Background

A surge of interest in trekking across the Kokoda Trail in the 1990s led to the PNG Minister for Provincial and Local Level Government establishing a Kokoda Track (Special Purpose) Authority (KTA) in 2003 to bring some order to the emerging industry.

The management body had to be self-funding due to the lack of funds available for the Minister to run his department at the time – Adventure Kokoda was asked to advance K10,000 to allow the new management body to operate until trek permit fees began to flow.

Trek permit fees were introduced to provide employment for villagers across the Trail to keep it safe by building bridges, clearing fallen trees, cutting steps in steep areas, etc. They were also used to assist in the development of campsites throug the installation of toilet pots, provision of cooking ovens, etc.

Purpose of Trek Permit Fees

According to KTA Newsletter No 1 of March 2005:

‘Trek Permit Fee income is collected for funding community infrastructure projects with 20% being set aside for administration expenses. 

The current KTA website advises that Kokoda Trek Permit Fees are:

‘currently the sole source of revenue for the Kokoda Track Authority and are used to fund Papua New Guinea staff salaries, pay office rental, undertake track maintenance, business planning and management and make land owner / community payments (Ward Development funding).’

The KTA website also advises that:

‘Since its restructure in early 2008, the Kokoda Track Authority (KTA) has reformed its financial and procurement procedures to provide accountability and transparency. The KTA now has robust, transparent financial management processes.’[1]

The KTA website outlines the distribution of trek fee income for village projects in 2009 only. There is no record of any distribution for the following decade from 2010-2020 which contradicts their current claim regarding ‘robust, transparent financial management processes’.

Since Australian officials from the Department of Environment, Water, Heritage and the Arts (DEWHA) assumed responsibility for the Trail in 2009 the original disbursement of trek fees, which required 80% of trek fee income to be allocated towards ‘community infrastructure projects’, decreased to almost nothing as more money seemed to circulate in Port Moresby.

In 2012 responsibility for the management of the KTA was transferred from the Australian CEO to the ‘PNG Designate CEO’ who had worked as his understudy. Unfortunately, the PNG ‘Designate CEO’ had no business qualifications or experience; was not provided with any management training during his tenure; and did not inherit any management systems as none had been put in place.

It was therefore not possible to monitor the disbursement of trek fees because of the KTA refusal to publish financial statements in contravention of their statutory obligations and despite numerous requests.

The PNG CEO was later humiliated when he was given a ‘dressing-down’ by the Australian High Commissioner in her office. This led to a bitter dispute with the DFAT Strategic Management Advisor who witnessed his humiliation but did not offer any support to him.

The DFAT Strategic Management Advisor was then declared persona no grata in the KTA office, and a stalemate ensured.  This was eventually resolved after the PNG CEO was ‘promoted’ to an executive position with NCDC. 

Mr Julius Wargiral, Deputy Secretary for Technical, Advisory Support Services at the Department of Provincial and Local Government, was engaged in an acting capacity.

Mr Wargiral has now been engaged in an ‘acting’ capacity for three years in contravention of  the Public Service (Management) Act 2014 which stipulates that ‘acting’ appointments provide for ‘temporary assistance’ to a department ‘for a period not exceeding 12 months’[2].

Mr Wargiral had no previous experience in business, tourism, trekking or military heritage

He was unable to rely on staff in his office as none had any qualifications or experience in any of these areas. No management systems had been put in place and no business development training had been provided.

After Mr Wargiral’s ‘acting’ appointment was confirmed, the DFAT Strategic Management Advisor moved back into the KTA Office.

Transfer of KTA Funds to an Australian NGO

Soon after Kokoda trek operators were advised that K350,000 had been withdrawn from the KTA Bank Account and ‘donated’ to an Australian NGO (KTF[ii]) for disbursement to support the payment of ‘educational supplements for villagers on and off the Trail’.

In the recent Annual Review of the Papua New Guinea Australian Governance Partnership 2019 the author, possibly the DFAT Strategic Advisor, Mark Nizette, described the transfer as thus:

‘The program has entered a pivotal phase due to changes in key personnel within the Kokoda Track Authority, particularly the secondment of a chief executive officer (CEO) from DNPM. The change in approach is evidenced by recent efforts of the Kokoda Track Authority to channel undisbursed revenue into school fees (through an NGO partner) and by the revival of a Technical Working Group (including agency CEOs of the Kokoda Track Authority, National Museum and Art Gallery and CEPA, and DDAs) which has met four times in the past six months. These shifts have seen a sharp upturn in relationships between the Kokoda Track Authority and the other multiple stakeholders, including DFAT and the KIP delivery team.’

