The chairman of PNG Sustainable Development Program Ltd, Sir Mekere Morauta, said the O’Neill Government’s decision to appoint Mr Paul Yangen as interim Managing Director of the company is of no effect.
“PNGSDP is a Singapore not-for-profit company, bound by its own constitutional documents, known as the Program Rules and Memorandum and Articles of Association,” he said.
“NEC’s actions are entirely inconsistent with the company’s constitutional documents and are unlawful.
“The same goes for the purported removal of the board and attempted appointment of a Transitional Management Team last month.
“All of these actions are of no legal effect whatsoever, and PNGSDP does not accept any of them.
“The chairman, the board and the CEO of PNGSDP will continue to manage the company in accordance with its constitutional documents.”
Mekere Morauta KCMG
It seeks to nullify board sacking, safeguard US$1.4b
[SINGAPORE] A Singapore non-profit has invoked Singapore laws to nullify the purported sacking of its entire board including a prominent corporate figure by the government of Papua New Guinea and to prevent US$1.4 billion in assets from being “wrongfully appropriated” in a high-profile tussle over a controversial gold and copper mine in the country, according to court documents obtained by BT. Among those purportedly terminated from the board of PNG Sustainable Development Program Ltd (PNG SDP) is Lim How Teck, who has been a director since 2003.
A shipping veteran who retired as chief operating officer of Neptune Orient Lines (NOL) after 26 years there, Mr Lim sits on 14 other boards in Singapore. He is currently chairman of Certis Cisco, ARA-CWT Trust Management (Cache) and Temasek Holdings unit Heliconia Capital Management, as well as the Singapore-based director for major German heavy lift and projects cargo liner company Rickmers.
Typically, directors from Singapore-incorporated companies can only be removed under Singapore law in accordance with the provisions of the Companies Act and the Memorandum and Articles of Association. But in this case, the PNG government has apparently passed legislation, which it says gives it “all necessary powers” to restructure PNG SDP and its operations, and to expropriate its assets including a 63.4 per cent stake in the Ok Tedi mine, among other things.
Former PNG prime minister Mekere Morauta, who was removed from his position as chairman of PNG SDP last week, has criticised the legislation as “unlawful” and which “violated the rules of international law”.
“It is apparent that the government passed the legislation to purport to restructure PNG SDP,” court papers said, “despite the fact that the structure and governance of PNG SDP was carefully decided and agreed upon after lengthy negotiations between BHP Billiton (the mine’s former operator) and the state, and after extensive consultations with key stakeholders.”
The company was established when Australian mining company BHP Billiton, in a deal with the government in 2001, divested its majority share in the mine to PNG SDP following concerns about its long-term environmental impact, and in return was granted legal immunity.
It is responsible for ensuring that dividends from the Ok Tedi mine, which accounts for more than a quarter of the country’s total exports and nearly 10 per cent of its GDP, are used and managed transparently and accountably for the sustainable development of PNG’s western province region and in communities affected by the mine’s pollution.
In an effort to nullify the board changes and protect its assets, PNG SDP, represented by Senior Counsel Harpreet Singh Nehal of Cavenagh Law LLP, has sued the PNG government and three members of a transitional management team in the High Court this week.
According to court papers, PNG Prime Minister Peter O’Neill wrote to Mr Morauta last week to advise him of the termination, referring to a section in the Expropriation Act passed last month that he said gave the government powers to remove the directors.
But PNG SDP disagreed. According to court papers, it said that the parties expressly provided that the security deed over the dividends received from the Ok Tedi mine is governed by Singapore law.
The company is seeking declarations that the existing board has full authority to manage its business; that the PNG government may not restructure the company unless in accordance with the provisions of its Memorandum and Articles of Association. It is also seeking a declaration that its assets can only be applied to promote sustainable development within PNG and to advance the general welfare of its people.
PNG SDP is also seeking an order to stop the transitional management team from “taking any action or giving any instructions in relation to its property, rights and assets in Singapore or elsewhere”.
Represented by Nish Shetty of Clifford Chance, PNG SDP has also commenced arbitration proceedings through the International Centre for Settlement of Investment Disputes (ICSID) in Washington DC in what is believed to be the first multi-billion dollar claim by a Singapore company against a foreign government for recovery of the expropriated stake, or alternatively, for compensation to be paid. It is also seeking damages for violations of international law, the company said.
Mr Morauta said that the company, which has operated the mine since 2002, is entitled to an annual dividend, currently capped at US$350 million a year, on its shares in the mine. To date, the government has not paid, or proposed to pay, any compensation to PNG SDP for taking its property, he said.
Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.