Call in PNG for oversight of SDP after Singapore ruling

7:31 pm on 8 April 2019

There's a call for Papua New Guinea's Sustainable Development Programme (SDP) to consider creating an oversight mechanism.

This comes after PNG's government lost its battle to seize control of the company's long-term $US1.4 billion fund for PNG's Western Province.

Ok Tedi mine, Papua New Guinea

Ok Tedi mine, Papua New Guinea Photo: Dev Policy

The fund is based in Singapore where the Supreme Court last week ruled that the government had "failed entirely" in its claim over the company.

SDP was established in 2001 when BHP Billiton divested its majority share in the lucrative Ok Tedi copper mine in Western Province to SDP.

The divestment followed legal action by Western Province landowners over extensive and long lasting environmental damage caused by the mine operations, particularly its riverine tailings disposal system.

In 2013, the government expropriated Ok Tedi Mining Ltd from the SDP, and sought control of the SDP's long-term fund for the province parked in Singapore.

The government argued that it could never have agreed when SDP was established to relinquish any rights of control or oversight.

But in his judgement, Justice Vinodh said there was no agreement or charitable trust that would share the company's assets with the government

Martyn Namorong, a Papua New Guinea writer and social commentator.

Martyn Namorong, a Papua New Guinea writer and social commentator. Photo: RNZ / Johnny Blades

PNG commentator Martyn Namorong welcomed the ruling, noting suspicion about the government's bid to access the SDP fund.

"Governance or oversight could have been used as a way of getting a leg-in to then have political interference in the utilisation of the funds," he explained.

"I am very pleased with how the initial fund creators thought through all of these political risks, and managed to set down really strong rules that enables the independence of the fund beyond political risk or other social risks including pressures from within Western Province."

But the case highlighted how the SDP board was very powerful and not accountable to anyone, he said.

"That scares me because maybe now we might have a sympathetic board, or a decent board. But later on, we don't know who is going to be on that board and what type of people they are," Mr Namorong said.

"So I think the current board members should be thinking of creating an oversight mechanism or something which maintains the independence of PNG SDP but allows some sort of feedback from the PNG government and of course the people of Western Province through their elected representatives."

Sir Mekere Morauta

Sir Mekere Morauta Photo: Post Courier

Claiming that the PNG state had a right to manage the fund, PNG's prime minister Peter O'Neill previously alleged the SDP board was influenced by foreign interests.

Mr O'Neill repeatedly clashed with his political rival, former PNG prime minister Sir Mekere Morauta, over the O'Neill government's nationalisation of the Ok Tedi mine and the move to access the fund.

Sir Mekere, a former chairman of SDP, said the long-term fund was invested overseas, by law, to protect it from unscrupulous people, including politicians.

Following the ruling, Mr O'Neill has said the government will appeal the decision, and  establish a Commission of Inquiry into PNG SDP.

But he's been urged to accept defeat and move on by Sir Mekere who said any commission of inquiry instituted by Mr O’Neill would be a waste of time and money.

“Sure, he could find some money-hungry legal figures to hold a fake inquiry,” Sir Mekere said. “But I know the company has nothing to hide and will take whatever Peter O’Neill throws at it in its stride."

He alleged that all Mr O'Neill sought was access to the long term fund, but that no commission of inquiry could deliver him that.

“What is really needed is an inquiry into Mr O’Neill’s actions in relation to PNGSDP and Ok Tedi, and whether he personally profited from the expropriation in any way, including through contracts to companies in which he had an interest or through contracts to his cronies.”

PNG PM Peter O'Neill

PNG PM Peter O'Neill Photo: AFP / Peter Parks

The prime minister insists the government's aim is to ensure the company's funds are given to the people of Western Province.

However, Sir Mekere explained that the fund is to be used for the benefit of the people of Western Province after mine closure.

“I want to assure the people of Western Province that the decision of the court means that those funds are safe," he said.

SDP had been criticised by numerous PNG politicians for not doing enough to foster development in remote Western province. But Mr Namorong said it was not always well publicised that SDP had contributed significantly to development in Western Province.

"It's easy for people in Western Province to post on Facebook about PNG SDP not doing anything. But the irony is that they wouldn't be able to get on Facebook if PNG SDP had not invested in those mobile towers," Mr Namorong said.

"They have made some very strategic investments in the province, and I think they really need to improve on their media and public relations in communicating their message on what they're doing in Western Province. They've done their fair share."

While some PNG politicians were anxious to tap into the lucrative fund for development purposes, it was established as a long-term fund because the environmental devastation from the mine in Western Province is expected to last for hundreds and maybe thousands of years.