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Wednesday, August 28, 2013

Government corruption in Papua New Guinea

According to The Economist, a respected British news magazine, PNG's governments are notorious for corruption.  The 2012 Transparency International Corruption Perceptions Index rated PNG 2.5 on a scale of 0 (highly corrupt) to 10, (very clean).

Billions of dollars in foreign aid to PNG are being siphoned off by corrupt politicians and officials says Sam Koim, head of PNG's Anti-Corruption Task Force, who is on a mission to stop it.

Sam Koim

Australia contributes around $500 million to the PNG budget and 40 per cent of that budget is being stolen every year and transferred to Australian banks. "The dirty money is then moved from the banks to Australian-based businesses and then the money disappears" Mr Koim said.

Among those facing a committal hearing are three current politicians - Paul Tiensten, Mark Maipakai, and Francis Potape. The Task Force has arrested and charged 59 people with 30 committed to stand trial. Some of those arrested have properties in Australia and preparations are being made to have their assets frozen.

In July 2009, $45 million was deposited at the Commonwealth Bank in Lismore into a company account called Woodlawn Capital and how it got there is interesting.  It started in PNG with the Government-owned Motor Vehicle Insurance Limited (MVIL) who own shares in the Bank of South Pacific. They used those shares to take out a loan to raise $45 million.  That money was then transferred to Australia into the account of Woodlawn Capital at the Commonwealth Bank.

Griffith University Professor Jason Sharman says the responsible minister for the illegal transaction was Arthur Somare who is the son of former PNG Prime Minister Sir Michael Somare.  Arthur was found guilty of 13 charges of misconduct in office and was suspended from office in office in 2011.

Sir Michael Somare

The PNG government recalled the $45 million from Woodlawn Capital's directors Tim McNamara and Tim Breen who deny any wrongdoing and said they had no idea the funds were stolen.  "We haven't laundered any money, all the money is accounted for, all money was held on behalf of the client" Mr Breen said. 

Current PNG Prime Minister Peter O'Neill

Mr Koim said the newly elected Prime Minister Peter O'Neill is committed to fighting corruption and he was the one who created the Anti Corruption Task Force.

A few weeks ago Kevin Rudd  struck a deal with Mr ONeill - he pledged $1.1 billion into operating the Manus Island Detention Centre over four years and promised to give another $420 million in foreign aid.  The mind boggles at the temptation. 

And one more thing, The Commonwealth Bank doesn't seem to mind where the money comes from, as long as it keeps coming.