This is grossly misleading. The Acting CEO had not yet come to terms with his job because of the competing pressures he was confronted with on a daily basis which included:

  • a dysfunctional Board of Directors which has never produced an Annual Report, a financial statement, or a set of Board Minutes;
  • at least three Government Departments (Provincial and Local Level Government, CEPA, and PNG Tourism);
  • two Provincial Governments (Central and Northern);
  • two Local Level Governments (Koiari and Kokoda);
  • 14 Ward Councillors;
  • numerous landowners;
  • up to 33 trek operators; and
  • an aggressive Australian Kokoda Tour Operators Association (KTOA) which had been established to protect the financial interests of primarily eco-tour operators.

It is worthy of note that NEC Decision 123/2019 of 23 May 2019:

‘noted the expiry of the Kokoda Track Authority Board in 2016 and directed that the Minister for Inter-Government Relations approve an Interim Board pending the establishment of the proposed legislation, consisting of the same positions as detailed in the 2008 Proclamation, but calling for new nominations for the positions of the Koiari and Kokoda Landowner representatives.’

As a result, he neither had the time nor the resources to produce newsletters, financial statements or even answer emails.

The ‘educational’ needs of remote families on and off the trail would not have featured as an issue for him in view of these competing demands at the time.

Mark Nizette’s assertion that the funds represented ‘undisbursed revenue’ is disingenuous.

Trek operators, who have paid around K12 million in trek permit fees have been demanding that hygienic toilets be installed across the Kokoda Trail but not one has ever been built! They have also been denied information on the financial state of the KTA as no financial reports have ever been published.

Mr Wargiral contradicted the claim of ‘undisbursed revenue’ made by Mark Nizette, in an email on 26 June 2019 where he stated:

‘When I took office in November 2018, KTA was already without funds due to the closure of the track in mid 2018. KTA is a Special Purposes Authority established under the Organic Law on Provincial and Local Level Governments (does not have its own Act) and it does not receive direct Funding from the National Government, although it can be supported by departments and Provincial Governments that play some role in the Management and Administration of the Track.

‘ I have to run around seeing heads of relevant departments (DPLGA, Finance, Treasury, Planning and CEPA and TPA) to seek funding to get the operations of KTA going. I presented to them the status of KTA which convinced them to jointly agree and provide the support through properly approved release of government funds to get KTA operational until this year when it is anticipated to start tracking season again and commence receiving trekking fees (revenue) to support itself.’

Mr Wargiral commenced his tenure as ‘Acting CEO’ of the KTA in November 2018.

Kokoda tourism goes into hibernation during the wet season from November through to April each year.  As a result, there would have been no income from the time Mr Wargiral was first employed in November until the following April.

If the KTA was ‘without funds’ in November 2018 as stated by Mr Wargiral, and there was no income from trek permit fees, where did they find K350,000 to give to a ‘friendly’ Australian NGO which is not associated with trekking in March 2019?

The transfer was in contravention of the rules for the disbursement of funds advised by the KTA on 1 March 2005. It could not have been approved by the Board of Directors as there are no reports of the Board meeting during this period. It would thus appear that Mr Julius Wargiral was not authorised to approve such a large transfer of funds as he was only just seconded to his role in an acting capacity.

The approval process for the transfer apparently involved the Director of the National Museum and Art Gallery (NMAG), Dr Andrew Moutu; the Director of KTF, Dr Genevieve Nelson; and the DFAT Strategic Management Advisor, Mark Nizette.

KTF is an Australian NGO which has no association with pilgrimage tourism across the Kokoda Trail or the commemoration of our shared wartime heritage. Mark Nizette is closely associated with both Dr Moutu, CEO of NMAG, and Dr Nelson, an Australian academic ‘educator’.

Dr Moutu failed to declare he was a Director of KTF in the ‘approval’ process for the transfer of funds from the KTA to KTF.

