The Germination and Spread of Corruption in Papua New Guinea: An Unfortunate Combination of Three Prime Ministers




Three Prime Ministers including the Father of PNG, Sir Michael Somare, have, over the past 40 years, effectively congealed to destroy what could have been a bright future and equal opportunity for the people of Papua New Guinea following independence.   As such, the noble ideals articulated by Somare and other members of the legendary Bully Beef Club during their many gatherings prior to Independence, and articulated in the Constitution's Six Directives, were never fulfilled and today are essentially abandoned.   PNG's sad progression downwards has produced its current state of rampant corruption.  Like Nigeria, like Mexico, like Indonesia, all fabulously wealthy nations in terms of natural resources, the wealth has gone nowhere useful in PNG.   PNG drags the bottom in global rankings today in terms of how little meaningful integral human development has occurred for the majority of its population. Thus far, the advent of cell phones and other modern technology that has reached deep into remote areas has not reversed this sad trend despite their potential.   

The destruction of national dreams and hopes can be traced to the combined leadership and interactions between 3 Prime Ministers:   Somare, Chan and Peter O'Neill.  Together they have combined, never formally and certainly not purposely, to create a recipe for national development disaster that today affects the country.  The rampant state of corruption in the country today doubtfully would have occurred had any one of these 3 links been missing.   The reason why Somare and Chan -- and also former PM Paias Wingti -- remain in, and continue to support the most corrupt government, by far, in the history of Papua New Guinea, reflects their passive support and general lack of principles.   If you want allies in the fight against corruption, the last people you select would be PNG's past Prime Ministers, with the exception of Rabbie Namaliu and to a lesser extent, Mekere Morauta. 

The Loose Knit "Waigani Club" Assemblage of Thieves

The combined negative influences of Somare, Chan, and O'Neill reflects an intriguing, loose knit informal grouping of PNG's most successfully corrupt public figures popularly termed by political observers as the "Waigani Club".  It's not a Club in any real sense, but is more accurately a network of alliances, nearly always informal and often short lived.  What binds its 'members' together most strongly is a shared vision of using the public trust to pursue private interests.  Each member has their own favourite tricks and ways to enrichen themselves.  They can be ranked at different levels in terms of their success in terms of how much stealing, how sophisticated their techniques, and how well they've been able to avoid prosecution and conviction.  All together, the collective bag of tricks used by Waigani Club members today rivals what the most legendary organised crime members elsewhere in the world utilise in their respective pursuits of wealth.   The tricks used today in PNG were rarely self developed.   Most arrived from Asia with the encouragement of Chan and to some extent, Pais Wingti.   Adding to this was a scattering of conartists and carpetbaggers from Greece, Italy, Australia, and other parts of the world adding their expertise to the mix and now wealthy businessmen, sometimes bordering on tycoons, operating in PNG.    


Julius Chan Was First To Amass Personal Wealth While On Public Servant Pay

Indisputably, Julius Chan was the original high level PNG politician crook. He has always prided himself as an astute businessman but is obviously not so astute that his businesses didn't often tip towards financial trouble.  From the start, he has always been keen at identifying ways to gain wealth through unfortunate loopholes in the law. He inherited certain connections with Chinese businessmen and traded favours with them even before he became PM for the first time. Wingti may have conspicuously declared a Look North policy, but Chan schooled Wingti in the lucrative opportunities that would come to him, Wingti, and other high ranking officials if they started opening the doors for Asians to come pillage customary land and their resources, with a gatekeepers fee always payable to Chan, Wingti or whoever was manning the gate high in the halls of Waigani.

