By Doug Norlen
In December of 2009, the U.S. Ex Im Bank gave a record $3 Billion dollars in financing to ExxonMobil for a controversial Liquefied Natural Gas (LNG) project in Papua New Guinea. NGOs and Civil Society groups in Papua New Guinea and abroad warned Ex Im Bank that this project’s pipeline would slice through tribal lands and stir conflicts among local people. And, as predicted, that’s exactly what happened.
Early this week, an outbreak of violence was reportedly sparked by the recent death of a child near the project site. Villagers reportedly attacked employees of an international contractor to the gas project which led to the shutdown of work at one of the LNG project sites. Disputes between local landowners and the $15 billion dollar LNG project are nothing new and have been reported several times since the project was sanctioned in 2009. The project was disrupted even last week when landowners protested that they hadn’t received the benefits they have been promised from this project. In February 2010, four people were reportedly killed when fighting broke out over a land dispute and there have been several other shutdowns of the project due to similar issues with landowners and tribal communities.
This is the latest incident of subsequent violence that has resulted from this project and is clearly a concern that the U.S. Ex Im Bank downplayed as they raced to approve this massive subsidy for ExxonMobil. This is yet another example of negative local impacts of Ex Im Bank’s global obsession with fossil fuel projects.
By Paul Cleary, The Australian
WHEN Papua New Guinea’s petroleum minister bought a Cairns McMansion in 2001, the deal was so ‘‘quick and easy’’ that the agent selling the property thought he was dealing with the wealthy owner of a coffee plantation. Despite buying in the depths of the global financial crisis, William Duma didn’t aggressively negotiate for a better price. He paid $585,000 for the 330sq m, five-bedroom, twobathroom home with water views after securing the services of a Cairns agent to do the deal. ‘‘I was thinking, where did he get the money from? It was all too quick and easy,’’ says real estate agent Shane Trimby, who sold the property.
Duma was involved in a much more lucrative business than coffee. As petroleum minister in the government led by PNG’s 74-year-old founding father Michael Somare, Duma is the country’s oil supremo. At the time of the purchase he was negotiating with ExxonMobil’s consortium to build a mammoth $US15 billion liquefied natural gas project.
As PNG looms as an oil-rich country verging on state failure, some of its political elite have been quietly building up assets offshore, coinciding with huge development of the country’s gold, petroleum and copper riches. In the past five years, key political figures have invested $6 million in Cairns and Brisbane property. Some have their wives and children based in Australia and shuttle regularly between Port Moresby and Cairns. Some of these politicians may have exploited an exemption in Australia’s foreign investment regime that allows non-residents to buy new properties. In 2008, foreigners used this exemption to buy $15 billion worth of residential real estate.
PNG is emerging as an extreme case of the two-speed economy, with boom conditions in Port Moresby driven by liquefied natural gas and other resource projects, while the rest of the country sinks deeper into poverty and state dysfunction. While proving ineffective at running the country, Sir Michael and his family have shown themselves adept at buying real estate and hanging on to power. After a no-confidence motion back in July, Sir Michael suspended parliament for the rest of the year, and then agreed to stand down in December pending an investigation into allegations of misconduct. But PNG’s ‘‘grand chief’’ still remains very powerful, with his son Arthur and other party lieutenants in control. The push to remove Somare reflects growing concern among PNG’s elder statesmen over Somare’s handling of important developments. The LNG project is one, but more controversial is China’s Metallurgical Construction Corp nickel mine in the Ramu Valley, which has been given special concessions to dump toxic tailings into the sea.
An investigation on behalf of a major oil company found it cost about $500,000 in payments to landholders and other interests to get an oil permit approved. The company that commissioned the research decided not to invest in the country.
Another emerging concern is that vast tracts of rainforest are being leased to foreign logging companies in opaque arrangements involving corporate fronts controlled by foreign interests. As much as 10 per cent of the country has been handed over through these arrangements.
The Somare family made its first real estate purchase in Cairns in 2007, when Michael Somare bought an apartment in Parramatta Park north of the city for $349,000. The following year, his Australian-educated son, Arthur, minister for public enterprises, bought a home at Trinity Beach north of Cairns for $685,000. Somare’s daughter, Dulciana Somare-Brash, then bought a $425,000 Trinity Beach home, also in 2008. The purchases by Somare’s children followed his return to power in August 2007. Arthur Somare’s home is listed under his name in the phone book and he returns there regularly.
