LEAKED OMBUDSMAN COMMISSION REPORT ON THE 1.2 BILLION UBS LOAN


1995 

1.              On 5 December, the Investment Promotion Authority (IPA) registered Pacific Capital Ltd whose Shareholders also include Mr Frank Michael Kramer.
 2009

2.             On 5 March, the Government of PNG (GoPNG) mortgaged its shares in Oil Search Ltd with International Petroleum Investment Company (IPIC), Abu Dhabi and acquired the needed funding and it financed the State‘s share of the capital expenditure for the PNG LNG project.

3.              On 1 July, the IPA registered Pertusio Capital Partners Ltd whose Shareholders also include Mr Dairi Vele.

2013


4.             On 25 June, Prime Minister Hon Peter O‘Neill, CMG, MP (Prime Minister) advised Hon Kerenga Kua, MP, the then Attorney-General that a Brief-Out on legal services should be publicly tendered.

5.             On 6 August, the National Executive Council (NEC) appointed Mr Dairi Vele, as the Acting Secretary for the Department of Treasury (DoT).

6.             On 12 August, the DoT officials met with Union Bank of Switzerland, Aktiengesellschaft, Australia Branch (UBS AG) officials at Sydney, Australia.

7.              On 13 August, the DoT officials met with Morgan Stanley officials in Sydney, Australia.

8.             On 14 August, the DoT officials met with JP Morgan officials at Sydney, Australia.

9.             On 15 August, the DoT officials held a second meeting with UBS AG officials at Sydney, Australia.

10.          On 16 August, the DoT officials met with Credit Suisse officials at Sydney, Australia.

11.            On 19 December, the NEC during a Special Meeting No: 37/2013 in its Decision No: 479/2013 that the BPNG provide final evaluations on the proposals from Citi Bank and UBS AG to re-finance the International Petroleum Investment Company (IPIC) Exchangeable Bond.

12.           On 20 December, Hon Ben Micah, MP, Minister for State Enterprises and State Investment (SE&SI) wrote to Mr Loi Bakani, CMG, CBE, the Governor of Bank of Papua New Guinea (BPNG) and requested the BPNG to evaluate the potential financiers‘ proposals to re-finance the IPIC Exchangeable Bond.

13.           On 22 December, Mr Bakani advised Minister Micah that the four financiers should have been provided all the information and requested to bid for the Exchangeable Bond re- financing facility.

14.          On 27 December, Minister Micah requested Mr Bakani for clarification on the BPNG‘s advice on the four proposals by Hemsley Capital, ANZ/Barclay, CitiBank and UBS AG in regard to the refinancing of the IPIC Exchangeable Bond.

2014


15.           On 7 January, Mr Bakani advised Minister Micah that the State re-negotiate the funding structure of the proposals with the two Financiers, the UBS AG and Citi Bank in the event that the negotiations do not meet the State objectives, the State should consider othr Financiers.

16.           On 9 January, Mr Bakani forwarded the BPNG‘s recommendations to Minister Micah as requested that included the invitation of other potential Financiers apart from Citi Bank and UBS AG to re-finance the IPIC Exchangeable Bond.

17.           On even date, Mr Bakani requested the Prime Minister to allow the BPNG the mandate to assist the State in meeting the basic re-financing requirements in the negotiation process.

18.           On 14 January, Mr Wasantha Kumarasiri of Independent Public Business Corporation (IPBC), requested Mr Bakani to correct his advice to Minister Micah as it was incorrect and misleading when the actual amount should be AU$1.681 Billion and not AU$1.8 Billion.

19.           On 15 January, Minister Micah wrote to Mr Bakani and requested that the BPNG provide its final recommendations on the two Banks, UBS AG and Citi Bank.

20.         On 16 January, Mr Bakani requested all parties including the BPNG, Minister Micah, IPBC, and the DoT to draft the Terms of Reference to be used during negotiations with potential Financiers.

21.           On 17 January, Mr Bakani wrote to and advised Mr Kumarasiri that the BPNG‘s evaluations and recommendations were based on information provided in accordance with the NEC Decision No: 479/2013 in its Special Meeting No: 37/2013 that approved for BPNG to provide final evaluations on the proposals from Citi and UBS AG to refinance the IPIC Exchangeable Bonds; that Minister Micah advice the Government of United Arab Emirates the GoPNG‘s decision to redeem the IPIC Exchangeable Bonds and directed Miniser Micah to report back to NEC by end of January 2014 with the final evaluation report provided by BPNG.

22.         On even date, Mr Bakani requested Ms Natalie Yacoubian of Banque Nationale de Paris Paribas (BNP Paribas) to resubmit PNP Paribas proposal incorporating the refined terms.

