26 Jun 2013

Cook Islands MP says criminal element to 'Colagate'

4:52 pm on 26 June 2013

The Cook Islands MP Norman George says a Royal Commission of Inquiry is needed to fully investigate an invoicing scheme, also known as 'Colagate', which cost the country millions of dollars in import taxes.

An Audit Office report in 2011 uncovered the arrangement between the Cook Islands Trading Company, which imports Coca-Cola, and Customs between the mid-1980s and 2009.

The government has only recently approved a review of the scheme by the Public Accounts Committee, but Norman George told Bridget Tunnicliffe that's not enough.

NORMAN GEORGE: I really wanted a commission of enquiry chaired by a judge of the high court. Because of the highly technical areas of law involved, you're looking at customs tariffs and probably elements of the taxation laws, so I felt that it should have been given to a judge to evaluate. Because it also hinged very strongly on criminal conduct - on the part of the commercial company that initiated the whole thing and on the part of the customs official who authorised it.

BRIDGE TUNNICLIFFE: So I understand you tabled a motion last February to ask for a royal commission. Was that ever debated in parliament?

NG: No, it's still on the order paper. What's still happening is the government of today have been dodging it, avoiding it, running away from it and refusing to allow us to debate it by arranging the order of the day, the order of debates at the house, to circumvent the motion.

BT: So was the order offer itself that did an investigation in early 2011 and the government did nothing when that report was tabled in parliament then, do you think it's because of this article that came out earlier this year and the public outcry that followed that forced the government to hold some kind of review?

NG: Definitely. And there was already an outcry when the audit report revealed conduct that should be accountable. And the government decided to sweep it under the carpet. And, of course, it is the same people in the business sector who were unhappy with this Act that managed to get the material across to that gentleman that published it in the magazine.

BT: Do we have any idea about how much money was potentially lost, that the government missed out on because of this reduction in import duty?

NG: For a period of about 20 years our estimate is at least $18 million, at least $18 million, it could be more.

BT: Did it have the effect of not only hurting competitors, but effectively shutting them down?

NG: Oh, yes. That successfully put one local soft drink manufacturer out of business. They couldn't keep up with it. Because the company that was getting the preferred treatment concessions was selling Coca-Cola cheaper than anything else, so local businesses couldn't compete.