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Purchase of the Luganville Lord Mayor's Vehicle [2002] VUOM 8; 2002.09 (12 August 2002)

REPUBLIC OF VANUATU

OFFICE OF THE OMBUDSMAN

PMB 081
Port Vila
Vanuatu

PUBLIC REPORT

ON THE

PURCHASE OF THE LUGANVILLE
LORD MAYOR'S VEHICLE

12 August 2002

9390/2002/09

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PUBLIC REPORT ON THE
PURCHASE OF THE LUGANVILLE
LORD MAYOR'S VEHICLE

SUMMARY

Outline of events (see further page 5)

After Municipal elections in September 1998, Mr Roy Bongelan was elected Lord Mayor of Luganville. At that time the Lord Mayor had the use of a vehicle less than one year old, however Mr Bongelan wanted Council to buy another 'more executive' for him to use instead. The Finance Committee refused because of the Municipality's very poor financial position, however the Health and Sanitation Committee subsequently approved the purchase of a new vehicle at Mr Bongelan's request.

Mr Bongelan then conducted negotiations with Asco Motors in Port Vila and decided, without reference to any Council officers, and contrary to the Council's decision, to purchase a five year old, but more expensive, Toyota Crown instead. After the vehicle was delivered, the Finance Committee tried unsuccessfully to reverse the decision and Council found itself committed to paying a changeover cost (after trade of the previous mayoral vehicle) of VT1,620,208.

Findings (see further page 7)

The Ombudsman found evidence that the Council's Health and Sanitation Committee acted unreasonably and unlawfully when it agreed to Mr Roy Bongelan's request to purchase a new mayoral vehicle for his use when:

6. The existing vehicle was less than one year old;
7. The Municipality could not afford a new vehicle;
8. No provision had been made for the purchase in Council estimates; and
9. No competitive tenders were sought.
   

The Ombudsman found evidence that Mr Roy Bongelan the councillors who approved the purchase breached several provisions of the Leadership Code Act.

Recommendations (see further page 9)

The Ombudsman recommends prosecution of councillors, and in particular Mr Roy Bongelan, for breaches of the Leadership Code Act, the Municipalities Act and the Municipal Councils Financial Regulations.

The Ombudsman also recommends that the Minister appoint an inspector to examine the purchase of the vehicle and suggests that, if justified by the inspector's report, Mr Roy Bongelan should be surcharged VT1,620,208.

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TABLE OF CONTENTS

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1. JURISDICTION

1.1 The Constitution, the Ombudsman Act and the Leadership Code Act allow the Ombudsman to look into the conduct of government, related bodies, and Leaders. This takes in the Luganville Municipal Council and its elected councillors, including the then Lord Mayor of Luganville, Mr Roy Bongelan.

2. PURPOSE, SCOPE OF INVESTIGATION AND METHODS USED

2.1 The purpose of this report is to present the Ombudsman's findings as required by the Constitution and the Leadership Code Act.

2.2 The scope of this investigation is to establish the facts about:

10. The decision by Luganville Municipal Council to trade in the existing Lord Mayoral vehicle, which was barely one year old, in order to purchase a new vehicle; and
    
11. The subsequent action by the Lord Mayor, Mr Roy Bongelan, in ignoring Council's decision to purchase a new vehicle and instead committing the Municipality to purchase a more expensive second hand vehicle which was already 5 years old.
    

2.3 This Office collects information and documents by informal request, summons, letters, interviews and research.

2.4 This investigation, however, has been hampered by the refusal of Mr Roy Bongelan to answer most requests for information or assistance from the Ombudsman. This is despite many letters that were sent to him during the course of the enquiry. He was served personally with a formal Notice to Witness to appear on 27 July 2001, however he close to ignore this document also.

2.5 Mr Bongelan's silence has delayed the Ombudsman's investigation considerably. His lack of response suggests contempt for the rule of law and can also be interpreted as an acknowledgment of wrongdoing on his part.

3. RELEVANT LAWS, REGULATIONS AND RULES

Relevant parts of the following laws are reproduced in Appendix K.

