Posts Tagged ‘Task Force Sweep’

Promises, promises: a decade of anti-corruption budgets and spending in PNG

August 18, 2017 1 comment

Anti-corruption suggestion box, Mombasa, Kenya (Marcel Oosterwijk/Flickr CC BY-SA 2.0)

by Grant Walton and Husnia Hushang on DevPolicy Blog

In Papua New Guinea, government responses to corruption have received a great deal of media attention over the past decade (see here and here). Despite this coverage, there is still much we don’t know about the state of the country’s anti-corruption agencies. Indeed, many struggle to provide the public with basic information about their activities. We could not obtain a copy of recent annual reports from the Ombudsman Commission, despite a request (frustratingly, you can view the covers but not the content of recent annual reports here).

To address this knowledge gap, our recent Development Policy Centre Discussion Paper tracks ten years of budgetary allocations and spending on key anti-corruption agencies: the Ombudsman Commission, the National Fraud and Anti-corruption Directorate, Taskforce Sweep, the Auditor-General’s Office and the Financial Intelligence Unit. In this blog we examine one of the three research questions we answer in the paper, namely: how have allocations for and spending on anti-corruption organisations changed over time? By comparing budgetary allocations and actual spending, we highlight the degree to which governments have fulfilled their budgetary promises.

PNG’s Ombudsman Commission is one of the few agencies in our analysis where budgeted and actual spending have mostly been in sync – that was the case until 2015 when allocations outstripped spending (Figure 1). Budgetary allocations for 2017 suggest the organisation’s funding will decline even more; on current projections the organisation will end the decade in the same financial position it was at the beginning.

Figure 1: Ombudsman Commission allocations and spending (2016 prices)

Located with PNG’s police department, the National Fraud and Anti-Corruption Directorate (Fraud Squad) plays a significant role in fighting corruption. Figure 2 demonstrates that spending on the Fraud Squad, despite its role in attempting to arrest the Prime Minister Peter O’Neill and other senior ministers, increased between 2008 and 2015. Yet there has been significant variation. Between 2011 and 2015 there were large gaps between allocations and spending, although the gap has been declining. Reduced spending in 2012 and 2013 is likely due in part to resources being reallocated to Taskforce Sweep, which was established in 2011. Budget allocations declined by 23 per cent between 2016 and 2017.

Figure 2: National Fraud Squad allocations and spending (2016 prices)

The third anti-corruption agency we examine is the Financial Intelligence Unit (FIU) – now known as the Financial Analysis and Supervision Unit – an agency with a mandate to investigate money laundering and terrorist financing. At the time the 2015 budget was announced, the media made much of the fact that the FIU was allocated less than the police band’s budget. Our analysis (Table 1) shows the difference in spending between these organisations was even worse. In 2015, in real kina 1.07 million kina was spent on the PNG police band and the FIU received 264,364 kina – so the police band received almost four times more than the FIU. For the two years data is available (2014 and 2015), spending on the FIU was less than half of allocations.

Table 1: Financial Intelligence Unit allocations and spending (kina, 2016 prices)

The Auditor-General’s Office is tasked with inspecting, auditing and reporting on accounts, finances and properties of government departments, agencies, and public corporations. Figure 3 shows that in 2012 the agency’s allocation rose above spending, and 2013 spending rose above allocations. By 2015, spending had declined to 21 million kina, and then increased slightly in 2016 to 22.3 million kina. However, funding is set to decline, with allocations reducing to 16 million kina by 2017; in real kina this is less than the agency was allocated at the start of the decade.

Figure 3: Auditor-General’s Office allocations and spending (2016 prices)

Figure 4 depicts the PNG government’s budgeted and actual spending on the short-lived but relatively successful Taskforce Sweep and the yet to be established Independent Commission Against Corruption (ICAC). After Taskforce Sweep’s role in the attempted arrest of Prime Minister Peter O’Neill, spending slumped sharply to 5 million and zero kina in 2015 and 2016 respectively. However, the amounts reportedly spent are far lower than allocations. While the O’Neill-Namah government quickly spent 7.5 million kina (non-budgeted) on the agency in 2011, since then the difference between allocated and actual spending has been significant. Just under one million (real) kina was allocated for the yet to be established ICAC in 2017. Thus, our analysis shows that the meteoric rise and fall of Taskforce Sweep was accompanied by unfulfilled spending promises.