Chan was never so dumb as to outright steal money from the government.  Instead, his focus has always been to use his privileged position and access to information as Prime Minister or Deputy Prime Minister, to forge personal business networks and exploit loopholes in the law.   One example during the 1990s was his secret selling of Islands Aviation to a Chinese business associate for a very large price, which no more than a few years later was followed by Chan buying back his own airline at a very low price.  This is the kind of technique that Greg Sheppard was caught on videotape promoting in the recent SBS Dateline report, where he advised that any corrupt movement of money be disguised as a commercial transaction.  Obviously Chan gave the business associate something very valuable as payment for his large profit on Islands Aviation, and the suspicion is that he facilitated a logging deal.   During the 1980's and 1990's the tremendous wealth of PNG's timber, all obtainable using simple technology and relatively little capital investment, was becoming known.   The Chinese Malaysian Company Rimbunan Hijau eventually pushed aside other corrupt Asian companies to take control of the PNG logging industry, a position it still holds today 

Now and then Chan came very close to overstepping his bounds.  When Highlands Pacific had claim over the incredibly rich Pogera gold reserves and was preparing to go public with a sale of shares, Chan strongarmed the Highlands Pacific Executives at the time into granting Chan a large, interest-free loan that he then used to buy millions of shares in the company.  After the shares went up considerably in value, as was the widespread speculation, Chan quietly sold his shares, returned the loan money, and pocketed a hefty profit.  The public share offering to Papua New Guineans generally was pushed by Chan as a coverup to his own private deal making, much like Peter O'Neill pushed a "restriction on the number of pokies" to Christian churches as a public cover for taking behind the scenes personal control of the pokies industry, of which he is one of the 3 most dominant players.    

Another of Chan's most famous and cunning means of making money on the basis of secret knowledge that he was entrusted with as a public servant related to the weakening status of the kina during the mid-1990s.  Chan was aware that a non-floating kina was no longer possible because of the pressure the growing domestic devouring of imports.  The principled thing to do would simply have been to devalue the kina without any personal involvement.  Instead, Chan and Wingti colluded to ship a large amount of their wealth out of PNG just prior to the kina being devalued.   While most of the rest of PNG essentially lost 10% of their wealth instantly with the kina's devaluation, Chan and Wingti profitted.   Probably under PNG law, there was nothing illegal with what they did.  In terms of ethics, the action was extremely unethical and clearly corrupt. 


Michael Somare:   Respected Leader Who Abandoned His Principles

Michael Somare can be considered to have achieved high status in the Waigani Club in a very different way from Chan.  Early in his career, he actually had principles, mostly gained in Bully Beef Club discussions and strengthened through interactions with certain leaders of the global non-aligned movement, which included a number of newly independent nations.   Long criticised by people back in East Sepik for not delivering enough development to people back home, this result actually reflected the most appropriate, modernday role of either a Prime Minister or Minister:   To serve the nation first and worry about local constituents second. 

From the beginning, Somare intensely disliked Chan's personal business wheeling dealing, partly out of principle but mainly out of jealousy.  Unfortunately, Somare's principles were never that strong, nor was he able to ideologically justify his initial pursuit of 'go slow' development that emphasised rural cottage industries that would put as much money as possible into the hands of the rural people.   In that sense, he was always an ideological lightweight compared to his counterpart leaders of independence in Africa and elsewhere during the 1960's and 1970's.   He greatly admired Fidel Castro but never possessed the motivation nor the heart for people of the village that would have allowed him to have created a PNG that emphasised health and education with the intensity that Castro pursued. This lack of strongly held principles was the first aspect of Somare's personality that would prove his undoing as a successful national leader once independence was attained. 

By the mid 1980s Somare and his family had developed unscrupulous dealings with local logging back in East Sepik Province and was actively trying to develop a logging empire there by the early 1990s.   His clear violations of the Leadership Code were detailed in the Barnett Inquiry on Forestry that PM Wingti commissioned in the late 1980s. 

By 1990, Somare had already abandoned his conviction to promote democratic leadership, being quoted in a Pacific Islands Monthly interview article that he would happily serve as PNG's benevolent dictator.  This change in attitude reflected a combination of Somare experiences.  In NEC he observed all around him Ministers who were following the lead of Chan and mostly concerned with personal wealth grabbing.  Certain of these Ministers were already actively dismantling the bureaucratic, non-political decision-making of government departments by politically appointing departmental secretaries and otherwise re-directing departmental resources into their own pockets.  