OMBUDSMAN ACT NO. 27 OF 1998

MUNICIPALITIES ACT [CAP 126] NO. 5 OF 1980

MUNICIPAL COUNCILS FINANCIAL REGULATIONS NO. 66 OF 1983

CONSTITUTION OF THE REPUBLIC OF VANUATU

LEADERSHIP CODE ACT NO. 2 OF 1998

4. OUTLINE OF EVENTS

4.1 After elections for the Municipality of Luganville were held in September 1998, the Lord Mayor, Mr Roy Bongelan, requested that Council buy a new car for his use.

4.2 At the time the Lord Mayor had the use of a vehicle that was less than one year old, having been purchased new on 18 May 1998.

4.3 The matter was considered at the Council Finance Committee meeting held on 25 February 1999. The minutes of the meeting (Appendix A) show that the Committee decided that the Council's poor financial situation meant that it could not afford a new car at that time.

4.4 Subsequently the Lord Mayor asked that the Health and Sanitation Committee approve a new vehicle instead. The minutes of the committee meeting held on 30 April 1999 (Appendix B) give no indication of the reasons for the decision to approve the purchase or why the question of the Lord Mayor's car was considered appropriate for the Health and Sanitation Committee.

4.5 Mr Bongelan then visited Asco Motors in Port Vila to discuss the purchase of a new Toyota Camry as the Lord Mayoral vehicle. When he was told the price, he decided that the Council could not afford such a vehicle.

4.6 A salesperson from Asco Motors then showed him a second hand Toyota Crown, approximately 5 years old. A 'pro forma invoice' (or quotation) was issued for the vehicle (Appendix C).

4.7 No tender process was undertaken, no quotations were sought from different suppliers, nor is there any evidence that any suppliers were requested to provide trade-in prices for the then current Lord Mayor's vehicle.

4.8 Mr Bongelan decided that the Municipality would purchase the more expensive, second hand Toyota Crown, even though Council had only approved a new vehicle. This decision was made without reference to Council or any of its committees or officers. Council administration only became aware of the purchase after the vehicle arrived in Luganville.

4.9 There is more confusion about whether or not Asco accepted the previous Lord Mayoral vehicle as a trade in for the Toyota Crown.[∗] In any event, the amount received for the previous car was VT1,300,000 on 25 May 1999. The purchase price, just one year earlier, had been VT2,381,509 - a loss to the Council of Vt1,081,509.

4.10 In the early part of our investigation, Mr Bongelan responded to some questions about the purchase (Appendix H). In his letter he:

• Acknowledged that there had been no tender process because it 'took ages for all processes to get through [sic]... I have taken such an initiative step [purchase of a second hand car] to merely avoid all these...'.
  
• Admitted that he had decided that the Municipality should purchase a second hand car contrary to Council's decision.
  
• Claimed that the type of car purchased tends to last longer than other, new, cars offered, even thought it is older. The General Manager of Asco subsequently stated that this is 'of course, a nonsense' and that, although the Crown was in very good order, it 'in no way could compare with a brand new vehicle'. (Appendix J).
  
• Also claimed that the Lord Mayor was to the people of Luganville 'a symbol of the President and Prime Minister of Vanuatu' and that this justified buying a car with 'more executive features' than the previous vehicle.
  

4.11 After discovering Mr Bongelan's decision, following delivery of the vehicle to Luganville, Council officers obtained two quotations from the Mitsubishi distributor in Santo (Appendices D & E). These are compared with the quotation for the Toyota Crown in the table below.

4.12 On 21 June 1999, the Council's Finance Committee passed a resolution that the Toyota Crown should be returned to Asco (Appendix F), and the cheapest car bought instead. However Asco refused to accept the vehicle back.

4.13 The changeover cost to the Council was VT1,620,208, calculated as follows:

Cost of second hand Toyota Crown VT 2,920,208

Less amount received for former car - 1,300,000

Changeover cost VT 1,620,208

4.14 Of this, VT500,000 was paid immediately and the balance over time.

5. RESPONSES BY THOSE WITH COMPLAINTS AGAINST THEM

5.1 Before starting this enquiry, the Ombudsman notified all people or bodies complained of and gave them the right to reply. Also, a working paper was provided prior to preparation of this public report to give the individuals mentioned in this report another opportunity to respond.

