BACKGROUND INFORMATION OF MBPG INVESTMENTS

This summary provides essential details regarding investments by the Milne Bay
Provincial Government (MBPG) and its business arm, Milne Bay Properties Ltd
(MBPL). It aims to inform the people of Milne Bay about the value and status of
these investments, emphasizing transparency and accountability.
Key Investments and Sales
1. Milne Bay Estate (current NBPOL-Sime Darby)
On 16th December 1998.Council-
o 1. approved the offer to purchase 17.7 million of the shares held by the
State in Pacific Rim Plantations Pty Ltd for a price of K1.40 per share
totalling K24,787,091.00 subject to the condition already accepted by CDC
that Pacrim should be listed on the Port Moresby Stock Exchange within
two years of the completion of the transfer of shares subject to market
conditions ; and
o 2. Directed the minister for treasury and planning to make arrangements
for;
o The State to transfer 10% of its retained equity in Pacrim in trust to the
three provincial governments, free of charge, on a pro rata basis
respective to milling capacity at the three estates.

o Transferring the State’s remaining 10% to these governments on a

purchased but carried pro rata in the form of a second Trust to provide
social benefits to the local level governments in the three project areas.

o 2024: The state sold MBPG’s interest to Sime Darby in 2018, raising
capital, and is now paying its dues (K52 million) through KCHL.
Questions remain about the number of shares and their value at the time
of sale, suggesting possible undervaluation.
2. Alotau Enterprises Ltd (AEL)
o 1995: MBPG purchased a 10% interest in both Alen Enterprises Pty
Limited and Alotau Enterprises Partnership for K222, 500.00. This
included 20 company shares (10%) and partnership (10%) interests.
o 2024: The shares were sold in 2021/22 for K11.3 million, based on
unaudited records from 2017, potentially undervalued. An audit is needed
to distinguish between partnership profit distributions and shareholding
returns, ensuring accurate financial records and transparency.
MBPL could have increased its shareholding interest in the business instead of
selling its shares.

3. Alotau International Hotel Ltd (AIH)

o 2017 Valuation: The hotel’s enterprise value was K17 million plus. AIH
increased its shareholding to 77%, valuing MBPL’s 23% share at
approximately K3.8 million.
o 2024: MBPG was paid K1 million after selling its shares, indicating
possible undervaluation. An audit is required to verify financial details
due to the lack of recent financial reports.
MBPL could have bought AIH, as the sale of Alotau Enterprise shares has
provided the company with the funds needed for an outright purchase.

Importance of an Audit
The complexity of these arrangements, especially regarding Alotau Enterprises
Ltd, necessitates an audit to:
o Clarify the distinction between profit distributions and returns from
shareholding.
o Ensure accurate allocation of funds and transparency in financial
reporting.

Unaudited Information
o Potential unpaid dividends or undistributed profits from Alotau
Enterprises Ltd worth K16, 258,327.00 (subject to audit).
 o Possible undervaluation of the 23% shareholding sale in Alotau
International Hotel worth K3,800,000.00
Conclusion
Over the past eight years, the actions of the Milne Bay Provincial Government
(MBPG) have raised significant concerns. The current leadership has been
redeeming investments that were established 40 years ago by previous
provincial government leaders, including Premier Lepani Watson, Vernon Guise,
Patrick Paulisbo, and Navy Aule. These investments were intended to secure the
financial future and stability of the province.
The redemption of these long-standing investments is worrisome for several
reasons:
A. Lack of Financial Reports and Audits:
B. There has been a noticeable absence of recent financial reports and
audits. This lack of transparency makes it difficult to assess the true value
and performance of these investments over time.

1. Potential Undervaluation:
Without proper financial documentation and audits, there is a high risk
that the investments might be undervalued. This means the province
could be receiving less money than the investments are actually worth
when they are sold or redeemed.

2. Need for Comprehensive Audits:

To address these concerns and ensure that the province's assets are being
managed appropriately, it is crucial to conduct comprehensive financial
audits. These audits would provide an accurate valuation of the
investments, ensure transparency in financial dealings, and help restore
public trust in the management of provincial assets.

3. Historical Significance:
The investments made by leaders like Watson, Guise, Paulisbo, and Aule were
significant contributions intended to benefit future generations. Redeeming
these investments without proper oversight undermines the legacy and
foresight of these earlier leaders.
The current trend of redeeming longstanding investments without adequate
financial oversight poses a risk to the province’s financial health and legacy.
Comprehensive audits are essential to ensure these assets are valued correctly
and managed transparently.