Government clarifies gross misinformation on Government’s decision to buy LSL estates

The Government for National Unity and Transformation (GNUT) today clarifies the emerging misinformation on social media surrounding its decision to buyback the Lever Solomons Limited (LSL) Estates at a cost of SB$140 million.

Prime Minister Jeremiah Manele announced the cabinet decision early this week, highlighting, the importance of retaking ownership of the LSL estates by Solomon Islanders, which, has the potential to contribute immensely to the national economy and importantly, to safeguard our long-term peace and security. Ownership of the estates were held by foreign companies since independence, leaving little benefits to locals.

A government statement today clarified that LSL currently holds Fixed Term Estate land titles over 781 land parcels across more than 1,900 hectares in Guadalcanal Province, and Fixed Term Estates over 18 land parcels across 6,629 hectares in the Russell Islands in Central Islands Province.

The Fixed Term Estates generally run for a period of 75 years dating back to independence, having been automatically converted from freehold title at that time by legislation. Fixed Term Estates are a type of lease, and the overall owner of the freehold title (“Perpetual Estates”) is the Commissioner of Lands on behalf of the Solomon Islands Government.

LSL is owned by International Comtrade & Shipping (SI) Ltd (ICSL) – 75.1% and Lavukal Investment Company Limited – 24.9%. ICSL is owned equally by Mr. Willem Van Vlymen (Vlymen) and Mr. Patrick Wong (Wong) through their companies Pacific Investment Limited (PIL) and Overseas Shipping Trading and Investment Ltd., (OSTI), respectively. Vlymen and Wong jointly own several other entities on a 50:50 basis.

Due to various issues, Vlymen and Wong decided to part ways in late 2012, and entered into a Settlement Agreement in November 2014 which was eventually executed in 2016, that Vlymen, buy Wong’s interests out for a total of US$2.0 million and SBD $15 million. (Approximately SBD $32 Million in total).

On completion of these payments, Wong and his controlled entities must: (i) transfer all shares in OSTI, and (ii) relinquish all directorships of the Wong entities, and the Jointly Controlled Entities, including RIPEL and LSL. Vlymen was not able to meet the payments and Wong sued for specific performance, which the Supreme Court of New South Wales ruled in the Mr Wong’s favor.

This dispute eventually led to the Vlymen entities being placed in Receivership, granting an opening for the SIG to acquire the estates held by LSL since Independence.

The Cabinet of Solomon Islands had previously approved a process to take back all of LSL’s land titles in Guadalcanal Province. This was actioned through a combination of compulsory acquisitions and forfeiture of Fixed Term Estates. However, LSL has appealed all these actions in the High Court, and these cases are still before the court. Based on the status of these cases no real resolution is expected in the medium term.

The Government statement also noted that even if the compulsory acquisitions are successfully defended in court, legislation requires compensation to be paid to LSL which could be more the proposed settlement figure.

In September 2016, Worrells Solvency & Forensic Accountants Pty Ltd., were appointed Receiver and Manager for the Vlymen properties.

On 16 April 2021, Van Vlymen appointed Hall Chadwick as Administrator to both Orbis & PIHL entities. On 12 May 2021, Hall Chadwick issued its first report to Creditors for both entities and immediately recommended to creditors that the companies be liquidated in the absence of any Deed of Company Agreement [DOCA].

From about July 2021, discussions commenced with the Solomon Islands Government who had expressed an interest in providing a DOCA. After several Court approved extensions, the second creditors meeting was held on 17 June 2022 at which time unsecured creditors voted unanimously in favor of the proposed (draft) SIG DOCA.; with Mr Wong voting against. The proposed DOCA at the time was AU$15,669,225.62. The latest DOCA presented to the SI is now AU$24,340,875.00.

Hall Chadwick the Court appointed Receivers/Liquidators recently met with various arms of the SIG to facilitate the possible acquisition of LSL.

Upon execution of the DOCA, payment is to be made to the secured creditor (Wong) simultaneously with Wong and the following will occur:

1. relinquishing all directorships in Pacific Finance Ltd, Cross Pacific Trading Ltd, Pacific Management Services, and International Comtrade & Shipping (Si) Ltd (collectively the “JV Entities”);
2. appointing an Australian entity established by Investment Corporation of Solomon Islands (“ICSI”) on behalf of Solomon Islands Government (“the Agency”);
3. transferring of Wong’s shareholdings in OSTI to the Agency or their nominee;
4. ensuring the Agency deed proponent or their nominee to cause a meeting of the shareholders of each of the JV Entities to be convened, and to put forward and vote in favor of a resolution in each of the JV Entities to resign, remove, or terminate any existing officeholders of the JV Entities and to appoint any person as director of each of the JV Entities.
5. The Agency takes control of all bank accounts & assets of all Van Vlymen and Wong entities in each jurisdiction;
6. The Agency cause a review, settlement, and / or discontinuance of all outstanding LSL and RIPEL proceedings currently on foot;
7. The Agency to take all reasonable steps to review and take an accounting of all Van Vlymen and Wong entities (in each jurisdiction) and determine which entities are to be wound up, modified, consolidated, and brought into statutory compliance;
8. The Agency to take any steps to remedy any legal or equitable issues identified within the Van Vlymen and Wong entities;
9. The Agency to work with ICSI stakeholders as necessary to source current and future funding & individual project opportunities;

The Solomon Islands Government (SIG) reiterates its intention is to gain control of land titles in Solomon Islands currently held by Levers Solomons Limited (LSL), by acquiring majority ownership of LSL in the best possible method that avoids potential litigation or any other unintended adverse consequences, and at the lowest cost to the Government.

GCU Press