Also influencing Somare's growing attraction to an authoritarian style of leadership for PNGN was his observation of what certain leaders of independence were doing elsewhere in the world.  Personally, he was developing an elitist attitude of looking down on the very people he was elected to serve, sometimes screaming at his own staff as being incompetent and as 'lazy Papua New Guineans'.   

By the late 1990's Somare had abandoned any pretense of standing apart from Chan's self serving attitude.   He freely admitted in discussions with friends and acquaintances alike that his biggest mistake during his earlier terms as Prime Minister was not having followed Chan's lead by not paying more attention to amassing his own personal wealth.  He began to adopt his own self serving belief system that so long as he followed the Chan strategy of not stealing directly from the government, but rather, using his position of power to develop personal business networks and finding legal loopholes to amass power, it was okay.  In fact, by embracing this philosophy, Somare joined the league of corruption and bad ethics. 

One side weakness of Somare that eventually contributed to his becoming more of a stimulus for national corruption than for national development was his poor management abilities.   He repeatedly failed to establish authority over his ministers and even his family over the years. With respect to the latter, he was unusual amongst PNG husbands in being largely dominated by his wife.  During the 1980s, it was common for Lady Veronica to go at Sir Michael with a beating stick after he returned from overseas trips, perpetually paranoid that Somare was having overseas affairs.  In fact, the champion of overseas affairs amongst Prime Ministers has always been Julius Chan and Paias Wingti.  On another front, Lady Veronica has always expected to be treated like royalty.  Her years of constant pressure on the Grand Chief eventually resulted in his total capitulation.  The Somare family traveled and accommodated in style wherever they went, with Somare now using his entrusted public position to serve his family before he served the nation.   He deluded himself into not confronting this new aspect to his personal corruption, by continuing to serve the public interest before that of his people back in Sepik.  

Somare's son Arthur, daughter Bertha, and to some extent son Sana, also eventually gained control over their weak-willed father.  .Somare's long-standing jealousy of Chan's financial success drove him to expand his personal business deals. So many of PNG's political leaders have demonstrated over time that they actually are not very good businessmen and either must keep their businesses afloat through subsidies that they obtain corruptly through other means or allow their businesses to collapse altogether.  To his credit, the virtually abandoned Somare Haus at Waigani reflects that Somare at least occasionally follows the tactic of letting his personal businesses collapse.  Somare Haus was originally a revenue-generating initiative to financially support Somare's Pangu Party.  When Chris Haiveta yanked control of Pangu away from Somare, Somare's revenge was to yank Somare Haus away from Pangu's control and make it a personal family possession. 

Michael Somare has other weaknesses that continued to erode his principles and essentially make him corrupt.  His own deals with shady Asian businessmen came from a personal soft spot for the Japanese (as a small boy, he interacted with local Japanese teachers in occupied PNG during World War II Japanese occupation).

During Somare's last, nearly 10 years in office, he basically let his family run wild, like monkeys in a bakery. Out of control, they stuffed their mouths with public wealth, Arthur being the main culprit. Arthur isn't nearly as dumb as his father and, in fact, generally took good care to cover the trail of evidence that would document his stealing. Both he and his rather stupid father were never caught for big crimes but honest people in the judiciary and in the ombudsmans office were well aware by mid-point in Somare's last administration that his corruption was rampant.   In the end, they had to be satisfied to prosecute him for almost inconsequential violations of the leadership code.

Perhaps the greatest corruption of Michael Somare was to fully exploit foreigners to buy PNG elections.   Being in the logging business himself, and also having a natural affinity for Asians, Somare developed a growing alliance with the Chinese-Malaysian family who owned Rimbunan Hijau.  RH has a worldwide reputation of pillaging forests from PNG to Brazil to Siberia, and leaving as little behind as possible, and essentially impoverishing nearby forest residents.  Somare saw RH as his way to get revenge against a growing number of political opponents, real and imagined.   This points to yet another weakness of Michael Somare:  a petty tendency towards revenge.  He has most childishly demonstrated this against communities back home who failed to majority vote for him in national elections.  On a grander scale was his determination for payback against Chris Haiveta after Haiveta took control of Pangu.  This led Somare to start up the National Alliance.  Obviously, to trounce Pangu, National Alliance needed money, and Somare kept the Somare Haus asset under his own family rather than use it to generate revenue for NA.  Instead, Somare ended a long courtship and got completely into bed with Rimbunan Hijau by his second term.  RH already was beginning to financially dominate PNG.  Today, RH is the owner of The National newspaper, Vision City, Kina Securities, Maybank and many many other businesses, while still controlling more than 3/4 of all PNG's existing logging concessions, using different names for each local operation to hide that ownership.

