Investigations now targetting PM, BPNG, Fly Government, PNG Power and Treasury for Money Laundering with the LR Group

Under the spotlight - PM
Updated: 11:48am
Current investigations into international money-laundering have extended directly into the Office of the Prime Minister, Peter O’Neill, the Bank of Papua New Guinea, the Fly River Provincial Government, PNG Power Ltd, the Department of Treasury and other Government institutions, focussing on the Israeli company LR Group Ltd, which is closely involved at the highest levels of the O’Neill and Western Province administrations. The inquiries under way within PNG and overseas are believed to involve the PNG authorities including the Sam Koim SWEEP Team, Australian agencies and Interpol. 

The growing power and control of LR group in many aspects, activities and levels of government has attracted the interest of local and international investigators conducting existing inquiries into a number of cases, predominantly Mr O‘Neill’s involvement in the Paraka lawyers scandal. LR Group wields significant influence over the Prime Minister and in the Bank of Papua New Guinea, and is believed to be a front-runner for the purchase of a controlling shareholding in  PNG Power. The PM's announcement to the Unions and the Public of a "transparent process of privatization" is a disguise to deliver the power assets to LR Group. 

One of the links to the money-laundering investigations is through Mr O’Neill’s close confidant, Dr Jakob Weiss, who is the Israeli Consul-General in PNG, a long-time advisor to the central bank, and the Team Leader of the Prime Minister’s task force that recently took over the Ok Tedi copper mine in Western Province. He is on the Ok Tedi board, sitting alongside the Treasury Secretary Mr Daire Vele, the CEO of Ok Tedi, Mr Nigel Parker, and the Fly River Provincial Administrator, Dr Modowa Gumoi. Since Ok Tedi became a State Owned Enterprise, its profits have plummeted from hundreds of millions of US dollars in dividends to a net profit of just $US17 million for 2013. As a SOE, Ok Tedi must comply with the IPBC Act, especially in relation to the letting of contracts. Ok Tedi is not complying with the IPBC Act on contracts that have been let.

In addition to all of these absolutely critical and highly sensitive roles, Dr Weiss is father of the PNG head of LR Group, Mr Ilan Weiss. And LR Group itself is involved with NEC-approved Projects and other activities.

Dr Weiss is understood to have  spearheaded  through an illegal and extremely suspicious transaction, struck on the personal orders of the Prime Minister,  that enabled PPL to buy two mobile turbine generators, for Port Moresby and Lae. It is estimated that LR Group benefited by up to K10 million from the deal because of the way it went through the Bank of PNG rather than normal commercial banking channels. One source described the arrangements as “highly irregular and counter to the political independence of the central bank”.

The PPL arrangements do not comply with the IPBC Act, and PPL Board, legal, management and technical  evaluation processes were bypassed to bring the gensets in. Nor are the arrangements available to ordinary Papua New Guinea citizens or companies - if they want to arrange such a deal they must go through a commercial bank, where the interest and exchange rates are more expensive. The Prime Minister has not explained why he opened the doors of the central bank to an Israeli company - LR Group - and enabled it to benefit by up to K10 million by doing so.

The operation of the new diesel gensets has compounded PPL’s financial woes - huge fuel costs are currently being met by the Department of Treasury by injecting K10 million per month into PPL, without which BSP and other banks would have appointed a Receiver Manager. Banks have sent in Independent Investigating Accountants to examine the company’s books.

Mr O’Neill is also planning to sell control of Air Niugini to the Airways Group under the control of his close associate Sir Theo Constantinou (Airways have also recently conducted due diligence to acquire Airlines PNG). Airways Group is also interested in becoming a Private Power Provider through a company called Eda Pawa Ltd, their only issue at this stage is that they need Gas from Exxon.

The controversial PPL deal is being investigated, as is another one involving a big and also controversial vegetable farm at Nine Mile outside Port Moresby involving Dr Weiss’s former employer PNGSDP Ltd and a religious organisation of doubtful character. Former employees of PNGSDP say Dr Weiss lobbied them in favour of the vegetable farm deal when he was  a PNGSDP director - he was later asked to resign over another conflict of interest. Investigators are also known to have collected information relating to the many deals done with LR Group by the Fly River Provincial Government in Western Province.

There are also suspicions that Dr Weiss was involved behind the scenes in the controversial UBS loan, which was also personally overseen by the Prime Minister. The $A1.2 billion transaction, which is also illegal and is the subject of an Ombudsman Commission inquiry, enabled the State of Papua New Guinea to buy shares in Oil Search, and is also being investigated in PNG and in Australia. Mr O’Neill has already been referred by the Ombudsman Commission for not following due process in the UBS  deal. Dr Weiss is believed to have advised the Prime Minister that NEC made the decision to buy the shares and not him personally hence the Public Prosecutor should not refer him.

An analysis of one money trail flowing from the UBS loan and other earlier transactions points to two companies in particular - Pacific LNG in Singapore and Insurance Partners Ltd in PNG and its associates overseas. Other money trails are being investigated, including transactions in PNG, Australia, Israel, Fiji, Switzerland and Liechtenstein. The link between Mr O’Neill and Insurance Partners  is a Joseph  Kup,  who is registered as a shareholder in Insurance Partners and who is also the Treasurer of the PM O’Neill Foundation and works as a Financial Controller for Remington and Wildcat Developments, companies where Mr O’Neill confirmed in Parliament recently that he has shareholdings.

The latest investigations covering LR Group result from inquiries into the financial activities of lawyer Paul Paraka and others, including the Prime Minister and his associate Mr Jimmy Maladina. Investigators are believed to be interested in some members of the Prime Minister’s staff, including his chief of staff Mr Isaac Lupari and his media advisor Mr Daniel Korimbao, plus two law firms, Pacific Legal Group and Twivey Lawyers. Pacific Legal Group is predominantly owned by Mr Maladina and Mr John Beattie.  Twivey Lawyers (Mr Maladina is a consultant to them) acts for the Prime Minister and for the O’Neill Government in a multitude of cases. Mr Beattie is  a Director of Remington, Wildcat Developments and South West Air, another O’Neill company.

COVERUP TO OWN AIR NIUGINI?

Nasfund is a major shareholder of Airlines PNG and the CEO of NASFUND, Ian Tarutia (IT), is closely related to Sir Theo Constantinou (TC) through Richard Sapias (RS), NASFUNDs property manager. Sapias and Constantinou own Consap , a company that acquired a loan from NASFUND to build on their 8/9mile housing estates for the NASFUND housing program but ended up selling it at phenomenal prices not to many NASFUND contributors...Tarutia and Richard Sapias are well informed of the potential Airlines PNG and PX sale and have gone into owning a helicopter company called Heliscope, knowing that NASFUND might sell off the shares to TC to assist in acquiring AP before PX; look further and a closer relationship is at play with Richard Sapias being the president of PNG rugby football union (PNGRFU), Tarutia is on the PNGRFU board and John Beattie of Pacific Legal Group is president of Capital Rugby Union (CRU)...do more investigations and you'll find out NASFUNDs investment manager, Pacific Wealth capital, were heavily involved in the arrangement of the UBS loan,This all relates back to Pertusio Capital, the company that Dairi Vele the Acting Secretary for Treasury is heavily involved with.

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