Chan: Making money

is not sinful

In a frank interview with SINCLAIRE SOLOMON in Port Moresby, Sir Julius strongly defended his decision to invest in Placer Pacific. The interview: Do you know why three companies, in which you had an interest, got the full amount of shares they asked for?

I honestly don’t know. You shall have to ask Placer Pacific and the underwri ters. They certainly owed me no favours.

I put them under a lot of pressure to increase the quota of shares to Papua New Guinea. If they knew they were my companies I mightn’t have got the amounts! Also it is important to note that the other two companies that applied, my wife and every PPP appli cant got less than they asked for.

Were you at any time asked by Placer Pacific or the underwriters if you or your companies were applying for shares? If so, were you asked to mention the names of those companies.

No.

Did you provide any inside information on the Placer shares, whilst negotiating with Placer and the underwriters, to your party or your companies which might have influenced them to apply?

What inside information? The de cisions to apply for shares was taken by the companies and the party auton omously. The information on which they based their decisions was the Placer Pacific prospectus and what people were saying in the newspapers. I agreed to buy shares on the basis of the same information. The only difference is that I had access to the managers of Placer Pacific who naturally said that their company had a bright future just as any company managers would say about their companies.

What were the circumstances of your direction to the Bank of Papua New Guinea to relax foreign exchange guide lines?

At first it was decided to allow only the Misima and Porgera landholders com panies to buy KlOO,OOO each. The exchange regulations forbid any over seas share purchases by companies. But when it seemed that PNG would be totally unable to take up more than a few million shares, I requested the Governor

to allow all PNG companies to apply for KlOO,OOO each.

It was a tough decision to make because it went against my views on tight monetary and exchange controls.

But it needed to be done if we were to take up our fair quota of shares. If I had not done it I would have failed the Prime Minister and my own belief that PNG should be a main actor in the ownership of Placer Pacific.

The Governor naturally protested pointing to the same concerns I had and I took his letter to the Prime Minister who said that we should go ahead anyway, but only for this share float. I wholeheartedly agreed with him and so the exchange guidelines were changed to enable individuals to apply for K 20,000 and companies for

Kloo,Ooo.

Do you believe that your actions were in any way a breach of the Leadership Code?

No. The Leadership Code remains unbreached I have not abused my position. I have not used confidential information, I have not done anything morally or legally incorrect.

The Finance Department is probably the most difficult and demanding of any

department to handle and run. It is very important, in fact imperative, to me that I maintain total authority and respect amongst the staff. Otherwise things simply do not work, problems remain unsolved and a feeling of mistrust under mines everything. I would never do anything to allow such a situation to develop. The Leadership Code is there to stop that and I am one of the most ardent supporters of it.

Fr Momis (Deputy Opposition leader) says you have ignored the interests of the “little people” in this whole affair. How do you respond to that?

My first response, when I read this, was amazement. The “big people” have resources to purchase huge blocks of shares I am talking about millions of kina here. Some companies could have applied for millions of kina each, mine certainly would have liked to apply for more than they did.

But I restricted all these big company buyers to KlOO,OOO and individuals to K 20,000 each so that the total alloca tion was spread as evenly as possible.

The five companies with which I am involved received about K 300,000 of shares they, like many others, would like to have bought more.

So, with the exchange regulations, we stopped the big boys buying up single blocks of a million plus. I also, through the Governor, arranged for a relaxation of the lending guidelines. This directly helped the small investors to raise quick finance.

The big boys and the big companies have less trouble raising quick loans because they have the necessary collate ral and credit backing. The relaxed lending guidelines was another move to help the little people get shares.

In all this the landowners of Misima and Porgera were not forgotten and the companies set up by Placer Pacific to represent them both got shares.

The “little people” did not miss out on the opportunity to participate in the float. Those who lacked the initiative to do so, like Fr Momis, should stop whinging because they missed out. Fr

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Sir Julius Chan.

Momis considers it a sin to show good business sense. It is not a sin. We are a nation of entrepreneurs and traders, and no amount of idealistic wishful thinking will ever change that.

Papua New Guinea is never going to advance if the act of making business profits is seen as distasteful and some how downgrading. Development can never take place if everyone is expected to take a vow of poverty and chastity, as Father Momis undoubtedly has. I share Father Momis’s religious beliefs but not his economic ones. Fr Momis wants everyone to be given the chance to be What role did the Prime Minister play in securing more shares for Papua New Guinea and in making sure Papua New Guinea was able to absorb them?

We were both concerned when we learned that Papua New Guinea looked like only taking some 1.5 million shares.

As there were only a couple of weeks to go before the application period ended, he directed me to begin negotiations with Placer Pacific and their underwri ters to secure an assurance for a larger allocation of shares to Papua New Guinea. At the same time I was to take the “necessary actions” to enable Papua New Guinea to absorb whatever Placer Pacific could offer us

The initiatives taken, as you know, T™ }° T 3 ‘u® U ] a ' tlo " s *° K2 °’ oo ° for ,nd ! v,duids and KIOO.OOOfor companies “ d *° r 9 p hen 1 requested the Central Bank Gov « r "° r> Slr J denr V T ° Robert . t 0 lr "plement theS ® h ® expr f«cd his concern about thc outflow of liquidity * he move meant and * e •rregulanty of tempora , n ' v changing the guidelines for a s P eculatlve venture.

I took Sir Henry’s concerns up with the Pr ‘ me Minister bu ‘ he decided, and I a9r f ed ’ to push on to ensure * hat we took up whatever Placer Pacific could tu o • M The Prime Minister also obtained, through his own actions, an extension of one week for Papua New Guinea applications by Papua New Guinea citi zens and companies, That was the extent of the Prime Minister s involvement.