Papa New Guinea Prime Minister James Marape has called out UBS for its role in a costly oil loan, supporting a recent recommendation from a commission of inquiry for a 10-year ban.

Three years after Papa New Guinea Prime Minister James Marape first launched an inquiry into a 2014 loan for oil shares that resulted in losses for the country, recommendations have been unveiled for charges against UBS.

«The UBS loan had no satisfactory justification or rationale, there was failure to follow processes, apart from a huge fee of A$28 million ($20.5 million),» according to a «Guardian» report citing Marape in a statement to the parliament. «UBS also overcharged A$175m which should be repaid.»

Business Bans

Marape voiced support for the counsel assisting the commission's recommendations earlier this week to penalize UBS’ Australia arm with a 10-year ban and repayment of the A$175 million overcharged with interest.

The recommendations also included a ban against key former UBS personnel Mitchell Turner and Patrick Jilek from activities in Papa New Guinea and a five-year ban against firm Norton Rose Fulbright for failing to give «proper advice». 

Peter O’Neill

Marape took over as Prime Minister of Papa New Guinea in 2019 and succeeded Peter O’Neill who stepped down due to a loss of confidence.  

Marape is also calling for the prosecution of O’Neill over the oil loan, adding that he «knew the submission was complex and lengthy» but did not give cabinet members «advance notice or opportunity to debate the submission».

O’Neill, which does not face proposed charges, said he «fully accepted the recommendations from the inquiry into the deal» and does not oppose further investigations.

«I am responsible to the people of Papua New Guinea. I am responsible as a mandated leader,» he said, adding that the «highly politicized» inquiry into the UBS deal was the country’s most expensive at around $8 million.

2014 UBS Deal

The investigation and subsequent recommendations for legal charges relate to an oil loan transaction from 2014 between UBS’ global investment banking unit and the former O’Neill government. 

A A$1.3 billion loan who be used to acquire 10.1 percent of shares from oil and gas exploration company Oil Search. The firm’s share price soon fell and Papa New Guinea would sell its holdings at a loss.