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• Ombudsman Commission
  of Papua New Guinea

  AN INVESTIGATION INTO THE ALLEGED IMPROPER
  BORROWING OF AU$1.239 BILLION LOAN FROM THE UNION
  BANK OF SWITZERLAND, AKTIENGESELLSCHAFT (AUSTRALIA
  BRANCH) TO PURCHASE 149,390,244 SHARES IN OIL SEARCH
  LIMITED AND IMPROPER TENDER AND PROCUREMENT OF
  CONSULTANTS IN RELATION TO THE BORROWING.

  FINAL REPORT
  DECEMBER 2018

  TABLE OF CONTENTS

  TABLE OF CONTENTS
  ii

  ABBREVIATION
  vii

  GLOSSARY OF TERMS
  ix

  GLOSSARY OF PERSONS REFERRED TO IN THE REPORT
  xii

  CHRONOLOGY
  xiv

  EXECUTIVE SUMMARY
  xlv

  1. JURISDICTION AND PURPOSE OF INVESTIGATION
  1

• Page 2 of 475

• [1.1] INTRODUCTION
  1

  [1.2] JURISDICTION OF THE OMBUDSMAN COMMISSION
  4

  [1.3] PURPOSE OF THE INVESTIGATION
  5

  [1.4] METHOD OF INQUIRY
  6

  [1.5] WITNESSES WHO GAVE EVIDENCE BEFORE THE COMMISSION
  7

  [1.6] OMBUDSMAN COMMISSION NOT CONFINED TO REPORTING ON LEGALITY OF
  ADMINISTRATIVE CONDUCT
  7

  [1.7] WHAT IS ―WRONG CONDUCT‖?
  8

  [1.8] THE PROVISIONAL REPORT
  8

  [1.9] RESPONSE FROM THE PRIME MINISTER HON PETER O‘NEILL, CMG, MP,
  10

  [1.10]CHALLENGE ON OMBUDSMAN COMMISSION‘S JURISDICTION – SCR NO: 15
  OF 2015 17

  [1.11]RESPONSE FROM THE ACTING SECRETARY FOR TREASURY, MR DAIRI VELE
  18

  2. FINDINGS OF FACTS
  20

  PART 1 THE DECISION OF THE NATIONAL EXECUTIVE COUNCIL TO BORROW UBS
  AG
  (AUSTRALIA BRANCH) LOAN AND IT‘S IMPLEMENTATION
  20

  [1] NEC DECISION NO: 37/2013 ON THE RE-FINANCING OF THE
  INTERNATIONAL
  PETROLEUM INVESTMENT COMPANY (IPIC) EXCHANGEABLE BOND
  20

  [2] BANK OF PAPUA NEW GUINEA RECOMMENDED UBS AG AS THE LENDER OF
  THE
  LOAN TO RE-FINANCE THE IPIC EXCHANGEABLE BOND
  22

  [2.1] RESPONSE FROM THE GOVERNOR OF BANK OF PAPUA NEW GUINEA MR LOI
  BAKANI

• Page 3 of 475

• 31

  Table of Contents
  Page ii

  [3] THE STATE ENGAGES UBS AG TO FINANCE PURCHASE OF NEW SHARES IN
  OIL
  SEARCH LIMITED 33

  [4] BUY BACK OF IPIC EXCHANGEABLE BOND BY THE STATE FAILS 35

  [5] THE PRIME MINISTER‘S MEETING WITH MR PETER BOTTEN, MANAGING
  DIRECTOR OF OIL SEARCH LIMITED 36

  [6] THE ACTING SECRETARY, DEPARTMENT OF TREASURY, INVOLVEMENT IN
  THE
  WHOLE UBS AG TRANSACTION 39

  [6.1] RESPONSE FROM MR DAIRI VELE 43

  [7] STATE SOLICITOR‘S ADVICE ON THE WHOLE OF UBS AG TRANSACTION 57

  [8] NEC DECISION TO PURCHASE SHARES IN OIL SEARCH LIMITED 64

  [9] HON DON POLYE MP DECOMMISSIONED AS MINISTER FOR TREASURY 71

  [10] INVOLVEMENT OF INDEPENDENT PUBLIC BUSINESS CORPORATION 74

  [11] INDEPENDENT PUBLIC BUSINESS CORPORATION BOARD DECISION 78

  [12] INVOLVEMENT OF PETROMIN PNG HOLDINGS LIMITED 79

  [13] INVOLVEMENT OF NATIONAL PETROLEUM COMPANY OF PAPUA NEW GUINEA
  (KROTON) LIMITED 81

  PART 2 ENGAGEMENT OF CONSULTANTS TO FACILITATE THE BORROWING OF UBS
  AG
  LOAN 90

  [1] ENGAGEMENT OF LEGAL CONSULTANTS 90
  [1.1] RESPONSE FROM MR DAIRI VELE 92

  [2] ENGAGEMENT OF FINANCIAL AND TECHNICAL CONSULTANTS 94
  [i] ENGAGEMENT OF UBS AG AS FINANCIAL ADVISOR AND LEAD ARRANGER
  FOR
  THE REFINANCING OF IPIC EXCHANGEABLE BOND 94
  [2i] RESPONSE FROM MR DAIRI VELE 100

  [ii] ENGAGEMENT OF KPMG AND PACIFIC CAPITAL LIMITED TO FACILITATE
  THE
  BORROWING OF UBS AG LOAN
  101
  [2ii] RESPONSE FROM MR DAIRI VELE ON THE ENGAGEMENT OF KPMG AND

• Page 4 of 475

• PACIFIC CAPITAL LIMITED 106
  [2iii] RESPONSE FROM MR FRANK KRAMER 107

  [3] MR DAIRI VELE‘S, ACTING SECRETARY, DEPARTMENT OF TREASURY,
  ENGAGEMENT OF CONSULTANTS TO FACILITATE THE UBS AG LOAN
  TRANSACTION 108
  [3.1] RESPONSE FROM MR DAIRI VELE
  113

  [4] REQUEST FOR A CERTIFICATE OF INEXPEDIENCY FOR THE ENGAGEMENT
  OF
  CONSULTANTS
  115
  [4.1] RESPONSE FROM MR DAIRI VELE
  117

  [5] STATE SOLICITOR‘S ADVICE ON THE ENGAGEMENT OF CONSULTANTS TO
  FACILITATE THE BORROWING
  118

  [6] CENTRAL SUPPLY & TENDERS BOARD APPROVED THE ISSUANCE OF THE
  CERTIFICATE OF INEXPEDIENCY 122
  Table of Contents Page
  iii

  [6.1] RESPONSE FROM MR DAIRI VELE
  128

  [7] DR KEN NGANGAN, ACTING SECRETARY FOR DEPARTMENT OF FINANCE
  APPROVED THE AUTHORITY TO PRE-COMMIT FUNDS
  131
  [7.1] RESPONSE FROM DR KEN NGANGAN
  134

  [8] PRIVATE CONSULTANTS PREPARE POLICY SUBMISSION & OTHER
  DOCUMENTS
  FOR THE NATIONAL EXECTIVE COUNCIL
  135
  [8.1] RESPONSE FROM MR DAIRI VELE
  140

  [9] EXECUTION OF THE LOAN CONTRACT
  141

  PART 3 PAYMENTS MADE TO CONSULTANTS AND UBS AG AS PER NEC DECISION
  NO. 79/2014 144

  [1] PAYMENTS MADE TO UBS AG (AUSTRALIA BRANCH)
  144

  [2] PAYMENTS TO OTHER CONSULTANTS
  147
  [2.1] RESPONSE FROM MR DAIRI VELE

• Page 5 of 475

• 150

  [3] DR KEN NGANGAN, ACTING SECRETARY FOR DEPARTMENT OF FINANCE
  APPROVED THE RELEASE OF FUNDS FOR CONSULTANTS
  151

  [3.1] RESPONSE FROM DR KEN NGANGAN
  153

  [4] PAYMENTS MADE TO UBS AG BY NATIONAL PETROLEUM COMPANY OF
  PAPUA
  NEW GUINEA (KROTON) LIMITED
  154

  [5] LOAN AND INTEREST PAYMENT TO UBS AG (AUSTRALIA BRANCH)
  158
  [5.1] RESPONSE FROM MR DAIRI VELE
  166

  3. INTERVIEWS WITH WITNESSES
  168

  [3.1] EVIDENCE GIVEN BY HON DON POLYE, THEN MINISTER FOR TREASURY
  168

  [3.2] EVIDENCE GIVEN BY MR DANIEL ROLPAGAREA, STATE SOLICITOR
  168

  [3.3] EVIDENCE GIVEN BY HON KERENGA KUA, THEN MINISTER FOR JUSTICE
  AND
  ATTORNEY-GENERAL
  169

  [3.4] EVIDENCE GIVEN BY MR LOI BAKANI, GOVERNOR FOR BANK OF PAPUA
  NEW
  GUINEA
  169

  [3.5] EVIDENCE GIVEN BY MR DAIRI VELE, ACTING SECRETARY FOR THE
  DEPARTMENT
  OF TREASURY
  169

  [3.6] EVIDENCE GIVEN BY MR ANTHONY YAUIEB, DEPUTY SECRETARY
  (POLICY),
  DEPARTMENT OF TREASURY
  170

  [3.7] EVIDENCE GIVEN BY MR WASANTHA KUMARASIRI, THE MANAGING
  DIRECTOR
  FOR IPBC
  170

  4. FINDINGS

• Page 6 of 475

• 171

  [4.1] FINDING No. 1
  171

  [4.2] FINDING No. 2
  172

  [4.3] FINDING No. 3
  173

  Table of Contents
  Page iv

  [4.4] FINDING No.4 174

  [4.5] FINDING No. 5 175

  [4.6] FINDING No. 6 176

  [4.7] FINDING No. 7 178

  [4.8] FINDING No. 8 179

  [4.9] FINDING No. 9 180

  [4.10]FINDING No. 10 190

  [4.11]FINDING No. 11 195

  [4.12]FINDING No. 12 197

  [4.13]FINDING No. 13 201

  [4.14]FINDING No. 14 205

  [4.15]FINDING No. 15 206

  [4.16]FINDING No. 16 210

  [4.17]FINDING No. 17 211

  [4.18]FINDING No. 18 212

  [4.19]FINDING No. 19 214

  [4.20]FINDING No. 20 215

  5. RECOMMENDATIONS 217

  [5.1] CONSTITUTIONAL FRAMEWORK FOR MAKING RECOMMENDATIONS 217

  [5.2] RECOMMENDATIONS CONCERNING PARTICULAR INDIVIDUALS 218

• Page 7 of 475

• [5.3] RECIPIENTS OF RECOMMENDATIONS 218

  [5.4] RESPONSIBLE MINISTERS 218

  [5.5] MINISTERS RESPONSIBLE FOR FOLLOWING UP ON THE IMPLEMENTATION
  OF
  RECOMMENDATIONS 218

  [5.6] DUTIES OF RECIPIENTS TO ACT ON THE RECOMMENDATIONS 219

  [5.7] RECOMMENDATIONS 219

  [5.7.1] RECOMMENDATION No. 1 220

  [5.7.2] RECOMMENDATION No. 2 221

  [5.7.3] RECOMMENDATION No. 3 221

  [5.7.4] RECOMMENDATION No. 4 222

  [5.7.5] RECOMMENDATION No. 5 223

  Table of Contents Page v

  [5.7.6] RECOMMENDATION No. 6
  224
  [5.7.7] RECOMMENDATION No. 7
  224
  [5.7.8] RECOMMENDATION No. 8
  225
  [5.7.9] RECOMMENDATION No. 9
  226
  [5.7.10] RECOMMENDATION No. 10
  227
  [5.7.11] RECOMMENDATION No. 11
  227
  [5.7.12] RECOMMENDATION No. 12
  228
  [5.7.13] RECOMMENDATION No. 13
  229
  6. CONCLUSION
  231
  7. APPENDIX
  232
  7.1 RELEVANT LAWS AND SPECIFIC PROVISIONS
  232
  [7.1.1] CONSTITUTION OF THE INDEPENDENT STATE OF PAPUA NEW GUINEA
  232
  [7.1.2] ORGANIC LAW ON THE OMBUDSMAN COMMISSION
  236
  [7.1.3] ATTORNEY-GENERAL ACT 1989

• Page 8 of 475

• 237
  [7.1.4] CENTRAL BANKING ACT 2000
  237
  [7.1.5] LOANS (OVERSEAS BORROWING) ACT (CHAPTER 133)
  238
  [7.1.6] LOANS (OVERSEAS BORROWINGS) (No.2) ACT (CHAPTER 133A)
  240
  [7.1.7] OFFICIAL PERSONNEL STAFF ACT (CHAPTER 383)
  243
  [7.1.8] PAPUA NEW GUINEA FISCAL RESPONSIBILITY ACT 2006
  243
  [7.1.9] INDPENDENT PUBLIC BUSINESS CORPORATION OF PAPUA NEW GUINEA
  ACT 2002 243
  [7.1.10] PETROLEUM PNG HOLDINGS LIMITED AUTHORIZATION ACT 2007
  244
  [7.1.11] COMPANIES ACT 1997
  244
  [7.1.12] LAWYERS ACT 1986
  245
  [7.1.13] OATHS, AFFIRMATIONS AND STATUTORY DECLARATIONS ACT (CHAPTER
  317) 245
  [7.1.14] PUBLIC FINANCE (MANAGEMENT) ACT 1995
  245
  [7.1.15] THE FINANCE MANAGEMENT MANUAL
  250
  [7.2] INVESTMENT PETROLEUM INVESTMENT COMPANY (IPIC) LOAN AGREEMENT
  276
  [7.3] UBS AG LOAN DOCUMENTS
  280

  Table of Contents
  Page vi

  ABBREVIATION
  Act – The Act of Parliament
  APC – Authority to Pre – Commit
  BPNG – Bank of Papua New Guinea
  CoI – Certificate of Inexpediency
  Constitution – Constitution of the Independent State of Papua New
  Guinea
  CSTB – Central Supply & Tenders Board
  DJAG – Department of Justice & Attorney-General
  DoF – Department of Finance
  DoPE – Department of Public Enterprise
  DoT – Department of Treasury
  FAI – Foreign Affairs & Immigration
  FMM – Finance Management Manual
  GGPNG – Governor-General of Papua New Guinea
  GloCo – PNG Liquefied Natural Gas Global Company LDC
  GoPNG – Government of Papua New Guinea
  Hon – Honourable
  IPBC – Independent Public Business Corporation

• Page 9 of 475

• IPIC – International Petroleum Investment Company
  IRC – Internal Revenue Commission
  KPMG – Klynveld Peat Marwick Main Goerdeler
  LNG – Liquefied Natural Gas
  Ltd – Limited
  MD – Managing Director
  Abbreviation Page vii

  MP – Member of Parliament
  NEC – National Executive Council
  NPCP – National Petroleum Company of PNG (Kroton) Ltd
  Commission – Ombudsman Commission of Papua New Guinea
  OLOC – Organic Law on the Ombudsman Commission
  PFMA – Public Finance (Management) Act 1995
  PNGLS – Papua New Guinea Law Society
  PRL – Petroleum Resource Licence
  Pty – Propriety
  State – The Independent State of Papua New Guinea
  SE&SI – State Enterprise & State Investments
  State Sol – State Solicitor
  UBS AG – Union Bank of Switzerland, Aktiengesellschaft
  (Australia Branch)

  Abbreviation Page viii

  GLOSSARY OF TERMS

  Introduction
  The terminologies listed and defined in this Glossary were taken
  from the UBS AG Loan
  documents, the Internet and Oxford Dictionary.

