PM to appeal ruling

By GYNNIE KERO
THE Government will appoint a Commission of Inquiry into the PNG Sustainable Development Program, after the Singapore High Court rejected its quest to control the company’s assets.
Prime Minister Peter O’Neill told The National that the Government’s stand had always been that the company’s funds in a trust account in Singapore should be given to the people of Western.
He said the court ruling implied that the company was a “private trust”.
“What about the rights of PNG and the people of Western? These funds must be given to Western province as required under the agreed terms (with the company’s co-founder BHP Mineral Holdings),” he said.
“I will appoint an independent Commission of Inquiry in two weeks to establish the facts once and for all. In addition we will appeal the court’s decision as the court acknowledged that there was an arguable case.”
According to The Strait Times, the PNG Government lost its battle to wrest control of the company with assets worth about US$1.4 billion (K4.2 billion) spawned from a deal reached with BHP Minerals Holdings, the “largest mining company in the world”.
Justice Vinodh Coomaraswamy ruled in favour of the PNG Sustainable Development Program company, saying the PNG Government had failed to prove it had a deal with BHP Minerals Holdings, for joint control to develop PNGSDP assets.
It also failed to prove that there was a charitable trust that allowed the State to “intervene”.
“I have found that neither the agreement nor the trust exists. The pleaded breaches of the agreement and the trust must correspondingly fail,” he said.
The ruling means that the company is free to carry out its objectives under the control of its independent board, according to the 2001 contractual framework, without interference from the Government.
“I acknowledge I found the (PNG) State’s narrative compelling and its logic attractive. But the essential problem is that this narrative stands alone and is unsupported by the evidence,” the judge said.
He said none of the State’s witnesses pointed to the existence of a partly oral agreement, much less to the terms of that agreement.
The court found that in the context of a “sovereign nation” and “the largest mining company in the world”, it was likely that the parties would have entered into written contracts “definitively and exhaustively setting out the precise terms actually agreed, instead of exposing their minds to the vagaries of memory and ambiguity inherent in a partly oral agreement”.
The team defending the company was led by Senior Counsel Philip Jeyaretnam from Dentons Rodyk and Davidson.
The Government was represented by WongPartnership’s Senior Counsel Alvin Yeo.
The company (PNGSDP) was incorporated in Singapore in 2001 with two shareholders – the Government and BHP Minerals Holdings. It was meant to enable BHP to divest its shares in mining company Ok Tedi Mining to PNGSDP.
Both parties intended that PNGSDP hold BHP’s shares in Ok Tedi Mining and apply the derived income to promote sustainable development in PNG. BHP owned 52 per cent and the State 20 per cent of the mine.
The judge noted there were several reasons PNGSDP was incorporated in Singapore and these include its robust corporate governance regime.
In 2012 and 2013, PNGSDP made material changes to its corporate governance framework which diluted the state’s powers of control and oversight over the company.
The PNG government sued to reverse the changes. It argued that it would not have agreed to form PNGSDP if the company was free to cast off the state’s rights of control and oversight.
PNGSDP countered that the structure of the parties’ written agreement left no scope for such a critical aspect of PNGSDP’s corporate governance framework to be left “entirely undocumented in that suite of contracts and to be the subject of an oral agreement”.