Uechtritz family history changed Kalo
Lessons I have learned

Porgera: Government has whip hand

Waile Creek  Porgera
Waile Creek, Porgera


ADELAIDE - Eric Schering has beautifully articulated the classic neo-liberal arguments about the defence of property rights and the necessity of the rule of law.

There is much of merit in these arguments but,  in this case, there are major problems as well.

I think James Marape and his negotiators will be saying several things to those sitting opposite.

First, they will say, the present arrangements were unfair and exploitative from the outset, providing the owners of the Porgera mine site with grossly inadequate compensation for the loss of access to their traditional lands, not to mention the large scale pollution involved.

In effect, Papua New Guinea got the equivalent of the "beads and trinkets" that were once offered by the past European invaders who took possession of the New World.

Second, the beneficial owners have made huge profits of which they have not paid a fair and reasonable share, not just to the landowners, but to the government.

They have engaged in tax minimisation schemes (legal or otherwise) whereby the true level of profitability of the mine has been obscured through the use of deliberately opaque company structures and accounting methodologies.

This is the modus operandi of international capitalism in a globalised world, where revenue can almost miraculously vanish from its point of origin to reappear in a tax haven.

Third, the expiration of the lease allows the government the lawful right to renegotiate its terms and, if necessary, to terminate the lease if it is not satisfied with those terms.

Fourth, there is no necessity for the government to purchase additional shares to secure a better return because it would, in effect, be purchasing land and resources that it already owns.

Fifth, while the national court must follow the requirements of the law, it is the government that makes those laws. Thus, if needed, the law can be amended to allow the government to secure control of the mine.

International law, so freely flouted by both the USA and China, has no bearing on this matter.

Sixth, it is possible for the beneficial owners to continue to enjoy a large profit from the mine provided that the landowners and PNG government can enjoy an appropriately proportionate share of that revenue, not the mere "beads and trinkets" now on offer.

Eric Schering is right about the necessity to negotiate but quite wrong to conclude that it is the PNG government that must make concessions: it holds the whip hand and should apply the whip as necessary to achieve a deal that is both legally and morally defensible.

Right now, there is certainly no morally defensible arrangement in place, even if it may be legal.


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Philip Fitzpatrick

Rex Connor was a minister in the Whitlam government. He organised a loan from a shonky loan shark in Pakistan called Khemlani to "buy back the farm" i.e. nationalise some big resource developments. It was what eventually brought down the Whitlam government.

William Dunlop

No, Phil. Who was he? But I do remember former kiap Keith Dowling flogging off the Rothwell's shell to Laurie Connell. Christopher Skase being the runner up.

Keith Dowling was the then MD of Walter Reid P/L. At about that time I bought a few thousand shares in Walter Reid in order to be able to attend the AGM, mainly to see what Keith Dowling's cloth was cut from.

I wasn't disappointed that the previous write up Keith Dowling had received in the financial press describing him as the quiet John Spalvins of Queensland. It was quite correct.

As to PNG governments buying into and running business, a big no. They are not capable of running a country small house.

Philip Fitzpatrick

Tolakuma, in Central Province, is,in fact, another very sorry saga Derk.

It went bust in 2015 and the government sold it to a series of improbable Asian buyers. It lost millions in the deal.

The Tolukuma landowners have every right to feel they have been betrayed and deceived by government authorities.

Derk Kurtain

Does anyone remember Tolakuma mine. Excellent management practices and the landowners benefited. What are people's problems?

Philip Kai Morre

In the 1980s, most coffee and tea plantations in the Western Highlands and Jiwaka provinces were given back to landowners only to run down due to management problems and inner fighting among landowners.

Carpenters and Steamships companies gave up plantations and concentrated on their store businesses.

I don't know but similar could happen to the mine at Porgera if the government happens to take over. We do not have a good track record in managing national assets. And managing directors and chief executive officers are frequently paid more than the prime minister and ministers.

Simbu Coffee, the biggest coffee cooperative society in PNG, was completely bankrupted and closed due to change of management.

Our local managers are not trusted and nothing has been done to recoup the company.

Philip Fitzpatrick

Do you remember when Rex Connor announced his plans to "buy back the farm" in 1975 William?

That didn't end well as I recall.

A cautionary tale that Marape might like to ponder.

William Dunlop

It will be a change to see PNG'ians negotiate back the farm on their terms. One presumes legal as opposed to the previous Ali Baba style of O'Neill Consolidated Holdings and those of that ilk of which PNG has a proliferation.

Baubles and trinkets to the landowners; and kickbacks. Gold to the grafters & O'Neill and Co.

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