  Authority to Pre-Commit
  The purpose of the APC process is to ensure proper accounting,
  management and
  reporting on the Pre-Commitment of Expenditure is maintained in all
  levels of the
  National, Provincial and Local-Level Governments. The validity of
  contracts with the

• Page 10 of 475

• government for those authorised by the Secretary for Finance is
  evidenced by his signature
  on an Authority to Pre Commit Form.

  Authorisation
  An authorisation, consent, declaration, exemption, notarisation or
  waiver, however it is
  described; and in relation to anything that could be prohibited or
  restricted by law if a
  Government Agency acts in any way within a specified period, the
  expiry of that period
  without that action being taken, including any renewal or amendment.

  BPNG
  The Bank of Papua New Guinea is the Central Bank of the Sovereign
  Independent State of
  Papua New Guinea.

  Bond
  It is a written and signed promise to pay a certain sum of money on
  a certain date, or on
  fulfilment of a specified condition. All documented contracts and
  loan agreements are
  bonds.

  Bridge Loan
  A type of short term loan used to finance an enterprise, investment
  or government pending
  the receipt of other funds.

  Bridge Takeout Letter
  A written promise by a lender to provide a long term loan (Bridge
  Loan).

  Central Supply & Tender Board
  This is the GoPNG major procurement and tender authority that was
  empowered by the
  GoPNG to screen and further endorse contractors to be engaged by the
  State.

  Certificate of Inexpediency
  A certificate issued by the Central Supply & Tenders Board only when
  in situations where
  a declared natural disaster or defence emergency or health emergency
  occurs or there is a
  situation of civil unrest. A Certificate of Inexpediency cannot be
  applied retrospectively.

  Collar Loan
  The purchase of an out-of-the money put option is what protects the
  underlying shares
  from a large downward move and locks in the profit. The price paid
  to buy the puts
  (shares first placed on the stock market) is lowered by amount of

• Page 11 of 475

• premium that is collect
  Glossary Page ix

  by selling the out of the money call (the time which the share was
  placed). The ultimate
  goal of this position is that the underlying stock continues to rise
  until the written strike
  (agreed market value price of shares) is reached.

  Distribution
  Any payment or distribution of money or other property (including by
  management or
  other fee, interest on shareholder loans, dividend, return of
  capital, repayment or
  redemption) to or for the benefit of any holder (in that capacity)
  of securities issued.

  CHESS
  The Clearing House Electronic Sub-register System operated by the
  ASX Settlement and
  Transfer Corporation Pty Ltd (ASTC).

  Exchangeable Bond (XB)
  A security consisting of a straight bond and option to exchange the
  bond for the stock of
  the company other than the Issuer (usually a subsidiary or company
  in which the Issuer
  owns a stake) at some future date and under prescribed conditions.

  Facility Agent
  The UBS AG, Australia Branch ABN 47 088 129 613.

  Facility Agreement
  The Bridge Facility Agreement that was dated on or about the date of
  the Payment
  Direction Deed between, among others, the Borrower and the Facility
  Agent.

  Fee Letter
  The letter or letters dated on or about the date of the Bridge
  Agreement between the
  parties to the agreement.

  GloCo
  The Papua New Guinea Liquefied Natural Gas Global Company LDC.

  IPBC
  The Independent Public Business Corporation is the major shareholder
  in NPCP

  IPIC Loan
  Loan obtained by the State from International Petroleum Investment
  Company based in

• Page 12 of 475

• Abu Dhabi in 2009 to finance the PNG LNG Project.

  NPCP
  The National Petroleum Company of Papua New Guinea (Kroton) Ltd was
  created as the
  receivership of proceeds from the PNG LNG project.

  Payment Direction Deed
  This is the document that contains the directions that NPCP agreed
  to instruct and direct
  GloCo to pay, in immediately available funds, all Distributions
  which are to be paid to
  NPCP in relation to the Share Holding from time to time, to a bank
  account in the name of
  NPCP with the Facility Agent or an affiliate of the Facility Agent
  with such account to be
  located in Singapore.

  Glossary Page x

  Rollover Collar
  A rollover Collar loan is essentially a loan that gets renewed at a
  defined point, as
  stipulated in a loan contract. There are several types of rollovers,
  each different from the
  others except for this principal idea of renewal.

  Share Holding
  All shares or other securities held by NPCP in GloCo from time to
  time.

  Specific Security Deed
  Specific security deed dated on or about the date of this document
  granted by the
  Borrower in favour of the Security Trustee over certain OSH Shares
  held by the Borrower.

  Security Trust Deed
  The security trust deed dated on or about the date of this UBS AG
  Contract Agreement
  document between the borrower and the Security Trustee.

  Share
  A unit at a value for various investments.

  Share placement
  This is one way a company can raise additional share capital –
  particularly if funds are
  needed relatively quickly – is to do a ―share placement‖, ie., by
  way of ―placing‖ some
  shares with an investor/s at a share price that might typically be a
  say 15 – 25% discount to

• Page 13 of 475

• the most recent share issue or (particularly where stock exchange
  listed) market price of
  the company‘s shares.

  Side Letter
  This is a letter to confirm certain of the terms and conditions on
  agreement of the UBS AG
  Loan Contract Agreement.

  Sovereign Bond
  A debt security issued by a national government within a given
  country and denominated
  in a foreign currency. The foreign currency used will most likely be
  a hard currency, and
  may represent significantly more risk to the bondholder.

  Subscription Agreement
  It is an agreement signed on 27 February 2014 between the Equity
  Derivative Financier
  (UBS AG) and Oil Shares Limited.

  Substantial shareholders notice
  Notice of change of interests of substantial holder of shares
  (completed and filed by Oil
  Search Ltd on Australian Stock Exchange).

  Term Loan
  It is a monetary loan that is repaid in regular payments over a set
  period of time. Term
  loans usually last between one and ten years, but may last as long
  as 30 years in some
  cases. A term loan usually involves an unfixed interest rate that
  will add additional
  balance to be repaid.

  UBS AG
  Union Bank of Switzerland in which the loan was obtained.
  Glossary Page xi

  GLOSSARY OF PERSONS REFERRED TO IN THE REPORT

  Sir Michael Ogio, GCL, GCMG, KStJ
  Governor-General of PNG

  Hon Peter O‘Neill, CMG, MP
  Prime Minister of Papua New Guinea

  Hon James Marape, MP
  Minister for Finance

  Hon Ben Micah, MP
  Minister for State Enterprise & State Investments

• Page 14 of 475

• s
  Hon Kerenga Kua, MP
  Former Attorney-General and Minister for Justice

  Dr Ken Ngangan, PhD. CMA, CPA
  Acting Secretary, Department of Finance

  Hon Rimbink Pato, LLB, OL
  Minister for Foreign Affairs & Immigrations

  Hon Don Pomb Polye, MP
  Former Minister for Treasury

  Ambassador Isaac B. Lupari, CBE
  Chief of Staff to the Prime Minister

  Dr Lawrence Kalinoe, LLB, LLM, PhD
  Secretary for Department of Justice

  Mr Loi Bakani, CMG, CBE
  Governor of Bank of Papua New Guinea

  Ms Betty Palaso
  Commissioner-General, Internal Revenue Commission
  n
  Mr Dairi Vele,
  Acting Secretary for Department of Treasury

  Mr Daniel Rolpagarea,
  State Solicitor

  Mr Ilagi Veali, MPS
  Secretary, National Executive Council

  Glossary Page xii

  Mr Philip Eludeme,
  Chairman, Central Supply & Tenders Board

  Mr Anthony Yauieb
  Deputy Secretary, Policy for Department of Treasury

  Mr Babaga R. Naime
  Acting Board Secretary for Central Supply & Tenders Board

  Dr Clement Waine, PhD
  Secretary, Department of Public Enterprise & State Investments

  Mr Wasantha Kumarasiri,
  MD for Independent Public Business Corporation

  Mr Erastus Kamburi,

• Page 15 of 475

• Chief Legal Officer for Independent Public Business Corporation

  Mr Wapu R Sonk,
  MD for National Petroleum Company of PNG (Kroton) Ltd

  Mr Rogen Wato,
  Company Secretary, National Petroleum Company of PNG (Kroton) Ltd

  Mr Frank Kramer,
  Chairman for National Petroleum Company of PNG (Kroton) Ltd

  Mr Guy Fowler,
  MD for UBS AG

  Ms Celle Raguine
  Representatives of UBS AG

  Mr Luke Goldsworthy
  Representative of UBS AG

  Mr Peter Botten,
  MD for Oil Search Ltd

  Mr Peter Graham,
  MD for PNG Liquefied Natural Gas Global Company LDC (GloCo)

  Ms Tessa Hoser
  Norton Rose Fulbright of Australia

  Mr Carl Okuk
  Lawyer and Consultant

  Glossary Page xiii

  CHRONOLOGY

  1995

  1. On 5 December, the Investment Promotion Authority (IPA)
  registered Pacific Capital Ltd
  whose Shareholders also include Mr Frank Michael Kramer.

  2009

  2. On 5 March, the Government of PNG (GoPNG) mortgaged its shares in
  Oil Search Ltd
  with International Petroleum Investment Company (IPIC), Abu Dhabi
  and acquired the
  needed funding and it financed the State‘s share of the capital

• Page 16 of 475

• expenditure for the PNG
  LNG project.

  3. On 1 July, the IPA registered Pertusio Capital Partners Ltd whose
  Shareholders also
  include Mr Dairi Vele.

  2013

  4. On 25 June, Prime Minister Hon Peter O‘Neill, CMG, MP (Prime
  Minister) advised Hon
  Kerenga Kua, MP, the then Attorney-General that a Brief-Out on
  legal services should be
  publicly tendered.

  5. On 6 August, the National Executive Council (NEC) appointed Mr
  Dairi Vele, as the
  Acting Secretary for the Department of Treasury (DoT).

  6. On 12 August, the DoT officials met with Union Bank of
  Switzerland, Aktiengesellschaft,
  Australia Branch (UBS AG) officials at Sydney, Australia.

  7. On 13 August, the DoT officials met with Morgan Stanley officials
  in Sydney, Australia.

  8. On 14 August, the DoT officials met with JP Morgan officials at
  Sydney, Australia.

  9. On 15 August, the DoT officials held a second meeting with UBS AG
  officials at Sydney,
  Australia.

  10. On 16 August, the DoT officials met with Credit Suisse officials
  at Sydney, Australia.

  11. On 19 December, the NEC during a Special Meeting No: 37/2013 in
  its Decision No:
  479/2013 that the BPNG provide final evaluations on the proposals
  from Citi Bank and
  UBS AG to re-finance the International Petroleum Investment
  Company (IPIC)
  Exchangeable Bond.

  12. On 20 December, Hon Ben Micah, MP, Minister for State
  Enterprises and State
  Investment (SE&SI) wrote to Mr Loi Bakani, CMG, CBE, the Governor
  of Bank of Papua
  New Guinea (BPNG) and requested the BPNG to evaluate the
  potential financiers‘
  proposals to re-finance the IPIC Exchangeable Bond.

• Page 17 of 475

• Chronology of Events Page xiv

  13. On 22 December, Mr Bakani advised Minister Micah that the four
  financiers should have
  been provided all the information and requested to bid for the
  Exchangeable Bond re-
  financing facility.

  14. On 27 December, Minister Micah requested Mr Bakani for
  clarification on the BPNG‘s
  advice on the four proposals by Hemsley Capital, ANZ/Barclay,
  CitiBank and UBS AG in
  regard to the refinancing of the IPIC Exchangeable Bond.

  2014

  15. On 7 January, Mr Bakani advised Minister Micah that the State
  re-negotiate the funding
  structure of the proposals with the two Financiers, the UBS AG and
  Citi Bank in the event
  that the negotiations do not meet the State objectives, the State
  should consider othr
  Financiers.

  16. On 9 January, Mr Bakani forwarded the BPNG‘s recommendations to
  Minister Micah as
  requested that included the invitation of other potential
  Financiers apart from Citi Bank
  and UBS AG to re-finance the IPIC Exchangeable Bond.

  17. On even date, Mr Bakani requested the Prime Minister to allow
  the BPNG the mandate to
  assist the State in meeting the basic re-financing requirements in
  the negotiation process.

  18. On 14 January, Mr Wasantha Kumarasiri of Independent Public
  Business Corporation
  (IPBC), requested Mr Bakani to correct his advice to Minister
  Micah as it was incorrect
  and misleading when the actual amount should be AU$1.681 Billion
  and not AU$1.8
  Billion.

  19. On 15 January, Minister Micah wrote to Mr Bakani and requested
  that the BPNG provide
  its final recommendations on the two Banks, UBS AG and Citi Bank.

  20. On 16 January, Mr Bakani requested all parties including the
  BPNG, Minister Micah,
  IPBC, and the DoT to draft the Terms of Reference to be used
  during negotiations with
  potential Financiers.

• Page 18 of 475

• 21. On 17 January, Mr Bakani wrote to and advised Mr Kumarasiri that
  the BPNG‘s
  evaluations and recommendations were based on information provided
  in accordance with
  the NEC Decision No: 479/2013 in its Special Meeting No: 37/2013
  that approved for BPNG
  to provide final evaluations on the proposals from Citi and UBS AG
  to refinance the IPIC
  Exchangeable Bonds; that Minister Micah advice the Government of
  United Arab
  Emirates the GoPNG‘s decision to redeem the IPIC Exchangeable
  Bonds and directed
  Miniser Micah to report back to NEC by end of January 2014 with
  the final evaluation
  report provided by BPNG.

  22. On even date, Mr Bakani requested Ms Natalie Yacoubian of Banque
  Nationale de Paris
  Paribas (BNP Paribas) to resubmit PNP Paribas proposal
  incorporating the refined terms.

  23. On even date, Mr Bakani requested Mr Mitchell Turner of UBS AG
  to resubmit UBS AG
  proposal incorporating the refined terms.

  24. On even date, Mr Bakani requested Mr Philip Graham to resubmit
  Citi Bank‘s proposal
  incorporating the refined terms.

  Chronology of Events Page xv

  25. On even date, Minister Micah advised Mr Bakani that he expected
  a recommendation by
  Wednesday 22 January 2014.

  26. On 23 January, Mr Bakani recommended to the NEC to request the
  Abu Dhabi
  Government for an extension of six months, to allow time to
  improve on the proposal by
  BNP Paribas, the superior proposal, as well as the UBS AG, Citi
  Bank and ANZ/Barclays.

  27. On 27 January, Hon Don Polye, Minister for Treasury wrote to Mr
  Bakani and requested
  for a full brief on the implementation of the NEC‘s Decision No.
  479/2013 regarding the re-
  financing of IPIC Exchangeable Bond.

  28. On even date, after its inconclusive asseement of the proposals
  from BNP Paribas, UBS
  AG, Citi Bank and ANZ/Barclays, Mr Bakani, recommended the UBS AG
  to Minister
  Micah, for the refinancing of the IPIC Exchangeable Bond.

• Page 19 of 475

• 29. On 30 January, Mr Vele engaged UBS AG to act as the sole
  Financial Advisor and Lead
  Arranger, in relation to the management of the investment of the
  State in Oil Search Ltd by
  way of letter.

  30. Mr Bakani informed the Directors for Investment Banking, UBS AG
  that the State had
  accepted its proposal to re-finance IPIC Exchangeable Bond worth
  AU$1.7 Billion and that
  UBS AG to confirm in writing its commitment to fund the AU$1.7
  Billion IPIC
  Exchangeable Bond.

  31. On even date, Minister Micah noted Mr Bakani‘s recommendations
  but he advised that
  the six months extension recommended would incur costs and was not
  possible.

  32. On 3 February, Minister Micah informed Mr Frank Kramer, Chairman
  for National
  Petroleum Company of PNG Ltd (NPCP) Board regarding the
  Exchangeable Bond and the
  appointment of UBS AG. At that material time, the Speaker of
  Parliament was yet to
  certifiy Kroton Act.

  33. On even date, Hon Minister Micah accepted the BPNG‘s
  recommendations and the
  NPCP‘s lead to re-finance IPIC Exchangeable Bond process on behalf
  of the Independent
  State of Papua New Guinea (State), even though NPCP had no legal
  basi to conduct
  business for and on behalf of the country and the government of
  PNG.

  34. On 4 February, the Prime Minister advised HH Sheik Mansour bin
  Zayed Al Nahyan that
  the State wanted to retain its shares in Oil Search Ltd.

  35. On 7 February, Mr Bakani re-assured Minister Micah on its
  recommendation to use UBS
  AG to re-finance IPIC Exchangeable Bond.

  36. On 13 February, a Mandatory Exchange Notice to Deutche Bank AG,
  London Branch
  (Exchange Agent) indicated that the IPIC did not want to sell its
  shares to Government of
  Papua New Guinea (GoPNG).

  37. On even date, Mr John Leahy, Head of Business Assurance & Asset
  Serving, National
  Nominees Limited, consented and became a member of Oil Search Ltd

• Page 20 of 475

• and undertook
  trading of Shares on the Australian Stock Exchange.

  Chronology of Events Page xvi

  38. On 23 February, the Prime Minister, Mr Peter Botten, MD of Oil
  Search Ltd, Mr Gerea
  Aopi, Board Chairman for Oil Search Ltd and Mr Vele met at Grand
  Papua Hotel and
  decided over a cup of coffee for the State to buy 149, 390, 244
  shares which translated to 10.01
  % shareholding in Oil Search Ltd.

  39. On 24 February, Hon Rimbink Pato, MP, Minister for Foreign
  Affairs and Immigration
  (FAI) advised HH Sheikh Abdullah bin Zayed Al Nahyan, the
  Minister for FAI, Abu
  Dhabi, United Arab Emirates, that the GoPNG wanted to retain
  ownership of the Oil
  Search Ltd shares.

  40. On 25 February, UBS AG wrote to Mr Vele and outlined the terms
  of engagement of UBS
  AG as the Sole Financial Advisor and Sole Lead Arranger that was
  effected on 30 January
  2014, in relation to the management of the investment of the
  State in Oil Search Ltd and
  associated matters flowing from the issuance in 2009 of
  Exchangeable Bond in respect of
  the State‘s 196.6 million shares in Oil Search Ltd to the IPIC of
  Abu Dhabi. This is done
  with a conflict of interest.

  41. On even date, trading in Oil Search Ltd shares halted ahead of
  its announcement issuing
  shares to existing shareholders and interested buyers.

  42. On even date, His Excellency Grand Chief Sir Michael Ogio,
  G.C.L, G.C.MG, K.St.J the
  Governor-General of Papua New Guinea (GGPNG) signed the document
  agreements
  which were witnessed by Mr Carl Okuk as a Commissioner for Oath
  witnessing the
  agreement on the terms and conditions of engagement of UBS AG.
  The action of the
  GGPNG was improper and unconstitutional as per Section 2(1) and
  3(1) of the Loans
  (Overseas Borrowing) Act (Chapter 133).

  43. On 26 February, Prime Minister wrote to Mr Botten regarding the
  State‘s willingness to
  buy shares in Oil Search Ltd.

• Page 21 of 475

• 44. On 27 February, four days after the meeting, the Prime Minister
  wrote to Mr Guy Fowler,
  the MD for UBS AG regarding UBS AG proposal to provide funding
  facilities to the State
  in connection with the subscription by the State for
  approximately 149.39 million shares
  in Oil Search Ltd at AU$8.20 per share. (Refer to said dated
  letter). Facts relevant to this
  query are set out in page 38

  45. On even date, the Subscription Agreement was signed between UBS
  AG (the Equity
  Derivative Financier) and Oil Shares Limited.

  46. On even date, Oil Search Ltd shares trading were suspended ahead
  of its announcement.

  47. On even date, Oil Search Ltd announced that it had agreed to
  acquire a 22.835% gross
  interest in PRL 15 (Elk Antelope) from the Pac LNG Group
  Companies for US$900 million
  to be funded through a placement of new shares to the State.

  48. On even date, the UBS AG forwarded a Commitment Letter that was
  signed by the
  GGPNG which was witnessed by Mr Okuk.

  49. On 4 March, Ashurst Lawyers forwarded draft documents for its
  client UBS AG to the
  State that outlined the financial package that UBS AG was
  offering the State.

  Chronology of Events Page xvii

  50. On even date, Mr David Heathcote of KPMG presented KPMG‘s
  analysis on the monetised
  collars relating to financing the purchase of Oil Search Ltd
  shares.

  51. On 5 March, Mr Fowler requested the Prime Minister to intervene
  in resolving the IPIC
  Exchangeable Bond, PNG LNG direction-to-pay and Sovereign Bond
  take-out of the
  Bridge Loan.

  52. On even date, Mr Vele requested Mr Daniel Rolpagarea, the State
  Solicitor to give legal
  clearance on the documents relating to the transaction for the
  State to acquire 149,390,244
  shares in Oil Search Ltd.

• Page 22 of 475

• 53. On even date, Mr Rolpagarea requested Mr Vele to provide to him
  details of confirmation
  and clear instructions on the engagement of Pacific Legal Group
  Lawyers and the breach
  of Section 209 of (Parliament Responsibility) of the Constitution
  by the NEC.

  54. On even date, NPCP Board Chairman submitted a proposal to the
  IPBC Board advising of
  the State‘s acquisition of 149,390,244 shares in Oil Search Ltd
  and that UBS AG required
  NPCP to enter into a payment direction between NPCP, PNGLNG Global
  Company LDC
  (GloCo).

  55. On even date, Mr Rolpagarea advised Mr Vele that the NEC
  Submission needed approvals
  from the relevant Agencies‘ Boards and the Parliament for the
  Bridge and Collar loans
  totalling AU$1.239 Billion.

  56. On 6 March, the UBS AG issued a Bridge Takeout Letter to Mr Vele
  that outlined the
  terms of the fees payable to UBS AG as Facility Agent under the
  Bridge Facility Agreement
  that was signed by the GGPNG and witnessed by Mr Okuk.

  57. On even date the UBS AG as the Facility Agent for the loan wrote
  to Mr Vele and
  requested for the State to pay the Facility Agent fees as per the
  Bridge Facility Agreement
  that was signed by the GGPNG and witnessed by Mr Okuk.

  58. On even date, the UBS AG as the Security Trustee for the loan
  wrote to Mr Vele and
  requested for the State to pay the Security Trustee fees as per
  the Bridge Facility
  Agreement that was signed by the GGPNG and witnessed by Mr Okuk.

  59. On even date, the Prime Minister submitted an NEC Policy paper
  No: 67/2014 to the NEC.

  60. On even date, the NEC in its Decision No: 79/2014 appointed
  Petromin as the State‘s
  subscriber and nominee for the transaction, confirmed the
  authority of the Treasurer,
  execute the Payment Direction Deed by NPCP, approved the payment
  direction by IPBC,
  Central Supply Tender Board (CSTB) to issue a Certificate of
  Inexpediency (COI) and
  Authority to Pre-Commit (APC) to be executed by the Department of
  Finance (DoF).

  61. On even date, Mr Vele advised Minister Polye that the loan would

• Page 23 of 475

• not affect the State‘s
  debt program and that Petromin was the subscriber and nominee.

  62. On even date, Mr Vele requested Mr Philip Eludeme, the Chairman
  for CSTB to approve
  the request for COI at the earliest to cover the advisory costs.

  Chronology of Events Page xviii

  63. On even date, the Prime Minister advised the GGPNG, that the NEC
  approved the
  borrowing of a loan for the purpose of purchasing shares in Oil
  Search Ltd and for the
  purpose of meeting the expenses of the borrowing itself.

  64. On even date, Mr Okuk representing Mr Vele delivered 28
  documents pertaining to the
  UBS AG loan to Mr Rolpagarea for his legal clearance.

  65. On 7 March, Mr Vele explained to Mr Eludeme that the COI was
  needed to access funds
  to pay for fees pertaining to the State‘s acquisition of the
  shares in Oil Search Ltd.
  66. On even date, Mr Vele requested Mr Rolpagarea to issue legal
  clearance on the submission
  regarding the State‘s borrowing of loan arrangements.

  67. On even date, the Prime Minister informed IPBC of the
  government‘s decision to enter into
  the agreement.

  68. On even date, Ambassador (Amb) Isaac Lupari, the Chief of Staff
  to the Prime Minister,
  advised Mr Kumarasiri that the NEC approved the State‘s intent to
  borrow from UBS AG
  to fund its acquisition of shares in Oil Search Ltd.

  69. On even date, Minister Micah directed the Board of IPBC to
  approve the Payment
  Direction Deed and to sign the Payment Direction Deed on or before
  09 March 2014.

  70. On 8 March, Mr Vele emailed to and requested Dr Thomas Webster,
  the then Chairman
  for IPBC Board, to progress the documents to the IPBC Board for
  its consideration and
  approval. The electronic mail included electronic copies of
  documents that Mr Vele had
  prepared for the IPBC Board and NPCP Board to endorse and approve.
  The attachments
  are as follows:

• Page 24 of 475

• Memo with explanation of Transaction and the Payment Direction
  Draft Payment Direction Deed
  Draft IPBC Shareholder Resolution regarding Payment Direction
  Draft IPBC Director Resolution regarding Payment Direction
  Draft NPCP Board resolution regarding Payment Direction
  Draft Power of Attorney regarding Payment Direction.

  71. On even date, Mr Kumarasiri advised Dr Webster to issue
  instructions to the management
  of IPBC Management to prepare documents in anticipation to receive
  requests from the
  Board of NPCP with their resolutions.

  72. On 9 March, Mr Erastus Kamburi, the Chief Legal Officer for
  IPBC, requested the IPBC
  Directors to meet and discuss on the directives from the Minister
  Micah and Amb Isaac
  Lupari and the NEC Decision No: 79/2014.

  73. On even date, an Explanatory Note was prepared with the Board
  Circular Resolution
  outlining the purpose of the Special Board Meeting.

  74. On even date, the NPCP Special Board of Directors Meeting No:
  02/2014 resolved that the
  Company enter into any Transaction Document to give effect to the
  Payment Direction
  Deed and authorised Mr Sonk and Mr Wato with the Power of
  Attorney.

  Chronology of Events Page xix

  75. On even date, the NPCP Board empowered Mr Sonk and Mr Rogen
  Wato, the Company
  Secretary for NPCP with the Power of Attorney.

  76. On even date, Mr Sonk verified copies of the Shareholder
  resolutions of the NPCP dated
  09 March 2014, Minutes of a Meeting of the Board of Directors and
  Power of Attorney of
  the NPCP.

  77. On even date, Mr Wapu R Sonk, Managing Director for NPCP
  forwarded to Mr
  Kumarasiri an Extract of the Board Meeting Minutes.

  78. On even date, Mr Rolpagarea advised Mr Vele that the Treasurer
  was the authorised
  person to execute loan agreements on behalf of the State strictly
  in accordance with

• Page 25 of 475

• Section 209 (Parliament Responsibility) of the Constitution.

  79. On even date, Norton Rose Fulbright wrote to the GGPNG and the
  Minister for Treasury
  regarding financing of the acquisition of the shares and possible
  options to re-finance
  following completion.

  80. On even date, Norton Rose Fulbright wrote to the GGPNG outlining
  what documents
  needed to be signed in order for the State to borrow AU$1.239
  billion to purchase Oil
  Search Ltd shares.

  81. On even date, the GGPNG signed the document enabling the State
  to borrow AU$335
  million from UBS AG for the purpose of the purchase of shares in
  Oil Search Ltd and for
  the purpose of meeting the expenses of the Borrowing and for the
  services of the State.

  82. On even date, Mr Kumarasiri wrote to Hon James Marape MP,
  Minister for Finance and
  requested him to approve the Memorandum of Approval to enable NPCP
  to enter into the
  Transaction Documents.

  83. On even date, Minister Polye advised Mr Vele that he will not
  sign the documents that
  enabled the State to borrow the said UBS AG loan.

  84. On even date, Minister Marape approved the Memorandum of
  Approval that enabled
  NPCP to enter into the Transaction Documents.

  85. On 10 March, IPBC Board resolved that NPCP Directors enter into
  the Transaction
  Documents and recommend to the Minister for Finance to approve a
  proposal by NPCP to
  enter into Agreement to execute all documents that gave effect to
  the Payment Direction
  Deed.

  86. On even date, the NPCP Board deliberated and resolved and
  authorised Board to enter into
  Agreement to execute the Transaction Documents.

  87. On even date, Mr Eludeme advised Mr Vele that the CSTB resolved
  and approved the
  issuance of the COI for the awarding of contracts to both local
  and international
  Consulting Firms.

  88. On even date, Mr Vele confirmed with Mr Rolpagarea that the

• Page 26 of 475

• GGPNG and Minister for
  Treasury were to execute the transaction documents to purchase Oil
  Search Ltd shares on
  behalf of the State.

  Chronology of Events Page xx

  89. On even date, Mr Kumarasiri certified the Circular Resolution of
  the Board of Directors of
  IPBC that authorised the execution of the Payment Direction Deed
  by NPCP.

  90. On even date Mr Kumarasiri wrote a Memorandum of Recommendation
  recommending
  Minister Marape to approve the NPCP to enter into the Transaction
  Documents.

  91. On even date, the Prime Minister decommissioned Hon Polye as the
  Minister for Treasury.

  92. On even date, Hon Polye accepted his decommissioning as Minister
  for Treasury by the
  Prime Minister.

  93. On even date, the National Gazette No: G83 and G89 of 10 March
  2014 confirmed the
  decommissioning and replacement of Hon Polye as the Minister for
  Treasury by the Prime
  Minister.

  94. On even date, the Determination of titles and responsibilities
  of the Prime Minister Hon
  Peter O‘Neill, MP also changed to allow him to act as the
  Minister for Treasury that
  enabled him to sign the loan contract agreements on the same
  date.

  95. On even date, Mr Vele requested Dr Ken Ngangan, Acting Secretary
  for DoF to approve
  the payment to UBS AG in relation to the acquisition of the
  shares.

  96. On even date, Mr Rolpagarea advised the GGPNG that all
  documentations relating to the
  borrowing were in order and that Mr Vele was satisfied with the
  Terms of the Transaction
  Documents.

  97. On even date, the State and Oil Search Ltd signed and exerted
  the subscription
  Agreement.

  98. On even date, Mr Vele advised Mr Eludeme that the local and

• Page 27 of 475

• international financial and
  legal Advisors should be paid for services rendered.

