Tag Archives: Jacob Weiss

Row over PNG’s Ok Tedi nationalisation hots up

Rowan Callick | The Australian 

THE row over the Papua New Guinea government’s nationalisation of the country’s biggest single taxpayer, the Ok Tedi copper and goldmine, is heating up, but ratings agency Standard and Poor’s believes the impact may be quarantined if the move is “an isolated case”.

The government named the first four members of its new board without any independent directors, although further appointments are expected.

No details have been given about whether, or how much, compensation will be paid for the cancellation — through legislation — of the 63 per cent of Ok Tedi Mining shares that had been owned by the PNG Sustainable Development Program trust.

The new board members are the acting heads of the PNG Treasury and of the Western provincial government where the mine is based, and Ok Tedi’s managing director Nigel Parker.

The fourth and most controversial member is Jacob Weiss — an Israeli economist, long-time PNG central bank adviser, and the representative of Prime Minister Peter O’Neill in failed negotiations with SDP.

Dr Weiss was formerly a board member of the trust, until suddenly switching sides.

The new board is expected to answer directly to Mr O’Neill.

Craig Michaels, Melbourne-based associate director of sovereign ratings at Standard and Poor’s, yesterday told The Australian that the business community would be watching the impact of the Ok Tedi move closely.

He said “the legislated removal of immunity of BHP-Billiton” — which handed control of Ok Tedi to SDP as it quit, 10 years ago, from compensation claims — “will have been particularly surprising”.

The government was highly reliant on the resources sector, he said, so any damage to the sector “would have a big impact on the economy and on government revenues”.

The establishment by ExxonMobil of a liquefied natural gas project there, he said, “suggests if the returns are high enough, foreign investors are willing to work and invest there”.

Stephen Howes, director of the Development Policy Centre at the Australian National University, said of the nationalisation that “while the government has achieved a stunning victory, it is quite possibly a temporary one” — with legal challenges expected in Port Moresby and in Singapore, where SDP is domiciled, although all its management and staff are in PNG.

The Catholic Bishops of PNG have issued a statement that SDP “has supported hundreds of projects nationwide with integrity”.

“In contrast, government, by itself, often struggles to successfully carry out community-based . . . or even larger development projects. Politics plays a large part in this, and corruption is a truly serious problem.”

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