Figure 4: Taskforce Sweep and ICAC allocations and spending (2016 prices)

To get a sense of the relative spending on each organization, Figure 5 compares actual spending over time (and allocations where spending data is not yet available) of each of these organisations. It shows that out of the agencies we examine, the Ombudsman Commission and Auditor-General’s Office are by far the most heavily funded. Traditionally, more has been spent on the latter than the former, although in 2017 this appears set to change, with the Auditor-General’s Office facing severe funding cuts. In comparison, other agencies receive paltry sums.

Figure 5: Spending on five anti-corruption organisations, 2008-2017 (2016 prices)*

*Actual spending solid lines; budgeted dashed lines. 2016 figures for Ombudsman Commission and Auditor-General’s Office from Final Budget Outcome (2016).

Figure 6 shows that overall spending on anti-corruption agencies has been less than allocations since 2012. Overall spending and allocations have been reducing since 2014; because budgetary allocations are made the year before (i.e., the 2014 allocation is made in 2013), this means that the PNG government was significantly reducing its commitment to anti-corruption agencies before Taskforce Sweep helped organise an arrest warrant for then Prime Minister O’Neill.

Figure 6: Total anti-corruption allocations and spending (2016 prices)*

*Total Anti-corruption Spending – Ombudsman Commission/National Fraud and Corruption/Auditor-General’s Office/Taskforce Sweep/FIU/Anti-corruption program Department of Finance

Amidst calls for the new government to establish an ICAC, these findings suggest anti-corruption activists and policy makers should be pressuring the PNG government to close the gap between budget promises (allocations) and actual spending. In addition, greater efforts are needed to ensure that spending on existing anti-corruption agencies does not continue to fall.

Grant Walton is a Research Fellow and Husnia Hushang is a Program Officer with the Development Policy Centre. This blog is based on the Development Policy Centre Discussion paper, ‘Promises, Promises: A Decade of Allocations for and Spending on Anti-Corruption in Papua New Guinea’ available hereCalculations for graphs and tables can be found here.

Note: We understand that it is now possible to get a hardcopy of recent annual reports from the Ombudsman Commission’s office.


Peter O’Neill’s arguments do not stand scrutiny

June 3, 2016 1 comment

Dilu Goma

Peter O’Neill’s argument against stepping down or resigning as Prime Minister in order to allow law enforcement authorities to do their job of investigating allegations of crimes or misconduct in office is that there is no ‘evidence’ of any wrongdoing on his part. Based on this, he has fought tooth and nail, both in court and out of court, to stay on in the office of Prime Minister of PNG. The out of court tactics he has used (killing the Task Force Sweep, changing justice minister, removing police commissioner, trying to remove the chief magistrate, etc) are clear signs of a power-hungry individual. The in-court battles he has fought will not come out in his favor in the end, because lawful processes of the Police, Prosecution, Leadership Tribunal, etc are all guaranteed under the Constitution, and the Supreme Court is likely to uphold this clear principle of good governance.

Two fallacies of O’Neill’s argument concerning ‘lack of evidence’ are as follows.

One, it is not for him to determine whether there is evidence of any wrongdoing, because only a court can make that determination. And the ridiculous thing is that when the court (and Tribunal) want to make this determination, he finds a way to put a stop to that. So, it seems that only HIM will continue to make this determination, albeit only temporary. I do not believe the Constitution has given him (or any body else who has been alleged to gave committed a crime) to make such a determination. Everyone else submits to the due process of the law, so who is Peter O’Neill to not to do the same? If it is because he is the Prime Minister, then this is a clear abuse of his office. Indeed, it really should be the other way around; i.e., because he is the Prime Minister he should be the first person in the country to show respect for the public office he holds and do two three things: one, he should resign from office; two, he should voluntarily attend at the police station and answer questions that the police have; and three, he should cooperate with the police and leadership code authorities to have any case started against him heard and determined. I would say that that would be the marks of a true leader who cares about protecting the integrity of the office of Prime Minister. This is not to say that he will forgo his individual Constitutional rights, because the recognition of his rights are integral in the legal processes involved, and so his rights will be observed as a matter of course.

