Papua New Guinea says will fully investigate UBS oil loan

MELBOURNE (Reuters) - Papua New Guinea Prime Minister James Marape announced on Thursday a full investigation into a A$1.2 billion loan from Swiss bank UBS UBSG.S in 2014 that funded a government purchase of a key stake in energy firm Oil Search.

FILE PHOTO: A man walks past a UBS logo projected on a screen in Singapore, January 14, 2019. REUTERS/Feline Lim/File Photo

The investigation will try to ascertain if the government broke its own rules in taking out the loan (now worth $847 million). Marape was finance minister at the time.

“This enquiry ... is not just looking at leaders but also digging deeper into a separate and full scope of the entire UBS transaction,” Marape told a televised news conference.

“The scope is not only confined to investigations in country. UBS transactions ha(ve) taken place in one or two other jurisdictions outside of our country and so the train of events will be followed by this inquiry... once concluded will put finality to the matters,” he said, on a broadcast from local news station NBC News aired on Facebook.

UBS did not immediately return an emailed request for comment but has previously said it would not comment on specific transactions.

“UBS adheres to strict standards in the due diligence and execution processes of our banking operations,” UBS said earlier this year.

Marape took over the role of prime minister in May from Peter O’Neill, who quit after a loss of confidence in his leadership.

The government later sold the stake in Oil Search OSH.AX and paid back the loan.

The PNG investigation comes after the loan was also scrutinized by the PNG’s Ombudsman Commission. Former Treasurer Don Polye had said the deal breached budget guidelines.

Swiss financial watchdog FINMA said in March it was in contact with UBS about the loan.

Marape said the PNG government had asked for the investigation to be concluded within three months, although the timeframe could be extended.

The prime minister said he was also under investigation because he was finance minister at the time of the deal, but there was no preconceived gameplan for the investigation.

“The country deserves the fullest scrutiny as to what has happened,” he said.

Reporting by Melanie Burton; Editing by Neil Fullick