Skip to main content

The Australian branch of UBS should be banned from doing business in Papua New Guinea for ten years and former Prime Minister Peter O’Neill should be prosecuted for his role in a loan which resulted in a huge loss for the country , said current Prime Minister James Marape. said.

A former government led by O’Neill secured the AU$1.3 billion loan from global investment bank UBS in 2014 to acquire a 10.1% stake in the oil exploration and gas company Oil Search Limited. However, Oil Search’s stock price quickly fell, with PNG shares subsequently sold at a loss.

Addressing parliament on Wednesday after a commission of inquiry into the loan concluded, Marape said the deal had cost the state “over A$340 million” as well as “lost opportunities” such as the creation of a sovereign wealth fund and “revenue diversion” from the PNG LNG export project.

“The UBS loan had no justification or satisfactory justification, there was no follow-up process, other than a huge fee of A$28 million,” Marape said. “UBS also overcharged A$175 million which should be refunded.”

He also said the commission’s final report recommended that state-hired lawyers from the Australian branch of Norton Rose Fulbright not give “appropriate advice” and that the unit be banned from doing business in the country. for five years.

Mr O’Neill ‘knew the submission was complex and lengthy’ but did not give the rest of the cabinet ‘notice or opportunity to debate the submission’, he added.

Marape, who succeeded O’Neill as prime minister in 2019 and launched the commission’s inquiry, was finance minister when the deal was struck.

O’Neill said he “fully accepts the recommendations of the deal inquiry” and will “submit to further inquiries.”

“I am very happy to defend myself whether it is at the ICAC [Independent Commission Against Corruption] or in court. So I have no problem with that, I am responsible to the people of Papua New Guinea. I am responsible as a mandated manager.

“The UBS deal investigation was the most expensive of all investigations at K30 million [11 million AUD] and very highly politicized,” he added.

A UBS spokesperson said the company disagreed with statements made by Marape in parliament and “strongly disputes claims that it overcharged PNG”.

The bank had been appointed to act for PNG to secure the loan “following a competitive tender” and the government “received advice from a number of independent Australian and Papuan legal and financial advisers. -experienced New Guineans throughout the transaction,” the spokesperson said.

“UBS maintains that its dealings with PNG were proper and transparent. The transaction was entered into by PNG pursuant to relevant legislation and duly ratified by the PNG Parliament in 2014 in accordance with the Constitution,” the holder said. speech, adding that the bank’s net income from the deal was less than A$50 million.

“UBS provided a detailed account of the transaction to the Commission via two full statements (August 2021 and March 2022) and other supporting documentation,” the spokesperson said.

“UBS believes that its responses, including its criticism of Brattle’s analysis and conclusions, have not been given due consideration by counsel assisting the Commission.”

A Norton Rose spokesperson declined to comment.