Sandline wins pounds 11m court battle over anti-terrorist action

THE CONTROVERSIAL British security firm Sandline won a court battle in Australia yesterday against the Papua New Guinea government over unpaid fees of $18m (pounds 11.3m).

The ruling follows Sandline's involvement in an anti-terrorist operation on Bougainville Island that was aborted and nearly caused a coup in 1997. Colonel Tim Spencer, Sandline executive and Falklands hero, was arrested and deported. Queensland supreme court said it had no jurisdiction to hear Papua New Guinea's appeal against a 1998 international tribunal order that it pay the money. Sandline hired investigators and bailiffs to find and freeze bank accounts across the world held by Papua New Guinea.

"Sandline knows where Papua New Guinea's assets are. The state can run but it cannot hide," said a company spokesman. "Sandline would hope, although it does not expect, that the government will behave responsibly and meet its liability without wasting further costs in a futile attempt to delay the inevitable." The company has already taken action against Papua New Guinea's accounts with the Bank of England and the EU. Sandline has been involved in a number of controversial operations. It was at the centre of the `Arms to Sierra Leone' scandal that caused great embarrassment to the Foreign Office and to Robin Cook, the Foreign Secretary. The Papua New Guinea contract arose from the long-standing dispute between the government and Melanesian secessionists on Bougainville.

The Deputy Prime Minister and Defence Minister of Papua New Guinea turned to Sandline, "security consultants" based in London, after rebels on Bougainville had cut off a vital copper mine. In 1997 they contracted Sandline to provide military personnel and equipment and paid $18m of the agreed $36m fee up-front. But the involvement of foreign troops angered the army, which threatened mutiny.

The new government of Bill Skate has refused to pay the outstanding half of the fee. It says the contract with the previous administration was illegal and unconstitutional. Sandline appealed and the tribunal was convened, which unanimously awarded in favour of Sandline.

The judges ruled that under international law the contract was valid.