PNG premier promises political stability, corruption crackdown

CANBERRA Wed Nov 28, 2012 1:37am EST

CANBERRA Nov 28 (Reuters) - Papua New Guinea's Prime Minister Peter O'Neill promised on Wednesday to bring stability to the revolving door of Papua New Guinea politics and to crack down on corruption as his government courts multi-billion dollar resources investments.

O'Neill and rival Sir Michael Somare had both claimed to be the leader of the South Pacific island nation last year, turmoil typical of PNG politics, before O'Neill was re-elected in August.

In the middle of that crisis, corruption watchdog Transparency International ranked PNG 154th out of 183 nations on its global graft index released a year ago, only beating out countries like Somalia, North Korea and Afghanistan.

"We have to fight corruption. Corruption is like a cancer. If it is not detected, it simply grows and grows," O'Neill told the National Press Club in the Australian capital, Canberra.

"If not reduced, it undermines our efforts to maintain political stability and social cohesion. It is also a strong deterrent to good foreign investment."

On his first visit to PNG's former colonial ruler Australia since his re-election, O'Neill said an anti-corruption commission should start operating next year.

A special task force -- known as Sweep -- has been investigating graft for the past year and is looking into more than 170 complaints involving around $1 billion of public funds.

PNG, a nation of around 6.5 million people, is going through a resources boom and is home to a $15.7 billion Exxon Mobil gas export project, which is due to start production in 2014 and boost GDP by around 20 percent. There is also the vast OK Tedi copper mine and the Frieda River copper project run by Swiss-based global miner Xstrata.

Despite such abundant mineral wealth, successive governments have been unable to deliver infrastructure or services to the people, around 80 percent of whom eke out subsistence livings of village farming and small cash crops.

Task force Sweep's chairman Sam Koim has targeted politicians and officials who have invested money in the tropical northern Australian city of Cairns, describing Australia as the money-laundering destination of choice.

O'Neill said that, as well as plans for the new anti-corruption body early in 2013, parliament was also working on political stability. New laws that will guarantee a grace period of 30 months before a government can face a no-confidence motion, instead of the current 18 month, have passed the first stage of the legislative process, he said.

To win power in PNG, leaders must cobble together a range of lawmakers and parties to form a coalition. Lawmakers often change allegiances if offered better jobs from rival parties or leaders, which creates uncertainty and instability.

O'Neill said that, since PNG gained independence from Australia in 1975, many governments had faced challenges as early as six months into their terms, even though elections are only held every five years.

"That has not created stability at all. It does not give confidence to any investor to invest in an environment as such," he said. O'Neill hoped the new 30-month grace period would ease investors' concerns.

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