Tag Archives: PNG development

Massacres: land rights over resource rich land may have played a role

Mt Kare in the Papua New Guinea Highlands. A large gold mine is planned for the area. Source: Supplied

Lush and humid, Papua New Guinea’s highlands look idyllic. But a brutal massacre of women and children has highlighted a deadly turf war on our doorstep.

Benedict Brook | News. com | July 15, 2019

WARNING: GRAPHIC IMAGE

The images that shot around the world last week were shocking enough. The hacked bodies of women and children, victims of a bitter inter-clan conflict.

Their remains wrapped in cloths, tied to branches and lying beside a sun-soaked country road. There is a brutal logic to some of the deaths.

The scene was gruesome but what also horrified many Australians was that it happened so close to our shores.

The 16 people murdered hailed from the Hela province of Papua New Guinea. At its closest point, the PNG coast is just four kilometres from Australian islands in the Torres Strait.

Australia used to govern the nation until as recently as 1975 and, with the US, Canberra is setting up a military base in the country.

PNG’s Prime Minister James Marape has condemned the slaughter and told the culprits bluntly: “I am coming for you.”

The massacre occurred in the country’s humid highlands, a region drunk on a heady cocktail of bitter clan rivalries, mining riches, lawlessness and even sorcery. In one grim incident, young boys were beheaded.

Locals stand by the bodies of victims recovered in recent tribal violence in Papua New Guinea. Picture: Pills Kolo via AP. Source: AP

Even in an area where killings are not uncommon, PNG watchers have struggled to comprehend the sheer brutality of these murders.

“I wish I could say violence was a surprise in this part of PNG,” Jonathan Pryke, Director of the Pacific Islands Program at think tank the Lowy Institute told news.com.au.

“But targeting women and children is what makes this stand out. It’s sadistic.”

One answer to the sustained violence in this part of PNG may be found several valleys away in the shadow of a mountain. Deep beneath the grassy exterior of Mt Kare, rich seams of gold run. Just down the road, the Pogera gold mine is one of the world’s largest.

Hela provincial administrator William Bando told news agency AFP last week that the killings might have a connection to local rivalries at Mt Kare.

Location of the Hela region in Papua New Guinea. Picture: Google Maps. Source: Supplied

WHY ARE MINES SUCH FLASHPOINTS?

Mines are generally run by major firms but a proportion of the royalties are distributed locally, to the government and landowners.

In a poor country, the effect of that cash can be huge. Indeed, Hela province itself was carved out of another government region so the local Huli people could more directly benefit from the proceeds of a huge liquefied natural gas project in the town of Hides, backed by the US company ExxonMobil.

PNG experts news.com.au has spoken to have said it’s too early to tell if the new Mt Kare mine and the massacre are connected. Violent disputes can be for many reasons. The mine’s owner Indochine has said that linking the site to the tragic incident is nothing more than “speculation”.

A plausible alternative explanation is the slaughter was a tit-for-tat action for other recent killings. But land rights, including over mines, have turned violent in the past. During the 1990s, more than 20,000 people died in PNG’s Bougainville province, largely over who would benefit from an enormous mine.

Resources are big business in PNG with the industry making up 21 per cent of the nation’s economy.

Luke Fletcher, Executive Director of Jubilee Australia, an organisation that advocates for communities in the Pacific region, told news.com.au the entry of big mining firms into remote regions had fundamentally changed the way of life.

“It impacted the whole fabric of society. There was a lot more cash coming in. Disputes became associated with land and who was the landowner of a particular tenement identified for a mining project.

“The Huli ethnic group has a complex social connection to the land so it’s been very difficult for the Government to identify who is a landowner.”

That’s led to not only skirmishes over property but also the withholding of some royalties as the mining firms don’t know who to give the money to.

These disputes have rumbled alongside more longstanding feuds as well as desperation brought on by poverty.

At the same time, promises of modern infrastructure haven’t, in some cases, eventuated. And while shiny new hospitals and schools have been built, in a number of cases, funds to pay staff and materials have dried up.

