$300 million pillaged in Papua New Guinea graft

By Rowan Callick – The Australian

A cabal of top public servants and lawyers have hijacked Papua New Guinea’s government chequebook, plundering more than $300 million through sham compensation claims.

The rorts include Finance Secretary Gabriel Yer initiating a spurious claim of $700,000 for himself and 225 people from his home village. He delivered the money to a dozen of them whom he had flown to Port Moresby, in a case containing 50-kina notes.

A devastating judicial report detailing the conspiracy, commissioned and tabled in parliament by Prime Minister Michael Somare last month, shows the collapse of PNG’s control over its finances. This is despite the Australian government spending more than $160m in the past decade on programs to “strengthen governance” in PNG, through highly paid Australian advisers.

When Sir Michael finally managed to table the report after three years and numerous legal battles, lawyer Paul Paraka and former solicitor-general Zacchary Gelu — both named in its 812 pages — obtained a court injunction banning any publication of its findings within PNG, where public interest in its contents is intense.

The Australian has obtained a copy of the report, which details a dramatic and pervasive web of corruption. Sir Michael is now waging the greatest battle of his 40 years in parliament — to wrest back control of the country’s finances from the corrupt nexus, who have been approving and settling vast payouts for claims with scant or no evidence, and sharing the cash with claimants and lawyers.

The report also details $1.5m in compensation claims by former chief secretary Isaac Lupari, once the head of PNG’s public service and an economic adviser to Sir Michael, over contracts for four top government jobs.

Mr Lupari, whose lawyer, Mr Paraka, received $320,000 costs, suffered no loss, said the inquiry, and the claims amounted to “triple and quadruple dipping”.

Among 57 people recommended for criminal prosecution are PNG’s finance secretary and his predecessor; the former chief secretary; a former attorney general and former solicitor-general; an MP; several prominent lawyers and others.

Sir Michael said when tabling the findings in parliament last month: “When you read this report, you cannot help but shudder in awe at the level of corruption that has permeated key government departments and agencies tasked with managing public monies.

“The group of wealthy Papua New Guineans who have siphoned off vast sums from the government is so confident of its capacity to keep doing so that it last week pushed through $6m claimed by controversial former politician Peter Yama for alleged loss of business from developing government land in Madang, where he runs a security company. The claim was declared baseless in the report but was settled while the Prime Minister was out of the country.


13 thoughts on “$300 million pillaged in Papua New Guinea graft

  1. Please note that this was first reported by Sir Micheal Somare in a report to PNG Parliament, then subsequently quoted in The Australian newspaper.

    This blog is merely repeating what has been published elsewhere in the public record, and is not liable for any content.

    This is legalise for bugger off, lawyers!

  2. Thanks Emmanuel.

    The community must rally and do something about this as we’ve done against the passage of the Maladina Ammendments without proper debate and scrutiny.

    The Prime Minister and the a/Chief Secretary to government told us on Kundu2 that there is currently a court injunction stopping the executing agencies from implementing the findings of the Finance Department Commission of Inquiry.

    Is there any way in which we, the general public through our collective actions, can cause the injuctions to be lifted so that the findings of the report can be executed?

    We’ve allowed only a handful of faceless individuals to hold our country to ransom for so long. Enough is enough! These traitors deserve to be prosecuted and sent to rot behind bars.

    1. True true David. I think first things first we’d need to assess what is. Legally possible and what is not.

      I’m also still unclear what implications I may have for posting this as well.

      But let’s start with that first.

  3. Agreed Emmanuel.

    That seems to be the logical step. Are there any lawyers out there willing to do a bit of pro bono work and guide us in the right direction in this regard?

    With regards to your hosting it, you merely copied and pasted an article from The Australian (which became public information upon publication) onto your blog. And the people of this country have every right to be given the opportunity to react to a matter of public interest. So thanks for the opportunity.

    As far as I am concerned, you did not originate the article and so my layman’s understanding is that you should be safe.

  4. Another article by Rowan Cllick about the Yama compensation dispute.

    Note that the report on the Finance Inquiry declared Yama’s claims “baseless.”

