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The drama behind David Brown’s PNG legal stoush
It’s tough for investment professionals to live and work in Port Moresby. Sometimes, the unique culture of the underprivileged nation can go against the grain and local politics can interfere with what we consider best practice. David Brown has just been through such an experience.
New Zealand-born Brown is a well-known and respected Australian fund manager, most recently in Australia as head of private markets for VFMC. He was also chair of the private equity association, AVCAL and a director of ClearView, which he remains.
He went to Port Moresby in 2015 as CIO of PacWealth Capital and then, the following year, became CIO of one of the two main Government-controlled funds, the A$2 billion NASFUND Ltd. This is where he got his introduction to local politics.
NASFUND is the largest shareholder in a unit trust known as the Pacific Balanced Fund, which was a former government entity privatised in 2002. Its trustee and sole investment manager is a controversial company called Melanesian Trustee Services Ltd (MTSL), which is on a continual watch list by the PNG Securities Commission. The Commission announced an investigation into MTSL’s solvency last August. The executive chair of MTSL since 2000 is John Sanday, a native of Fiji, who lives in Brisbane and was educated at the University of Canberra. Its chief executive is Australian-born Lawrence Stephens, also educated in Australia, who has become a citizen of PNG. Sanday is also on the boards of several Pacific Balanced Fund investee companies.
Last year Brown, in his capacity as CIO of the Pacific Balanced Fund’s largest shareholder, signed a letter requesting more information about the MTSL and fund accounts, which were late being lodged. Sanday and/or Stephens shortly after lodged a complaint with the PNG Police Fraud Squad specifically against Brown. Luckily for Brown, MTSL also lodged a complaint with the Police Fraud Squad against the Securities Commission for conspiracy, with NASFUND and others, to have MTSL removed as trustee of the fund.
But Brown’s ordeal continued for months – five-and-a-half to be precise – with 12 separate hearings before the local magistrate. And notwithstanding the support of NASFUND’s chair, Hulala Tokome, and the board of ClearView back home, things didn’t look too good late last October when MTSL won a stay of proceedings against the Securities Commission preventing the Commission from revoking MTSL’s license and removing it from the Pacific Balanced Fund.
But on January 11, the Waigani District Court of Port Moresby threw out the criminal charge against Brown on the basis of lack of evidence.
Fund chair Tokome said: “In the process of defending an obviously spurious charge, Mr Brown and his family have endured prolonged distress, not to mention the considerable disruption to the ordinary business of NASFUND.
“The NASFUND board is pleased with the court’s ruling, justice has prevailed, and David Brown’s professional reputation is restored
“Importantly, the court’s decision recognises the good governance and regulatory obligations of the superannuation industry in PNG and those entrusted to implement the same.”
– G.B.
