WikiLeaks, Stratfor and Papua New Guinea's corrupt politics

Written by Philip Dorling  

 When Papua New Guinea’s Prime Minister, Sir Michael Somare, was unceremoniously removed from office last August, the private US intelligence company Stratfor was desperate for inside information to pass to its clients, especially international companies with interests in PNG’s burgeoning resources sector.

Sir Michael Somare: Stratfor says he's dodgy

Stratfor had one well connected operative who could provide insight on PNG politics, a Brisbane based consultant closely engaged in business in Port Moresby. “Source CN65” was quickly tasked and his subsequent reports, released by WikiLeaks, provide a direct insight into the chaotic and often corrupt PNG political scene.

CN65 didn’t mince words about PNG’s new Prime Minister, Peter O’Neill. In an email to his Stratfor “source handler,” CN65 suggested the new prime minister had a keen sense of personal financial interest.

“Quite corrupt. I know him. … O'Neill is not any more pro-Western than anyone else up there. As long as he makes money for himself (he has significant business investments in mobile phones, among other things), he couldn't really care less.”

Asked what the new Prime Minister would want from Australia, CN65 gave a succinct reply: “He'll be interested in just one thing - money. He will be wanting increased aid from Australia, and untied aid, i.e. direct budgetary support as opposed to aid tied to particular projects and administered by Australia.”

 PNG is Australia's largest recipient of foreign aid and with more than A$480 million allocated in 2011-12.

Stratfor’s Source CN65 was revealed by WikiLeaks last week to be the former Australian Senator, Bill O’Chee. A Queensland National Party Senator from 1990 to 1999, O’Chee was the first ethnic-Chinese Australian to serve in the Australian Parliament and was also the youngest person to serve as a senator. He remains active in the Liberal National Party in Queensland.

Last week WikiLeaks began the release of more than 5 million leaked Stratfor emails, which it said show ''how a private intelligence agency works, and how they target individuals for their corporate and government clients.''

According to its website, Stratfor, ''uses a unique, intelligence-based approach to gathering information via rigorous open-source monitoring and a global network of human sources''.

Now a partner in the Brisbane based Himalaya Consulting, O’Chee has a Stratfor “A” rating for “source reliability.” Drawing on a wide range of personal political and business contacts in Port Moresby, his reporting was regarded as “unique insight” into the labyrinth of PNG politics.

After spending a day and a half with “my PNG chums, who were down for the Oxford [University] dinner at the Sydney Opera House,” O’Chee was able to provide Stratfor with an inside account of the collapse of the Somare administration, specifically the personal falling out between acting prime minister Sam Abal and foreign minister Don Poyle, both Enga, a region in the PNG Highlands, that “ripped apart the government” while Sir Michael was slowly recovering from heart surgery in a Singapore hospital.

“Everyone in the government got fed up with this, and it led to huge dissatisfaction. On top of that, Abal moved to shift Peter O'Neil from the Treasury portfolio. That was the [catalyst] for action.”

Significantly O’Chee also referred to “a group of about four or five from the political class, led by one of our business associates (won't say who) helped put the numbers together for a change of government.” However in subsequent reports, O’Chee directly identified Prime Minister O’Neil’s most important backer as former Defense Minister and PNG National Rugby League chief, Highlands businessman Ben Sabumei.

“Uncle Ben is advising O'Neill. … It is wrong though that business put O'Neill in place: it was Uncle Ben and his Highlands circle,” O’Chee wrote.

Referring to the maneuvering that preceded Somare’s downfall, O’Chee simply observed “corruption will win the day.”

O’Chee also had contacts with the Somare camp, leading him to comment that a return to power by Sir Michael would take PNG back to “a cesspit of corruption, incompetence and mediocrity. Need I regale you with the details of my meeting last year with Somare's housing minister who was stoned on betel nut?”

Reporting on PNG’s international relationships, O’Chee expressed the view that domestic political turmoil was unlikely to have much effect. Asked about PNG’s growing ties with China, he observed that “the links between PNG and China won't be changed by who is in power, as China already has a substantial foot in the resources sector - Ramu NiCo and Marengo Mining, for example, as well as sniffing around PNG LNG.”

“The main factor limiting China's ability to reach into the country is the inability of the PNG politicians to be efficient in receiving aid offers. For example, most of a US$200m loan facility remains undrawn because they can't work out how to utilize it. The thing about Melanesia is that politicians are not pro-active, and certainly not policy active. They are instead led by people from outside. The factors that determine future direction are: first and foremost, how Australia throws aid around; and what other countries put on offer.”

More broadly O’Chee concluded: “The real challenge for PNG is that it is too corrupt to develop efficiently. … The standard of the political class is clearly lower than it was 15 years ago. The old guys got corrupt and lazy, and outdated. The newer guys have been obsessed with personal wealth, and lack the respect for the offices they hold, which the previous generation had. This, at least, was the view presented to me privately … by one of most senior diplomats.”