Two, the only criteria under the Leadership Code (s.27 Constitution) that Peter O’Neill (or any other such leader) is required by this Code to be concerned about is to ask himself if his conduct (or what is alleged against him) may give rise to ‘doubt in the public mind’ as to whether he ‘could’ have a conflict of interest or he ‘might’ be compromised or his conduct ‘demeans’ the office of Prime Minister or his conduct has allowed the integrity of the office of Prime Minister to be called into question or his conduct has endangered or diminished the respect for and confidence in the integrity of government of PNG. The general public of this country may not know these exact wordings of the Leadership Code, but it is their general understanding of things that can be sufficient to warrant a leader to resign, submit himself to the law, and cooperate with law enforcement authorities. The bottom line in the Leadership Code is the protection of the name and integrity of the public office that the leader holds. In my mind, Peter O’Neill has clearly forgotten about this very important principle.

The Case Against Peter O’Neill

June 2, 2016 1 comment


Adam Boland | Pacifik News | June 1, 2016

Peter O’Neill has become the great survivor.

For two years, he’s avoided serious questioning over allegations that could end his time as Prime Minister of Papua New Guinea.

Amid the claims and counterclaims, it’s perhaps easy to lose track of how we got to this point. So, we’ve broken down the main issues that refuse to go away.

The crusade

Almost immediately after coming to power in 2011, Peter O’Neill vowed to rid his country’s bureaucracy of corruption.

He set up a powerful crime fighting unit comprising police, prosecutors and auditors. It was known as Taskforce Sweep and it proved extremely effective.

Investigators showed they weren’t scared of anyone. Business leaders, senior officials and politicians were among those arrested. Their probe revealed shocking examples of public money being used for private purposes. Education, health and other vital projects all suffered as corruption flourished.

Arrests turned into convictions as taskforce head Sam Koim proudly declared: “We have created a momentum and other agencies are now beginning to rise up. More and more, we see prominent people are being called into question.”

One of the people about to be called into question was none other than Peter O’Neill.

The Paraka Allegations

Evidence emerged that supposedly linked the Prime Minister to fraud at PNG legal firm, Paraka Lawyers.

Lawyer Paul Paraka

Lawyer Paul Paraka

In mid 2013, Paul Paraka was accused of invoicing the government for work that was never done. Of almost 3,000 bills issued, 97 per cent were found to have been inflated or falsified. That added up to around $30 million in public money that was then thought to have been laundered through Australian banks. Paraka denies any wrongdoing.

Investigators say the money kept flowing to Paraka thanks to a letter of authority signed by Mr O’Neill when he was Finance Minister. He insisted the letter was forged and he had no knowledge of the payments.

But Taskforce Sweep was confident in the evidence and wanted to question Mr O’Neill. When he refused in June 2014, an arrest warrant was issued.

The fallout

The Prime Minister was determined to avoid being questioned. He went to court, gaining an order that prevented his arrest.

Soon enough, Taskforce Sweep was starved of funding before finally being disbanded. The Police Commissioner and Attorney-General were also replaced.

Mr O’Neill was unrepentant: “We are going to continue to terminate everybody who is going to undermine the work of the government,” he said.

To this day, he’s avoided arrest but a smaller anti-corruption unit is again on the case, albeit with tight restrictions from factions within the police loyal to Mr O’Neill. Investigators were even locked out of their building last month after arresting the Prime Minister’s lawyer on allegations of perverting the course of justice.

The UBS loan

The Paraka scandal isn’t Mr O’Neill’s only problem.

He’s also facing intense scrutiny over the process he used to take out a US$1.2 billion loan on behalf of the country in 2014.

The money was used to buy a 10 per cent stake in Oil Search Limited.

Former PM Michael Somare

Former PM Michael Somare

Former Prime Ministers Michael Somare and Mekere Morauta both accused Mr O’Neill of bulldozing the deal through government agencies despite huge risks to PNG.

The country’s Ombudsman was concerned too and referred the matter to the public prosecutor who then called in the Leadership Tribunal.

