Date: Fri, 14 Mar 1997 14:04:29 -0500
From: malecki-AT-algonet.se (Robert Malecki)
Subject: Bougainville Update - 14/3/97


>Delivered-To: malecki-AT-algonet.se
>Date: Fri, 14 Mar 1997 18:28:43 +1000
>To: (Recipient list suppressed)
>From: Sasha Baer <sashab-AT-magna.com.au>
>Subject: Bougainville Update - 14/3/97
>
>Papua New Guinea contract with mercenary troops going ahead
>==========================================================>
>Radio Australia, Thursday 13 March, 1997 (5:04pm AEDT)
>------------------------------------------------------
>
>Papua New Guinea's Prime Minister, Sir Julius Chan, says his government's
>contract with the private military advisers, Sandline International, is
>going ahead.
>
>Sean Dorney reports that Sir Julius has sent an official reply to the
>Australian Prime Minister, John Howard, following their meeting in Sydney
>last Sunday at which Mr Howard canvassed what he called reasonable
>alternatives to the Sandline's Contract.
>
>Speaking publicly for the first time since his meeting with Mr Howard, Sir
>Julius said they had basically agreed to disagree on the wisdom of bringing
>a company like Sandline into the South Pacific region. "As it stands at the
>moment, we have a contract, not only we have a contract, we have paid for
>the contract, and not only that they are on the ground and they're
>performing according to the conditions of our contract." Sir Julius
>confirmed to me that that contract included the Sandline advisers going into
>Bougainville with the Papua New Guinea troops they are training. Sean
>Dorney, Port Moresby.
>
>----------------------------------------------------------------------------
>
>More criticism on PNG Government's relationship with mercenaries
>===============================================================>
>Radio Australia, Friday 14 March, 1997 (7:28am AEDT)
>----------------------------------------------------
>
>The Head of Political Studies at the University of Papua New Guinea, Doctor
>Ray Anere, says the PNG Government should reveal its source of funding for
>the engagement of Sandline International.
>
>Doctor Anere said the government's actions to date in the engagement of
>Sandline as a 36-million dollar military consultant, show it is moving away
>from being an open government.
>
>He warned that the government could be exposed to pressure from any external
>source of funding, with contractual obligations taking precedence over the
>views of the people of PNG.
>
>Doctor Anere said the funding details should be public, to rule out any
>suspicion of foreign manipulation.
>
>He said he believed any hardline approach to the Bougainville crisis would
>be counter-productive and further prolong the war.
>
>----------------------------------------------------------------------------
>
>World Bank denial on reviewing loans to Papua New Guinea
>=======================================================>
>Radio Australia, Friday 14 March, 1997 (3:29pm AEDT)
>----------------------------------------------------
>
>The World Bank has denied reports that it's reviewing its loans to Papua New
>Guinea, over the government's use of mercenaries on Bougainville.
>
>The Bank says its 358-million dollar economic recovery package agreed to
>last year has been fully disbursed, and the Bank is precluded from
>interfering in the internal political affairs of any country.
>
>It says where the Bank would comment on military matters is when military
>spending is seen to impinge on sound economic planning and management -
>especially where such expenditure distorts a country's development priorities.
>
>The Bank says its primary concern with P-N-G is to ensure these development
>priorities are maintained.
>
>----------------------------------------------------------------------------
>
>Australian Opposition calls for tough line against P.N.G.
>========================================================>
>Radio Australia, Friday 14 March, 1997 (4:09pm AEDT)
>----------------------------------------------------
>
>The Australian opposition has called on the government to get tough with
>Papua New Guinea over its decision to use mercenaries against rebels on
>Bougainville.
>
>The Opposition Foreign Affairs spokesman, Laurie Brereton, says as a minimum
>Australia must cut aid to P-N-G and suspend immediately the bilateral
>defence cooperation program.
>
>Mr Brereton says the use of mercenaries in the region is a dangerous step
>and must be stopped.
