Transcript
Peter O'Neill and other leading officials have been referred by the Ombudsman Commission to a Leadership Tribunal over a $US1.2 billion loan his government took on from Swiss-based investment bank UBS in 2014.
The loan was nominally taken for the state to buy a 10 percent stake in oil and gas producer Oil Search, a major player in PNG's burgeoning petroleum sector.
In last week's heated parliament debate the prime minister said it was imperative for the state to secure its Oil search shares.
These were earlier lost after being mortgaged by the Somare government in 2009 as it sought finance to gain equity in the country's first LNG gas Project
"The Treasury officials said the oil search investment is a strategic investment to government. So the company decided to offer the government of Papua New Guinea at a special issue so we can secure the ten percent. Why? Because Oil Search, even today, is the biggest company in PNG, is the biggest taxpayer in PNG."
However the leaked report reveals the ombudsman found the prime minister failed to present the Government's proposal on the borrowing of a loan, from UBS' Australia branch, in parliament for debate and approval as required by the constitution.
Furthermore, Mr O'Neill was found to have misled the cabinet into approving the loan, among other irregularities.
The opposition's justice spokesman Kerenga Kua says the deal and Mr O'Neill's role in pushing it through was very suspicious.
"In the end we only held that share for about twelve months before it was foreclosed by UBS and sold. So you see we don't have those shares in our hands any more, because the state fell into default on that loan arrangement."
PNG was forced to sell its Oil Search shares when the stock price fell sharply, incurring a big loss.
Meanwhile, UBS profited around 83 million US dollars in fees, interest and trading revenue from the deal,
Mr Kua says the financial professionals involved in arranging this loan must have known the transaction was bound to fail
"They would have seen this as a scam, a real professional scam. Because everybody know of the state's financial vulnerability, and the lack of cash flow to pay for that loan. Yet they created a monster, so that within a matter of months it would fall into default, and then you foreclose on the asset, cover yourself. But what is the people of PNG left with? Nothing, except a debt of 3 billion kina."
The commission's findings also implicate the former Finance Minister, James Marape, who was found to have signed off the loan's approval as minister despite knowledge of irregularities and "that his actions were improper".
Mr Marape resigned last month, and is now the opposition's choice for alternative prime minister in a motion of confidence against Mr O'Neill which it lodged last week.
Being implicated in the ombudsman report undermines Mr Marape's own recent attacks on the prime minister regarding the loan.
But the former Health Minister Sir Puka Temu, who also left the government last month, has portrayed the prime minister as exerting too much control on state departments, overriding the authority of ministers.
"I too left him. I resigned because I saw things were not working well. There were a lot of corrupt practices and there were governance processes from agencies and bodies of the state that the leaders did not support."
Meanwhile, the ombudman's report, which was completed last December but only handed to the parliament speaker this month, is yet to be tabled in the house.
Meanwhile, Mr O'Neill has denied any wrongdoing, characterising the investigation as "fatally flawed".