    Aussie bankers to face PNG court on conspiracy charges

    * Rowan Callick
    * From: The Australian
    * May 03, 2010 12:00AM

    AUSTRALIAN bank executives Robin Fleming and John Maddison will appear in court in Port Moresby tomorrow for a committal hearing on charges of conspiring to defeat the course of justice.

    If Mr Fleming and Mr Maddison are committed to stand trial, they will almost certainly have to surrender their passports.

    They are facing court over their action, on behalf of the Bank of South Pacific, to recover $3 million in loans outstanding from the Yama Group.

    The money was first awarded by a court to the group, a security firm owned by controversial former politician and police officer Peter Yama, for security services he claimed he had provided to the state-owned Motor Vehicle Insurance Ltd. BSP, the country’s largest bank, is seeking a total of about $14.5m from the Yama Group for outstanding loans, and instructed MVIL to make the payment to its agent, accounting firm Deloitte.

    Start of sidebar. Skip to end of sidebar.

    End of sidebar. Return to start of sidebar.

    But Mr Yama responded that the bank had falsified his loan documents, and has pressed the court to order that he keeps the MVIL money, an issue on which judge Bernard Sakora is due to rule. Mr Yama also pressed the police to pursue Mr Fleming and Mr Maddison.

    Australian law firm Gadens withdrew from representing BSP in the case after its staff received threats.

    Brisbane-based barrister Greg Egan will be representing the bankers tomorrow, instructed by Blake Dawson. John Mua, the managing director of MVIL, and Kerenga Kua, the president of the PNG Law Society, who represents MVIL, spent weeks earlier this year in hiding in their home province of Simbu in the PNG Highlands, after claiming that a bounty had been placed on their heads.

    A judicial commission of inquiry into corrupt false claims against government agencies was recently tabled in parliament by Prime Minister Michael Somare. But then, subject to an injunction issued by Justice Sakora preventing its publication, recommended that Mr Yama be referred to the police for making an allegedly unlawful claim in a different case.

  5. The growing list of lawyers involved in various allegations of corruption in the is adding to the growing amount of disrespect for the legal profession.

    The Finance Inquiry Report tabled by Sir Michael contains the names of very senior practioners on the Bar. THe Law Society should move swiftly to address these issues. It affects the credibility of all lawyers in the country.

    The list of lawyers in the Finance Inquiry adds to the existing list of lawyers in the NPF Inquiry.

    These lawyers must be prosecuted and if found guilty, serve their time in prison just like all the other ordinary citizens.

    The actions of these lawyers raises the issue of declining ethical standard of the legal profession in the country. The PNG Law Society should move swiftly to deal with these lawyers because the credibility of the legal profession is clearly being put at stake here.

    I also challenge the Attorney General to take proceedings to disbar these lawyers because they fail to be a fit and proper person now to practice law.

  6. But at last a victory for common sense! Thanks to Fred Tomo.

    Aussie bankers walk free from PNG court
    May 6, 2010 – 6:29PM


    Charges of conspiring to defeat the course of justice have been dismissed against two Australian bank executives in Papua New Guinea.

    Bank of South Pacific (BSP) executives Robin Fleming and John Maddison had been charged after they tried to recover millions of dollars worth of outstanding loans from the controversial businessman Peter Yama.

    Mr Yama, who denies owing the bank, claimed the two BSP executives and others conspired to defeat the course of justice, charges BSP rejected as “ridiculous”.

    Magistrate Fred Tomo told a Port Moresby court on Thursday that the charges were fundamentally flawed, adding that court documents hadn’t been properly sworn in front of a magistrate.

    The Australian executives’ lawyer, Ian Shepherd, said he had been instructed to file damages claims against the state for deprivation of liberty, emotional distress and breaches of their constitutional rights.

    On February 24, Magistrate Sinclair Gora dismissed a similar charges against Mr Maddison relating to the dispute between BSP and Mr Yama.

    Mr Maddison had been facing 50 charges of conspiracy to defraud and 45 counts of misappropriation, but Magistrate Gora said there was “no evidence” of conspiracy and the charges lacked credibility.

