Did the DCC government act hastily in providing Dutchman Vlymen life-saving relief from virtual bankruptcy?

IT all seemed a tall story, which later came unstuck.

Patrick Wong either personally or through his associates had told the government back in 2011 that two offshore companies in his stable had loaned or lent millions of dollars to RIPEL.

Repayment of the loan became overdue and Mr Wong now sought it (the repayment) as part of the sale of RIPEL from the then Danny Philip Government.

A deal was negotiated and agreed at USD3.25 million (about SBD26 million). In addition, the government agreed to provide a further SBD10 million to pay outstanding dues of former employees.

All was well until the Central Bank of Solomon Islands (CBSI) began checking its records.

Contrary to Wong’s claims, there was no record whatsoever that PACIFIC FINANCE LIMITED and CROSS PACIFIC TRADING LIMITED – the two offshore outfits that allegedly provided RIPEL with start-up capital in the form of a loan had actually provided the funds. The two companies were registered in the Cook Islands.

Under its foreign currency control regime, no one [companies or individuals] is allowed to bring in funds from outside without first obtaining clearance from the CBSI. In fact, if it’s true that Wong had brought in the money in the form of a loan to RIPEL, someone had forgotten to clear it with the CBSI.

What followed was history.

The proposed Deed of Partial Discharge of Charge, Compromise and Settlement of 21 June 2011 never went ahead.

So what drove the government to assist Mr Vlymen, whose assets in Australia were on the verge of liquidation and perhaps subsequent bankruptcy for the man who until recently was Mr Wong’s right hand man?

A number of considerations appeared to be central to the government’s decision. Mr Vlymen’s back, it seemed, was against a rock and a hard place. He had to do something or lose it all.

All of a sudden 28 February this year became the deadline to pay Mr Wong a non-refundable deposit of USD250, 000 in compliance with the judgement handed down by the New South Wales Supreme Court in March last year.

As well, the Court ruled that within 60 days of acceptance, the agreement is to be formalised in a comprehensively drafted settlement agreement (Settlement Agreement) whose substantive terms include the payment to Mr Wong of a non-refundable deposit of USD250, 000 by the Van Vlymen’s entities.

The Van Vlymen entities are to pay to the Wong Entities (as directed by them) a further USD1.75 million as well as a further sum of SBD15 million, total payments of roughly SBD31 million.

In exchange for the payments, the Wong Entities are to transfer their entire interests (including indirect interests) in the JV and any business relationship between them, unencumbered, and relinquish all directorships…”.

Amongst other things, the Settlement Agreement identifies the various “Wong Entities” and “Van Vlymen Entities” and provides that the sale of the Wong Entities’ interest in the Joint Venture is to be effected by a transfer by Mr Wong of his shareholding in OSTI to one or other of the Van Vlymen Entities.

What the Government was particularly worried about was losing the titles of the Hell’s Point land and Bloody Ridge back to Mr Wong should Mr Vlymen defaulted on the terms of the Court decision.

Hell’s Point and Bloody Ridge have become important national projects for the government. Hell’s Point has become a permanent base for police training of bomb disposal squads not only in Solomon Islands but also for neighbouring countries in the Pacific.

It is something the government had discussed with former Secretary of State, John Kerry, when he visited Honiara in 2014. The US Government was willing to invest in the training school.

The second project is the Bloody Ridge. Discussions were in advanced stage that Bloody Ridge should be turned into a national park, where World War II veterans from the United States and Japan could visit every year.

“It’s a good tourist attraction,” some said.

It could serve as the only World War II national park in the Pacific, dedicated to those who fought and died in the Pacific campaign.

The two projects are still projects of national interest. It is a point which Wong and company had taken into account in lowering their High Court award from SBD80 million to SBD50 million.

Some lawyers argue the High Court ruling cannot be enforced against the State. Others are pinning their hopes on the taxman.

“Once the taxman has assessed the tax liabilities involved, Wong could end up with nothing in terms of payment,” one said on the weekend.

The result of such an action could be devastating for the government as Wong and company could lock up the land in a timeless caveat.