Charlie Gilichibi The REAL FACTS about the PM’s Ok Tedi Expropriation. By Sir Mekere Morauta, Friday 25th October 2013 Earlier this week the Prime Minister published a statement about the State’s expropriation, without compensation, of the Ok Tedi mine. As with most of what the Prime Minister has said on this issue, the detail and substance of his statement are wrong. What he presents as “facts” are half-truths; in some cases, lies. I sit deliberate? Or manufactured to achieve a purpose? The most important thing about the Prime Minister’s statement is that he failed once again to answer: :: WHY he expropriated the shares held in trust for the people of Western Province, worth K3.0 billion, :: WHY he has effectively stolen the K800 million spent by PNGSDP on Ok Tedi Mine Life Extension, :: WHY he stopped PNGSDP from receiving the dividends due to it for 2012 and 2013 up to the time of expropriation, worth K1.0 billion, :: WHY he wants to destroy PNGSDP, a Papua New Guinean institution recognized by independent commentators as unique and successful, certainly more successful than the O’Neill Government in bringing social and economic development to Western Province, and :: WHY he wants to control the expenditure of the Long Term Fund. The fact is that Peter O’Neill is the first Prime Minister to expropriate an asset belonging to his own people, without compensation. He is the first Prime Minister to attempt to destroy a world-class futures fund, PNGSDP. He is the first Prime Minister to legislate to give himself the power to decide if compensation should be paid for an expropriated asset, how much should be paid, and to whom the payment should be made. I will deal with the Prime Minister’s claims point by point, and leave it to the people of Papua New Guinea to decide who is right and who is wrong. 1. PM: “Sir Mekere has published a letter that has not been received by me.” The Truth: The only letter to the Prime Minister that I have published appeared in The National on 18 October. It was received and signed for by an officer in the Prime Minister’s Office at 1pm on 17 October. I have the receipt. 2. PM: “Sir Mekere represents BHP Billiton on the Board of PNGSDP.” The truth: I do not represent BHP Billiton on the board of PNGSDP. BHP relinquished its right to appoint three directors in September last year. I was appointed by the existing board after BHP relinquished its right. 3. PM: “Sir Mekere does not represent the PNG Government, the Western Provincial Government, and the people of Western Province, including landowner groups.” The truth: I most certainly do not represent the PNG Government or the Fly River Provincial Government. But as PNGSDP held its OTML shares in trust on behalf of the people of Western Province, I like the other eight directors of PNGSDP, represent the interests of the people of Western Province. We are custodians, trustees. We will continue to represent their interests by fighting the Prime Minister’s decision to deprive them of their assets,their income, their rights and their compensation benefits. 4. PM: “The Mining lease expired in March 2013.” The truth: The mining lease did not expire in March 2013. It is still current.The Special Mining Lease, which is OTML’s main asset, runs until 28th May 2022, and includes a right to renew. 5. PM: “The PNG Government engaged in discussions with PNGSDP, BHP Billiton and Sir Mekere for about nine months.” The truth: The Prime Minister rejected or ignored all of my exhaustive efforts to negotiate an agreement. He has not replied to any of my numerous letters and proposals, sent both as Chairman of PNGSDP and me personally. There has not been one discussion between the Government and PNGSDP. I have all the documents to prove this. I have not reneged on any agreement reached verbally with the Prime Minister. What we shook hands on in Port Moresby in late April and In Majuro in early September is still my position. It is the Prime Minister who, through third parties, has reneged. 6. PM: “BHP Billiton refused to talk with the PNG Government and informed us that Sir Mekere will speak to us on their behalf.” The truth: I am not privy to the discussions between BHP Billiton and the PNG Government. I do not speak on BHP Billiton’s behalf. I speak on behalf of PNGSDP. I have however been informed by BHP Billiton that they did not agree with the Prime Minister’s proposals to expropriate the shares they gifted, without fair payment; nor did they agree to the proposals made by Dr Jacob Weiss on behalf of the Prime Minister to take control of PNGSDP, as no sound argument had been made for the governance structure and independence of PNGSDP to be changed. 7. PM: “Sir Mekere insisted that he was prepared to transfer the ownership ofthe Mine to the State but on condition that he and the BHP “A” Class directors control PNGSDP and its restructure. The truth: I was prepared to negotiate a sale of the mine on the basis of a full and fair price. But I refused to allow the politicisation of PNGSDP and thereby open the door to the $US1.4 billion in the Long Term Fund to misuse, abuse and misappropriation. The current structure of PNGSDP as an independent, not-for-profit charitable organisation must remain. It has proven to be successful,particularly in preventing the misuse, abuse and misappropriation of funds because of political interference. I agree that there must be greater Western Province participation in its affairs, and have started that process through the appointment of the Western Province Administrator as a director. Other steps are being taken to bring PNGSDP closer to Western Province. The PM’s assertion that the “A” Class directors (no longer appointed by BHP Billiton, as noted above) control PNGSDP is incorrect. The“A” Class directors do not control PNGSDP. The governance structure of the company safeguards the Fund and the operations of PNGSDP from being controlled by any class or group of directors. For example,no decision can be made without the agreement of both an “A” and “B”director. 8. PM: “The State had no option but to pass Laws to protect our people’s interest.” The truth: The State had the option to pay a fair price for the mine so that the people of Western Province benefited appropriately. It did not take up this option and instead chose to expropriate the mine without compensation. 9. PM: “Sir Mekere uses PNGSDP money to pay for costly advertisements,telling lies after lies to justify his actions.” The truth: I and the other directors of PNGSDP have a legal duty to defend the assets, income, rights and compensation benefits that the company is entrusted with. That includes making public the facts of the matter in advertisements such as this. We also have a moral duty to defend PNGSDP from external attacks aimed at depriving the people of Western Province of their assets, income, rights and compensation benefits. All the statements I have made have been based on facts. 