Der Lasslett Disput

The following interview had been released on March 10th, 2012. It has been quoted in several newspapers and blogs, such as the Post-Courier, Islands Business and in PNG Industry News Net. On April 23rd, 2012 a certain Dr. Kris Lasslett from the University of Ulster criticised the interview and started the following dispute:

Political uncertainty affected PNG related securities during the last months. Only a few weeks ago the European Shareholders of Bougainville Copper (ESBC) issued a claim to support their fight against naked short selling. But stopping short selling alone is not enough to stop the sell-off in PNG shares. The ESBC say that the PNG Government itself must encourage investors. We talked to ESBC President Axel G. Sturm:

Why did the ESBC claim for stopping unauthorized short selling by preventing security lending?

Within the last months Bougainville Copper’s (BCL) securities suffered a lot from increasing fraudulent short selling attempts on the ASX and other international stock markets. That’s why BOC shares are highly undervalued securities today. Of course, this makes shareholders unhappy. But the worst thing is that this scenario caused in consequence that a lot of new investors are scared to buy shares of our company today. But, BOC securities are and will remain one of the most promising opportunities in the international commodity segment - today and tomorrow!

Is naked short selling the only reason for the drop of BOC shares during the last year?

No, absolutely not! These short selling attempts have to be seen as the logical response of cynical market participants to the ongoing political instability in PNG. Today, many investors are confused about the situation in PNG. It has a new Prime Minister elected by an overwhelming majority in Parliament while an old stubborn Prime Minister cannot accept having been ousted. Unfortunately the new Prime Minister’s deputy contributes to this situation by making irritating statements from time to time. This fires foreign investors’ confusion. Actually, the most positive news from PNG is their honest struggle to fight against corruption. During the regime of the Somare family misappropriation of national funds and bribe had become a normal instrument in PNG politics. Even former Prime Minister Sir Michael Somare himself did not hesitate to use this tool regularly in the past. It was meant to achieve his personal political and private targets.

It was an excellent step made by the U.K. High Commissioner, Mrs. Jackie Barson, to organize a road show for Pacific Countries in Great Britain. This gave PNG the possibility to present themselves to interested investors. Quite obvious this was a success. It has also been a success that Mining Minister Byron Chan attended an international Mining workshop in Toronto/Canada. But this is not enough! PNG should also show that they back their own development. One opportunity to do so, is investing in companies from abroad who are already on the ground. I suppose, if for example the PNG Sovereign Wealth Fund would invest moneys into home industries it would be a great signal to investors worldwide. Let me explain this by the situation of our own company: PNG holds round about 19 percent of Bougainville Copper’s shares, the Autonomous Region of Bougainville (AROB) holds none. In order to motivate the AROB Government, the ABG, Papua New Guinea should help the ABG to acquire a major stake in Bougainville Copper to become real partners in the company. I imagine if PNG/ABG hold up to 25 percent or even more in BCL, both would be keen to increase their stake’s value by fast-tracking the re-opening the Panguna mine. BCL and Bougainville are like twins – they are linked forever in the awareness of the international financial markets. Even on the ground: one cannot survive without the other! A strong investment in Bougainville Copper shares by PNG would be understood by investors as PNG’s commitment to a better economic future. Investors are watching out for security of their investment; uncertainty is poison. Certainty is strongly needed now. Don’t forget: In the years while the Panguna mine was operational it contributed round about 30 percent to the national budget. Therefore I say: PNG, you must invest in your own country for you own benefit! And keep in mind: Share prices that are going down are also a very bad publicity for you! Each K 1,000 that is invested in BOC shares today easily will become K 2,000 within a couple of months. Once the Panguna mine is operational again the share price is supposed to be even thirty times higher than the actual level!

