Corporate Governance in Resource-Driven Emerging Economies: A Comparative Study of Papua New Guinea and India

Introduction

Natural resource wealth is often celebrated as a pathway to prosperity, yet history repeatedly shows that it can generate governance crises rather than sustainable development. Papua New Guinea and India, two resource-driven emerging economies, exemplify this paradox. PNG’s economy remains heavily dependent on mining and petroleum, while India’s industrial expansion is tied to coal, energy, and powerful corporate conglomerates. In both jurisdictions, corporate governance serves as the critical safeguard for accountability, transparency, and equitable distribution of resource benefits.

This article contends that despite comprehensive statutory frameworks, weak enforcement, corruption, and political influence continue to undermine the effectiveness of governance. It examines Papua New Guinea’s Companies Act 1997 alongside India’s Companies Act 2013, and analyses landmark disputes such as the Ok Tedi litigation and the Satyam scandal. Together these highlight structural strengths, persistent weaknesses, and lessons for reform. The comparative analysis explores statutory provisions, judicial oversight, and environmental accountability before concluding with recommendations and future directions to strengthen governance in resource-dependent economies.

Legal Framework

Papua New Guinea

Papua New Guinea’s corporate governance regime is principally anchored in the Companies Act 1997,¹ which delineates directors’ obligations, shareholder entitlements, and disclosure requirements. The legislation was intended to modernise corporate practice and align PNG with international standards, yet its implementation has been hindered by limited institutional capacity and political patronage. Complementary statutes such as the Environment Act 2000² impose environmental compliance duties on corporations engaged in extractive industries, reflecting the state’s recognition of the ecological risks associated with mining and petroleum projects.

Despite these provisions, enforcement remains inconsistent. The Ok Tedi Mine disaster³ stands as a stark illustration: BHP’s operations caused widespread ecological damage and social disruption, exposing deficiencies in board accountability and regulatory oversight. More recently, the Papua LNG Project⁴ has generated debate over transparency in contractual arrangements. Civil society organisations have demanded greater disclosure of agreements and stronger monitoring of foreign investors, underscoring the tension between economic development and governance integrity.

PNG’s reliance on resource exploitation magnifies the importance of corporate governance. Weak enforcement mechanisms, combined with the influence of customary law and political networks, often dilute statutory protections. While reforms have been introduced to enhance transparency and accountability, including initiatives supported by international partners, the gap between legislative design and practical enforcement persists. The challenge for PNG lies not in the absence of legal frameworks but in the robustness of institutions tasked with applying them. Effective governance in such a resource-dependent context requires strengthening regulatory bodies, integrating customary practices with corporate norms, and ensuring that environmental and social obligations are not subordinated to short-term economic gains.

India

India’s corporate governance architecture is comparatively sophisticated, built upon the Companies Act 2013,⁵ which introduced significant reforms in board composition, audit committees, and corporate social responsibility (CSR). The Act mandates the appointment of independent directors, requires listed companies to establish audit committees, and obliges certain corporations to allocate a portion of profits to CSR activities. These provisions reflect India’s attempt to embed accountability and ethical responsibility within corporate structures.

Oversight is further reinforced by the Securities and Exchange Board of India (SEBI),⁶ which enforces disclosure norms, protects investor interests, and monitors compliance with listing obligations. Judicial activism has also played a decisive role in shaping governance standards. The Satyam Computer Services scandal (2009)⁷ revealed serious lapses in board independence and auditing practices, prompting regulatory reforms and stricter enforcement of corporate governance norms. Another prominent example is the Vedanta Resources case, where environmental compliance failures under the Environment Protection Act 1986⁸ highlighted the conflict between corporate profitability and governance obligations.

India’s framework demonstrates notable strengths: institutionalised regulatory bodies, mandatory CSR reporting, and judicial willingness to intervene in governance failures. However, challenges remain. Corruption, political influence, and compliance evasion continue to undermine the effectiveness of statutory provisions. Moreover, while CSR obligations have improved transparency, questions persist about their substantive impact on communities and the environment.

