Tag Archives: MRDC

Pressure on MRDC to come clean on LNG revenue

Isaac Lupari chairs MRDC where “everything it does is shrouded in secrecy”

Mekere Morauta | PNG Attitude | 25 September 2019

The Mineral Resources Development Corporation (MRDC) needs to publish up-to-date audited details of its group finances since PNG LNG gas production began in mid-2014.

MRDC manages landowner equity interests in both mining and petroleum projects and is chaired by chief secretary Isaac Lupari.

It is estimated that almost K1 billion in landowner royalties has flowed into its coffers since then, but virtually none of that money has reached its rightful owners.

And, contrary to claims by MRDC last week, I am advised that the company has not paid any dividends on the investments it has made on behalf of landowners from their royalty payments.

Hundreds of millions of kina have been invested, but are these profitable, sound investments?

MRDC can make flowery statements, empty promises and false and irrelevant denials, but the fact is that, without publishing its accounts, it cannot prove what it says is true.

It cannot demonstrate that it is operating according to the law, or that landowners are receiving a fair return on their funds.

MRDC’s independent auditors have refused to sign off financial statements. The auditor-general has refused to sign off financial statements. And MRDC has not supplied financial statements to the auditor-general or the Investment Promotion Authority as required.

This is why it is so important that the public inquiry into MRDC proposed by prime minister James Marape goes ahead as soon as possible. In the meantime MRDC should immediately come clean on the state of its finances.

It is in the landowners’ interests that current information verified by independent auditors and the auditor-general is made available.

Failure to supply that information will only heighten public suspicions that all is not well at MRDC. Has there been waste, abuse and mismanagement? The public, as owners of this state corporation, has a right to know.

The information required includes details of trust accounts and other accounts holding landowner funds, the cost and current value of MRDC’s investments, returns on those investments to landowners, withdrawals of landowner funds and details of board approvals for them, payments to all directors and management, fees charged by MRDC to subsidiary companies, and payments to suppliers.

A media release issued last week by MRDC consisted of spin and misinformation. The dividends the company claimed to have been paid are not dividends from MRDC’s investment of landowner funds. They are dividends paid from underlying resource projects as a result of equity participation negotiated by the State.

Nor can MRDC legitimately claim any increase in asset values because its financial statements have been called into question by its independent auditors and the auditor-general.

The value of MRDC’s investments using landowner funds is singled out for criticism by its auditors and the auditor-general. There are other question marks over short term deposits, receivables, related party balances, income tax and financial statement disclosures.

Other comments made by MRDC have an equally unsound basis – none of the documents or processes it refers to in its media release are open to public scrutiny. MRDC, unlike most other state-owned enterprises, does not even have a website.

Everything MRDC does is shrouded in secrecy. It has not provided up-to-date information or full information or even correct information for years.

Now is the time to provide it.

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Mountain of allegations & many questions about MRDC scandals

Mekere Morauta

Mekere Morauta | PNG Attitude | 12 September 2019

New information about the scandal-plagued Mineral Resources Development Corporation has become available, reinforcing the urgent need for an inquiry into its operations and the status of the hundreds of millions of kina it manages on behalf of landowner companies.

There is now a mountain of allegations about MRDC and its landowner subsidiaries. I expect that in the coming weeks more will be revealed about their dubious activities and the real value of the investments they have made, purportedly in the interest of landowners.

The latest revelations affirm prime minister James Marape’s decision to hold an inquiry into MRDC, and add substance to existing allegations of possible fraud, misappropriation, abuse of office and breaches of various laws including the Public Finances (Management) Act, the Companies Act and the Auditor-General’s Act.

It is in the public interest that these allegations are fully tested in a formal inquiry.

The new allegations came within a matter of hours of public comments in defence of MRDC and their own operations by Gulf Governor Chris Haiveta, the interim chairman of MRDC landowner company Petroleum Resources Gobe, and John Natto, the chairman of MRDC’s Petroleum Resources Kutubu.

They covered a wide range of activities by MRDC and its subsidiaries, including the expenditure of landowner trust funds I identified in parliament on 4 September.

One example is K30 million that was allegedly withdrawn from an MRDC subsidiary’s account in November last year.

Landowners have an absolute right to know the details of the processes involved in its use, the people responsible, the purpose of the expenditure, and the ultimate destination of the funds.

There are some important questions the prime minister’s inquiry should consider in this specific instance:

Where did the K30 million come from – was the ultimate source an account held by Petroleum Resources Gobe?

Was the K30 million drawn down in November 2018, and was approval granted by the PRG board at that time?

Was a board meeting, not attended by landowner directors Philip Kende (then chairman) and George Kisi, held in January this year to restrospectively ratify the draw-down?

Is it true that the K30 million was then split between Petroleum Resources Kutubu and Mineral Resources Star Mountains then shifted out, purportedly to pay for a shortfall in finances for the construction of the Hilton Hotel/Star Mountains Plaza?

On what authority did PRK and MRSM accept the transfer of funds to their accounts and is there any documentation to support the transfer?

Can the MRDC, PRK and MRSM boards demonstrate with documentation that the money was actually used on the Hilton, and not for some other purpose?

