The Pacific Games Council (PGC) says it will seek legal advice on the next steps after a court ruling that the Solomon Islands National Hosting Authority (NHA) had breached public finance rules while hosting the 2023 Pacific Games in Honiara.
PGC chief executive Andrew Minogue confirmed on Monday that the council had received notification of the High Court ruling after the Solomon Islands’ Auditor-General’s Office filed a case seeking clarification.
The ruling follows a dispute between the PGC and the NHA last year over which laws applied to the expenditure of public funds from the Sports Solomons Fund.
“To date, the Pacific Games Council has supported the position of the National Hosting Authority that the 2023 Pacific Games Act, passed by the Solomon Islands Parliament in 2017, in consultation with Council, deliberately contained clauses to streamline the procurement process for the Games, and that these provisions should guide the post-Games audit process,” Minogue said in response to questions raised with them if they were aware of the court ruling,” he said.
“The PGC will consider the next steps in the legal process.”
The High Court ruled that the NHA breached provisions of the Public Financial Management Act (PFMA) 2013 governing the expenditure of public funds.
The court’s clarification was sought after the Auditor-General’s office pointed out that because the funds earmarked for the Games were public funds, the PFMA 2013 was applicable in how the funds were being appropriated, expended and managed.
However, this was not accepted by the NHA, led by Dr Jimmy Rodgers, who said the funds were subject to the Pacific Games Act, and appropriated by the Parliament Development Budget of the Office of the Prime Minister and Cabinet (OPMC).
But the High Court has ruled that while the Development Budget of the OPMC for 2019 to 2024 were validly appropriated in parliament for the purpose of the Pacific Games, how it was spent from the Sports Solomons Fund did not comply with sections 25, 57 and 60 of the PFMA 2013.
The ruling also stated that the Accountable Officer of NHA did not have the authority to expend funds from the Sports Solomons Funds for the Pacific Games 2023, including funds from the Advance Warrants made on 4 separate occasions. Expenditure approvals for the funds were without lawful authority.
The court also ruled that the Modification Policy (Resolution NHA 03-23-01) purported to authorise the Blanket Waiver of competitive tendering, were beyond the powers of NHA and so the Policy is null and void and that the expenditure made pursuant to the blanket waiver aspect of the modification policy was without lawful authority,
The ruling also clears the Auditor General’s Office to complete its report and present that to Parliament, through the Speaker in accordance with section 108 (4) of the Constitution.
Auditor-General David Teika Dennis welcomed the High Court’s ruling, and said they will now present the report to parliament, and added the report will also be given to the authorities for further investigation.
“I think it is really important that our audit reports into hosting one of the best ever Pacific Games 2023 have clear findings and learnings,” he said.
“The ruling resolves the applicable legal framework governing the Sports Solomon Fund and how it should be expended and managed, and we very much welcome the rulings.
“In addition, this sets the precedence for the management and expenditure of all other special funds within Government Ministries and Agencies.
“The Court ruling makes it clear that Special Funds as public money, unless explicitly required otherwise by Parliament must comply with the Public Financial Management Act.
“It follows from this ruling that all accountable officers of special funds including for Sports Solomon Fund must have a valid warrant to be able to lawfully incur expenditure.”
A number of serious weaknesses in procurement and financial management processes surrounding the Games were identified in the special audit report, done by KPMG Fiji.
Most contractors did not provide adequate financial information to support an assessment of their financial capacity, while contracts allowed between 30 and 50 percent of the contract value to be paid upon signing, before goods, services or works had been delivered.
One of the biggest cases identified in the report was the controversial procurement of toilet paper.
Dennis said the procurement for the supply and delivery of toilet paper initially involved a contract amount of SB$6.18 million (NZ$1.2m/US$717,117)), despite being linked to an overall budget of only SB$300,000 (NZ$58,000/US$34,660).
The contract was later reduced to SB$1.89m (NZ$370,000/US$221.106), but the revised amount was still significantly above the available budget.
It was one of the five contracts for which competitive bidding was bypassed.
The audit includes detailed review of 16 procurement activities totalling $222.4m (US422.75m), selected from $502.16m (US$62.67m) in purchase orders.
“The Pacific Games were one of Solomon Islands’ largest national events, requiring major investment in sporting venues, accommodation, transport, equipment, logistics and other infrastructure and services,” Dennis told the media in Honiara.
“The audit was therefore intended to establish whether public funds associated with the Games were spent lawfully, properly and transparently.”
