UBS LOAN: WHAT REALLY WENT ON BEHIND THE SCENES AND WHAT PNG IS FACED WITH NOW

by Vincent Moses

Prime Minister Peter O’Neill and his State Enterprises Minister Ben Micah as well as sidekick supporter and NCD Governor Powes Parkop all turned up at the FM 100 Talkback Show today. 

The Show itself was pretty crappy with host Roger Hau’Ofa doing a pitiful job of allowing the Prime Minister and his party to really answer the tough questions that Papua New Guineans wanted to ask about the UBS Loan.

 It was obvious listening to the whole show that Roger would be quick to intervene and cut off anyone who was asking the important and tough questions. On the other hand, those who were stroking the Prime Minister’s ego and basically sucking up to him were allowed to rant and rave on to their hearts content.

Anyway, that crappy show allowed me as a keen listener to pick up an important statement by PM O’Neill, Minister Micah and sidekick Governor Parkop. The three admitted that the UBS Loan was obtained to re-finance the IPIC Loan.

All along I had been of the opinion that the IPIC loan had already been concluded because the government had failed the people of PNG by not being pro-active and not being prepared to settle the loan in a manner that PNG would redeem our Oil Search (OSL) shares. 

There was ample time to persuade IPIC to accept payment for the shares but the Government was not prepared on time and as a result, the option to redeem our shares fell through. This line of thinking is confirmed by Deputy Opposition Leader Sam Basil. This is one line of thinking but there is also another.

The other line of thinking is that the Government must have known for a long time that IPIC were not going to give up the OSL shares. 

In the midst of organising the re-financing of the IPIC loan, the government approached a number of potential financiers, including UBS. Funding was secured from UBS with the government ALREADY having FULL KNOWLEDGE that the OSL shares were lost to IPIC.

Instead of pulling out of the loan negotiations with UBS, and NOT FURTHER COMMITTING PNG and our people (taxpayers) to MORE DEBT the Government, in the Wisdom of Peter O’Neill, James Marape and Ben Micah decided to proceed!! They did so with FULL KNOWLEDGE that IPIC were not going to give up the shares!!

James Marape admitted to this at the UPNG Forum today. Don Polye also confirmed this was what happened and in fact called O’Neill, Marape and Micah “naughty boys” because they COULD HAVE pulled out of the UBS deal and released PNG from any more debt but they DELIBERATELY CHOSE not to!! 

They CHOSE to proceed with the loan because another “sweet deal” was waiting on the other side of the table.

There must have been some good lollies offered to these “naughty boys” by UBS, Interoil or OSL because this loan was “UNNECESSARY” AND “COULD” HAVE BEEN AND “SHOULD” HAVE BEEN AVOIDED!! PNG did not have to commit itself further to the UBS LOAN, we were under no obligation to do so!!

Peter O’Neill, James Marape and Ben Micah can “dress this deal” up all they want by calling it the “best deal” but it is NOT a best deal at all for PNG. Apart from contravening all the laws outlined by Don Polye, the loan itself has brought our National Debt to K14 BILLION as confirmed by Don Polye at the UPNG forum.

James Marape also confirmed that THIS LOAN alone was the reason Don Polye got the sack as Treasurer.

 He said there were differences in opinions with Marape, O’Neill and Micah of the opinion that PNG would be BETTER OFF with this investment in OSL shares but Don Polye on the other hand opposed the deal because he wanted the Government to concentrate on its CORE BUSINESS which is to deliver Infrastructure and other social obligations to the people of PNG. Polye was of the opinion that if we have to obtain a loan, then we must use it to support our ailing infrastructure and SOEs like PNG Power, Telikom or even Jacksons Airport were three examples he used.

Polye’s argument is this “IF WE HAVE ALREADY SIGNED OFF ON THE UBS LOAN AND WE ARE STUCK WITH IT, WE MIGHT AS WELL USE IT ON OUR INFRASTRUCTURE AND OTHER SOCIAL OBLIGATIONS, THE “PRIMARY” OBLIGATIONS OF GOVERNMENT instead of investing it in a private company like OSL!!

While we dream of some future returns on our investments in shares, the CHILDREN, WOMEN and MEN of PNG are dying “TODAY” and “RIGHT NOW” - "EVERYDAY" because of lack of government services!! This is what economists and accountants refer to as OPPORTUNITY COST.

The pertinent question we all must ask then is this “WHAT IS THE PRIMARY OBLIGATION AND BUSINESS OF GOVERNMENT”?? Is it to enter into business deals by investing in speculative share markets for some anticipated future earnings or to address its SOCIAL and MORAL obligations and try to improve people’s lives NOW!!

To conclude, it seems the Prime Minister and his key Economic Ministers have LOST FOCUS of their primary mandated responsibilities to the people of PNG. They are now thinking as businessmen using PNGs resources to invest in speculative share markets.