In comparison to PNG, India benefits from stronger institutions and a more active judiciary, yet both jurisdictions grapple with balancing economic growth against governance integrity. India’s experience illustrates that codified laws must be accompanied by vigilant enforcement and cultural shifts within corporate practice. The country’s trajectory suggests that governance reforms, when coupled with judicial oversight and regulatory vigilance, can significantly enhance accountability in resource-driven economies.

Case Law Analysis

Having outlined the statutory frameworks above, this section turns to the specific disputes that have tested — and in some respects defined — corporate governance practice in each jurisdiction.

Papua New Guinea

Ok Tedi Mining Ltd v PNG Sustainable Development Program Ltd⁹

This major dispute arose when the PNG Government moved to take complete control of the Ok Tedi copper and gold mine. The PNG Sustainable Development Program (PNGSDP), a Singapore-incorporated charitable trust, held a 63.4% majority stake in the mine, meant to fund long-term development for the Western Province. In 2013, the PNG Parliament passed the Mining (Ok Tedi Tenth Supplemental Agreement) Act 2013,¹⁰ effectively cancelling PNGSDP’s shares and nationalising the mine without compensation.

The core issue centred on constitutional property protections (Section 53 of the PNG Constitution)¹¹ and whether the state’s legislative expropriation violated company rights and fiduciary duties. Parliament’s sovereign power to legislate in the national interest ultimately prevailed, paving the way for state ownership. This episode fundamentally altered PNG’s resource governance landscape, sparking parallel international arbitration and cross-border litigation over PNGSDP’s remaining assets.¹²

Independent State of Papua New Guinea v Landowners of Petroleum Development License Areas (National Court, 2019–2024)¹³

This extensive, multi-year litigation stems from the PNG LNG (Liquefied Natural Gas) Project. Under the Oil and Gas Act 1998,¹⁴ local customary clans within Petroleum Development License (PDL) areas were entitled to millions in royalties. Payouts were frozen for years, however, because the state struggled to legally verify the exact beneficiaries, leading to intense inter-clan disputes and legal challenges against ministerial determinations.

The court had to resolve conflicting clan-vetting exercises, social mapping discrepancies, and the lawful beneficiaries of resource royalties under customary land tenure rules. Utilising court-annexed Alternative Dispute Resolution,¹⁵ the National Court worked through overlapping clan claims across various PDL blocks. The rulings emphasised that the state must finalise accurate, transparent landowner identification before extracting resources — a significant precedent for preventing future benefit-sharing gridlocks in major resource projects.

India

CBI v B Ramalinga Raju & Others (Special Court, Hyderabad, 2015)¹⁶

This landmark corporate governance case emerged from the 2009 Satyam Computer Services scandal, often dubbed “India’s Enron.” B. Ramalinga Raju, the founder-chairman, confessed to systematically manipulating the company’s accounts for years, inflating assets, overstating revenues, and fabricating ₹5,040 crore in non-existent cash balances to mislead shareholders and regulators.

The key issues involved large-scale accounting fraud, criminal conspiracy, breach of trust, and forgery under the Indian Penal Code 1860.¹⁷ In April 2015, the Special CBI Court convicted Raju and nine others, sentencing them to seven years’ rigorous imprisonment and imposing heavy fines. The judgment underscored strict accountability for corporate promoters and auditors.

Importantly, the scandal catalysed systemic reforms under the Companies Act 2013 and strengthened SEBI’s enforcement role. These reforms introduced mandatory independent directors, stricter disclosure norms, and enhanced audit committee oversight. The case thus became a turning point in India’s corporate governance landscape, demonstrating how judicial intervention can trigger statutory and regulatory transformation.

Sterlite Industries (India) Ltd v Union of India (Supreme Court, 2013)¹⁸

This key environmental law litigation concerned Sterlite’s copper smelting plant in Tuticorin, Tamil Nadu. Residents and activist groups alleged severe ecological degradation, air pollution, and violations of proximity guidelines near sensitive marine zones, and the Madras High Court ordered the plant’s closure.

