KATE LYONS & PNGi | The Guardian | Extract
SYDNEY - A company owned by Papua New Guinea’s prime minister, Peter O’Neill, won a $32 million government contract to build bridges in the country in a process with “serious procurement irregularities” that may have violated anti-corruption guidelines, the Guardian can reveal.
The 2015-16 building project was fraught with problems, requiring the Asian Development Bank (ADB) to temporarily stop payments and send in inspectors. Eventually, the contract was terminated and had to be retendered to a Chinese company.
The revelations centre on Wild Cat Developments Ltd, of which O’Neill was the sole shareholder at the time the contracts were granted by the ADB.
O’Neill came to power in 2011 and has had corruption allegations levelled at him in the past, but according to some experts this is the first time he has been revealed to have been involved in such a questionable deal by an international body while prime minister.
“The PM’s conflicts of interest are legion, but there has never been anything like this ADB report before,” said Kristian Lasslett, an investigative criminologist who has been researching corruption in PNG for more than a decade.
“O’Neill is PNG’s Mr Teflon, while others around him have crashed against the rocks, he seems to escape unscathed.
“This ADB investigation is a bone-shaking exception to the rule. An international body has uncovered activity by a company he owns which appears to fit within the dictionary definition of fraud.”
The prime minister’s office issued a statement disputing the allegations, saying: “The ADB-funded joint venture contract that you are referring to was awarded in accordance with all procurement processes of government and the ADB.”
The statement said O’Neill had not been present when cabinet made the decision to award the contract to his company, in keeping with PNG law that requires politicians to excuse themselves from decision-making processes if there is a potential conflict of interest.
It also said the prime minister did not receive any income from the company and divested himself of shares in it upon realising the potential for a perception of a conflict of interest.
The revelations raise questions about O’Neill’s business dealings at a time when he is trying to promote PNG as a site for tourism and investment at the APEC leaders’ forum, which takes place this week.
In 2014, Wild Cat, in partnership with contractors Golding PNG Ltd, won a $32.86 million contract from the ADB to build 12 bridges in the West New Britain province of PNG.
The contract was part of a $100 million project, funded 90% by the ADB and 10% by the PNG government, to improve road access for the rural population, something direly needed in PNG, where about 85% of people live in rural areas.
More than a year after the contract was awarded, ADB inspectors found work had begun on three of the 12 bridges and just 10% of work had been completed, despite 60% of the money having been paid.
The ADB asked the Department of Works to monitor the sites to ensure progress was made and temporarily suspended payments due to the lack of progress.
Shortly after these problems, O’Neill sold his shares in Wild Cat, which was renamed Construction and Procurement Services Ltd in October 2016.
The ADB published a report into the procurement process for the project in August 2017 in which it outlined a series of issues with the awarding of contracts, including “deficiencies in financial management” and “potential integrity violations”.
After this report, the ADB terminated the Wild Cat-Golding contract “due to poor contractor performance” and in June 2018, a new contract worth $14.328 million for completion of the project was awarded to China Jiangsu International ETCG Ltd, a Chinese state-owned company.
O’Neill’s office disputed this, saying: “The contract was terminated by mutual consent by both parties, not because of the audit reports as you have suggested.”