Papua New Guinea’s government has appealed to the Australian Federal Police and the Singapore Police to assist PNG police to link money laundering trails.

Speaking in Parliament yesterday, Prime Minister James Marape said Australia and Singapore had been the major hub of transit for possible money laundering activities.

He wants help from police in the two countries to assist PNG police in their fight against corruption in the country.

“We are fighting corruption. For instance, we are following the footprints of the [A$1.2 billion Swiss bank] UBS money that has gone deeply rooted so our police are working on it,” he said.

“Therefore I want to encourage police in Singapore and police in Australia assist PNG police to deal with money laundered from PNG.

“I want to appeal again to the Australian police and Singaporean police to assist our police and I make this statement as the Prime Minister of this country.

“And in the case of UBS, we have made [a] deep incision, we are following the money trail, the entire loot that was looted from this country,” he said.

‘Prioritise law and order’
“I want to give commendation to the Police Commissioner, David Manning — he is not here to stop tribal fights; stopping tribal fights is the job of our members of Parliament.

“Governors you have PSIP (constituency development funds) funds so prioritise law and order using your funds, do not wait for police commissioners to come and stop tribal fights.

“PNG has been labelled a corrupt country so I don’t want to leave this label for the next 20 years so we have to make an example out of other existing corruption that has been documented and evidence are used.

“And the ICAC [Independent Commission Against Corruption] commission of inquiry has sufficient evidence for us to pursue our efforts to fight corruption.

“I will indicate to this House that we will bring to this floor of Parliament the Finance Inquiry again and other inquiries that are outstanding.

“We will revisit if they are not time bound but we will not limit the limited police capacity so that is why I appeal to Singapore police and Australia police to assist my policemen to link to the money trails,” the Prime Minister said.

“Monies do not hide, monies move from one bank account to another bank account, forensic auditors and investigators will follow the money trials and our police are working as part of the law and order conversation, focusing on our country like fighting corruption like never before,” he said.

Marape said the ICAC, Ombudsman Commission and police would work in partnership in the pursuit to address corruption in the country.

He said with the efforts to strengthening the work of the ICAC, three commissioners had been appointed while a third Ombudsman commissioner would be appointed this week.

Jeffrey Elapa is a PNG Post-Courier reporter. Republished with permission.

Article by AsiaPacificReport.nz

Deputy Prime Minister Davis Steven has been tasked to set boundaries on the terms of reference and set a timeframe to complete Papua New Guinea’s proposed Commission of Inquiry into the UBS Loan Report. Video: EMTV News

By Miriam Zarriga in Port Moresby

Papua New Guinea Prime Minister James Marape says he will resign from office if found guilty of improper conduct in securing the controversial K4 billion (NZ$1.8 billion) UBS – Union Bank of Switzerland – loan five years ago.

He said during question time in Parliament yesterday that he was open to total scrutiny but insisted all other players, including private lawyers, accountants, Oil Search, Kumul Petroleum Holdings Limited, and all members named in the report, including former prime minister Peter O’Neill, would be open to the commission of inquiry.

Marape said the Australian Security Commission would be asked to provide information on the loan while the UBS commission of inquiry would act as a precursor to what the Independent Commission against Corruption (ICAC), would eventually be and would continue as a buffer for corruption into the future.

READ MORE: PNG leadership rivals O’Neill, Marape both implicated in UBS loan saga

The then government of Peter O’Neill had borrowed A$1.239 billion (K4bn) from the Australian branch of UBS to buy 149,390,244 Oil Search Limited shares in 2014.

“The UBS report that was furnished in this House and emanates from the Ombudsman Commission was more geared towards establishing the culpability of leadership breaches in the context of those of us who held offices in relation to our subscription to the Leadership Code of conduct,” he said.

“When I made the announcement in response to the tabling of this report, it was my humble opinion that a greater cry was out there. While the focus was on those of us that hold leadership the offices pertaining to the subscription of Leadership Code, the UBS saga extends beyond leadership breach and culpability that relates to the leadership, a greater step back and a dive into the entire UBS saga in the first instance.

“The OC report is one that has come out for the benefit of the public and Parliament and for the benefit in the instance for the OC to pick on and expand beyond just a report, and see those of us implicated and breach of the leadership code and for them to initiate individual proceedings in this manner,” Marape said.

Terms of reference
“The COI (commission of inquiry) must be established to fully ascertain whether there are other corruptions involved in the entire saga, an inquiry will be set up on the earliest I have asked the Deputy Prime Minister and Attorney-General to bring into Cabinet at the earliest a paper that will entail the inquiry start, when it will terminate and what the boundaries of the Terms of Reference of the inquiry.