>
>"And given that we are subsidizing PNG to the tune of 320-million dollars
>per annum, given that this is Australian taxpayers money, and given that
>some 36-million of this money is going to help pay indirectly for the
>mercenaries, Australia should get tough and say for every dollar spent,
>there will be a dollar reduction in the allocation from Australia."
>
>----------------------------------------------------------------------------
>
>Chan vows to use mercenaries
>===========================>
>The Australian, Page 1, March 14, 1997
>--------------------------------------
>
>By South Pacific correspondent MARY-LOUISE O'CALLAGHAN 
>
>MARCH 14: Australia's relationship with Papua New Guinea was plunged into a
>fresh crisis yesterday when the Prime Minister of Papua New Guinea, Sir
>Julius Chan, rejected Australia's pleas and said he would send mercenaries
>to Bougainville.
>
>Sir Julius's comments, the first since his weekend meeting with the Prime
>Minister, John Howard, effectively rule out Australia's compromise offer to
>provide a "reasonable" alternative in aid and defence training to the use of
>the Sandline mercenaries.
>
>Mr Howard and the Foreign Minister, Alexander Downer, both restated
>Australia's "firm opposition" yesterday to the use of mercenaries.
>
>Speaking at a press conference in Port Moresby, Sir Julius said his country
>would not be treated like "a little child".
>
>"It is time for people offshore to realise that we are an independently
>elected government of an independent country . . . I have to decide at
>crucial times what is best for Papua New Guinea," he said.
>
>"We have a contract. Not only do we have a contract, we've paid for the
>contract. And not only that, they are on the ground (on mainland PNG) and
>they are performing to the conditions of our contract."
>
>Mr Downer said last night the PNG Government was entitled to make its own
>decisions, whatever the consequences might be.
>
>Last month federal Cabinet refined a series of options in response to the
>issue which are believed to include cutbacks in Australia's $320 million
>($US253 million) annual aid program with PNG.
>
>"At the end of the day, whatever the consequences may be, the Papua New
>Guinea Government is entitled to make its own decisions," Mr Downer said in
>an interview on ABC Radio. Dialogue with PNG on the issue would continue but
>Australia's position was "crystal clear".
>
>"Our national interest is to ensure that mercenaries don't become the norm
>in our region and mercenaries aren't used in Bougainville to try and resolve
>a very difficult political issue."
>
>A spokesman for Mr Howard said the Prime Minister would write to his PNG
>counterpart, after receiving a letter from Sir Julius following their
>meeting last Sunday.
>
>"Mr Howard is ready to continue discussing with the Papua New Government how
>the problem of the mercenaries might be resolved," he said.
>
>However, Sir Julius told journalists that while he understood where Mr
>Howard "stands on this position", he still intended to use the "paid
>military advisers" from the British-based Sandline International on
>Bougainville.
>
>"Yes . . . definitely; I have made it very clear on several occasions," he
>said when asked if the Sandline employees would accompany the PNG Defence
>Force personnel they are training to Bougainville.
>
>On the offer of reasonable options, he said Mr Howard "gave me some ideas to
>chew over, and I also responded in the same vein to him".
>
>In a separate development, World Bank officials yesterday denied they were
>in PNG to review loans recently granted to the Government in the light of
>the $36 million spent on the he mercenary contract.
>
>A spokeswoman for the bank said the delegation was in Port Moresby at the
>Government's invitation and it was not the bank's policy to interfere with a
>country's internal affairs.
>
>----------------------------------------------------------------------------
>
>Bank threat to PNG over mercenaries 
>==================================>
>Sydney Morning Herald, Wednesday, March 12, 1997
>------------------------------------------------
>
>By GREG ROBERTS
>
>In a move which may have serious implications for the beleaguered Papua New
>Guinean economy, the World Bank and other international agencies are
>reviewing loans worth $210 million because of PNG's use of mercenaries on
>Bougainville.
