The former leaders called a press conference in Port Moresby on Monday afternoon to slam Mr O'Neill for "bulldozing" the UBS arrangements through government agencies and exposing the PNG people to "huge" risks and costs.
The former leaders were responding to a Fairfax Media investigation which revealed the onerous terms and implications of the UBS deal, and how the deal has contributed to growing anger among land owners involved in the country's $19 billion PNG LNG project, whose major investors are ExxonMobil and Oil Search.
Michael Somare and Mekere Morauta said in a joint statement the revelations indicated Mr O'Neill had shown disregard for due process by ramming through terms that were loaded against his government, raising questions of corruption.
They said PNG fraud and anti-corruption investigators may require international forensic assistance, including from Australia's corporate regulator, the Australian Securities & Investment Commission, and the anti-money laundering agency AUSTRAC.
They also asked how Mr O'Neill intended to cope with the "huge fiscal burden" which will land mid-next year, when a complex UBS financial arrangement known as a "monetised collar" expires.
"Where will that money come from?" said the former prime ministers, in their joint statement. "Will he join hands with UBS to add another rope around the country's collar?"
But their most pointed questions relate to whether the PNG Government has been working with UBS over a new financial arrangement that could disadvantage land owner claims to a 4.2 per cent equity option in the PNG LNG project that has been pledged to them.
UBS flatly denies that it has been doing any such work.
"We have not been mandated by anyone in PNG to raise the finance for the landowner call option," a UBS spokeswoman told Fairfax on Sunday.
But the former prime ministers suggested they knew of approaches by officers purporting to work on behalf of UBS.
"We note that UBS has now denied working on behalf of the PNG Government to arrange new financing for land owners without their consent," said the two prime ministers, in their joint statement.
"This is contrary to our own information. Is it possible that UBS has a 'rogue' representative in PNG?"
The joint statement is politically significant because, until recently, Mr O'Neill's political position has been seen to be impregnable.
But he has come under pressure as the country's fiscal position deteriorates and he has had to battle with cascading corruption investigations.
The statement is also significant because Mr Somare, the country's "founding father", and Sir Mekere Morauta, who is widely respected for his commitment to probity and fiscal responsibility, have not been known to see eye-to-eye.
Over the weekend Mr O'Neill defended the UBS-financed investment in "our country's biggest taxpayer and one of the largest employers", saying the deal was necessary to clean up "the mess left behind" by the previous Somare Government.
Fairfax has sought comment from UBS and Mr O'Neill.