23.          On even date, Mr Bakani requested Mr Mitchell Turner of UBS AG to resubmit UBS AG proposal incorporating the refined terms.

24.         On even date, Mr Bakani requested Mr Philip Graham to resubmit Citi Bank‘s proposal incorporating the refined terms.

25.         On even date, Minister Micah advised Mr Bakani that he expected a recommendation by Wednesday 22 January 2014.

26.         On 23 January, Mr Bakani recommended to the NEC to request the Abu Dhabi Government for an extension of six months, to allow time to improve on the proposal by BNP Paribas, the superior proposal, as well as the UBS AG, Citi Bank and ANZ/Barclays.

27.          On 27 January, Hon Don Polye, Minister for Treasury wrote to Mr Bakani and requested for a full brief on the implementation of the NEC‘s Decision No. 479/2013 regarding the re- financing of IPIC Exchangeable Bond.

28.         On even date, after its inconclusive asseement of the proposals from BNP Paribas, UBS AG, Citi Bank and ANZ/Barclays, Mr Bakani, recommended the UBS AG to Minister Micah, for the refinancing of the IPIC Exchangeable Bond.

29.         On 30 January, Mr Vele engaged UBS AG to act as the sole Financial Advisor and Lead Arranger, in relation to the management of the investment of the State in Oil Search Ltd by way of letter.

30.         Mr Bakani informed the Directors for Investment Banking, UBS AG that the State had accepted its proposal to re-finance IPIC Exchangeable Bond worth AU$1.7 Billion and that UBS AG to confirm in writing its commitment to fund the AU$1.7 Billion IPIC Exchangeable Bond.

31.           On even date, Minister Micah noted Mr Bakani‘s recommendations but he advised that the six months extension recommended would incur costs and was not possible.

32.          On 3 February, Minister Micah informed Mr Frank Kramer, Chairman for National Petroleum Company of PNG Ltd (NPCP) Board regarding the Exchangeable Bond and the appointment of UBS AG. At that material time, the Speaker of Parliament was yet to certifiy Kroton Act.

33.          On even date, Hon Minister Micah accepted the BPNG‘s recommendations and the NPCP‘s lead to re-finance IPIC Exchangeable Bond process on behalf of the Independent State of Papua New Guinea (State), even though NPCP had no legal basi to conduct business for and on behalf of the country and the government of PNG.

34.         On 4 February, the Prime Minister advised HH Sheik Mansour bin Zayed Al Nahyan that the State wanted to retain its shares in Oil Search Ltd.

35.          On 7 February, Mr Bakani re-assured Minister Micah on its recommendation to use UBS AG to re-finance IPIC Exchangeable Bond.

36.          On 13 February, a Mandatory Exchange Notice to Deutche Bank AG, London Branch (Exchange Agent) indicated that the IPIC did not want to sell its shares to Government of Papua New Guinea (GoPNG).

37.          On even date, Mr John Leahy, Head of Business Assurance & Asset Serving, National Nominees Limited, consented and became a member of Oil Search Ltd and undertook trading of Shares on the Australian Stock Exchange.

38.          On 23 February, the Prime Minister, Mr Peter Botten, MD of Oil Search Ltd, Mr Gerea Aopi, Board Chairman for Oil Search Ltd and Mr Vele met at Grand Papua Hotel and decided over a cup of coffee for the State to buy 149, 390, 244 shares which translated to 10.01
% shareholding in Oil Search Ltd.

39.          On 24 February, Hon Rimbink Pato, MP, Minister for Foreign Affairs and Immigration (FAI) advised HH Sheikh Abdullah bin Zayed Al Nahyan, the Minister for FAI, Abu Dhabi, United Arab Emirates, that the GoPNG wanted to retain ownership of the Oil Search Ltd shares.

40.         On 25 February, UBS AG wrote to Mr Vele and outlined the terms of engagement of UBS AG as the Sole Financial Advisor and Sole Lead Arranger that was effected on 30 January 2014, in relation to the management of the investment of the State in Oil Search Ltd and associated matters flowing from the issuance in 2009 of Exchangeable Bond in respect of the State‘s 196.6 million shares in Oil Search Ltd to the IPIC of Abu Dhabi. This is done with a conflict of interest.

41.          On even date, trading in Oil Search Ltd shares halted ahead of its announcement issuing shares to existing shareholders and interested buyers.

