SAREI VS. RIO TINTO

C O N F I D E N T I A L PORT MORESBY 000319

SIPDIS

SIPDIS

FOR L/EAP J. HERGIN

E.O. 12958: DECL: 8/9/2016
TAGS: PREL PGOV PP
SUBJECT: SAREI VS. RIO TINTO

REF: 05 PORT MORESBY 120

CLASSIFIED BY: Robert Fitts, Ambassador, U.S. Embassy Port
Moresby, Department of State.
REASON: 1.4 (b)

1.(C) SUMMARY/COMMENT: The current PNG government would not
object to continuation of the case vs. Rio Tinto in California
courts, however it would likely be discomfited if the case were
prolonged. A lengthy case could also serve to delay responsible
decision making by the Bougainville government. A new PNG
government (expected in June 2007) could well raise anew
objections to the case. Thus, there would be little immediate
adverse foreign policy impact to resumption of the case.
However, there could well be different considerations down the
road. END SUMMARY

2.(C) The current PNG government is on record as preferring that
the Bougainville class action suit now in California courts be
decided in the U.S. That statement was made in March of 2005
(reftel) in the context of upcoming elections in Bougainville.
Those elections were held in May last year. The autonomous
provincial government has been formed and has gotten down to the
serious business of hitting the government and donors up for
money to fund its operations. The new provincial government has
uninterested in raising its own revenue within the province. If
we enquired today for the position of the PNG government, we
confidently expect that it would not oppose continuation of the
case in US courts. This is after all a national election year
for PNG. The prospect for funds from the case also helps
contain, to some extent, demands for additional funding from
Bougainville. If the Department wishes, we will request the
views of the government, but a response might take some time.

3.(C) The Bougainville peace process, in the eyes of
Bougainville leaders, has a long way to go. It will only end
some ten or 15 years in the future with a referendum on
independence which is provided for in the newly adopted
constitution. Whether that referendum will in fact be held,
will depend on the progress of national politics. Continuation
of the case does encourage those who hold the millennialist
hope/belief that the suit will produce billions, rendering the
province rich. A long trial could thus serve to delay
provincial leaders from making hard decisions, like raising
revenue locally to fund development. In fact, the same PNG
Minister who said (reftel) his government would not raise an
objection to the case proceeding, pressed the Ambassador to
ensure that the case was decided expeditiously, "so that the
Bougainvillians can get down to business."

4.(C) The previous Government in PNG had objected strongly to
the case being tried in U.S. courts, which was the basis for the
original USG submission on the case. A national election in PNG
will be held in May 2007 and it is completely conceivable that a
new government would raise those objections anew, particularly
if evidence in the case was drawing criticism of PNG's conduct
in the succession crisis.

FITTS