Garnaut resigns as Chairman of Ok Tedi Mining | Pacific Beat

Garnaut resigns as Chairman of Ok Tedi Mining

Garnaut resigns as Chairman of Ok Tedi Mining

Updated 14 January 2013, 11:11 AEST

Leading Australian economist, Ross Garnaut, has been forced to resign as chairman of Papua New Guinea's biggest mining company because of travel ban's imposed on him by PNG's Prime Minister, Peter O'Neill.

Professor Garnaut's resignation as Chairman of Ok Tedi Mining Limited brings his official involvement with PNG to an end after an association of almost 50 years. The ban on Professor Garnaut was imposed back in August after BHP Billiton failed to respond to Mr O'Neill's request to renegotiate it's agreement with the PNG government over control of Ok Tedi 's biggest shareholder, the PNG Sustainable Development Program.

Presenter: Campbell Cooney

Speaker: Jemima Garrett, Radio Australia's Pacific Economic and Business Reporter

GARRETT: Around the world, it's very rare for a key figure in a major private sector organisation like Ok Tedi to be blocked from entry in this way or for a government to hamper company's activities. So this really is quite significant, made more significant, of course, by the fact that Ross Garnaut is a leading figure, both in Australia and in Papua New Guinea. In Australia, he's had a host of roles, from Ambassador to China, to author of the Australian Government's Climate Change Report and Ok Tedi is a very significant company to. It puts in 16 percent of the Papua New Guinea Government's non-aid revenue and Ross Garnaut has been a Director of that company since 2002 and Chairman since 2011. Of course, he was also Foundation Chairman of PNG's Sustainable Development and only retired from that role in October.

COONEY: The travel bans. Did they leave him really any choice and has he had anything to say about it since the announcement?

GARRETT: Well, the Papua New Guinea Government really has shown no sign since Ross Garnaut was banned in August of a willingness to lift the ban, so really I think Professor Garnaut was put in a position where he couldn't do anything else. In his letter of resignation, he points out that Ok Tedi has big issues coming up in the next month. There's the mine life extention plan which governs whether the mine will stay open till 2025, rather than closing in 2015, the succession issues in senior management that are urgent, and there's also crucial opportunities for Ok Tedi to invest in new projects, such as Xstrata River's 5.6 Billion dollar Frieda River Project. He simply couldn't progress these issues while not setting foot in Papua New Guinea. He's also been a bit critical of the PNG Government. He's clearly not happy. He's also worried about the precedent that this ban might set and in his resignation letter, he said it's an undesirable development for Papua New Guinea, that the government's use of its immigration power should be seen as effectively forcing changes in the board of a major private company.

COONEY: Alright, now it's making news in Australia, Australia's main financial newspaper, The Australian Financial Review, it's front page news on it. They're announcing that BHP has slammed the decision of Papua New Guinea. I mean the resignation and the fallout from it. Is it going to led to a resolution of this dispute with Peter O'Neill and BHP Billiton?

GARRETT: Well, that's the $64 question. Essentially, it's all over control of Papua New Guinea's Sustainable Development Program, which has assets of 1.4 Billion dollars. It was set up originally to protect it from corruption and mismanagement as an independent organisation and there are three directors, called the A Directors, which are now used to be appointed by BHP Billiton, but are now appointed by the PNG STP Board itself. Now, Peter O'Neill argues that ten years after BHP left, these should be controlled in Papua New Guinea, by Papua New Guinea run and based organisation. Now PNG Sustainable Development is still based in Singapore, but it has to be said now with Sir Mekere in charge. This is an enormously significant development, because it now means that Papua New Guinea is running a world class organisation in their own country. It's a generational change. He has a track record of tackling corruption, improving financial management. So a big step has been made towards what Peter O'Neill wanted. It hasn't gone the whole way, so it will really be a question as to how Peter O'Neill sees this as to whether he's going to keep pursuing it.

COONEY: Alright. BHP would they be happy with the decision to give Sir Mekere Morauta the job. I mean it would go down pretty well as you mentioned. He's seen as a campaigner, he's seen as very upstanding and very solid in fighting corruption and other issues. It would play out well that he's got that job?

GARRETT; Oh, absolutely, yes. I mean BHP is happy to see the transition, but I think they want to maintain this independence where Papua New Guinea's Sustainable Development is based in Singapore and that's what Peter O'Neill is saying. It's been too long and it should now be based in Papua New Guinea. But then, of course, it may become vulnerable over the longer term to some of the mismanagement we've seen of pots of money in Papua New Guinea. So I guess that's the question.

COONEY: When that ban was put it place, because Peter O'Neill said the comments by Professor Garnaut, disrespectful, patronising. It wouldn't look good by the sounds of that for Professor Garnaut to be visiting PNG anytime soon?

GARRETT: Well, I think the PNG Government and Peter O'Neill have told Australian diplomats that in fact the main argument Peter O'Neill has with BHP Billiton over control of these crucial positions of this very important development organisation in Papua New Guinea. So I guess, as you say, Professor Garnaut's comments weren't received very well by Peter O'Neill, but he does have very strong links. He's time with PNG goes back 50 years and he's a big figure there, so we'll just have to wait and see I guess.

Contributors

Campbell Cooney

Campbell Cooney

Correspondent

Campbell joined the ABC in 1997 and has been reporting as Radio Australia’s Pacific Correspondent since 2006.

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