Friday, November 28, 2014



Mr Speaker I seek leave of Parliament to clarify the issue around some of the statement going through the newspapers and social media over the past few weeks relation to the establishment of leadership tribunals past and present. Mr Speaker, I want everyone in Papua New Guinea to remember that during my time as Prime Minister, in the last Parliament a leadership tribunal was setup by the Chief Justice Sir Salamo Injia. The aim of this process was to look into allegations that as a leader I had failed to submit compete and timely annual returns to the Ombudsman Commission.

The Leadership Tribunal was established after the Ombudsman Commission referred me to the Public Prosecutor for those breaches of the leadership code. Mr Speaker, the reason for my referral was very clear. My office was late in submitting my annual returns as required by the Leadership
Code. Every elected Member of Parliament and some appointed office holders in this country are subject to the Leadership Code. This code or long list of rules demands transparent and accountable
behavior where public interest is concerned. The Leadership Code reminds us according to a clearly written set of rules of our sworn obligations as elected representatives. This is the purpose of a Code
of Conduct in our adopted system of accountable government.

Mr Speaker, I would like to stress that when the Tribunal was setup by the Chief Justice, I did step aside to protect the integrity of the highest office in our country. Before doing so, I appointed Hon Don Polye as Acting Prime Minister.

Personally, I felt that this was an issue of morality. The precedent  it established must be remembered for the sake of the principle of accountability – I knew I had set. To step aside as required by my own
conscience was to instill confidence in the people of Papua New Guinea that I too was subject to every law. After stepping aside, I then applied to the Tribunal requesting to return as the Prime Minister while the tribunal was being run. Due to the administrative nature of  the offence, the Tribunal granted my request.

Mr Speaker, the tribunal found that being a leader I failed to comply with the rules of leadership and after much deliberation that tribunal saw fit to impose a penalty on me of a two week suspension. I was Prime Minister and I was not above that ruling.

Mr Speaker, I have listened with much interest over the last two and a half years while debate has aired over the media about major decisions my government took regarding the commitment of our people’s present and future sovereign wealth - I refer to:
• The IPIC transaction and the Government’s “back-in”,
• And the acquisition of the 19.6% share in the PNGLNG project.
I am compelled now to state that all aspects of the transaction were covered by NEC Decisions and all expenditure items for the transactions in any given fiscal year were covered by appropriation
bills. This commitment of public monies required the consent of parliament prior to the execution of those major commercial transactions involving the Independent State of Papua New Guinea.

Mr Speaker, I am also compelled to ask this parliament as to who is the ultimate beneficiary to this transaction; I can only see OIL SEARCH. I can only see the State taking on the risk of a major
commercial entity. This is because:

• Oil Search walks away with 1.2billion Australian Dollars, a dilution of share volume and no risk of an imminent take over from shareholders on the ASX.
• UBS hold the shares in case of a default and
• The Government of PNG bears the burden of the debt by one of the largest companies on the ASX.

Mr Speaker I am also compelled to advise this Parliament that the right investment would have been a direct investment in the InterOil Project, where the people of Papua New Guinea would not have paid “risk capital” to a highly risky proposition by Oil Search Limited.

This risky proposition for an indirect equity stake of 10.1% with effective returns of about 1.5% if we are lucky. The Government should have allowed IPBC or NPCP to simply exercise the State’s “back-in” rights to own 22.5% direct equity in the InterOil Project at approximately the same price.

Mr Speaker, I further suggest that the time frame for project delivery would have allowed for far greater diligence around a debt management structure in this budget.

Mr Speaker, I would also like to reflect on the past decade of economic growth under my leadership as Prime Minister. I am pleased to say that I led a team of bright energetic politicians, who created a
vibrant policy environment that fostered foreign and local business confidence. Businesses grew knowing that their immediate investments were protected due to fiscal certainty in the longer term and they delivered their projects in our country on time.

Mr Speaker I delivered a stable and conducive environment where heads of departments were communicating with their Ministers and statutory heads of companies and CEOs of State Owned Enterprises were able to grow their asset base and increase their revenue as they were able to interpret clearly articulated government policies and develop strategies to deliver targets that they had set, without fear or favour.

Mr Speaker it is in this context that I now emphasise the absolute need for our leaders to not squander the fruits of the seeds that were sown in much harsher financial conditions. Mr Speaker we have in the last decade created a secure platform for our present and future leaders to launch from. We are in a position where future revenue is guaranteed for generations to come and it is therefore our responsibility now to ensure that we are diligent in our decision-making processes now for our future generations.

