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Was UBS loan corrupt? Many questions to be answered: Marape

LISA MURRAY, ANGUS GRIGG & JONATHAN SHAPIRO | Australian Financial Review | Extracts

SYDNEY - Papua New Guinea's new government has appointed a former chief justice and an anti-corruption crusader to lead a three-month inquiry into the UBS loan affair, which is expected to renew focus on the investment bank's role in the controversial deal.

Prime Minister James Marape announced on Friday the inquiry would investigate whether any laws were broken when the Sydney office of UBS lent $1.2 billion to the PNG government in 2014 to buy a 10% stake in ASX-listed Oil Search.

The commission of inquiry will also look into whether there was any corruption or impropriety.

PNG PM James Marape says there are many questions that need to be answered.

Former chief justice Sir Salamo Injia has been appointed commissioner and Sam Koim, who headed the disbanded Taskforce Sweep that looked into allegations of corruption involving former prime minister Peter O'Neill, was announced as counsel assisting.

According to its terms of reference as set out in the Post Courier newspaper, the inquiry will investigate how and why UBS was selected as well as the fees paid to individuals and entities involved in the negotiations.

It will look into "whether there [was] negligence on the part of leaders or persons involved in the deal".

PNG lost an estimated $420 million after it was forced to sell its stake in Oil Search following a slump in oil prices. The Post Courier said the inquiry would look at both the purchase and sale of Oil Search shares, while also looking into dealings around the PNG LNG project.

There had been some pressure for Mr Marape, who became prime minister in May after the resignation of his predecessor Peter O'Neill amid fresh scrutiny around the deal, to appoint an Australian judge to head the inquiry.

However, he defended the decision to choose Sir Salamo, telling local media it was made after wide consultation and he was "a man of respectable standing and integrity".

"If there are any doubts, he was the person overlooked by the previous government of former prime minister Peter O’Neill for his reappointment as the chief justice for the second term,” he said.

There are some fears, however, that Mr O'Neill could seek to injunct the commission, claiming "perceived bias" on the part of Sir Salamo. Mr O'Neill has said he would prefer an overseas judge to run the commission…..

New police minister Brian Kramer told The Australian Financial Review last month that UBS should have been wary about entering into a rushed transaction, which was not approved by Parliament and was hurried through cabinet.

 “The likes of UBS, these international bankers, they should have the experience to understand something that appears like a red flag transaction,” he said.

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