Prime Minister rejects TV report on PNG money laundering

Prime Minister Peter O’Neill today categorically rejected an Australian television report alleging AUD1.7 billion of Australian taxpayers’ money, supposedly supply aid to PNG, being stolen from PNG’s budget annually.

Mr O’Neill has called on the Australian government and its AusAID agency to correct the misinformation campaign being waged against PNG by uninformed Australian journalists and the media community in Australia who have never been to PNG to appreciate and understand PNG’s national affairs more deeply.

“The Australian Channel 7 Television’s 'Today Tonight' report on PNG money laundering is factually incorrect,” O’Neill said in a statement.

“These are baseless allegations we can write off as the creation of an attention seeking reporter’s wildest imaginations.

“Channel 7 owes PNG and its citizens a big apology and the journalist responsible for concocting such a negative international image of PNG should be dismissed from his employment.

“No one has stolen Australian taxpayers’ precious AUD1.7 billion because that amount of Australian money has never featured in any of our national budgets to date.

“The television report is without foundation and is totally speculative,” O’Neill said.

He said the facts were clear and were obtainable from the Australian government or more specifically from the Australian Aid agency.

“There has never been any amount more than AUD1.7 billion in PNG’s annual budgets over the last 10 years,” O’Neill said.

“AusAID to PNG has not been more than AUD490 million annually over the three years from 2009 to 2012.

“Australian aid to PNG is exclusively administered in Canberra by the Australian Government’s foreign aid agency AusAID.

“All contracts and procurement of goods and services are tendered and let in Canberra to Australian consultancy companies who then employ highly paid consultants to implement their programmes in PNG.

 “Under the PNG-Australia Partnership for Development arrangement PNG has been advised to expect AUD500.7 million in Australia’s 2013-2014 financial year and to expect a further AUD507.2 million in the 2013-2014 period.

 “Frankly, AusAID runs a parallel education, health and HIV/AIDS, law and justice and transport and infrastructure development programme agenda to PNG’s own annual budgeted public investment programs embracing our government’s core policies of transport and infrastructure development, provision of free education and free primary health care, law and order administration and growing and diversifying our economy.

“We are in talks with the Australian government to realign the AusAID programmes with our national development priorities.

“AusAID has its place in PNG’s development but their modus operandi cannot continue to be modelled on a scattergun approach.

“I urge Australia’s Channel 7 television management and their reporting staff to be fair, factual and balanced in their reporting of PNG affairs.

“For now, I can say without fear or favour that the Channel 7 TV report alleging AUD1.7 billion of Australian aid money being stolen from PNG’s budget annually is Australian media’s most ill-researched, mischievous and misinformed piece of journalism coverage on PNG affairs.

“Australia’s development assistance to PNG under the PNG-Australia Partnership for Development over the three years from 2009 to 2012 was under AUD500 million annually.

“The Australian aid assistance we have been advised to expect for the 2012-2013 period is AUD500.7 million and AUD500.2 million for the 2013-2014.

“These are the facts,” Mr O’Neill said.

A comedy of errors along the Kokoda Trail

By MALUM NALU

 

In 2010, the Australian government allocated A$3 million (K6.46 million) on a 'Village Livelihood Project' along the Kokoda Trail, a failed project that has not seen a single project for local villagers and highlighted a dysfunctional management structure.

Latest case studies provided to The National  by veteran Kokoda trekking company operator, Charlie Lynn, and Network Kokoda, a not-for-profit company whose directors are former politician Dame Carol Kidu, former PNG Defence Force commander Brig Gen Ken Noga, secretary for Tourism, Arts and Culture Marianna Ellingson, and Lynn, highlight a comedy of errors.

Chickens, ducks and goats were supposedly eaten by the villagers.

Rice, cabbages, carrots and broccoli were given to villagers to grow without any technical advice on how to grow, tend and harvest the crops.