    Mr Yama, a former government minister, last December won 7.6 million kina ($A3 million) in a legal battle against a motor vehicle insurance company, but BSP moved to secure the money, claiming Mr Yama had millions in outstanding loans.

    Mr Yama, a former police officer and serial litigator, claimed that BSP, its lawyers and two employees tried to defraud him because of a vendetta dating back to 2001.

    © 2010 AAP

  7. Ministry of Finance better get things tightened up or all those billions from LNG are going to disappear into the jungle. Literally.

  8. Does the corruption never end? his can’t happen without the involvement of Finance Department senior staff.

    From this morning’s National…

    Caught red-handed

    POLICE detectives from the central investigation division and fraud unit are questioning two women over their alleged involvement in the “cash for cheque” scam involving millions of kina at several key government departments.
    One of the women was caught last Friday, posing as a Finance Department officer, trying to deliver a government cheque worth K2.5 million to the chairman of a primary school in the city in exchange for K25,000 in cash, as commission.
    The transaction took place at a major hotel in the city.
    Metropolitan commander Chief Supt Fred Yakasa said the woman, a receptionist at a guest house in the city, also had in her possession two other Petroleum and Energy Department cheques (ANZ cheques, dated May 14, 2009, and May 28, 2009) each for K1.5 million for two separate landowner groups in the PNG LNG project.
    “The suspect was apprehended last Friday at around midday and, after questioning, named another woman whom police picked up later at the same guest house,” Yakasa said.
    Last week, National Planning and District Development secretary Joseph Lelang had asked police to investigate widespread fraud and bribery that were allegedly taking place within three key government departments. He named them as National Planning and District Development, Finance and Treasury and Petroleum and Energy.
    Yakasa said these sorts of corrupt practices had been going on for a while and involved certain senior officers in key positions.
    He said police detectives would fully investigate the complaint and weed out corrupt officers who were promising ordinary people on the streets big money to do their dirty jobs and avoid being caught.

  9. More power to Superintendent Yakasa. Those tired old sitting ducks in the police pecking order must vacate their seats in disgrace and allow new blood like Yakasa who take their responsibilities to society seriously and who do their jobs with some degree of vengeance to take control of the police force. 99% of all corrupt acts can be mitigated if the police did their jobs properly, meticulously and professionally at the first place.

    Deal with corruption, get the wheels of government spinning in the right direction, create greater opportunities for our people to better their livelihoods and the police won’t ever have to worry about the gun totting common criminal. If I had one guarantee to give the police, this would be it. Papua New Guineans are hard working people and we know how to earn a life for ourselves, if only the government can provide us with the right support mechanisms.

  10. The Finance Inquiry was a cook up. Patrick Pruaitch and Chris Haiveta got former Justice Sheehan, consultant to certain law firm in Port Moresby involved. Sheehan was paid well over K20 Million for this Inquiry which passed thru that Law firm and got kicked back to Pruaitch and Haiveta and others in the PMs Office. Poor old Somare they pulled the wool over his eyes once again. I know because I saw the cheques being processed. So so sad for what was supposed to be a transparent Inquiry.

  11. Somare “Shuddered in awe” and supported the destruction of those involved – probably because he didn’t get a cut, Somare is one of the most corrupt leaders in the world bringing in high priced asian australian consultants all his money is made offshore banked in China.

    1. Tasa,Like you I can so fipplingly angry and upset with the thieves that have helped themselves to our money.Money for the developed of major infrastrature all over the 20 provinces of PNG>We are living poor and dieing from preventable diseases and our children are no matter off .The thieves are not ashamed to get those millions and feed their many wives and their many children with it.There is no fear of God, who sees all and knows all and these thieves will “slipped and fall” very soon,it is written in the Bible.Their place or fine living wil not last long.
      Yesterday, Cairns Posts Newspaper had man from western province who had come over to sabai island to get medical help and ended up in Cairns Base Hospital.Now he needs help to go back with the body of his child and guess what? People all over Australia are helping.Where is the PNG Government,makes me feel like hiding myself and telling others I’m not from Papua New Guinea.

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