IF OK TEDI MINING LTD files for voluntary liquidation next year after it licence to operate as a miner at Mt Fubulan is not renewed by the PNG government, what will happen to its assets?
Do its assets include the Singapore based US$1.5 billion long term fund currently managed by HSBC and Schroeders? This is the question that Sir Mekere Morauta as former Prime Minister should answer.
The Long Term Fund is governed by trust deeds which contain the list of trustees which Sir Mekere is privy to.
The trust deeds were drafted by the law firm Allens Arthur Robinson on behalf of its client BHP Billiton and relayed to PNG via Gadens Lawyers who presented the final document to Sir Mekere.
The then prime minister acquiesced with its contents and got his Cabinet to approve the 22 different agreement and trust deeds that set the legal framework indemnifying BHP Billiton from future claims over the destruction of the Fly River system.
The compensation package included these provisions:
1.Transferring BHP’s majority interest in OTML to PNG Sustainable Program Ltd and ensuring that PNGSDP received every year an income stream from the mine.
2. PNGSDP using 15% of the income generated by the long term fund to mitigate against additional hardship and suffering faced by the six different communities impacted by the destruction of the Fly River system through the continued operation of the Ok Tedi mine.
3. The income received by PNG Sustainable Program be held outside PNG with the purpose of settling future claims against BHP over the destruction of the Fly River system in the event that a competent court found in future against BHP Billiton.
4. The trust deed has a life of 50 years and trustees are appointed for the same duration. Of the seven trustees, three are appointed by BHP and the other three by the PNG government. The seventh trustee is a Singapore resident and owes his appointment to the fact that you need a Singapore residential address for purposes of incorporating a resident company in the Republic of Singapore.
BHP walked out of Ok Tedi following a law suit for environmental damage filed in Melbourne by Slater & Gordon for a claim of K4 billion by over 30,000 people of the Lower Fly led by Rex Dagi. This case is not technically over.
There is veiled threat now emerging in the Ok Tedi debate from the trustees of the Long Term Fund to trigger the break-up of the fund in the event that PNGSDP no longer receives an income stream from the mine.
I believe that is not necessary and that it is the role of the trustees and the fund managers to continue to grow the current fund without additional cash injections from the Ok Tedi mine every year and to use the current income generated from the Long Term Fund, currently averaging 5.5% per annum or approximately K100 million, to maintain the excellent work and program that PNGSDP and the trustees are currently carrying out in the Western Province and in PNG.
During his watch as former prime minister, Sir Mekere was instrumental in nominating Professor Helen Hughes and Dr Ross Garnaut as PNG’s trustees on PNGSDP and needs to ask the current prime minister that, with the passing of Professor Helen Hughes in June, whether the PNG government will be involved in appointing a replacement.
It is important for Sir Mekere to Inform and reassure the prime minister that he would not be a party to any attempt aimed and breaking up the Long Term Fund and that there is sufficient capability within PNGSDP to grow the Long Term Fund without additional injection of funds from Ok Tedi and that the fund will not be eroded during his watch as trustee.
Further that the fund will continue to serve the purpose for which it was set up, anything falling short of that, including the threat to break up the fund, will add to speculation that that the Long Term Fund is a Trojan Horse owned and controlled by BHP Billiton.
PNGSDP and the Long Term Fund stand as a lasting legacy to Sir Mekere, Ross Garnaut and Helen Hughes and their contribution to the development of PNG’s financial sector.
It is now time to move on and allow Peter O’Neill and Ben Micah to make a lasting contribution to the betterment of our country and people. It is important that Peter O’Neill’s agenda on Ok Tedi and subsequently Freida is not derailed but be allowed to blossom so that we can judge him fairly on his contribution to the development of our country.
I have, over the last 28 years, not changed my views on how PNG should deal with the exploitation of its natural wealth. The natural wealth of the nation belongs to the State to exploit for the benefit of the people, and the State should not have pay for its entry into any resource development project.
As the prime minister recently pointed out on Ok Tedi, why should the government of PNG pay for what it already owns.
My colleague, the former Member for North Fly the Hon Warren Dutton and many leaders of his generation including Sir Michael Somare, Sir Mekere Morauta and Sir Rabbie Namaliu, seem to continue to harbour the view that PNG needs international capitalists to deliver our people out of poverty and Ignorance and that we should all kowtow to these multinationals and their boards and proxies sitting in board rooms in Singapore or Melbourne.
Well the verdict is out. Bougainville stands as our Biafra and is an indictment against national governments that put multinationals’ interests ahead of the people’s aspiration. Over the last 28 years we have failed our people; failed to give them a better quality of life.
I am glad to see that Sir Julius Chan has come around to see the fallacy of the argument that foreign capital will somehow rescue our country and lift our people out of poverty. I am glad that his son now sits as our Mining Minister and has no doubt received wise counsel from Sir Julius.
The situation in Ok Tedi is unique and gives the post-independence generation of leaders enormous leverage to deal with the exploitation of our natural wealth without moving the current goal post.
Papua New Guineans, and land owners in particular, have to be wary of foreign scribes and lobbyists in the guise of academia poisoning our minds and getting us to fight among ourselves over a resource we already own.
PNG is an emerging state that will self-correct as it continues to take painful steps forward as a young nation. As our institutions of State mature, PNG will have to deal problems that may now seem insurmountable: lawlessness and corruption are the two biggest scourges of our time and must be addressed.
PNG must learn from China on how to deal with lawlessness and official corruption and on how to embrace and develop successful state enterprises and at the same time allow the spirit of free enterprise to flourish among ourpeople.
PNG must learn from history. It cannot expect BHP, or Exxon Mobil, Xstrata, Newcrest or Barrick to deliver us from poverty, ignorance and misery.
It needs the strength of its political leaders and the goodwill of its people to create a better tomorrow.