Palau newspaper sued by president’s family company ahead of general election

Palau’s largest newspaper is being sued for defamation by the company of President Surangel Whipps Jr’s father, just days ahead of general elections in the Pacific nation.

Surangel and Sons alleges “negligence and defamation” by the Island Times and its editor Leilani Reklai for an article published on Tuesday with “false and unsubstantiated allegations,” owner Surangel Whipps Sr. said in a press release on Thursday.

Reklai has rejected the company’s allegations and said the “lawsuit is trying to control how media here in Palau tells a story”, a news article about the case in the Island Times reported on Friday.

“I feel like we are being intimidated, we are being forced to speak a certain narrative rather than present diverse community perspectives,” said Reklai, who is also a stringer for BenarNews.

The Micronesian nation of 17,000 people – 400 miles (650 km) north of Papua New Guinea – goes to the polls Nov. 5. Whipps Jr.’s rival is his brother-in-law Tommy Remengesau Jr., who was president from 2001 to 2009 and 2013 to 2021.

The controversy comes after Palau was top of the inaugural 2023 Pacific Media Freedom Index of 14 island countries that highlighted the region’s media faces significant political and economic pressures, bribes and corruption, as well as self-censorship.

Island Times reported on Friday the suit is seeking compensation and punitive damages and that the company asserts the “monetary awards should be substantial enough to prevent similar conduct from the newspaper and Reklai in future.”

Surangel and Sons financial details – leaked from the country’s tax office – were posted on social media last weekend, prompting heated online debate over how much it paid.

A new corporate and goods and services tax system introduced by Whipps Jr’s government is currently being rolled out in Palau and its merits have been a focus of election campaigning.

The company in a statement said its “privacy rights had been violated,” the tax details were obtained illegally, posted online without consent, and some of the figures had been altered.

“The motivation behind the circulation of this document is clearly for misinformation and disinformation to confuse voters. In the end Surangel and Sons is not running for office. Unfortunately, it has been victimised by this smear campaign,” the company posted on social media.

Island Times in a 225-word, front-page story headlined “Surangel & Sons Condemns Tax Report Leak as Privacy Violation” reported the company’s statement on Tuesday. It also quoted financial details from the leaked documents and accompanying commentary.

Whipps Jr in a press conference last Wednesday accused the Island Times of publishing disinformation.

“Island Times continues to print political propaganda, it’s not accurate,” Whipps Jr said, calling for a correction to be published.

The lawsuit against the paper and its editor was served the next day.

Whipps Jr’s spokesperson told BenarNews any questions related to the lawsuit should be directed to the parties involved.

Surangel and Sons was founded in 1980 by Whipps Sr, who also served as Palau’s president briefly in 2005 and for two years from 2007.

The privately-owned business “offers everything from housing design and automotive repair to equipment rentals, groceries, and scuba gear” through its import, sales, construction and travel arms, the company’s website says.

Previously as CEO, Whipps Jr transformed the company from a family store to one of Palau’s largest and most diversified businesses, employing more than 700 people.

His LinkedIn profile states he finished as CEO in January 2021, after 28 years in the position and in the month he became president. His spokesperson did not respond to questions from BenarNews about if he still retains any direct financial or other links to the company.

Surangel and Sons said the revelation of sensitive business information threatens their competitive advantage and puts jobs at risk.

Palau’s Minister of Finance Kaleb Udui Jr. told the president’s press conference on Wednesday an investigation was underway, a special prosecutor would be appointed and apologised for the leak to the company.

“I would hope the media would make extra effort to help educate the public and discourage misinformation and breaches of privacy of the tax office and any other government office,” Udui said, confirming the tax documents had been altered before being posted on social media.

He said tax office staff have previously been warned about leaks and ensuring data confidentiality, as breaches negatively impact the confidence of foreign investors in Palau.

Whipps Jr added the newspaper should have explained the tax system instead of reporting the leaked information.

He also accused Island Times of failure to disclose a paid advertisement in this week’s edition of the paper for his political opponent.

“I’m disappointed in the Island Times, because there was an article that was not an article, a paid advertisement,” Whipps Jr. said about a colorful blue and yellow election campaign graphic.

Island Times told BenarNews it was not usual practice to put “Paid Advertisement” on advertisements but it would review its policy for political campaign material.

Reklai fears the lawsuit could have serious consequences for the media in Palau and bankrupt Island Times, the paper reported.

“If I don’t stand up to this, it sends a signal to all journalists that they risk facing claims for damages for powerful companies and government officials while carrying out their work,” she said.

Palau has two newspapers and four radio stations and enshrined in its constitution are protections for journalists, including a guarantee they cannot be jailed for refusing to disclose sources.

Surangel and Sons said they would no longer sell Island Times through their outlets.

Meanwhile, the Palau Media Council has expressed deep concern in the recent lawsuit filed by Surangel and Sons company against Leilani Reklai, publisher of Island Times, in response to her paper’s coverage of tax-related documents that surfaced on social media.

This lawsuit, combined with government’s statements endorsing that Island Times reported mis-information on its coverage of the tax related document and the decision to ban Island Times from Surangel and Sons outlets, raises critical concerns about citizens’ access to information and the freedom of the press—both of which are cornerstones of a democratic society.

The Council sees this legal action as an assault on press freedom and an attempt to undermine the accountability that is vital to democracy.

Reklai, one of Palau’s senior journalists, is being targeted simply for reporting on documents that were already in the public domain. She did not originate the information but responsibly conveyed what these documents suggested, raising questions about the current administration’s narrative on corporate tax contributions. Reporting on such information is a journalistic duty to ensure transparency in tax policies and government incentives impacting the private sector.

The Island Times, by publishing these documents, has provided a platform for clarifying public understanding of the new PGST tax law’s impact on major corporations and the actual tax contributions of Surangel and Sons. These issues are clearly within the public’s right to know, and the Council emphasises that media plays a crucial role in reporting such findings and promoting informed debate.

“We stand in solidarity with Reklai and all journalists who strive to find and uphold the truth.

“In a healthy democracy, a free and open press is essential for informed citizens and responsible governance,” said the Palau Media Council.