5.2 No responses were received to the working paper.

6. FINDINGS

6.1 Finding 1: The Ombudsman finds there is evidence that Luganville Municipal Council, through its Health and Sanitation Committee, acted unreasonably, took into account irrelevant considerations and failed to take into account relevant considerations when it decided to purchase a new car for the Lord Mayor.

6.1.1 The existing Lord Mayoral car was not yet one year old, and the municipality was acknowledged to be in a very poor financial position. Council members ignored their legal and moral obligations to act prudently and in the best interests of the citizens of Luganville and instead succumbed to Mr Bongelan's request.

6.2 Finding 2: The Ombudsman finds there is evidence that members of Luganville Municipal Council acted unlawfully in committing the Municipality to expenditure for which no provision had been made in any estimates.

6.2.1 Section 52(1) of the Municipalities Act states:

No expenditure shall be incurred by a council unless it can be properly charged to an item in the approved estimates or in approved supplementary estimates.

6.3 Finding 3: The Ombudsman finds there is evidence that members of Luganville Municipal Council acted unlawfully in authorising the purchase of a new vehicle for the Lord Mayor without publicly calling for tenders.

6.3.1 Section 27(2) of the Municipalities Act states:

Except as may be permitted by its standing orders a council shall not enter into any contract-

(a) for the supply of any goods or materials; or

(b) for the execution of any work or provisions [sic] of any services, other than professional services to or for the council, except after publicly calling for tenders for the same.

6.3.2 Regulation 118 of the Municipal Councils Financial Regulations also imposes an obligation to obtain Ministerial approval for a purchase such as that of a vehicle.

6.4 Finding 4: The Ombudsman finds there is evidence that the elected Councillors breached the Leadership Code Act.

6.4.1 The following is a list of the breaches of the Leadership Code Act for which the Ombudsman has found evidence. The breaches arise from authorising expenditure other than in accordance with estimates and failing to call for public tenders.

6.5 Finding 5: The Ombudsman finds there is evidence that
Mr Roy Bongelan in particular has committed numerous breaches of the Leadership Code Act in addition to those that Councillors generally may have committed.

6.5.1 Mr Bongelan deliberately and by his own admission (see Appendix H) ignored the decision of Council to purchase a new vehicle and instead committed the Municipality to purchasing a car that was already 5 years old. The only reason for this seems to have been to gratify his vanity by having a 'more executive' car that he felt was appropriate for his position.

6.5.2 The following is a list of the breaches of the Leadership Code Act (and, where applicable, the Constitution) for which the Ombudsman has found evidence. The breaches arise from requesting Council's Health and Sanitation Committee to authorise purchase of a new car for his use as well as subsequently committing the Municipality to purchase a second hand car when Council's approval had been for a new vehicle.

6.5.3 The court, on conviction, may also impose additional penalties such as dismissal, disqualification and loss of employment benefits.

7. RECOMMENDATIONS

7.1 That all councillors of Luganville Municipal Council's Health and Sanitation Committee present at the meeting on 30 April 1999 be prosecuted for breaches of sections 3, 13(1)(a), 28 and 29 of the Leadership Code Act 1998, as detailed in this report.

7.2 That Mr Roy Bongelan be prosecuted for additional breaches of sections 3, 13(1)(a), 28 and 29 of the Leadership Code Act 1998, as well as article 66(1)(d) of the Constitution, as detailed in this report.

7.3 That the Public Prosecutor also considers prosecuting councillors for breaches of sections 27(2) and 52(1) of the Municipalities Act and regulations 5 and 118 of the Municipal Councils Financial Regulations.

7.4 That the Minister appoint an inspector under section 59 of the Municipalities Act to examine all circumstances surrounding the purchase of the vehicle and, if justified after receiving the inspector's report, surcharge Mr Roy Bongelan under section 60 for an amount equal to the Council's changeover cost in purchasing the second hand vehicle, namely VT 1,620,208.

7.5 Since a Commissioner was appointed to Luganville Municipal Council with effect from 2 November 2001, it is not considered useful to make general recommendations about the administration of the Council by its councillors.

Dated the 12th day of August 2002.