Mr Speaker I wish to now advise Parliament I will move to the middle benches beginning today as I do not believe that due process was followed creating a massive debt of over K3billion. Particularly that this debt is not reflected in our total debt stock of Papua New Guinea in our supplementary budget 2014 to 2015.

Retired New Zealand judge Sir Peter Blanchard to head inquiry starting January 26

Post Courier PIC
A LEADERSHIP Tribunal has been appointed to inquire into allegations of misconduct in office made against Prime Minister Peter O’Neill.

It will be headed by a retired New Zealand judge Sir Peter Blanchard, who begins the inquiry on January 26 next year.

Chief Justice Sir Salamo Injia yesterday announced his decision to appoint the tribunal following a request from the Public Prosecutor on November 14.

The allegations of misconduct in office are "that the Prime Minister failed to comply with administrative and financial processes, including the normal overseas borrowing process in the approval of a K3 billion loan from the Union Bank of Switzerland AG (Australia branch) to purchase shares in Oil Search Limited".

It was further alleged that the purchase of the shares was in the interest of Oil Search Limited and not the State.

Other members of the Blanchard Tribunal are retired Australian Federal Court judge John von Boussa and Justice Salatiel Lenalia.

Sir Salamo also announced an instrument formalising the tribunal appointment, its composition, the date, time and venue for the start of the inquiry, which are Monday, January 26, 2015, at 9.30am, Courtroom No 1 at the National Court building in Waigani.

Sir Salamo said the instrument also specifies that for the avoidance of doubt, pursuant to Section 142(6) of the Constitution, subject to which Section 28 of the Organic Law and Duties and Responsibilities is to be read, the question of suspension pending the inquiry will be determined by the tribunal in its discretion.

"The importance of the high office held by the PM O’Neill is the reason for the appointment of two imminent former judges of two developed common law jurisdictions and a senior Judge of the National and Supreme Court of Papua New Guinea," Sir Salamo said.

 PRIME Minister Peter O’Neill has expressed relief that a Tribunal has been appointed to clear the air on Oil Search shares issue once and for all.

He said the announcement that the Leadership Tribunal has been appointed in January to hear matters relating to the purchase of Oil Search shares is a positive move.

The Prime Minister said he is looking forward to these proceedings and the tribunal will provide the opportunity to put the issue to rest.

"It is best that this tribunal is convened sooner rather than later," he said in a statement.

"I have ultimate respect for the independence of the judiciary. The tribunal hearing will offer the opportunity to present the facts, and cross-examine any claims in relation to administrative and financial procedures.

"This will clear the air on this issue once and for all.

"There has been a great deal of politically motivated misinformation and blatant lies relating to the purchase of the oil search shares by government of Papua New Guinea.

"The purchase of these shares is an investment in the key resource infrastructure of our country.

"It is time to participate directly in the development of our resources.

"Without such investment we continue to be bystanders in our own resources sector, which has been the case in decades past.

"The referral by the Ombudsman Commission is not on a decision on a personal matter, it relates to a government decision by the Cabinet of which I am Chairman.

The Prime Minister said the nature of the referral are out of the ordinary and could set a dangerous precedent creating legal vagaries in relation to the decision making process which is clearly defined in our national constitution.

"The question that will come from this is, can the Chair of the NEC, or any member of the NEC, be singled out over a Cabinet decision," the prime minister said.

"This action brings into question a number of legal questions that are relating to democratic process in our country.

According to this action, the collective decision of the Cabinet members are irrelevant to the process."

No further comment will be entered into on this matter until the proceedings have run their course, he said.


Brief on Frieda- December 2014- 0n Issues of Ownership and Control and the Pre Emptive rights of the State in Resource Projects.


As  the Market awaits the Decision of the International Tribunal to be handed down early next year  in London in the case  referred  by Oil Search Ltd against Interoil on its rights  as an existing  Partners in the Elk LNG project  to be offered the first right of refusal to purchase any shares on offer by the project developer ,  the States own interest  relating to pre emptive rights   needs to be clearly   stated to avoid the situation  that has landed the Prime Minister  before the Leadership Tribunal  with respect to the UBS K3 Billion loan from ever rising again.