“There is more cash around but in some ways that has been just as much of a problem. Because there’s so much cash, there are now so many weapons,” said Mr Fletcher.

“This isn’t the first violence we’ve seen, it’s just the most egregious.”

GOLD RUSH

Michael Main, an anthropologist and PhD candidate at Australian National University, knows Hela well. On visits to the lush mountain valleys he recalls having to persuade locals he was merely a student and not a geologist looking to pinpoint the next rich fissure of gold.

“When a piece of land acquires a much greater value (due to mining) that does exacerbate things; even if it’s only perceived in that way. With the hype around mining some think a mountain is literally full of gold.”

There had been a “gold rush” in the early 2000s at Mt Kare, he said, where nuggets were found in the soil and dug up by locals. But that was all now gone with the remainder of the riches beneath the surface.

The Porgera gold mine in Papua New Guinea is one of the world’s largest. Source: News Limited

STONE AGE TO ARMS RACE

The population of PNG’s Highlands were completely unknown until the 1930s when Australian patrols stumbled across a people who, essentially, were no more progressed than the “Stone Age”, said Mr Main.

The modern age has arrived with speed: mobile phones now sit alongside age old beliefs in sorcery. It’s a place where rivalries run as deep as superstitions, all unencumbered by the usual trappings of the nation state, like police, who are rarely seen.

But in times past there was a framework around violence.

“Most people would not have been involved in fighting and it would have been bows and arrows facing off,”

“There is no longer the strong tradition of dispute resolutions through dialogue. Guns have changed the power dynamics,” he said.

“It’s become an arms race. One clan will be well armed, the another clan they have a historical enmity with will get armed too.

“You can even hire guns from a friend.”

A Huli man in traditional ceremonial dress at a mobile phone shop in PNG’s capital of Port Moresby. Source: Supplied

BRUTAL LOGIC TO KILLINGS
Weapons mostly came in from the neighbouring Indonesian province of West Papua. But some come through Australia’s Torres Strait. While the few police will sell individual bullets to supplement their meagre wages. The Government’s own armoury has been pilfered from.

“The amount of guns vastly outnumbers those held by the entire PNG defence force,” Mr Main said.

The recent violence has been eye opening, however. Women, who in Huli society are never armed, have become victims as have children. And traditional tools — like the bush knife — have also been used to butcher victims.

“When I was there, there was the case of young children being beheaded as part of the conflict,” he said.

He added there was a brutal logic to killing kids: “It’s making sure the next generation doesn’t grow up to take revenge.”

Mr Main likened the violence to that which has occurred in many parts of the world, from the Balkans to Ireland, where groups jostle for land and prominence.

The Lowy Institute’s Mr Pryke agreed: “There’s nothing distinct about PNG people; it’s just where they sit on the development spectrum”.

There was no “silver bullet” he said to end the violence, but the PNG Government needed to make its presence felt.

Some mining firms, he said, had been more successful than others at building local infrastructure and remunerating locals. But they needed to step up.

“The mining industry will tell you they are doing as much as they can and they don’t want to fill the gaps left by the Government. But they need to think more deeply about improved development outcomes, because if this violence continues that could be destabilising for business interests in the country.”

Mr Main said the mines have brought jobs and cash. But much of that was when they were under construction, with many wage packets drying up when mining began.

“When they were in the construction phase there wasn’t much fighting because there was money coming in, development was happening and people were focused on the future.

“Now that vacuum has been filled with all these jealousies and grievances from the past returning.”

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Understanding “transfer pricing”: how corporations dodge taxes through financial colonialism

Often these laundry manoeuvres through poor countries involve assets whose valuation-swings are massive: a company can mine 2 million tons of cobalt in Papua New Guinea and export it at $5/ton to Mauritius, then export it again to Canada at $10/ton — not only does this help them disguise their profits in Canada, it also helps them dodge taxes in desperately poor Papua New Guinea, where the real value of the cobalt ($10m) is booked as $5m, despite PNG’s already-low tax rate of 5%, meaning that PNG loses out on $250k, which they can’t afford to lose.