>
>A World Bank delegation led by an Iranian economist, Mr Pirouz Hamidian-Rad,
>has arrived in Port Moresby and is questioning the PNG Government about the
>$35 million it is spending to hire the London-based company Sandline
>International for operations gainst rebels on the disputed island.
>
>Mr Hamidian-Rad has asked Port Moresby to explain why the bank should not
>consider PNG has breached conditions Port Moresby agreed to in exchange for
>loans because there was no provision in the PNG Budget for the money, say
>finance sources.
>
>Mr Hamidian-Rad, who is the bank's PNG loans officer, has also asked the
>Government to explain how it proposed to fund its planned purchase of
>RTZ-CRA's majority share in the abandoned Panguna copper mine on Bougainville.
>
>The bank may not proceed with loans worth $65 million if it finds
>"performance criteria" agreed to by PNG have not been met.
>
>The bank's investigation is being followed closely by the International
>Monetary Fund, which has prepared a draft agreement offering another $65
>million in loans to PNG this year.
>
>The agreement is being reviewed by IMF economists because of the
>controversy, and there is no guarantee it will be ratified by the fund's
>executive at a meeting next month.
>
>Diplomatic sources said the Asian Development Bank (ADB), which was expected
>to offer PNG loans worth $80 million this year, is also reviewing its position.
>
>The IMF loans may not necessarily have been taken up, but the World Bank and
>ADB loans are essential to the PNG Government's development plans.
>
>The loans are part of a $465 million "structural readjustment" package
>agreed to in 1995 by the World Bank, the IMF, the ADB, Japan and Australia.
>
>It is subject to PNG meeting strict performance criteria ranging from
>adhering to an agreed national budget to implementing environmentally sound
>logging practices. 
>
>Australia has lent PNG $70 million under the package, in addition to the
>$320 million a year in aid it provides.
>
>The PNG Finance Minister, Mr Chris Haiveta, originally sought to pay
>Sandline from PNG's share of proceeds
>from the float of Oregon Minerals Ltd, partly because of "conditions
>relating to the IMF/World Bank loans",
>according to a confidential letter he wrote to the North Fly Highway
>Development Company.
>
>However, the proceeds could not be spent this year under agreements with the
>IMF and the World Bank. The
>letter was leaked to PNG's Post-Courier newspaper two weeks ago, forcing Mr
>Haiveta to give an assurance
>the payment would come from the "normal budgetary process".
>
>Mr Haiveta has said the mine takeover could cost between $50 million and
>$200 million, but he has not explained how the Government intends to fund
>the purchase, or pay estimated costs of between $400 million and $600
>million to restart the mine, which was abandoned in 1989 following rebel
>attacks.
>
>----------------------------------------------------------------------------
>
>PNG rebuffs Australia: mercenaries go ahead 
>==========================================>
>Sydney Morning Herald, Friday, March 14, 1997
>---------------------------------------------
>
>By CRAIG SKEHAN, Foreign Affairs Correspondent
>
>The diplomatic crisis over Papua New Guinea's hiring of foreign mercenaries
>for a military campaign against secessionist rebels on Bougainville deepened
>yesterday with the PNG Prime Minister, Sir Julius Chan, rejecting new
>Australian pleas to scrap the plan.
>
>The Prime Minister, Mr Howard, on Sunday personally offered Sir Julius an
>increase in military assistance on condition that mercenaries provided by
>the British-based firm Sandline International are not used.
>
>However, a defiant Sir Julius told a Port Moresby media conference yesterday
>that a $US36 million contract for the supply of mercenaries and military
>equipment would be implemented.
>
>The PNG Government has waged a nine-year military campaign against guerillas
>of the Bougainville Revolutionary Army (BRA) fighting for independence for
>the copper-rich island.
>
>The conflict has claimed the lives of hundreds of PNG soldiers and thousands
>of civilians, and Australia has argued that there should be a negotiated
>settlement as no military solution is possible.
>
>"Not only do we have a contract, we've paid for the contract," Sir Julius
>said yesterday. "And not only that, they are on the ground and they are
>performing to the conditions of our contract."
