Home > Corruption, Human rights, oil palm, Papua New Guinea > Legal conspiracy abuses the law and process to defeat landowner injunction in Ok Tedi mining case

Legal conspiracy abuses the law and process to defeat landowner injunction in Ok Tedi mining case

Ok Tedi mine waste spewing into the Fly river [ Photo: ABC]

Ok Tedi mine waste spewing into the Fly river [ Photo: ABC]

Last Friday Justice Hartshorn handed down a bizarre decision in the National Court that has legal commentators, academics and practitioners scratching their heads and wondering what is going on with PNG’s legal system.

Justice Hartshorn, operating apparently in cahoots with the Attorney General Kerenga Kua and international law firm Allens, has managed to turn upside down a whole series of legal precedents, practices and rules to defeat an injunction obtained by Western Province landowners to stop the continued pollution of the Fly river by Ok Tedi Mining Limited.

While the judges ultimate decision, that the interim ex parte injunction should be lifted, may, ironically be correct, the method by which he took possession of the matter, his erroneous legal reasoning and his bulldozing of established legal principles leave a big stink hanging over his name and the lawyers who seemingly conspired with him to cook the process.

Here is a quick list of what Justice Hartshorn got wrong and how he manipulated the situation to deliver what was clearly a pre-determined outcome:

  1. It is unprecedented for the National Court  to stay its own orders, and particularly one judge has no power to stay the orders of another judge. If a party wants a stay then it should appeal the original decision to the Supreme court.
  2. Hartshorn has seized on the power of the National court to issue a stay on proceedings and completely misinterpreted / abused that power to pretend it gives a right to stay an order.
  3. Hartshorn also relied on Supreme Court decisions and authorities that only apply in the Supreme court and which do not apply in the National court
  4. The original injunction was made ex-parte and given a return date to be argued inter partes. The simple and correct procedure was for any variation in the order to made at that inter parties hearing. Instead Hartshorn has grabbed control of the case and made his own orders without any legal precedent.
  5. In order to get the matter into his Court Hartshorn had to first make another erroneous decision. He ruled that the matter was a commercial matter and therefore could be transferred to his court. But the case is clearly not a commercial case in the legal sense as it is a case brought by the landowners over environmental damage and the dumping of poisons tailings into the Fly river.
  6. Hartshorn heard the case and made his decision without the mining company – the central player in the litigation – even being present or having any legal representation! The company had only just been served with a notice of the proceedings but Hartshorn refused to adjourn the matter to allow them to be present and heard.

To compound this litany of abuse, Allens, the legal firm instructed by Kua to appear for the State of Papua New Guinea, are also the long servicing legal representatives for Ok Tedi Mining Limited – putting them in a gross conflict of interest situation where they are acting for the regulator in a case brought by the landowners for gross environmental damage caused by another of their clients.

Even worse, there is other litigation currently before the courts in Port Moresby where Allens are acting for Ok Tedi Mining Limited in a matter instigated by the company AGAINST the Minister for Mining, the Minister for Finance and the State.

Clearly these big international lawyers have no conscience or appreciation of common legal ethics… but at the end of the day in this sorry drama it is the poor people of Western Province who continue to suffer while the fat cats in their air conditioned city offices count their ill-gotten gains.

  1. kanex Kanarepa
    March 7, 2014 at 9:22 am

    I am not a lawyer but have being throug courts myself and can say that a National Court can set aside its own decision so long as its a deferent judge according to his judgement. With His worship J Hartshorns decision, I think he is correct that while waiting for the matter to go into trial or so the Mine must continue to operate. Its not right to stop an operating mine to wait for a court to preceed is stupid in every sense. Not all land owners are taking OK Tedi to court; and even so, the people of Western Province and PNG as a whole is far bigger and important than those small group of landowners.

  2. Dr Patrick Onguglo
    March 8, 2014 at 3:05 pm


    The Prime Minister Peter O’Neill (‘aka O’Steal) has personally and unilaterally directed that the State of PNG borrow US$1.2 Billion Dollars through international financiers syndicated by the Swiss UBS Bank, to buy 10% of Oil Search Limited (OSL) shares. It is believed this transaction is motivated by personal gain. Therefore, this loan is believed to be for a corrupt outcome. This corruption is perpetrated by UBS and other international banks lending the money.