Yes, of course! PNG leaders are not stupid. They know that this is the best way to be recognized as a trustful partner in business affairs.PNG must change from a “Land of unexpected” to a “Land of expected”. In consequence speculation in BCL will calm down and shares of all companies concerned will take benefit from this. They will be re-considered as good investments according to their fair value. Within a few years even under developed regions, such as Bougainville will be able to re-flourish and gain prosperity. This prosperity will also stabilize politics. Remember the United Arab Emirates who developed from desert of warring clans to one of the wealthiest and comfortable places in the world – within 60 years only!

Find out here how Kris Lasslett commented on the interview on ACT NOW and PNG Mine Watch:

However, perhaps the ESBC’s President needs reminding, the greatest threat to BCL’s future remains its unacknowledged past. Despite revelations aired on SBS last year, which evidenced BCL’s complicity in the brutal security force operations on Bougainville, BCL and the ESBC continue to play down the company’s instrumental role in the conflict.

If the ESBC wish to restore the integrity of BCL, then they should forward the following demands to BCL’s Chairman and Managing Director Peter Taylor:

As the last ten years has proven, Bougainvilleans are a forgiving people. But they will not suffer corporate intransigence lightly. If BCL comes to the table and publicly acknowledges its role on the Bougainville war, perhaps the healing process can begin. Only then will BCL shareholders find the certainty they demand.

Being personally addressed, Axel G. Sturm published the following "open letter" on March 23rd, 2012 :

It's really shameful if an expert in criminology completely ignores facts and reality. Your naive adoption of statements and claims from rebel groups on the ground disqualify you as an honest scientist. In all your text there is no single word on competing criminal gangs on the ground. You don't refer on intimidation or blackmail. You don't expose neither robbery nor murder committed by these groups. A comparison to mafia or triads structures would be more appropriate.

You even do not hesitate to refer to the infamous California court case that has been initiated by a small group of greedy PNG citizens to raise money from Rio Tinto. No word about the doubtful involvement of former Prime Minister Sir Michael Somare in all this as well. All information on this was made public and is accessible thanks to some leaked documents in the past.

If you ignore facts, you do not deserve to be called a scientist. I suppose that your work in Ulster, a region well known for rebellion and organised crime, troubled your vision. Your text unmasks you as a naive and fanatic anti-mining activist. Unfortunately you are also allowed to spread your ideas amongst young students. You shall not use your academic position as a platform for indoctrination and agitation.

BY KEITH JACKSON

A PUBLIC DISPUTE HAS ERUPTED between Kris Lasslett [left], an academic specialising in the social and political impacts of mining, and Axel Sturm [right], the president of the European Shareholders of Bougainville Copper (ESBC).

It all began when Lasslett wrote of Sturm that he “needs reminding the greatest threat to BCL’s [Bougainville Copper Ltd] future remains its unacknowledged past”, contradicting Sturm’s view that the big problem is PNG’s current political uncertainty.

Now Dr Kris Lasslett is a bright, highly qualified and interesting bloke. He graduated from the University of Technology Sydney in 2004 with a first-class honours degree in law and a BA in communications. He went on to complete a PhD at the University of Westminster in the UK.

Dr Lasslett lectures in criminology at the University of Ulster and his research focuses on the political economy of state crime and civil conflict. He has conducted extensive field work on the Bougainville crisis in Papua New Guinea, and is researching mining, conflict and civil society.

In his article, Lasslett wrote:

Despite revelations aired on SBS last year, which evidenced BCL’s complicity in the brutal security force operations on Bougainville, BCL and the ESBC continue to play down the company’s instrumental role in the conflict.

If the ESBC wish to restore the integrity of BCL, then they should forward the following demands to BCL’s Chairman and Managing Director Peter Taylor:

-- BCL must publicly apologise for its evidenced role in the Bougainville conflict.

-- In an act of goodwill BCL should publicly disclose the depth of its involvement in the security force operations on Bougainville. This public disclosure should document the logistical support BCL supplied to the government’s security forces between December 1988 and March 1990. It should also reveal the relevant conversations that took place between the BCL management and senior state officials during this period.