These are just some of the concerns about MRDC and its landowner subsidiaries raised by credible sources. Other allegations have been made about MRDC’s involvement in HeviLift, Dirio Gas and Power, resorts in Samoa and Fiji, the Four-Mile Casino, Ela Beach land and Moran Haus in Lae.

It is clear from the reaction of MRDC that it is terrified of being exposed to the disinfectant of sunlight – it would much rather its activities remain hidden from scrutiny.

I have been reliably informed that extraordinary measures have been taken by board and management to cover up their activities, including IT measures and video surveillance of staff members.

In the face of this MRDC campaign against transparency and accountability, I encourage members of the public with information about MRDC and its activities to contact the Police Fraud Squad

The decision by the MRDC group not to publish all its audited accounts means that public suspicions and questions will not go away.

So I urge Governor Haiveta and Mr Natto to use their influence and involvement to ensure that MRDC publishes all the group’s outstanding audited financial statements.

It is the lack of verified information, and the refusal of auditors and the Auditor-General to sign off on many financial statements, that give credence to the public’s fear that all is not well within the MRDC group.

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Investigate MRDC and Petroleum Resources Gobe

Ensure politically connected do not out laws

Mack Lone Bolan | Post Courier | 28 August 2019

Taking back PNG also means ensuring that the politically connected do not out our laws – the case of MRDC.

It is quite alarming to witness that the Office of the Prime Minister and other responsible agencies of government have not found it necessary to inquire into what is unfolding at the MRDC and inform the public to reduce their apprehensions about the government’s resolve on curbing corruption.

We have the chairman of the trustee company, the Petroleum Resources Gobe Ltd (PRG) Philip Kende and the managing director of the manager (MRDC) Mr Augustine Mano engaged in open war of words over a K30.3m which disappeared just weeks before the recent vote of no confidence and there is plenty of speculation surrounding it.

The MRDC is just the manager of the trustee and therefore does not have the authority to be involved in anything relating to policies over the GLC process and the amendments to the provisions of the Oil and Gas Act on the management of the trust funds.

The Chief Secretary to Government, Isaac Lupari, is the chairman of the board of the manager – MRDC. He would be in a unique position to assist the government and inform the project area landowners what the truth is about the missing millions of kina not only the K30.3m but also the K200m reported in the newspapers in December last year.

In the interest of fairness, both men (Kende and Mano) ought to be sidelined and allow the National Fraud and Anti-Corruption Squad led by Chief Superintendent Mathew Damaru with his Officers to have free access to the records and interview staff at the MRDC to settle these things quickly.

The Minister for Petroleum would need to ensure that the Department of Petroleum is still responsible for policy issues in the sector and not stand by and have this function or parts of it performed by someone else such as overseeing the GLC process.

We would really like to believe that the days of “if you are politically connected, you can do anything” are gone but cannot begin to talk about “Taking Back PNG” when we still have an environment where the politically connected feel they can still continue to do anything.

Tok pisin bilong Waigani must stop. Commission and inducements for processing papers, clearing things, responding to correspondences and securing approvals etc. would have to be things of the past.

Only when we have overcome all of the above and more can we begin to feel that we are Taking Back PNG.

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Deputy PM Orders KPHL To Go Under PAC Scrutiny

Isaac Nicholas | Post Courier |  August 5, 2019

Kumul Petroleum Holdings Limited must do the right thing and respond to the summons of the Public Accounts Committee, Minister for Justice and Attorney-General Davis Steven said on Friday.

“I want to clarify to the people of Papua New Guinea and to the KPHL Board and management that the powers of the Public Accounts Committee are quite clear under the Constitution,” he said in a statement.

Mr Steven said there had been arguments raised questioning and challenging the PAC mandate that the oil company was separate from the State-owned entities and was not subject to processes, including scrutiny of its financial affairs by the Permanent Parliamentary Public Accounts Committee.

“These arguments, in my view, are erroneous and misleading to the general public as to the intention of the law,” Mr Steven said.

“The fact that the State owns the interests in petroleum projects and the KPHL is a nominee of the State to hold its interests for and on behalf of the people of PNG, this brings the KPHL under the jurisdiction of the Public Accounts Committee.”

He said the PAC is the body that the Constitution has mandated with that responsibility by giving it a broad mandate to examine and report to the Parliament on the public accounts of Papua New Guinea, and on the control of and on transactions with or concerning, the public moneys and property of PNG.

“It is not in PNG’s national interest and has always not been the intention of establishing the KPHL that it should not be open to public scrutiny of its financial accounts, where such requests made by the Public Ac- counts Committee.

“KPHL must now do the right thing and respond to the summons of the Parliamentary Accounts Committee,” Mr Steven said.

“I am concerned that State institutions and businesses like KPHL are questioning the authority of the Parliament. KPHL including the Mineral Resources Development Authority (MRDC ) are trust companies holding the interests of the citizens of Papua New Guinea.

“I therefore urge all government departments, agencies, SOEs to answer to the demands of our people and work together with the political leadership and the relevant bodies established by the Constitution to change PNG. Our people demand that.”