  99. On even date, the DoT deposited K1,250,000.00 into Pacific
  Capital Ltd Managed Account
  with ANZ bank (PNG) Ltd.

  100. On even date, Hon Don Polye, then Minister for Treasury was
  interviewed at the
  Ombudsman Commission Office at Deloitte Tower, Port Moresby
  during which he stated
  that it was during his term as Treasurer that the 2014 budget was
  compiled and tabled in
  Parliament

  101. On 11 March, Mr Kamburi advised Mr Kumarasiri that the
  Certificate did not include the
  Shareholder Resolution which was signed and hence he sent an
  amended and verified
  Certificate for Mr Kumarasiri‘s signature.

  102. On even date, Minister Marape gave his approval for the NPCP to
  enter into Payment
  Direction Deed.

  103. On even date, Dr Ngangan and Mr Vele signed and approved the
  APC form to release
  AU$14,555,759.00 to be paid to the Consultants relating to the
  purchasing of Oil Search
  Ltd shares.

  Chronology of Events Page xxi

  104. On 12 March, Mr Babaga R. Naime, Acting Board Secretary for
  CSTB, advised Mr
  Rolpagarea that the CSTB awarded the Contract to both local and
  International
  Consulting Firms.

  105. On even date, Mr Eludeme certified that the inviting of tenders
  for the provision of
  financial, legal and technical advisory services was impractical
  or inexpedient.

  106. On even date, Dr Ngangan approved the application for the
  Department to complete and
  issue the APC for the above Procurement.

  107. On even date, the State, NPCP and UBS AG agreed to the terms
  and conditions upon
  signing the Payment Direction Deed that directed PNG Liquefied
  Gas Global Company

• Page 28 of 475

• (GloCo) to pay immediately available funds due to NPCP to UBS AG
  as per the NEC
  Decision No: 79/2014, even though at that material time the
  Kroton Act was yet to be
  certified by the Speaker of Parliament.

  108. On even date, UBS AG confirmed with Mr Vele the terms and
  conditions of the financing
  transaction that were entered into between the State and UBS AG
  in respect of Oil Search
  Ltd shares.

  109. On even date, the Prime Minster, Mr Vele, UBS AG (the
  Arranger), UBS AG (the Facility
  Agent) and UBS Nominees Pty Ltd signed the Bridge Facility
  Agreement.

  110. On even date, the GGPNG witnessed by Mr Okuk signed the
  Specific Security Deed
  (CHESS Securities – Collar) with UBS AG that provided security to
  the loan acquisition.

  111. On even date, the GGPNG, witnessed by Mr Okuk signed the
  Security Trust Deed with
  UBS Nominees Pty Ltd that provided security to the loan
  acquisition.

  112. On even date, the GGPNG, witnessed by Mr Okuk signed the
  Participant Sponsorship
  Agreement with UBS Nominees Pty Ltd.

  113. On even date, the Prime Minster, Mr Vele, UBS AG (the
  Arranger), UBS AG (the Facility
  Agent) and UBS Nominees Pty Ltd signed the Confirmation Side
  Letter.

  114. On even date, the GGPNG witnessed by Mr Okuk signed the Nominee
  Deed with UBS
  AG, UBS Nominees Pty Ltd and UBS Securities Australia for the
  Nominee (UBS Nominees
  Pty Ltd).

  115. On even date, the Substantial shareholders notice prepared and
  lodged with Port Moresby
  Stock Exchange (POMSox) and ASX lodged on 17 March 2014.

  116. On even date, the State (Subscriber) represented by the GGPNG
  witnessed by Mr Okuk
  signed the Subscription Agreement with Oil Search Limited
  (Issuer).

  117. On even date, Mr Stephen Gardiner, the Chief Financial Officer
  for Oil Search Ltd, advised
  that Goldman Sachs Financial Markets Pty Ltd with a Bank Account

• Page 29 of 475

• number 011-112034-
  041 was the recipient of the Subscription.

  118. On even date, Oil Search Ltd announced completion of share
  placement and file appendix
  3B, Cleansing Notice and Completion Letter.

  Chronology of Events Page xxii

  119. On 14 March, the Substantial shareholder notice prepared and
  lodged with POMSoX and
  ASX (lodged on 17 March 2014).

  120. On even date, the Commission issued directives under Section
  27(4) of the Constitution
  determined that it was necessary to issue a direction under
  Section 27(4) of the Constitution to
  freeze all further progress on the PGK3 Billion loan and
  requested for collective cooperation
  from the Prime Minister; and the members of the NEC; the Chief
  Secretary; the Minister
  for Treasury and the Minister for Finance; the Secretary, DoF;
  and the Secretary, DoT; the
  Attorney-General; and the Secretary, DJAG; the Governor of BPNG;
  Petromin; and IPBC;
  and Port Moresby Stock Exchange Limited; and Oil Search (PNG)
  Limited; and UBS
  Nominees Pty Ltd.

  121. On 15 March, the Commission wrote to Mr Vele acknowledging
  receipt of his letter dated 14
  May 2014 and advised that he will be advised on the Commission‘s
  independence and
  proceedings under Section 217(5) and (6) of the Constitution.

  122. On 20 March, Mr Rolpagarea advised Mr Naime on his legal
  opinion on the request for the
  issuance of Legal Clearance – CSTB COI 02/04 stating that the CoI
  shall only be issued
  during Natural Disaster; or Defence Emergency; or Health
  Emergency; or Civil Unrest and
  that the CoI cannot be applied retrospectively.

  123. On 26 March, during his interview with the Ombudsman
  Commission, Mr Rolpagarea
  stated that he was not given enough time to thoroughly go through
  the documents and
  that he was not present at the CSTB meeting that approved the
  issuance of the COI.

  124. On 28 March, Mr Eludeme advised Mr Vele that the State
  Solicitor declined the issuance
  of legal clearance.

• Page 30 of 475

• 125. On even date, Mr Kumarasiri advised the Commission that the
  IPBC gave its approval for
  NPCP to go ahead with the transaction and referred the matter to
  the Minister for Finance
  to execute.

  126. On 31 March, Hon Kua, then Attorney-General was interviewed at
  the Commission Office
  at Deloitte Tower, Port Moresby during which he stated that he
  was never present at the
  NEC meeting that made the decision to approve the borrowing, nor
  was he consulted on
  the matter.

  127. On 3 April, Mr Bakani was interviewed at the Commission Office
  at Deloitte Tower, Port
  Moresby during which he stated that the BPNG was not involved in
  the second part of the
  UBS AG loan in which the loan was obtained to purchase shares in
  Oil Search Ltd.

  128. On 10 April, Mr Eludeme advised Mr Vele that the Board
  effectively nullified the issuance
  of the COI for the engagement of private Consultants.

  129. On 11 April, Mr Sonk directed Mr Peter Graham, MD for GloCo to
  divert all distributions
  of payments payable to NPCP to be paid to UBS AG (Singapore
  Branch).

  130. On even date, Mr Sonk and Mr Wato of NPCP directed Mr Graham of
  Esso Highlands
  who was also the MD for GloCo to immediately pay all available
  funds to UBS AG.

  Chronology of Events Page xxiii

  131. On 22 April, Ashurst Lawyers advised Norton Rose Fulbright of
  Australia that non-
  compliance with payment obligations would constitute an Event of
  Default and UBS AG
  can commence enforcement processes without further reference to
  the State.

  132. On 28 April, Hon Polye reiterated to Hon Theodore Zurenuoc, the
  Speaker of Parliament,
  his position that the government‘s borrowing UBS AG loan was bad.

  133. On 30 April, Hon Polye stated to the Commission that the loan
  was an unplanned activity

• Page 31 of 475

• and it was not a prudent thing to do and it breached the 2014
  Budget Appropriation Bill
  and the Fiscal Responsibilities Act.

  134. On even date, Ms Tessa Hoser of Norton Rose Fulbright of
  Australia advised Mr Vele that
  in the event of a default UBS AG would charge default interest on
  any unpaid interest.

  135. On 2 May, Hon Don Polye instituted proceedings in OS 142 of
  2014 against the Hon Peter
  O‘Neill, Prime Minister, Hon Patrick Pruaitch and the State.

  136. On even date, during his interview with the Ombudsman
  Commission, Mr Vele stated
  that the State engaged UBS AG together with the other financial
  and legal firms as they
  were already providing the services.

  137. On 8 May, the National Court (Salika, DCJ) OS 142 of 2014 ruled
  that Hon Polye‘s
  application be dismissed on the grounds of abuse of process of the
  National Court rules.

  138. On 9 May, Mr Anthony Yauieb, Deputy Secretary for DoT, stated
  to the Commission that
  the NEC Policy Submission on the UBS AG Loan to purchase Oil
  Search Ltd shares was
  prepared outside by Mr Vele.

  139. On 14 May, Mr Vele advised the Commission that the State is
  required to make periodic
  interest payments to UBS AG.

  140. On even date, Finance Forms number 3 & 4 (FF3& FF4) indicated
  AU$2,261,938.36
  which is about K5,543,966.57 was paid to UBS AG.

  141. On 15 May, Mr Luke Goldsworthy and Ms Celle Raguine,
  Representatives of UBS AG
  pointed out to Mr Vele that failure to pay interest breached
  clause 5.1(b) of the Agreement
  which states that all payments to be made under the Commitment
  Documents shall be
  paid in the currency of the invoice and immediately available,
  freely transferable cleared
  funds and shall be paid without set-off or counterclaim or any
  deduction or withholding
  for or on account of tax (a ―Tax Deduction‖) unless a Tax
  Deduction is required by law. If
  a Tax Deduction is required by law to be made, the amount of the
  payment due shall be
  increased to an amount which (after making any Tax Deduction)
  leaves an amount equal

• Page 32 of 475

• to the payment which would have been due if no Tax Deduction has
  been required;‖

  142. On even date, Mr Vele requested clearance from Commission on
  the interest payment to
  UBS AG.

  143. On 16 May, Mr Vele instructed Mr Bakani to immediately process
  and remit funds to the
  UBS AG.

  144. On even date, Mr Vele advised Mr Bakani that interest payment
  must be paid to UBS AG.

  Chronology of Events Page xxiv

  145. On even date, Ms Betty Palaso, Commissioner-General for
  Internal Revenue Commission
  (IRC) issued a Tax Clearance Certificate to the DoT to transfer or
  remit moneys for the
  purpose of payment of interest on UBS AG Loan.

  146. On even date, a copy of the Notification (transmission) of
  Original indicated that the
  BPNG transferred AU$2,261,938.36 to the Reserved Bank of
  Australia.

  147. On 19 May, Hon Don Polye filed an application under to Section
  18(1) of the Constitution
  that in SCCOS No. 1 of 2014 to be part of the Supreme Court
  proceedings relating to the
  borrowing of the UBS AG loan.

  148. On 23 May, the Commission responded to Mr Vele‘s letter dated
  15 May 2014 and advised
  that the Commission‘s investigation into the UBS AG Loan was
  continuing and that
  Section 27(4) of the Constitution was still in force and that it
  also applied to the interest
  payments to UBS AG.

  149. On 27 May, Dr Clement Waine, Acting Secretary, Department of
  Public Enterprise (DoPE)
  explained that neither he nor his Department were involved in the
  matter been
  investigated.

  150. On 3 June, Mr Kramer stated that NPCP was involved in the
  execution of the Payment
  Direction Deed as per the IPBC Board request and direction.

  151. On 5 June, Mr Vele wrote to the Commission and stated that the
  Commission does not

• Page 33 of 475

• have the power to issue directives to stop such interest payments.
  To fail to make the
  interest payments would simply not be in the best interest of
  Papua New Guinea or its
  people.

  152. On even date, Mr Eludeme confirmed that CSTB approved a request
  for application for
  COI by Mr Vele.

  153. On 6 June, Mr Vele as second Plaintiff and the Hon Peter
  O‘Neill, Prime Minister as First
  Plaintiff filed proceedings in OS (JR) 383 of 2014 the National
  Court against the
  Commission and the State seeking Courts powers under Section 18(2)
  of the Constitution to
  refer questions to the Supreme Court on the Commission‘s power to
  issue Directions
  under Section 27(4) of the Constitution and Section 23 and 27(5)
  of OLDRL.

  154. On 12 June, Dr Lawrence Kalinoe, Secretary for DJAG, advised
  the Commission that
  neither he nor his Department was involved in the UBS AG Loan
  transaction.

  155. On 13 June, Hon Kua categorically denied the allegations that
  he was personally involved
  in giving clearance for the UBS AG loan and that he was not
  present in the NEC Special
  Meeting No 37/2013 that approved the UBS AG loan.

  156. On 4 July, Mr Vele advised the Commission that the UBS AG loan
  transaction was
  constitutional and had been lawfully undertaken by the State and
  its related parties in
  every aspect including the decision made over a cup of coffee at
  the Grand Papua Hotel by
  the Prime Minister, Mr Botten, Mr Aopi and Mr Vele.

  Chronology of Events Page xxv

  157. On 7 July, Mr Ilagi Veali, MPS, Secretary to the NEC forwarded
  copies of the NEC Special
  Meeting No: 08/2014 together with the list of Cabinet Ministers
  who were present or
  absent at the Special Meeting.

  158. On 27 October, Pacific Legal Group Lawyers representing the Hon
  Peter O‘Neill, Prime
  Minister and Mr Vele, mared the proceedings in OS (JR) No. 383 of

• Page 34 of 475

• 2014 for the Court to
  refer certain questions to the Supreme Court for interpretatin.

  159. On 3 December, the National Court granted the application by
  the Hon Peter O‘Neill,
  Prime Minister and Mr Vele and referred various questions to the
  Supreme Court for
  interpretation pursuant to Section 18(2) of the Constitution. The
  Court also ordered that the
  proceedings in OS (JR) No. 383 of 2014 be stayed.

  160. On 8 December, the Ombudsman Commission issued the Provisional
  Report to those
  implicated.

  161. On 11 December, copies of Provisional Reports were delivered to
  Hon James Marape,
  Minister for Finance, Dr. Ken Ngangan, Acting Secretary for DoF,
  Mr Dairi Vele, Acting
  Secretary DoT and Mr Loi Bakani, Governor for Central Bank.

  162. On 12 December, copies of the Provisional Report were delivered
  to Hon Peter O‘Neill,
  Prime Minister, Hon Ben Micah, Minister for State Enterprise and
  State Investments, Mr
  Philip Eludeme, Chairman of CSTB and Amb Isaac Lupari, Prime
  Minister‘s Chief of Staff.

  163. On 16 December, a copy of the Provisional Report was delivered
  to Mr Carl Okuk, legal
  consultant.

  164. On 22 December, Young & Williams Lawyers representing the Prime
  Minister Hon Peter
  O‘Neill, MP responded to the Provisional Report, refuting any
  wrong doing and that the
  Commission‘s investigations were fatally flawed. The Prime
  Minister‘s Lawyers did not
  request for an extension of time as required.

  2015
  165. On 8 January, the National Court ruled pertaining to OS No. 810
  of 2014 that the
  Constitutional question be referred to the Supreme Court and
  interim injunctions and a
  stay of proceedings on the leadership tribunal.

  166. On 22 January, Dr Ken Ngangan responded to the Provisional
  Report.

  167. On 23 January, Mr Vele, Acting Secretary, DoT responded to the
  Provisional Report.

  168. On even date, Hon Peter O‘Neill, Prime Minister made an

• Page 35 of 475

• application to the National
  Court seeking referral of several questions for interpretation by
  the Supreme Court under
  Section 18(2) of the Constitution.

