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Police have arrested the owner of the Rabaul Queen which sank last year killing hundreds of people.

The arrest follows over a year of investigation by a Commission of Inquiry and then an independent probe by the police.

Deputy Police Commissioner Operations Simon Kauba says 69 year old Peter Sharp from Scotland was arrested in East New Britain this afternoon.

Captain Sharp is the Managing Director of Starhips Limited in Rabaul which operates the Rabaul Queen among its fleet.

Mr Kauba says Captain Sharp has been charged with more than 162 counts of manslaughter and one count of taking unseaworthy vessel out to sea. 

Police confiscated his passport and he's remanded in custody at the Kokopo Police Station after an unsuccessful attempt late this afternoon by his lawyer to get an order from the National Court for bail.

Captain Sharp is expected to appear at the Kokopo District Court tomorrow.

A police investigation team from the National Capital District was in the East New Britain province this week to carry out the arrest and interview before Captain Sharp was formally charged this afternoon. 

His arrest is the first of many others to follow including the captain of MV Rabaul Queen and three other government officials from the National Maritime Safety Authority and others who may have neglected their part to ensure safety of the passengers on board the fateful journey on February 2nd 2012. 

Investigators say the case will go to the district court and if there is enough evidence, then he will stand trial at the National Court.

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