But once again, the Prime Minister sought court intervention, obtaining an order to stop the tribunal from convening.

Former Chief Justice Arnold Amet says if the tribunal is ever allowed to convene, Mr O’Neill will be automatically suspended. The three judges who make up the tribunal also have the right to dismiss the Prime Minister if they find wrongdoing.

The Supreme Court will soon rule on whether the tribunal can convene.

The protests

And that brings us to the ongoing protests by university students.

For a month now, they’ve been calling on the Prime Minister to come good on his 2011 promise to shine a light on corruption.

They say that can only happen when he finally submits to questioning.

The thirteen MPs so far charged, waiting sentence or imprisoned

April 27, 2015 2 comments


For those of you who are keeping track, this is an update on the Papua New Guinea members of Parliament who have been charged or found guilty and await sentence or have been imprisoned to date:

CHARGED: Francis Awesa, MP for Imbonggu, Works Minister

Referred to the Public Prosecutor by the Ombudsman Commission, Nov 2014 for unlawfully engrossed a public easement for personal use and in the process denied the public right of access and failure to disclose a property. Public Prosecutor requested a Leadership Tribunal, March 2015

CHARGED: Delilah Gore, MP for Sohe, Community Development Minister

Referred to the Public Prosecutor by the Ombudsman Commission, January 2015

CHARGED: John Hickey, MP for Bogia

Arrested and charged by police for misappropriation of K700,000, March 2015

PRISON: Havila Kavo, MP for Gulf

Found guilty of misusing US$50,000 from a trust account. Sentenced to three years prison, December 2014

GUILTY: Ronny Knight, MP for Manus

Found guilty of misappropriation of K900,000 by a Leadership Tribunal, March 2015. Awaiting sentencing.

CHARGED: Boka Kondra, North Fly MP and Tourism Minister

Referred to the Public Prosecutor by the Ombudsman Commission and suspended from Office for alleged misappropriation and misuse of funds including K85, 276 from the DSIP funds and District Support Grant; K134, 966 from DSIP and DSG funds in rental payments for accommodation in Port Moresby; and K18, 200 from the DSIP and DSG

CHARGED: James Lagea, Kagua-Erave MP

Referred to the Public Prosecutor by the Ombudsman Commission in January 2015 for his failure to submit Financial Returns as required under Section 89 of the Organic Law on the Integrity of Political Parties and Candidates and his failure in upholding his duties and responsibilities of office as required under Section 27 of the Constitution and the Organic Law on the Duties and Responsibilities of Leaderhship.

CHARGED: Ben Micah, Kavieng MP and Public Service Minister

Referred to the Public Prosecutor by the Ombudsman Commission, March 2015

The referral may relate to allegations the Minister has been living at the Grand Papua Hotel at the taxpayers expense

CHARGED: Belden Namah – Vanimo-Green MP

Referred to the Public Prosecutor by the Ombudsman Commission for alleged misconduct in office, April 2015. Mr Namah faces at least 16 categories of misconduct, including failure to declare his election expenses and failure to acquit public funds among others.

CHARGED: Peter O’Neill – Ialibu Pangia MP and Prime Minister

Referred to the Public Prosecutor by the Ombudsman Commission over accusations of bypassing proper procedures to secure a $1.3 billion loan from UBS bank to buy Oil Search shares for the PNG government. The referral is currently being challenged in the Supreme Court. O’Neill is also using the courts to challenge an arrest warrant issued in June 2014 over allegations of fraud

PRISON: Francis Potape, Komo-Magarima MP

Found guilty of misappropriation of over US$100,000, October 2014, and sentenced to 30 months prison

CHARGED: Puka Temu, Abau MP

Referred to the Public Prosecutor by the Ombudsman Commission, March 2015, for alleged misconduct in office. The first allegation relates to the facilitation and allocation of a piece of state land to a group in Western Highlands when he was Lands Minister in the Somare-Temu Government. The second allegation refers to a road contract awarded by the Abau Joint District Planning and Budget Priorities Committee, allegedly to a company owned by a close relative of Sir Puka.

PRISON: Paul Tiensten, Pomio MP and Minister for National Planning

Sentenced to nine years prison in 2014 for stealing over K10 million.