DFAT, the Kokoda Initiative, and KTA are listed as ‘Partners’ of the KTF on their website.

This ‘partnership’ was not declared as part of the approval process.

Efforts to seek a response regarding the justification for the transfer of trek fee income and the approval process have been stonewalled by the KTA.

In a nutshell – Mark Nizette advised there was K350,000 in the KTA account when he was embedded back into the KTA office[iii] – Julius Wargiral later advised that there were no funds in the KTA account when he was appointed Acting CEO.

An investigation into which one is telling the truth needs to part of a Terms of Reference for any investigation into the matter.

A further conflict of interest involves the relationship between the Kokoda Initiative and KTF since Mark Nizette was embedded back into the KTA office.

Around this time KTF announced that the Kokoda Initiative was one of their ‘Platinum Partners’ which is the highest level of partnership that usually involves payment of an annual cash or in-kind sponsorship.

It therefore begs the question as to the type of ‘donation’ the Kokoda Initiative makes to KTF in return for its Platinum status and was the K350,000 donated to KTF by the KTA part of their sponsorship arrangement?.

DFAT Fraud was requested to investigate the transfer which has all the hallmarks of being illegal but they declined.

Terms of Reference

The issue remains outstanding and should be investigated by the PNG ICAC as the KTA is a PNG Special Purpose Authority – the Terms of Reference should have the scope to investigate:

  • Who was the author of the Papua New Guinea Australian Governance Partnership Report, 2019?[iv]
  • Why was the ‘undisbursed revenue’ referred to the Australian Governance Partnership Report 2019 not disbursed towards the upgrade of the Third World toilets across the Trail to meet the most basic hygiene standards for trekkers who paid the fees and/or to improve the basic standards of campsites along the Trail?
  • According to the email received by the Acting CEO on 26 June 2019 he was not aware of any ‘undispersed income’ when he was appointed in November 2018 – he also advised there was no money in the KTA account when he was appointed. So, who is truth, the author of the  Australian Governance Partnership Report 2019, or the Acting CEO?
  • Was a formal application submitted by KTF for a donation of K350,000?
  • Does the Constitution of the KTA provide for the approval of donations to NGOs – if the transfer of funds was not in accordance with the KTA constitution will the KTF be required to repay the funds?
  • Given that the donation contradicts the information on the KTA website regarding the expenditure of trek fee income – did the Acting CEO of the KTA or the Australian Strategic Management Advisor seek legal advice to ensure there was no breach in governance because of the donation – if legal advice was provided is there a record of that advice?
  • How did KTF justify the figure of K350,000 – did provide an itemised list of recipients, their contact details and the amount to be paid to or on behalf of each student – if not, why not?
  • Did the Acting CEO of the KTA submit a formal request for the donation to the KTA Board of Directors for approval?
  • In view of NEC Decision 123/2019 of 23 May 2019 had an Interim Board been appointed to the KTA at the time of the discussions re the transfer of funds to the KTF – if so is there a Board Minute which records their approval of the donation?
  • If a KTA Board did not approve the donation, or did not exist, who did?
  • Was the Acting CEO of the KTA authorised to approve the transfer of funds?
  • If it is claimed that Trek Permit Fees were not used for the donation, which Government Department was the source of the funds?
  • If the funds were provided by a PNG Government Department, why would they not have provided them directly to their schools in accordance with normal National and Provincial Government procedures?
  • If the funds were provided by a PNG Government Department, why would they not have provided them directly to their schools in accordance with normal National and Provincial Government procedures?
  • Who decided that the transfer of trek fees for philanthropic purposes was more important than meeting the urgent needs of the people who paid the fees i.e., trekkers; or for local village communities who have not received their fair share of benefits from the Kokoda tourism industry for more than five years?
  • Has KTF acquitted the K350,000 they received?
  • Why did Dr Moutu fail to declare that he is a Director of KTF?
  • Was the relationship between Mark Nizette, Dr Andrew Moutu and Dr Genevieve Nelson declared in the approval process for the allocation of the K350,000 donation to KTF by the KTA? If not – why not?
  • Why did KTA fail to declare their partnership with DFAT, the Kokoda Initiative, and KTF?
  • The Kokoda Initiative is listed as a ‘Platinum Partner’ of the KTF:
    • Does the Kokoda Initiative pay an annual cash subscription for their Platinum Partnership? If so, what is the cost of their annual sponsorship?
    • If the sponsorship in an ‘in-kind’ partnership what KTF projects have been supported by the Kokoda Initiative and what was the financial contribution of each partner, i.e., the Kokoda Initiative and KTF to each project?
    • Was a cost-benefit analysis conducted for each project?
    • If a cost-benefit analysis was conducted can copies of each one be provided?
    • What were the measurable outcomes from each project?
  • Was the fact that the Kokoda Initiative is a ‘Platinum Partner’ of KTF declared? If no – why not?

