Home > Corruption, Papua New Guinea > COI Finance Department: Lest we forget

COI Finance Department: Lest we forget

November 18, 2013 Leave a comment Go to comments

By PNG Echo

‘Cabal’ (Wikipedia) “… is a group of people united in some close design together, usually to promote their private views or interests… often by intrigue … The use of this term usually carries strong connotations of shadowy corners, back rooms and insidious influence.” 

Corruption: systemic, systematic and contrived

The findings of the Commission of Inquiry into the Finance Department (COI) stands, now, more than five-years-old, as a damning indictment of the inefficacy and lack of will of PNG’s criminal investigating agencies and those with the power to direct them.

Had the findings of this Inquiry been acted upon, PNG could have avoided up to seven additional years where large amounts of money remain unsatisfactorily accounted for. (Read: misappropriated – stolen).

It’s been described as a ‘cabal’: a high level conspiracy involving lawyers, public servants, banking officials, judicial officers, Members of Parliament (and, in a seeming continuation of the practices beyond the remit and time scope of the COI) even up to and including the current Prime Minister, all seemingly colluding to rob the coffers of the State of PNG – money that rightfully belongs to the people.

High Treason

The most shocking revelation of the COI is that the massive theft was perpetrated not just by outside lawyers and their clients, but facilitated by the very people who were paid and tasked with protecting the State’s interests in a breathtaking display of treachery, self-interest, venality and/or incompetency – (including, but not confined to) the Attorney General, the Solicitor General and the Secretary of Finance.

These trusted employees and representatives of the people of PNG callously and wilfully betrayed them.  Their crime, should it be proved, must surely be ‘high treason’.

The system exposed

An elaborate scheme had been put in place going back to the year 2000 to by-pass all checks and balances, enabling the payment of exorbitant and/or false claims – to the enrichment of everyone concerned in the cabal, who all got their cut.

It was so entrenched that it prevailed through various Secretaries of Finance, starting with Thaddeus Kambanei in 2000, his replacement Gabriel Yer and finally Stephen Gibson who inherited the system and, in some cases, increased the stakes and enhanced the unwritten and corrupt rules. Gabriel Yer, for unstance,not content
with his role as facilitator,  (with whatever riches that brought) launched his own claim from an incident involving a botched police raid that the COI suspected was bogus.

Officially, it was the job of the courts to determine the legitimacy of a claim and the Solicitor General’s job to defend the State’s interest in court but this system was constantly and consistently by passed.

…except for a very small number they [compensation awards against the State] comprise payment on liability incurred under default judgments or out of court settlement. (p12)

The State’s agencies ignored stated procedure, rules and even directives.

In evidence before the Commission current and past Secretaries of Finance, and former Attorneys General and Solicitors general have all acknowledged they were fully aware and conversant with the directions but incredibly, each stated that they were “mere policy” [original emphasis] statements that need not be followed. (p20)


  • Late lodgments that should have rendered compensation claims unenforceable by law were entertained and paid out.
  • The Solicitor General’s Department, whose job it is to defend claims against the State in court, didn’t. Counsel for the defense failed to show up in most cases – and lost the case by default.
  • Nor did the Solicitor general follow up in court on the quantum.

Thus the Department of Finance acted as a de facto court, often making arbitrary decisions detrimental to the financial welfare of the State of PNG.

Whereas, the Finance Department’s only task was to find legally available funds in a ‘reasonable time’ to pay out adjudicated claims, in reality, their hand was constantly ‘in the cookie jar’ at their own pleasure.

The bastardized system had become normalized and deeply ingrained. Rorting of it was rife. Cooperating with this system was the bank that cleared and cashed compensation cheques immediately.

For the benefit of private lawyers

The Solicitor General’s Office and Department of Justice “failed to maintain its law office with adequate staff” according to the COI, This became the Departments’ excuse for failing in its duty to defend the interests of the state.

Yet there was always available money to brief private lawyers (the Departments in the period 2000-2006 exceeded the allotted budget by a whopping 10 million kina per annum in payments to outside private law practices, known as ‘brief outs’.)

Those sums [brief out fees] have provided a sure income for small law firms which have now grown on State business to 5 and 10 times the staffing of the Justice Department. (p34)

One of those private legal practices was that of Paul Paraka.

In a recent statement, a self-testament of good character, written subsequent (or a little prior) to his arrest, Paraka stated that his firm has 22 law offices nationally and that his firm “…prides itself in recruiting half of the Legal Training Institute pass-outs every year.”

Had the Department of Justice adequately staffed the department (the overspend of K10 million per annum would have been more than adequate) the state of PNG would not have been responsible for the unnecessary over enrichment of Paul Paraka Lawyers to its own detriment and, by association, the people of PNG.

Legally available funds and the Transfer Fund Suspense Account No 2

In 2000 and 2001 there were no allocations [by NEC] under the Appropriation Act for settlement of claims against the State.  However, the Secretary [Finance Department] illegally sourced well over K83 million to settie [sic] claims against the state… (p51)

…notwithstanding that NEC rulings have “…the force and authority of law.” (p18).

The establishment of a ‘slush fund’ helped him.

‘Trust Fund Suspense Account No 2’ was established illegally by the then Minister for Finance, Hon Andrew Kumbakor, after which the Secretary for Finance sought clearance from the Attorney General Mr Francis Danem – who cleared it.  Did he understand it to be illegal?  As the highest law officer in the land he ought to have.

The fund accrued monies to pay out the dubious claims when ‘legally available’ funds, weren’t.  It was kept topped up by monies sourced from unpresented cheques, cancelled cheques meant to be relodged in the original accounts, cancelled cheques that had been reissued (hence presented twice), refund cheques and other entries “…with no basis in accounting,” (p49).  This seriously skewed budgetary consideration for the departments and accounts where these cheques rightfully belonged.

At some stage, this account was revoked by the Minister in response to “…concerns about the way the trust was being used.” This notwithstanding, the cash book confirmed,  “…that the sum total of K130 million was paid out of the Account during the period 2002 to 2006 despite the ministerial assurance to the Auditor General that the Trust Deed was revoked.” (p56)

A law unto itself

The Finance Department had become a law unto itself answering to no one including and especially, the COI.

Senior officers of the Finance department have at all times been difficult even combative with the Commission. (p57)

Sam Koim of Task Force Sweep was prompted to ask an audience of AUSTRAC officers and bankers in Sydney (October 2012)…

… to imagine what would happen in Australia if your Department of Finance refused to answer to Parliament; if its members disbursed money without recourse to the national budget; if they colluded with each other and people outside the department to circumvent all controls, and misappropriated half of your government budget?

They would surely be prosecuted to the full extent of the law is the answer.  Corruption,on that level, once exposed, would never be tolerated in an Australian context.

Sadly: “Only in PNG.”

  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: