Papua New Guinea’s Ombudsman Commission has referred the Prime Minister Peter O’Neill to prosecutors for alleged misconduct in office.

In May, O’Neill sought on behalf of the government a loan to purchase shares in resources company Oil Search, which controls more than 60 per cent of PNG’s oil and gas assets.

He’s facing allegations that proper processes were not followed in that decision, as well as decisions made in the sacking of treasurer Don Polye, and of statements O’Neill made on local television.

O’Neill says the issue is already subject to a judicial review, and he’s surprised by the Ombudsman’s actions.

“It is disappointing that the Ombudsman Commission has chosen to take this course of action instead of following procedure and tabling its final investigation in parliament,” he said.

He describes the referral as a circumvention of the judicial process, and has dismissed it as being politically motivated.

“This is a case of ‘sour grapes’ by former ministers who have been pushing this issue with the Ombudsman.

“I will see to it that these claims are fully tested through the court system and if there has been undue interference in this process it will be exposed.”

O’Neill has reiterated the importance of PNG moving quickly to buy back shares in Oil Search which he says have since increased in value by close to 200 million US dollars.

Oil Search is an ASX top 50 company with a significant stake in the ExxonMobil-led PNG LNG project and in the big Elk Antelope gas field that is being developed by Total of France.

The PNG Government currently has a 0.8 per cent stake in Oil Search and is its 10th largest shareholder.

In March, the PNG Government had to relinquish its existing 14 per cent stake in Oil Search to the Abu Dhabi-based International Petroleum Investment Corporation because it could not agree on terms to pay out its loan for the shares.

The then treasurer Don Polye was sacked for refusing to sign off on a $1.2 billion loan from Swiss Bank UBS to fund the deal.

O’Neill managed to settle that loan for a new shareholding after Poyle’s dismissal.

He says there has been full disclosure of the process involved, and those shares have already increased in value close to A$220 million.

“Oil Search is by far the largest employer, investor and taxpayer in PNG,” he said.

“It is right and proper for the nation to invest in this company in the interests of the people.”

“My only concern is that investors are not put-off by ongoing political attacks.

“PNG has a robust democracy and from time-to-time attempts are made to undermine the Government.

“But the government remains politically strong with more than 90 members in the parliament and our results over the past three years in advancing the economy speak for themselves.”