Hannington G. ALATOA
OMBUDSMAN OF THE REPUBLIC OF VANUATU

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8. INDEX OF APPENDICES

1. Extracts from minutes of Council Finance Committee meeting held on 25 February 1999.
   
2. Extract from minutes of Council Health and Sanitation Committee meeting held on 30 April 1999.
   

100. Pro forma invoice from Asco Motors for Toyota Crown dated 8(?) May 1999.
     

4. Quotation from Socometra Vanuatu Ltd (Mitsubishi dealer) for L200 Pickup 4x2 dated 14 June 1999.
   
5. Quotation from Socometra Vanuatu Ltd (Mitsubishi dealer) for Lancer GLS dated 14 June 1999.
   
6. Extract from minutes of Council Finance Committee Meeting held on 21 June 1999 (two pages).
   
7. Letter from Asco Motors Vanuatu to Ombudsman dated 18 August 1999.
   
8. Letter from Mr Roy Bongelan to Ombudsman dated 23 August 1999 (two pages).
   
9. Facsimile letter from the Treasurer, Municipality of Luganville, to Ombudsman dated 21 October 1999 (two pages).
   
10. Letter from Asco Motors Vanuatu to Ombudsman dated 29 February 2000.
    
11. Relevant laws.
    

Appendix ‘K’

Relevant laws

OMBUDSMAN ACT NO. 27 OF 1998

DEFINITION

1. 'government agency' means:

...

(c) a municipal council

MUNICIPALITIES ACT [CAP 126] NO. 5 OF 1980

CONTRACT

27(2) Except as may be permitted by its standing orders a council shall not enter into any contract-

(a) for the supply of any goods or materials; or

(b) for the execution of any works or provisions [sic] of any services, other than professional services, to or for the council, except after publicly calling for tenders for the same.

INCURRING EXPENDITURE NOT IN ACCORDANCE WITH ESTIMATES

52(1) No expenditure shall be incurred by a council unless it can be properly charged to an item in approved estimates or in approved supplementary estimates.

FINANCIAL REGULATIONS AND TENDER BOARD OFFERS

57(1) The Minister may after consultation with the Minister responsible for finance make regulations not inconsistent with any of the provisions of this Act for the purchase of-

...

(e) regulating the procedure for dealing with tenders;

(f) requiring contracts by councils to be in accordance with such orders and in particular requiring, in the case of contracts for the supply of goods or materials or for the execution of works to the value of VT 150,000 or more or such higher minimum value as the Minister may specify in respect of any council or councils to enter into, the contract shall be published and tenders invited and reguLating the manner in which such notice shall be published and such tenders accepted.

DISALLOWANCE AND SURCHARGE

60(1) If, on receipt of the report of the auditor or an inspector, the Minister is satisfied that expenditure has been incurred without proper authority he may either sanction or disallow such expenditure and if he disallows such expenditure, he may, subject to the provisions of section 67 by directive in writing surcharge any person responsible for such expenditure for the whole or any part thereof.

60(2) If, on receipt of the report of an auditor or an inspector, the Minister is satisfied that-

(a) any failure to collect money due to the council; or

(b) any loss of money or property; or

(c) any damage to property;

has occurred by reason of any wilful or wrongful act or any negligence by any councillor or person in the service of the council, the Minister may, subject to the provisions of section 67 by order in writing surcharge such councillor or person for the whole or any part thereof.

60(3) Any sum surcharged on any person under the provisions of this section shall be a debt to the council and shall be payable by such person within 1 month or such longer period as the Minister may approve of the dated of service upon him of the order of the Minister.

MUNICIPAL COUNCILS FINANCIAL REGULATIONS NO. 66 OF 1983

CONTROL OF REVENUE

5. No revenue may be collected or expenditure incurred other than in accordance with the approved estimates.
   

USE OF LOCAL PURCHASE ORDER

116. (1) A local purchase order will be used-
     
     • (a) where the cost of a specific work or service is less than VT20,000; or
       
     • (b) for all sea/air passages and freight charges within Vanuatu; or
       
     • (c) for the hire of all land transport; or
       
     • (d) for the payment of hotel costs for officers on tour;
       

except that in circumstances where a cash payment is more practical that the issue of a local purchase order, these requirements may be waived.

116. (2) The local purchase order shall be in the prescribed form.
     