42.         On even date, His Excellency Grand Chief Sir Michael Ogio, G.C.L, G.C.MG, K.St.J the Governor-General of Papua New Guinea (GGPNG) signed the document agreements which were witnessed by Mr Carl Okuk as a Commissioner for Oath witnessing the agreement on the terms and conditions of engagement of UBS AG. The action of the GGPNG was improper and unconstitutional as per Section 2(1) and 3(1) of the Loans (Overseas Borrowing) Act (Chapter 133).

43.         On 26 February, Prime Minister wrote to Mr Botten regarding the State‘s willingness to buy shares in Oil Search Ltd.

44.         On 27 February, four days after the meeting, the Prime Minister wrote to Mr Guy Fowler, the MD for UBS AG regarding UBS AG proposal to provide funding facilities to the State in connection with the subscription by the State for approximately 149.39 million shares in Oil Search Ltd at AU$8.20 per share. (Refer to said dated letter). Facts relevant to this query are set out in page 38

45.         On even date, the Subscription Agreement was signed between UBS AG (the Equity Derivative Financier) and Oil Shares Limited.

46.         On even date, Oil Search Ltd shares trading were suspended ahead of its announcement.

47.         On even date, Oil Search Ltd announced that it had agreed to acquire a 22.835% gross interest in PRL 15 (Elk Antelope) from the Pac LNG Group Companies for US$900 million to be funded through a placement of new shares to the State.

48.         On even date, the UBS AG forwarded a Commitment Letter that was signed by the GGPNG which was witnessed by Mr Okuk.

49.         On 4 March, Ashurst Lawyers forwarded draft documents for its client UBS AG to the State that outlined the financial package that UBS AG was offering the State.

50.         On even date, Mr David Heathcote of KPMG presented KPMG‘s analysis on the monetised collars relating to financing the purchase of Oil Search Ltd shares.

51.           On 5 March, Mr Fowler requested the Prime Minister to intervene in resolving the IPIC Exchangeable Bond, PNG LNG direction-to-pay and Sovereign Bond take-out of the Bridge Loan.

52.         On even date, Mr Vele requested Mr Daniel Rolpagarea, the State Solicitor to give legal clearance on the documents relating to the transaction for the State to acquire 149,390,244 shares in Oil Search Ltd.

53.          On even date, Mr Rolpagarea requested Mr Vele to provide to him details of confirmation and clear instructions on the engagement of Pacific Legal Group Lawyers and the breach  of Section 209 of (Parliament Responsibility) of the Constitution by the NEC.

54.         On even date, NPCP Board Chairman submitted a proposal to the IPBC Board advising of the State‘s acquisition of 149,390,244 shares in Oil Search Ltd and that UBS AG required NPCP to enter into a payment direction between NPCP, PNGLNG Global Company LDC (GloCo).

55.          On even date, Mr Rolpagarea advised Mr Vele that the NEC Submission needed approvals from the relevant Agencies‘ Boards and the Parliament for the Bridge and Collar loans totalling AU$1.239 Billion.

56.         On 6 March, the UBS AG issued a Bridge Takeout Letter to Mr Vele that outlined the terms of the fees payable to UBS AG as Facility Agent under the Bridge Facility Agreement that was signed by the GGPNG and witnessed by Mr Okuk.

57.          On even date the UBS AG as the Facility Agent for the loan wrote to Mr Vele and requested for the State to pay the Facility Agent fees as per the Bridge Facility Agreement that was signed by the GGPNG and witnessed by Mr Okuk.

58.          On even date, the UBS AG as the Security Trustee for the loan wrote to Mr Vele and requested for the State to pay the Security Trustee fees as per the Bridge Facility Agreement that was signed by the GGPNG and witnessed by Mr Okuk.

59.         On even date, the Prime Minister submitted an NEC Policy paper No: 67/2014 to the NEC.

60.         On even date, the NEC in its Decision No: 79/2014 appointed Petromin as the State‘s subscriber and nominee for the transaction, confirmed the authority of the Treasurer, execute the Payment Direction Deed by NPCP, approved the payment direction by IPBC, Central Supply Tender Board (CSTB) to issue a Certificate of Inexpediency (COI) and Authority to Pre-Commit (APC) to be executed by the Department of Finance (DoF).

61.           On even date, Mr Vele advised Minister Polye that the loan would not affect the State‘s debt program and that Petromin was the subscriber and nominee.

62.         On even date, Mr Vele requested Mr Philip Eludeme, the Chairman for CSTB to approve the request for COI at the earliest to cover the advisory costs.

63.          On even date, the Prime Minister advised the GGPNG, that the NEC approved the borrowing of a loan for the purpose of purchasing shares in Oil Search Ltd and for the purpose of meeting the expenses of the borrowing itself.

