Revised secret deal by DCGA to circumvent Patrick Wong and LSL backfires
A SECRET deal designed by advisers of the former Democratic Coalition Government for Advancement (DCGA) to circumvent businessman Patrick Wong and Levers Solomon Ltd [LSL] now appears to be backfiring on Prime Minister Jeremiah Manele’s Government of National Unity and Transformation (GNUT).
In the deal, the DCGA planned to grab prime land jointly registered under LSL and Russell Islands Plantation Estate Ltd (RIPEL. These titles are on Guadalcanal and Russell Islands.
Businessman Patrick Wong is the working chairman of the joint LSL-RIPEL entity.
The Board of LSL-RIPEL was never consulted in the process.
To make the deal watertight, the DCGA government initially seemed to have elected to deal with the appointment of Hall Chadwick as liquidators.
On 16 April 2021, Richard Albarran and Kathleen Vouris were appointed Administrators of Orbis Commodities Pty Ltd and Pacific Investment Holding Pty Ltd (collectively known as “the Companies”).
In a press statement issued this week, the company has warned that as liquidators, “they will legally oppose new LSL land sale deal if Solomon Islands Government fails to honor existing sale agreement”.
Now it seems the pressure is on the Prime Minister and SIG to come clean and inform the people of the Solomon Islands, exactly what sale agreement, the Liquidator is referring to.
The threat of legal action also implies Solomon Islands taxpayers could end up paying someone’s else debt to the tune of $140 million – something the Commissioner of Lands (CoL) has advised against, in his report to the Deputy Prime Minister in early August.
This very point is now reiterated and reaffirmed in this week’s Media release, where the Liquidator said: “… the DOCA Transaction would result in all creditors of the Companies being paid in full.
In this context, the Companies referred to are Orbis Commodities Pty Ltd and Pacific Investment Holding Pty Ltd, as the Media Statement confirms in their opening statement, raising questions such as, “Who are the Creditors of these two companies? Whose debts do these belong to?
The Australian company has revealed more on what went on behind the scene.
“During the Administration numerous telephone conferences were held with representatives of the Solomon Island Government (“SIG”) who committed to entering into a Deed of Company Arrangement (“DOCA”) which is a mechanism to compromise the claims of creditors of the Companies,” the Australian liquidators revealed.
“That transaction (“DOCA Transaction”) would see the SIG take control of the land interests held by LSL via the Companies’ indirect shareholdings in LSL and would remove once and for all any challenge to the ownership of these land holdings.
The Administrators sought a number of extensions in the Administration in both the Supreme Court of New South Wales and the Federal Court of Australia to allow sufficient time for SIG to secure cabinet approval of, and proceed with, the DOCA Transaction as an Administration is only generally for a short period of time.
“Despite the time afforded, the SIG encountered a number of issues which delayed the above.
“Unfortunately, it appeared unlikely that a further extension of time was going to be granted by the Australian Courts and as such the Companies were placed into Liquidation on 30 August 2022 with Richard Albarran and Kathleen Vouris appointed a s Liquidators,” the statement said.
“As Administrators and subsequently Liquidators we have afforded the SIG with every accommodation available to enable the DOCA Transaction to proceed.
“The accommodations provided were on the basis of numerous assurances, both verbal and in writing, that the SIG was committed to the DOCA Transaction,” it said.
“Notwithstanding the liquidation of the Companies, discussions with the SIG continued and once again assurances were provided by representatives of SIG that they were committed to proceeding with the DOCA Transaction. Even though the Companies are in Liquidation a DOCA can still proceed with consent of either the creditors of the Companies or the Court.
“As a result of these accommodations the Administrators and subsequently Liquidators did not enforce their positions with respect to the assets, nor did they embark on what was considered unnecessary and costly litigation on the basis the DOCA Transaction would be effectuated within a relatively short period of time. Those time periods continued to be exhausted.
“This has caused detriment to the winding up of the Companies and their creditors and potentially allowed a dissipation of the underlying assets, being the landholdings.
“The Solomon Star’s recent media articles regarding the matter suggest that SIG is contemplating a transaction which appears to be targeted at the LSL level (“Alternative Transaction”).
“Those reports are inconsistent with the numerous and repeated assurances made by representatives of SIG to the Liquidators that SIG was committed to completing the DOCA Transaction,” the statement said.
It warned that the purported Alternative Transaction would significantly prejudice the interests of the Companies and its creditors.
“The Alternative Transaction would constitute an undervalued transaction capable of being injuncted or overturned. In particular, the Alternative Transaction would not result in any flow of funds to the Companies (and their creditors) notwithstanding the significant value of their 37.55 per cent interest in LSL.
“The Liquidators have put SIG and LSL on notice of their position. The Alternative Transaction, as an undervalue transaction, would also constitute a breach of the following provisions of the Companies Act 2009:
- section 64 – which requires the directors of LSL to act in good faith and in the interests of LSL; and
- section 69 – which requires the directors of LSL to exercise the care, diligence and skill that a reasonable person would exercise in LSL’s circumstances.
“The statutory duty in section 64 of the Act to act in the best interests of LSL naturally extends to the interests of the shareholders of LSL, including the Companies as the ultimate owners of 37.55 per cent of LSL,” the statement said.
“The Liquidators consider the undervalue issue referred to above to be fatal to the Alternative Transaction. In contrast, the undervalue issue does not impact the DOCA Transaction as it would result in all creditors of the Companies being paid in full. In other words, the DOCA Transaction would not operate in a manner prejudicial to the interests of creditors of the Companies.
“The Liquidators have put SIG and LSL on notice that they will oppose the Alternative Transaction (or any other transaction) that is at an undervalue and/or prejudices the creditors of the Companies and that they will apply for an injunction to prevent any such transaction from proceeding.
“SIG has represented to the Liquidators on numerous occasions that it wishes to acquire or otherwise take control of the land holdings held by LSL for the benefit of the people of the Solomon Islands. The DOCA Transaction is the only feasible and practical transaction available to SIG to achieve that outcome.
“Whilst the Liquidators are committed to continuing to work with SIG to complete the DOCA transaction to return control of the LSL land holdings to the people pf the Solomon Islands, they will take all available legal action to ensure that the interests of the Companies (and their creditors) are not prejudiced.”
The Prime Minister needs to come clean and confirm if indeed it proposed a DOCA in August 2022. If SIG did not propose any DoCA, then the PM should counter what the Liquidator said.
The Liquidator seems to lean on various verbal discussions and written assurances, according to the press statement.
Was there any such assurance given and were they binding?
Solomon Star reached out to Mr Wong of Lever Solomon Islands, but he had not responded when this article went to press.
By Alfred Sasako
