PNG govt closer to gaining control of mines

oneill_vesus_morauta

Court orders their S’pore-based operating firm to release key accounts for inspection

K.C. Vijayan | Straits Times

The Papua New Guinea (PNG) government’s move to wrest control of gold and coal mines in its Western Province inched forward when the High Court here ordered the Singapore-based operating company to release key accounts for inspection.

The court found the PNG government had the right to examine the documents based on its contract terms with the PNG Sustainable Development Program (PNGSDP).

The items for inspection include ledger and management accounts as well as disputed documents involving expenditure.

Justice Judith Prakash, in judgment grounds last month, further held the PNG state had a right to make copies of the documents.

“Accounting documents are some of the most information-sensitive documents in a company’s records and often require detailed and lengthy study that is not achievable during the physical inspection of documents,” she added.

The Singapore-incorporated PNGSDP is a non-profit firm tasked with developing the mines for PNG’s social and economic benefit. It was formed in 2001 and is based here so that it can remain independent and unaffected by any potential change in the PNG government, according to the country’s former prime minister Mekere Morauta, who is the PNGSDP board chairman.

A third of the annual dividends from the company that runs the mines – OK Tedi Mining – was to be used for a fund to support PNG development projects while two- thirds were ploughed into a long- term fund to benefit PNG after the mine closed. PNGSDP owned 52 per cent of the shares in OK Tedi while the PNG state owned 20 per cent.

The judge noted that at the end of 2012, the development fund contained US$158 million (S$217 million) while the long-term fund had US$1.35 billion.

PNG claimed PNGSDP had amended its Memorandum and Articles of Association (M&A) in 2012 without state consent.

The state is suing PNGSDP for failing to provide an account of all its dealings with its assets, claiming PNGSDP had dealt with them in breach of new programme rules.

In denying the allegations, PNGSDP is counter-claiming that the state’s purported removal of PNGSDP’s directors and CEO in October 2013 was void and they had full authority to run the business.

In the run-up to the pending main suit, the state sought this court order to access PNGSDP’s books.

PNGSDP, defended by Cavenagh Law lawyer Nish Shetty, argued the state had no right of inspection and, even if it did, the right did not include the documents sought.

Wong Partnership lawyer Koh Swee Yen countered that the state must succeed, “especially in the light of the many admissions PNGSDP has made to the effect that the state has a right of inspection”.

Justice Prakash found there was an enforceable collateral contract between the parties that incorporated the M&A as part of its terms. “This point is relatively uncontroversial,” she said, in allowing the accounts inspection but making clear the minutes of meetings and disputed papers involving gifts or sale of subsidiaries and assets were excluded.

Leave a comment

Filed under Financial returns, Papua New Guinea

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s