The central issues involved judicial review of government environmental clearances under the Environment Protection Act 1986 and balancing industrial development against ecological conservation. The Supreme Court set aside the High Court’s closure directive, holding that regulatory clearance procedures had been followed. However, applying the “Polluter Pays” principle established in Vellore Citizens Welfare Forum v Union of India,¹⁹ the Court imposed a ₹100 crore compensation penalty for environmental remediation.

This judgment reinforced that corporate governance in India extends beyond shareholder interests to encompass environmental stewardship and community welfare. It established that while sustainable development permits industrial activity, corporations bear liability for the ecological harm they cause. The case remains a critical precedent for integrating environmental accountability into corporate governance.

Critical Evaluation

The case law analysis demonstrates that judicial intervention in both Papua New Guinea and India has functioned primarily as a corrective mechanism, stepping in when governance failures threaten economic stability and public trust. In Papua New Guinea, the Ok Tedi dispute exposed the fragility of constitutional property protections when confronted with resource nationalism. Parliament’s exercise of its expropriation powers reinforced sovereign authority but simultaneously raised concerns about investor confidence and the sanctity of fiduciary duties. The Petroleum Development License Areas disputes further revealed structural weaknesses in benefit-sharing frameworks, where prolonged delays in landowner identification undermined equitable distribution and stalled national projects. The judiciary’s reliance on Alternative Dispute Resolution highlighted its role in reconciling customary tenure with statutory obligations, yet also underscored the absence of proactive governance mechanisms capable of preventing such disputes in the first place.

India’s trajectory reflects different but equally significant vulnerabilities. The Satyam scandal illustrated how unchecked corporate fraud can destabilise markets and necessitate systemic reform. The Special Court’s conviction of Ramalinga Raju and others catalysed statutory overhauls under the Companies Act 2013, strengthening disclosure requirements and board independence. In contrast, the Sterlite litigation emphasised environmental accountability, with the Supreme Court applying the “Polluter Pays” principle to impose substantial compensation. This judgment reinforced that corporate governance extends beyond shareholder interests to encompass ecological stewardship and community welfare.

Taken together, these cases reveal a common weakness: judicial responses tend to arrive only after a crisis has already erupted, exposing systemic fragility. Sustainable governance in resource-driven economies requires more than reactive judicial remedies — it demands proactive enforcement, transparent corporate practices, and inclusive stakeholder participation. Without these safeguards, resource wealth and corporate expansion risk perpetuating instability rather than fostering equitable and resilient development.

Comparative Perspective

Examining Papua New Guinea and India side by side highlights how governance challenges manifest differently yet converge on the need for judicial oversight. Papua New Guinea’s disputes are rooted in resource nationalism and customary land rights, reflecting the state’s struggle to balance sovereign control with indigenous entitlements. The Ok Tedi case illustrates how legislative expropriation can override corporate structures, while the Petroleum Development License Areas litigation underscores the complexity of reconciling clan-based tenure with statutory benefit-sharing. Judicial intervention here primarily mediates between state authority and community legitimacy, ensuring extraction projects do not collapse under social conflict.

India’s governance challenges, by contrast, stem from corporate fraud and environmental negligence. The Satyam scandal exposed failures in internal controls and auditing, prompting systemic reforms in corporate law. The Sterlite case emphasised environmental stewardship, with the judiciary imposing liability on corporations for ecological harm. Unlike PNG, where disputes focus on ownership and distribution, India’s cases highlight the need for transparency, accountability, and compliance within corporate structures.

Despite these differences, both jurisdictions converge on the principle that judicial oversight is indispensable in correcting governance failures. Courts in PNG and India act as guardians of accountability, whether by enforcing constitutional safeguards, protecting indigenous rights, or applying environmental liability. Yet the comparative perspective also reveals a shared weakness: judicial action tends to be reactive, intervening only after a crisis has emerged. The broader lesson is that sustainable governance requires proactive regulation, stronger institutional frameworks, and inclusive participation to prevent disputes from escalating into systemic instability.