  169. On 16 February, Mr Frank Kramer, Chairman, KPHL responded to
  the Provisional Report.

  Chronology of Events Page xxvi

  170. On 18 February, Mr Vele submitted his affidavit in the matter
  SCR No.7 of 2014 relating to
  the Special Reference by Hon Ano Pala, Minister for Justice &
  Attorney-General, MP
  before the Supreme Court.

  171. On 24 February, Mr Loi Bakani, Governor for Central Bank
  responded to the Provisional
  Report.

  172. On 25 September, Young & Williams Lawyers responded on behalf
  of Prime Minister Hon
  Peter O‘Neill, MP filed a schedule of questions and proposed
  answers to questions in
  consolidated references pursuant to Order made 11 August by the
  Bernard Sakora, J.

  173. On even date, Young & Williams Lawyers representing the Prime
  Minister Hon Peter
  O‘Neill, MP filed a Special Reference 7 of 2014 and SC References
  No. 1 and 2 of 2015
  referring 13 Constitutional questions to the Supreme Court to
  answer.

  2016
  174. On 19 July, Justice Catherine Davani of the National Court made
  reference to the Supreme
  Court under SCR No. 5 of 2016, eleven (11) questions pertaining
  to whether the OC had
  the jurisdiction to investigate the PM and whether or not the
  issuing of the OLOC
  Provisional Report ultra vires the power of the Ombudsman
  Commission.

  175. On 28 July, Justice Catherine Davani submitted Facts pertaining
  to the Supreme Court
  Reference SCR No. 5 of 2016.

  176. On 19 August, the Ombudsman Commission submitted an
  Intervention to be part of the

• Page 36 of 475

• Supreme Court Reference SRC No. 5 of 2016.

  177. On even date, the Prime Minister Hon Peter O‘Neill, MP
  submitted an Intervention to be
  part of the Supreme Court Reference SRC No. 5 of 2016.

  178. On 20 September, Hon Ano Pala, Attorney-General submitted an
  Intervention to be part
  of the Supreme Court Reference SRC No. 5 of 2016.

  179. On 26 September, Hon Ano Pala, Attorney-General amended his
  statement of response
  and submitted it as part of his Intervention to be part of the
  Supreme Court Reference
  SRC No. 5 of 2016.

  180. On even date, the Prime Minister Hon Peter O‘Neill, MP through
  his lawyers filed an
  injunction on the matter OS No. 15 of 2015 in the National Court.

  2017
  181. On 6 October, the Supreme Court dismissed the Supreme Court
  Reference SCR No. 5 of
  2016 made by Justice Catherine Davani and returned the matter to
  the National Court.

  182. On 15 November, the Supreme Court conclusively determined that
  the Office of the Prime
  Minister does fall within the OLOC functions of the Commission.
  There was therefore no
  utility in the current proceedings. Therefore, the court
  dismissed the entire proceedings

  Chronology of Events Page xxvii

  with costs and discharged any injunction that may have been
  issued against the
  Commission on this matter.

  RESPONSE FROM THE ACTING SECRETARY FOR TREASURY, MR DAIRI VELE

  On 23 January 2015, Mr Dairi Vele responded to the Provisional
  Report, in particular to
  the Chronology of Events section and stated the following:

  Comments

  As an initial comment on the Chronology as set out by the
  Ombudsman Commission, I say that it has
  been drafted in a way that is biased towards a finding of
  improper conduct. Many essential steps in the
  process have been completely omitted, beginning with omitting all

• Page 37 of 475

• Cabinet decisions in 2013
  concerning, the sourcing of advice on the IPIC Bond, including
  the creation of a Committee of which I
  was Chair to advise both IPBC and NEC on the options available
  for refinancing of the IPIC Bond and
  the retention of Oil Search shares – to omitting that the
  Ombudsman Commission refused to allow the
  State to pay interest to UBS AG pursuant to the binding
  obligations on the loan exposing the State to
  serious adverse financial consequences, and also fails to include
  that such decision of the Ombudsman
  Commission was stayed by the National Court.

  It fails to set out that at all times I sought legal advice on
  every step of the process.
  It also does not include that the initial proceedings commenced
  by Don Polye to challenge the validity
  of the loan that were dismissed, but more importantly does not
  include the commencement by Mr
  Polye of SCCOS 4 of 2014 on 15 May 2015 that seeks constitutional
  opinions of the Supreme Court on
  the application of Section 209 in these circumstances and which
  seeks to have the loan declared void
  and unenforceable against the State. These Supreme Court
  proceeding make the subject matter of this
  report subjudice the Ombudsman Commission ought to cease work on
  this investigation pending the
  outcome of SCCOS 4/14 otherwise, it is acting in content of the
  Supreme Court.
  In order to respond to this Chronology, I have reproduced the
  Chronology but have in addition
  inserted the factual events that have been omitted – these are
  highlighted and in different font for your
  ease of reference.

  1995

  1. 5 December, the Investment Promotion Authority (IPA) registered
  Pacific Capital Ltd whose
  Shareholders also include Mr Frank Michael Kramer.

  2009

  2. 5 March, the GoPNG through IPBC mortgaged its shares in Oil
  Search Ltd with International
  Petroleum Investment Company (IPIC), Abu Dhabi and acquired the
  needed funding and it financed
  the State‘s share of the capital expenditure for the PNG LNG
  project. In addition to GoPNG through
  IPBC mortgaging the Oil Search Shares, all SOEs were also
  mortgaged to secure the IPIC loan.

  In addition to GoPNG through IPBC mortgaging the Oil Search
  Shares, all SOEs were also mortgaged

• Page 38 of 475

• to secure the IPIC loan.
  3. 1 July, the IPA registered Pertusio Capital Partners Ltd whose
  Shareholders also include Mr Dairi Vele.

  2012

  In March, Mr. Dairi Vele ceases to be a Director and Shareholder
  of Pertusio Capital Partners Ltd.

  5 December Norton Roase Fulbright was retained by IPBC to provide
  legal advice on the IPIC Bond
  Project. The work expressly included
  Reviewing the terms and conditions of the IPIC Bond,

  Chronology of Events Page xxviii

  Reviewing and advising options available to IPBC for refinancing
  of the loan and or restructure of the
  terms of the existing loan.

  Specifically it was recognised in the scope of work that ―a
  significant aspect of this scope of work
  would involve meeting the objectives regarding the ownership of
  the Oil Search shares.

  2013
  (Omitted) 5 April 2013,
  Cabinet Decision No. 117/2013.
  On 5th April 2013, Council:
  Noted the strategic investment positive and negative implications
  of not retaining the Oil Search
  Shares currently pledged in the IPIC Bond Transactions;
  Approved for the Minister for Public Enterprise and the State
  Investments to direct the Board and
  Management of IPBC and its successive organisations to explore
  the following;
  To raise funds in the capital market (estimated to be AUD1.8
  billion) to repurchase Oil Search shares
  through the Redemption of IPIC Bonds and negotiate the best
  interest rates with favourable
  conditions to PNG to the term of the loan/bond not to exceed 10
  years but preferably at 7 years;
  IPBC should minimize cost associated with raising funds through
  direct negotiations with potential
  financier and use of IPBC Management;
  Provide appropriate security options to meet financiers security
  requirements;
  To raise funds needed for Train 3 of the PNG LNG Project
  expansion estimated to be AUD 1.2 billion;
  and

• Page 39 of 475

• Consider USD (United State Dollar) as a form of currency during
  the fund raising preferred by the
  financiers.
  Directed the Minister for Public Enterprise and State Investments
  and the Acting Managing Director
  for IPBC to report back to the NEC of potential financiers and
  their team sheets immediately for NEC
  approval.
  2013
  (Omitted 5th April 2013
  Cabinet Decision No. 119/2013
  On 5th April 2013, Council:
  Appointed Mr. Wasantha Kumarasiri, OBE as the Managing Director
  of IPBC and its successive
  organisation for period of four (4) years effective from the date
  of this Decision in accordance with
  Section 23 of the IPBC Act (as amended).
  Note that until the establishment of ―Kumul Petroleum Holding
  Limited‖ in line with the NEC
  decision and the appointment of its Managing Director, during the
  interim period, the Managing
  Director of IPBC shall manage all affairs necessary on Abu Dhabi
  based IPIC Transaction and any
  refinance requirements and negotiations and also oversee NPCP as
  part of the General Business Trust.
  4. 25 June, the Prime Minister Hon Peter O‘Neill, MP advised Hon
  Kerenga Kua, MP, the then Attorney-
  General that a brief –out legal services should be publicly
  tendered, which Mr. Kua failed to do for
  ANY legal brief out whatsoever during his time as Attorney-
  General.

  (Omitted) 9 July 2013
  Cabinet Decision No. 241/2013

  Chronology of Events Page xxix

  On 09th July 2013, Council:

  noted the content of Policy Submission No. 176/2013;

  noted the refinancing options presented in the submission to redeem
  the International Petroleum
  Investment Company (IPIC) Exchangeable Bonds;
  Appointed the following as members of the IPIC Exchangeable Bond
  Review Committee:

  Director, Gas Project Coordination Office – Chairman; (Mr Vele)
  Secretary, Public Enterprise – Deputy Chairman;
  Secretary, Treasury or his nominee – Member;
  State Solicitor or his nominee – Member;
  Managing Director, IPBC – Member.

• Page 40 of 475

• Include the following in Terms of the Reference for the Review
  Committee to look at:

  ―Bidding internationally for the engagement of international experts
  to provide up market and up to date
  advice to the Government on petroleum and gas issues‖.

  approved the Terms of Reference for Committee;

  approved to repeal clause 3 of the NEC Decision No. 119/2013 in its
  entirety;

  Directed the Minister for Public Enterprise and State Investments to
  take carriage of all matters pertaining
  to the redemption of IPIC Exchangeable Bond and the retention of Oil
  Search Shares and that this NEC
  Decision supersedes all previous NEC Decisions, namely NEC Decision
  117/2013 or such other decisions
  pertaining to the IPIC Bond issue; and

  Directed that the IPIC Exchangeable Bond Review Committee reports
  its findings back to the Minister for
  Public Enterprise and State Investments before 31st August 2013 with
  a clear path towards completing IPIC
  Exchangeable Bond transaction.

  The Terms of Reference for the IPIC Exchangeable Bond Review
  Committee were as follows:

  ―Under the Direction of the Minister of Public Enterprise and State
  Investments, Hon Ben Micah, MP, and
  the Chairman of Dr. Thomas Webster, Chairman IPBC, the Committee is
  directed to:

  Meet as required by the Chairman to consider and review proposals
  for the State to refinance the IPIC
  Exchangeable Bond.

  The chairman is to report the final recommendation of the Committee
  to the Minister by 31 August 2013.

  All information you require with regard to the original IPIC
  funding, other related matters and the current
  position and negotiations with IPIC are to provide to the Chairman
  of the Committee immediately on
  request of any relevant party.

  Proposals must meet the following requirements:
  4.1 The amount to be raised is estimated to be AU$1.681B plus
  interest of approximately another
  AU$84M.

  4.2 If the Oil Search shares are to be used as collateral for new

• Page 41 of 475

• funding, those shares are to be secured
  as a stand-alone asset and are not be conditional on any
  other asset.

  4.3 As stand-alone security, Oil Search equity must be the only
  security available for any proposal
  which includes the Oil Search equity on a basis which has no
  recourse to any other asset.

  4.4 For any cash flow security component in any proposal,
  security recourse is to be the cash flow
  above. No security other than the potential cash receipt is
  available. Where cash flow is monetised
  or securitised by a lender, the control or de facto ownership
  of the underlying asset is not available
  to the lender.

  4.5 The underlying control interest of Oil Search shares must be
  vested with IPBC and all dividends
  during the term of the refinance transaction must be paid to
  IPBC.

  4.6 Neither the whole of nor any part of NPCP‘s equity is
  available to support the refinancing. NPCP‘s
  equity is not available as security or for sale nor will any
  dilution of its current equity to any party

  Chronology of Events
  Page xxx

  to be accepted except the 4.20% mandatory acquisition by
  landowner company as provided under
  the benefit-sharing arrangements.
  4.7 First interest payment should not be earlier than December
  2015 to align and prepare with cash
  inflows from PNG LNG Project.

  4.8 No State guarantee should be a condition requirement.
  4.9 Transaction fees on success must be kept at minimal or zero
  if possible.

  4.10 Meet Regulatory Transaction Certification requirements
  through Certified Agent in the
  appropriate Financial Markets complying post Global
  Financial Crisis (GFC) Financial Transaction
  Regulatory Requirements.

  5. Timing of finalising this refinancing is critical. A
  successful proposal must demonstrate funding to
  be complete after the 31 August, which absolute certainty.

  As Chairman of the IPIC Exchangeable Bond Review Committee,

• Page 42 of 475

• under the direction of IPBC, Mr. Vele
  utilised the services of Norton Rose Fulbright in accordance
  with their retainer by IPBC for the purposes
  of the achievement of the Committee‘s Terms of Reference.

  5. 6 August, the National Executive Council appointed Mr. Dairi
  Vele, as the Acting Secretary for
  Department of Treasury (DoT).

  8 August, a recommendation by Gas Office and Chairman of the
  IPIC Exchangeable Bond Review
  Committee that Financial Advisers be appointed and position/
  discussion paper drafted by Mr. Vele.

  6. 12 August, the DoT officials Mr. Vele, in his capacity as IPIC
  Exchangeable Bond Review Committee
  Member and Acting Secretary for Treasury and met with Union Bank
  of Switzerland,
  Aktiengesellschaft, Australia Branch (UBS AG) officials at
  Sydney, Australia.

  15. 13 August, the DoT officials Mr. Vele, in his capacity as IPIC
  Exchangeable Bond Review Committee
  Member and Acting Secretary for Treasury met with Morgan Stanley
  officials in Sydney, Australia.

  16. 14 August, the DoT officials Mr. Vele, in his capacity as IPIC
  Exchangeable Bond Review Committee
  Member and Acting Secretary for Treasury met with JP Morgan
  officials at Sydney, Australia.

  17. 15 August, the DoT officials Mr. Vele, in his capacity as IPIC
  Exchangeable Bond Review Committee
  Member and Acting Secretary for Treasury held a second meeting
  with UBS AG officials at Sydney,
  Australia.

  7. 16 August, the DoT officials Mr. Vele, in his capacity as IPIC
  Exchangeable Bond Review Committee
  Member and Acting Secretary for Treasury met with Credit Suisse
  officials at Sydney, Australia.

  8. 19 December 2013, the National Executive Council (NEC) during a
  Special Meeting No: 37/2013 in its
  Decision No: 479/2013 noted the submission that UBS AG was the
  preferred financial adviser and
  arranger by IPBC and the IPIC Committee but approved and
  directed that the BPNG provide final
  evaluations on the proposals to be obtained from Citi Bank and
  UBS AG to re-finance the International
  Petroleum Investment Company (IPIC) Exchangeable Bond and to
  retain the interest of the State in
  Oil Search.

• Page 43 of 475

• 12. 20 December, Hon Ben Micah, MP, Minister for State Enterprises
  and State Investment (SE&SI) wrote
  to Mr Loi Bakani, the Governor of Bank of Papua New Guinea
  (BPNG) and requested the BPNG to
  evaluate the potential financiers‘ proposals to re-finance the
  IPIC Exchangeable Bond.

  13. 22 December, Mr Bakani advised Minister Micah that the four
  financiers should have been provided all
  the information and requested to bid for the Exchangeable Bond
  re-financing facility.

  14. 27 December, Minister Micah requested Mr Bakani for
  clarification on the BPNG‘s advice.