BoingBoing | 11 July 2019

Every day, the world’s poorest countries lose $3b in tax revenues as multinationals sluice their profits through their national boundaries in order to avoid taxes in rich countries, and then sluice the money out again, purged of tax obligations thanks to their exploitation of tax loopholes in poor nations.

The secret to all this tax-dodging is a complex grift called “base erosion and profit shifting” (BEPS). Like many of the most important and dangerous things in the world, it’s boring, complicated, and very important, and the reason it persists is that the boringness and complexity baffles and bores people so they stop paying attention to it, leaving it to chug along, despite its importance.

At its core, BEPS involves using bookkeeping fictions to transfer your profits to low-tax jurisdictions and your costs to high-tax jurisdictions. BEPS abuses “transfer pricing,” which is the pricing of goods and service between multinational companies, by using prices of convenience for transactions within a single company’s international divisions.

Here’s how that works, in a real-world example detailed in an IRS lawsuit against Amazon, which is one of the world leaders in BEPS tax-avoidance. Amazon transfered all its “intellectual property” assets to a company called Amazon Lux, in Luxembourg, where taxes are very low. Then, every time Amazon’s other divisions make a profit, they send that profit to Amazon Lux, which sends them an invoice for their use of Amazon’s trademarks, software, etc. That way, Amazon’s other divisions break even (or even lose money, if that makes them eligible for a tax-credit on the loss), and Amazon Lux makes all the company’s profits in a tax-free jurisdiction (Luxembourg).

Variations on this scheme use other jurisdictions (the Netherlands, Switzerland) and other intangibles to quote on in the bogus invoices (“management services” as an alternative to “intellectual property”).

But things get really sweaty once the countries involved are poor ones whose political, regulatory and judicial systems can be suborned at low expense: in the “Mauritius Manoeuvre,” an individual or company can arrange to book all its profits on Mauritius at no tax, then bring the money back to a rich country as “dividends from foreign investment,” again, at low- or no tax.

Often these laundry manoeuvres through poor countries involve assets whose valuation-swings are massive: a company can mine 2 million tons of cobalt in Papua New Guinea and export it at $5/ton to Mauritius, then export it again to Canada at $10/ton — not only does this help them disguise their profits in Canada, it also helps them dodge taxes in desperately poor Papua New Guinea, where the real value of the cobalt ($10m) is booked as $5m, despite PNG’s already-low tax rate of 5%, meaning that PNG loses out on $250k, which they can’t afford to lose.

Much of this sort of shenanigan is documented in the Paradise Papers and the Panama Papers — indeed, the whistleblower who leaked the Panama Papers said they were motivated by the “metastasizing” of offshore shell companies used for tax evasion (the Panama Papers detail the finances of 214,000 offshore shell companies).

The impact of trade and transfer mispricing on developing countries is not just monetary. There are a series of moral effects as well. In the hypothetical PNG scenario, for instance, one glaring concern that arises from this manipulative business practice is the implication that the people of PNG are somehow unaware of the value of their own resources. A red flag must be raised to the psychological impact of pricing discrepancies that suggest cobalt, somehow, has a lesser value within the borders of PNG than within, say, Canada or Belgium.

Trade and transfer (mis)pricing are symptoms of an ongoing colonial hangover. Given that transfer (mis)pricing is at the centre of operations of MNEs, then the only way to remove this jewel in the crown of every MNE is to dismantle the multinational enterprise as it exists today. A first necessary step would be to introduce strict and enforceable regulations that help guide us away from such damaging relations of production.

Transfer (mis)pricing, the jewel in every multinational enterprise’s crown [Tanya Rawal-Jindia/Opendemocracy]

(via Naked Capitalism)

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Federation Backs Ban On Fly-In Fly-Out

Post Courier | July 9, 2019

The Resource Owners Federation of Papua New Guinea has commended Minister for Immigration and Border Security Petrus Thomas on the proposed ban of the controversial fly-in fly-out (FIFO) system of employment by the extractive and other industries.