Leaked US diplomatic cables released by WikiLeaks last year described PNG is being trapped in ''Ponzi politics'' and quoted Australian diplomats as referring to the PNG government as a “dysfunctional blob.”

In a November 2008 briefing, the US embassy in Port Moresby noted that resource revenues and Australian aid have served ''more to enrich the political elite than to provide social services or infrastructure. There are no large-scale local businessmen, but numerous politicians are relatively well off.''

O’Chee’s confidential reporting most recently informed Stratfor’s analysis of the unsuccessful pro-Somare PNG military mutiny in January, with the intelligence company describing prime minister O’Neill as “staunchly pro-business” and highlighting strategic investments by ExxonMobil, Santos and Oil Search in PNG’s growing LNG production and export sector.

Contacted about his work with Stratfor, O’Chee declined to comment on what he described as “private business.” He said he had no ties to any government and his business activities ''didn't require advertising.'' He said he had no contractual relationship with Stratfor and was not on the company's payroll, but declined to respond when asked about whether he received any payment for his reporting or analysis.

(Philip Dorling is a contributing writer for the Sydney Morning Herald and The Age (Melbourne). He is a former Australian diplomat.

Gulf LNG projects hits more hitches

By MALUM NALU

The proposed Gulf LNG project has hit more hitches, according to the fourth quarter and 2011 financial report of one of the major stakeholders, Flex LNG, The National reports.

Flex admitted in its just-released financial report that the Gulf LNG project had lapsed due to “lack of progress” and it was unable to forecast the expected timing of a final investment decision (FID).

Loss before tax was US$4.6 million in the quarter and US$23.6 million year-to-date, with a year-to-date retained net loss of US$23.7 million.

In the year and quarter, there have also been additional Gulf LNG project related costs.

The admission came just weeks after Shell, one of the largest energy and petrochemical companies in the world, returned to Papua New Guinea last month (February) and there is already speculation that it is being mooted as heir-apparent in the Gulf LNG project.

Prime Minister Peter O'Neill welcoming back Shell to PNG last month. Industry sources say Shell is heir-apparent in the Gulf LNG project.

Shell sources in Singapore, however, declined to comment when contacted by The National.

In April 2011, Flex announced that it had signed agreements with InterOil Corporation (IOC), Pacific LNG Operations (PACLNG) and Samsung for a floating liquefaction (FLNG) project in PNG (the ‘Gulf LNG Project’) with targeted start of operations in 2014.

The Gulf LNG project was expected to have liquefied and exported gas from the Elk and Antelope gas fields in the Gulf province.

Last September, however, the InterOil-proposed Gulf LNG project was dumped by cabinet on grounds that it deviated from the original project agreement.

 InterOil, in reply then, said it was still committed to delivering a world-class Gulf LNG project in compliance with the 2009 agreement with the government.

Gulf Governor Havila Kavo, in parliament two weeks ago, called on Prime Minister Peter O’Neill and petroleum and energy minister William Duma to explain why Shell was allowed to return to PNG and take over the Gulf LNG project.

“The objective had been for the Gulf LNG Project to have reached a final investment decision (FID) in December 2011,” according to the Flex LNG report.

“In December 2011, the multi-party agreements among IOC, PACLNG and Samsung and the framework agreement between Flex and the sponsors of the Gulf LNG Project lapsed due to lack of progress with the Gulf LNG project.

“Flex LNG is currently unable to forecast the expected timing of a potential FID for the Gulf LNG project.

“With the front-end engineering and design (FEED) work that has been executed, the company has taken the technical preparations necessary to support FID, if and when the project sponsors, the PNG government and other stakeholders are able to finalise project terms.

“Flex LNG continues to work closely in providing ongoing technical assistance to IOC and PACLNG.

“In light of the uncertainty surrounding the timing of FID for the Gulf LNG project, the 2011 preliminary agreement between Flex LNG and Samsung has lapsed and the parties have now expanded the scope of their discussions to include negotiations for the alternative deployment of the capital invested by Flex LNG.”

Obituary: Hank Nelson

By Jon Fraenkel, Stewart Firth and Bryant Allen

State, Society & Governance in Melanesia program

Australian National University

Professor Hank Nelson of the Australian National University died in Canberra on Friday 17^th February after a long battle with cancer.

His was a life focussed on both Papua New Guinea and Australia, and it was the relationship between the two that nourished his intellect.

His books, including Black, White and Gold: Goldmining in Papua New Guinea, 1878-1930 and Taim Bilong Masta: the Australian involvement with Papua New Guinea, established for him a reputation as the foremost historian of Papua New Guinea. 

His work on Australian involvement in the Pacific War and the impact of that war on the peoples of Papua New Guinea drew upon and refined his skills in oral history, as with the 1982 documentary Angels of War, which won awards both from the Australian Film Institute and at the Nyon Film Festival in Switzerland.

That work led to his involvement in the preparation of displays and sound archives of the Australian War Memorial.

