to the Wanigela Integrated Agriculture Project which involves forestry clearing and oil palm development, but when you have such a project and according to your evidence in paragraph 15, investors express interest in development of such project am] Do you advert your mind through the soil suitability in as far as your consideration of the project? A: Yes, Counsel. Even before projects are supported, we provide the technical information on the suitability of those projects which includes soil suitability, we actually --- SABL15 08/09/

15 Q: Soil suitability would be one of the prerequisites to soil suitability to a particular project. It may be peanuts or cashew nuts or oil palm. But soil suitability has to be for each of the or a particular project and particular crop, would it be not? A: We will provide information soil suitability, climate suitability, on four particular crops, including tree crops. Q: Yes. Your Deputy Secretary, Mr Daink said that in evidence that there is a nationwide database that the Department has which basically can be used to identify areas that which are suitable for agriculture. Is that in the computerized system? There is a book which has been prepared by the University of Papua New Guinea for your Department, for the Department of Agriculture and Livestock compiled by JE Bryan B-R-Y-A-N and PL Shearman S-H-E-A-R-M-A-N, who appear to be experts in this area. The book starts off on; Papua New Guinea Resource Information System Hand Book, third edition. Obviously, it has got the National Emblem and it has been sponsored by the Government for your Department. Is this one of your resource materials that you use to assist you in assessing your projects? A: Yes, Counsel. This is an update of our database that we have. As you would know over the years we had a database which supported government and the Australian government, through CSRO. So this is an update of the database that we have, it is in electronic form as well. That booklet that you have is a result of the support by the European Union to both the Departments as well and we had sought assistance from the University of Papua New Guinea to actually compile that. So that would be an update information on the soils and --- Q: I just mentioned that for record. At the moment as the Inquiry progresses, there may be a need, depending on the individual files, may be a need to either recall you or Mr Daink as and when necessary but I just mentioned that for the record that that is one of the resource materials. A: Thank you. MR KETAN: Thank you. SABL15 08/09/

16 COMMISSIONER JEREWAI: Counsel, can you just explain if the contents of the book rather will assist us in any of our Terms of Reference? [11.26 am] MR KETAN: It is will in terms of the assessment process for the agro-forestry projects in the soil suitability aspect which has to be considered before the agriculture development plan is approved by the department. COMMISSIONER JEREWAI: Counsel, that is fine. The integrity of the approvals given by the Department of Agriculture with regard to the proposed agriculture development on any of these SABLs is really not part of the Terms of Reference. If indeed, it should come up in Terms of Reference (c) when we investigate individual SABLs and the integrity comes into question in the course of individual investigation, then I should think that should become relevant. But at this stage, I do not think it is of relevance, generally. I just want to be on record expressing that. MR KETAN: Yes, that is very well, Commissioner. Witness, Secretary, the other question I wish to ask is in relation to your particular experience in the SABL process - and I am referring to paragraph 19 of your affidavit, do you yourself have experience in the processing and monitoring of the SABL based projects? A: Thank you, Counsel. We have the necessary capacity. Q: Sorry, I mean yourself, personally, because I want to ask the next line of questions. A: Okay. Q: Have you been involved in the assessment and monitoring of the projects related to the or based on the SABL leases? A: Thank you, Counsel. No, I have not been directly involved in terms of some of the studies that have been conducted. But we depend on our department, technical expertise to provide the information necessarily for us to support this project.i am not a forestry man, my background is in livestock. But over the years, I have come to appreciate some of these important projects and their contribution to agriculture and development, in general. THE CHAIRMAN: Counsel, can I intervene? I note that you did indicate earlier on that you have got Henry Wasa after that. SABL15 08/09/

