My life’s journey with Dr Bill Standish
Dancing Kundu Drums

Huge setback: O'Neill fails to land K4.7 billion PNGSDP stake

Mek
In 2013 PNGSDP, under chairman Sir Mekere Morauta, launched legal action against the PNG government arguing it had breached Singaporean law

KC VIJAYAN | Senior Law Correspondent, The Straits Times

SINGAPORE - The government of Papua New Guinea has lost its protracted battle in the Singapore High Court to wrest control of an entity with assets worth about US$1.4 billion (K4.7 billion) that were spawned from a deal inked with the largest mining company in the world.

Justice Vinodh Coomaraswamy has ruled in favour of PNG Sustainable Development Program (PNGSDP), saying the state of PNG had failed to prove it had a deal with PNGSDP's co-founder BHP Minerals Holdings for joint control to develop PNGSDP assets.

It also failed to prove that there was a charitable trust that allowed the state to intervene.

"I have found that neither the agreement nor the trust exists. The pleaded breaches of the agreement and the trust must correspondingly fail," Justice Vinodh said on Tuesday.

The outcome means PNGSDP is free to carry out its objectives under the control of its independent board according to the 2001 contractual framework, without interference from the state.

Justice Vinodh, in his 149-page judgment, addressed each of the arguments made as he explained why the state had failed in its bid to wrest control of PNGSDP from its independent board.

"I acknowledge I found the state's narrative compelling and its logic attractive. But the essential problem... is that this narrative stands alone and is unsupported by the evidence," he said.

I have found that neither the agreement nor the trust exists. The pleaded breaches of the agreement and the trust must correspondingly fail.

I acknowledge I found the state's narrative compelling and its logic attractive. But the essential problem... is that this narrative stands alone and is unsupported by the evidence.

The court examined each key plank of the state's case and found in addition that none of the state's witnesses pointed to the existence of a partly oral agreement, much less to the terms of that agreement.

The court found that in the context of a "sovereign nation" and "the largest mining company in the world", it was likely that the parties would have entered into written contracts "definitively and exhaustively setting out the precise terms actually agreed, instead of exposing their minds to the vagaries of memory and ambiguity inherent in a partly oral agreement".

The high-stakes court battle involved law heavyweights on both sides. Defending PNGSDP was a team led by Senior Counsel Philip Jeyaretnam from Dentons Rodyk & Davidson while WongPartnership's Senior Counsel Alvin Yeo led the team representing the PNG government.

PNGSDP was incorporated in Singapore in 2001 with two shareholders: the state of PNG and BHP Minerals Holdings and was meant to enable BHP to divest its shares in mining company Ok Tedi Mining to PNGSDP.

Both parties intended PNGSDP to hold BHP's shares in Ok Tedi Mining and apply the derived income to promote sustainable development in PNG.

BHP owned 52% and the state 20% of the mine, which was rich in gold and copper and highly profitable.

The judge noted there were several reasons PNGSDP was incorporated in Singapore and these include its robust corporate governance regime.

In 2012 and 2013, PNGSDP made material changes to its corporate governance framework which diluted the state's powers of control and oversight over the company.

The PNG government sued to reverse the changes.

It argued, among other things, that it would not have agreed to form PNGSDP if the company was free to cast off the state's rights of control and oversight.

PNGSDP countered that the structure of the parties' written agreement left no scope for such a critical aspect of PNGSDP's corporate governance framework to be left "entirely undocumented in that suite of contracts and to be the subject of an oral agreement".

It added that the common intention in PNGSDP's formation was to eventually make it a self-run and self-perpetuating organisation and the changes made in 2012 and 2013 were the next step in effecting the common intention.

Justice Vinodh said the dispute is "about corporate governance of PNGSDP".

He added: "For all the reasons set out, I hold the state fails entirely in its claim against PNGSDP. It is not entitled to the relief sought."

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Mathias kin

You're right there William. In a PNG court the thieves will surely win - as corrupt as the PNG courts are themselves - thankfully it is a court away from the reach of our criminal two faced politicians, where the honorable court can right from wrong.

William Dunlop

Ali Baba O'Neill & his band of thieves defeated by the Singaporean Court. Hype and bullshit got him nowhere.

The people of PNG and Western Provence can be ever so thankful to Sir Mekere Morauta for his great foresight in protecting their interests.

Mathias Kin

I consider this a fair decision by the Singapore court. The main thing is that Peter O'Neill does not get his hands on all this money.

Under a new regime hopefully things will be handled well for the people of Western Province.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)