Contemporary Pacific: Melanesia In Review: Issues And Events, 2008: Papua New Guinea

The Contemporary Pacific Volume 21, Number 2, Fall 2009, pp. 364-373

Melanesia In Review: Issues And Events, 2008

Papua New Guinea

Solomon Kantha

The year 2008 began on a high note with a state visit by Australian Prime Minister Kevin Rudd from 6–7 March, heralding the dawn of a new era between Papua New Guinea (PNG) and Australia. Almost four years of diplomatic friction had begun in 2005 when Prime Minister Sir Michael Somare had to go through three security checks and remove his sandals at the Brisbane airport for security personnel. The Australian government refused to apologize for the incident, calling it a cultural misunderstanding between Papua New Guinea's "big man" culture and Australian norms and security procedures. This sparked public protests in Port Moresby and prompted the PNG Department of Foreign Affairs to summon Australian Ambassador Michael Potts to explain.

Diplomatic relations between the two countries were further strained in 2006 when the international fugitive Julian Moti was spirited out of Port Moresby to Solomon Islands in a clandestine operation on a PNG Defence Force aircraft. The Australian government retaliated by banning PNG politicians from entering Australia.

Rudd's trip to the country was the first such visit by an Australian prime minister in eleven years and was well received by Papua New Guinea as a rejuvenation of its relations with Australia. The visit culminated with the two countries signing a forest carbon partnership whereby both countries agreed to reduce greenhouse gas emissions caused by deforestation and forest degradation.

Following his meeting with Sir Michael, Rudd released the "Port Moresby Declaration," stressing Australia's commitment to a "new era of cooperation with island nations of the Pacific." The twenty-point declaration outlines Australia's plans related to economic development across the Pacific, as well as their intentions to help Pacific Island nations make progress toward the United Nation's Millennium Development Goals; to pursue the Pacific Partnerships for Development; to work together with other countries to meet the challenges [End Page 364] of climate change; and to achieve better outcomes for health and education, among other goals (The National, 7 March 2008).

On 16 September, the country celebrated a rare accomplishment for any of the multiethnic states in the region: thirty-three years of political independence as a thriving democracy comprising multiple ethnic groups with over 800 different languages. To commemorate the anniversary, the Somare government launched the first government-owned National Television Station on Independence Day, signifying a monumental development in Papua New Guinea's broadcasting history.

It was also a significant year for Sir Michael, the current and founding prime minister, as he celebrated his fortieth anniversary in PNG politics (1968–2008). This makes him the longest-serving prime minister in the Commonwealth. As PNG political history has been plagued by numerous votes of no confidence, Somare became the first prime minister in history to survive a full five-year term in office (2002–2007) and seems likely to make it through his second (2008–2012)—despite numerous affirmations that he will retire from politics before his term expires.

However, Somare's celebrated longevity in politics did not come with a clean slate. In June 2008 he was referred by the PNG Ombudsman Commission—a political watchdog and institution that he helped create—to the public prosecutor for alleged misconduct in office. Somare was investigated over allegations that he failed to file his annual returns (statements accounting for expenditures of District Support Grants and discretionary funds) or filed them late or incomplete on many occasions since 1992 (RNZI, 8 May 2008; Radio Australia, 2 July 2008). In June, the then chief ombudsman, Ila Geno, said the investigation was "based on section 4 of the Organic Law on the Duties and Responsibilities of Leadership, which requires leaders to furnish to the Ombudsman Commission their annual statements every 12 months while in office." This was "the first time since the Leadership Code was enacted for a PNG Prime Minister to be referred for prosecution on misconduct charges" (The National, 27 June 2008).

Another blow to Somare's reputation came in November when an Australian newspaper reported that in April 2007 he had bought a three-bedroom apartment with a private plunge pool in inner-city Cairns for A$395,000, through a deal brokered by a Gold Coast lawyer. Two months before, his son Arthur bought a four-bedroom home with his wife at Trinity Beach, just north of Cairns, for A$685,000. (One Australian dollar was the equivalent of approximately US$.93 in 2007.) Arthur Somare denied any suggestion of wrongdoing in the purchase of his property, explaining that it was to accommodate his children studying in Australia. The legal counsel for the Ombudsman Commission, Vergil Narokobi, said that the commission would investigate, but it is quite possible that the trans actions were legitimate (The National, 7 Nov 2008).