-- BCL should demand that Rio Tinto – its parent company – cease contesting litigation taken by Bougainvillean landowners in the US, and fully compensate those victimised by the security forces using BCL property/facilities.

-- BCL should immediately remove from its Board of Directors, Sir Rabbie Namaliu who was appointed in March 2011. Sir Rabbie Namaliu was the Prime Minister of Papua New Guinea during 1988-1992. Under his Prime Ministership the Papua New Guinea security forces – in an effort to reopen the mine – executed and tortured civilians, systematically destroyed villages, and imposed a blockade on Bougainville, which included the denial of humanitarian aid. It is astonishing, in light of these facts, BCL would appoint Sir Rabbie Namaliu to the Board of Directors, and that the ESBC would support this decision.

As the last ten years has proven, Bougainvilleans are a forgiving people. But they will not suffer corporate intransigence lightly. If BCL comes to the table and publicly acknowledges its role on the Bougainville war, perhaps the healing process can begin. Only then will BCL shareholders find the certainty they demand.

Axel Sturm was outraged. In a public letter to Lasslett his opening salvo of “your disgraceful lampoon is remarkable” was quickly followed by:

It's really shameful if an expert in criminology completely ignores facts and reality. Your naive adoption of statements and claims from rebel groups on the ground disqualify you as an honest scientist. In all your text there is no single word on competing criminal gangs on the ground. You don't refer on intimidation or blackmail. You don't expose neither robbery nor murder committed by these groups. A comparison to mafia or triads structures would be more appropriate.

You even do not hesitate to refer to the infamous California court case that has been initiated by a small group of greedy PNG citizens to raise money from Rio Tinto. No word about the doubtful involvement of former Prime Minister Sir Michael Somare in all this as well. All information on this was made public and is accessible thanks to some leaked documents in the past.

If you ignore facts, you do not deserve to be called a scientist. I suppose that your work in Ulster, a region well known for rebellion and organised crime, troubled your vision. Your text unmasks you as a naive and fanatic anti-mining activist. Unfortunately you are also allowed to spread your ideas amongst young students. You shall not use your academic position as a platform for indoctrination and agitation.

Freedom of research and science does not mean promoting untruth!

I will not further comment on your ideas in future. It’s not worth it.

Powerful stuff, and it seems it's an argument that is likely to rage for a while yet.

On April 26th, 2012 Kris Lasslett replied to Sturm's open letter in ACT NOW as follows:

The Evidence of BCL's role in the Bougainville Conflict: A Reluctant Response to Axel G. Sturm's Open Letter

On the 23rd of April 2012, Act Now posted a blog I had written on BCL and the Bougainville conflict. It was a critical but hopefully constructive piece, on how BCL might mend certain bridges with communities on Bougainville, using fairly orthodox transitional justice techniques. It was not a new argument, indeed the distinguished ANU scholar John Braithwaite wrote in 2011: “Reconciliation between the mining company, a subsidiary of Rio Tinto, and Bougainvilleans is yet to be achieved. An obstacle here is that the company fears ritual apology would expose it to liability in the courts. Yet this reconciliation to some extent holds a key to international reconciliation among Bougainville, Australia and Papua New Guinea”.

In response to my article the President of the European Shareholders of Bougainville Copper composed an open letter addressed to me. This letter included comments that bordered on the slanderous. In particular Axel G Sturm argued:

Your disgraceful lampoon is remarkable. It’s really shameful if an expert in criminology completely ignores facts and reality. Your naive adoption of statements and claims from rebel groups on the ground disqualify you as an honest scientist...I suppose your work in Ulster [Northern Ireland], a region well known for rebellion and organised crime, troubled your vision...Unfortunately you are also allowed to spread your ideas among you students. You shall not use your academic position as a platform for indoctrination and agitation. (emphasis added)

I took it from Mr Sturm’s statement, he had not bothered to familiarise himself with my research on the Bougainville conflict. Had he, Mr Sturm would have discovered that my findings are based upon interviews with General Managers and three Managing Directors who steered BCL during the 1987-1991 period. These interviews were triangulated through extensive documentary research, using internal BCL records including meeting minutes and company memorandums (these documents became available following two court cases involving BCL and its parent company). I also interviewed senior state officials in Papua New Guinea, including the former Prime Minister Sir Rabbie Namaliu (1988-1992), and senior military officers involved in the operations on Bougainville.