64.         On even date, Mr Okuk representing Mr Vele delivered 28 documents pertaining to the UBS AG loan to Mr Rolpagarea for his legal clearance.

65.         On 7 March, Mr Vele explained to Mr Eludeme that the COI was needed to access funds to pay for fees pertaining to the State‘s acquisition of the shares in Oil Search Ltd.
66.         On even date, Mr Vele requested Mr Rolpagarea to issue legal clearance on the submission regarding the State‘s borrowing of loan arrangements.

67.          On even date, the Prime Minister informed IPBC of the government‘s decision to enter into the agreement.

68.         On even date, Ambassador (Amb) Isaac Lupari, the Chief of Staff to the Prime Minister, advised Mr Kumarasiri that the NEC approved the State‘s intent to borrow from UBS AG to fund its acquisition of shares in Oil Search Ltd.

69.         On even date, Minister Micah directed the Board of IPBC to approve the Payment Direction Deed and to sign the Payment Direction Deed on or before 09 March 2014.

70.          On 8 March, Mr Vele emailed to and requested Dr Thomas Webster, the then Chairman for IPBC Board, to progress the documents to the IPBC Board for its consideration and approval. The electronic mail included electronic copies of documents that Mr Vele had prepared for the IPBC Board and NPCP Board to endorse and approve. The attachments are as follows:

Memo with explanation of Transaction and the Payment Direction Draft Payment Direction Deed
Draft IPBC Shareholder Resolution regarding Payment Direction Draft IPBC Director Resolution regarding Payment Direction Draft NPCP Board resolution regarding Payment Direction
Draft Power of Attorney regarding Payment Direction.

71.           On even date, Mr Kumarasiri advised Dr Webster to issue instructions to the management of IPBC Management to prepare documents in anticipation to receive requests from the Board of NPCP with their resolutions.

72.          On 9 March, Mr Erastus Kamburi, the Chief Legal Officer for IPBC, requested the IPBC Directors to meet and discuss on the directives from the Minister Micah and Amb Isaac Lupari and the NEC Decision No: 79/2014.

73.          On even date, an Explanatory Note was prepared with the Board Circular Resolution outlining the purpose of the Special Board Meeting.

74.         On even date, the NPCP Special Board of Directors Meeting No: 02/2014 resolved that the Company enter into any Transaction Document to give effect to the Payment Direction Deed and authorised Mr Sonk and Mr Wato with the Power of Attorney.

75.          On even date, the NPCP Board empowered Mr Sonk and Mr Rogen Wato, the Company Secretary for NPCP with the Power of Attorney.

76.          On even date, Mr Sonk verified copies of the Shareholder resolutions of the NPCP dated 09 March 2014, Minutes of a Meeting of the Board of Directors and Power of Attorney of the NPCP.

77.          On even date, Mr Wapu R Sonk, Managing Director for NPCP forwarded to Mr Kumarasiri an Extract of the Board Meeting Minutes.

78.          On even date, Mr Rolpagarea advised Mr Vele that the Treasurer was the authorised person to execute loan agreements on behalf of the State strictly in accordance with Section 209 (Parliament Responsibility) of the Constitution.

79.          On even date, Norton Rose Fulbright wrote to the GGPNG and the Minister for Treasury regarding financing of the acquisition of the shares and possible options to re-finance following completion.

80.         On even date, Norton Rose Fulbright wrote to the GGPNG outlining what documents needed to be signed in order for the State to borrow AU$1.239 billion to purchase Oil Search Ltd shares.

81.           On even date, the GGPNG signed the document enabling the State to borrow AU$335 million from UBS AG for the purpose of the purchase of shares in Oil Search Ltd and for the purpose of meeting the expenses of the Borrowing and for the services of the State.

82.         On even date, Mr Kumarasiri wrote to Hon James Marape MP, Minister for Finance and requested him to approve the Memorandum of Approval to enable NPCP to enter into the Transaction Documents.

83.          On even date, Minister Polye advised Mr Vele that he will not sign the documents that enabled the State to borrow the said UBS AG loan.

84.         On even date, Minister Marape approved the Memorandum of Approval that enabled NPCP to enter into the Transaction Documents.

85.          On 10 March, IPBC Board resolved that NPCP Directors enter into the Transaction Documents and recommend to the Minister for Finance to approve a proposal by NPCP to enter into Agreement to execute all documents that gave effect to the Payment Direction Deed.

86.         On even date, the NPCP Board deliberated and resolved and authorised Board to enter into Agreement to execute the Transaction Documents.

87.          On even date, Mr Eludeme advised Mr Vele that the CSTB resolved and approved the issuance of the COI for the awarding of contracts to both local and international Consulting Firms.

