Australia questioned over its role in corruption in PNG and Malaysia
Money laundering on Australia’s watch
“Australia is becoming the choice destination for dirty politicians in the region to park their funds.”
Two reports by The Age investigative team last week showed how corrupt foreign officials are laundering money in Australia. The stories cut uncomfortably close to the prime ministers of Malaysia and Papua New Guinea, generating outrage in both countries.
On Tuesday, we reported that Malaysian officials had used Australian real estate transactions to steal money from their citizens. They used a Malaysian government agency to buy a student accommodation block at Monash University, at an inflated price, and arranged for a $4.75 million kickback to be sent offshore.
On Wednesday, The Age and SBS presented undercover video footage that showed lawyers explaining how to bribe politicians in PNG and send tainted money to Australia.
The prime ministers of Malaysia and PNG, Najib Abdul Razak and Peter O’Neill, both sought to distance themselves from the players involved and announced wide-ranging investigations into their own governments. They were forced into action not because the behaviour uncovered by The Age was unexpected, but because it had been so clearly exposed in the Australian media and disseminated online.
The scourge of corruption is an old problem in both Malaysia and PNG, and their citizens are running out of patience. Some of the implications for Australia, however, are new. This stable, open and law-abiding nation has never had to think of itself as a place for corrupt leaders in the region to wash their dirty money. This week’s reports show how complacent we have become. Foreign officials are targeting weaknesses in the integrity of our systems.
Why did corrupt Malaysian officials choose something so brazen as an apartment block in Caulfield? The answer, in part, is that real estate is exempted from Australia’s otherwise-onerous anti-money laundering legislation. “Large sums of illicit funds can be concealed and integrated into the legitimate economy through real estate,” the agency responsible for tracking questionable money flows, AUSTRAC, says in a recent report, Money laundering through real estate. Why do corrupt PNG officials hire lawyers to do their dirty work? Because, in part, they too have been exempted from Australia’s money-laundering regime. “Legal practitioners provide a veneer of legitimacy,” says a second AUSTRAC report, which details how lawyers can abuse their “gate-keeping” and “facilitating” roles to conceal all manner of dodgy dealings.
Professionals in both industries see the legislative loopholes as business opportunities, as the PNG video footage makes abundantly clear. “The days of banging a million bucks into this secret numbered account in Singapore are over,” says one of the lawyers, Greg Sheppard, explaining how clients should conceal bribes in commercial contracts drafted by lawyers. Sheppard’s law firm partner, Harvey Maladina, was even more explicit. He suggested that clients could conceal corrupt money in inflated invoices issued by a well-known Queen’s counsel.
These revelations should help to shake this country from a deep complacency. Our reports point to substantial legislative gaps that need to be closed. Regulators need to wake up. The Age‘s investigative team has exposed all this is only after several Australian enforcement agencies chronically and systematically failed to fulfil their roles.
Australia has always relied on foreign capital and probably always will. What is new, and highlighted in these stories, is that much of it now comes from developing countries in our region where corruption is rife and rule of law is weak. People seeking to launder money have worked out that there are major weaknesses in Australia’s integrity and oversight systems.
How much does this failure matter? Just ask Papua New Guinea’s renowned corruption investigator, Sam Koim, who has been endeavouring to extract PNG public money from Queensland casinos and real estate – without success – for many years. As Koim told The Age: “Australia is becoming the choice destination for dirty politicians in the region to park their funds.” Australian authorities need to listen, and act.