PNG PM calls for full investigation in Horizon’s scandal

PNG Prime Minister, James Marape. Picture: RNZ

PORT MORESBY/SYDNEY, 19 FEBRUARY 2020 (THE FINANCIAL REVIEW) – The Prime Minister of Papua New Guinea, James Marape, is backing a full investigation into allegations the ASX-listed Horizon Oil ignored corruption warnings and paid a shell company linked to a senior minister US$10.3 million (AUD$15.4 million).

In his first comments on the scandal, revealed by The Australian Financial Review last week, Marape told PNG’s Parliament he was seeking help from “the highest levels” in Canberra to investigate allegations against his Commerce Minister, William Duma.

But the Prime Minister pushed back against demands to immediately sack Duma, who was Minister for Petroleum and Energy when the payment was made in mid-2011.

“If there is corruption involved … then find the evidence and due action will take its course,” Marape told Question Time on Tuesday.

“I have sent a request to the highest levels in Australia … [that] I am interested in this matter,” he said.

Marape, who came to power last year pledging to clean up PNG and make foreign companies more accountable, said domestic investigations could also begin.

“The Ombudsman and the police have every right to establish a file on this matter,” he said.

Documents obtained by the Financial Review showed Duma’s department awarded a 10 per cent stake in a lucrative development licence to a shell company owned by his personal lawyer, Simon Ketan, even though that company had no experience in the sector and lacked the money to develop the gas fields.

Horizon bought out this stake 10 weeks later for US$10.3 million, ignoring repeated corruption warnings from lawyers working on the deal.

Duma has denied any wrongdoing and said any suggestion he acted improperly “amounts to political witch-hunting with malicious intent to make me look bad”.

Marape said Duma will make a formal statement on his role in the Horizon Oil scandal “in due course”.

The Prime Minister’s tepid support for Duma, who is an influential powerbroker in the highlands, came on the same day as parliament passed new protections for whistleblowers.  It is set to debate the establishment of an anti-corruption body as early as Wednesday.

“Corruption is possibly the number one challenge facing us,” Marape said.

Horizon’s shares have fallen around 30 per cent since the Financial Review first revealed details of the payment. The company has established an independent board committee to investigate the allegations.

It has suspended chief executive Michael Sheridan pending the outcome of the investigation, which is being conducted by lawyers at Herbert Smith Freehills and accounting firm Deloitte.

In PNG, the Minister for Petroleum and Energy, Kerenga Kau, has asked his department to investigate the allegations. The Police Minister, Bryan Kramer, said his officers would await the results from the Petroleum Department’s investigation.

During his visit to Australia last year, Marape sought help from Australian authorities to better fight corruption and money laundering in PNG.

Transparency International PNG has been leading calls for Duma to stand aside while an investigation is undertaken into what it describes as “grand corruption”.

“Given the transaction involved US dollars and an Australian-listed company, there is prospect for the PNG Police and anti-corruption agencies to work closely with the Australian Federal Police, the U.S Securities Exchange Commission and the U.S Department of Justice to investigate the evidence exposed by The Australia Financial Review,” it said in a statement.

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