88.          On even date, Mr Vele confirmed with Mr Rolpagarea that the GGPNG and Minister for Treasury were to execute the transaction documents to purchase Oil Search Ltd shares on behalf of the State.

89.         On even date, Mr Kumarasiri certified the Circular Resolution of the Board of Directors of IPBC that authorised the execution of the Payment Direction Deed by NPCP.

90.         On even date Mr Kumarasiri wrote a Memorandum of Recommendation recommending Minister Marape to approve the NPCP to enter into the Transaction Documents.

91.           On even date, the Prime Minister decommissioned Hon Polye as the Minister for Treasury.

92.         On even date, Hon Polye accepted his decommissioning as Minister for Treasury by the Prime Minister.

93.          On even date, the National Gazette No: G83 and G89 of 10 March 2014 confirmed the decommissioning and replacement of Hon Polye as the Minister for Treasury by the Prime Minister.

94.         On even date, the Determination of titles and responsibilities of the Prime Minister Hon Peter O‘Neill, MP also changed to allow him to act as the Minister for Treasury that enabled him to sign the loan contract agreements on the same date.

95.         On even date, Mr Vele requested Dr Ken Ngangan, Acting Secretary for DoF to approve the payment to UBS AG in relation to the acquisition of the shares.

96.         On even date, Mr Rolpagarea advised the GGPNG that all documentations relating to the borrowing were in order and that Mr Vele was satisfied with the Terms of the Transaction Documents.

97.          On even date, the State and Oil Search Ltd signed and exerted the subscription Agreement.

98.         On even date, Mr Vele advised Mr Eludeme that the local and international financial and legal Advisors should be paid for services rendered.

99.         On even date, the DoT deposited K1,250,000.00 into Pacific Capital Ltd Managed Account with ANZ bank (PNG) Ltd.

100.      On even date, Hon Don Polye, then Minister for Treasury was interviewed at the Ombudsman Commission Office at Deloitte Tower, Port Moresby during which he stated that it was during his term as Treasurer that the 2014 budget was compiled and tabled in Parliament

101.        On 11 March, Mr Kamburi advised Mr Kumarasiri that the Certificate did not include the Shareholder Resolution which was signed and hence he sent an amended and verified Certificate for Mr Kumarasiri‘s signature.

102.      On even date, Minister Marape gave his approval for the NPCP to enter into Payment Direction Deed.

103.       On even date, Dr Ngangan and Mr Vele signed and approved the APC form to release AU$14,555,759.00 to be paid to the Consultants relating to the purchasing of Oil Search Ltd shares.

104.      On 12 March, Mr Babaga R. Naime, Acting Board Secretary for CSTB, advised Mr Rolpagarea that the CSTB awarded the Contract to both local and International Consulting Firms.

105.       On even date, Mr Eludeme certified that the inviting of tenders for the provision of financial, legal and technical advisory services was impractical or inexpedient.

106.       On even date, Dr Ngangan approved the application for the Department to complete and issue the APC for the above Procurement.

107.       On even date, the State, NPCP and UBS AG agreed to the terms and conditions upon signing the Payment Direction Deed that directed PNG Liquefied Gas Global Company (GloCo) to pay immediately available funds due to NPCP to UBS AG as per the NEC Decision No: 79/2014, even though at that material time the Kroton Act was yet to be certified by the Speaker of Parliament.

108.       On even date, UBS AG confirmed with Mr Vele the terms and conditions of the financing transaction that were entered into between the State and UBS AG in respect of Oil Search Ltd shares.

109.      On even date, the Prime Minster, Mr Vele, UBS AG (the Arranger), UBS AG (the Facility Agent) and UBS Nominees Pty Ltd signed the Bridge Facility Agreement.

110.        On even date, the GGPNG witnessed by Mr Okuk signed the Specific Security Deed (CHESS Securities - Collar) with UBS AG that provided security to the loan acquisition.

111.         On even date, the GGPNG, witnessed by Mr Okuk signed the Security Trust Deed with UBS Nominees Pty Ltd that provided security to the loan acquisition.

112.        On even date, the GGPNG, witnessed by Mr Okuk signed the Participant Sponsorship Agreement with UBS Nominees Pty Ltd.

113.        On even date, the Prime Minster, Mr Vele, UBS AG (the Arranger), UBS AG (the Facility Agent) and UBS Nominees Pty Ltd signed the Confirmation Side Letter.

114.        On even date, the GGPNG witnessed by Mr Okuk signed the Nominee Deed with UBS AG, UBS Nominees Pty Ltd and UBS Securities Australia for the Nominee (UBS Nominees Pty Ltd).

