Horizon Oil hired disgraced lobbyist in PNG

Horizon Oil, the ASX-listed company at the centre of corruption allegations in Papua New Guinea, hired a lobbyist who was found guilty of stealing public money and openly talked about providing favours to the then petroleum minister.

Documents obtained by AFR Weekend show Horizon retained Sir Moi Avei, a former PNG petroleum minister and deputy prime minister, after he was dismissed from parliament.

Sir Moi was found guilty in May 2007 on three counts of "misconduct in office" after depositing $110,000 of funds earmarked for rural infrastructure projects into his bank account.

Despite the guilty verdict, Sir Moi was hired two years later by Horizon to lobby then petroleum minister William Duma, who was holding up the company's licence approvals and transfers.

“I've been helping Minister Duma out for the past six weeks because the LNG project is in my backyard," he wrote to Horizon's then chief executive Brent Emmett in November 2009.

"You know how the system works ‘you scratch my back and I’ll scratch yours'.”

Horizon declined to comment on its hiring of Sir Moi. He no longer works for the board. Sir Moi did not respond to questions.

Mr Duma, who is currently the Minister for Commerce, is a key figure in the corruption scandal engulfing Horizon, after his department awarded a 10 per cent stake in a lucrative development licence to a shell company owned by his personal lawyer, Simon Ketan.

Corruption warnings

Horizon bought out this stake 10 weeks later for $US10.3 million ($15.4 million), ignoring repeated corruption warnings from lawyers working on the deal.

PNG Prime Minister James Marape is coming under increasing pressure to remove Mr Duma from the cabinet, after pledging to clean up corruption when he came to office last year.

The chairman of Transparency International in PNG, Peter Aitsi, said Mr Duma must step down pending a full investigation, which must look into who was the ultimate beneficiary of the shell company.

"Given the transaction involved US dollars and an Australian listed company, there is prospect for the PNG Police and anti-corruption agencies to work closely with the Australian Federal Police, the US Securities Exchange Commission and the US Department of Justice to investigate the evidence exposed by The Australian Financial Review," Mr Aitsi said.

Mr Duma has denied any wrongdoing and said any suggestion he acted improperly "amounts to political witch-hunting with malicious intent to make me look bad".

“That I may know Mr Ketan does not necessarily mean that processes set out in the Oil and Gas Act were breached just to grant favours for Mr Ketan,” he said via email.

PNG's current Minister for Petroleum and Energy, Kerenga Kua, has asked his department to investigate the corruption allegations against Horizon.

“It is a serious matter, which is why I have referred it to the department to investigate,” Mr Kua said when contacted by the Financial Review.

On Wednesday, Horizon suspended its chief executive Michael Sheridan, while an independent board investigation is undertaken. At the time of the payment in 2011 Mr Sheridan was the company's chief financial officer, company secretary and sat on the board.

Chairman Mike Harding will chair the board committee overseeing the internal investigation, which will also comprise Sandra Birkensleigh and Greg Bittar.

The company has hired lawyers at Herbert Smith Freehills and the accounting firm Deloitte to conduct the investigation.

Horizon shares have fallen 28 per cent this week and ended at 8.4¢ on Friday.