All Hydro Carbon  resources  found  beneath the  surface of the earth and on our sea bed belongs to the State.  Mining Exploration Licences and  petroleum  Retention  Licences  are the property of the State  which reserve the right  to  enter into  and to invest in this  licences if it chooses too. While the Mining Act  and the Oil and Gas Act  allows the State to exercise its rights to take up to 30% Equity in Mining Projects and 22.5% in all hydro carbon Projects , these Acts do not prohibit  the State from making  commercial investment decisions  for the National Good.

There is  a misconception  that the Government of PNG cannot enter into any  major resource project until  after the completion  of the Bankable Feasibility study  by the licence holder  and only at the commencement of negotiations  on Mine or  Petroleum Development Contract  between the Developer and the State . This view is not only  misconceived  but  is dangerous as it perpetuates   neo colonialism.

 With respect to  the case of Elk neither the State or its proxy  Oil Search  were made an offer to  inject additional capital into the Elk LNG project  and  ultimately on whether Total of France  should  be  the development  Partner in the Elk and Antelope Gas Fields .While Oil Search has  gone for Arbitration the Government of PNG has been forced  to enter into a Commercial  decision to enter into  the UBS  loan to participate in the Elk Project via Oil Search Ltd.  The important question that  will still be dealt with is the State’s 22.5% interest  in Elk and the value of that interest and  for the State  to enter the project now and participate in the decision as to whether Exxon or total is made the developer of the PNGs second LNG project.

On this note  we also remind  our own senior Bureaucrats heading down to Sydney for  the biannual shopping and Mining Conference at the Sydney Hilton not to mislead the  Australian Mining  Community  in Particular on another similarly large project , the Frieda Gold and Copper Project and the intent of the Government of PNG with respect to the issue of Ownership and Control of  our  country’s  biggest mining project . We remind  our  Sydney Mining Conference  Participants to be aware of  NEC decision  265/2014  and to take note in particular to the contents of NEC Policy Submission 242/2014 which gives rise to the said decision.

Let me  again caution our leading citizens that while making the case for  Foreign Direct  Investment in the PNG resource sector in a foreign land  that they be mindful  of the growing disillusionment   by the  majority of our people and  our Land owners in particular about the way we have  dealt with the exploitation our non renewable resources  which continues  to treat our people as mere  spectators in this sector  and  not to concede too much to  investors whose main driver for investment is guided only by profit motive  and not the improved quality of life for our people.

It would appear that while Total has been endorsed as the preferred developer of the second LNG project  no such endorsement has been given to Pan Aust Ltd to take on the responsibility of developing  the Frieda Gold and Copper project  on the contrary the State is desirous of owing and developing this massive deposit itself  jointly with  Land owners and the two Provincial

Governments  of East and West Sepik  Province and that  Pan Aust Ltd  and Xstrata-Glencore  would do well in accepting the offer made by the State to Xstrata Glenocre to acquire their interest in EL58 on the same terms as  reached between Xstrata and Pan Aust  Ltd on the 30th of September 2013 and that this is the position of the PNG Government unless overturned by Cabinet.

Wednesday, November 26, 2014



The Prime Minister’s economic and financial madness and stupidity have been exposed again by holes in the 2014 Supplementary Budget and the 2015 Budget. It is painfully obvious that both Budgets are already unravelling, within a week of being handed down. The cost to innocent hard-working Papua New Guineans - people unlike the Prime Minister and his konmen cronies - is likely to be very high. The profits will flow to the konman PM and his cronies and no one else.

The cost of living will soar above even the current high levels, the value of the kina will continue to plunge, unemployment will keep on rising, and incomes falling. Poor people - the great majority of the people in settlements, rural towns and villages - will suffer the most from Mr O’Neill’s Budgets for the criminal elite like his cabinet colleagues and silent, secret partners in big business.

Hidden away in the detail of the 2014 Supplementary Budget and the 2015 Budget are a number of time-bombs ticking away that could cause further serious damage to the nation’s finances and the economy. As always with the current Prime Minister, some of them may involve breaches of the law. Others are the usual smoke and mirror tricks that this Prime Minister often uses to fool the long-suffering public.

For example the budgets are projecting the receipt of significant funds from dividends to be paid by State Owned Enterprises. The National Petroleum Company of PNG, is expected to pay a dividend of K450 million. But where is this money to come from? It would be wise for the authorities such as the police, the Auditor-General and the Ombudsman Commission to investigate a $170million  loan recently taken out by NPCP from the ANZ, a bank which is a partner in an increasing number of the Prime Minister’s shady schemes.

