Debt-trap diplomacy: PNG wants Huawei loan cancelled

Aug 12, 2020 – 12.00am

Papua New Guinea should not have to repay a $US53 million ($74 million) loan to China, according to the Pacific nation's Communications Minister, after being sold a faulty Huawei data centre that exposed its government files to being stolen.

Timothy Masiu, whose portfolio also includes information technology, said the National Data Centre, funded via a loan from China's Exim Bank, had not delivered what was promised.

Huawei is accused of building a deliberately faulty data centre in PNG. Bloomberg

"If you buy something from a shop and it does not work, you return it and get your money back," Mr Masiu told The Australian Financial Review.

"We are struggling to repay our other debts, why should we repay this loan?"

His comments follow the Financial Review obtaining a report that found the data centre, which used Huawei equipment and was designed by its engineers, had major cyber security flaws.

"It is assessed with high confidence that data flows could be easily intercepted," the 2019 report said. "Remote access would not be detected by security settings."

The report was commissioned by the National Cyber Security Centre of PNG, which is funded by the Australian Department of Foreign Affairs and Trade.

It was written by a cyber security contractor hired by DFAT and as part of that process was handed to the Australian government.

'It barely works'

DFAT declined to comment on the report. Huawei said the "project complies with appropriate industry standards and the requirements of the customer".

Huawei's statement is at odds with the cyber security report and comments by Mr Masiu noting that the data centre had fallen into disrepair recently, as insufficient money was set aside for maintenance and operations.

"It barely works," Mr Masiu said. "It's a failed investment. We may just have to shut it down."

The extension of loans by Beijing for projects that have little or no economic benefit has been labelled "debt-trap diplomacy".

The most outspoken critic of this practice was Australia's former minister for international development, Concetta Fierravanti-Wells, who in 2018 said China's assistance to the Pacific often resulted in "white elephant" projects and "roads to nowhere".

To get the PNG data centre up and running again, Port Moresby sought financial assistance from the Australian government, a request that resulted in the report being commissioned.