17 MR KETAN: Yes. THE CHAIRMAN: Time is getting close to lunch so maybe he can be excused and come back at half past 1. You want to do that now, so that we are not keeping him in here long? MR KETAN: The next line of questions should only take 10 minutes or so. THE CHAIRMAN: Okay, so long as you finish with Mr Wasa by lunch time. I do not want us to drag beyond lunch. So that is why I am saying that he can excused now and come back at half past 1 if you are going to take up time. MR KETAN: Very well, let me get an indication from Mr Wasa whether--- THE CHAIRMAN: Okay, you do that, thank you. MR KETAN: He says he can come back after lunch. THE CHAIRMAN: All right, we will do that; half past 1. MR KETAN: Thank you. In considering again, this is related to your evidence in paragraph 15. When you get an investor who expresses interest in developing a project, apart from soil suitability test and other aspects, do you also, as a matter of requirement, consider the capability of those investors in terms of expertise and finance? [11.31 am] For example, if it is an agriculture project, whether they have agricultural experience in amongst other things like financial position; if it is oil palm, whether they have had experience in oil palm projects? If I can just put this in perspective, this is so to protect the landowners against people that might come in the disguise of proposing agriculture projects, may actually be more interested in the forestry aspect; the felling of logs and more than agriculture development. A: Thank you, Counsel. For those projects which are genuine projects they invest in like cassava, for instance, then we know it is going to be cassava, but those other agricultural projects as I said earlier, you do not actually find out until later on after they have commenced operation, then we have problems arising in relation to the implementation of the agriculture plan; and this is a concern to us when a lot of these people come up with all kinds SABL15 08/09/

18 excuses when they are not able to implement the agriculture plan. That however also indicates to us that they are not quite genuine; they are more interest in logging.but, Counsel, I think the important thing is for us to be involved initially in the establishment of the project to ensure that these projects are implemented according to schedule. You know, 500 hectares, we should know when they start with their nursery operation; when they should build their nursery; when they should now get their seeds from OPRA and when they should be commencing their nursery operation so that it is all in line with their plan. We do not have that we do not find out about this until when they have problems with their operations. So I what am saying, perhaps, a way forward for us in that regard is that we work with the investor to ensure that they comply and are implementing according to schedules, then we can avoid these problems. But in terms of expertise, as I said earlier, some of these operators if they are more forestry orientated, they do not have the expertise in agriculture. So we advise them to ensure that part of the requirement, they must demonstrate to us that they have expertise in order to implement the agriculture plan. Q: Normally, these proponents or in the case where there are overseas investors involved, how do they demonstrate their expertise like--- A: You will not know until after the project is implemented that they do have the capacity. Initially, the information that we require is really based on that document that they produce to us, that they want to go into oil palm; they want to go into teak plantation--- COMMISSIONER JEREWAI: Just the primary one, you begin with. A: Yes. Q: Then progressively, as they perform in accordance with the schedule, you begin to know that they actually know what they are doing? A: Exactly, Commissioner. That is why it is important for us to monitor that from the start to the end so we know that if they are genuine and whether they have the expertise, we can be able to intervene to provide that advice accordingly. But the department is basically on call, even the Commodity Boards are on call to at least to provide that technical expertise. It is all required by the investor to the end. SABL15 08/09/

19 11.36 am] So we know that if they are genuine, whether they have the expertise we can be able to intervene to provide that advise accordingly. But the department is basically on call even the commodity boards are on callto at least to provide the technical expertise if so required by the investor. Q: So basically what you are saying, Secretary is, that these people just come on a trust basis that --- COMMISSIONER JEREWAI: Counsel, you just have to rely on their CVs. MR KETAN: Yes. COMMISSIONER JEREWAI: You take on a lawyer into a firm, you just look at the CV and until he goes and performs for you, you do not know as principal, would you? MR KETAN: Yes, some - basically I come, as Commissioner has pointed out, on the presentation of resumes and CVs. THE CHAIRMAN: Counsel, can I ask this question. I have asked that,secretary, to your deputy. When they have done the first 500 hectares and if they are not doing what they are required or expected to do, as far as agriculture development of project is concerned, and they move on, do you have any authority to stop them or to advise them not to proceed until they have met the requirements or conditions of the SABLs that they must do some agriculture activities; conduct some agriculture activities on the land, that first 500 hectares? A: We do not have the authority stop them. I think it is Forestry that does that; does not give them approval to extend to new 500 hectares. But what we need to do, Commissioner, is that the department should be involved; should be involved in the process to ensure that I mean, basically, Commissioner, what we would like to I mean these are investments and we appreciate the risk that those people are taking. At the same time we also appreciate the fact that they are helping us partner with government to actually develop a lot of these rural areas. Our position is that we would like to help them. If there are things that are not right in terms of their implementation of the agriculture plan, the department would like to come in and assist them, including the commodities, to assist them to actually make sure that they do SABL15 08/09/