Recommendations and Future Directions

Drawing on the comparative analysis above, several reforms would strengthen corporate governance in both jurisdictions. First, Papua New Guinea should prioritise institutional capacity-building within its regulatory bodies, ensuring that agencies tasked with enforcing the Companies Act 1997 and the Environment Act 2000 have the resources and independence to act before, not only after, disputes escalate. Second, both jurisdictions would benefit from clearer, faster mechanisms for identifying rights-holders and beneficiaries — the delays seen in the Petroleum Development License Areas litigation illustrate how administrative gaps can generate years of avoidable conflict. Third, India’s experience suggests that mandatory disclosure and independent-director requirements are necessary but not sufficient; genuine board independence and auditor accountability require sustained regulatory vigilance beyond the immediate aftermath of a scandal. Finally, both countries would benefit from integrating environmental and social accountability more directly into corporate governance codes, rather than treating them as separate regulatory silos, so that ecological and community harms are captured by the same governance mechanisms that already monitor financial conduct.

Conclusion

The comparative analysis of case law from Papua New Guinea and India demonstrates that governance failures in both resource and corporate sectors frequently necessitate judicial intervention as a corrective mechanism. In Papua New Guinea, disputes such as the Ok Tedi nationalisation and the Petroleum Development License Areas litigation highlight the difficulty of balancing sovereign authority with customary land rights and investor confidence. In India, the Satyam scandal and the Sterlite litigation underscore the risks posed by unchecked corporate fraud and environmental negligence. Collectively, these cases affirm the judiciary’s pivotal role in safeguarding accountability, whether by enforcing constitutional protections, ensuring transparent benefit-sharing, or applying doctrines such as the “Polluter Pays” principle.

Yet the broader lesson is that sustainable governance cannot rely solely on judicial remedies applied after the fact. It requires proactive regulation, transparent corporate practices, and inclusive stakeholder participation. Strengthening institutional frameworks and embedding accountability at every level are essential reforms. Looking forward, resource-driven economies must integrate preventive oversight with cultural shifts in corporate practice, so that resource wealth and industrial growth become engines of equitable development rather than sources of instability.

Reference(S):

1. Companies Act 1997 (Papua New Guinea).
2. Environment Act 2000 (Papua New Guinea).
3. Ok Tedi Mining Ltd v PNG Sustainable Development Program Ltd [2013] PGSC (citation to be confirmed by the author against a primary case database prior to publication).
4. Transparency International PNG, Papua LNG Project Transparency Report (2021).
5. Companies Act 2013 (India).
6. Securities and Exchange Board of India Act 1992 (India).
7. Colin Filer, ‘The Ok Tedi Mine Disaster’ (2000) 26 Journal of Pacific History 133.
8. Environment Protection Act 1986 (India).
9. Mining (Ok Tedi Tenth Supplemental Agreement) Act 2013 (Papua New Guinea).
10. ICSID proceedings and Singapore High Court litigation relating to PNGSDP’s remaining assets.
11. Papua New Guinea Constitution, s 53 (protection from unjust deprivation of property).
12. Independent State of Papua New Guinea v Landowners of Petroleum Development License Areas (National Court of Papua New Guinea, 2019–2024) (citation to be confirmed by the author).
13. Oil and Gas Act 1998 (Papua New Guinea).
14. National Court of Papua New Guinea, Court-Annexed Alternative Dispute Resolution Rules (2010).
15. CBI v B Ramalinga Raju & Others (Special Court, Hyderabad, 2015); ‘Satyam scandal: Raju convicted’, The Hindu (Hyderabad, 10 April 2015).
16. Indian Penal Code 1860 (India).
17. Sterlite Industries (India) Ltd v Union of India (2013) 4 SCC 575.
18. Vellore Citizens Welfare Forum v Union of India (1996) 5 SCC 647.
19. World Bank, Papua New Guinea Economic Update: Enhancing Transparency in Resource Governance (2020).