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13-Jul-2017 03:42 by 5 Comments

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Prime Minister O’Neill himself admitted in February 2014 that billions of kina in taxpayers money has been wasted, stolen or misused by state-owned corporations over the last 40 years.The UBS Loan has attracted a storm of criticism over the years, including from Transparency International, the official National Research Institute, the private-sector Institute of National Affairs, senior politicians and expert commentators, as well as becoming the target of an investigation by the Ombudsman Commission.It was signed off by the Prime Minister himself as acting Treasury Secretary, but neither he nor the National Executive Council (PNG’s version of Cabinet) sought the required Parliamentary approval for it.The deal, in which Union Bank of Switzerland loaned PNG $A1.3 billion (K3 billion) to buy a 10% shareholding in Oil Search, has now been unwound, at crippling financial cost to the near-bankrupt Pacific Island nation.Its collapse renews questions about the transaction, known as the UBS Loan, and the involvement of the Prime Minister and his cronies.In addition, Papua New Guinea now no longer owns any shares in Oil Search, which has been regarded by successive governments as a critical strategic investment.

It is also facing the prospect of the company being taken over by a corporation much less likely to be as sympathetic to the national interest and much less likely to engage in illegal conduct with the Government.Oil Search, largely through MD Botten and executive director Gerea Aopi, has an almost symbiotic relationship with corrupt PNG Governments going back many years, first through the Government of Michael Somare between 20 and then with the O’Neill Government from 2012 to date.The election of the Somare Government in 2002 opened the floodgates of corruption, transforming what was largely opportunistic theft into systematic abuse of government and semi-government finances.The loan was a flow-on from Papua New Guinea’s original decision to buy its 19.5% share in the PNG LNG project on behalf of itself and project landowners.The project is managed by US giant Exxon-Mobil, and other partners are Oil Search and Santos of Australia and Nippon Gas of Japan.In essence the funding for the project was obtained using Papua New Guinea’s 17.6% shareholding in Oil Search as collateral, creating a fundamental conflict of interest for Aopi and Oil Search.

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