[1] This is a self-serving statement as the KTA has not published an annual financial report since Australian Government officials  assumed responsibility for the Kokoda Trail in 2008. As a result, Kokoda trek operators, who generate the income that sustains the KTA via trek permit fees, have no idea where the money goes.

[2] Public Service (Management Act) 2014 Para 39 (b) https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/102735/124305/F-314343062/PNG102735.pdf 

[i] KTA Newsletter. January 2006. No 2

[ii] The Kokoda Track Foundation was established and funded by Charlie Lynn who was the Founding Chairman. The objective was to protect the wartime heritage of the Kokoda Trail through the development of a Strategic Plan which was completed and presented to the PNG Prime Minister, Sir Michael Somare, in 2006. Lynn resigned from the Board after this as they wanted to move towards philanthropy rather than our shared military heritage. As a result, they changed their name to ‘KTF’ and replaced the logo which was based on George Silk’s famous photo of the ‘fuzzy-wuzzy angel escorting a wounded digger with a butterfly.

[iii] https://dfat.gov.au/about-us/publications/Documents/annual-review-of-the-papua-new-guinea-australia-governance-partnership-2019.pdf

Email to Julius Wargirai re Misuse of Trek Fees in Support of KTA

From: Charlie Lynn
Sent: Monday, May 6, 2019 11:06 PM
To: ‘Julius Wargiral’
Cc: ‘sogent@global.net.pg’; ‘Rashmii Bell’; ‘Leiao Gerega’; ‘jerry.agus@papuanewguinea.travel’; Tracie Watson
Subject: Misuse of Trek Fees in support of KTF

Dear Julius,
I write to express my serious objection to the introduction of the KTA partnership with the KTF and the use of trek fees to support the proposed scholarship program as reported in the following link: http://www.looppng.com/community/scholarship-scheme-kokoda-children-84024

Our company, Adventure Kokoda, will pay approximately K200,000 in trek fees to the KTA this year.

Since trek fees were introduced we have paid more than K1.5 million to the KTA.We have received absolutely nothing in return. We have no protection against unlicensed trek operators; we cannot book a campsite; there is not a single toilet along the trail that meets the most basic hygiene standards; there is no trek itinerary management system- nobody knows who is on the trail or what direction they are travelling; there is no welfare protection for local guides and carriers; there is not audit protection for local campsite owners; there is no plan for community development; there is no monitoring of health or education facilities; there are no income earning opportunities for local villagers; there is no master plan to protect the military heritage along the trail; there is no trail maintenance plan; the KTA website is irrelevant and obsolete; there is no database; etc. etc. etc.

I appreciate that you are not aware of some of the history regarding the KTA and KTF because it was before your time.

I established and funded both organizations because I wanted to develop a system that provided shared benefits to local communities along the trail and to establish a sustainable economic future based on wartime tourism.

The KTA was hijacked by the Australian Government in 2009 – their record speaks for itself. Since they assumed control of the Kokoda trekking industry they have spent more than K150,000; trekker numbers have declined by 46 percent; and they refuse to engage an accredited military heritage architect to develop a master plan to protect, honour and interpret our shared wartime heritage along the trail.I established the KTF to provide philanthropic support to local villagers along the trail to earn their trust and respect because they are the custodians of land sacred to our shared wartime heritage. 

I resigned from the Board of the KTF in 2006 because I felt they did not appreciate the importance of the military heritage of the trail and were more interested in operating as an NGO throughout PNG – they now appear to be Samaritans in search of a cause!I object to their involvement with communities along the trail because they don’t have any skin in the game – they use other people’s money which creates a handout mentality amongst local villagers. This has not worked in our indigenous communities in Australia and it will not work in PNG.

