No written DOCA agreement apparent in secret deal on prime LSL, RIPEL land, SI taxpayers question why should they pay the multi-million-dollar debt incurred by Vlymen
THERE appears to be no written commitment by the Government in its secret deal to snatch prime land jointly owned by Levers Solomon Ltd (LSL) and Russell Islands Plantation Estate Ltd (RIPEL), according to a Statutory Report on the matter.
At the same time, Solomon Islands’ taxpayers are up in arms, asking why they should be paying the multi-million-dollar debt incurred by Van Vlymen?
Mr Vlymen stands to collect AUD2.7m (or about SBD13.5 million). “Why should taxpayers pay his debt when he was the one who caused his own companies to go into liquidation?”
Australian Liquidator Hall Chadwick produced the report titled, Statutory Report About Dividends dated 30 November 2022. It shows the Liquidator is actively promoting the Deed of Company Arrangement otherwise known as DOCA as the only way forward in resolving the ownership tissue of the LSL and RIPEL land on Guadalcanal and Russell Islands.
Hall Chadwick has threatened legal action, if the government opted for an alternative arrangement to settle the matter.
The comprehensive report gave details of numerous discussions, including teleconferences with Attorney General John Muria Jr who, it said, represented the Solomon Islands Government.
Prime Minister Jeremiah Manele has since revealed it has hired an Australian legal firm, King & Wood Mallesons to undertake a due diligence of the deal on behalf of the Investment Corporation of Solomon Islands (ICSI).
ICSI is the business arm of the government. It holds shares in State-Owned Enterprises on behalf of the government of the day.
King & Wood Mallesons has completed its report. Its involvement suggests the government has no binding arrangement with Hall Chadwick despite numerous discussions, including teleconferences.
The Hall Chadwick Report gave details of the costs of secured and unsecured creditors, including proposed hourly-based remuneration or pay rates for employees of Hall Chadwick.
The Report also provided what a DOCA looks like, detailing what to pay and to whom. Despite numerous discussions with the government on the proposed DOCA, the Government appears to have fallen short of going through with a DOCA of its own.
Below is a summary of the remuneration that Hall Chadwick would be seeking creditor approval for via proposal, meaning there would be no creditors’ meeting to approve it.
The remuneration package alone is estimated at AUD$ 2.771 million, equivalent to more than SBD14 million.
Since there are two companies in liquidation – Orbis Commodities Pty Ltd and Pacific Investment Holdings (PIH) – separate liquidate fees apply.
Fees and other charges are additional.
As at end of 2022, the Liquidation fees for example for one company totalled some AUD1,344,339.00 (about SBD 6,721,695.00), according to the Report. For the second company, the total amount is AUD1,426,299.00 (about SBD 7,131,495). Grand total owed to Hall Chadwick is AUD 2,770,698.00 (about SBD13,853,190.00)
Under the deal the government struck with Hall Chadwick during Prime Minister Manasseh Sogavare’s administration,, the Australian Liquidator stands to collect up to AUD5 million or the equivalent of SBD25 million, after accounting for fees in last two years (2023 and 2024).
Below is a summary of the cost for one company.
| Period | Amount ($) Excluding GST |
| Voluntary Administration | |
| Administrators’ Remuneration for the period of the Administration to 9 July 2021 | 193,934.00 |
| Administrators’ Remuneration for the period from 10 July 2021 to 31 May 2022 | 619,495.00 |
| Administrators’ Remuneration for the period from 1 June 2022 to 30 August 2022 | 227, 156.00 |
| Total – Voluntary Administration | 1, 040, 585.00 |
| Liquidation | |
| Liquidators’ Fees from 31 August 2022 to 23 November 2022 | 53, 754.00 |
| Prospective Liquidators’ Fees from 24 November 2022 to completion | 250, 000.00 |
| Total – Liquidation | 303, 754.00 |
The Company pointed out it has not been paid since its engagement.
It is now seeking creditor approval “for our remuneration and internal disbursements by way of proposals without a meeting”.