  2014

  Chronology of Events Page xxxi

  15. 7 January, Mr Bakani advised Minister Micah that the State re-
  negotiate the funding structure of the
  proposals with the two Financiers the UBS AG and Citi Bank.

  16. 9 January, Mr Bakani forwarded the BPNG‘s recommendations to
  Minister Micah as requested.

  Mr Bakani requested the Prime Minister to allow the BPNG the
  mandate to assist the State in meeting
  the basic re-financing requirements in the negotiation process.

  17. 14 January, Mr Wasantha Kumarasiri for Independent Public
  Business Corporation (IPBC), requested
  Mr Bakani to correct his advice to Minister Micah as it was
  incorrect and misleading.

  18. 15 January, Minister Micah wrote to Mr Bakani and requested that
  the BPNG provide its final
  recommendations on the two Banks, UBS AG and Citi Bank.

  19. 16 January, Mr Bakani requested all parties including the BPNG,
  Minister Micah, IPBC, and the DoT to
  draft the Terms of Reference to be used during negotiations with
  potential Financiers.

  20. 17 January, Mr Bakani wrote to and advised Mr Kumarasiri that
  the BPNG‘s evaluations and
  recommendations were based on information provided in accordance
  with the NEC Decision No:
  479/2013 in its Special Meeting No: 37/2013.

• Page 44 of 475

• Mr Bakani requested Ms Natalie Yacoubian of PNP Paribas to
  resubmit PNP Paribas proposal
  incorporating the refined terms.

  Mr Bakani requested Mr Mitchell Turner of UBS AG to resubmit UBS
  AG proposal incorporating the
  refined terms.

  Mr Bakani requested Mr Philip Graham to resubmit Citi Bank‘s
  proposal incorporating the refined
  terms.

  Minister Micah advised Mr Bakani that he expected a
  recommendation by Wednesday 22 January
  2014.
  21. 23 January, Mr Bakani recommended to the NEC to request the Abu
  Dhabi Government for an
  extension of six months, to allow time to improve on the
  proposal by BNP Paribas, the superior
  proposal, as well as the UBS AG, Citi Bank and ANZ/Barclays.

  22. 27 January, Hon Don Polye, Minister for Treasury wrote to Mr
  Bakani and requested for a full brief on
  the implementation of the NEC‘s Decision No. 479/2013 regarding
  the re-financing of IPIC
  Exchangeable Bond.

  23. Even though the BPNG‘s assessment on the four proposals was
  inconclusive, Mr Bakani, however,
  recommended the UBS AG over BNP Paribas to Minister Micah to
  refinance the IPIC Exchangeable
  Bond.

  24. 30 January, Mr Bakani wrote to the Director of Investment
  banking UBS AG regarding the re-financing
  of the IPIC Loan and advised that the State accepted its
  proposal to re-finance the IPIC Loan and
  advised that the State accepted its proposal to re-finance the
  IPIC Exchangeable Bond by a combined
  structure of a Rollover Collar and term Loan. Mr Bakani also
  requested the UBS AG to confirm in
  writing its commitment to fund the AUD$1.7 Billion IPIC
  Exchangeable Bond.

  30 January, Mr Vele engaged UBS AG to act as the sole Financial
  Advisor and Lead Arranger, in
  relation to the management of the investment of the State in Oil
  Search Ltd. This is completely
  incorrect. Mr Vele did not engage UBS AG on 30 January 2014 or
  any other time prior to 6 March 2014.
  UBS AG were only actually engaged by the State following Cabinet
  Decision no 79/2014. Following the
  advice from BPNG that the State had accepted UBS AG proposal, as

• Page 45 of 475

• essentially project manager of the
  IPIC Bond matter, Mr Vele commenced negotiations and dealing
  with UBS AG, but their retainer was
  contingent on the Cabinet Decision of 6 March 2014.
  Mr Bakani informed the Directors for Investment Banking, UBS AG
  that the State had accepted its
  proposal to re-finance IPIC Exchangeable Bond worth AU$1.7
  Billion.

  Chronology of Events Page xxxii

  Minister Micah noted Mr Bakani‘s recommendations but he advised
  that the six months extension
  recommended would incur costs and was not possible.
  25. 3 February, Minister Micah informed Mr Frank Kramer, Chairman
  for National Petroleum Company of
  PNG Ltd (NPCP) Board regarding the Exchangeable Bond and the
  appointment of UBS AG.

  Hon Minister Micah accepted the BPNG‘s recommendations and the
  NPCP‘s lead to re-finance IPIC
  Exchangeable Bond process on behalf of the Independent State of
  Papua New Guinea (State).

  26. 4 February, the Prime Minister advised HH Sheik Mansour bin
  Zayed Al Nahyan that the State
  wanted to retain its shares in Oil Search Ltd.

  27. 7 February, Mr Bakani re-assured Minister Micah on its
  recommendation to use UBS AG to re-finance
  IPIC Exchangeable Bond.

  28. 13 February 2014, team of Foreign Affairs Minister, Governor of
  BPNG, Acting Secretary for Treasury,
  representatives of UBS, Peter Botten of Oil Search and Anthony
  Latimer of Norton Rose Fulbright
  prepared to travel to Abu Dhabi commencing 15 February to return
  on 20 February to meet with IPIC
  leaders in relation to the Bond and Shares as no indication had
  been given as to the method of re-
  payment preferred to retain the Oil Search Shares.

  13 February, a Mandatory Exchange Notice to Deutche Bank AG,
  London Branch (Exchange Agent)
  indicated that the IPIC did not want to sell its shares to
  Government of Papua New Guinea (GoPNG).

  Mr John Leahy, Head of Business Assurance & Asset Serving,
  National Nominees Limited, consented
  and became a member of Oil Search Ltd and undertook trading of
  Shares on the Australian Stock
  Exchange.

• Page 46 of 475

• Consideration was given by the State team that other methods of
  acquiring shares in Oil Search
  needed to be explored, to replace the shares to be retained by
  IPIC.

  Market rumours were of a placement of Shares by Oil Search to
  raise capital to purchase an interest in
  the Elk Antelope Project and if this happend post purchase the
  share price would rise significantly and
  it would be much more expensive for the State to buy shares from
  the market. The Oil Search share
  price was very closely linked to projects they had under
  development. If a share purchase was to be
  done by the State it therefore needed to be done from the share
  placement or before the share
  placement – it was a commercial reality that time was of the
  essence.

  20 February 2014, Mr Vele and Mr Latimer meet with UBS AG in
  Sydney to discuss whether UBS AG
  could give an indication whether they would agree to provide
  funding to purchase part of a share
  placement by Oil Search, as any submission to NEC would need to
  have some Certainty that funding
  would be available to purchase the Oil Search shares.
  20 February 2014, Mr Vele seeks instructions from Prime Minister
  Hon Peter O‘Neill, MP as to
  whether the State would consider buying a placement of shares
  from Oil Search given IPIC was to
  retain the State‘s shares in Oil Search and the Prime Minister
  Hon Peter O‘Neill, MP instructed that it
  was a NEC decision to retain shares in Oil Search so Mr Vele
  should proceed to put together a draft
  deal to be considered by NEC.
  21 February 2014, Mr Vele met with Mr Botten in Sydney and
  advised that the State may be interested
  in buying shares in Oil Search and asked for the State to be
  informed of any plans to issue additional
  shares and informs Botten that the State would be able to obtain
  funding from UBS AG.
  21 February 2014, Mr Vele in constant communication with Prime
  Minister Hon Peter O‘Neill, MP for
  instructions.
  21 February, Oil Search share price was AU $8.46.
  22 February 2014, Mr Botten flies to Papua New Guinea and seeks
  to meet with Prime Minister Hon
  Peter O‘Neill, MP and does meet with the Prime Minister and has
  preliminary discussions about price
  but the Prime Minister informs Mr Botten that any specific
  negotiations must be done with Mr Vele as
  he was preparing the draft deal.

  Chronology of Events Page xxxiii

• Page 47 of 475

• 23 February 2014, Mr Vele returns to Papua New Guinea.
  29. 23 February, the Prime Minister, Hon Peter O‘Neill, MP, Mr Peter
  Botten, MD of Oil Search Ltd, Mr
  Gerea Aopi, Board Chairman for Oil Search Ltd and Mr Vele met at
  Grand Papua Hotel and decided for
  the State to buy 149, 390, 244 shares which translated to 10.01
  % shareholding in Oil Search Ltd. and
  discussed the availability of a placement of Oil Search shares.
  There was a discussion on price but the
  Prime Minister advised Mr Botten to speak to Mr Vele about price
  in further negotiations to take
  place. The Prime Minister and Mr Vele expressed to Oil that the
  State had an interest in buying Oil
  Search Shares. No agreement or commitment was made on behalf of
  the State, the share price was not
  settled on and it was the position negotiations would be ongoing
  before a submission would be put to
  NEC.

  30. 24 February, Hon Rimbink Pato, MP, Minister for Foreign Affairs
  and Immigration (FAI) advised HH
  Sheikh Abdullah bin Zayed Al Nahyan, the Minister for FAI, Abu
  Dhabi, United Arab Emirates, that
  the GoPNG wanted to retain ownership of the Oil Search Ltd
  shares.

  24 February 2014, Mr Botten and Mr Vele have numerous
  discussions on a possible price that the State
  could pay. Mr Botten informed that Oil Search wanted $8.50 per
  share and that although they could
  discuss a price, any proposed price would have to be put to the
  Board of Oil Search. Mr Vele advised
  Mr Botten that he would need to speak to the Prime Minister
  about the price and then any proposed
  deal would need to be put to and approved by cabinet.
  24 February 2014, Mr Vele met with the Prime Minister Hon Peter
  O‘Neill, MP and the Prime Minister
  instructed that the State would only be prepared to pay AUD$8.20
  per share as that was the price Mr
  Botten had indicated on 22 February 2014.
  24 February 2014, Mr Vele advises Mr Botten that he had been
  instructed that the State would only
  consider a price of $8.20.
  24 February 2014, UBS AG advised that $8.20 was an unrealistic
  price and that the State would need
  to pay $8.50 a share but Mr Vele stated he had a clear
  instruction that $8.20 was the price the State
  would consider paying.
  31. 25 February 2014, UBS AG write to Mr Vele and outlined the
  proposed terms of engagement including
  fees charged in relation to the role as financial advisor and
  lead arranger as well as financial modelling.

• Page 48 of 475

• 25 February, UBS AG wrote to Mr Vele and outlined the terms of
  engagement of UBS AG as the Sole
  Financial Advisor and Sole Lead Arranger that was effected on 30
  January 2014, in relation to the
  management of the investment of the State in Oil Search Ltd and
  associated matters flowing from the
  issuance in 2009 of Exchangeable Bond in respect of the State‘s
  196.6 million shares in Oil Search Ltd
  to the IPIC of Abu Dhabi. These terms were agreed to when the
  GGPNG signed the document that
  was witnessed by Mr Okuk.
  Trading in Oil Search Ltd shares halted ahead of its
  announcement issuing shares to existing
  shareholders and interested buyers.
  His Excellency Grand Chief Sir Michael Ogio, G.C.L, G.C.MG,
  K.St.J the Governor-General of Papua
  New Guinea (GGPNG) signed the document agreements which were
  witnessed by Mr Carl Okuk as a
  Commissioner for Oath witnessing the agreement on the terms and
  conditions of engagement of UBS
  AG.
  32. 26 February, Prime Minister wrote to Mr Botten regarding the
  State‘s willingness to buy shares in Oil
  Search Ltd.

  26 February 2014, KPMG was brought in to review the terms
  offered be UBS AG to make sure that the
  offer was on proper commercial terms. No retainer agreement was
  given to KPMG as they were aware
  their advice was only relevant as part of the draft deal if
  approved by NEC, but it was essential that
  figures were checked prior to a NEC submission.
  26 February 2014, advice was being provided on legal matters
  from Norton Rose Fulbright as a result
  of their retainer by IPBC. As Acting Secretary for Treasury Mr
  Vele was still a member of the IPIC
  Bond Committee and that was under the direction of IPBC.

  Chronology of Events Page xxxiv

  Mr Vele was not receiving advice from the State Solicitor as Mr
  Vele was informed he was busy and a
  derivative transaction of this type was complicated not something
  that the State Solicitor had any
  experience in or expertise and therefore the State required
  specialist advice. Norton Rose Fulbright
  retained Pacific Legal Group as their local counsel to assist in
  Papua New Guinea. The State did not
  retain Pacific Legal Group.
  26 February 2014, as Ashurts were the local Counsel of UBS AG
  they drafted documents relevant to the

• Page 49 of 475

• proposed deal, but on the basis that Cabinet was still to approve
  the transaction. They were retained
  by UBS AG and not the State.
  26 February 2014, UBS AG and Oil Search enter into separate
  underwriting agreement whereby if the
  State through Cabinet did not approve and go through with the
  deal to buy Oil Search Shares, then
  UBS AG could buy the Oil Search Shares for their own investment
  purposes.
  33. 27 February, four days after the meeting, the Prime Minister
  wrote to Mr Guy Fowler, the MD for UBS
  AG proposal to provide funding facilities to the State in
  connection with the subscription by the State
  for approximately 149.39 million shares Ltd at AU$8.20 per share.

  27 February 2014, Mr Vele receives a commitment letter from UBS
  AG regarding the Oil Search shares
  loan.
  Subscription Agreement was signed between UBS AG (the Equity
  Derivative Financier) and Oil Shares
  Limited.
  Oil Search Ltd shares trading were suspended ahead of its
  announcement.
  Oil Search Ltd announced that it had agreed to acquire a 22.835%
  gross interest in PRL 15 (Elk
  Antelope) from the Pac LNG Group Companies for US$900 million to
  be funded through a placement
  of new shares to the State.
  UBS AG forwarded a Commitment Letter that was signed by the GGPNG
  which was witnessed by Mr
  Okuk.
  28 February 2014, Consolation between Mr Vele as Secretary for
  Treasury and in his capacity as
  member of IPIC Exchangeable Bond Review Committee and BPNG being
  the Governor and Dr Jakob
  Weiss on the terms and conditions of the UBS AG proposal. Paddy
  Jike of UBS AG was available at the
  meet to assist. The proposal for the loan to purchase Oil Search
  shares on market that UBS was making
  was not substantially different to what had previously been
  proposed in their previous advice
  regarding refinancing the IPIC loan. The terms and conditions
  therefore cannot in any way be said to
  be prejudicial to the State.
  28 February 2014, both Treasurer and Prime Minister were updated
  regularly by Mr Vele as to the
  meetings and negotiations.
  34. 4 March, Ashurst Lawyers forwarded draft documents for its
  client UBS AG to the State that outlined
  the financial package that UBS AG was offering the State.

  Mr David Heathcote of KPMG presented KPMG‘s analysis on the
  monetised collars relating to
  financing the purchase of Oil Search Ltd shares.

• Page 50 of 475

• 35. 5 March, Mr Fowler requested the Prime Minister to intervene in
  resolving the IPIC Exchangeable
  Bond, PNG LNG direction-to-pay and Sovereign Bond take-out of the
  Bridge Loan.

  5 March 2014, which was as soon as the documents were provided to
  Mr Vele from the Counsel to UBS
  AG being Ashursts, Mr Vele requested Mr Daniel Rolpagarea, the
  State Solicitor to give legal clearance
  on the documents relating to the transaction for the State to
  acquire 149,390,244 shares in Oil Search
  Ltd.