20 you know, if it is a delay in the establishment of the nursery, we would like to help them to make sure that they do that so that they have the ability to meet those requirements. In terms of seedlings, we expect the seedlings to be ready and should be for planting as according to schedule. This is where we would like to come in to support that. But our problem has been lack of involvement, supervision and so you sort of left it to the investor or the company to operate and eventually they end up with this program and it costs a lot of delays and the cost if the operators fall. If managed properly, and as I have said, if massaged then I think we can actually guarantee proper implementation of those programs and projects. COMMISSIONER JEREWAI: With regard to that let me ask another pertinent point. Where SABLs involve forest operations, there may be other related regulatory basis that Forestry may want to stop the forest clearance harvesting of undersized logs or some regulatory matter about exports, and they go down and stop the forestry operation, and therefore, it will affect the agriculture operation. In your view, they should really consult with your department how it is going to affect the progression of the agriculture development where such a stoppage does not relate to the progress in the agriculture development but rather to some strict forestry requirement relating to export duty or levy or whatever it is. I think that is very pertinent. We have to consider that. If I can have your view on that? am]a: Thank you Commissioner. I think that Committee that we had intended to put in place, that would have been an avenue through which a lot of these issues would have been addressed because that would require sort of intervention or advices from the other government agency that are responsible for this. I think if we have had that committee established we would have fully addressed those issues and actually move some of these projects forward. It could be an administrative issue, if it is not a technical one, and so I think by, through the committee, we can be able to address those specific issues and deal with it so that it does not become a major problem. That would be the way forward. COMMISSIONER MIROU: If I understood it well, according to Mr Pouru one of the reasons why the operations were suspended is a result thatafter 500 hectares of forest have been harvested, no agricultural crops or oil palm SABL15 08/09/

21 or seedlings or things of this nature, activities have taken place. So what they do is they normally stop the felling of the trees; they actually stop the cutting. But they say agricultural activities and other activities like road line, things like this will continue. One of the reasons that he highlighted was that there was a lack of people from within the department or from the provincial agricultural extension officers being able to monitor those activities on a particular land or SABL which is situated. Is that one of the and that is where the Forestry Authority comes in and they suspend operations on the actual harvesting of the logs within that 500 hectares. Is that one of the reasons why - based on the lack of monitoring from within the provincial agricultural extension officers or from your department? A: Commissioner, that will be correct. As I have said earlier, the government or through the respective agency they must be involved and the fact that a lot of these projects in those provinces, we would expect the province directly be empowered so that they can actually supervise, work with the company to ensure that they are meeting those requirements and are performing according to schedules. And where you have situations where they are not, the agriculture plan is being delayed for various reasons, I think, they can be addressed if we had that capacity and to actually monitor that. For the department, it is basically, it is not a funding sort of activity and so we hope that once we get this committee established we can be able to at least be able to look, find out a way forward, at least there are resources available which we can utilise to actually provide that. But really, what we want to do now is empower those people in the provinces through district DPIs, the Forestry, people in the provinces, the Lands people in the provinces directly take charge of that so they can work with the investor to ensure that they are meeting those targets. And if we had that, I am sure we can be able to work with the operators to ensure that it is a win/win situation for everyone. That they comply with our requirements as well as there are progress in terms of development of the project. That would be the way forward. So far it has been a lack of ability to actually supervise or monitor this project. And often it is when you realize it, it is late and so we have try to find a way around to a system. But we should be involved with those investors directly supervise their activities. SABL15 08/09/