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Upstream LNG Landowners ‘Left In The Dark’ On Benefits

There have been years of complaints of a lack of benefits coming from the LNG project. Photo: RNZI/Johnny Blades

Simon Keslep | Post Courier | October 30, 2018

The Paguale Kekero Resources Landowners Association of Southern Highlands province has raised their concerns regarding benefits of the Liquefied Natural Gas project.

Yesterday association general sectary Paul Kewai Ipakasa and chairman Simon Kayako told Post-Courier their people especially 11 major clans including a total population of over two thousand people are left in the dark on LNG project benefits (royalty and equity payment).

They were referring to statements by Mineral Resource Development Company managing director Augustine Mano and published by this paper last week (October 25, page 20) “PNG LNG pipeline landowners to receive benefits-MRDC.”

The two raised concerns on issues regarding no agreement signed by them under the Umbrella Benefits Sharing Agreement despite gas pipelines under the Greenfield and future generation’s benefits without guarantee.

“Since 2009 till now there were no agreements under Umbrella Benefits Sharing Agreement despite having gas pipeline passing through our land,” said Mr Ipakasa.

According to Mr Ipakasa they come under segment 4 and spin-off benefits for their future generations remains uncertain.

The two called upon MRDC to consider their issue and put business agreements in order especially to fully benefit landowners whose land has gas pipelines passing through.

In relation to Mr Mano’s comments in the article referred to, he explained that while the pipeline determinations have already been made by the minister in reference to the onshore 300 kilometres of the entire 400 km pipeline, those areas not in dispute are being processed and assisted for the flow of benefits.

“There are eight (pipeline) segments which ministerial determination has been made for those areas where there are no disputes.”

“These are the ones we are going to proceed with their preparations of opening up their account, appointment of their board and then start making payments,” Mr Mano said in the report.

He made comments in a previous interview that for upstream pipeline landowners it has been a huge obstacle and that MRDC was aware of landowner frustration, however, mentioned that the areas that are still in dispute will be overlooked and carry on with the ones that are not in dispute pending their outcomes.

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Ok Tedi funds not safe: MRDC a milking cow for people in Waigani

O’Neill clears air on K200m mine fund

The National aka The Loggers Times | 18 July 2018

PRIME Minister Peter O’Neill told Parliament yesterday that well over K200 million from OK Tedi Mine is currently accumulating in the Community Mine Continuation Agreement (CMCA) and non-CMCA trust accounts for the people of Western.

He said this in response to questions from Middle Fly MP James Donald on why Government had made a decision to transfer money in the CMCA and the non-CMCA trust accounts to Mineral Resource Development Company (MRDC).
Donald said he was very concerned because MRDC was a “milking cow” for people in Waigani.

“I asked the prime minister earlier on and he had given me and the people of Western province assurance that the funds were in safe hands,” he said.

“An NEC decision in June 2017 has stated that after the audits of the CMCA and the non-CMCA trust accounts, the balance of the funds, will be transferred to MRDC.

“I am very concerned that the prime minister has lied to me and the people of Western.

“MRDC is a milking cow for Waigani people and the funds are now in the wrong hands.”

O’Neill said what the Government tried to do was to correct gross mismanagement and misuse of funds in the CMCA and non-CMCA trust accounts over the past years.

He said hundreds of millions of kina belonging to Western people under CMCA and non-CMCA trust accounts had been mismanaged over the years.

“Those funds have never reached the people,” O’Neill said.

“That’s why we are trying to correct and stop this nonsense going on.

“The government has put a ban on the CMCA and non-CMCA trust accounts and conducted an audit.”

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Resource Owners Welcome PM’s Address

PNG Prime Minister Peter O’Neill (AAP)

“Their statements are a truthful admission and acknowledgement of the injustices suffered by the landowners of major resource exploitation projects in the country since colonisation”

Post Courier | April 4, 2018

The president of the Resource Owners Federation of PNG Jonathan Paraia has welcomed sentiments expressed by two important persons in the mining and petroleum sectors of the country.

Mr Paraia claimed that Mineral Resources Development Company (MRDC) managing director Augustine Mano and Prime Minister Peter O’Neill have expressed disappointment in the current benefit sharing arrangement between resource-owners, the government and resource developers.

Mr Paraia praised the Prime Minister and Mr Mano for their views on landowners and Papua New Guineans not benefitting enough and participating in the development and extraction of their mineral and petroleum resources.

“Their statements are a truthful admission and acknowledgement of the injustices suffered by the landowners of major resource exploitation projects in the country since colonisation,” Mr Paraia said.

He said the State laws on acquiring ownership of all minerals and petroleum resources held under the surface of the land without paying just compensation to the customary owners is unjust.

Mr Paraia said it was first introduced by the colonial governments and later adopted by the Independent State of Papua New Guinea, even though those laws are in breach of Section 53 (prohibition of unjust deprivation of property) of the Constitution of Papua New Guinea.

He said although a United Nations declaration in 2007 resolved for member governments to remove such unjust laws and restore the ownership of all land and resources acquired by the member States without paying compensation to their traditional owners.

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