“The investigations will not stop at the leadership level and that involves some of us including the former prime minister, in the process of UBS our country lost money and lost in the billions and we need to know exactly how much we lost.

“Oil Search will be asked to answer several questions including what happened to the 10.01 per cent of shares the country should have a share in, with KPHL asked on their involvement in the UBS loan as well.

“The former PM made a suggestion that the UBS saga predates even as to when UBS took place, it might be correct it may not be correct, the question of corruption the question of the possibility of corruption doesn’t only entail leadership breaches, but goes beyond this one to fully ascertain what has transpired.

“And in the name of giving honest sincere answers to the public who demand accurate information on what has taken place.”

Marape said the commission “must be established to fully ascertain whether there are other corruptions involved in the entire saga because the question is whether there is corruption in the UBS transaction”.

He added the inquiry “must establish who are the middlemen, the nation talks about corruption.

Leadership breach?
”We need to establish not only Leadership Code breach but entire criminality in it if there was any criminal offence conducted by anyone”.

“Money flowed from UBS to purchase of Oil Search shares, what happened beyond the Oil Search share, did PNG government spend any money it? The nation deserves greater scrutiny instead of just leadership scrutiny, how much did we lose in the process and revenue that was meant to support the budget of 2014-2016 if we did lose it, the inquiry must ascertain and establish exactly how much we lost,” Marape said.

“We want this to be concluded at the earliest and questions must be framed to make up the terms of reference when it is established.”

Miriam Zarriga is a reporter with the PNG Post-Courier.

Article by AsiaPacificReport.nz

By Johnny Blades of RNZ Pacific

Political fallout from a controversial loan taken on by Papua New Guinea’s government five years ago could hinder rather than help attempts to remove Prime Minister Peter O’Neill.

O’Neill and other leading officials have been referred by the Ombudsman Commission to a Leadership Tribunal over a US$1.2 billion loan his government took on from Swiss-based investment bank UBS in 2014.

The ombudman’s report, which was completed last December but only handed to the Parliament Speaker, Job Pomat, late last month, is yet to be tabled in the house.

READ MORE: UBS loan to PNG may have breached 15 laws

LISTEN: The controversial loan saga on RNZ Dateline Pacific

However, the report has been published at a time when the parliamentary opposition, bolstered by recent defections from the government, is planning for a vote of no confidence against the prime minister later this month.

The UBS loan was nominally taken for the state to buy a 10 percent stake in oil and gas producer Oil Search, a major player in PNG’s burgeoning petroleum sector.

In last week’s heated Parliament debate the prime minister said it was imperative for the state to regain Oil Search shares.

These were earlier lost after being mortgaged by PNG’s Sir Michael Somare government in 2009 as it sought finance from the United Arab Emirates-based International Petroleum Investment Company to gain equity in the country’s first LNG gas project.

‘Strategic investment’
“The Treasury officials said the Oil Search investment is a strategic investment to government,” O’Neill explained in Parliament last week.

“So the company decided to offer the government of Papua New Guinea at a special issue so we can secure the 10 percent. Why? Because Oil Search, even today, is the biggest company in PNG, is the biggest taxpayer in PNG.

However, the report reveals that the Ombudsman found the prime minister failed to present the government’s proposal on the borrowing of a loan, from UBS’ Australia branch, in Parliament for debate and approval as required by the constitution.

O’Neill was found to have misled the cabinet into approving the loan, among other irregularities. But he was not alone.

The commission’s findings also implicate the former Finance Minister, James Marape, who was found to have signed off the loan’s approval as minister despite knowledge of irregularities and “that his actions were improper”.

According to the opposition’s justice spokesman, Kerenga Kua, the deal and O’Neill’s lead role in pushing it through were very suspicious. He said the greatest transgression in the deal was its commercial injustice.

“In the end we only held that share for about twelve months before it was foreclosed by UBS and sold. So you see we don’t have those shares in our hands any more, because the state fell into default on that loan arrangement.”

Stock price fell
PNG was forced to sell its Oil Search shares when the stock price fell sharply, incurring a big loss. On the other hand, UBS profited around US$83 million in fees, interest and trading revenue from the deal.

Kua said the financial professionals involved in arranging the huge loan must have known the transaction was bound to fail for PNG.

“They would have seen this as a scam, a real professional scam. Because everybody knew of the state’s financial vulnerability, and its lack of cash flow to pay for that loan,” Kua said.

“Yet they created a monster, so that within a matter of months it would fall into default, and then you foreclose on the asset, cover yourself. But what are the people of PNG left with? Nothing, except a debt of 3 billion kina [NZ$1.4 billion].”