Hank Nelson wanted history to serve a broader purpose, and he wrote not just for his colleagues or his profession but for a wider public.

His three books published by the ABC and the associated radio series exemplified this approach, above all Taim Bilong Masta: The Australian Involvement with Papua New Guinea, ABC, 1982, which told the story in large part through people’s reminiscences.

Hank (Hyland Neil) Nelson was born on October 21st 1937 in Boort, country Victoria.

His parents, Hyland and Hilda, were farmers and his brother John and two younger generations still work the same farm.

 Hank was educated at Boort Higher Elementary School, Kerang High School and then the University of Melbourne.

He first became a school teacher at Numurkah and then Rosanna High Schools before being appointed as a lecturer at the Royal Melbourne Institute of Technology in 1964.

 Then commenced what was to prove a life-long association with Papua New Guinea.

Hank was appointed to the Administrative College in Port Moresby in 1966, and in 1968 moved to the new University of Papua New Guinea.

 That university had still to be built, and when he arrived he taught students in the preliminary year in sheds at the showground with his characteristic blend of straightforwardness, imagination and high expectations.

His students in the late 1960s were to become Papua New Guinea’s first governing elite.

 One of them was Charles Lepani, now PNG High Commissioner to Australia.

Hank was appointed to The Australian National University (ANU) in 1973. He once joked that Australians were such a rarity in the ranks of historians at ANU that his position had to be due to affirmative action.

That was typical humility.

Nothing could be further from the truth.

 He was a splendid historian, equally at home with the detail of Papua New Guinea’s history and with theories of political power or the dynamics of group identity.

 He was proud of his rural origins and drew upon them in With Its Hat About Its Ears: Recollections of the Bush School.

And his interest in the experiences of those at war inspired his book Prisoners of War: Australians Under Nippon.

His background was the foundation of his research, and it helps to explain his concern for the place of the common people in history.

He was a firm empiricist, but one who happily engaged with global themes, such as Francis Fukuyama’s perspectives on state-building or Paul Collier’s analysis of the causes of poverty amongst the ‘bottom billion’.

In recent years, as Chair of the ANU’s State, Society & Governance in Melanesia Program, he was always on the lookout for seemingly small incidents that gave a window through which to look at wider trends, and that would reveal something about how political power worked in Melanesia – letters to the newspapers, for example, which he used as a way of understanding the frustrations and hopes of ordinary Papua New Guineans in a country where government has delivered much less than promised at independence.

He had no time for sloppy or badly-conceived work but was the first to praise first-rate work, generous to colleagues in a profession where generosity is often missing. 

 For that reason he served as a solid mentor for younger scholars at ANU, and an inspiration to fellow senior colleagues.

A lively strain of common decency also made Hank a much-liked colleague and friend.

Hank became a Fellow of the Academy of Social Sciences and a Member of the Order of Australia.

He kept writing until close to the end, with a series of articles for Inside Story about the crises of the Somare government in PNG, a paper on ‘Comfort women’ in wartime Rabaul, and another on the perils of labelling states as having ‘failed’ in the Pacific.

 He was a firm advocate of straight talking and solid prose, with no fluff around the edges.

 He was possessed with a great sense of the urgency of scholarly research in Melanesia, and of how much still needed to be done. 

It is a tribute to Professor Nelson that he contributed so much of what has been done.

He is survived by his wife Janet, his children Tanya, Lauren and Michael and his grandchildren Rachel, Jack and Eliza.

No female intakes for UNRE Popondetta

 The increased lawlessness in Popondetta town has forced the University of Natural Resources & Environment (UNRE) to stop accepting female students to its Popondetta campus.

The only female students at the campus now are continuing second and third year students.

They are expected to be the last batch of female students until police and provincial government authorities address the law and order issues in Popondetta town.

This decision was reached by the university council in its 50^th meeting in September 2011 after 15 men armed with guns and bush knives held up 16 female students in their dormitory in April the same year.

After stealing mobile phones, computers and other personal effects of the students the armed men tried to drag a female student out of the dormitory with them. 

Quick response from male students saved her from being taken away by the armed men.

Vice chancellor Prof Philip Siaguru, who spoke on behalf of university chancellor Margaret Elias, said council, which views the safety of staff and students as paramount, resolved that no female students be accepted to the campus as from 2012 until the law and order situation in Popondetta is resolved.

Prof Siaguru said the university has had several meetings with provincial authorities and police in the province about the attacks on students and staff over the years but there has been no improvement so far.

“The police are faced with handicaps of their own such as no vehicles and no fuel for the ones they do have, and everyday the situation worsens,” he said.

“As a responsible body, council could not sit by and put the safety of the campus community, particularly female students, who are the most vulnerable group, at risk at the campus if the lawlessness and harassment of staff and students continued.

“If the residents of Popondetta do not respect the university and leave it alone, then they don’t deserve to have a higher learning institution. 

"We will close shop."

Should this happen, the campus will be used as a research field station for the University.

The UNRE council will review the situation in July this year.