In 2007, Somare stayed in power not only through the usual RH donations to the National Alliance but by getting a single, K40 million RH contribution that was deposited into an ANZ PNG bank account. Before he started his final move to form the government, he instructed ANZ to not allow cash the cheques of any competing political leaders seeking to pay off their own supporters.  While in seclusion to form the new government after the 2007 elections, Somare gave out a cool K1 million to each one of 40 MPs to buy their loyalty and thus remain in power.

Nearly 10 years of Michael Somare in power proved beyond a doubt that government stability in PNG doesn't provide the same rewards as in other countries. Instead, it allows the development and improvement of sophisticated ways of stealing public monies. It was Michael Somare's complete abuse of power and allowance of rampant corruption under his long administration that opened the door to Peter O'Neill becoming PM.

Peter O'Neill:  The Most Cunning of Prime Ministerial Crooks

Peter O'Neill is the latest Waigani Club member to reach platinum status. O'Neill is more cunning than Chan, far more mature than Somare, and develops a network that is not wantok in nature, but based upon finding fellow thieves with like interests. His connections to Luciano Cragnolini, Greg Melides, and Jimmy Maladina have been strong and lasted for years. He pats their backs and they are his willing briefcase carriers who carry out his instructions far and wide. Like Chan and Somare, the other two highest ranking members of the Waigani Club, Peter O'Neill isn't so stupid as to directly steal money from the government.   He is far smarter and more cunning than Somare.  O'Neill works like Chan but on a grander scale.   Like Chan, he uses the privileged information he gets as PM to find ways to funnel money his directions. He's into kickbacks, but is also accomplished at having brought the PNG Pokies industry completely under the control of himself, Cragnolini and Melides. Nii Cragnolini, who he and Luciano Cragnolini share in sex, is in charge of the Gaming Board's substantial profits, which are distributed to allies.

Where Peter O'Neill has gone well beyond Chan and Somare in public corruption is in developing a large series of ways to develop a body of supporters through carrots and sticks. The biggest stick he uses is to perpetually delay the disbursement of public funds to MPs who do not support him. This has coerced an unprecedented number of MPs to join his ranks. The carrot approach he uses are side payments of monies that are supposed to be used for local government services, such as DSIP.   With the District Support Initiative grants, he esssentially places the money on a big plate, and sets the plate on the table where one of his MP allies sits.  He then turns his eyes so he won't see what they do with that money. That way, O'Neill remains untouchable for the thievery of those in his large alliance.  Elegantly, it doesn't matter whether DSIP monies go into the pockets of MPs or district officials.  The bottom line is that is develops prostitute-like political allies who are more than willing to promote Peter O'Neill come election time.   

With respect to his ministers, O'Neill turns his head the other way again.  He gives them freedom to find their own ways and means to make their own corrupt deals and otherwise deplete PNG of its resources and its wealth. O'Neill is renowned for his constant lying and deceptions, but the lying never comes in the absence of a purposeful strategy.   Thus, he lies about his commitment to corruption to cover up his personal tolerance of corrupt activities by his ministers.   He tried to secure the support of NGOs and other groups angry about the massive SABL land grab that started taking place during the last years of the Somare regime, while actually allowing SABLs to continue as a means for fellow Ministers like Maru (Sepik Plains oil palm), Temu (in an aborted rice growing attempt in Central Province) to get super-rich.  His tolerance of SABLs even allowed his arch-enemy, Belden Namah, to remain financially viable to fight O'Neill another day, although O'Neill views Namah with contempt and not an opponent worth worrying about.    