I remained somewhat aloof during the controversy elicited by an SBS report in June 2011, as I feel my research speaks for itself – on reflection, I perhaps erred in not correcting factual inaccuracies that were subsequently reported in the media (see Callick 2011). However, in light of recent personal attacks on my credibility as a researcher and scholar, I feel compelled to summarise the empirical evidence on which my recent suggestions were based.

1. BCL placed substantive pressure on the Papua New Guinea government to send the Royal Papua New Guinea Constabulary Mobile Squads – a paramilitary style force, who according to their own commanders excel in the use of terror (RPNGC Assistant Commissioner, Personal Communication, 2006) – to Bougainville in 1988, following attacks on mine property by a landowner group. They made this request in full knowledge of the Mobile Squads’ chequered human rights record. As one General Manager informed me: “We knew the riot squads were heavy handed, that was well known in PNG. That’s how they worked. If you threw a rock at them you would get ten rocks thrown back. They were very heavy handed in the way they handled disputes in the Highlands…It was a case, somebody has to come. They were the only ones that could come, and put a lid on this thing before it got out of hand” (Personal Communication, 2006). The Mobile Squads were responsible for numerous atrocities on Bougainville during 1989-1990.

2. When Prime Minister Namaliu opted to send a peace delegation to Bougainville to resolve the impasse with landowners in December 1988, BCL’s Chairman – who was also an executive at Conzinc Rio Tinto Australia (CRA) – threatened to withdraw all CRA investments from Papua New Guinea. In a memorandum dated 6 December 1988 he recounts his reaction to the Prime Minister’s proposal: “The PM’s priority was to ‘appease’ the landowners. I expressed the view that CRA would want to review its assessment of PNG as a place to invest. In all, it was an unsatisfactory meeting”. At the time CRA was investing heavily in mineral projects at Hidden Valley in Morobe, and Mount Klare in Enga (Post-Courier, 29/11/1988; Business Review Weekly, 9/6/1989).

3. When Mobile Squad units and Papua New Guinea Defence Force (PNGDF) soldiers arrived on Bougainville during December 1988 and early 1989, BCL gave the security forces access to company assets. A BCL General Manager from the period recalls: “We did everything they asked of us to make their life more comfortable, and better able to manage through, with transport, communications, provisions, whatever, fuel. You know we gave them everything, because as a far as we saw it we were hoping that they were going to solve the situation, so we could start operating again. So we supported them every way we could” (Personal Communication, 2006). This claim was confirmed by a senior civil servant who was working in Papua New Guinea’s Prime Minister’s department: “We relied heavily on some of the civilian facilities provided by the company. They did everything, I mean we spent lots and lots of money, to provide backup support services for the operation. But the defense force was not properly equipped at all” (Personal Communication, 2006). I have found no evidence to suggest BCL were forced by the PNG government to make this contribution.

4. BCL regularly met with military commanders from the PNGDF and senior Cabinet figures. During these meetings security force operations were discussed in detail. For example, BCL was informed by the Minister of State that the security forces were planning to use “brutal firepower” to resolve the situation on Bougainville. This is evidenced in meeting minutes dated 8 June 1989. BCL did not alert the domestic or international community of the impeding humanitarian crisis.

5. BCL meeting minutes evidence the fact that during 1989 the company’s Managing Director provided strategic input to PNGDF commanders and government officials on security force offensive operations.

6. BCL was aware of the illicit tactics being employed by the government’s security forces, yet still availed company assets to the PNGDF and RPNGC. For example, the company’s charitable arm – the Bougainville Copper Foundation (BCF) – had surveyed homes lost to village burnings, which were conducted en masse by the Mobile Squads and the PNGDF during 1989. A BCF official informed me that during a security operation in March/April 1989, “forty, fifty villages, and the crops [were destroyed]. The villages were varying from five or six houses to twenty or thirty houses” (Personal Communication, 2006).