The Kokoda trekking industry is capable of providing a sustainable future for local villagers along the trail – all it needs is an effective management system.

In 2009 the KTA will collect K1.2 million in trek fees; trek operators will spend a further K2.2 million in wages; more that K500,000 in campsite fees; more than K1 million on food and souvenirs along the trail; trekkers will donate more than K1 million in clothing to their PNG support crews and more than K250,000 in school supplies.

In addition to this trek operators will invest millions of kina in marketing the Kokoda Trail in Australia.

On the other hand the KTF will not invest a single toea of their own money in the industry – however under this proposed agreement they will get all the PR accolades.

If the KTA was to develop a database, as I have recommended every year for the past 8 years, you would have now raised enough money to meet the educational and health needs of all your village communities along the trail. The failure to develop such a database to capture the contact details of the 45,000 trekkers who have crossed the trail over the past decade is negligence of the highest order. I appreciate this was before your time but there is now no excuse for not making it a priority task.

I have no objection to the KTF providing philanthropic support to villagers in Central and Oro Province who do not have the benefits of a trekking industry or other economic opportunities however I strongly object to KTF using our trek fees to do philanthropic work that we have been doing across the trail for the past 28 years.

I therefore request that you rescind the agreement with KTF and provide an assurance to all Kokoda trek operators that their trek fees will be used for what they were intended to do i.e. support an effective management system for the Kokoda trekking industry.

Best regards,
Charlie

Email response from Julius Wargirai re Misuse of Trek Fees

From:                        Julius WARGIRAI
To:                             Charlie Lynn
Cc:                             gjoku@dec.gov.pg; jerry.agus@papuanewguinea.travel; dguina@dplga.gov.pg; Andrew Moutu;mark.nizette@gmail.com; Michael O”KAVE
Subject:                    RE: Withholding of Trek Fees: Adventure Kokoda
Date:                         Wednesday, 26 June 2019 10:09:05 AM

Hi Charlie!

When I took office in November 2018, KTA was already without funds due to the closure of the track in mid 2018.

KTA is a Special Purposes Authority established under the Organic Law on Provincial and Local Level Governments (does not have its own Act) and it does not receive direct Funding from the National Government, although it can be supported by departments and Provincial Governments that plays some role in the Management and Administration of the Track.

I have to run around seeing heads of relevant departments (DPLGA, Finance, Treasury, Planning and CEPA and TPA) to seek funding to get the operations of KTA going.

I presented to them the status of KTA which convinced them to jointly agree and provide the support through properly approved release of government funds to get KTA operational until this year when it is anticipated to start tracking season again and commence receiving trekking fees (revenue) to support itself.

Having assured of the government funding, I decided to seek partnership programs, as this was the only way of to get things moving.

With this support, KTA was able to facilitate a joint team including the National Parliament Member for Sohe, both Governors for Central and Oro to open the Track at various locations starting with Kovelo late last year. There after I toured the villages along the track to meet the villagers, talk to them on the significance and importance of the track and just get to know them and them knowing me.

Since then I have done a number of major joint partnership programs including the repair of the track (KTA, CEPA, Oro and Central Provincial Administrations, land owners and Local Communities) , Law and Order Awareness to selected hotspot areas (KTA/Cental Police) Radio repair (KTA engaged TE PNG) which is yet to be completed, joint consultations with selected aggrieved land owners of the track and special sites, Primary school Project fees subsidy (KTA/KTF), Water Project for four Wards in Kokoda area (KTA/Governor for Oro/Abt) and now entering into joint partnership with DPLGA, Central Provincial Administration and Koiari Local Level Government (LLG) to complete the LLG Chamber. I am currently talking to other government and NGO’s currently operating in the Koiari/Kokoda area to see if I can partner with them on selected community projects and programs also.

It is my strongest opinion that KTA has established that strong partnership foundation and I am confident would broaden its joint community services along the Kokoda Track for the good of everyone and the two countries.

Julius Wargirai
Acting CEO for KTA

[iv] https://dfat.gov.au/about-us/publications/Documents/annual-review-of-the-papua-new-guinea-australia-governance-partnership-2019.pdf