Meanwhile, Opposition Leader Sir Mekere Morauta said that the Somares owed it to the people to reveal their assets and to explain [End Page 365] publicly how they obtained the real estate. Sir Mekere, in the same year, bought a riverfront mansion at New Farm in Brisbane's inner city under his wife Roslyn's name, for A$3.6 million. In another controversial case, it was alleged that the prime minister did not declare his shareholding in the company Pacific Registry of Ships Ltd. The official registry showed that Sir Michael is a shareholder "in trust for the Independent State of PNG." All of these allegations have contributed to overshadowing Sir Michael's achievements in his political career and eroding his symbolic status as the "father of the nation."

The ruling National Alliance Party experienced a major setback when it lost a number of seats due to election petitions filed after the 2007 general elections. On 21 February, the National Court voided the election of Minister for Education Michael Laimo, a National Alliance Party candidate. Laimo lost his parliamentary seat due to irregularities and illegal practices committed during the 2007 elections. Steven Kami, a New Generation Party candidate, challenged the election result on the grounds of gross errors, omissions, and illegal practices committed by Electoral Commission officials (The National, 22 Feb 2008).

The next setback came on 23 April 2008 when East Sepik Governor Peter Wararu Waranaka was unseated because of a k50 bribe he had given a voter. (The PNG kina was the equivalent of US$.38 at the time.) This resulted from an election petition filed by contender and runner-up candidate Gabriel Dusava.

Then, on 11 September, former Chief Justice and Madang Governor Sir Arnold Amet was ousted from his seat by an election petition filed by businessman and former politician Peter Yama. Comments made by Prime Minister Somare during the 2007 election campaign urging voters not to vote for polygamists or people of shady character led the court to rule in favor of Yama, who apparently has three wives (The National, 12 Sept 2008).

In an election petition against elected Western Highlands Governor Tom Olga, a former prime minister and 2007 election contender, Paias Wingti, asked the court for a recount, alleging errors and omissions committed by Electoral Commission officials during the polling and counting of votes. Wingti won a recount of all provincial ballot papers in March 2008, turning up gross anomalies and omissions on the part of electoral officers, which resulted in the court declaring the election of Governor Tom Olga null and void. In what could have been a related incident, the Western Highlands provincial headquarters, known as Kapal Haus, was completely destroyed by fire on 22 October 2008. It was believed that supporters of one of the candidates were responsible for burning down the building.

On 5 June 2008, the Autonomous Region of Bougainville lost its founding president, Joseph Kabui, to a suspected heart attack. Kabui played an instrumental role at the height of the Bougainville crisis and in the peace building and reconciliation process. To succeed him, James Tanis, a former separatist, beat thirteen other contenders to be elected president of the Autonomous Region of Bougainville on 28 December. A new chapter in [End Page 366] Bougainville's history began in April when the PNG national government and the Autonomous Bougainville Government (ABG) signed a memorandum of understanding on the transfer of mining, oil, and gas functions to the Bougainville government.

The rate of economic growth accelerated in 2008 to 6.6 percent, is expected to reach 7 percent in 2009, and is likely to remain on solid ground, potentially above 5 percent per annum, for the next few years (Independence Magazine 2008, 7–8). This remarkable growth in the economy can be attributed primarily to the stable political climate bolstered by the Organic Law on the Integrity of Political Parties and Candidates (OLIPPAC) and the government's receptiveness to foreign investment and competition in some key sectors of the economy such as mining, construction, and telecommunications.

According to the World Bank, in the past five years Papua New Guinea has seen the longest period of uninterrupted growth since independence. World Bank's half yearly assessment of East Asian and Pacific economies indicated the gross domestic product rose by around 6 percent in 2007, the highest real economic growth rate in the past decade. Formal employment across most sectors has been growing by about 10 percent annually since 2005. This growth was led by construction, telecommunications, and export-oriented agriculture (coffee, copra, and palm oil) and mining (The National, 2 April 2008). While giving high marks to PNG economic performance on most fronts, the World Bank stated that despite a comfortable macro-fiscal position, significant structural and policy challenges limit its long-term growth potential. In order to stimulate private investment, particularly outside the mining sector, the critical priority is improving the business climate, especially by opening more markets to competition.

Mobile connectivity between two of the rival telecommunication companies, the government-owned Telikom PNG and the Irish company Digicel, dominated the early part of the year, including interconnection issues and tussles over the rights for the international gateway. On 16 April, the government used its numerical strength to pass amendments to the Telecommunication Act, effectively removing the international gateway enjoyed by Digicel. Minister for Information and Communication Patrick Tammur introduced the amendments to make Telikom PNG the only licensed general carrier. Opposition leader Sir Mekere Morauta said that there was no justification for the amendments, that they would not benefit the people and would take away private companies' rights. It would also create a monopoly for Telikom PNG. After several months of delay and customer frustration, interconnection between Telikom PNG and Digicel finally came to fruition on 26 June.