22 MR KETAN: Secretary, this line of questions is being asked because in paragraph 19 of your affidavit you state that your department is an integral part of the whole process because of the experience we have or you have on land use management for agriculture purposes am] That is the reason why your Department is required in those that are approvals of the programs under the Forestry Act and the particular requirements under Section 90(a) and 90(b) of the Forestry Act and the Environment Act 2000 (As Amended). The line of questions that we will ask is a matter of due diligence prior to approval of these projects. I am putting it to you, do you not think that approving of a land development plan without being satisfied that the proponent is an experience entity in that particular area, is taking an unacceptable risk, particularly where customary land has been alienated? A: To some extent. Our responsibility is really the agriculture plan, and we make sure that the agriculture plan is in order, and all the information related to the agriculture plan is provided to the investor to show that that plan is the agriculture plan is effectively implemented. COMMISSIOINER JEREWAI: Put it this way, Secretary Benjamin. You have within your Department, the capacity to know a good agriculture plan when presented to you? A: Yes, Commissioner. Q: Where Counsel has asked with regard to due diligence, to that extent, you can determine as to whether that plan had been diligently prepared and carry some merits to be approved. Is that right? A: Yes. Q: Sorry if you are nodding your head, it does not get on record. And until they actually implement the plan, you will not know whether they have the expertise or not? A: That is correct, Commissioner. Q: And that is determined along the development path for that particular agriculture project by monitoring by your Department? SABL15 08/09/

23 A: That is correct, Commissioner. COMMISSIONER MIROU: And also another aspect for the procedure. When you make that endorsement for approval, is that done prior to, let us say, the NFA issue in the Forest Clearance Authority and the Environmental Permit, Level 3 Impact Reports. Is that done prior to that or after? A: Commissioner, usually before that some of these big projects, the Department is actually involved in assisting those investors, say from land use studies and they provide sort of company reports as far as land use is concerned. On the basis of that we approve the agriculture plan and we recommend based on the potential in that particular area. Q: And so these endorsements, they go back to Forestry and Environment and-- A: And it goes back, yes, it goes down the line. So our involvement is the agriculture plan; we approve the agriculture plan. COMMISSIONER JEREWAI: The Managing Director of the National Forest Service of the Papua New Guinea Forest Authority, I think that is the proper description of that organization. Brother Commissioner referred to as NFA; NFA is actually the National Fisheries Authority. Mr Pouru, the Managing Director of the PNG Forest Authority, National Forest Service, he said in his evidence that SABLs are primarilyagriculture projects and where forests are found on those leases, they clear fell the area. [11.51am] They remove the entire forest and that is why they are involved there. But their function really, he said, was to manage the renewable area of that forest resources. So the ownership it seems is primarily on your Department to be really satisfied that the proposed agriculture development is it meets all the requirements rather, and will justify the complete clearance of a forest. That in effect is the true position in regard to SABLs that has forest stands on it on them rather. So it comes back to the point I raised with you earlier that you should be the primary agency to make that first decision as to the viability and every other consideration SABL15 08/09/

24 that ought to be given and approval given then will trigger all the other approvals, including forest clearance approvals. Doyou not think so? A: Yes, Commissioner. MR KETAN: Secretary, just I think another five more questions and we will be over with you. Paragraph 20 of your affidavit, you referred to some programs under the SABL scheme are successful and there of course are issues in others in relation to land ownership and others but you state that that can be managed if the Department, for example like Lands, can work with your Department and assist in the process of alienation of land customary land. For example, provide certification to landowners. Usually most of the problems are related to landowner issues. Could you, for the record, explain, with an example of a project that may have met with this issue, particularly landowner issue? It may have been at the beginning of the project or it may been half way through the development of the project but if you can explain your statement in paragraph 20 and give an example? A: Thank you Counsel, I will try; try my best to respond to that. There are proposals or projects that have come directly to the Department but where the investors have consulted the landowners and we are not aware of the manner in which this was done -and so they come with landowners to us to assist them. And there are cases where landowners have their differences. There are people in the community or in the village who are not party to that, who have not been consulted and this is where the problem is. After the endorsement is being given by the Department, we get letters from the landowners to us advising us that they have not been consulted, they are not party to this one and they want the project stopped until it is all been reviewed. So these are some of the issues that arises from the projects that - when investors are actually dealing with the landowners themselves without coming to the Department and so those are issues that we are not aware of until after we have given approval, then we start to see this problem arises. So it becomes a concern where the investors are not able to commence operation and eventually do, to some extent or eventually they pull out. So what we are saying is [11.56 am] So what we are saying is perhaps if we could be the first point of contact so that we can assist insofar as the agriculture plan is concerned and then SABL15 08/09/