In February 2015 convicted over the theft of a further K3.4 million with a further 3 years added on his sentence.

Bougainville’s Momis government rocked by another corruption scandal

April 20, 2015 2 comments

The Momis government has been plagued by serious allegations of high level corruption. Now it can be revealed that the President’s strategic planning head, Lauvatu Tautea, has been slammed by Taskforce Sweep for the alleged theft of K 7.5 million. Tautea has also been condemned by Prime Minister O’Neill for a separate alleged illicit payment, in the amount of K 10.9 million.

'Lauvatu Tautea meets with President Momis and his Australian advisor, Anthony Regan

Lauvatu Tautea meets with President Momis and his Australian advisor, Anthony Regan

According to Taskforce Sweep when Acting Chief Executive Officer of the Cocoa Board Tautea wrote a two page letter to the National Planning Secretary on 15 July 2010, using the Board’s letterhead. This was not a proper project proposal format. In this letter Tautea stated that the Cocoa Board was sponsoring the rehabilitation and development of the Banio Plantation* on Bougainville. He nominated Rait Fama Limited to manage the project on behalf of the Board. Taskforce Sweep notes that what Tautea neglected to mention is that he and his wife were both Directors and signatories of Rait Fama Limitied!

Within just four days the wrongful proposal was approved. According to Taskforce Sweep the payment was made illegally from vote items 4203-2202-225 (K5 million) and 4203-2213-225 (K2.5 million) earmarked for the construction and improvement of roads for the Bogia-Angoram Road and East New Britain Roads. The bank account of the company, Rait Fama Limited, was opened on the 16/07/2010 at the Bank of South Pacific in Port Moresby, the K7.5 million cheque was issued on 19/7/2010. Why the Bank of South Pacific did not raise the alarm is anyone’s guess.

According to Taskforce Sweep, the bank statements indicate that most of the funds were diverted for personal use with huge amounts made on a cash payment basis, with some funds being credited to personal accounts. Some of the funds, Sweep notes, were used to purchase motor vehicles from Ela Motors.

This is not the first time Tautea is alleged to have abused public funding for his personal benefit. According to the Post Courier, the National Planing Department gave K10.9 million to Teariki Holdings Limited, to “educate farmers” about pest threat.

In a familiar story, Teariki Holdings was incorporated on 10 August 2010.  The Post Courier states:

“The shareholders of the company are: Mr Lauatu Tautea (51), Nialapan Tautea (20), Pute Tautea (27) and Ruth Tautea (55). The directors are all of the above and Falope Tautea (22)”.

The paper goes on to note:

“according to the Registrar of Companies office, Teariki was incorporated on August 10, 2010 and several months later it was a lucky recipient of K10.9m”.

The then Treasurer, Peter O’Neill slammed the payment to Tautea’s company, stating

“I am appealing to all government agencies like the police fraud squad and the Ombudsman Commission to investigate and find out who authorised that payment I never authorised that payment”.

Despite the findings of Taskforce Sweep and the reporting of the Post Courier, Tautea was appointed head of Strategic Planning for Bougainville.

This news comes after the Momis government is reeling from other serious allegations of corruption. Earlier this year ex-combatants expressed concern over a K10 million payment made to a close friend of President Momis, Sir Henry Chow, via Chow’s company Hakau Investment Limited. The K10 million payment was evidently made to facilitate a feasibility study in 2010/11 of a proposed Torokina Oil Palm Plantation, despite strong local opposition. Given the lavish amount granted for a feasibility study, Bougainville’s Public Accounts Committee has earmarked this payment for investigation.

President Momis and his Natural Resource and Finance Ministers, were also found to be shareholders in Bougainville POGE Development Corporation. Controversially, POGE is a co-venture with a Filipino businessmen slammed in a range of human rights reports for land-grabbing, violence against landowners, illegal labour practices, and environment breaches.

There is also the question of the payments made to President Momis’ extensive team of foreign advisers, including his Development Advisor, Seagate Global. Seagate Global is a hedge fund, operated by US businessmen, William Lawton. While Seagate appear to have experience in financial trading, they have very little knowledge of rural development in Melanesia, which raises questions why they were appointed Momis’ ‘development advisor’.