According to the 2007 Information and Communication Technologies Opportunities Index of the World Information Society Report 2007—published jointly by the International Telecommunication Union and the UN Conference on Trade and Development—Papua New Guinea ranked poorly (162 out of 183 countries) on an international benchmark report on access and use of information and [End Page 367] communication technologies (ICT), including mobile telephony, fixed landline phones, and Internet (The National, 2 April 2008). The PNG government will need to allow more competition in the telecommunication industry and relax its stringent ict policy to reverse the country's ranking.

There were also a number of significant developments in the mining industry. In early February, the Emperor Mines officially handed over the Tolukuma Gold Mine to the PNG company Petromin Holdings Ltd, in a ceremony held at the mine site. It was the first time in history that a state company bought 100 percent of a gold-producing mining concern (The National, 22 Feb 2008).

One of the biggest and most promising projects in PNG mining industry got a head start in 2008. The liquefied natural gas (LNG) project will become the biggest mineral resource extraction seen since independence and the third largest such development project in the world. In October the PNG Parliament passed nine amendments to the Oil and Gas Act that will, among other things, provide tax concessions during construction of the US$10 billion project. Under Exxon Mobil, it is projected to produce 6.3 million tonnes per annum of liquefied natural gas. With Asia likely to be the main market, the first LNG sales are expected to occur in late 2013 or early 2014. The project development comprises the upstream infrastructure including production wells, processing facilities, and a network of pipelines linking the wells to the facilities and to the main export gas pipeline. Other developments include the gas pipeline from the highlands to the LNG plant location just outside of Port Moresby, the LNG facility itself, export loading, and other support facilities located near Port Moresby (The National, 2 April 2008).

The PNG government created greater certainty in the LNG scheme after concluding the financing agreement for A$1.68 billion to fully finance its 19.4 percent equity in the massive project. (The Australian dollar had fallen to approximately US$.65 by November 2008.) The finalization of the transaction will see the International Petroleum Investment Corporation (IPIC), wholly owned by the Abu Dhabi government in the United Arab Emirates, acquire exchangeable bonds over the PNG government's 17.6 percent shareholding in Oil Search. This would enable the state to receive principal financing from ipic, which would be placed in an escrow account that could only be drawn down for specified purposes related to the project (The National, 26 Nov 2008).

In a bid to control the state's equity, the PNG resource company Petromin Holdings took court action to take control of the state's Oil Search shares given to the Independent Public Business Corporation (IPBC) where the prime minister's son Arthur Somare is the minister. However, Petromin Holdings withdrew the case after its board was threatened with being sacked. National Planning Minister Paul Tiensten slammed the legal challenge launched by Petromin Holdings against ipbc as the state's nominee for the multibillion-dollar LNG project (The National, 14 Nov 2008). The Parliament passed legislation to shut Petromin Holdings out completely and, in turn, empowered the ipbc as the State nominee to sign the deal with IPIC. [End Page 368]

The government plans to keep proceeds from its direct equity participation in the ExxonMobil-led LNG project in a trust account outside of the budget. These funds would be used on development projects in line with the government's long-term development strategy (The National, 3 Dec 2008).

In an unprecedented step in April, Isaac Lupari, the chief secretary to the government, was sacked after a National Executive Council meeting in Madang Province. Minister for Public Service Peter O'Neil said that the action was "in the best interest of the state" and necessary to move the country forward. Lupari had been brought over from Brussels where he was serving as the PNG ambassador to the European Union (EU) to replace Joshua Kalinoe as chief secretary.

The removal of Lupari angered the Highlands members of Parliament. Southern Highlands Governor Anderson Agiru commented that the National Executive Council decision was a slap in the face of highlanders (The National, 29 April 2008). The government announced that it would bring forward legislation in the July session of Parliament to abolish the Office of Chief Secretary as well as the Central Agencies Coordinating Committee. The government has started the process with the creation of ministerial sectoral committees in a proposed restructuring, following the dismissal of the chief secretary (The National, 30 May 2008).

The public service was also beset by a number of problems. A commission of inquiry looking into the cases of financial mismanagement and corruption at the Finance Department has on a number of occasions come to a standstill supposedly because of lack of funds. Complaints were made that the commission had been sitting on the inquiry and yet were being paid hefty fees without any inquiry reports for the last three years. Among the files was Chief Secretary to the Government Isaac Lupari's claim against the state for breach of contract when he served as the head of various government departments. In early April, Chairman Maurice Sheehan announced that the commission was ready to look into the Finance Department's payouts involving millions of kina made to claimants between 1 January 2000 and 31 July 2006 (during the period, one kina ranged from US$.26 to US$.34). The inquiry revealed that the government could have saved K63.46 million in payouts resulting in "deeds of release" and another K15.71 million under "default judgment" payouts.

