15 May 2019
The Ombudsman Commission’s findings into the illegal K3 billion UBS loan affair raises questions about whether Prime Minister Peter O’Neill is a fit and proper person to hold this high public office, Opposition Leader Patrick Pruaitch said today.
In a damning 322-page final report titled, “Alleged Improper borrowing of A$1.239 billion from Union Bank of Switzerland”, the Ombudsman Commission has deemed that the actions of Prime Minister O’Neill “was wrong and improper” and that he had misled the National Executive Council.
Mr Pruaitch said it was clear that Prime Minister O’Neill had orchestrated the loan affair in order to purchase 149 million Oil Search shares and, in the process, had unscrupulously convinced other Cabinet Ministers and senior bureaucrats to make this criminal conduct possible.
“We now have a situation where the O’Neill Government borrowed K3 billion to purchase Oil Search shares which have been liquidated at a great loss to all Papua New Guinea citizens,” he said.
Mr Pruaitch said the Ombudsman report made it clear that one of the key reasons for the poor state of the PNG economy has been due to the diversion of the government’s LNG export revenues.
“This has directly contributed to inadequate levels of foreign exchange for normal day to day business operations that have resulted in big falls in private sector employment and declining average incomes throughout the country.
He said the Ombudsman had noted that because the UBS loan had been subscribed to by the National Petroleum Company, its Managing Director, Mr Wapu Sonk, had instructed the PNG LNG Project to divert revenues from LNG exports to the UBS branch in Singapore.
“Hundreds of millions of US dollars were diverted annually from the PNG economy, directly contributing to the shortage of foreign exchange and the inability of companies and individuals to import essential goods and services and causing a shrinkage of formal sector employment,” Mr Pruaitch said.
He said: “When my colleague, the Shadow Treasurer Hon. Ian Ling-Stuckey, asked Prime Minister O’Neill last week in Parliament why he was hanging on to office when many Coalition leaders had lost faith in his leadership, the Prime Minister tried to claim legitimacy because of his role as leader of the Peoples’ National Congress.
“The way I see it is that the PNC is a political party in total disarray. The illegal UBS loan highlighted by the Ombudsman Commission is just one of many improper actions and judgements that has resulted in severe hardships to most people throughout this country.
“Mr O’Neill needs to recognise that the ship of state is sinking under his poor and misguided leadership and he should step aside for a genuine change in direction.
“The chronology of events in the UBS loan fiasco enumerated by the Ombudsman shows incredibly that Mr O’Neill’s personal envoy in this transaction, then Acting Treasury Secretary Dairi Vele, had agreed to the purchase of 149 million Oil Search shares on 23 February while sharing a cup of coffee with Oil Search Managing Director Peter Botten and then Chairman Gerea Aopi at the Grand Papua Hotel.
“This event took place at a time the O’Neill Government was trying to convince the Abu Dhabi Government to sell back Oil Search shares previously acquired through the IPIC Exchangeable Bond transaction that provided the PNG Government with funds to pay for its 19.6% stake in the PNG LNG Project.
“The Ombudsman report alludes to fears that Oil Search at the time could be subject of a takeover threat, possibly from IPIC, although it appears the Ombudsman has not been made aware that IPIC had originally been introduced by Oil Search as a potential buyer of the Government (through IPBC) stake in Oil Search.”