Federation president Jonathan Paraia said the practice has seen the loss of billions of kina in disposable income and other benefits over many decades to foreign countries.

He claimed that it was first introduced by the Ok Tedi, Porgera and Lihir mines which has not only seen the loss of disposable incomes of the employees but has also denied the project areas of social, economic and infrastructure development which could have improved the life styles of the citizens of those areas and the country.

“The resource owners of this country have persistently complained about the FIFO system to successive governments for decades through media publicities and others but no action was ever taken by any government to ban the system, for reasons only they can explain. It is their deliberate negligence that has seen the loss of billions of kina to the country,” said Paraia.

He said the federation has not yet identified any country in the region that allows foreign employees to work in their countries on a FIFO basis. Instead, the foreign workers are required to live in the countries of employment with their families for the duration of their employment contracts.

“This requirement ensures that the country and its communities in which the foreign employees work bene t from the disposal incomes of those workers.

“For example, some Papua New Guineans work and live in Australia, New Zealand, Cananda, Africa and other countries, but they do not fly in and fly out from Papua New Guinea on a regular basis,” he said.

The federation expects that the proposed policy, if adopted, will see a significant development of quality infrastructure in housing, health, education and commercial facilities, to service non y-in y-out communities of employees who will now live and spend their disposable incomes within the country boosting its economy.

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Call for change in resource sector laws

Julius Chan is one of the founding fathers of political corruption in PNG

The National aka The Loggers Times |  July 8, 2019

ONE of the founding fathers of the nation [and of political corruption] believes in changing the colonial laws governing the resource sector.

New Ireland Governor and former prime minister Sir Julius Chan, who has been fighting for fair and equal benefit sharing and ownership of resources in the country, said now was the time to take back the country.

He said for the good of the nation, it was time to take back the resources and give it back to the people by legislating resource benefit laws.
Sir Julius said Papua New Guinea exported more than K30 billion worth of resources (in oil, gas, copper, gold, nickel and the agriculture and fisheries) each year but only a small percentage of that remained in the country.

He said of the K30 billion, only about K5 billion was retained in the country through taxes, royalties and equities while the rest was taken out unlike other countries who had a greater return from their resources.

“Many countries get almost half the value of their resources from what they export so we must change,” he said.

“We must change our laws and we must take back the country back as the prime minister said.” He said among them was the laws governing the resource sector that needed to be changed to take back what rightfully belonged to the people and the country.

Sir Julius, debating on the economic status of the country, said the landowner rights and resources were given away when development licences are issued.

He said landowners and government paid for the equity from their share and that needed to change for greater benefits to flow back to the people.

“The landowners and provincial governments are given two per cent equity and development levies yet the companies get that back through tax rebates so in fact the companies or developers pay nothing, the people are paying for their own royalties, the company is paying nothing.”
Sir Julius said the country was in an economic crisis.

“Over the last five years, we have not been true to ourselves,” he said.

“We have been over estimating our budgets revenues and underestimated our expenditures so each years we have ended up with a far higher budget deficit.

“We need to admit we have a problem.”

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Tuke yet to receive mining audit report

The National aka The Loggers Times | July 4, 2019

MINING Minister Johnson Tuke says a report on an internal audit into one of the trust accounts that keeps the funds from the proceeds of the Ok Tedi mine for the people of Western is yet to be furnished to his office.

Tuke said these in response to questions from Western Governor Taboi Awi Yoto in Parliament yesterday.

Tuke said the previous government under the leadership of Peter O’Neill had put a moratorium on one of the trust accounts to undertake an audit after allegations of corruption and misuse of funds.

“There are two trust accounts – the Community Mine Continuation Agreement (CMCA) Trust Account and non-CMCA,” he said.

“Under CMCA 12 projects have been identified and they were being done. It comes under Ok Tedi Development Foundation (OTDF).