115.        On even date, the Substantial shareholders notice prepared and lodged with Port Moresby Stock Exchange (POMSox) and ASX lodged on 17 March 2014.

116.        On even date, the State (Subscriber) represented by the GGPNG witnessed by Mr Okuk signed the Subscription Agreement with Oil Search Limited (Issuer).

117.        On even date, Mr Stephen Gardiner, the Chief Financial Officer for Oil Search Ltd, advised that Goldman Sachs Financial Markets Pty Ltd with a Bank Account number 011-112034- 041 was the recipient of the Subscription.

118.        On even date, Oil Search Ltd announced completion of share placement and file appendix 3B, Cleansing Notice and Completion Letter.

119.        On 14 March, the Substantial shareholder notice prepared and lodged with POMSoX and ASX (lodged on 17 March 2014).

120.      On even date, the Commission issued directives under Section 27(4) of the Constitution determined that it was necessary to issue a direction under Section 27(4) of the Constitution to freeze all further progress on the PGK3 Billion loan and requested for collective cooperation from the Prime Minister; and the members of the NEC; the Chief Secretary; the Minister for Treasury and the Minister for Finance; the Secretary, DoF; and the Secretary, DoT; the Attorney-General; and the Secretary, DJAG; the Governor of BPNG; Petromin; and IPBC;  and Port Moresby Stock Exchange Limited; and Oil Search (PNG) Limited; and UBS Nominees Pty Ltd.

121.        On 15 March, the Commission wrote to Mr Vele acknowledging receipt of his letter dated 14 May 2014 and advised that he will be advised on the Commission‘s independence and proceedings under Section 217(5) and (6) of the Constitution.

122.       On 20 March, Mr Rolpagarea advised Mr Naime on his legal opinion on the request for the issuance of Legal Clearance – CSTB COI 02/04 stating that the CoI shall only be issued during Natural Disaster; or Defence Emergency; or Health Emergency; or Civil Unrest and that the CoI cannot be applied retrospectively.

123.       On 26 March, during his interview with the Ombudsman Commission, Mr Rolpagarea stated that he was not given enough time to thoroughly go through the documents and that he was not present at the CSTB meeting that approved the issuance of the COI.

124.      On 28 March, Mr Eludeme advised Mr Vele that the State Solicitor declined the issuance of legal clearance.

125.       On even date, Mr Kumarasiri advised the Commission that the IPBC gave its approval for NPCP to go ahead with the transaction and referred the matter to the Minister for Finance to execute.

126.       On 31 March, Hon Kua, then Attorney-General was interviewed at the Commission Office at Deloitte Tower, Port Moresby during which he stated that he was never present at the NEC meeting that made the decision to approve the borrowing, nor was he consulted on the matter.

127.       On 3 April, Mr Bakani was interviewed at the Commission Office at Deloitte Tower, Port Moresby during which he stated that the BPNG was not involved in the second part of the UBS AG loan in which the loan was obtained to purchase shares in Oil Search Ltd.

128.       On 10 April, Mr Eludeme advised Mr Vele that the Board effectively nullified the issuance of the COI for the engagement of private Consultants.

129.       On 11 April, Mr Sonk directed Mr Peter Graham, MD for GloCo to divert all distributions of payments payable to NPCP to be paid to UBS AG (Singapore Branch).

130.       On even date, Mr Sonk and Mr Wato of NPCP directed Mr Graham of Esso Highlands who was also the MD for GloCo to immediately pay all available funds to UBS AG.

131.        On 22 April, Ashurst Lawyers advised Norton Rose Fulbright of Australia that non- compliance with payment obligations would constitute an Event of Default and UBS AG can commence enforcement processes without further reference to the State.

132.       On 28 April, Hon Polye reiterated to Hon Theodore Zurenuoc, the Speaker of Parliament, his position that the government‘s borrowing UBS AG loan was bad.

133.       On 30 April, Hon Polye stated to the Commission that the loan was an unplanned activity and it was not a prudent thing to do and it breached the 2014 Budget Appropriation Bill and the Fiscal Responsibilities Act.

134.       On even date, Ms Tessa Hoser of Norton Rose Fulbright of Australia advised Mr Vele that in the event of a default UBS AG would charge default interest on any unpaid interest.

135.       On 2 May, Hon Don Polye instituted proceedings in OS 142 of 2014 against the Hon Peter O‘Neill, Prime Minister, Hon Patrick Pruaitch and the State.

136.       On even date, during his interview with the Ombudsman Commission, Mr Vele stated that the State engaged UBS AG together with the other financial and legal firms as they were already providing the services.