As the scandals mount, it has to be questioned whether recent moves to unilaterally reopen the Panguna mine is motivated by a desire to develop Bougainville, as is publicly claimed, or is it instead a moved designed to generate a flow of revenues that will be captured by Bougainville’s political elite (at the expense of landowners!), to fund lavish lifestyles, holidays, cars, businesses and other luxuries. The record of the Momis government raises serious concerns in this respect.

*Note, there are allegations on New Dawn Radio that the Banio plantation was grabbed from traditional owners and sold off to the Queensland businessmen Geoffrey Mantle, who has close links to President Momis.

bougainville mantle

Paraka fails in latest bid to escape justice

April 17, 2015 Leave a comment


Paraka’s court bid dismissed

Post Courier

An application by controversial lawyer Paul Paraka to stop a series of criminal proceedings against him at the committal court was refused by the Waigani committal court yesterday.

Mr Paraka, who has been charged for defrauding the state of huge amounts of money and facing a series of counts of conspiracy, false pretence, misappropriation and money laundering, filed an application at the district court to stay the committal proceedings pending an appeal he is pursuing at the National Court to consolidate all the criminal proceedings against him.

Related stories

More charges against PNG lawyer Paul Paraka over government fraud case

Top PNG lawyer Paul Paraka arrested over $28m

Paraka wiring large sums to his ‘Australian based wives and girlfriends’

Namah alleges fraudulent payment of K71.8 million to Paul Paraka Lawyers

The Paraka Scams: Read the archives; Download the report

The application was filed pursuant to section 5, 9 and 32 of the District Court Act and seeking inherent powers of the District Court to stay the proceedings pending the determination of the National Court appeal.

Mr Paraka had submitted that the outcome of the National Court appeal would have direct effect on the committal court proceedings, and therefore those proceedings should be stayed pending the National Court appeal.

Senior committal court magistrate Cosmos Bidar, while making a ruling on the application, explained that the District Court does not have inherent powers and the clause relied on in the application was misconceived.

Magistrate Bidar explained that Section 155 of the Constitution only refers to inherent powers of the National and Supreme Courts and not the District Courts.

“Also in my view, the outcome of the appeal would not affect other cases…there is no appeal against any of the orders or rulings in relation to the current committal court cases.

“The appeal which is pending before the National Court would be either upheld or dismissed. Applications to consolidate all cases may go before another magistrate if the application is successful.

“Another thing is the question of whether the National Court has powers to consolidate the pending cases,” Mr Bidar said.

The magistrate therefore dismissed the application.

Tackling Corruption at its Root in Papua New Guinea

February 25, 2015 2 comments

cartoon showing Peter O'Neill being fed by Rimbunan Hijau while he sits on a pile of SABL reports

Catherine Wilson | Inter Press Service

Corruption, the single largest obstacle to socioeconomic development worldwide, has had a grave impact on the southwest Pacific Island nation of Papua New Guinea. While mineral resource wealth drove high gross domestic product (GDP) growth of eight percent in 2012, the country is today ranked 157th out of 187 countries in terms of human development.

Key anti-corruption fighters in the country say that money laundering must be tackled to increase deterrence and ensure that stolen public funds earmarked for vital hospitals and schools do not pay for luxury assets abroad.

“Our police officers, school teachers and health workers live and work in very squalid circumstances,” Lawrence Stephens, chairman of Transparency International (PNG), in the capital, Port Moresby, told IPS.

“So when we see the government awarding a contract for pharmaceutical and medical supplies to a company not qualified to tender, a company quoting a price 40 percent higher than the closest qualified tender and costing the equivalent of 160 new homes for nurses each year of the three-year contract, we blame corrupt individuals for destroying development.”

Papua New Guinea has been given a corruption score of 25/100, where 100 indicates clean governance, in comparison to the world average of 43/100, by Transparency International.

The country’s dedicated anti-corruption team, Investigation Task-Force Sweep (ITFS), launched by the government in 2011, has described the country as a ‘mobocracy’, where a patronage system of governance and a culture of secrecy have led to the misappropriation of an estimated half of the development budget of 7.6 billion kina (about 2.8 billion dollars) from 2009 to 2011.