In a startling revelation early in February, National Planning Minister Paul Tiensten alleged that officers in Vulupindi Haus, the building that houses his department, were asking for 10 percent commission before processing checks and payments. He said that this 10 percent check-processing syndicate was operating in three departments—National Planning and Rural Development, Finance, and Treasury—implying that officers in the departments were involved (The National, 22 Feb 2008). Tiensten also stated that more than k3 billion from the 2006 and 2007 supplementary budgets was sitting idle in trust accounts in Waigani, managed by department heads. Despite all the mechanisms to facilitate a smooth and expedient implementation of programs, only 10 percent of the funds [End Page 369] had been drawn and expended to date. Tiensten argued that the system and bureaucracy continue to fail the government (The National, 9 Jan 2008).

The bureaucracy also came under severe attack from the government. Prime Minister Somare said that appropriations have been made in the budget, and that the problem was with lack of implementation by civil servants (The National, 7 Feb 2008). The national government described this bureaucratic failure as a "real nightmare." Government priority programs in education, health, and law and order worth millions of kina have been rolled over for a number of years due to non-implementation, which has now become a source of real concern. This follows criticisms from a wide spectrum of society, in the light of government boasting about the economic boom and budget surpluses that are not reaching ordinary people.

Toward the end of the year the bureaucracy came under another stinging attack from the University of Vudal Vice Chancellor Professor Philip Siaguru. During a graduation ceremony Professor Siaguru lamented that the k23 million Chinese government– funded student dormitories and staff houses were still not occupied because the PNG government had not released K1. 2 million for beds and wardrobes for the dormitories. Locating the problem in the corridors of Vulupindi Haus, he said he had been given the runaround by the departments of National Planning and Treasury since March (The National, 1 Dec 2008).

In July the Post Courier reported that more than US$40 million was being held in a bank account in Singapore. The newspaper alleged that secret payments amounting to 2.1 percent of the sales of log exports was accumulating in this account, kept by a minister, since 2002. Opposition Leader Sir Mekere Morauta called on the government to investigate the allegations, saying that if they were true, it represented "the most serious case of corruption that has come to light to date." Sir Mekere said that the amount of money involved was serious and the situation demonstrated that senior members of the government were using state institutions for personal gain. Corruption, therefore, according to Sir Mekere, has become systemic and institutionalized (The National, 3 July 2008).

Of similar magnitude was the reported US$30 million "Taiwan dollar diplomacy scandal." The Post Courier first reported in May that six Papua New Guineans allegedly received money from two Taiwanese middlemen and that National Planning Minister Paul Tiensten, who was then acting foreign affairs minister, allegedly signed a draft communiqué in September 2006 for Papua New Guinea to set up "full diplomatic relations" with Taiwan.

However, as it has done since independence in 1975, Papua New Guinea continues to recognize Beijing and the One China policy. Meanwhile, the Opposition and the PNG chapter of Transparency International (TI) have condemned the actions of those involved and are seeking assistance to establish the truth. The country also lost one of its staunch fighters of corruption, the TI-PNG chapter chairman, Mike Manning, who died of a heart attack. The TI-PNG board of directors appointed Peter Aitsi as the new chairman.

In September, Benjamin Mul, the [End Page 370] member for North-Waghi, argued that the K2,017 fortnightly salary that members of Parliament receive was not enough to both support their families and entertain people who come to them for money (The National, 22 Sept 2008). Earlier in the year, Ken Fairweather, the member for Sumkar, appealed to the public, highlighting the financial plight of parliamentarians as a result of providing handouts to "bubus" (older family members) and their tribal entourage. PNG Trade Union Congress General Secretary John Paska slammed the moves to increase parliamentary wages and allowances, saying that this was the most "putrid and irresponsible" statement coming out of Parliament when most ordinary citizens are suffering from high cost of goods and services.

Meanwhile, the PNG Trade Union Congress has been pushing for an increase in minimum wages for workers, saying that the current minimum wage of K37.20 per week is grossly inadequate, with minimum-wage workers and their families struggling to make a living. Most minimum-wage earners cannot afford education and health care for their children due to the lack of adequate information on how to budget for goods and services while raising and educating their children. With the cost of living having increased dramatically, the trade union congress is proposing to the 2008 board for the minimum wage to be set at K120.00 per week or K240.00 per fortnight, a k40 increase over that proposed by the government (The National, 18 Dec 2008).