But an issue over which the opposition has been attacking O’Neill for years is now proving problematic for the MP seeking to replace the prime minister.

Marape, who resigned last month as minister and left the ruling party, has emerged as the opposition’s choice for alternative prime minister in a motion of confidence against O’Neill which it lodged last week.

But along with other officials, including Government Chief Secretary Isaac Lupari, Treasury Secretary Dairi Vele, and the Central Bank Governor Loi Bakani, Marape has also been referred by the Ombudsman Commission for investigation under the leadership code over the UBS loan. This undermines his own recent attacks on the prime minister.

Questions unsuccessful
Standing on opposite sides of the Parliament chamber for the first time last week, Marape questioned the prime minister about the loan process. The questions were unsuccessful because the prime minister was able to remind Marape that he was also involved in those decisions himself.

While it remains to be seen whether O’Neill, Marape and others will face the Leadership Tribunal, the opposition continues to portray the prime minister as the lead transgressor in the UBS saga and other controversies.

The former Health Minister, Sir Puka Temu, who also left the government last month, has portrayed the prime minister as exerting too much control on state departments, overriding the authority of ministers.

“I resigned because I saw things were not working well. There were a lot of corrupt practices and there were governance processes from agencies and bodies of the state that the leaders did not support,” Sir Puka said.

O’Neill has denied any wrongdoing, characterising the investigation as politically motivated, and part of a “dirty game” by the opposition as it tries to lure support to change the government.

He has indicated that the issue would be the subject of a judicial review.

Although he was a member of the last Somare government in its later stages, O’Neill has placed blame with that regime for placing PNG in a weak position when it sought finance in Abu Dhabi for the LNG Project.

Country ‘mortgaged’
“When they borrowed that money, when the mortgaged not only Oil Search, but they borrowed every state-owned entity of this country,” O’Neill explained.

“So if we wanted to sell one of the planes in Air Niugini, we had to ask the permission of the Arabs. If we wanted to sell one of the buildings in any of the SOEs, we had to ask the Arabs. So literally, we were mortgaged to the Arabs.”

But Kua said the O’Neill government’s purchase of Oil Search shares under the controversial UBS loan was a far more shoddy deal than the IPIC transaction.

“The IPIC transaction led to PNG owning 19.26 percent in the PNG LNG Project. That equity is still there and annually we are receiving over a billion kina in revenue from that project,” he explained.

The UBS loan was opposed from an early stage by the then Treasurer Don Polye, who ultimately refused to sign off on the deal before resigning in protest.

Polye insisted that the loan required parliamentary approval, warning that taking the loan on would break the country’s official debt ceiling.

The former Kandep MP was also not involved in the negotiations with Oil Search on the purchase of the shares.

‘Cup of coffee’
According to the Ombudsman report, the agreement to buy the shares was reached “over a cup of coffee” in a swanky Port Moresby hotel when O’Neill and Vele met with Oil Search’s managing director Peter Botten and its board chair, Gerea Aopi.

The government’s purchase of the Oil Search shares allowed the company to buy a stake in the Elk Antelope gas field in PNG’s Gulf province. This resource is being developed by French company Total SA to be the second major LNG project in PNG.

The Papua LNG Project agreement was signed by Total and the government last month.

However, the agreement immediately preceded the exodus from O’Neill’s ruling party, and was cited as a causal factor in the move by several of the MPs who resigned, including  Marape.

Warning that interests of provinces and landowners were not being protected, the MPs lamented that promised equity and royalty benefits from PNG’s first big LNG gas project, based in Marape’s province, had still not transpired, 10 years after that project agreement.

Meanwhile, the Chief Ombudsman, Richard Pagen, says the commission submitted its final UBS report to the Parliament Speaker, Job Pomat, on April 30.

Asserting that the commission has jurisdiction over the prime minister’s office, Pagen said the Speaker must table the report within 8 sitting days of receiving it.

Public interest
However, he added that the commission decided to publish the report as it considered it a matter of public interest

Only one day of Parliament sitting has lapsed since the handover of the report. That was last Tuesday, May 7, the same day the opposition lodged its motion of no confidence, when Pomat adjourned parliament until May 28.

PNG’s Attorney-General has filed a Supreme Court application to which could yet delay the confidence vote against the prime minister proceeding.

Opposition MPs say they’re confident that the vote will go ahead. The group is not likely to change Marape’s nomination as alternative prime minister, but his involvement in the UBS loan may yet count against him.

Article by AsiaPacificReport.nz