10. PM: “Sir Mekere gave exemptions from law suit to BHP Billiton for massive environmental and social damages they caused when they operated the mine.” The truth: When I was Prime Minister, the State (through the 9th Supplemental Agreement enacted by Parliament) gave both BHP Billiton and itself immunity from law suits seeking compensation for environmental damage, and associated indemnities. In exchange the mine-affected communities were given (through PNGSDP) shares in the mine,extensive compensation rights, and a social licence to shut the mine if in their view compensation was not sufficient. It is noteworthy that the Prime Minister never admits to the immunity and indemnity to the State. Nor does he mention the fact that he has not revoked the immunity given to the State. Therefore under his laws the State can do what it likes in terms of environmental damage and it can never be sued. 11. PM: “Sir Mekere has a serious conflict of interest in that he accepted the position of Chairman of PNGSDP and Ok Tedi, thus raising questions about whether he acted in our people’s and nation’s interest when he gave those exemptions.” The truth: I have no conflict of interest. The fact is that without giving immunity to BHP Billiton, and the State, the mine would have closed in 2001. So given the benefits to the nation and to the people of Western Province of Ok Tedi remaining open, what was not in the national interest or peoples’ interest? As majority owner of OTML, under the shareholding agreement with the Government, PNGSDP appoints the chairman of OTML. What is the conflict of interest? The Prime Minister has not stolen the shares in Ok Tedi from BHP Billiton; he has stolen them from the people of Western Province. 12. PM: “PNGSDP has been pursuing projects costing millions of kina which are yet to be delivered and making investments that have been loosing (sic) substantial amounts of money. Examples are Daru Port Development and the Purari Hydro Power project.” The truth: PNGSDP has pursued some high-impact projects such as the Purari scheme (in partnership with the National Government) and the Daru Port. Part of PNGSDP’s mandate for the Western Province is to provide a strong economic foundation for the future. These projects are intended to do that. High-impact projects require extensive feasibility studies and by nature have extremely long lead times. It should also be noted that these two projects were pursued on the basis that the life of the Ok Tedi mine would be extended with PNGSDP as a shareholder. 13. PM: “The current Ok Tedi mine is not wholly owned by the State but together with the landowners under Mineral Resources Star Mountains Ltd and Western Provincial Government under Mineral Resources Ok Tedi Ltd. Their shareholding is to increase after negotiations with the State is complete.” The truth: The 63.4 percent of Ok Tedi held by PNGSDP was held in trust for the people of Western Province, including the Mine-Affected people,and was given to them as part of the compensation package for environmental damage. Now they are left with nothing; the Fly River Provincial Government holds the 12.2 percent they have had since 2011. The O’Neill Government has stolen their major compensation benefit. 14. PM: “Ok Tedi management rebutted Sir Mekere’s statement about the dividends being stopped by the State, but he continues to lie about that as well.” The truth: PNGSDP has rebutted OTML’s statement about the payment of dividends. The dividend is still payable to PNGSDP and the company has taken legal action to see that it is paid. The Prime Minister himself admitted he had stopped the 2012 dividend being paid to PNGSDP, as reported in The National on 18 September 2013 and as reported to myself and other PNGSDP Board members by Government representatives. 15. PM: “Sir Mekere is more interested in protecting his legacy and the interest of BHP. Sir Mekere does not speak for any PNG stakeholder but he speaks for BHP, a foreign interest.” The truth: My one interest in this matter is protecting the interests of the people of Western Province, and along with the other PNGSDP directors, will continue to do so. It is our legal duty, and it is morally required of us. BHP Billiton speaks for itself. I speak for PNGSDP and the people of Western Province as chairman of PNGSDP. I simply state the facts as chairman of PNGSDP. I do not represent investors in or outside of PNG. Investors will speak for themselves. In making my statements I reflect the interest of PNGSDP and the people of Western Province. It is also my view that it is in the national interest for an independent PNGSDP to continue, without government interference or control. 16. PM: “Sir Mekere is deliberately making misleading statement about investors expressing concerns about acquisition of Ok Tedi mine.” The truth: I certainly do not intend to create fear amongst investors or to discourage direct foreign investment. The problem for the Prime Minister is that his actions are outside the norms of responsible Government behaviour. Expropriation of a private asset and the destruction of a legally binding, legislated contract is an extreme act. I am sure investors and their financiers will make up their own minds about that. 17. PM: “The PNG government is willing to engage with anyone other than Sir Mekere who has the interest of people of Western Province on the future of PNGSDP at heart.” The truth: I and PNGSDP remain willing to engage with the Government on fair compensation for PNGSDP’s shares in Ok Tedi mine that were expropriated by law on 18 September 2013. PNGSDP will not compromise the independence, integrity and accountability of PNGSDP and put the $US1.4 billion in the Long Term Fund at risk of misuse, abuse and misappropriation. I urge the Prime Minister to work with PNGSDP and help spend the Long Term Fund in ways that will develop infrastructure and services in Western Province. The Long Term Fund is now frozen, which is not in the interests of the people of Western Province. People will judge the factual statements - the truth - I have outlined above,against the statements of the Prime Minister. History and people will be the judge. Mekere Morauta KCMG Chairman, PNGSDP Note: A copy of this message appeared in The National of Friday 25th October 2013, on pages 32 and 33
Posted on: Fri, 25 Oct 2013 12:29:36 +0000
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