A Somare spokesman declined to respond to questions about how these properties were purchased. But Duma tells The Australian he was ‘‘quite well off’’ before entering parliament, having been a partner in the Port Moresby office of the law firm Blake Dawson Waldron. ‘‘I purchased a property in Cairns using my personal savings in Port Moresby. I obtained foreign exchange approval from the PNG Central Bank to remit funds to my Australian solicitor’s trust account,’’ Duma says. ‘‘My Australia solicitors also obtained Foreign Investment Review Board approval before I could purchase the property. There is a clear paper trail showing the origin of the funds which I used to purchase the property.’’ Duma says he declared the property to the Ombudsman Commission, which serves as ‘‘the watchdog for leaders in PNG’’. But the commission does not publicly release this information. Duma acknowledges ‘‘there may be a perception that because I am the Minister for Petroleum and Energy, I may have received some form of benefit from ExxonMobil’’. ‘‘All that I can say is that I was a wealthy person before I became a politician. The funds I used were from my savings account.’’ Duma denies he was ‘‘on the take’’ and says ExxonMobil was very rigorous in its running of the project. ‘‘They want to do it the ExxonMobil way — very bureaucratic, very thorough.’’
Businessman Peter Aitsi, who heads the PNG branch of Transparency International, a global anti-corruption watchdog, says MPs are not required to tell the public about these purchases. ‘‘Given we have a general idea of the salary levels of MPs, this raises questions of how they have financed these purchases’’ Aitsi says. ‘‘For the man in the street, this should raise serious questions. So let’s make this information public.’’
Some of Somare’s opponents, however, are also among the biggest property owners in Australia. Key opposition figure Mekere Morauta has built up even more assets than Somare from the profits of his fishing business. Land title records show that Morauta’s Australian wife, Roslyn, bought a $3.6m riverside mansion in the Brisbane suburb of New Farm in 2008. This followed a $910,000 purchase of another New Farm property in 1999.
Former minister Allan Marat bought a Brisbane apartment in 1996 for $400,000 and then in 2005 bought a $240,000 apartment in Surfers Paradise. Marat resigned in May last year after making comments critical of the nickel mine and the benefits for PNG from the LNG project. A spokesman for Marat — his son Immanuel — says the properties were acquired with proceeds from Marat’s Port Moresby law firm. Immanuel Marat says the purchases have been fully disclosed.
Australia’s anti-money laundering body, Austrac, declines to comment on any evidence it may have obtained on real estate purchases by foreign politicians from neighbouring countries. A spokesman says secrecy provisions prevent it from making any comment.
While some of PNG’s political elite are accumulating wealth, life expectancy is falling and infant mortality is rising as the government becomes increasingly dysfunctional, unable to deliver basic services to its poor. The LNG project is also fanning conflict as landholder groups squabble over the spoils. Earlier this year there was as shoot-out at Port Moresby airport between rival factions of landowners.
AusAID says about 40 per cent of PNG’s population lives in poverty, below the international benchmark of less than $US1 a day. HIV-AIDS is rising inexorably. The latest estimate is almost 100,000 sufferers — 2.56 per cent of the population.
There is no evidence that Duma, the Somare family or Marat acquired their properties inappropriately, but the federal government has been pushing PNG to consider adopting an anticorruption regime known as the ‘‘extractive industries transparency initiative’’. This program is designed to produce a set of double accounts showing what the government receives from oil companies and what the companies pay. The initiative has in-principle support from 32 resource-rich nations, with PNG remaining a notable exception. East Timor, which only became independent eight years ago, has become the third country to fully comply with the demanding regime. But Australia’s Oil Search, one of PNG’s main oil developers for the past 20 years, is not a member of the initiative because the PNG government does not support it. Oil Search operates the Kutubu oilfield in the southern highlands and is a minority shareholder in the LNG project. A spokesman for ExxonMobil says the company has never given any special benefits to Duma or Arthur Somare. He says there is no connection between their real estate purchases and negotiations on the LNG project.
Bulolo MP Sam Basil is asking why there has been no criminal investigations in Papua New Guinea of politicians implicated in the Taiwanese cash-for-recognition diplomatic scandal.
The MP’s comments follow news that authorities in Taiwan have announced new charges against the diplomatic middleman in its failed bid to buy diplomatic recognition from Papua New Guinea by using the Taiwanese peoples tax money.
“Why have authorities in PNG not investigated the former PM, Michael Somare, Planning Minister, Paul Tiensten, and Forest Minister, Timothy Bonga who are all alleged to have met with the Taiwanese middle men?”, asks Basil.
“If Taiwan can investigate, charge, prosecute and convict people involved in this scandal at their end, what is the excuse for our own authorities not to have acted at this end?”.
Prosecutors in Taiwan have indicted Wu Shih-tsai on breach of trust charges and recommended he be sentenced to 4.5 years jail for embezzling US$29.8 million in government funds.
The money was wired to a Singapore bank held by Wu and Ching Chi-ju in September 2006 to be used to establish diplomatic ties with Papua New Guinea.