EXTRAORDINARY EXPENDITURE

117. Specific items that appear in the approved estimates for extraordinary expenditure up to the value of VT 100,000 may be requisitioned by a local purchase order.
     

FORMAL CONTRACT WITH SUPPLIER

118. The purchase of any works and services other than those laid down in regulation 116 and 117 will be made by formal contract with the supplier, and will be subject to approval by the Minister.
     

CONSTITUTION OF THE REPUBLIC OF VANUATU

CONDUCT OF LEADERS

66. (1) Any person defined as a leader in Article 67 has a duty to conduct himself in such a way, both in his public and private life, so as not to-

(a) place himself in a position in which he has or could have a conflict of interest or in which the fair exercise of his public or official duties might be compromised;

(b) demean his office or position;

(c) allow his integrity to be called into question; or

(d) endanger or diminish respect for and confidence in the integrity of the Government of the Republic of Vanuatu.

66(2) In particular, a leader shall not use his office for personal gain or enter into any transaction or engage in any enterprise or activity that might be expected to give rise to doubt in the public mind as to whether he is carrying out or has carried out the duty imposed by sub-article (1).

DEFINITION OF A LEADER

67. For the purposes of this Chapter, a leader means the President of the Republic, the Prime Minister, members of Parliament, and such public servants, officers of Government agencies and other officers as may be prescribed by law.
    

LEADERSHIP CODE ACT NO.2 OF 1998

LEADER'S BEHAVIOUR

3. A leader holds a position of influence and authority in the community. A leader must behave fairly and honestly in all hi or her official dealings with colleagues and other people, avoid personal gain, and avoid behaviour that is likely to bring his or her office into disrepute. A leader must ensure that he or she is familiar with and understands the laws that affect the area or role of his or her leadership.
   

LEADERS

5. In addition to the leaders referred to in Article 67 of the Constitution, the following are declared to be leaders:
   
   • (a) members of the National Council of Chiefs;
     
   • (b) elected and nominated members of local government councils;
     
   • (c) elected and nominated members of municipal councils;
     

DUTIES OF LEADERS

13. (1) A leader must:

(a) comply with and observe the law;

(b) comply with and observe the fundamental principles of leadership contained in Article 66 of the Constitution;

(c) comply with and observe the duties obligations and responsibilities established by this Code or any other enactment that affects the leader; and

(d) not influence or attempt to influence or exert pressure on or threaten or abuse persons carrying out their lawful duty.

BREACH OF LEADERSHIP CODE

19. A person who does not comply with Part 2, 3 or 4 is guilty of a breach of this Code and is liable to punishment in accordance with Part 6.
    

OBEYING THE LAW

28. A leader acting in his or her capacity as a leader who fails to abide by an enactment that imposes on the leader a duty, obligation, or responsibility is in breach of this Code.
    

SPECIFIC PROVISIONS

29. Without limiting the generality of section 28 a leader who fails to abide by the provisions of an Act that provides for:
    
    • (a) the public service; or
      
    • (b) public finance or economic management; or
      
    • (c) expenditure review committee or audit functions; or
      
    • (d) government contracts or tenders;
      

is in breach of this Code.

FINE OR IMPRISONMENT

40. (1) A leader who is convicted of a breach of section 19, or 20, or 21, or 22, or 23, or 24 or 26 or 27 is liable to-

(a) a fine not exceeding VT5,000,000; or

(b) imprisonment for a period not exceeding 10 years.

(2) A leader who is convicted of a breach of section 33 is liable to:

(a) a fine not exceeding VT2,00,000; and

(b) if the offence is a continuing one to a fine not exceeding VT20,000 a day for each day or part day the leader remains in breach.

(3) A leader who is convicted of a breach of this code for which no specific penalty is provided is liable to a fine not exceeding VT2,000,000.

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^[∗] The letter from Asco dated 18 August 1999 (Appendix G) states that "Asco Motors did not trade any vehicle from the Municipality or get involved with the valuation or the disposal of their vehicle". However, correspondence from Council officers refers to vehicle as having been traded in (e.g. Appendix I) and a later letter from Asco (Appendix J) says "As to the condition of the vehicle previously owned by the Council. I believe the new owners are very happy with their purchase and the vehicle is going very well", suggesting that they had at least some involvement with the vehicle's sale.