Monday, August 26, 2013

PNG money laundering

JAMES THOMAS Today Tonight
August 26, 2013, 6:18 pm

Huge amounts of Australian taxpayers' money, supposedly supplying aid to our third-world neighbour Papua New Guinea, is being lost to corruption.
Australian aid is being lost to corruption, with an estimated $1.7 billion being stolen from PNG's budget annually.
The stolen money is then brought to Australia to be hidden in our banks and the Queensland property market.
Around 59 people have already been charged with corruption offences in PNG, and it is alleged much of their illegally obtained money is spent in Cairns.

Professor Jason Sharman, deputy director of the Centre for Governance and Public Policy at Griffith University, is a renowned expert on money laundering.
Professor Sharman along with Sam Koim, head of PNG's Anti-Corruption Task Force, are on a mission to lift the lid on billions of dollars of dirty money leaving PNG to be laundered in Australia.
"Corrupt politicians, and senior officials are buying houses and gambling. Obviously they need bank accounts to do so, and setting their families up here (in Australia) as well," Professor Sharman said.
"Most of Australia's aid program is effectively wasted."
Mr Koim says they have a number of prominent politicians and businessmen on their radar.
"Almost half of the budget (is being stolen. That is how big the problem is," Mr Koim said.
"They see Australia as the Cayman Islands. They see that it is the safest place where they can bring their stolen money from PNG."
There are more than 100 homes in Cairns that belong to Papua New Guineans, a similar number in Brisbane. They inhabit some of the nicest suburbs, and include the prominent PNG politicians and officials.
One such home in Cairns, valued at $585,000, belongs to PNG's petroleum/energy minister William Duma.
Australia's banks have a strong presence in PNG, and Mr Koim says the banks are well aware of the corruption.
"The writing is on the wall. There is some clear evidence of suspicious transactions, but they (the banks) turned a blind eye and accepted those transactions," Mr Koim said.
Mr Koim and his task force informed Australia's money laundering agency Astrac, the Australian Federal Police (AFP) and the Attorney General's department in August last year that Paul Paraka - a lawyer who allegedly sent $2.5 million dollars to his family - was a person of interest in their investigation into corruption.
However Mr Paraka was still able to transfer hundreds of thousands of dollars to his wives and girlfriends through the NAB.
In a statement the NAB claim to take money laundering seriously. They admitted that following an investigation in late 2012 that: "...some customer's accounts were closed and some payments originating from PNG were declined..."
Professor Sharman says few Australians realise how serious PNG's corruption problem is for Australia. He says for every dirty dollar we harbour, PNG is one step close to ruin, with huge consequences.
"If you give $10 million to a hospital and that money comes in as aid through the front door, and at the same time, $10 million is stolen out the back door through a corrupt official, then the net benefit of Australian aid is zero," Professor Sharman said.
"If half the budget is stolen, there is a real risk that PNG as a country will simply collapse. One of the things associated with state failure is massive refugee flow. If you were looking to escape PNG, the closest country is Australia.
"So rather than PNG being a refugee solution, it will become a massive refugee problem."

Response from AFP Assistant Commissioner Serious and Organised Crime, Ramzi Jabbour:
"On 23 May 2013, the AFP Senior Liaison Officer (SLO) in Port Moresby addressed a Royal Papua New Guinea Constabulary (RPNGC) Provincial Police Commanders Conference in Lae, PNG. The comments made were general in nature and related to unconfirmed sources of information.I can confirm the AFP does not have evidence of corruption involving PNG public officials.Australian authorities are committed to ensuring that Australia is not a safe haven for the proceeds of crime."

Statement from NAB (National Bank of Australia):"National Australia Bank takes all allegations of money laundering seriously. Payments NAB deems as suspicious will be blocked and reported, as required by law.In late 2012, NAB launched a thorough investigation regarding some funds transfers from Papua New Guinea, based on information provided by the Australian Federal Police and other law enforcement agencies in both Australia and PNG.Following NAB's investigation, some customers' accounts were closed and some payments originating from PNG were declined."

Response from ANZ bank: "We cannot discuss any individual customers due to privacy obligations.
However, as part of its global compliance program, ANZ has undertaken an extensive review of all politically exposed people and taken steps to exit relationships with individuals considered to be 'high risk'.We also continually monitor client activity, report suspicious matters to regulators such as AUSTRAC, and our professionalism has recently been recognised by the Australian Federal Police as 'being a major disruption tactic to combat corruption in Papua New Guinea'.We take our anti-money laundering responsibilities seriously and according to this recent correspondence from the Australian Federal Police, ANZ has been instrumental in 'countering the collective effort to combat corruption' within PNG.We are continuing to strengthen our anti-money laundering procedures. For example, ANZ has set aside $75 million to strengthen our financial crime detection capability this year, including around $25 million on anti-money laundering programs.All of ANZ's 47,000 staff are required to complete annual training to make sure they are able to spot and report suspicious activity. Any staff that do not complete this training are disciplined which could include termination of employment."