137.       On 8 May, the National Court (Salika, DCJ) OS 142 of 2014 ruled that Hon Polye‘s application be dismissed on the grounds of abuse of process of the National Court rules.

138.       On 9 May, Mr Anthony Yauieb, Deputy Secretary for DoT, stated to the Commission that the NEC Policy Submission on the UBS AG Loan to purchase Oil Search Ltd shares was prepared outside by Mr Vele.

139.       On 14 May, Mr Vele advised the Commission that the State is required to make periodic interest payments to UBS AG.

140.      On even date, Finance Forms number 3 & 4 (FF3& FF4) indicated AU$2,261,938.36 which is about K5,543,966.57 was paid to UBS AG.

141.        On 15 May, Mr Luke Goldsworthy and Ms Celle Raguine, Representatives of UBS AG pointed out to Mr Vele that failure to pay interest breached clause 5.1(b) of the Agreement which states that all payments to be made under the Commitment Documents shall be paid in the currency of the invoice and immediately available, freely transferable cleared funds and shall be paid without set-off or counterclaim or any deduction or withholding for or on account of tax (a ―Tax Deduction‖) unless a Tax Deduction is required by law. If a Tax Deduction is required by law to be made, the amount of the payment due shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction has been required;‖

142.      On even date, Mr Vele requested clearance from Commission on the interest payment to UBS AG.

143.       On 16 May, Mr Vele instructed Mr Bakani to immediately process and remit funds to the UBS AG.

144.      On even date, Mr Vele advised Mr Bakani that interest payment must be paid to UBS AG.

145.      On even date, Ms Betty Palaso, Commissioner-General for Internal Revenue Commission (IRC) issued a Tax Clearance Certificate to the DoT to transfer or remit moneys for the purpose of payment of interest on UBS AG Loan.

146.      On even date, a copy of the Notification (transmission) of Original indicated that the BPNG transferred AU$2,261,938.36 to the Reserved Bank of Australia.

147.       On 19 May, Hon Don Polye filed an application under to Section 18(1) of the Constitution that in SCCOS No. 1 of 2014 to be part of the Supreme Court proceedings relating to the borrowing of the UBS AG loan.

148.      On 23 May, the Commission responded to Mr Vele‘s letter dated 15 May 2014 and advised that the Commission‘s investigation into the UBS AG Loan was continuing and that Section 27(4) of the Constitution was still in force and that it also applied to the interest payments to UBS AG.

149.      On 27 May, Dr Clement Waine, Acting Secretary, Department of Public Enterprise (DoPE) explained that neither he nor his Department were involved in the matter been investigated.

150.       On 3 June, Mr Kramer stated that NPCP was involved in the execution of the Payment Direction Deed as per the IPBC Board request and direction.

151.        On 5 June, Mr Vele wrote to the Commission and stated that the Commission does not have the power to issue directives to stop such interest payments. To fail to make the interest payments would simply not be in the best interest of Papua New Guinea or its people.

152.       On even date, Mr Eludeme confirmed that CSTB approved a request for application for COI by Mr Vele.

153.       On 6 June, Mr Vele as second Plaintiff and the Hon Peter O‘Neill, Prime Minister as First Plaintiff filed proceedings in OS (JR) 383 of 2014 the National Court against the Commission and the State seeking Courts powers under Section 18(2) of the Constitution to refer questions to the Supreme Court on the Commission‘s power to issue Directions under Section 27(4) of the Constitution and Section 23 and 27(5) of OLDRL.

154.      On 12 June, Dr Lawrence Kalinoe, Secretary for DJAG, advised the Commission that neither he nor his Department was involved in the UBS AG Loan transaction.

155.       On 13 June, Hon Kua categorically denied the allegations that he was personally involved in giving clearance for the UBS AG loan and that he was not present in the NEC Special Meeting No 37/2013 that approved the UBS AG loan.

156.       On 4 July, Mr Vele advised the Commission that the UBS AG loan transaction was constitutional and had been lawfully undertaken by the State and its related parties in every aspect including the decision made over a cup of coffee at the Grand Papua Hotel by the Prime Minister, Mr Botten, Mr Aopi and Mr Vele.

157.       On 7 July, Mr Ilagi Veali, MPS, Secretary to the NEC forwarded copies of the NEC Special Meeting No: 08/2014 together with the list of Cabinet Ministers who were present or absent at the Special Meeting.

158.       On 27 October, Pacific Legal Group Lawyers representing the Hon Peter O‘Neill, Prime Minister and Mr Vele, mared the proceedings in OS (JR) No. 383 of 2014 for the Court to refer certain questions to the Supreme Court for interpretatin.