>
>While some PNG officials have indicated that up to 80 mainly southern
>African mercenaries would be used only for training PNG special forces in
>counter- insurgency techniques, Sir Julius said they would have an
>on-the-ground role on Bougainville.
>
>"Some of those backroom operators will need to be there to operate some of
>this equipment," he said.
>
>Sandline has been contracted to give direct back-up to PNG Defence Force
>company commanders in a planned campaign to wipe out the "hardline" BRA
>leadership.
>
>Sir Julius referred sarcastically to four Australian-supplied Iroquois
>helicopters which have been the subject of protects by Canberra over their
>use as a weapons' platforms.
>
>"We might give them back and ask Australia to sell them to help finance this
>project," he said.
>
>PNG bitterly resented Australia's refusal to provide increased military
>assistance, including high technology infra-red equipment to pinpoint BRA
>positions.
>
>But a series of human rights violations, including civilian massacres, has
>increased Australia's reluctance to be associated with the military campaign.
>
>----------------------------------------------------------------------------
>
>PNG lawyer fights mercenary plan
>===============================>
>The Age, 13 March 1997
>----------------------
>
>By GREG ROBERTS 
>
>A contract between Sandline International and the Papua New Guinea
>Government made specific provision for foreign mercenaries to be employed in
>front-line fighting on Bougainville, says a Port Moresby lawyer who is
>mounting a legal challenge against the operation. 
>
>The PNG Government responded to the challenge by Mr Rimbink Pato in the
>National Court yesterday by serving notice that it will try to throw the
>case out on security grounds. 
>
>The National Security Intelligence Organisation and the North Fly Highway
>Development Company applied to become parties in the case, which was
>adjourned to next week pending consideration of their application tomorrow. 
>
>The PNG Finance Minister, Mr Chris Haiveta, wrote to the company in January
>saying he had directed the Bank of PNG to transfer $35million from the
>Government's share of a mineral company float to another account to
>implement its Bougainville plans. 
>
>The letter is being examined as part of a review by the World Bank and other
>international agencies of loans to PNG worth $210 million. Agreements
>between PNG and the agencies prevent such transfer of funds. 
>
>The security intelligence organisation will argue that the case could
>threaten national security. 
>
>Mr Pato seeks an application restraining Mr Haiveta and the Prime Minister,
>Sir Julius Chan, from paying further public money to Sandline International.
>He argues that the contract with the company breaches the Constitution and
>violates bureaucratic procedures. 
>
>Mr Pato, who hopes the case will reveal contract details, said a lawyer had
>told him it provided for Sandline employees to be involved in fighting.
>``The contract makes it clear mercenaries will be actively engaged in the
>front-line on Bougainville,'' he said. 
>
>----------------------------------------------------------------------------
>
>PNG to go ahead with mercenaries
>===============================>
>The Age, 14 March 1997
>----------------------
>
>By LINDSAY MURDOCH,
>international affairs
>correspondent, Canberra
>
>Australian efforts to force Papua New Guinea to abandon plans to launch a
>mercenary-led offensive on Bougainville appear to have failed.
>
>The country's Prime Minister, Sir Julius Chan, yesterday declared
>mercenaries would still go to Bougainville and his Government would not back
>away from a $35 million contract with the London-based company Sandline
>International.
>
>Sir Julius's comments in Port Moresby dashed hopes that talks he had in
>Sydney last weekend with the Prime Minister, Mr John Howard, would lead to
>PNG backing away from using the mercenaries in an offensive designed to wipe
>out leaders of the secessionist Bougainville Revolutionary Army.
>
>Mr Howard is likely to approve some form of retaliatory against PNG if the
>mercenaries fight on Bougainville, where an estimated 12,000 people have
>died in the island's nine-year war.
>
>He issued a statement last night saying he would respond to Sir Julius's
>comments after seeing a transcript.
>
>Sir Julius refused to reveal the contents of his talks with Mr Howard, but
>made clear the Sandline contract would stand.
