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By Isaac Nicholas

PORT MORESBY, Papua New Guinea (July 31, 2000 – The National)---Prime Minister Sir Mekere Morauta announced on Friday that the government intends to introduce legislation providing for salary caps on top executives in the public service and statutory organizations.

"People writing up their own contracts is a sign of disaster in the system. We have no choice but to correct it." Sir Mekere said.

The Prime Minister was replying to a question from Goroka MP Henry Smith who asked whether the government can introduce legislation for uniform salary packages.

"I am seriously looking at legislation for caps to be put in place, for example at K 100,000 US$ 38,000)," Sir Mekere said.

The Prime Minister also said he would obtain legal opinion on whether new legislation put in place can also "nullify" existing contracts.

Corporatization and Privatization Minister Vincent Auali also issued a statement outlining the packages paid to the head of Finance Pacific.

He said he had appointed Mr. Pato after the NEC revoked Peter O'Neill's appointment on August 29, 1999.

He said by then Finance Pacific and its subsidiaries were fully corporatized and all internal workings of the company such as appointments and terminations had become subject to provisions of the Companies Act and the company's constitution.

Mr. Auali said the question of whether the salary level was justified was an area open to debate. However, the decision to award the terms and conditions of Mr. Pato was based on what the previous Executive Chairman was receiving at that time.

"As trustee shareholder for the State, I approved a remuneration package that was completely similar to Mr. O'Neill's package," he said.

Mr. Auali said Mr. O'Neill's total package was K 825,000 (US$ 313,500) a year including an allowance of K 270,000 (US$ 102,600) and salary of K 555,000 (US$ 210,900) compared to Mr. Pato's total package of K 882,500 (US$ 335,350) including an allowance of K 332,500 (US$ 126,350) and a salary of K 550,000 (US$ 209,000).

"It is therefore evident that much of the excitement that has been generated within Parliament and elsewhere have been based on information quoted out of context," he said.

He said the manner in which the media had reported the payments seem to have misled the public to believe that Mr. Pato was being paid K 300,000 (US$ 114,000) a month which would have placed him on an annual salary range even higher then chief executives of Australia's large corporations.

"My reaction to that kind of situation would have been completely different. I would have directed that such arrangements be immediately terminated," he said.

Mr. Auali said as of Thursday he had directed Mr. Pato to repay to Finance Pacific all entitlements that were advance that he said were relatively excessive, which he has done.

Mr. Auali said when the corporatization process began in 1995 there was no government remuneration policy in place to determine salaries and remuneration of senior executives of State-owned enterprises that were now in operation as limited liability companies under the Companies Act.

He said he was directed by the Prime Minister to review the organizational structure of Finance Pacific within 14 days, aimed at cutting costs and to provide financial support to SRC to complete the review at the earliest possible time.

For additional reports from The National, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The National (Papua New Guinea).

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