  Mr Rolpagarea requested Mr Vele to provide to him details of
  confirmation and clear instructions on
  the engagement of Pacific Legal Group and the breach of Section
  209 of (Parliament Responsibility) of
  the Constitution by the NEC. This is incorrect. Mr Rolpagarea
  actually noted
  Correctly that the documents were delivered to his office by
  Pacific Legal Group

  Chronology of Events Page xxxv

  Incorrectly that Norton Rose Fulbright and Pacific Legal Group
  had been retained by Mr Vele or by Treasury
  (NRF had been retained by IPBC and PLG had been retained by NRF)

  Correctly that the documents required his urgent consideration
  and issuance of the legal clearance to NEC‘s
  consideration if appropriate

  Correctly the NEC‘s decision and background information and the
  State‘s intention to acquire a 10.1% interest in
  Oil Search

  And advised Mr Vele that
  The documents are a reflection of the State‘s negotiated position
  and as such are acceptable to the State.

  That the documents which were Minutes and Certificates that were
  not as yet signed by representative
  individuals or Company Boards were in order for Mr Vele to
  facilitate such signatures and/or Board meetings.
  (This includes IPBC Board meeting minutes, the IPBC shareholders
  resolution and the NPCP minutes and POA –
  Mr Vele forwarded these documents to IPBC on the express advice
  and clearance of the State Solicitor contrary to
  OC assertions of wrongdoing)

  And Commented
  That his advice was that many recommendations for NEC approvals

• Page 51 of 475

• require approvals/authorisations specifically
  from the State agencies acting independently but taking into
  account the NEC decision and advised further that
  the relevant approvals should be sought by Mr Vele from the
  State‘s relevant agencies after NEC consideration
  and approval of the financing transactions, including
  recommendation of the COI from CSTB

  That Section 209 of the Constitution required parliament‘s
  approval for the Bridge and Collar loans and advised
  that Mr Vele take the appropriate steps to facilitate the process

  That Mr Vele may proceed to NEC taking into account his advice

  That after NEC approval, Mr Rolpagarea would then prepare an
  advice to the Head of State to execute the
  transaction documents.

  NPCP Board Chairman submitted a proposal to the IPBC Board
  advising of the State‘s acquisition of
  149,390,244 shares in Oil Search Ltd and that UBS AG required
  NPCP to enter into a payment
  direction between NPCP, PNGLNG Global Company LDC (GloCo).

  Mr Rolpagarea advised Mr Vele that the NEC Submission needed
  approvals from the relevant
  Agencies‘ Boards and the Parliament for the Bridge and Collar
  loans totalling AU$1.239 Billion and that
  Mr Vele was to facilitate the said approvals after the NEC
  decision.

  36. 6 March, the UBS AG issued a Bridge Takeout Letter to Mr Vele
  that outlined the terms of the fees
  payable to UBS AG as Facility Agent under the Bridge Facility
  Agreement that was signed by the
  GGPNG and witnessed by Mr Okuk.

  The UBS AG as the Facility Agent for the loan wrote to Mr Vele
  and requested for the State to pay
  the Facility Agent fees as per the Bridge Facility Agreement that
  was signed by the GGPNG and
  witnessed by Mr Okuk.

  UBS AG as the Security Trustee for the loan wrote to Mr Vele and
  requested for the State to pay the
  Security Trustee fees as per the Bridge Facility Agreement that
  was signed by the GGPNG and
  witnessed by Mr Okuk.

  The Prime Minister submitted an NEC Policy paper No: 67/2014 to
  the NEC.

  The NEC in its Decision No: 79/2014
  Noted the transaction documents, approved Petromin as the

• Page 52 of 475

• eventual subscriber but that the State
  would be the initial subscriber, noted the certificate of
  correctness from the State Solicitor and
  confirmed the authority of the Minister for Treasury to finalise
  any documents that were not included
  in the cabinet submission prior to submission of the transaction
  documents to the Head of State for
  Execution,

  approved to advise the Head of State to approve the borrowing for
  the purchase of shares and to execute the
  transaction documents for the State.

  Chronology of Events Page xxxvi

  approved to advise the Minister for Treasury to sign such
  documents, instruments and certificates as the
  transaction required. He was not given the discretion to refuse
  to sign by Cabinet. It was a Cabinet decision to go
  ahead with the transaction and he was to implement parts of that
  decision.

  noted other approvals were required from other State Agencies
  and endorsed all of them including but not limited
  to a Certificate of Inexpediency be issued by CSTB, an authority
  to pre-commit by the Secretary for Finance and a
  certificate by the Secretary for Treasury certifying the extent
  of overseas commercial debt, execution of a payment
  deed by NPCP, and the payment direction by IPBC.

  noted that the approval by Cabinet was specifically to cover any
  processes that had to occur either before or after
  the decision by Cabinet so that the transaction could proceed in
  a commercial time frame.

  This distribution list of the Cabinet Decision included the
  Minister for Justice and Attorney-General, the Minister
  for Treasury, the Minister for Public Enterprises, the Minister
  for Finance, the Departments of Finance, Treasury,
  Justice & Attorney-General, IPBC, the State Solicitor, BPNG,
  NPCP and Petromin.

  Mr Polye was present throughout the NEC Meeting and during the
  making of NEC Decision 79/2014

  On 5 March 2014 (and not on 6 March 2014) Mr Vele advised
  Minister Polye that the loan would not
  affect the State‘s debt program and that Petromin would be the
  eventual subscriber and nominee and
  Mr Vele explained why it was considered it to be in the best

• Page 53 of 475

• interests of the State. Mr Vele explained
  that usually there is an equity cushion which is needed in order
  to secure borrowings. As the State was
  the only equity that could get an equity cushion, it was the
  only entity that could secure the $300
  million bridging loan. Therefore Mr Vele advised him that it was
  not possible in the first instance for a
  State owned entity like Petromin or ICPC to secure the loan but
  that it could be transferred to them at
  a later time, but within the financial year. The Treasurer said
  to Mr Vele that, he was concerned that
  the loan would be in breach of debt to GDP ratios. Mr Vele
  explained to Mr Polye that this could only
  be determined at the end of the 2014 financial year and that
  there were provisions to correct any such
  issues in the 12 month period after the end of the financial
  year. Nonetheless the Treasurer was explicit
  that he wanted the transaction off the balance sheets. This was
  simply not possible, however.
  Petromin however would have been unable to secure funding in its
  own right but rather would need
  the State to secure the loan and then transfer it to Petromin.
  UBS had made it quite clear to Mr Vele
  that they would not loan directly to Petromin in relation to the
  bridging loan.

  Mr Vele requested Mr Philip Eludeme, the Chairman for CSTB to
  approve the request for COI at the
  earliest to cover the advisory costs, in accordance with and for
  the purposes of implementing Cabinet
  Decision No 79/2014.

  Prime Minister advised the GGPNG, that the NEC approved the
  borrowing of a loan for the purpose of
  purchasing shares in Oil Search Ltd and for the purpose of
  meeting the expenses of the borrowing
  itself.

  Mr Okuk representing Mr Vele delivered 28 documents pertaining
  to the UBS AG loan to Mr
  Rolpagarea for his legal clearance.

  37. 7 March, Mr Vele explained to Mr Eludeme that the COI was needed
  to access funds to pay for fees
  pertaining to the State‘s acquisition of the shares in Oil
  Search Ltd, in accordance with and for the
  purposes of implementing Cabinet Decision No 79/2014.

  Mr Vele requested Mr Rolpagarea to issue legal clearance on the
  submission regarding the State‘s
  borrowing of loan arrangements, in accordance with Mr
  Rolpagarea‘s advice of 5 March 2014 and in
  accordance with and for the purposes of implementing Cabinet
  Decision No 79/2014.

• Page 54 of 475

• The Prime Minister Hon Peter O‘Neill, MP informed IPBC of the
  government‘s decision to enter into
  the agreement, in accordance with and for the purposes of
  implementing Cabinet Decision No 79/2014.

  Mr Isaac Lupari, the Chief of Staff to the Prime Minister,
  advised Mr Kumarasiri that the NEC
  approved the State‘s intent to borrow from UBS AG to fund its
  acquisition of shares in Oil Search Ltd,
  in accordance with and for the purposes of implementing Cabinet
  Decision No 79/2014.

  Minister Micah directed the Board of IPBC to approve the Payment
  Direction Deed and to sign the
  Payment Direction Deed on or before 09 March 2014, in accordance
  with and for the purposes of
  implementing Cabinet Decision No 79/2014.

  Chronology of Events Page xxxvii

  38. 8 March, Mr Vele requested Dr Thomas Webster, the then Chairman
  for IPBC Board, to progress the
  documents to the IPBC Board for its consideration and approval in
  accordance with Mr Rolpagarea‘s
  advice of 5 March 2014 and in accordance with and for the
  purposes of implementing Cabinet Decision
  No 79/2014.

  Mr Kumarasiri advised Dr Webster to issue instructions to the
  management of IPBC Management to
  prepare documents in anticipation to receive requests from the
  Board of NPCP with their resolutions,
  in accordance with and for the purposes of implementing Cabinet
  Decision No 79/2014.
  39. 9 March, Mr Erastus Kamburi, the Chief Legal Officer for IPBC,
  requested the IPBC Directors to meet
  and discuss on the directives from the Minister Micah and Mr
  Lupari and the NEC Decision No:
  79/2014, in accordance with and for the purposes of implementing
  Cabinet Decision No 79/2014.

  An Explanatory Note was prepared with the Board Circular
  Resolution outlining the purpose of the
  Special Board Meeting.
  The NPCP Special Board of Directors Meeting No: 02/2014 resolved
  that the Company enter into any
  Transaction Document to give effect to the Payment Direction Deed
  and authorised Mr Sonk and Mr
  Wato with the Power of Attorney in accordance with Mr
  Rolpagarea‘s advice of 5 March 2014 and in

• Page 55 of 475

• accordance with and for the purposes of implementing Cabinet
  Decision No 79/2014.
  The NPCP Board empowered Mr Sonk and Mr Rogen Wato, the Company
  Secretary for NPCP with
  the Power of Attorney in accordance with Mr Rolpagarea‘s advice
  of 5 March 2014 and in accordance
  with and for the purposes of implementing Cabinet Decision No
  79/2014.
  Mr Sonk verified copies of the Shareholder resolutions of the
  NPCP dated 09 March 2014, Minutes of a
  Meeting of the Board of Directors and Power of Attorney of the
  NPCP in accordance with Mr
  Rolpagarea‘s advice of 5 March 2014 and in accordance with and
  for the purposes of implementing
  Cabinet Decision No 79/2014.
  Mr Wapu Sonk, Managing Director for NPCP forwarded to Mr
  Kumarasiri an Extract of the Board
  Meeting Minutes.
  Mr Rolpagarea advised Mr Vele that the Treasurer was the
  authorised person to execute loan
  agreements on behalf of the State strictly in accordance with
  Section 2(7) of the Loans (Overseas
  Borrowing) (No.2) Act 1976. Section 209 (Parliament
  Responsibility) of the Constitution [VERY
  IMPORTANT Mr Rolpagarea did not mention Section 209 (Parliament
  Responsibility) of the
  Constitution in that sentence or context – this is wrong].
  Norton Rose Fulbright wrote to the GGPNG and the Minister for
  Treasury regarding financing of the
  acquisition of the shares and possible options to re-finance
  following completion.
  Mr Kumarasiri wrote to Hon James Marape MP, Minister for Finance
  and requested him to approve
  the Memorandum of Approval to enable NPCP to enter into the
  Transaction Documents in accordance
  with Mr Rolpagarea‘s advice of 5 March 2014 and in accordance
  with and for the purposes of
  implementing Cabinet Decision No 79/2014.
  Minister Polye advised Mr Vele that he will not sign the
  documents that enabled the State to borrow
  the said UBS AG loan contrary to the NEC Decision No 79/2014 of
  which he was a part.
  Minister Marape approved the Memorandum of Approval that enabled
  NPCP to enter into the
  Transaction Documents in accordance with Mr Rolpagarea‘s advice
  of 5 March 2014 and in accordance
  with and for the purposes of implementing Cabinet Decision No
  79/2014.
  Mr Rolpagarea advises GGPNG to sign transaction documents.
  The GGPNG signed the document enabling the State to borrow AU$335
  million from UBS AG for the
  purpose of the purchase of shares in Oil Search Ltd and for the
  purpose of meeting the expenses of the
  Borrowing and for the services of the State, in accordance with

• Page 56 of 475

• Mr Rolpagarea‘s advice of 5 March
  2014, his advice following the Cabinet meeting and in accordance
  with and for the purposes of
  implementing Cabinet Decision No 79/2014.

  Chronology of Events Page xxxviii

  40. 10 March, IPBC Board resolved that NPCP Directors enter into the
  Transaction Documents and
  recommend to the Minister for Finance to approve a proposal by
  NPCP to enter into Agreement to
  execute all documents that gave effect to the Payment Direction
  Deed.

  The NPCP Board deliberated and resolved and authorised Board to
  enter into Agreement to execute
  the Transaction Documents.

  Mr Eludeme advised Mr Vele that the CSTB resolved and approved
  the issuance of the COI for the
  awarding of contracts to both local and international Consulting
  Firms, in accordance with the PFMA
  1995 and in accordance with Cabinet Decision No79/2014.

  Mr Rolpagarea advises Mr Vele that the GGPNG and Minister for
  Treasury were to execute the
  transaction documents to purchase Oil Search Ltd shares on behalf
  of the State.

  Mr Vele confirmed with Mr Rolpagarea that the GGPNG and Minister
  for Treasury were to execute
  the transaction documents to purchase Oil Search Ltd shares on
  behalf of the State.
  Mr Kumarasiri certified the Circular Resolution of the Board of
  Directors of IPBC that authorised the
  execution of the Payment Direction Deed by NPCP.
  Mr Kumarasiri wrote a Memorandum of Recommendation recommending
  Minister Marape to approve
  the NPCP to enter into the Transaction Documents.
  Following discussion between the Prime Minister and Mr Polye, the
  Prime Minister decommissioned
  Hon Polye as the Minister for Treasury.
  Hon Polye accepted his decommissioning as Minister for Treasury
  by the Prime Minister Hon Peter
  O‘Neill, MP. This is incorrect. Mr. Polye challenged his
  decommissioning in the National Court – in
  proceedings as OS No. 142 of 2014 filed 25 March 2014. They were
  dismissed however on 8 May 2014.
  The National Gazette No: G83 and G89 of 10 March 2014 confirmed
  the decommissioning and
  replacement of Hon Polye as the Minister for Treasury by the

• Page 57 of 475

• Prime Minister.
  The Determination of titles and responsibilities of the Prime
  Minister also changed to allow him to act
  as the Minister for Treasury.
  Mr Vele requested Dr Ken Ngangan, Acting Secretary for DoF to
  approve the payment to UBS AG in
  relation to the acquisition of the shares, in accordance with Mr
  Rolpagarea‘s advice of 5 March 2014,
  his advice following the Cabinet meeting and in accordance with
  and for the purposes of
  implementing Cabinet Decision No 7/2014.
  Mr Rolpagarea advised the GGPNG that all documentations relating
  to the borrowing were in order
  and that Mr Vele was satisfied with the Terms of the Transaction
  Documents.
  The State and Oil Search Ltd signed and exerted the subscription
  Agreement.
  Mr Vele advised Mr Eludeme that the local and international
  financial and legal Advisors should be
  paid for services rendered in accordance with and for the
  purposes of implementing Cabinet Decision
  No 79/2014.
  DoT deposited K1,250,000.00 into Pacific Capital Ltd Managed
  Account with ANZ bank (PNG) Ltd.
  41. 11 March, Mr Kamburi advised Mr Kumarasiri that the Certificate
  did not include the Shareholder
  Resolution which was signed and hence he sent an amended and
  verified Certificate for Mr
  Kumarasiri‘s signature.