The funds were completely removed from the bank account between November and December 2006.
Wu is already serving a 30 month sentence after being convicted in 2008 on charges of forgery and making false accusations in relation to the PNG matter.
Investigations into other suspects in Taiwan, including the Secretary-General of the National Security Council and a former Minister are still ongoing.
The Taiwanese deal adds to other many issues such as the Moti Saga, NPF Saga and the list goes on Mr Basil said, today many Papua New Guinean have lost faith in our own institutions and are now asking many questions even suggesting a neutral Police Commissioner or Chief Justice from abroad to come and take control of our institutions.
Mr Basil believes that there are politicians who are supposed to be prosecuted dismissed or locked up in jail are now actively serving in parliament and further stressed that the situation itself is very scary and the citizens must be concerned about this too.
By Leslie Bahn Kawa, Physician, Port Moresby General Hospital
The proposed Pacific Medical Centre is not the answer to lifestyle diseases as suggested by Dr Vinit.
Dr Vinit, the Advisor to the National Department of Health on Lifestyle Disease proposed that “PNG needs two PMC type hospitals.” His arguments are based on the rising incidences of lifestyle diseases among the two per cent of well to-do citizens of PNG.
Dr Vinit is known for his contradictory statements on many public health issues in PNG. His opinions have consistently been contrary to his employer’s stance and this view is of the same. I make my professional opinion just as much as my other colleagues and do not concur with Prof Mola on the PMC issue.
Vinit’s arguments for two PMC type hospitals are taken with utter disdain firstly from an epidemiological and secondly from a clinical point of view.
Firstly as PNG continues to traverse the stages of epidemiological transition from the age of pestilence and famine to the age of delayed degenerative diseases, lifestyle disease will continue to rise, just as much as the developed countries like the US in the 1900s. This trend does not occur in isolation but is the effect of socioeconomic changes associated with the transition.
Fortunately for these countries improvement in reducing morbidity and mortality have come about because of irrepressible and ingrained primary preventive strategies and not secondary prevention strategies such as PMC argued by Vinit.
Australia has declared in 2009 that more than 50 per cent of its population was obese and the USA has declared obesity as a threat to its National Security in 2006, the only developed country to do so. Vinit’s figure of 70 per cent obesity among PNG workers is flattery and an overstatement.
PNG remains in the first epidemiological transition stage and infectious disease remains the number one cause of disease among both the rural and the high flying urban class and will do so in the decades to come.
However the trend in the lifestyle diseases will continue to rise with the rising population and these public health domains call for people like Dr Vinit as the advisor to the Department on these diseases to develop primary preventive strategies, incessantly seek funding, implement them and review and assess the impacts of his programs.
Secondly, Dr Vinit claims to raise awareness of these diseases but so far we in the clinical arena have not seen a respite.
He now needs to ask himself in his capacity as the Advisor of Lifestyle Diseases if he is doing enough in his role in the primary prevention and propose medical insurance for all lifestyle diseases if his strategies are failing.
Two PMC type hospitals are not even a panacea to the rising burden of lifestyle disease.
We have been arguing all along that unless our government is capable of correcting and reinvigorate the execrable health system, it will not sustain it at all if PMC is given the nod.
Learn from the past and get the current system right, develop the capacities to sustain it and then move up the standard of clinical care deliveries.
Nurture the latent and not frustrate it and for leadership and engagement to become ingrained, not a fad.
Only then we will have a national clinical governance of the health system which is effective in serving all classes of Papua New Guineans.
“Prevention is better than cure” as they say and Vinit has a lot on his table.
The Post Courier and Sunday Chronicle newspapers have reported the Prime Minister, Michael Somare, is expected to resume duties next Monday (the 10th).
The Post Courier says government insiders informed the newspaper on Sunday that Sir Michael was returning to office from his home electorate because of the legal questions surrounding his decision to step aside as Prime Minister last month.
“He is also coming back to work because of issues confronting the National Alliance Party over his decision to demote Don Polye and appoint Sam Abal as Deputy PM and Acting Prime Minister. “The National Alliance Highlands bloc have outstanding issues with him that he needs to deal with. There are other matters like the implementation of the 2011 supplementary budget, which raises some issues over good governance,” one insider close to the National Executive Council said last night.
The story has not been confirmed with the PM’s office.
The story below, by Peter Korugl, gives a clear picture of how the massive, but poorly planned, Exxon-Mobil LNG project in Papua New Guinea is fueling corruption and seems destined to leave the nation and its indigenous landowner groups poorer, while boosting the profits of the global oil giant and its overseas investors.
