Another vital lesson learnt

The National Editorial

AS would have been expected, yesterday’s debate on the tabling of the inquiry into the Union Bank of Switzerland (UBS) loan was long and fierce.
The underlying message from the emotive and well-articulated speeches by members from either side of the house that Papua New Guinea was duped or coerced into a commercial transaction that should not have happened.
In tabling the inquiry report, Prime Minister James Marape told Parliament that after sitting for over 120 days, the COI (commission of inquiry) has received and analysed over 19,000 documents, received exhibits comprising over 10,000 documents, and received evidence from over 60 witnesses.
The conclusions it arrived after going through all that documentation and oral presentations were as follows:

  • THE loan had no satisfactory justification or rationale. It declared that there was no strategic interest in obtaining new Oil Search shares in 2014;
  • THE failure to follow proper processes, coupled with the speed with which complex documentation was produced meant no one within the public service understood the overcharging of the State by UBS, and the risks inherent in the UBS loans;
  • IN addition to its sizable fee of AU$28.4 million (about K73 million), UBS also benefitted from the refinancing of the collar loan in December 2014 and February 2016, and from the ultimate sale of the shares in September 2017. Its total overcharging amounts to AU$175 million (about K464 million), and should be made to repay the amounts;
  • LAWYERS retained by the State did not advise the State properly on the potential conflict of interests and how to manage them;
  • OFFICER responsible for the National Executive Committee (NEC) policy submission, and submission failed to set out the downside to the proposal and the false statement that the then treasurer agreed to the submission contents; and,
  • THE then prime minister knew the submission was complex and lengthy but did not provide the NEC advance notice or the real opportunity to debate the submission during the meeting. The meeting lasted less than an hour. These are the vital process of democracy and good governance.
    The commission’s recommendations included:
  • AMENDMENTS to the Commission of Inquiry Act, to improve and enhance its powers;
  • IMPROVEMENTS to our public service system in keeping proper records and documentation of government businesses;
  • PROHIBITION of certain foreign individuals and entities, from doing any work for the State, by reason of their conduct;
  • AMENDMENTS to the leadership code, to enable retrospective accountability of persons under the Leadership Code;
  • INVESTIGATION against UBS and the law firm of Norton Rose Fulbright, on their conduct in respect of their duty of care to the State and the management of the conflict of interest;
  • AMENDMENTS to relevant legislations covering overseas commercial loans by the Government, to ensure prior parliamentary approval above a defined level; and,
  • IMPLEMENTATION of the Sovereign Wealth Fund and its relevant functions and features.

Yesterday’s debate included calls to bring certain individuals to account for the bad deal that cost the people of Papua New Guinea dearly.
It was interesting however, that member for Kandep Don Polye, the former treasurer who was decommissioned for refusing to agree to the loan, urged his colleagues to debate the matter without anger or prejudice but with clear heads.
The COI, completed over a much longer time than anticipated, and costing over K30 million has run its course.
Now it is up to the incoming government, parliament and state agencies to pursue its recommendations to avoid any such mistake in the future.