    PNG does not need the loan. It is Peter ONeill who needs the loan for his own corrupt gain. He is using the country’s assets to obtain a personal benefit. This must be made very clear to the international lenders. On this basis no future PNG Government will be liable to repay the funds, lent for an illegal purpose.

    As of this article the international lenders will be deemed to be aware of the allegations I make here.( I invite the Prime Minister to contradict me if he can).

    This is not an ordinary share purchase (investment) made by the Prime Minister on behalf of the people of PNG. What I am about to reveal is only known to a few key people in government circles.

    In 2013 Total, the French Petroleum conglomerate entered into a deal with InterOil Limited wherein it purchased 60% stock in InterOil with the intention to develop the Gulf/Elk-Antelope LNG Project. Total bench marked the price of the InterOil shares against the known oil and gas reserves of InterOil’s Gulf/Elk LNG reserves, and international price indicators.

    Interoil was started by two men in this country, Phil Mulacek and Gayland Baker in early 1990s. These two men, one a Texan and the other from California walked into Port Moresby government offices with empty brief cases promising to build an Oil Refinery in PNG out of one abandoned by Chevron in Alaska. While Curtain Brothers offered the Motukea refinery, these two men with very slick marketing skills, and Gayland Baker’s position as a director of conservative Fuller Christian Seminary, gained the upper hand.

    The rest is history, of the way they manipulated government decision making processes, public announcements, to gain every benefit, favour, approval, license and a free lift up in every other step of that company’s development.

    Interoil today is testimony to how Phil Mulacek has carefully and deliberately manipulated the goodness of the people of PNG and their government, how he has ruthlessly and unscrupulously exploited the weaknesses of key leaders of PNG, to build a personal fortune worth several hundred Million Dollars for himself and his extended family. Mulacek has been ably assisted by Christian Vincent, the Frenchman, his brother-in-law who acts as Phil’s main go-to man who has also gained in the hundreds of Millions.

    In a small town things can get a bit incestuous, as Christian Vincent’s long term girlfriend in PNG happens to be the Fijian-Indian Lady with the short skirt who is the CEO for Peter O’Neill insurance company. Peter O’Neill is no stranger to Vincent and Mulacek having had many private dinners and meetings over the years when Mr O’Neill was a Minister in the Somare Cabinet.

    Having sold 60% of InterOil to the French Company for several hundred Million dollars, Mulacek and co have been holding out the balance of the shares of 40% for a price that is almost triple what the French have paid for per share previously. The French having pre-emptive rights could not pay the price that the Mulacek camp has been asking for the balance of the shares. Meanwhile the Gulf-Elk LNG Project is not going anywhere fast.

    The Mulacek camp have been trying to play Total against Exxon and Oil Search Ltd, who both also expressed interest in a piece of the action. Mulacek had hoped Total would pay the price to own the whole lot or Exxon would pay a premium to participate. No one took the bait. Over the years people have become tired and weary of Mulacek and his antics, always trying to profiteer and gain unreasonably, when he came to PNG with nothing. The InterOil project could have been fully financial 5 years ago had Mulacek not been greedy and held out.

    This game has developed into a stalemate with Total holding majority stock and cant fund the project until it took the rest of the stock. It required a game breaker.

    This is where the creative genius of Phil Mulacek came to the fore once again, and perhaps for the last time against the people of PNG. He approached Peter O’Neill through the lady with the short skirt for a private meeting. In that meeting it was laid out to ONeill that someone should assist Oil Search Limited (who has expressed interest ) to buy the balance of the 40% shares in Interoil for the exorbitant price that even Total would not pay. That Oil Search Limited had already been sounded out on this, and provided someone funded OilSearch Limited for the price of the Interoil Shares they would do the deal to further fortify them against any corporate raid. The State of PNG taking the shares would surely be a poison pill for the Dubai based Arabs seeking to do a raid on OilSearch Limited. The aggregate agreed price for 40% InterOil shares and OilSearch 10% shares was in the vicinity of USD1.0 Billion with enough fat to go around.

    What was put to O’Neill in that meeting was that if he could get the Government of PNG to borrow USD$1.2 Billion from international commercial lenders, and buy 10% of Oilsearch Limited shares, Oilsearch Limited would use the proceeds definitely to buy the 40% shares from Interoil at its ridiculous asking price, AND THERE WOULD BE A VERY TIDY KICK BACK OF USD$100 MILLION FROM MULACEK & CO TO ONEILL for making this happen.