Despite some affirmative action incentives for political parties to nominate women candidates, women's representation in Parliament has not improved. Since independence only three women have managed to win a seat. Currently, the only woman parliamentarian, Dame Carol Kidu—the minister for community development and wife of the late chief justice, Sir Buri Kidu—is pushing for greater representation of women in Parliament.

Parliament recently endorsed a submission by Dame Kidu to bring in three women by 2009, using an amended constitutional provision for nominated seats. This will be the first time in the history of the country for women to be nominated as representatives from the floor of Parliament. However, Professor John Nonggorr, a constitutional lawyer, criticized the move, saying that there were serious constitutional flaws in the initiative, one being that it may be challenged as sexually discriminatory (Post Courier, 22 Jan 2009).

The organic integrity law (OLIPPAC) was introduced by the Morauta government in 2003 to promote stability in Parliament. However, certain provisions dealing with the rights and conscience of elected members were restricted because they have to work along party lines. The law was challenged by Western Province Governor Bob Danaya. The three crucial problems with the law are that it (1) restricts the ability of members from exercising their votes in Parliament; (2) prevents them from resigning from political parties; and (3) prevents them from exercising their votes in accordance with their conscience and in the interests of their constituents (The National, 11 Nov 2008).

While speaking at a People's Party convention, John Bishop, the director of funding and disclosure of the Office of the Integrity of Political Parties and [End Page 371] Candidates, revealed that according to the organic integrity law, companies are permitted to fund political parties and that companies and individuals should not be afraid to donate money to support political parties (The National, 29 April 2008). This may surprise some who hold the view that political parties and candidates should not accept external funding because of the danger of being unduly influenced by big businesses and corporations.

In August, Papua New Guinea finally was given the opportunity to participate in the Pacific seasonal worker scheme in Australia. Under a three-year pilot program, up to 2,500 workers from Papua New Guinea, Kiribati, Tonga, and Vanuatu will be employed for up to seven months in the horticulture industry.

PNG Foreign Affairs Minister Sam Abal and his Australian counterpart, Stephen Smith, also announced the renaming of the Enhanced Cooperation Program, through which Australian advisers were being seconded to PNG government departments. It will now be called the Strongim Gavman project and will help boost programs between the two countries. The announcement was made at the closure of the PNG-Australia Ministerial Forum in Madang. Also during the forum, National Planning Minister Paul Tiensten announced the Long Term Development Plan, a twenty-year initiative, incorporating the five-year medium-term plans. The long-term plan would run from 2010 to 2030 and would stress economic independence, economic growth by 10 percent, and higher quality education (The National, 24 April 2008).

In November, Papua New Guinea hosted the 16th African Caribbean Pacific–European Union joint parliamentary assembly. In the same month, most of the coastal and island provinces were hit by rising sea tides as a result of La Niña. Reports of damage caused by sea swells came in from the provinces of Sandaun, East Sepik, Manus, New Ireland, Bougainville, and Morobe. The government immediately provided k50 million in disaster relief to assist the stricken provinces.

In its 2008 report, the international human rights group Amnesty International described Papua New Guinea as having high levels of crime, and its police as having neither the ability nor the will to guarantee security to its public (The National, 30 May 2008). This was further corroborated in September in a Washington DC foreign policy publication, stating that Port Moresby is among the top five murder capitals of the world (Foreign Policy 2008). Police Commissioner Gari Baki was quick to rebut these statements, but drew little support from the public in light of the increasing crime in the nation's capital.

Many unanswered questions remain concerning the major scandals and the government's perpetual denial and sluggishness in investigating and prosecuting those involved. The cases outlined in this review, if unresolved, will continue to haunt the Somare government long after Sir Michael retires from the political scene.

Solomon Kantha

Solomon Kantha is a project assistant with the International Organization for Migration, based in Port Moresby, Papua New Guinea. Kantha holds a master's degree in political science from the University of Hawai'i at Mānoa. His areas of interest are international relations, international political economy, comparative politics, and public policy.


The Australian Online.

Foreign Policy. 2008. The List: Murder Capitals of the World. September. [End Page 372]

Independence Magazine 2008. Special magazine insert, Post Courier, 16 September.

The National. Daily. Port Moresby.

Post Courier. Daily. Port Moresby.

Radio Australia. Online at

RNZI, Radio New Zealand International. Online at

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