7. There is evidence to suggest BCL’s Managing Director did raise concerns with PNGDF officers over the loss of civilian life. Nevertheless, the company continued to provide material assistance to the security forces.

8. Allegations have been made that BCL’s Chairman supported the military blockade which was placed around Bougainville during 1990 – this blockade included the denial of humanitarian aid. In particular, the former Prime Minister and Foreign Minister (1988-1992) of Papua New Guinea, Sir Michael Somare, alleges that the Chairman stated lets “starve the bastards out”. Sadly the Chairman has passed away, and I have not been able to confirm the veracity of this particular allegation. However, I was told by a senior BCL executive that the company was supportive of the blockade for two reasons: “One was the ability of the militants to get more weapons to increase the level of their militancy. And the second was that there was always these threats that they were going to sell off the mine equipment” (Personal Communication, 2006).

Of course, I can only hint here at the evidence collected over several years of doctoral research. Moreover, in a blog post, it is clearly impossible to add more context, which would help readers understand some of the complex factors influencing BCL’s decisions.

Though in light of the above, I would suggest – to borrow the words of Mr Sturm – it was in fact those scholars and journalists that rejected the allegations made against BCL by landowners and activists who might be accused of being “naive”, after all accessible documentary evidence on BCL’s involvement has been available since 1990 (following a Supreme Court of Victoria court case involving BCL and their insurers – BCL records are also stored in an archive at the University of Melbourne and may be viewed upon request).

Nevertheless, it is not my intention to vilify BCL. They operated the Panguna mine for 17 years, and many scholars and journalists have written quite favourable pieces on their corporate record during this period. My specific claims relate to a small window in the company’s life, 1988-1990, where decisions were taken that implicated BCL in the hostilities, and the human rights abuses they generated.

Clearly it is up to the people of Bougainville to decide how they wish to manage their natural resources. However, democratic decision making about the future depends upon accurate knowledge of the past. In this respect, BCL can make an important contribution to democracy and reconciliation in Bougainville by, a) fully disclosing their role in the conflict; and b) making amends with those affected by their actions.

I am more than happy to engage in further probing dialogue with anyone who cares to comment; but I will not react to any further personal attacks, or ill informed judgements on the rigour of my research. I consider that issue now resolved.

*Kristian Lasslett is a Lecturer in Criminology at the University of Ulster and he sits on the Executive Board of the International State Crime Initiative.

Axel G. Sturm does not intend to comment on Kris Lassett's one-sided views. Dr. Lassett gave a good demonstration of his scienfic abilities. If he makes more in-depth research on the ESBC's homepage he may find out that his arguments are superficial and incomplete.

First: These four episodes discribe the situation on Bougainville in 2000. Very interesting: the role of the rebels who - today - find support by Dr. Lassett:

Last but not least, find here a timetable of the rebellion published by the Post-Courier on July 5th, 1989 :

The ESBC believe that Dr. Lassett should better do some more research on corruption and organised crime in PNG and in Bougainville as well. Perhaps, he then will also find out more about the real reasons of the Bougainville Crises. By the way: The ESBC cannot completely exclude that our mangement at the time might have committed some mistakes also. Nobody acts perfectly - especially not in a situation of violent rebellion and repeated attempts on their life.

But one thing has also to be clear: A state who earns a lot of money with mining on its territory (in our case: taxes and dividends!) is obliged to provide law and order on the ground! PNG did not! Bougainville Copper Limited had to leave the island over haste as it could not guarantee its staff's security anymore.

Brief: We appreciate Dr. Lassett's interest in Bougainville. We only DO NOT appreciate his one-sided approach to the Bougainville issue and his high-banded arrogance to believe that only his his view and his analyse are the correct ones!