  Minister Marape gave his approval for the NPCP to enter into
  Payment Direction Deed in accordance
  with and for the purposes of implementing Cabinet Decision No
  79/2014.

  Dr Ngangan and Mr Vele signed and approved the APC form to
  release AU$14,555,759.00 to be paid to
  the Consultants relating to the purchasing of Oil Search Ltd
  shares, in accordance with Mr
  Rolpagarea‘s advice of 5 March 2014, his advice following the
  Cabinet meeting and in accordance with
  and for the purposes of implementing Cabinet Decision No 7/2014.

  Chronology of Events Page xxxix

  42. 12 March, Mr Babaga R. Naime, Acting Board Secretary for CSTB,
  advised Mr Rolpagarea that the
  CSTB awarded the Contract to both local and International
  Consulting Firms, in accordance with the
  PFMA 1995 and the powers of the CSTB under such Act and in
  accordance with and for the purposes
  of implementing Cabinet Decision No 79/2014.

• Page 58 of 475

• Mr Eludeme certified that the inviting of tenders for the
  provision of financial, legal and technical
  advisory services was impractical or inexpedient, in accordance
  with the PFMA 1995 and the powers
  of the CSTB under such Section 40 of such Act and in accordance
  with and for the purposes of
  implementing Cabinet Decision No 79/2014.
  Dr Ngangan approved the application for the Department to
  complete and issue the APC for the above
  Procurement, in accordance with the provision by CSTB of the COI
  and in accordance with Mr
  Rolpagarea‘s advice of 5 March 2014, his advice following the
  Cabinet meeting and in accordance with
  and for the purposes of implementing Cabinet Decision No 79/2014.
  The State, NPCP and UBS AG agreed to the terms and conditions
  upon signing the Payment Direction
  Deed that directed PNG Liquefied Gas Global Company (GloCo) to
  pay immediately available funds
  due to NPCP to UBS AG.
  UBS AG confirmed with Mr Vele the terms and conditions of the
  financing transaction that were
  entered into between the State and UBS AG in respect of Oil
  Search Ltd shares.
  The Prime Minster, Hon Peter O‘Neill, MP as Treasurer and Mr Vele
  in accordance with Mr
  Rolpagarea‘s advice of 5 and 10 March 2014, his advice following
  the Cabinet meeting and in
  accordance with and for the purposes of implementing Cabinet
  Decision No 79/2014, UBS AG (the
  Arranger), UBS AG (the Facility Agent) and UBS Nominees Pty Ltd
  signed the Bridge Facility
  Agreement.
  The GGPNG witnessed by Mr Okuk signed the Specific Security Deed
  (CHESS Securities – Collar) with
  UBS AG that provided security to the loan acquisition.
  The GGPNG, witnessed by Mr Okuk signed the Security Trust Deed
  with UBS Nominees Pty Ltd that
  provided security to the loan acquisition.
  The GGPNG, witnessed by Mr Okuk signed the Participant
  Sponsorship Agreement with UBS Nominees
  Pty Ltd.
  The Prime Minster, Mr Vele, UBS AG (the Arranger), UBS AG (the
  Facility Agent) and UBS Nominees Pty
  Ltd signed the Confirmation Side Letter.
  The GGPNG witnessed by Mr Okuk signed the Nominee Deed with UBS
  AG, UBS Nominees Pty Ltd and
  UBS Securities Australia for the Nominee (UBS Nominees Pty Ltd).
  The Substantial shareholders notice prepared and lodged with Port
  Moresby Stock Exchange (POMSox)
  and ASX lodged on 17 March 2014.
  The State (Subscriber) represented by the GGPNG witnessed by Mr
  Okuk signed the Subscription
  Agreement with Oil Search Limited (Issuer).
  Mr Stephen Gardiner, the Chief Financial Officer for Oil Search

• Page 59 of 475

• Ltd, advised that Goldman Sachs
  Financial Markets Pty Ltd with a Bank Account number
  011-112034-041 was the recipient of the
  Subscription.
  Oil Search Ltd announced completion of share placement and file
  appendix 3B, Cleansing Notice and
  Completion Letter.
  43. 14 March, the Substantial shareholder notice prepared and lodged
  with POMSoX and ASX (lodged on 17
  March 2014).

  44. The Commission issued directives under Section 27(4) of the
  Constitution determined that it was
  necessary to issue a direction under Section 27(4) of the
  Constitution to freeze all further progress on the
  PGK3 Billion loan and requested for collective cooperation from
  the Prime Minister; and the members
  of the NEC; the Chief Secretary; the Minister for Treasury and
  the Minister for Finance; the Secretary,

  Chronology of Events Page xl

  DoF; and the Secretary, DoT; the Attorney-General; and the
  Secretary, DJAG; the Governor of BPNG;
  Petromin; and IPBC; and Port Moresby Stock Exchange Limited; and
  Oil Search (PNG) Limited; and UBS
  Nominees Pty Ltd, despite the fact that the Transaction was
  complete and the purchase settled.

  45. 20 March, Mr Rolpagarea advised Mr Naime on his legal opinion on
  the request for the issuance of
  Legal Clearance – CSTB COI 02/04, which is that he states that
  the COI was issued in accordance with
  PFMA Section 40, not issued in accordance with Financial
  Instructions and was improper. He stated
  that all the Consultants of they had provided work should be paid
  on a Quantum Merit basis on the
  basis of their work actually performed and the person who would
  be in the best position to decide
  what the quantum for payment would be was Mr Vele. His legal
  opinion on the COI is incorrect – the
  COI was correctly issued as the COI was issued in accordance with
  the discretion and powers given to
  CSTB by S40 PFMA. The Finance Manual restriction on that
  discretion and those powers is
  inconsistent and therefore void pursuant to S117 PFMA.

  25 March 2014, Mr Polye commences OS142 against the State seeking
  to have the loan transaction
  declared void on the basis of a breach of S209 of the
  Constitution and for himself to be re-instated as
  Treasurer.
  Mr. Vele responded to the Ombudsman Commission‘s Summons in which

• Page 60 of 475

• he forwarded a copy of the
  KPMG‘s analysis of the proposed monetised collars in relation to
  financing the purchase Oil Search
  Limited shares. He also stated that the Parliamentary Approval of
  the Bridge and Collar loans totalling
  A$1.225 Billion through the Budgetary process had not been
  obtained on the basis of the advice from
  the State Solicitor. The Department was advised by the State
  Solicitor that this Transaction must now
  be tabled at the next sitting of Parliament in May 2014, and for
  which the Treasurer will do. In specific
  reference to Point 6, the structure of the Sovereign Wealth Fund
  (SWF) has not yet been finalised and
  Treasury as the Lead Agency in consultation with the State
  Technical Working Group (comprising the
  Department of Justice and Attorney-General, the Central Bank, the
  Department of National Planning
  & Monitoring and Treasury) and the Secretaries Committee
  (comprising myself as the Chairman and
  the Governor Loi Bakani, Secretary Dr. Lawrence Kalinoe and
  Acting Secretary Juliana Kubak) have
  made several adjustments which will be tabled for Parliament in
  the May session.
  46. 26 March, Mr Rolpagarea stated that he was not given enough time
  to thoroughly go through the
  documents and that he was not present at the CSTB meeting that
  approved the issuance of the COI.
  For the State Solicitor to give out legal advice and them claim 2
  weeks later that he not had enough
  time and that there is an issue with the advice is negligence on
  his part. It is proper and reasonable for
  all persons who relied upon Mr Rolpagarea‘s advice, to have
  relied upon his advice given. It is
  professional negligence for a senior lawyer to advise his clients
  and then claim his advice was faulty as
  he did not have enough time, after his clients have relied upon
  his advice. This may be misconduct on
  behalf of the State Solicitor but no on behalf of those that
  relied upon his advice such as Mr Vele.

  47. 28 March, Mr Eludeme advised Mr Vele that the State Solicitor
  declined the issuance of legal clearance
  of the COI but the Consultants could be paid on a Quantum Meruit
  basis and such quantum was to be
  determined by Mr Vele.

  Mr Kumarasiri advised the Commission that the IPBC gave its
  approval for NPCP to go ahead with the
  transaction and referred the matter to the Minister for Finance
  to execute.
  48. 10 April, Mr Eludeme advised Mr Vele that the Board effectively
  nullified the issuance of the COI for
  the engagement of private Consultants.

• Page 61 of 475

• 49. 11 April, Mr Sonk directed Mr Peter Graham, MD for GloCo to
  divert all distributions of payments
  payable to NPCP to be paid to UBS AG (Singapore Branch).

  Mr Sonk and Mr Wato of NPCP directed Mr Graham of Esso Highlands
  to immediately pay all
  available funds to UBS AG.
  50. 22 April, Ashurst Lawyers advised Norton Rose Fulbright of
  Australia that non-compliance with
  payment obligations would constitute in an Event of Default and
  UBS AG can commence enforcement
  processes without further reference to the State.

  Chronology of Events Page xli

  51. 28 April, Mr Polye reiterated to Hon Theodore Zurenuoc, the
  Speaker of Parliament, his position that
  the government‘s borrowing UBS AG loan was bad. This is
  irrelevant to a chronology – Mr Polye‘s
  opinion.

  52. 30 April, Mr Polye stated that the loan was an unplanned
  activity and it was not a prudent thing to do
  and it breached the 2014 Budget Appropriation Bill and the
  Fiscal Responsibilities Act.

  Ms Tessa Hoser of Norton Rose Fulbright of Australia advised Mr
  Vele that in the event of a default
  UBS AG would charge default interest on any unpaid interest.

  53. 2 May, Mr Vele stated that the State engaged UBS AG together
  with the other financial and legal firms
  as they were already providing the services.

  8 May, National Court dismissed Application by Don Polye, MP to
  declare loan void of breaching
  Section 209 of the Constitution and to be re-instated as
  Minister for Treasury, as an abuse of process.

  The National Court made the following findings of Fact on 8 May
  2014;

  i. In 2009 the State through IPBC and from IPIC had
  obtained a loan to purchase the State‘s interest in the
  PNGLNG project by virtue of the issue of an Exchangeable
  Bond. The loan had been secured by the
  State‘s shares in the Oil Search Limited and mortgaged
  over all the State owned Enterprises. The
  maturity date of the Bond was 5 March 2014. Under the
  terms IPIC could take on the maturity date in

• Page 62 of 475

• repayment of the loan either the shares, cash and shares
  or just cash. IPIC had to make an irrevocable
  election 2 weeks prior to maturity dates as to what it
  wanted in repayment.

  ii. At the same time, the government, advised by the
  (Central Bank) BPNG and Department of Treasury,
  organized with UBS – after seven months of searching for
  the right financing institute, to re-finance the
  IPIC loan – that is, to repay the loan with cash. The
  Arabs however on the date for notice advised they
  would take the shares in Oil Search in repayment of the
  loan. The government policy has been always to
  retain shares in Ol Search. So instead of paying the
  Arabs back with cash – a lesser amount was borrowed
  to purchase 10.1% shareholding in Oil Search. A 10.1%
  share in Oil Search prevents any foreign takeover of
  Oil Search. Oil Search is the biggest company in PNG and
  in the top 25 on the Australian Stock Exhange.
  To lose Oil Search to overseas interest and have then
  Oil Search leave would be devastating to the PNG
  economy due to the tax it pays and the jobs it creates.

  iii. Further all international analysts predict an increase
  in value of Oil Search given the investments and
  directions the company is entering into. Government
  policy was for Papua New Guinea not just received
  royalties and taxes but also participate in the
  extraction of resources for the betterment of the people of
  PNG.

  iv. On 5 March 2014, IPIC took possession and ownership of
  the Oil Search shares previously owned by
  government – being 13.17%.

  v. On 6 March 2014, NEC approved the borrowing of USD$1.249
  Billion to purchase 14.39 million shares,
  with such borrowing to be secured solely by the shares
  themselves. Initially the State itself would be the
  subscriber but within three months of the transaction
  Petromin is to take over as subscriber and the
  debt would be off balance sheet and refinanced. The
  shares were to be purchased for a price of $8.20
  instead of the market value on the day of $8.55 since
  this time the share price has risen. No state owned
  enterprises have been mortgaged and the State‘s debt
  exposure has not been reduced.

  vi. Despite Cabinet‘s approval and the fact the plaintiff
  was a Cabinet when the decision was made,
  Minister Polye refused to sign the requite documents.
  Unfortunately for the plaintiff, he failed to
  understand the trading deadlines on the Australian Stock
  Exchange (ASX) and the approvals for the

• Page 63 of 475

• State had already been given by UBS – and to start the
  whole process off with Petromin, the window for
  purchase would have been closed. Oil Search had
  announced a halt in trading on 4 March 2014 and the
  Rules allow only 48 hours of cessation of trading (to
  prevent insider trading) as it had to notify the Stock
  Exchange of a major purchase – so the deadline was 5pm
  on 6 March 2014 for Oil Search to have
  determined to purchase into Elk Antelope on the basis of
  the funds coming in from the sale of shares to
  the State.

  vii. Minister Polye was de-commissioned as a Minister on 10
  March 2014 by the Head of State (and duly
  gazetted) and the treasury portfolio reverted to the
  Prime Minister.

  viii. The transaction of the purchase of the Oil Search shares
  and the UBS loan was completed on 12 March
  2014 and announcements were made by Oil Search to the
  Australian Stock Exchange (ASX0 in this
  regard. The deal was done and all documents completed
  and registered.

  Chronology of Events
  Page xlii

  ix. On 14 March 2014 the Ombudsman Commission determined to
  investigate into the loan and the
  transaction. It issued a directive to stop work on the USB
  loan. The Ombudsman Commission had not
  realized that the deal had already been finalized. All
  documentation has been provided to the
  Ombudsman Commission on the loan and transaction and now
  there is a current investigation into the
  deal that has been done. There was therefore nothing left
  for the Ombudsman Commission direct to
  stop.

  54. 9 May, Mr Anthony Yauieb, Deputy Secretary for DoT, stated that
  the NEC Policy Submission on the
  UBS AG Loan to purchase Oil Search Ltd shares was prepared
  outside by Mr Vele. This statement is
  incorrect. Mr Vele as Acting Secretary for Treasury and as
  essentially the Project manager for the
  matter prepared the submission with the assistance and advice of
  the Consultants, as would be
  expected given legal and financial positions were required in the
  submissions. Mr Yauieb was the only
  other person who had applied for the substantive Secretary of
  Treasury‘s position. His statement
  tainted is with personal interest.

• Page 64 of 475

• 55. 14 May, Mr Vele advised the Commission that the State is
  required to make periodic interest payments
  to UBS AG.

  Finance Forms number 3 & 4 (FF3& FF4) indicated AU$2,261,938.36
  which is about K5,543,966.57
  was paid to UBS AG.

  56. 15 May, Mr Luke Goldsworthy and Ms Celle Raguine,
  Representatives of UBS AG pointed out to Mr
  Vele that failure to pay interest breached clause 5.1(b) of the
  Agreement, that is all payments to be
  made under the Commitment Documents that stipulated that all
  payments shall be made in full and
  without deductions.

  15 May OC advises Mr Vele, that it has received Mr