Fish for an aquaculture venture never turned up even though a pond was dug.

Projects initiated, without any reference to relevant PNG authorities or the trekking industry included the construction of massage parlours, where masseuses were reluctant to touch their potential clients for cultural reasons.

The massage hut had to be torn down after being built on a revered battle site while the special rooms built for drying the clothes of damp trekkers have yet to be found in the jungle.

At Nauro 1 and Nauro 2, the villagers were abandoned after the initial visits by Village Livelihoods project staff in 2010.

"Since then they have consumed the poultry, destroyed the goats because of the damage they were causing to the village, abandoned the fisheries project because nobody turned up with the fish as promised, and abandoned the rice project because they did not receive the technical support or resources to harvest their crop," according to Network Kokoda.

"Isurava villagers were provided with ducks and chickens.

"They did not receive any follow up advice or training.

"They initially consumed the eggs – then they consumed the ducks and chickens.

"They grew their first rice crop but were not provided with any technical advice on how to harvest the crop and prepare it for consumption.

"They grew beans and then consumed them.

"They did not have any seeds for a second crop so they abandoned the project.

"No animals were provided for Alola.

"They were provided with seeds for cabbage, carrots and broccoli.

"They sold some of their first crop to trekkers but did not have any seeds for a second crop.

"There was no follow up training or technical advice.

"There are no animals or garden plots at Abuari village.

"It is clear that there is nothing to report on in these villages either."

A$20m aid money disappears into Kokoda ‘mists’

By MALUM NALU

 

A massive A$20 million  (K43 million) of Australian tax payers' money supposed to have been spent on the Kokoda Trail since 2008 has seemingly disappeared into the surrounding 'mists', according to veteran Kokoda trekking company operator Charlie Lynn.

He provided evidence of poor villagers along the trail being duped into raising chickens and goats which were later eaten because there was no training or support, likewise with growing vegetables, fish for an aquaculture venture never turning up though a pond was built, and even construction of a 'massage parlour' which was unheard of with masseuses reluctant to touch their potential clients for cultural reasons.

Lynn has called for the responsibility of the World War 11 heritage of the Kokoda campaign to be transferred from the Department of Sustainability, Environment, Water, Population and Communities (DSEWPC) to the Department of Veterans Affairs (DVA).

He said since 2008, when there was public outcry over the threat of mining, Kokoda seemed to have been used as a "subterfuge" for DSEWPC to pursue an environmental agenda in PNG, at the expense of the military heritage and the simple villagers along the trail.

"Highly paid Canberra envirocrats with tax-free salaries and generous allowances were dispatched to advise/assist the PNG government to 'save' the Kokoda Trail," Lynn said,

"It was the first trip to PNG for most of those involved.

"The trail quickly became a lucrative honey-pot for a coterie of anointed consultants who came, saw, held talk-fests, produced five-point action plans - and left with a wallet full of booty.

"The results speak for themselves.

"When the envirocrats arrived in 2008:  5, 621 Australians trekked Kokoda.

"After three years of 'assistance' resulting in a 10-fold increase in staff, a conga-line of consultants and more than A$20 million of taxpayers' money, the numbers decreased to 2, 914.

"Projects initiated, without any reference to relevant PNG authorities or the trekking industry included the construction of massage parlours, a failed $3 million 'Village Livelihood Project' that has not produced a single dollar and a dysfunctional management structure.

Lynn said DSEWPC had much to answer for.

"There is no evidence of a single sustainable outcome from their initiatives along the trail during their watch," he said.

"Apart from safety projects at the Kokoda airfield and the Owers Corner road, most of their A$20 million aid budget has boomeranged via Australian salaries, consultant fees and talkfests. "It is also apparent that Australian managers unfamiliar with PNG soon find the frustrations of their working environment too difficult to handle.

"They then 'manage' their jobs through to the end of their tenures and mask their lack of achievement with reports, meetings and conferences regarding codes of conduct, licensing conditions and consultant liaison tasks."

