By Angus Grigg, Lisa Murray and Jonathan Shapiro - Afr news
From its days as the city’s “top pub” to its current claim of “contemporary colonial” luxury, the hotel has hosted many of Port Moresby's larger moments.
In 1970, it was where Australian prime minister John Gorton declared Papua New Guinea on the path to “self-government” and it once offered a breezy teak bar for patrol officers and traders to survey the harbour below.
This place at the centre of life in the capital would continue one Sunday in early 2014 when Australian oil executive Peter Botten sat down with the Prime Minister of PNG, Peter O’Neill.
Over coffee that day the two men would agree on a $1.2 billion fix. Oil Search, the company Botten had taken from a junior explorer to a $11 billion PNG-focused major, was being stalked by a football-loving Sheik from Abu Dhabi.
“This made Oil Search panic,” according to the Ombudsman Commission of PNG, which has spent the past five years investigating that fix.
Treasurer sacked by text
It's an interpretation Oil Search denies, but there's no doubting O'Neill's determination to make the deal happen.
In the space of 11 days the Prime Minister would bypass Parliament, withhold legal advice from his cabinet and even fire his treasurer Don Polye, who opposed the deal, by text message.
Oil Search CEO Peter Botten in PNG is due to step down this year. Vanessa Kerton
Polye was worried the deal would wreck PNG's economy and, while he was a lone voice in cabinet, his signature was required to approve it. And so O'Neill "decommissioned" him via text for breaching "cabinet solidarity".
In replying Polye put on the record his concerns. "PM bro … I was applying CONSERVATIVE CONSCIENCE on this very bad deal I thought might destroy PNG’s economy.”
But O'Neill was having none of it.
PNG, one of the world’s poorest countries with levels of poverty and disease equivalent to sub-saharan Africa, would borrow $1.2 billion from Swiss investment bank UBS to buy a 10.1 per cent stake in the ASX-listed Oil Search, making it more difficult to take over.
Oil Search would then use $US900 million of this money to buy a 23 per cent stake in the Elk-Antelope gas fields in the PNG highlands, triggering a flurry of deals that is likely to culminate in the $16 billion Papua LNG project being approved this year. It will be the country’s second LNG project after the first began production in 2014.
PNG Prime Minister Peter O'Neill talks to Don Polye, now part of the opposition. Ilya Gridneff
But as the Ombudsman outlined in its 332-page report, leaked this month, O’Neill’s decision to invest in Oil Search was “speculative” and a “highly inappropriate” investment for a country like PNG. It would take less than two weeks from that coffee meeting proposal to the deal being approved by cabinet – a process so flawed the Ombudsman says 15 PNG laws may have been broken.
Left unanswered in the Ombudsman’s report is why O’Neill would expend political capital on such a high-risk transaction and one so hard to justify as being in the national interest.
The deal no one can escape
Five years on, it’s a deal the protagonists can’t escape. UBS is facing regulatory scrutiny in Zurich and Sydney over its role.
For Botten, who won an Order of Australia in January for his “eminent service” to the Australia-PNG relationship, the deal has the potential to dent his legacy. Botten is expected to step down as head of Oil Search in the next six months after 25 years in the role. He was unavailable for interview but Oil Search said in a written response to questions the share placement was “in full compliance with all relevant laws and regulations” and any assertions it was made to block a takeover bid from Abu Dhabi are “absolutely false". The company noted PNG already had the power to block such a bid on national security grounds.
Go to this link for more: https://www.afr.com/news/policy/foreign-affairs/revealed-png-pm-peter-o-neill-s-very-bad-oil-search-deal-20190523-p51qhk
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