“A proposal without a meeting enables a Liquidator to obtain creditor approval in a cost-efficient way without convening a meeting of creditors,” the report said. Here it shows the estimated amount of assets and liabilities of the Company (in liquidation)
Hall Chadwick and King & Wood Mallesons are said to have locked horns over the matter.
| Liquidators’ Est | ||||
| Low | High | |||
| Notes | ROCAP | |||
| Interest on Land | 1.1 | Nil | Nil | Nil |
| Cash at Banks | 1.2 | Nil | Nil | Nil |
| Fixed Assets | 1.3 | Nil | Nil | Nil |
| Motor vehicle | 1.4 | Nil | Nil | Nil |
| Shareholding in PIL | 1.5 | Unknown | Nil | Unknown |
| Total Assets | Undetermined | Nil | Undetermined | |
| Employment Entitlements | 1.6 | Nil | Nil | Nil |
| Secured Creditors | 1.7 | 7, 760,694.00 | 10, 040,000.00 | Undetermined |
| Unsecured Creditors | 1.8 | 2, 289, 054.00 | 7, 639, 636.00 | 7, 639, 636.00 |
| Deferred Creditors | 1.9 | Nil | 3, 094.00 | 540,885.00 |
| Total Liabilities | 10, 040, 748.00 | 17, 682, 730.00 | Undetermined | |
| Estimated Deficiency (Subject to costs of the Administration) | (10, 040,748) | (17, 682, 730) | Undetermined | |
The Report also provided details of the claims by unsecured creditors
| Creditor Name | Amount ($) |
| AKN Associates Pty Ltd | 2, 750.00 |
| Chifley Advisory Australia | 51, 232.00 |
| DPL Corporate Reconstructions Pty Ltd | 1, 800.00 |
| Grant Thornton Services (NSW) | 1,815.00 |
| OSTI | 7, 582,039.00 |
| Total: | 7, 639, 636.00 |
For the second company there is an additional Estimated Deficiency of AUD 20,762,107-00, as published in the report.
When Solomon Star approached Patrick Wong to confirm how much he is owed, he replied: “I am the secured creditor and after interest the amount will be close to AUD 11 to 12 million”.
Solomon Star asked Mr Wong, who is OSTI, as it is shown in the reports as a very large creditor. Mr Wong clarified that OSTI is his company and he responded that if he is paid the AUD11-12m, there is nothing further to pay.
Solomon Star contacted an accountant, and he explained, if Mr. Wong is paid, then there is no need to pay OSTI. This would mean the sum AUD7,582,039.12 will be adjusted.
Based on the accountant’s advice, the summary will be adjusted to:
- Secured Creditor – AUD 11m
- Unsecured Creditor (for one company) – AUD 435,817
- Unsecured Creditor (for one company) – AUD 57,597
- Deferred Creditor (Mr Van Vlymen) – AUD 2,704,250
- Deferred Creditor – for second company (Mr Van Vlymen) – AUD 3, 094.00
Summary total, together with Fees paid to Hall Chadwick will be AUD16,971,456 (or about SBD84,857,000). This then begs the question why the proposed SBD140m? Who is getting the extra SBD65m?
SIG in their earlier press statement, denied paying someone else’s debt. The Commissioner of Lands’ report confirms that, if the DOCA is followed, SIG will be paying Mr Vlymen’ debts.
Hall Chadwick in their response to Solomon Star denied that the DOCA is paying someone else’s debt, but instead amount is paid into the Deed Fund.
The accountant clarified that this in saying the Deed Fund is a technical name for a pool of Funds, but the bottom line is what and who would be paid from the Deed Fund pool.
On the Deed of Company Arrangement, the Report said: “The Liquidators are continuing to liaise with the SIG and other related parties in relation to a DOCA.
“Creditors will be updated in due course should a future DOCA be proposed and what steps are required to achieve same.”
The parties in the LSL/RIPEL saga could be in for a long haul.
By Alfred Sasako
