To: the Editor
Dear Sir
We wholeheartedly support the views expressed by Mr Narokobi reported in your article entitled 'Settle Sandline claim out of court, Govt urged'. Sandline has long sought to settle the matter of the outstanding sums due to the company under the terms of its contract with the State without the need to litigate every step of the way.
Sandline first approached the government of Papua New Guinea with a suggestion that a mutually acceptable settlement be negotiated very shortly after Mr Skate was appointed Prime Minister. That approach and every one made since has been either rejected out-of-hand or simply ignored.
Assuming that the State's costs are of a similar level to Sandline, then the legal fees incurred in fighting and losing the arbitration, together with the costs of other litigation relating to this contract, will have long ago passed US$2m. Add to this the fact that the arbitrators have directed that the State pays Sandline's costs plus interest on the debt, which today amounts to around US$3m, and continues to accumulate at the rate of around US$5,000 per day! To make matters worse, the Kina has depreciated by around 40% since the debt fell due two years ago.
All-in-all, by seeking unsuccessfully to litigate, as opposed to entering into a negotiated settlement, Mr Skate's government has accumulated an estimated additional US$14m of liability on top of the original sum. In other words, it will now cost Papua New Guinea the equivalent in 1997 terms of US$32m to clear this liability, instead of the US$18m that was claimed at that time.
Mr Skate and the attorney-general, Mr Gene, have gone on record as saying that it is wrong that Sandline is seeking to obtain payment for the award by attaching commercial assets around the world. However, none of this would be necessary if the State had not chosen to ignore the award, which was made unanimously by a distinguished panel of arbitrators, including the member of the tribunal selected by the attorney-general. If the State will not honour the outcome of the arbitration, which was a process that it had insisted on and promised to abide by, then Sandline is left with no other option if it is to obtain payment.
Both Mr Skate and Mr Gene are well aware that Papua New Guinea is quite entitled to make an application to the courts in Australia to 'stay' the execution of the award pending the outcome of yet another round of legal proceedings begun by the State in an attempt to obtain leave to appeal the arbitrators' decision. In fact, they were on the verge of doing just that in December last year when a full day of Court time was made available to hear such an application. However, this application was withdrawn at the last minute, presumably because the State would have been required to put up security for the award as a condition for the granting of the stay.
We are perplexed as to why, if the State is so confident that its legal battle is its best defence, it does not have the confidence to back this up by paying the amount of the award into court and thereby bringing to an end this ludicrous game of hide-and-seek, with PNG trying to protect its assets around the world from attachment by Sandline in settlement of the arbitration award and, in the process, incurring yet more costs.
It seems to us that, if the State is not prepared to honour what is an internationally recognised award against it, Mr Skate can hardly complain that Sandline continues to take all appropriate steps to collect what is lawfully due. His intransigence and delay of the inevitable is wreaking untold havoc and irreversible damage to Papua New Guinea's international standing and the confidence of foreign investors.
We are ready to settle this dispute. Is Mr Skate?
Yours
Michael Grunberg
The National newspaper
Papua New Guinea
Commercial Adviser
Sandline International