Task Force Sweep has been instructed to investigate the manner in which BHP Billiton was granted immunity from legal action in relation to damage caused by mining operations at Ok Tedi.

A second investigation will focus on major spending by the PNGSDP since it was created, including the hiring of consultants.

The mining company transferred its shares in Ok Tedi to PNGSDP charitable trust in 2002 so the revenues could be used to benefit the people of the Western Province and PNG.

PNG Prime Minister Peter O'Neill said the review would investigate the circumstances surrounding the granting of the unconditional indemnity to BHP for environmental and social damage by the then-government.

"The government needs to ascertain whether any breaches of the constitution or the laws of Papua New Guinea was involved in the agreement, which was personally negotiated by the then-prime minister (Sir Mekere Morauta)," he told the Post Courier.

"We will make the report public and then take advice from the government's lawyers on whether further action is justified.

"The fact that Sir Mekere was appointed chairman of PNGDSP and then OTML within a short period of his departure from the national Parliament raises serious questions in the minds of many people, given the influence BHP continued to exercise after it allegedly ended its involvement in OTML.

"We need to know exactly how the process was developed and implemented by the Morauta government."

O'Neill said the government would also appoint an independent accountancy firm to conduct an audit of spending on major projects by the PNGSDP since its establishment and would make public the audit report.

"This is about transparency and accountability and it must also be about not making the same serious errors in spending on major projects again," he added.

"These are monies belonging to the people of Western Province. They have the right to know their funds have been managed by those trusted to do so."