No immediate prospects of investment in PNG: FNPF

Fiji News

Taken from/By: FBC News
Report by: Shanal Sivan

The Fiji National Provident Fund has indicated that there are no immediate prospects of investment in Papua New Guinea.
This follows FNPF's announcement that it was withdrawing from a telecommunications deal involving PNG based bemobile.
Chairman Ajith Kodagoda, says as of now…they have no emerging interests in Papua New Guinea, despite earlier indications that the super annuation fund was in talks with the Independent Public Business Corporation.
"At this stage, we have just said that we are open for discussions, but the earlier chapter now firmly closed."
At the time when the deal was broken off, a number of staff from Vodafone Fiji had already been dispatched to bemobile in PNG.
Kodagoda confirms some of them have decided to stay on in PNG, while those who come back home will have a place with Vodafone.
"There are some people who were offered jobs in PNG. There were some people who were Vodafone overseas officers that have gone back to their own jobs, those who came back, if there are still opportunities at Vodafone, we will be taking them back."
Kodagoda could give no clear explanation as to why the deal was discontinued, saying he's not aware of some of the details.

Corruption in PNG (Part 2)

JAMES THOMAS Today Tonight
August 27, 2013

Billions of dollars in foreign aid going to PNG are being siphoned off by corrupt politicians and officials, and into Aussie companies.

The Australian property market, casinos, and the banks are playing host to millions of dollars in foreign aid being siphoned off by corrupt Papua New Guinea (PNG) politicians and officials.
The money trail ends up in Australian companies, caught up in the multi-million dollar corruption ring.
Sam Koim, head of PNG's Anti-Corruption Task Force, is on a mission to lift the lid on billions of dollars of dirty money leaving PNG to be laundered in Australia.
Mr Koim says Australia contributes about $500 million to the PNG budget, and 40 per cent of that budget is lost to corruption annually.
"The dirty money is then moved from the Australian banks to Australian-based businesses, and then from the companies the money disappears," Mr Koim said.
Mr Koim says his anti-corruption task force is particularly interested in a transaction of $45 million belonging to the people of PNG into an Australian bank.
In July 2009, $45 million was deposited at the Lismore Branch of the Commonwealth Bank into an account owned by a company named Woodlawn Capital.
The PNG government claims the money was stolen.
The money trail begins in PNG with the government-owned Motor Vehicle Insurance Limited (MVIL). They owned shares in the Bank of South Pacific, which they used to take out a loan to raise roughly $45 million.
The money was then transferred to Australia and into the account of Woodlawn Capital at the Commonwealth Bank in Lismore.
According to the PNG government this all took place without the approval of the board that authorises these transactions, The Independent Public Business Corporation (IPBC). Without the IPBC's approval the transaction is illegal in PNG.
 The newly elected PNG government are accusing the authors of the deal, and the recipients of the cash in Australia as being thieves, engaged in an elaborate scheme to funnel money offshore.
Money laundering expert at the Griffith University, Professor Jason Sharman, says the responsible minister for the $45 million was Arthur Somare, son of former PNG Prime Minister, Sir Michael Somare.
Professor Sharman is working closely with the PNG government to track the missing millions.
"The suspicions from the PNG government tend to focus on the responsible minister during that time," Professor Sharman said.
Arthur Somare has a $700,000 home in Cairns, and claims he has no knowledge of the transaction.
"I don't condone illegal transactions, and I don't have oversight over something that was illegal," Mr Somare said.
He points the finger at Australia's Commonwealth Bank in Lismore, who received the $45 million.
"There's such a thing called due diligence, and I would have expected that during a DD process, that someone would have given us a call," he added.
The Commonwealth Bank said in a statement that they were unable to comment on this specific transaction, but said that: "we can confirm generally, that the bank systematically reviews transactions including those of significant value."
The PNG government has alleged that Arthur Somare is the beneficiary of corruption, and have asked him to account for the $45 million that allegedly went missing on his watch.
Arthur Somare was suspended from office relating to 105 allegations of misconduct in office in 2011.
The PNG government recalled the $45 million from Woodlawn Capital's directors Tim McNamara and Tim Breen, accusing them of stealing the proceeds of an illegal deal.
However Mr Breen believes that they are the victims of corruption, not the perpetrators.
He claims that he and his partner had no idea that the funds came from an illegal transaction, and that everything they did at their end was above board.
"We haven't laundered any money, all the money is accounted for, all money was held on behalf of the client," Mr Breen said.
"It is a matter for the court. It's a contractual dispute, and we're being bullied by a much bigger party on the other side."
Australia's Anti-Money Laundering Agency, AUSTRAC, have stated before the Senate in 2008 that corruptly obtained money that gets laundered in Australia are a serious problem that they face, particularly those coming from PNG and the Pacific Region.

