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PORT MORESBY, Papua New Guinea (April 8, 1999 - Post-Courier)---The government’s move to challenge the Sandline international arbitration interim award in the High Court of Queensland has cost the State an extra K25 million (US$ 10.68 million).

And the total liability owed -- to be paid by the Government of Papua New Guinea on the Sandline saga alone -- is in the vicinity of K100 million (US$ 42.72 million).

However, it could not be independently confirmed whether Cabinet had approved the release of the K25 million (US$ 10.68 million) and whether the stipulated amount had been released by the Treasury and Planning Department.

However, a Cabinet submission to Prime Minister Bill Skate and the National Executive Council by the Attorney General Michael Gene in December 30 last year showed that an amount of K5 million (US$ 2.14 million) was to have been released immediately by the Department of Treasury and Planning to the Attorney General Legal Fees and Trust Account, as the government’s commitment to protect the people’s assets and interest within the country and abroad.

And another K20 million (US$ 8.54 million)was to be approved by the Cabinet to be held as security for costs to avoid Sandline International, Inc. seeking enforcement of the interim award.

The copy of the submission which was obtained by the Post-Courier yesterday showed that from the K5 million (US$ 2.14 million) an amount of K70,000 (US$ 29,902) was remitted immediately for costs as proposed by Sandline.

This was suggested as security for costs which had to be funded from the allocation to avoid Sandline enforcing the interim award.

Part of Mr. Gene’s submission on the potential liability to the State and need for the government to make sufficient funding available in order to protect the State’s assets and interests at all stages of the litigation process reads: "This matter therefore exposes the State to a potential liability to the value of more than K80 million (US$ 34.2 million) plus interest at eight percent.

"It is indeed a matter of grave concern to note that by the time the High Court of Australia and possibly the Privy Council of England finally resolve this appeal, the potential liability could easily reach K100 million (US$ 42.72 million) through costs and interest.

"It therefore requires a substantial commitment on behalf of the Independent State of Papua New Guinea in terms of adequate funding to continue to maintain and protect the assets and interests of the State at all stages of litigation."

The submission showed that the government engaged the services of four lawyers Queens Counsel (QCs) to represent PNG in overseas courts and they were Roger Gyles and David Hammersschlag as agents in Australia, and legal advice were sought from Professor O'Regan, QC and Professor Shearer, QC of the University of Sydney, and solicitor Richard Marsh of Taylor Joynson Garret of London was engaged in London to oppose the leave application by Sandline lawyers.

The submission did not show how much was paid to engage each of the QCs to render their professional advice to the PNG Government on the interim award and to represent PNG in foreign soil, a case which PNG lost to Sandline last week.

The High Court in Queensland upheld the international tribunal’s decision for PNG to pay the Sandline the balance of the aborted contract.

The international tribunal, which consisted of three former retired judges, Sir Edward Somers, QC, Sir Michael Kerr, QC and Sir Darryl Dawson, QC, in their hearing last year in Queensland, unanimously ruled that PNG should pay Sandline the balance of the failed contract.

Mr. Gene could not be contacted yesterday on what steps the State is taking to meet the liability.

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