>
>``Not only do we have a contract, we've paid for the contract,'' he said.
>``And not only that, they are on the ground and they are performing to the
>conditions of our contract.''
>
>Sir Julius said that Mr Howard had given him ``some ideas to chew over''.
>But he said PNG would not respond immediately.
>
>About 40 African-based mercenaries have been training PNG soldiers in
>preparation for a renewed offensive on Bougainville.
>
>Rebels on the island have vowed they will ``shoot on sight'' any
>mercenaries, and claim advance parties have already landed in six places.
>
>Sir Julius yesterday admitted that some Sandline employees would go to
>Bougainville in an ``advisory role'' to oversee PNG's use of new equipment,
>including helicopters.
>
>The Foreign Minister, Mr Alexander Downer, said from Perth late yesterday
>that further talks would be held with PNG in the next few days.
>
>Sir Julius's comments contradict an assurance that PNG's Foreign Minister,
>Mr Kilroy Genia, gave Mr Downer last week that no mercenaries would go to
>Bougainville.
>
>The ABC reported from Port Moresby that PNG wanted a deal whereby Australia
>would provide the same services as Sandline, including counter-insurgency
>training, equipment including helicopters and sophisticated intelligence and
>listening equipment.
>
>But the conditions would be unacceptable to the Government, which is
>demanding that PNG pursue non-military ways to end the war.
>
>The ABC quoted Sir Julius as saying he was acting in PNG's national
>interests, and it annoyed him that every time he made a decision he felt
>Australia tried to slap him on the wrists or on the knuckles.
>
>- with AAP
>
>
>----------------------------------------------------------------------------
>
>NIO role sought in Sandline case
>===============================>
>The National, March 13, 1997
>----------------------------
>
>By GARONA VERE
>
>PORT MORESBY: The National Court was yesterday asked to make the National
>Intelligence Organisation (NIO) a party to the legal challenge against the
>engagement of Sandline International by the State.
>
>Warner Shand lawyers filed a motion seeking orders that the NIO be joined as
>a party to the proceedings to prevent information being divulged to the
>parties opposing the Government's decision to engage the foreign military
>advisors.
>
>Mike Wilson sought the order on behalf of Deputy Prime Minister and Finance
>Minister Chris Haiveta who was named as the second defendant in the legal
>challenge by lawyer Rimbink Pato.
>
>Mr Pato who is an intending candidate, had named the Prime Minister Sir
>Julius Chan, as first defendant, and the State as third defendant.
>
>He is seeking seven declarations by the court to nullify the engagement of
>Sandline International, stopping the use of the K33 million earmarked for
>the exercise and prohibiting any deals with the contracted company.
>
>Mr Wilson submitted that the documents were privileged under section 46 of
>the NIO Act, Chapter 405, and it was necessary to protect the State's
>interest in protecting security over the right to freedom of information.
>
>Mr Wilson also applied for the North Fly Development Company Pty Ltd (NFDC)
>to be a party in the proceedings.
>
>NFDC is alleged to be the company used to channel the K33 million Orogen
>sale proceeds to fund Sandline International.
>
>Mr Pato objected to Mr Wilson's applications but Justice Gibb Salika
>adjourned the matter for hearing to tomorrow. 
>
>Mr Pato's substantial motion seeking the declaratory orders has been
>adjourned to the Registry for a date to be set. 
>
>A search of documents filed at the court registry revealed that NIO Director
>General Ovia Rauka had written a letter on Monday (March 11) to Acting
>Finance Secretary James Loko directing all officers attached to the
>department involved in the State's decision to sign declarations of secrecy.
>
>Part of the letter stated: "Please note that all information that has come
>to your knowledge and to those persons involved in the project is now
>governed by the National Intelligence Organisation Act and is confidential
>and shall not be divulged to any person or authority without my express
>approval." 
>
>Mr Loko in reply to Mr Rauka's direction said: "Please note that there may
>be other Government Authorities that have had access to documentation
>