By PETER KORUGL
MARUPA Kawi Development Limited (MKDL) – an ExxonMobil sanctioned umbrella company from a LNG project area in Southern Highlands lost its portion of the seed capital in what appears to be a corrupt deal involving officials from the Trade and Industry Department and outsiders.
This was brought to light yesterday by the board of MKDL and leaders from Pipeline Segment 3 area, who own the company. MKDL had applied for its share of the Business Development Grant early this year and had been waiting for the money.
“Our cheque was drawn to another company owned by people who are not from the Southern Highlands Province. Although I had advised the Trade and Industry Department not to release the cheque, the money is already in the other company’s account,” chairman of MKDL Nelson Alina said. “We have reported the matter to the Criminal Investigation Division of the Boroko Police and a stop payment notice has been issued to the bank.” Boroko Police confirmed receiving the report and have started investigations.
After camping in Port Moresby for one year, the theft has angered the leaders of the six major clans that own MKDL and the board, who want the police to arrest all those involved to swindle them of their money.
Under the Licencce Based Agreement, the pipeline landowners were given K16.12 million of the K120 million allocated by the Government as Business Development Grants and MKDL was entitled to 4.7 per cent of that money.
On the December 17, the Department of Trade and Industry raised a cheque (number 0013456163) for K662,860.80 for a company that the MKDL board claims is owned by people who are not from Southern Highland or from the PL segment 3 area.
“When the Business Development Grant was paid out on December 23 at March Girls Resort, we were there to get our money. There was another group, who used this old man from PDL 5 area in Moran, who admitted to the Secretary and his officials that his group did not apply for Pipeline Segment 3 funds.
“The cheque was held back by the secretary. I saw him the next day and told him not to release the cheque and issue a new one to us. On the 28th, I was informed that the money had gone into that company’s (named) bank account. The department was closed for the Christmas and New Year holiday and just how that cheque got out, I have no idea,” Mr Alina said.
On December 24, Acting Secretary John Andrias wrote to the bank to advise that the said company had received the funding for the business development grant and it must be assisted with clearance for the cheque to be deposited.
Mr Alina claimed in the last two days, certain officials from the department as well as the owners of this company have been in touch with him, to split the money.
“The trade and industry officials are telling me to sort the matter with the company officials and split the money. Even the company people are calling me to tell me that we should split the money in half.
“Why should I spilt money that is rightfully ours with someone who has no land in Southern Highlands. When I started getting these calls, I knew that we were victims of a corrupt deal, involving trade and industry officials and outsiders,” Mr Alina said.
The Trade and Industry Department has been closed for business at this time and Mr Andrias was not available to comment on the matter.
Construction work on the K200 Casino hotel in Boroko has been halted for several months and might never be completed says the Post Courier newspaper (see report below). K26 million has been invested in the project by two petroleum landowner companies managed by the Mineral Resource Development Company (MRDC). The project was sponsored by Trade and Industry Minister Gabriel Kapris and supported by the PNG government.
Casino hotel behind schedule
CONSTRUCTION of a K200m five-star casino hotel in Boroko, NCD, is eight months behind schedule – and may have even been abandoned.
Money spent so far – to the tune of K26m – has been put up by two petroleum landowner companies: Petroleum Resources Gobe (PRG) and Petroleum Resources Moran (PRM). There’s another PNG partner in the project but its identity is unknown. The two companies are managed by Mineral Resources Development Company (MRDC).
Sources said yesterday that MRDC was about to release another K24m into the project recently but that had been blocked by its board of directors unless proper equity holdings, project agreement and licensing issues were clearly spelt out.
Korean company CMSS (PNG) Ltd is the main investor with full backing from the PNG government. However industry sources told Post-Courier yesterday that the company had not put up any of its own capital in the project to date. Another source said last night CMSS was contracted to build the casino by Pacific Equities and Investment Limited – a successor to the Investment Corporation of PNG.
Industry sources told the Post-Courier yesterday that construction work on the casino hotel had stopped for several months. Work started in October 2008 and was to have been completed in April this year. The land on which it stands is owned by the Works Department where at one stage was home to the department’s largest transport and mechanical depot and workshop between Eda Ranu and Boroko Traffic Police Station. It was to be the first casino in PNG.
Trade and Industry Minister Gabriel Kapris assisted in seeking Cabinet approval for the project and in September 2009, as Trade and Industry Minister, he was in the company of CMSS managing director Jimmy Kim to give the media a tour of the project site.
Mr Kapris said then that “this project is supported by the Government as it will attract tourists and business people”.
All attempts to speak to Mr Kapris yesterday was fruitless. Mr Kim and MRDC executives were all overseas and could not be reached for comment. Security workers at site told Post-Courier: “nogat workman na nogat boss stap long hia.” (The staff and bosses are not here).