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September 3rd, 2013 
Peter Nolan
Updated
A company with no apparent experience in aviation has been awarded a $US350 million contract to upgrade Vanuatu’s airports and run them for the next 50 years.
Vanuatu Trade Development Ltd (VTD) secured the deal by promising that its global network of travel agents will soon be bringing a million tourists each year from Asia.
VTD’s management says the company is backed by a multi-billion dollar palm oil conglomerate and the Vanuatu Government has identified the company as Singaporean giant, Mewah.
Mewah has denied links to the company, its directors or the Vanuatu development.
“We confirm that the Company mentioned [Vanuatu Trade Development Ltd] is not a Mewah Group company. The Group has no involvement in the project, and is not underwriting the project,” said Tan Kim Tew, from Mewah Corporate Services Department.
But the Vanuatu Government is pushing ahead with the concession.
The ruling coalition used its majority in Parliament on August 30 to approve the deal with VTD and the $350 million promissory notes that effectively underwrite the project.
The Opposition walked out in protest and is preparing a Supreme Court challenge.
“This project will bring Vanuatu down to its knees and it’s likely to become another failed state,” said Willie Jimmy, Opposition member and former finance minister.
The deal
Tourism is a crucial part of Vanuatu’s economy.
Currently, a third of Vanuatu’s workforce is employed in the tourism sector and 40 per cent of the nation’s GDP is driven by international visitors.
For decades Vanuatu’s leaders have dreamed of a new airport that could accommodate wider-bodied, long-haul planes flying in tourists straight from Asia.
In late July that dream came a step closer to reality, when the government signed a deal with a Singapore-based company to build a new international airport and upgrade several regional airports.
The deal was signed by Vanuatu’s Prime Minister Moana Carcasses Kalosil and VTD’s general manager Eric Ong and director David Mak.
As part of the deal, the Vanuatu Government will issue four separate promissory notes guaranteeing the repayment of $350 million if the government, or any future government, breaches the agreement.
During the course of the 50 year concession, VTD will operate the airports to recoup the money spent on construction and to earn profits.
Aviation experts say the plan could work in theory, provided the company can bring in a lot more tourists.
As well as the alleged global network of travel agents, a leaked government document says VTD has an “implicit agreement” with an unnamed airline that will help bring a tenfold increase in annual tourist arrivals.
The company
VTD representatives have not responded to the ABC’s repeated attempts to contact them for comment, but they have spoken to local media in Vanuatu.
“VTD is part of a group of companies, very diversified,”Eric Ong told Marc O’Brien on Buzz 96FM.
“The core business of our group is in edible oils and then we are also into printing, we are into travel, we have our insurance companies, we have tobacco companies, we own plantations, we own oil palm plantations.
“We have an annual turnover of $4 billion in 2011 and…even if we were to fund it by the group ourselves, we are able to fund this $350 million project.”
In an August press release, the Vanuatu Government linked VTD with Mewah.
This project will bring Vanuatu down to its knees and it’s likely to become another failed state.
“The VTDL is a Singapore-based company established specifically for this purpose and is part of the Mewah group of companies listed on the Singapore stock exchange,” the Office of Vanuatu’s Prime Minister said in the statement.
But Mewah Corporate Services Department has told the ABC it has no involvement with the company, and that Mewah is not underwriting the project.
It says Mewah has no link to VTD’s executives Eric Ong and David Mak.
The denial raises more questions for the Opposition.
“Who is behind this? What is the track record of VTDL of any project of such magnitude that VTDL has undertaken in any part of the world or Asia or Pacific?” Opposition MP Willie Jimmy said.
Paper trail
The Vanuatu Trade Development company was formed out of the ashes of a failed tobacco investment.
David Mak and Eric Ong tried to start a tobacco plantation business using another company, Rock International.
When the Vanuatu Government last year refused to allow Rock International to import tobacco seeds and promote smoking, they changed direction.
One of the directors of Rock International was Cheo Tiong Choon, who is the sole shareholder of Vanuatu Trade Development Ltd.
Cheo Tiong Choon is a substantial shareholder of Mewah, but the company says Mr Cheo is not acting on behalf of the palm oil giant.
“We confirm that Mewah Group neither has any direct or indirect involvement in the project nor it has authorised anyone to act on its behalf for the project,” said Mewah’s Tan Kim Tew.
When Vanuatu Trade Development registered last year in Singapore it was as a “wholesale trader” with paid up capital of $400,000.
There was no mention of travel agents, construction or aviation, despite the Vanuatu Government saying VTD was set up specifically for the airport development.
Leap of faith
The size of the investment – $350 million is a quarter of Vanuatu’s annual GDP – makes the credibility of VTD an important matter for Vanuatu’s Government.
The Opposition says the tiny Pacific nation simply couldn’t afford to pay back the money if the government was to breach the concession agreement.
“All the economic productivity of this country just cannot sustain the recovery of this amount at any one time,” Opposition MP Willie Jimmy said.
The Vanuatu Government has investigated the background of Vanuatu Trade Development.
In April, the Council of Ministers directed its 20-member Airport Taskforce go on a “fact finding mission to Singapore to conduct further due diligence on the company, its directors, its shareholders and related companies and to ascertain their capacity to carry out the project as anticipated.”
A second legal opinion was sought from Australian lawyer John Mulally in July.
The Vanuatu Government, Vanuatu Trade Development Ltd, Rock International Marketing and John Mulally all declined to comment or did not respond to the ABC’s inquiries.
“It is a very sensitive and controversial issue as well concerning the sovereignty of this nation,” said Letty Williams Kaltonga, from Vanuatu’s Prime Minister’s Office.
“This is a sovereign domestic issue. Unfortunately we will not respond to your questions due to the matter is before the Vanuatu Parliament.”
Murky details
When the ABC tried to contact VTD director David Mak at his Singapore office, staff said he is now acting as the honorary consul for Vanuatu in Singapore, and gave the ABC an email address reflecting this.
If David Mak is the honorary consul for Vanuatu in Singapore, it could give rise to a conflict of interest in securing a multi-million dollar contract from the Government.
Numerous international aviation experts contacted by the ABC said they had never heard of VTD before the Vanuatu deal.
However, VTD has linked up with Australian-based consultant, Leading Edge Aviation Planning Professionals, known as LEAPP.
“I think they’ll be depending mostly on the consultants LEAPP and LEAPP have done quite a lot of work around the world,” said Kevin Abel, General Manager of Airports Vanuatu.
LEAPP did not respond to attempts to get comment on this issue.
Some basic elements of the airport deal remain murky.
When Kevin Abel met representatives of VTD last month, he asked where the new international airport might be located.
“It was kept top secret. It’s confidential. We don’t know the reasons behind it but they said they could not disclose much information about the airport site yet,” Mr Abel told the ABC.
It is believed the new airport will be built on Vanuatu’s main island of Efate and already landowner groups have banded together to reject the possibility of their land being compulsorarily acquired.
Topics:
air-transport,
company-news,
government-and-politics,
vanuatu,
pacific,
singapore,
asia
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Source Article from http://www.abc.net.au/news/2013-09-03/an-liam-feature-vanuatu-airport-development/4932954
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