The Prime Minister has many questions to answer about this money, which has been loaned against future NPCP ash flows. The most important question is whether NPCP is paying its dividends to the State out of the loan. If it is doing so, it is breaking the law. Dividends must be paid out of operating funds. The authorities need to investigate whether NPCP board members and management were involved in the declaration and payment of dividends out of the proceeds of this highly suspicious ANZ loan.

The authorities should also investigate the dividend arrangements for MVIL, which is due to pay K125 million in total to the State for both Budgets. Once again the dividends declared must be paid out of operating funds - MVIL’s income. It most certainly cannot come, for example, from the Third Party Insurance Trust that it manages and from which it receives a small management fee of less than 5% a year. Trust funds may only be used to pay third-party insurance claims. An investigation must be held into whether MVIL directors and management have played any role in the illegal payment of dividends out of the MVIL trust funds.

Ok Tedi Mining Limited is also projected to pay a dividend in the 2014 Supplementary Budget of K119 million - but there is a legal dispute over ownership of the 63.4% shareholding in the company expropriated from PNGSDP, and it is likely that the dividend will have to be placed in an escrow account, where it will not be available to the Government. 

The big question, of course, is why no dividend has been listed for Oil Search, in which the State recently illegally borrowed K3 billion from UBS to buy a 10% shareholding? The Prime Minister, who has been referred to a Leadership Tribunal over his role in this illegal loan, has been boasting how good the deal was for PNG. Yet the people of PNG are not going to receive one toea in dividends. How is that good for the people of PNG, Prime Minister?

The Budget papers also show that the Government expects to receive K2.5 billion from landowners to pay for their 4.6% share of the PNG NG project. The 4.6% for landowners in the project is inbuilt and paid for by the State out of the original IPIC loan.  Most analysts agree that, knowing landowners in the project area, and the corruptness of the O’Neill Government, the State will be lucky to receive even half of that amount.

Finally, a number of authoritative posts on social media have reported that 2015 budget revenue figures have been cooked by the Prime Minister. Treasury sources have said that the revenue figure of K16 billion is overstated by about K3 billion, potentially leaving another enormous deficit to be paid for by the suffering of ordinary PNG people.

It’s no wonder the Prime Minister would not table all the Budget documents on Budget day or provide them to the Budget lock-up. He has too much to hide.



We now have two budget speeches; one presented on the floor of Parliament on the 18th November, 2014 and the other one has been distributed outside of parliament as of this morning.
We, the Opposition, maintain that the presentation of the 2015 budget is improper and incomplete and borders on fraudulent misrepresentation by the government.

I want to highlight to the people of this country how ill-prepared the Prime Minister is.
This is the first time in the history of this country and the commonwealth nation’s we are affiliated with that a government has come to the floor of parliament with an INCOMPLETE BUDGET; And for that matter distribute the budget speech outside of parliament.

The Treasurer’s speech on the 18th of November on the floor of Parliament and the recently distributed speech shows a slight change on Page 4 of the Speech.

The Budget Speech being distributed recently clearly shows there is a paragraph which was added in but was never on the first speech delivered to us on the floor of Parliament. The paragraph added on makes reference to the controversial K3 billion UBS loan as shown below;

“Mr Speaker you will recall that earlier in the year (2014) the opportunity to purchase oil search shares arose and the O’Neill-Dion Government made a decision to purchase a 10.1% in Oil Search as part of the 2014 supplementary budget and in accordance with section 209 of the constitution we have appropriated for interest payments and it is anticipated that in the next month National Petroleum Company of PNG will refinance this transaction and take ownership of the shares”.

Members of Parliament and the people of this nation, I would like to point out that there has never been a 2014 supplementary budget presented early this year and that the UBS loan has never been debated on the floor of parliament nor passed through parliament debate. We have attended parliamentary sittings; we do not recall the Prime Minister presenting a supplementary budget in accordance with section 209 of the constitution to sanction the UBS loan.

At the hype of the Ombudsman Commission’s referral of the Prime Minister and the UBS loan and his subsequent referral by the Public Prosecutor and the letter by the chief justice to attend the tribunal; this clinical and surgical Prime Minister tried to curtail into the budget speech to legitimize his criminal action and I have no reservations when making that statement,

I want Papua New Guineans to know that the Prime Minister clinically and surgically curtailed the statement and this can be seen as in breach of the constitution.

The treasurer can be held responsible and the Opposition is considering referring the Treasurer to the Ombudsman Commission for misrepresentation, for fraud and for lying to this country.