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Comment Comment
“The granting of Special Autonomy and the expansion of The letter was signed by Pastor Dorman Wandikbo of the
civilian and military infrastructure is a camouflage to hide the Indonesian Evangelical Church, Reverend Benny Giay of the
occupation of the Land of Papua for the benefit of exploiting Kemah Injil Church, Reverend Andrikus Mofu of the Evangeli-
natural resources,” the church leaders said. cal Christian Church, and Rev Socratez Sofyan Yoman of the
First enacted in 2001, Special Autonomy allowed limited Fellowship of Baptist Churches of West Papua.
freedom – including a provincial assembly and the right to fly Despite this, Indonesia has renewed its special autonomy
a territorial flag – but these were rescinded three years later laws and the world – once again – has turned a blind eye to
by President Susilo Bamban Yudhyono. the desperation of a people who continue to struggle for
In a letter last year, church leaders objected to the renewal freedom.
of the autonomy laws. “Many Papuans have voiced objections
to Jakarta’s plans for Special Autonomy Volume 2 with its aims editor@islandsbusiness.com
of expanding civilian infrastructure, division of provinces and
districts, and strengthening of security force bases in West Netani Rika is the joint owner of Islands Business magazine
Papua,” their letter said. and the Development and Communications Manager at the
“To date 750,000 Melanesians have signed the Petition Pacific Conference of Churches.
Against Special Autonomy for Papua Volume 2 and have de-
manded the right to self-determination.”

LOAN LOSSES QUANTIFIED AS PNG

INQUIRY PREPARES TO RELEASE REPORT

By Kevin McQuillan mer finance minister, Don Polye, former Prime Minister, Peter
O’Neill and current Prime Minister, James Marape.
Papua New Guinea lost US$432 million on a loan arranged Polye - who was sacked by O’Neill for opposing the loan
by the Sydney office of the Union Bank of Switzerland in 2014, deal – told the Commission UBS “preyed” on PNG, had
far more than earlier thought. multiple conflicts of interest and held a gun to the head of
Current Prime Minister, James Marape, set up the inquiry cabinet. Part of the deal UBS insisted on was a guarantee that
three years ago but it only began hearing evidence earlier this the State’s income stream from the Exxon-Mobil LNG project
year. It is expected to report back at the end of September, would be paid directly to UBS.
2021. O’Neill has told the inquiry that “every minister and trea-
Led by former chief justice, Sir Salamo Injia, the inquiry is surer expressed their views in respect to this submission in
investigating whether there was any corruption or impropriety Cabinet”.
in the PNG government obtaining the loan. Former Treasurer Patrick Pruaitch described the loan as
simply a gift of US$900 million to Oil Search Ltd.
Background Marape said as Finance Minister he might have had a role in
In 2014, the Peter O’Neill government borrowed US$900m implementing the loan by endorsing documents.
to fund the purchase of 10% of shares in Oil Search Limited at Dr George Oldfield, a derivatives expert who previously
about $8 per share. The UBS loan comprised two components, worked for the US Securities and Exchange, told the inquiry
a bridging loan of US$240 million (K844 million) and a collar UBS made ‘excessive profits’ from the deal. He said UBS made
loan, (where the value of the parcel of shares on any day sup- US$81 million (K210 million) more than was “appropriate”
ported the loan itself), of US$660 million (K2.82 billion). from a loan and options deal that was “overly complex” and
The Ombudsman Commission said in 2015, the share pur- lacking in transparency.
chase and the loan were unlawful, and that O’Neill and Acting UBS was also given the right to purchase 20% of the PNG
Treasury Secretary Dairi Vele, by-passed all normal govern- government’s shares at 10% below what the government paid
ment procurement and tendering processes. for them, “guaranteeing a loss in the order of $18 million” for
At the time, commentators said Oil Search was vulnerable the State.
to a take-over and wanted a large injection of cash so it could Former Oil Search managing director Peter Botten told the
buy a stake in the new Elk-Antelope LNG project. inquiry that UBS was “greedy” for the fees, and that he was
As Oil Search share prices fell, the PNG government, uncomfortable with the investment bank being on both sides
through Kumul Petroleum, sold the shares US$4.94, represent- of the transaction.
ing an on-paper loss of US$240 million (K760 million). O’Neill UBS and Norton Rose, which advised the PNG government
falsely claimed at the time that PNG had made a $US29 mil- on the deal, have so far refused to co-operate with the in-
lion profit on the deal. quiry.

Evidence editor@islandsbusiness.com
Among those giving evidence to the commission were for-

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