The Ministry of Marine Resources (MMR) compromised its own compliance procedures when issuing fishing licences to the Northern Cook Islands Fishing Company (NCIFC) in 2008, Cook Islands Audit Office director of audit Paul Allsworth concludes.
Allsworth has completed an audit review of the dealings between those at MMR, NCIFC, and the Cook Islands government at the time.
He finds the ministry, its former secretary Ian Bertram, and former minister of marine resources Wilkie Rasmussen who is now deputy leader of the opposition to have been at fault in their dealings with the licences.
Allsworth has made recommendations to MMR, which he believes will serve the ministry well in dealing with applications for fishing licences transparently and within relevant regulations from now on.
Detailed in his audit review, which was tabled in parliament on Friday, are findings that the ministry failed to enforce its own conditions placed on the NCIFC for licences issued.
The ministry received $640,000 from the NCIFC for 16 foreign fishing licences each worth $40,000 which allowed vessels (all owned by Taiwanese company Yuh Yoh Fisheries (SP) Ltd) to operate in the northern Cook Islands.
Licences were issued on the conditions NCIFC paid $5000 for each vessel up front, and the remainder ($560,000) within six months of licences being issued, that it commenced land-based operations on Penrhyn within three months of issue, and that failure to comply with conditions would result in the suspension or cancellation of licences.
This was despite a clause in the Marine Resources Act 2005 which states licences must only be issued if required fees and other forms of compensation have been paid.
The licences were officially issued in January 2009 and NCIFC commenced fishing operations in the northern islands one month later.
By December that year NCIFC had yet to commence land-based operations on Penrhyn and pay the remaining $560,000.
Although it was apparent that NCIFC had failed to comply with the conditions set out in the Ministers memorandum of November 2008, none of the 16 licences issued were either suspended or cancelled by MMR, Allsworths report states.
The outstanding $560,000 was paid in full by NCIFC on December 23, 2009, when the company ceased fishing.
All catch for the year was offloaded in PagoPago, American Samoa.
NCIFC directors Stevenson Safou-Asuenga and Bruce Manuela initially applied for 30 licences.
Under the Marine Resources Act 2005 and Marine Resource Regulations 2008 only 40 fishing licences can be issued by MMR at any given time, although this figure is subject to review.
Considering the limit set on the amount of fishing licences allowed to be issued in a year, the fact that a company like NCIFC is allowed to continue fishing with 16 licences which were not fully paid for, in Audits opinion sends the wrong message to other local fishing companies (which) adhere to MMR procedures in ensuring their licences are paid for on time, Allsworth says.
The NCIFC, which was registered as a Cook Islands company in 2008, does not own any fishing vessels and its main role is to manage fishing licences for a group of international vessel owners.
Concerns that the company received preferential treatment in securing licences and that dealings were not transparent prompted the audit review, which follows one completed in 2006 of the internal controls over revenue received by the MMR for fishing licences.
On July 18, 2008, Rasmussen, who was the minister of marine resources at the time and is the member of parliament for Penrhyn, submitted to cabinet NCIFCs proposal for 30 fishing licences and suggested it be approved which it was, in principle, by cabinet five days later on July 23.
Penrhyn was set to receive the most benefit from fishing operations, although Allsworth says Rasmussen, in his defence, stated all his decisions were based on the advice from the former secretary of MMR and were in the best interests of his people in Penrhyn.
Allsworth says there was no comment on the proposal at the time from the Crown Law Office, Ministry of Economic Development, and MMR.
It is Audits opinion that Cabinets decision to go ahead with the NCIFC proposal without properly consulting with the relevant government agencies and officials placed MMR in the unfortunate position of compromising its own compliance procedures in terms of issuing fishing licences. Had key government ministries such as MMR, Crown Law, and MFEM properly reviewed and commented on the NCIFC proposal, many of the issues identified during this review would not have eventuated, his audit report states.
Navy Epati who is the Public Service Commissioner worked as an advisor to NCIFC on its proposal to the government in 2008.
Allsworth says Epatis involvement sparked concerns among senior MMR staff at the time, as he employed the ministrys secretary.
Our review found no evidence to suggest that Mr Epati used his position as Public Service Commissioner to put pressure on the former secretary of marine, Mr Ian Bertram, to provide a favourable response for his client (NCIFC), Allsworth says.
He says Bertram is not without fault, as his decision to withhold information regarding the NCIFC proposal from his own senior management team lead to a breakdown in communication within the ministry.
The lack of coordination within the management systems of MMR signals management inefficiencies and weaknesses, exposing the organisation to risks which potentially compromise the integrity of MMR and in particular, its fishing licence procedures. Its imperative that management and staff are familiarised with their corporate objectives and ensure that effective communication is coordinated across all senior management divisions to avoid misunderstanding and ensure harmonisation throughout, Allsworth says.
He provides six recommendations for the ministry within his report, and says the government should also develop a policy to ensure all papers presented to cabinet are commented on by relevant government agencies, the solicitor general, and financial secretaries as well as heads of ministries.
Allsworth says the government should also ensure all fishing licence applications include comprehensive business plans and company profiles, as the present system is inadequate.
He says the government should implement a policy to assist low-ranking officials when dealing with senior government officials who are, or may serve as, advisors on various projects where pecuniary benefits may arise.
A number of issues and anomalies still exist in the fishing licensing procedures and management system which have yet to be addressed.