Response from Attorney General's department, spokesperson Mark Dreyfus:"I'm writing to you with regard to the Head of Papua New Guinea's anti corruption taskforce Sam Koim's Aug 2012 speech, in which he accused Australia of being the Cayman Islands of the Pacific with respect to money laundering.He alleges our Government is turning a blind eye to large scale money laundering through property purchasing and casino use (among others), of sums up to hundreds of millions each year. He stated that the banking industry of Australia is doing large scale business with 'dirty money'.
We are doing a story relating to these allegations.The Australian Government rejects these assertions. Australia has a robust framework to deter and detect money laundering, and to ensure that Australia is not a safe haven for the proceeds of corruption. Banks and other regulated businesses are required to have appropriate controls to counter the money-laundering risk posed by corrupt foreign officials and politicians.Consistent with its commitment to tackle corruption domestically and overseas, the Australian Government supports the work of the Government in Papua New Guinea (PNG) to address corruption and stands ready to continue providing assistance to strengthen PNG's capacity to combat corruption.Australia’s law enforcement agencies work closely and cooperatively with PNG authorities on a range of complex issues relating to anti-corruption.For example, in May 2013 the Australian Government announced Phase Three of the Australia-PNG Policing Partnership for increased policing support. Foreign Minister Bob Carr has discussed with Foreign Minister Rimbin Pato plans for further strengthening this cooperation by building PNG police capacity and supporting PNG's Fraud and Anti-Corruption Directorate.Australia also provides ongoing training and mentoring on anti money laundering and proceeds of crime to PNG law and justice officials. This includes work with the Proceeds of Crime Unit and PNG prosecutors to increase capacity to pursue the proceeds of corruption under PNG law, providing case-specific mentoring on PNG proceeds of crime matters, and working with PNG Department of Justice to jointly review the PNG Proceeds of Crime Act to strengthen PNG’s capacity to detect and recover proceeds of crime.With regard to the Attorney-General’s Departmental regime to fight money laundering, we wish to discuss what measures the Department is currently taking including your involvement with the Financial Action Task Force and AUSTRAC.The Australian anti-money laundering and counter-terrorism financing (AML/CTF) regime predominantly operates at the point at which money enters the financial system.Under the AML/CTF regime, financial institutions have an obligation to assess the money-laundering risks when they engage with professionals such as real estate agents.Based on the risks, financial institutions may choose not to conduct the transaction, or may be required to report information about the transaction to AUSTRAC.AUSTRAC assists reporting entities understand their obligations by various means, including awareness-raising forums such as the Major Reporters Forum at which Mr Koim made his presentation. Raising awareness among reporting entities assists in improving the quality and quantity of transaction reports submitted to AUSTRAC.Reports from financial institutions are gathered and analysed by AUSTRAC, producing financial intelligence which can be shared with law enforcement and other government agencies to assist them to identify illegal activity and take action.Legislation is in place for the AFP to receive and assess referrals from foreign governments in regards to these types of allegations. The Commonwealth Proceeds of Crime Act 2002 provides a comprehensive scheme to trace, investigate, restrain and confiscate criminal proceeds. The Act can apply to ‘foreign indictable offences' if a benefit from such an offence is derived in Australia or transferred to Australia. The Commonwealth can also repatriate funds that are recovered from the registration of foreign proceeds of crime orders.The Attorney-General’s Department provides ongoing training and mentoring on anti-money laundering and proceeds of crime to Papua New Guinea.Given Australia's recent billion dollar aid assurance to Papua New Guinea, what measures is the Department taking to ensure it is not stolen and laundered?Australian aid is not routinely provided directly to foreign governments.AusAID has world-class anti-fraud measures in relation to our aid spending. Aid funding is provided to international organisations such as the UN, the World Food Programme and the like for projects in recipient countries. These organisations have excellent, internationally recognised anti-fraud measures.

Statement from AUSTRAC:
"Measures in place to prevent the laundering of stolen funds through Australia. Australia's AML/CTF regime includes a range of measures to address and mitigate the risk of overseas entities (including individuals) misusing the Australian financial system. Australia's regime is based on international Financial Action Task Force (FATF) standards.
Customer identification requirements
"Australia's AML/CTF laws require reporting entities (including banks and casinos) to have in place customer identification procedures appropriate to their particular business. These procedures are designed to identify overseas customers who may pose an increased money laundering risk and to report any suspicious transactions undertaken by customers.
Financial transaction and suspicious matter reporting requirements
"AUSTRAC's reporting entities are required to report certain threshold cash transactions, as well as international funds transfers and suspicious matters.
Reporting entities are required to report to AUSTRAC suspicious matters if the entity has reasonable grounds to suspect that a transaction may be related to money laundering or any other offence under a Commonwealth, state or territory law.
"AUSTRAC is not an investigatory or law enforcement body. Where AUSTRAC receives reports relating to possible instances of illegal activity, AUSTRAC refers that information to its relevant partner agencies, such as law enforcement agencies."

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