    This was the game breaker. ONeill became the game breaker. He became Peter O’Steal.

    Having shook hands on the deal in last quarter of 2013, Phil Mulacek has been working feverishly with Peter Botten of Oil Search Limited, to get international lenders to lend to the State this huge sum of money, while Peter ONeill has been carefully moving the right people into right places to take the decisions for him, and to cover his arse in the State agencies. The last act was to move the Minister for Petroleum William Duma aside and put his own man Duban in place to approve the deal. ONeill knew Duma would see through the deal as unfair, unreasonable and corrupt and not approve it.

    This week Peter ONeill has had lawyers and Financiers and bankers camping all over town feverishly working to finalize the deal. The only Minister working closely with ONeill to close the deal is Ben Micah, who will support ONeill because he needs ONeill to turn a blind eye to his own stealing.

    Most of the Members of Parliament in the Government side do not know about this very juicy and lucrative deal that is going down just this week.

    In fact most of the Cabinet Ministers do not even know. The Opposition does not have the manpower or the resources to keep up with Peter O’Steall’s very active life of carrying on private business deals while pretending to be Prime Minister of Papua New Guinea. Only a few people close to him only know some of the deals, but not all.

    This Prime Minister has made more money using his position as Prime Minister of this country than any other leader in the history of this country, and that folks, is the understatement of the Century. Nothing over K10 Million passes the Tenders Board, for example, without the Prime Minister getting a look in first. His fingers are so sticky that it is now common knowledge among all his Coalition Party colleagues that this man is not good for PNG.

    Papua New Guineans need to ask, and ascertain very clearly that:

    1. The State does not need the 10% of OilSearch Limited Shares. Oilsearch Limited is a public company. It can bloody well raise its own money and buy the shares. When Peter Botten was first approached to buy the Interoil shares he baulked at the sale price as he knew what Total paid. Interoil was asking far too much. When he was again approached with State Offer, he realized it would be a poison pill to have the State to hold substantial shares in OilSearch, so he happily agreed. Oilsearch quickly overpriced its batch of 10% shares and was also gaining from the sale of the shares to the State. Everybody gains from the State.

    2. The Deal and the Loan is not in the best commercial or financial interests of PNG and its economy. The Country has already pledged its assets, including the previous Oilsearch Shares (18%), to the Dubai based financiers of our LNG interests. Why borrow more to get into debt with Swiss Banks this time and park the interest encumbered (shares) in the same commercial entity (Oilsearch) that the Dubai lenders already have priority in call over? Putting all our LNG eggs (revenue stream) in one basket is not a wise move.

    3. Why didn’t Peter ONeill opt to use the money to allow the State to exercise its option to acquire 22.5% of the Gulf Elk LNG Project?

    4. Why is Peter ONeill helping to protect OilSearch which is a public company- unless there is a catch?

    5. Has Peter ONeill relied on a fair and commercial valuation of the shares of Oil Search Limited to justify the price, despite the prevailing share price? Where is the professional valuation?

    6. Why is Peter ONeill borrowing USD1.2 Billion to fund shares when the money can be best spent on health and education and infrastructure?

    7. How can the PNG economy which is already burdened by debt and currently underpinned by 2 consecutive years of massive budget deficits afford to shoulder this huge debt burden? Why has Peter ONeill further mortgaged our future?

    8. Why has Peter ONeill further exposed the PNG economy to the LNG Project. All the hopes of the politicians are on the LNG Project. This is a huge and monumental gamble; particularly because the State has failed to honour its agreements with the Landowners, and the State ( Arthur Somare) has failed to explain what happened to the 3% of the State’s 22.5% in the PNG LNG Project. What happened to the 3%? Mr ONeill was Finance Minister. He knows what happened to the 3% in the Dubai deal. Perhaps he can explain? The Landowners will not allow leaders to trick and mislead them anymore. They are wiser by the day.

    9. Why didn’t Peter ONeill allow the USD1.2 Billion to be borrowed by Kumul Holdings or National Petroleum Company or even the IPBC, for it to buy outright the shares of Interoil? Why gift Oil Search Limited this money at the expense of the people of PNG? Why does OilSearch have to own the InterOil Shares (thereby the Gulf-ELK LNG Project) when the State could easily acquire it and own it- and not for that price!