159.       On 3 December, the National Court granted the application by the Hon Peter O‘Neill, Prime Minister and Mr Vele and referred various questions to the Supreme Court for interpretation pursuant to Section 18(2) of the Constitution. The Court also ordered that the proceedings in OS (JR) No. 383 of 2014 be stayed.

160.       On 8 December, the Ombudsman Commission issued the Provisional Report to those implicated.

161.        On 11 December, copies of Provisional Reports were delivered to Hon James Marape, Minister for Finance, Dr. Ken Ngangan, Acting Secretary for DoF, Mr Dairi Vele, Acting Secretary DoT and Mr Loi Bakani, Governor for Central Bank.

162.       On 12 December, copies of the Provisional Report were delivered to Hon Peter O‘Neill, Prime Minister, Hon Ben Micah, Minister for State Enterprise and State Investments, Mr Philip Eludeme, Chairman of CSTB and Amb Isaac Lupari, Prime Minister‘s Chief of Staff.

163.       On 16 December, a copy of the Provisional Report was delivered to Mr Carl Okuk, legal consultant.

164.      On 22 December, Young & Williams Lawyers representing the Prime Minister Hon Peter O‘Neill, MP responded to the Provisional Report, refuting any wrong doing and that the Commission‘s investigations were fatally flawed. The Prime Minister‘s Lawyers did not request for an extension of time as required.

2015

165.       On 8 January, the National Court ruled pertaining to OS No. 810 of 2014 that the Constitutional question be referred to the Supreme Court and interim injunctions and a stay of proceedings on the leadership tribunal.

166.       On 22 January, Dr Ken Ngangan responded to the Provisional Report.

167.       On 23 January, Mr Vele, Acting Secretary, DoT responded to the Provisional Report.

168.       On even date, Hon Peter O‘Neill, Prime Minister made an application to the National Court seeking referral of several questions for interpretation by the Supreme Court under Section 18(2) of the Constitution.

169.       On 16 February, Mr Frank Kramer, Chairman, KPHL responded to the Provisional Report.

170.       On 18 February, Mr Vele submitted his affidavit in the matter SCR No.7 of 2014 relating to the Special Reference by Hon Ano Pala, Minister for Justice & Attorney-General, MP before the Supreme Court.

171.        On 24 February, Mr Loi Bakani, Governor for Central Bank responded to the Provisional Report.

172.       On 25 September, Young & Williams Lawyers responded on behalf of Prime Minister Hon Peter O‘Neill, MP filed a schedule of questions and proposed answers to questions in consolidated references pursuant to Order made 11 August by the Bernard Sakora, J.

173.       On even date, Young & Williams Lawyers representing the Prime Minister Hon Peter O‘Neill, MP filed a Special Reference 7 of 2014 and SC References No. 1 and 2 of 2015 referring 13 Constitutional questions to the Supreme Court to answer.

2016

174.       On 19 July, Justice Catherine Davani of the National Court made reference to the Supreme Court under SCR No. 5 of 2016, eleven (11) questions pertaining to whether the OC had the jurisdiction to investigate the PM and whether or not the issuing of the OLOC Provisional Report ultra vires the power of the Ombudsman Commission.

175.       On 28 July, Justice Catherine Davani submitted Facts pertaining to the Supreme Court Reference SCR No. 5 of 2016.

176.       On 19 August, the Ombudsman Commission submitted an Intervention to be part of the Supreme Court Reference SRC No. 5 of 2016.

177.        On even date, the Prime Minister Hon Peter O‘Neill, MP submitted an Intervention to be part of the Supreme Court Reference SRC No. 5 of 2016.

178.       On 20 September, Hon Ano Pala, Attorney-General submitted an Intervention to be part of the Supreme Court Reference SRC No. 5 of 2016.

179.       On 26 September, Hon Ano Pala, Attorney-General amended his statement of response and submitted it as part of his Intervention to be part of the Supreme Court Reference SRC No. 5 of 2016.

180.       On even date, the Prime Minister Hon Peter O‘Neill, MP through his lawyers filed an injunction on the matter OS No. 15 of 2015 in the National Court.

2017

181.        On 6 October, the Supreme Court dismissed the Supreme Court Reference SCR No. 5 of 2016 made by Justice Catherine Davani and returned the matter to the National Court.

182.       On 15 November, the Supreme Court conclusively determined that the Office of the Prime Minister does fall within the OLOC functions of the Commission. There was therefore no utility in the current proceedings. Therefore, the court dismissed the entire proceedings

with costs and discharged any injunction that may have been issued against the Commission on this matter.

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