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PNG Politics, by Damien Kingsbury

Prime Minister O’Neill steps down as the wolves circle

Published: 28 May 2019

Papua New Guinea prime minister Peter O’Neill’s decision to step down from office follows months of wrangling over his future by the country’s highly fractious parliament. O’Neill’s letting go of the top job was set against a backdrop of highly personalised leadership, a string of scandals and an increasing number of defections to the opposition camp.

O’Neill first became prime minister in 2011, when he ousted his predecessor, Michael Somare, within seven months of elections, in what was ruled as invalid under the PNG constitution’s ‘eighteen-month no-challenge’ rule. However, O’Neill toughed it out into the 2012 election and Somare fell into line, despite Somare’s being supported by the courts.

O’Neill went on to become, after Somare, PNG’s longest-serving prime minister. O’Neill was re-elected in 2017 and, under the constitutionally mandated eighteen-month rule, could not be challenged as leader until early 2019. 

However, several scandals and O’Neill’s overly personalised political style led to dissent among those in his own party, the People’s National Congress. Politics in PNG reflects little ideological or policy differentiation and is highly opportunistic, and hence (bought) political loyalties quickly shift.

After the eighteen-month period elapsed, a challenge was immediately mounted to O’Neill’s prime ministership, with members of his ruling coalition drifting across to the opposition. In early May O’Neill adjourned parliament rather than face a direct challenge and the two sides locked themselves inside hotels, effectively barring members from leaving, to assure their numbers.   

On 24 May, however, a group of nine members of the ruling coalition, including two ministers, defected to the opposition camp. When the numbers were again counted, the opposition had gathered 63 members to O’Neill’s 48 in the 111-member parliament.

Realising that he had lost the battle, O’Neill chose to step down and appoint his own successor, two-time prime minister Julius Chan. PNG’s parliament was expected to meet in early June to consider a formal notice of no confidence in O’Neill. It was also expected to consider whether to allow O’Neill’s appointment of Chan to remain or whether to put forward another candidate as prime minister.

The challenge to O’Neill was nominally justified on the grounds of his having signed off in 2014 on borrowing funds from Swiss bank UBS for a government purchase of 10 per cent of the Australian Stock Exchange–listed energy company Oil Search. Oil Search in turn used the money to buy into the $13-billion Elk-Antelope gas field being developed by ExxonMobil and France’s Total.

The decision to borrow the funds and make the purchase lacked transparency and became a source of contention. This was especially so when the value of Oil Search shares fell in 2017 and the government sold them for a one-billion-kina ($287-million) loss. O’Neill also faced a vote of no confidence then, but he managed to stave off the challenge. 

A lack of transparency around the PNG liquid-natural-gas project also angered many, not least when it was shown that moneys from the project earmarked for the country’s sovereign wealth fund had not been paid and the fund did not reach start-up stage. Also angering locals was a failure by the project to pay landowners royalties for the use of their land.

In 2017 a $423-million contract was let by the Australian government to what O’Neill later described as an ‘inexperienced and unknown’ Australian security company, Paladin Holdings. The contract, which did not go out to tender, was for garrison support and welfare services in Papua New Guinea, in particular on Manus Island.

Paladin then contracted Peren Investment to provide services. Peren is controlled by brothers of PNG’s parliamentary speaker, Manus MP Job Pomat, who is a parliamentary powerbroker and a critical O’Neill ally. Pomat insisted that Paladin do business ‘the PNG way’.

Then there was the government’s purchase of 284 luxury cars for the 2018 APEC summit in Port Moresby. The cars, which include some forty Maserati Quattroporte saloons and three Bentley Flying Spur limousines, along with Toyota LandCruisers and Mitsubishi Pajeros, have since been purloined by government officials, although a police task force is attempting to retrieve them.

The ostentatious APEC display of public wealth and the subsequent thefts contrasted with PNG’s overall economic poverty. PNG is the poorest country in the APEC grouping, with a poverty rate of almost 40 per cent. The PNG economy has been in recession for the last two years, and spending on health and education, already limited outside the main cities, has been cut.

It is unsurprising that PNG’s very poor levels of governance have led to its being classified by the World Bank as one of the world’s most corrupt countries.

The issue of corruption perhaps comes closest to explaining the push against O’Neill. It is not that he is corrupt that has bothered many parliamentarians but that the sharing of corruption has been reduced as he has increasingly personalised the political process.

In PNG, the ‘big man’ patron–client approach to community and tribal relations has transitioned from traditional pigs and chickens to cash and goods. To retain client loyalty, PNG politicians have distributed largesse, usually in the form of corruptly acquired cash or goods bought with such cash. The system was tolerated so long as enough parliamentarians felt that they were being adequately included in accessing funds.

Even by PNG’s relaxed standards, the level of scandal was becoming untenable. That its profits were not being shared was, for most parliamentarians, an outrage too far.

O’Neill sailed blithely over it all, Trump style, by positing ‘alternative facts’ and otherwise casually disregarding Westminster parliamentary conventions, with the support of his friend Pomat. O’Neill continued to claim that his government provided PNG with prosperity and stability, even though the opposite was true.

In particular, O’Neill highlighted progress on a number of infrastructure projects. However, these projects were funded by either Chinese loans or external aid donors, the terms of which have been widely criticised.

In the end, and even from near the beginning, it was all about O’Neill. It was not about the country, or even his governing partners. It is this last point that appears to have brought him undone.

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