Internal probe clears Australian junior of Papua New Guinea corruption allegations

Australian junior Horizon Oil claims it is not in breach of foreign bribery laws after completing an internal investigation into corruption allegations over a 2009 deal in Papua New Guinea.

Horizon launched the internal investigation earlier this year over alleged corruption related to the company’s US$10.3 million purchase of a minority 10% interest in PRL 21.

The minority stake was held by Elevala Energy, a company that the Australian Financial Review (AFR) described as an “unknown shell company” with links to an associate of PNG’s then minister for petroleum & energy William Duma.

Following the allegations printed by the AFR, then Horizon chief executive Michael Sheridan was also let go from the company, with Horizon stating it was “untenable” for Sheridan to continue on as chief executive while the investigation was ongoing.

The company revealed Tuesday the investigation, which it said “included a forensic review of all aspects of the transaction”, confirmed no breach of Australian foreign bribery law had been established.

It also stated that it was not aware of any regulatory investigation into the matters in Australia or Papua New Guinea.

The company claimed the deal was taken to “advance Horizon’s legitimate business interest in PNG”, while it also claimed the structure of the deal and the price paid was consistent with market practice and comparable to other relevant transactions at the time.

It also confirmed that no additional payments were made in addition to the agreed purchase price, adding it had no knowledge of any subsequent transfers or transactions “made by counterparties” after the purchase price was paid.

“We recognise and regret the impact of these allegations. The disclosure and publication of company information without seeking to fully understand the facts around a transaction occurring more than eight years ago has caused significant loss to shareholders and cost to the company,” Horizon chairman Mike Harding said.

“The investigation provides the necessary closure in relation to these allegations and after a challenging few months, we are now focussed on the process of regaining the confidence of our stakeholders, so that we can move forward with confidence and deliver on our corporate growth objectives.”

The internal investigation was carried out by Herbert Smith Freehils and Deloitte, with oversight from an independent board committee.