25 October 2019
[Photo: Google Maps]

AG says Central, China Sam deal unlawful, must be terminated



THE recently signed agreement between the Central Islands Provincial Government (CIPG) and China Sam Group of Companies Ltd to lease Tulagi has been dubbed unlawful and must be terminated.

This was revealed by Office of the Attorney-General (OAG) through a statement issued by the Office of the Prime Minister & Cabinet (OMPC) last night.

The statement said OAG has issued a letter to the provincial secretary of the Central Islands Provincial Assembly this week which stated that strategic cooperation agreement between the Central Islands Provincial Government (CIPG) and China Sam Group of Companies is “unlawful, unenforceable and must be terminated with immediate effect.”

The Attorney-General John Muria (Jnr) after reviewing the agreement stated amongst others, the following:

(a)The Strategic Cooperation Agreement contains significant defects with regards to the legal capability of the parties to enter into such Agreements; 

(b)Certain areas provided for under the agreement are the functions of relevant Government Ministries and are not devolved functions; 

(c)The Cooperation document does not contain essential clauses such obligations of both parties, termination clauses, confidentiality clauses, timelines etc; 

(d)Most importantly, the China Sam Group of Companies have not obtained Foreign Investor status nor have been registered as Foreign Investors under the Foreign Investment Act 2005 which is a breach of section 12 of the Foreign Investment Act 2005. The Foreign Investment Division is essentially the gateway of all Foreign Investors. Under the Foreign Investment Act 2005, no foreign investor is allowed, inter alia, to negotiate and enter into any arrangement, agreement or memorandum of understanding relating to the conduct of the investment activity, without first obtaining Foreign Investment approval;  

(e)A clause in the Strategic Cooperation Agreement further purportedly provides that from the execution of, any or all Foreign Investment or Investors from PRC for any new Development or Investment in Central Province, CIP will refer them to discuss and liaise with China Sam Group. This is a function of the Foreign Investment Division to approve Foreign Investment and is not a function that the CIP can contract to others. 

“It is settled practice that all agreements involving the Solomon Islands Government (which includes the provincial governments) must be vetted by the Attorney-General before it is executed.” 

The agreement was not vetted by the Attorney General’s Chambers before signing.

The Attorney General also advised that all foreign investors must follow the established procedures which is through the Foreign Investment Division prior to engaging with any person in Solomon Islands including the government.

Central Province Premier Stanley Manetiva last month signed the deal to lease on long term the whole island of Tulagi to China Sam to be developed into a ‘Special Economic Zone’.

The agreement also mentioned lease of islands surrounding Tulagi to the Chinese firm.

Sam Group prides itself as one of China’s top hi-tech investors.

The parties signed the agreement following the government’s September 16 decision to switch diplomatic ties from Taiwan to China.

In turn, Sam Group will provide a master plan for the development of Tulagi island and all surrounding islands.

When this is done, both parties will arrange and follow up on all issues that are needed with the people and the investors.

Tulagi is the nation’s former capital city before its relocation to Honiara on Guadalcanal after the Second World War (WWII).

It is currently the seat of Central Province’s political power.

The island holds a lot of historical significance not only to Central province but also the country.

Under the agreement, Central province will apply all necessary beneficiary policy, taxation policy, tourism encouragement special policy, and hotel casino licences with related government ministries for the special economic zone in order to encourage investors to come.

The province has also agreed to give a five-year exclusive right to Sam Group as their “sole representative and partner” to develop the province.

Under that exclusive right, Sam Group will be Solomon Islands’ appointed Commerce and Investment representative for China, Hong Kong and Macau.

“China Sam will set up the Solomon Islands representative office for all ministries and province to access and introduce their projects via the representative office directly to potential investors or corporations.

“If there is any foreign investment party or investors from China for any new development or investment in Central province, the province will have to refer them to discuss and negotiate with China Sam and follow the master plan to develop and invest,” the agreement stated.

The agreement added once land lease arrangement is confirmed and registration done, Sam Group will send a team for site visit and project feasibility study on potential projects.

Projects identified are tourism, agriculture, petroleum, fishery and marine, mining and infrastructure.

China Sam Enterprise Group Co., Ltd. was established in 1985 and has its headquarters in Beijing. 

Sam Group”, for short, is a Chinese high-tech enterprise. 

Its major business is in Oil & Gas, Energy, Minerals, Chemical Investment, Trade, File, Security and in other fields.