Large-scale theft of public funds, including foreign aid, is alleged to have occurred across government departments responsible for national planning, health, petroleum and energy, finance and justice.

A 2006 Public Accounts Committee Inquiry into the Lands Department alone concluded that it had conducted itself illegally over many years and given priority to the interests of private enterprise and speculators over the interests and lawful rights of the State. The department’s shortfall in revenue was 5.9 million kina (2.2 million dollars) in 2001 and 4.9 million kina (1.8 million dollars) in 2003.

State capture, where powerful private sector interests exert undue influence over state leaders, officials and procurement processes, has had devastating repercussions for national development. Approval of ‘white elephant projects’ has channelled windfalls to criminal syndicates, Sam Koim, the ITFS Chairman, reported in the Griffith Law Journal.

Koim told IPS that, of 302 cases of corruption entailing revenue of up to 5.3 billion kina (1.9 billion dollars) under investigation, 91 had been prosecuted. Twenty-eight senior public servants have been suspended or removed from office, while two Members of Parliament and two senior public servants have been convicted and jailed.

To date, 8.3 million kina (3.1 million dollars) in proceeds of crime have been recovered, but including all outstanding cases this figure could potentially rise to 500 million kina (187 million dollars). Investigation into corporate tax evasion has led to the restitution of 22.6 million kina (8.4 million dollars).

Globally it is estimated that corruption drains the developing world of up to one trillion dollars every year and what is lost is in the magnitude of 10 times the official development assistance budget, claims the United Nations Development Programme (UNDP).

This has impacted increasing inequality in countries such as PNG, where 40 percent of the population of seven million live below the poverty line, maternal mortality is 711 per 100,000 live births, literacy is just 63 percent and only 19 percent of people have access to sanitation.

It is a vicious cycle, as Koim also believes that the state becomes an alternative source of personal prosperity when there are few legitimate avenues available for people to economically improve their lives.

Banks crucial to fighting corruption

The majority of stolen funds have been transferred through banks to offshore investments. Australia receives about 200 million Australia dollars (155 million dollars) of illicit gains from the Melanesian island state every year, claims the Australian Federal Police.

Several PNG politicians have purchased luxury homes with a total estimated value of 11.5 million Australian dollars (8.9 million dollars) in the northern Australian city of Cairns.

“Without banks and financial institutions, it is impossible to commit economic crimes, such as fraud and money laundering,” states the Investigation Task-Force Sweep (ITFS).

In a report last year on the government’s payment of fraudulent legal fees, ITFS identified numerous control gaps, such as lack of written contracts, oversight of procurement and payment clearance processes and the failure of banks to prevent evidently suspicious transactions.

“The duty imposed on banks to avoid engaging in money laundering should not be limited to ticking the boxes or submitting periodic transaction reports, but also taking proactive steps including rejecting transactions and closing bank accounts,” the report recommended. Sixty-five percent of PNG’s financial sector assets are held by commercial banks, including foreign bank subsidiaries.

There are also gaps between national legislation and banking sector regulations. For instance, money laundering is a criminal offence under the Proceeds of Crime Act (2005), but there is no obligation on banks to check inexplicably large or unorthodox patterns of transactions.

Action is also required by recipient nations, experts say. Professor Jason Sharman of the Centre for Governance and Public Policy at Queensland’s Griffith University told IPS that there was a need for improved government “supervisory responsibility to make sure that Australian banks are not accepting suspect funds from PNG Politically Exposed Persons (PEPs).”

“One of the main weaknesses is in the Australian real estate sector with very little scrutiny of foreign money coming in, especially when, as is often the case, this money is routed via lawyers’ or real estate agents’ trust accounts,” he added.

But progress by the anti-corruption team has accelerated broader action. “A number of PNG-based banks have closed accounts of high risk customers and refused suspicious transactions”, while some international corresponding banks “have refused transactions they view to have originated from illicit sources,” ITFS reports.

Reducing and preventing corruption is a long-term battle, which includes addressing the cultural divide between an introduced western government system and centuries of traditional governance based on a leader’s ability to acquire and distribute resources to his own kin. But if corruption is driven largely by the lure of a quick route to untold personal wealth, then a critical measure now is eliminating safe havens for the plunder.