The Budget Accountability of the IPIC Loan

By SAM BASIL MP

The Opposition exposed the 2014 Budget Deficit for the citizens of Papua New Guinea (PNG) to be a rushed, templated copy of the 2013 Budget Deficit. This was to show the O’Neil government’s inefficient management of the country’s economy and the Opposition understood and forewarned earlier in 2014, that the impending Budget Deficit would be alot higher than what was announced where the details were not well explained and where the O’Neil government would not be able to account properly for their financial promises.

There has been many a “smoke and mirror” charade by the O’Neil Government with media statements lacking facts but rather story lines blaming all others including the Opposition without explaining the actual facts.

One of these storylines is that the Government is not able to pay DSIP funds on time as required by the Constitution and this must provide the guidance for the people that something is going on that is not transparent or fair for all Papua New Guineans.

The Budget for 2014 and a very suspicious supplementary budget for 2013 are warnings to PNG citizens about Prime Minister, Peter O’Neil and his government. This is exemplified whereby the 2014 Budget Deficit has taken no account of an event that is going to put further pressure on the O’Neil Government in the next three months, if they survive the Parakagate issue and that is the repayment of the IPIC Loan, on 14th March 2014.

The Prime Minister, Peter O’Neil, has already stated that the State will get back the Oil Search shares (OSH) but we have not heard any media commentary or proper account of how this is going to happen. We have seen reports in the media that international banks are bidding for the refinancing but some details have not been given to the public or accounted for in the 2014 Budget or any facts given.

To state the obvious, the O’Neil Government does not have a plan for the return of the OSH shares and with time against them, they will complete a transaction that is not beneficial to PNG, or they will do nothing at all.

The prediction by the Opposition is that the O’Neil Government will say the best outcome was addressed and concluded when there are beneficial alternatives or give the PNG public a mundane excuse as to why the OSH shares did not come back to the citizens of PNG; the O’Neil Government cannot let the latter occur as it is an asset that bears value in terms of income and capital growth to PNG.

Thus, Papua New Guineans need to know what is happening with the IPIC loan so that if the OSH shares are foregone as a State asset under the O’Neil government, then every citizen will know what they are trying to hide and judge them on the basis of truth rather than the lies that they give us.

Papua New Guinea needs to assess the original funds given for the IPIC loan to finance the country’s stake into the Exxon LNG project as well as the current refinancing:

1) The Original Funds

The original funds from the IPIC Loan were borrowed and then put into an account in Singapore. The money has never been accounted for in the budget as normal accounts should be, where there is a debit and credit reconciliation of the debt to the cash. Prime Minister O’Neil, as an ex accountant, should understand this but within his time in Treasury in previous Governments, he never released this information.

If there is still a remaining amount in the original IPIC Loan in Singapore, what is it being used for? There will be an excuse as to why this was not disclosed by PM O’Neil and Treasurer Polye but Papua New Guineans need to know if the remaining amount is going to be accounted for in terms of:
i) What the remaining amount is?
ii) What the purpose of the remaining amount is?
iii) Why is that amount still in Singapore?
iv) Is it part of the deal with IPIC?
v) Why was that account not disclosed and agreed or allowed to continue in a government claiming to be transparent and accountable?
vi) Are these funds in Singapore managed by any PNG Department Office or is this the domain of the Kumul entities that The Prime Minister O’Neil is driving to control?

The Treasurer, Don Polye, did not take these remaining funds of the IPIC loan into account when he was putting the 2014 Budget together and is there a reason that the original funds are not accounted for given the IPIC Loan is trying to be refinanced on 14th March 2014?

Logic would enable the obvious question as to why this was not accounted for when this liability and the Exxon LNG project accounts for all the future budget surpluses that Treasurer Polye is counting on.

It would be transparent to show this in the 2014 budget but it has not been acknowledged and Papua New Guineans will be left in the dark about the balance of funds and the use of the previous funds connected to the IPIC loan.

These obvious questions need to be acknowledged by the Public Accounts Committee because the Opposition knows that nothing has been signed off on the use and the control of these funds and the accounting treatment of them by the Department of Treasury and Treasurer Polye.

The urgent action of the Public Accounts Committee to determine the funds use has to occur immediately and if the Investigation Taskforce Sweep (ITFS) is also the entity that provides a basis for investigating massive funding program illegalities, the Opposition calls on the Fraud Squad, ITFS and the Ombudsman Commission to trace and account for these funds with the Public Accounts Committee.

2) Current Refinancing

Given that there has been no accountability under the IPIC loan, how is a transaction of more than K4.5billion going to be refinanced within 6 weeks to March 14, 2014 if the State is still negotiating with potential international banks for the financing?

The State would need a team and a long period of time to negotiate and finalise the transaction but what the Opposition are seeing is leaked information that is being done by interested persons who are looking for personal outcome, not an outcome for the citizens of PNG.

2014 will end up like 2013, all talk and no action when the emphasis is to make sure that the IPIC loan is refinanced so PNG still keeps its OSH shares; 14th March 2014 is D-Day and the Opposition are mindful of the worst case scenario for PNG, ie.
The citizens of Papua New Guinea will not get back their OSH shares as promised, an unheard plight when the government of the day should be making decisions for the betterment of future generations.

The IPIC refinancing is on the verge of ending up like the Nautilus Effect where another default looks to occur by the O’Neil Government who are only interested in their personal outcomes and not people outcomes.

The Opposition hope for all Papua New Guineans that we are wrong and regular information to the public is demanded, especially when the share price of Oil Search has been falling. This increases a risk to the State Budget further but yet again, this was not disclosed in the 2014 Budget.

The Opposition cannot see how the government is going to repay the loan given the budget deficit and if the funds from the IPIC Loan are being used for repayment, why is this not informed to the citizens of PNG. The only logic expressed is the suspicion that O’Neil and Polye are hiding these funds from Papua New Guineans and the scrutiny of their use in a transparent way.

Papua New Guineans who work hard for this nation are tired of the public campaign by O’Neil promising to do something and not doing it; as he always says, “I will look into it” but with no value attacks the Opposition for asking the important questions.

The Opposition saw the many problems with the 2014 Budget, as per the Opposition Leader’s response to the Budget on the floor of Parliament and why we are pushing O’Neil to step down when he and his Government treat the people of PNG without regard for the best interests of their minority.

The Opposition calls on all media groups to look into this matter and research the lack of detailed information on this subject, the findings will terrify the nation and as O’Neil and Polye have bought their positions into disgrace, they should resign as an investigation into the Budget and lack of accounting is exposed.

This will add further reasonings to the current status quo of their speculated involvement in the illegal processing of K71.8million to Paraka Lawyers.

Prime Minister O’Neil has no one to blame except his government and there is nowhere to hide now as the Opposition and the citizens of PNG are now looking for the answers to the questions posed by the Opposition on the IPIC loan matters more than 6 months ago as valid and true answers were not given.

Lets hope Papua New Guinea do not lose another asset in Oil Search on 14th March 2014 because of O’Neil and his government’s lack of fiduciary duties to this country.

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