    10. What is the underlying rationale and underlying value in the exorbitant price (of the loan) of the InterOil Shares? Who has done independent industry benchmarked valuations based on which Peter ONeill has agreed with Mulacek to do this deal?

    11. What is the nature of the Mulacek-ONeill kickback and how was it designed to be delivered?

    12. Is it true this major investment decision worth approximately K4 Billion was made by one man, Peter ONeill, without Cabinet or Parliamentary approval or debate? If so then it is clearly an abuse of the office of the PM, and he should be referred to the Ombudsman for investigation.

    There are many things absolutely and seriously wrong with this investment decision. The Prime Minister has no power to unilaterally commit this country like he has done with Manus Asylum seekers etc. It has become abuse of power. He has become dictatorial.

    ONeill is currently getting government agencies and Departments to approve this transaction for which even the Finance & Treasury officials and the Bank of PNG have not done any formal prior appraisal of this loan. He is trying to rail road the proper government agencies to approve this transaction, when they haven’t even done any proper evaluation of this loan against the country’s other commitments and debt levels.

    I call on Ministers of Cabinet, Government Coalition Partners and Leaders to demand full briefing on this transaction, and all documentation on this transaction be tabled in Cabinet and Parliament for public scrutiny. I call on the Cabinet Ministers and coalition partners to block this stupid loan.

    I call on Senior Ministers to feel sorry for this country and its people, to take their oaths to serve the people seriously. I call on responsible Ministers to stand firm and not endorse this deal even it means their sacking. It is time for principled leaders to stand up to this PM and his greed.

    Already the PM has set it all up so that he does not sign any documents himself. He is using quiet pressure through other people including, once again Ministers Marabe, Polye, Micah and Duban to sign and endorse this deal that Parliament and Cabinet did not approve. Even if Cabinet approved it, it seems they would have been mis-informed. When the shit hits the fan, the PM will naturally go after these Ministers and once again, blame them, as he did with the Paraka deal.

    This is a stupid deal, designed to benefit a few greedy and selfish people. IT MUST BE STOPPED!

    The Prime Minister needs to declare his interest in this matter publicly and resign. He has taken far too much from this country and the small people. He has to learn that enough is enough!

    By Dr Patrick Onguglo

  3. Turanabedika
    March 9, 2014 at 11:27 am

    The initial (ex parte) orders were granted without even the least amount of consideration given to the totality of consequences. The plaintiffs never had the capacity to give any value undertakings as to damages, to underpin the initial ex parte orders they sought. The State always has an overarching sovereign right to be respected in relation to where it stood in the issues raised in the substantive pleading and in the set of ex parte orders that in effect will be tantamount to closer of the Ok Tedi Mine. The Ok Tedi Mine has operated for decades. It is a legal mine. It cannot be closed down by a set of hastily sought and obtained ex parte orders.

    The first Judge acted irrationally and demonstrated a callous and complete disregard for the balance of convenience and clearly evident, unavoidable losses likely to be suffered by those restrained and may other impacted others that were always going to be caught out by the consequences and ramifications of the ex parte orders. Granting all the substantive orders sought in the proceedings ex parte was madness.

    So what was the first judge, who happens to be the Deputy Chief Justice, thinking? It is not clear whether the DCJ was in a immediate conflict of interest situation, but if he was then he should not have taken over the case. He is leader. He should lead by example, not cheapen the office he holds. Was there no other judges that he had to step in, in a matter that he may have had an interest in?

    The Attorney General’s conduct is just typical of the insensitive and egoistical approaches he has to managing the brief out of legal matters.

    This blog post appears to be from a source within the corridors of the national court, or if that is not the case, then evidently the writer has had advise from within. If it is true then the full implications does not auger well for judiciary; especially the notion of independence, ethics and integrity of judges. We do not need the complicity of judges in judicial outcomes.

  4. kanex Kanarepa
    March 10, 2014 at 1:40 pm

    Turanabedik, I fully agree with you. The earlier Judge really got himself too low by entertaining an ex-parte orders to hald dumping of waste in the Ok Tedi river. It was just stupid of the Judge. I think he is ashamed of himself that an other brother Judge has corrected him.

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