The Prayer
Marape must investigate Duma, says Transparency

Time to crack down on corruption

Commerce and industry minister William Duma says he did nothing wrong
Commerce and industry minister William Duma says he did nothing wrong

| Australian Financial Review

SYDNEY - The Australian Financial Review’s investigation into the issuing of Horizon Oil’s lucrative petroleum development license in Papua New Guinea in 2011 has raised serious questions about the conduct of the company.

Chairman Mike Harding has acted properly by standing down CEO Michael Sheridan – who in 2011 was Horizon’s CFO, company secretary and a board member – pending an independent investigation into the corruption allegations by Herbert Smith Freehills and Deloitte, which will be overseen by an independent board committee.

These developments followed Monday’s front-page story by the Financial Review’s Angus Grigg and Jemima Whyte.

This revealed that leaked documents show that Horizon had repeatedly ignored corruption warnings by lawyers working on the deal, and had paid $US10.3 million (K35 million) to purchase a shell company, Elevala Energy, which was controlled by a local lawyer with business and personal links to then PNG petroleum minister William Duma.

Elevala, which was granted a 10% stake in the development license by Mr Duma’s department, was bought by Horizon 10 weeks after the new license was approved.

This also followed a protracted court battle between Horizon and Mr Duma over the minister’s retraction of a previous license. Mr Duma, who is now PNG’s commerce and industry minister, denies any impropriety.

Transparency International has consistently ranked PNG as “highly corrupt.”

It is convenient to blame “corrupt politicians”, and to rationalise corruption as the price of doing business in some countries. But corruption can’t occur unless foreign companies and financial institutions are willing to play the game.

Bribing foreign public officials is also against Australian law, and carries penalties of a maximum 10 years jail for individuals and fines of up to $18 million (K41 million) for companies.

If Horizon’s independent investigation uncovers alleged wrongdoing, Mr Harding should expeditiously refer the matter for investigation to the Australian Federal Police.

Corrupt behaviour by business undermines the aim of Australia’s aid and foreign policy, which seeks to promote good governance in developing nations such as PNG and ensure local populations – not corrupt local elites – benefit from the support provided by Australian taxpayers.

Stamping out corruption in Port Moresby is especially important now that the Morrison government has lent the PNG government $US300 million (K1 billion) for "budget support" to prop up essential services, with more strategically-targeted cash likely to flow to stop our near-north neighbour from accepting financial assistance from China.

In the past decade, Australia lost leverage over public sector abuse in PNG when keeping Port Moresby happy, and Manus Island open to house refugees, took priority.

Australia might also have more moral authority if its politicians – on both sides – didn’t practice the petty corruption of politicised sports rorts and other taxpayer-funded cash splashes.

But getting to the truth of the Horizon allegations marks an important opportunity to reset how Australia does business in PNG.


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Bernard Corden

When do the protagonists receive their order of chivalry?

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