7 Mar 2019

Tongan PM accuses princess of taking millions intended for govt

3:32 pm on 7 March 2019

Tonga's Prime Minister, 'Akilisi Pohiva, has claimed a royal princess used her shareholding in a private company to take nearly $US50 million intended for the government, court documents show.

Tonga Prime Minister, 'Akilisi Pohiva

'Akilisi Pohiva Photo: RNZ Pacific / Koro Vaka'uta

The accusation emerged from an ongoing lawsuit brought by Mr Pohiva, the Tongan government and the Public Service Association against Tongasat, a company which manages the country's orbital space.

Controversially, Tongasat received the lion's share of $US50 million in grant aid payments from China in 2008 and 2011, which the government has claimed was intended for it.

In August last year, Tonga's Supreme Court ruled the payments made to the company lacked government approval and were intended to be public money for the government to use because they were gifted as grant aid.

Tongasat, which is appealing the decision, was ordered to pay costs of the legal action for the plaintiffs, which have not yet been finalised.

Last week, Mr Pohiva won a bid in Tonga's Court of Appeal to put the appeal on hold until the company pays $US6,600 in security towards his costs.

In the ruling last Thursday, Lord President Paulsen there was "good reason to believe that the appellant is not in a position to pay costs," in reference to Tongasat.

"The appellant has benefited by the impugned transactions, received a very large sum of grant aid funds and has divested itself of those funds in their entirety," he said, according to court documents reviewed by RNZ Pacific.

In evidence for the security for costs application filed on Mr Pohiva's behalf, the prime minister linked the divestment to Princess Salote Pilolevu, an elder sister of King Tupou VI and who holds an 80 percent stake in Tongasat.

Mr Pohiva referred to evidence given by Tongasat managing director Lucy 'Ilaiu under cross-examination during a previous hearing. The evidence was not detailed in Mr Pohiva's affidavit, and RNZ Pacific could not independently verify its contents.

"The only possible conclusion to be drawn from that evidence was that Tongasat had long since been stripped by HRH Princess Pilolevu of all significant financial assets, including but not limited to Tongasat's share of the first and second tranche payments the subject of the litigation, leaving Ms 'Ilaiu in control of an effective shell," Mr Pohiva's affidavit said.

Lawyers for Tongasat did not file any opposition to Mr Pohiva's application for security for costs or dispute the claim made in his affidavit.

In an email, a lawyer for the company, William Edwards, declined to answer specific questions because of the ongoing appeal.

Mr Pohiva's office did not respond to emailed requests for comment.

According to court documents, Tongasat was transferred 93 percent of the $US50 million in grant aids from China, despite an expectation from the government at the time they would split the money 50/50.

The payments were part of a settlement after China was found to have placed a satellite in Tonga's orbital space in 2006 without proper authorisation.

In Mr Pohiva's affidavit for the security for costs application, he also alleged Tongasat was being funded legal costs "from some outside source" because it had no longer held financial assets, adding that the source was unlikely to be prepared to pay any costs order made in his favour.

Lord President Paulsen said in his ruling last week that "it may be inferred on the evidence before me that a third party is standing behind the appellant and funding its appeal".

Tongasat's lawyer, Mr Edwards, declined to answer questions about a possible third party.

Mr Pohiva also alleged that Tongasat also failed to pay two court costs orders made against it in 2014 and 2016 which totalled $US30,000.

Tongasat has until 15 March to pay the security for Mr Pohiva's costs or its appeal will be stayed pending further order of the Court of Appeal.