10 Feb 2020
A nine-year-old payment in Papua New Guinea is threatening to derail the Australian-listed Horizon Oil, after it repeatedly ignored corruption warnings and paid $US10.3 million ($15.4 million) to an unknown shell company.
Lawyers working on the 2011 deal flagged links to PNG’s then petroleum minister William Duma and warned an investigation by the US Department of Justice or Securities Exchange Commission was “likely” if details of the transaction were scrutinised.
The payment was made just 10 weeks after Sydney-based Horizon was issued a lucrative development licence in the Pacific nation and followed the settlement of a protracted legal dispute with Mr Duma, who is PNG’s Minister for Commerce and Industry.
The payment is revealed in a cache of documents obtained by The Australian Financial Review, which raised concerns about “illicit payments” and “bribes”, while describing the potential transaction as “fruit of the poison tree”.
“The bad guys want 30%!!!,” said one lawyer, describing how the new licence would be allocated by PNG authorities.
The $US10.3 million payment flared again late last year after Spanish oil giant Repsol sought to sell out of its PNG joint venture with Horizon, prompting questions to Horizon’s current board and management about the 2011 transaction.
The revelations come at a sensitive time for the Morrison government, which in November agreed to lend $US300 million to PNG in direct budget support.
The loan has raised concerns around graft as PNG has been consistently ranked “highly corrupt” by Transparency International.
The leaking of thousands of emails, faxes, letters and legal briefs will heap pressure on Horizon chairman Mike Harding, who also chairs rare earth miner Lynas and engineering firm Downer EDI, to launch an internal investigation into the matter.
By Angus Grigg and Jemima Whyte, The Australian Financial Review, 10 February 2020
Read more at The Australian Financial Review
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