“The other one is non-CMCA and projects were endorsed before I became the minister.”

Tuke said there were 148 projects endorsed and funded under non-CMCA Trust.

“These projects were done already but we don’t know, whether these projects were actually delivered on the ground or not.

“For this reason, the previous government authorised a project audit to be done so that the people would know whether these funds were actually used to deliver projects and programmes to benefit the people of Western or not,” he said.

“The audit report was done already but I have yet to receive it.”

Tuke said once he received the report he would act on its recommendations with the relevant authorities.

He also clarified that the balance of that funds under the non-CMCA Trust would be given to the Mineral Resource Development Company (MRDC) as per a Cabinet decision.

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Govt To Have Dialogue With Mining Industry On Laws

Post Courier | July 2, 2019

Changes or amendments to the current resource laws will not be a shock to the industry, says Prime Minister James Marape.

Mr Marape while responding to the Rabaul MP Dr Allan Marat said the government will be engaging with the industry and will advise them on its thoughts and views and will listen to what the industry has to say before making any changes.

He said the Constitution was drafted by the founding fathers of this nation, however, the environment of doing business today has migrated so much away from what it was in the 70s, 80s 90s and early 2000s that is why it is necessary for the change.

“We will be engaging, having a by petition approach in the area of resource laws and finding a balance in not chasing away our investors but getting to ensure that we pick from the resource harvest through the systematic and proper shift in our resource laws,” he said.

“I put to this House in my view that amendments that we make will not be radical and such that will shock the industry.

“We will introduce to the industry what we have in mind and exactly what we have in mind must come forth from the discussions.

“Our discussions must be signaled in a systematic manner to the industry so they know exactly what we are talking about here and in this house I am comforted in having greater experience around me.”

He said the government is not in the business of chasing away miners in the country.

“They are here to partner us but as they partner us, the laws that we have will be the ones that we’ll honour and deal with them.

“But going forward I am in the business of discussing with all likeminded leaders of both sides of the houses, as well as our civil servants and advisors to ensure that we tailor make a new series of law and a constitution and these laws will not differ much or the laws will not differ from the intention of our Constitution,” he said.

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MRA is the real enemy within – it has no duty

James Wanjik  | Post Courier | 2 July 2019

THE Marape government wants to take back PNG. It is a very noble goal.

The issue is, where is PNG for it to be taken back?

Since May 30, when James Marape was voted in as prime minister of PNG we are yet to see what message PM Marape uttered that shows where PNG is.

Our leaders were too emotional to see the truth about a statutory body called Mineral Resources Authority (MRA).

In 2006 it was illegally set up. In 2007 it assumed all assets of former Department of Mining without any handover brief.

MRA’s first project was Solwara No 1 at Pacmanus basin within New Ireland. It had a peculiar condition for a mining lease. It’s first task was to develop technology and not mining. In one lease the MRA corrupted the purpose of mining lease and got the State of PNG to commit funds as a stakeholder.

Lies and deceit of MRA caused the Somare government in 2011. It was warned to remove MRA but it chose to keep it and got removed itself.

It was the same for the O’Neill government. When it tried to tame PNG Sustainable Development Program Ltd it was warned to remove MRA as soon as it could. It’s advisers did not listen. They caused O’Neill’s removal as PM though through resignation.

In 2009 the government was warned that PNG was on the MRA vehicle down the Zambian mining way.

If James Marape wants to take back PNG he must remove MRA to provide clear path to see way to taking back PNG. If he does not then he must be prepared to be embarrassed by MRA in any major forum.

MRA has no duty to the nation or her prime minister. It is answerable to the managing director who is above the MRA board. Also MRA has veto power over any new policy.

Prime Minister Marape has been warned in this letter to the editor. He will have no excuse if he does not act and MRA causes damage to, his leadership, the government, and the mining industry.

The prime minister is free to contact this writer on jameswanjik@gmail.com if he thinks he could be further enlightened.

We pray God may light and salt MRA darkness and bitterness for truth to set PNG free. In God we trust.

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