Joint statement from the Attorney-General and Minister for Justice and Home Affairs:

The Government is concerned about the allegations raised on the Today Tonight program.
The Minister for Justice and Home Affairs has spoken directly with AFP Commissioner Tony Negus about the allegations, and has sought further advice on the details of the claims.
The Attorney-General has tasked the Secretary of his Department and the Vice-President of the Financial Action Taskforce, Roger Wilkins, to assist the Australian Transaction Reports and Analysis Centre in examining these specific allegations. Mr Wilkins will advise the Government on any further action required following the election.
Australia's law enforcement agencies already work closely with Papua New Guinea authorities, including to help build PNG police anti-fraud and anti-corruption capacity.
Australia's foreign aid to Papua New Guinea is not paid to the PNG Government, but to internationally recognised Non-Government Organisations such as the United Nations and the World Health Organisation. These organisations have globally recognised standards for accounting and anti-fraud controls.

Close Manus until deal sorted, says PNG MP Ron Knight

From AAP

A PAPUA New Guinea MP has called for the Australian-run Manus Island detention centre to be closed until after the federal election.

Manus Island MP and vice-minister for trade Ron Knight today said Manus residents are preparing to "explode" over the deal, which he says has seen mainland PNG and Australian companies brought in at the expense of locals.
"I met with DIAC (Department of Immigration and Citizenship) officials," Mr Knight said.
"I told them I wasn't happy with the situation and I want the whole thing closed down until after the election.
"We will not be stepped on."
Mr Knight, a long time supporter of the facility, accused security firm G4S of underpaying Manus sourced staff, and says other contracts associated with the facility have gone to mainland PNG and Australian companies.

He said DIAC is yet to give him a final figure for the Manus plan.
"They couldn't or wouldn't tell me," he said.
"I have to explain to my people why Kina 400 million ($187m) is going to Angau hospital and Kina 200 million ($93.4m) to the Highlands Highway.
"This thing is getting out of hand."
During a speech yesterday to locals in Lorengau, the Manus capital, Mr Knight said he would refuse a proposal to build a permanent centre next to a primary school and demand a halt to all construction.
Board members of East Lorengau Primary School told the ABC last month school buildings will be knocked down to make way for a 30-metre wide access road to the new facility.
"We like Australia, we want to help Australia," Mr Knight said today.
"But we wouldn't do this to Australia. We want a fair go."
Immigration minister Tony Burke earlier this month defended the plan, telling journalists in Port Moresby there were already detention centres "within the community" in Australia.
Mr Knight's announcement follows reports PNG's chief migration officer Mataio Rabura temporarily halted all access to the centre last week following alleged breaches of protocol by Australian officials.
In a statement on Friday Mr Rabura said the issues had been dealt with and he was now happy with the implementation of the Manus processing scheme.
Australia is currently housing about 380 asylum-seekers on Lombrum Naval base in Manus Island.
AAP

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."