Re: Noreo BeangkeNovember 10 2006 at 4:27 PM
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Response to Noreo Beangke
by: Rowan Callick
Noreo Beangke is a successful Papua New Guinean businessman.
Deep in what appears the business environment from hell, he is a banker with plans to expand internationally, a director of one of Australia's top 100 listed companies and a major coffee and cocoa exporter.
He confounds many degraded expectations of corporate possibilities in the "arc of uncertainty" - not least in his derision for the protectionist nationalism prominent in pockets of PNG's private sector, and widespread among its political class.
"There is no Melanesian way of doing business," he stresses. "There is an international way. We have to join the world, with its capital and its expertise."
He learnt a lot about this way, he says, from his 10 years on the board of Oil Search, whose stocks stand to surge if the $6.5 billion gas pipeline from PNG to Brisbane - of which the company has the biggest single share - signs up the customers it needs for the go-ahead.
Beangke relishes such battles. His life has been a succession of victories over the odds.
He comes from the Henganofi area of PNG's exhilaratingly beautiful Eastern Highlands. Neither of his parents went to school. His father was a coffee smallholder, famed in his home region for helping carry a crashed DC3 plane for days across the mountains to Goroka airstrip.
Beangke was one of the last generation to live in a traditional, segregated "haus man" - a long, bush-material building exclusively for the men of the clan. He walked 11 kilometres to primary school every day and 11 kilometres home before being selected for high school - boarding in Goroka - and then for university in distant Port Moresby.
He chose to read economics and was interviewed by the young Ross Garnaut, then first assistant secretary in PNG's finance department, who has since become one of Australia's most influential economists, today a professor at the Australian National University and chairman of Lihir Gold.
After graduating in 1976, the year after PNG gained independence, Beangke went to work for Garnaut, who "had a lot of influence on me early in the piece".
By 1983, Beangke had climbed swiftly to become secretary for finance - one of the first Highlanders to head a major department. Two years later he shifted to head the Department of Primary Industry.
During this period, he represented the state on a number of boards, including those of Ok Tedi and Air Niugini.
Then in 1988, following a ministerial reshuffle and with the public service becoming more politicised, he was made ambassador to the European Union in Brussels - so removing his brand of independent thought far from PNG.
That was the last straw. "I threw the towel in, and walked off to my village. I just had it with all those politicians. I was going back to grow coffee," he says.
It lasted six months. Then a tall Australian - now a PNG citizen - walked in to the village to talk him back to a new career in business. The Australian was Garth McIlwain, who remains among his closest friends, and is general manager of the country's biggest bank, now also part of the Beangke bloc.
McIlwain, previously a central banker, had joined the PNG's first home-grown finance house, Credit Corporation, which had been established by PNG's first foreign minister, Maori Kiki, on leaving politics.
Beangke was persuaded to return to the capital, becoming company secretary of Credit Corp, and in 1990 managing director - which he remains.
The only finance house listed on PNG's embryonic stock exchange, the company has paid a dividend every year. And it has built a $25 million property portfolio.
In 1992 Credit Corp opened in Fiji, again profitably, except for a hiccup after the 2000 George Speight coup. It is back in the black, under the direction of one of the Pacific islands' most experienced business managers, Ross McDonald.
"He's ultraconservative - which you need in that type of economy, which is pretty volatile and can change overnight," says Beangke. "He knows who's crook and who's not."
Soon after investing offshore - the first time for any major PNG-based business - Credit Corp took on an even bigger challenge, uniting with the Roman Catholic archdiocese of Port Moresby to acquire the National Australia Bank's PNG offshoot, the Bank of the South Pacific.
Beangke has chaired the bank for almost 10 years, during which its share of the PNG market has soared from 5 per cent to 60 per cent. Its assets have grown from $40 million to $800 million following its latest takeover, together with a group of funds, of the government's PNG Banking Corp, against a bid from ANZ.
The PNGBC lost money in 2000, but was hauled back to the black in 2001 by McIlwain and is likely to make almost $20 million profit over the nine months from the purchase being finalised to the end of 2002.
Beangke's core company, Credit Corp, owns 11 per cent of the consolidated Bank of the South Pacific - a name which hints at its potential as a springboard into the broader region, having reached the limit of its growth within PNG.
That would almost certainly extend its competition with ANZ and Westpac, which dominate Pacific banking.
Soon, BSP is expected to become the second finance house, following Credit Corp, to join PNG's modest stock exchange, which lists just 11 companies.
Beangke has to stress to fellow countrymen who seek to get rich quick through the private sector: "There is no magic to it. There is no wantok system [network of relatives] in business. The principle is just to ask if an activity will contribute to the shareholders' interests."
He concedes that "there is a lot of political interference in a lot of areas in PNG and to a degree in Fiji, too. Politicians ask for favours, and there's no easy way to say no in Melanesian society.
"But you have to find a way if you're going to survive in business. Politicians don't bother me as much as they did 15 years ago."
As head of the Finance Department, Beangke was "Mr Maybe", he says. Since moving to the business world and becoming one of a handful of professional directors, he has become simply "Mr No".
"It's a small community, and everyone knows about it if you deal corruptly. When I was chairman of the Finance Department's budget priorities committee someone tried to offer money and they lost a tender because of it."
When the government of businessman Mekere Morauta, a predecessor of Beangke's as finance secretary, fell last year, the new administration of Michael Somare suspended the privatisation process and launched an inquiry into the sale of the PNGBC.
Beangke does not appear concerned about the possibility of being dragged into such inquiries. The convulsions caused by changes of government form a familiar occupational hazard for businesspeople in PNG.
"But it's a very disappointing thing about being successful in PNG, that people don't get credit for success."
He is chairman of PNG Coffee Exports, owned by Swiss giant Volcafe, and is a director of New Guinea Island Produce, the country's biggest cocoa exporter. Both crops are crucial earners for the 80 per cent of Papua New Guineans who live in rural areas, but output has suffered from decaying roads and burgeoning crime.
But Beangke's main focus is on managing the integration of the two banks, in a climate where interest rates rising past 15 per cent, big government borrowings and grim business prospects, provide scant scope for banking growth.
He believes that despite the country heading into its fourth year of recession, "it still has a lot of potential". That does not translate into short-term optimism, however.
He says: "Businesses are hanging on, after a very difficult three or four years, but many are by now close to using up all their savings. And the government has been crowding out the private sector from borrowing."
Tourism and agriculture should form the bases for future growth, he says. And a go-ahead for the gas pipeline would provide "a huge psychological boost" to long-suffering business people.
But until confidence can be restored, the net decline in jobs and rise in unemployment will continue, feeding crime in turn.
Beangke, although a level-headed nationalist, keeps a foot in Australia as do most PNG business people. Australia is the dominant trading partner and the source of whatever investment dribbles in.
His children are being educated in Brisbane, and he comes through Australia en route to checking on his business interests in Fiji.
"You can't rule out the possibility of our bank entering the Australian market . . . But you'd better point out that I said this with a smile."
Beangke has many other qualities. But perhaps the most essential - as for other PNG businesspeople who have survived the climate from hell - is a robust sense of humour.