The March Towards Authoritarianism in Papua New Guinea

As already noted, Michael Somare had decided that PNG needed a benevolent dictator many years ago, not realising that him serving the role, in the context of his many personal weaknesses, was the perfect recipe for widespread abuse of power.  Somare may envision Singapore's own benevolent dictator Lee as the model for PNG, but unlike Somare, Lee had and always maintained fairly consistent ethical principles. 

From the moment he assumed power (using the dictatorial gesture of ignoring a Supreme Court ruling that Michael Somare was still Prime Minister), Peter O'Neill bought into the benevolent dictatorship idea and sees it going further than what Somare was able to do.   From all reports, O'Neill doesn't intend to be the kind of high profile violent dictator that we see in North Korea.  The rumours that O'Neill intends to be another Kim Jung Un, leader of North Korea, undoubtedly comes from O'Neill's personal promotion of him and his ministers wearing Mao Suits in government.  Today, Mao Suits are only rarely worn by the Chinese authoritarian regime, but is the only dress of North Korean dictator Kim. 

In actuality, O'Neill trends towards becoming a Robert Mugabe dictator.  Mugabe, one of the principle the independence fighters for black rule in Zimbabwe, subsequently became President for Life, mostly exploiting a 'Founding Father' style loyalty amongst Zimbabweans.   O'Neill envisions a Prime Minister for Life future for himself. While he is as personally ruthless as any dictator trying to stay in power, Peter O'Neill relies more on threats and economic punishment, rather than physical mechanisms to get his way (in contrast to long time ally, Paul Paraka, who built his legal firm from its humble beginnings by having thugs under his hire beat up opposition witnesses and carry out other forms of intimidation).

The Waigani Club Comes Full Circle

Papua New Guinea is at a critical crossroads. The Waigani Club has was never an idea of anyone. It came about due to circumstances as well as to the existence of disreputable personalities who had no concern for integrity but were intent to increase personal wealth.

Over Somare's last term in power and continuing under O'Neill's leadership, the Waigani Club grew so large that it has become largely resistant to efforts by the ombudsman and public prosecutor to send its members to prison or at least boot them out of office.   One of Peter O'Neill's most successful strategies since assuming office has been to continue the economic stranglehold on the judiciary so that it cannot investigate effectively, can only handle a small fraction of the wave of corruption cases that head its way, and have developed a virtually insurmountable backlog that insures that court cases can linger on for more than a decade.   The beauty of the judicial backlog is that it takes advantage of the public's tendency to quickly lose interest and outrage over corruption cases, while also giving the corrupt many quiet opportunities to buy off judges, public prosecutors, police, and witnesses, as well as other avenues for ensuring that critical evidence is destroyed. 

Waigani Club members today, while still not organised in any formal way, actively trade specific secrets, contacts, and thievery strategies with other trusted Club members. When they feel the sense of threat, as they do right now with the Greg Sheppard and Harvey Maladina revelations, they informally but strongly close close to each other in defence. Their best defence is to say nothing, to remain silent, to only talk amongst themselves but never share any of the inner workings of Waigani Club members with the PNG public who has trusted them and voted them into power.

Waigani Club members have never felt threatened as a whole by Transparency International, Noah Anjo, ACT NOW NGO or any of the other individuals and groups who have sometimes noisily protested against corruption and corrupt governments. Unlike Chan, who worried enough about NGOs to actually once send police to raid their offices, was also fearful for his life from the Sandline demonstrators and stepped down from office, Peter O'Neill has no such fear.  He has come to conclude that PNG civil society is ineffective at keeping the PNG democracy functional. He has learnt from careful observation and a bit of experimentation that he can mostly ignore Facebook, the social media, and the corruption fighting NGOs.  This is because he has become convinced that all these entities are unskilled and unable to organise themselves to present a serious threat to O'Neill's power, either at the ballot box or through people power revolutions.   O'Neill doesn't for a moment think that an Arab Spring type uprising will occur in PNG.  Each new 'project' to rake in the money into the pockets of him and his cronies solidify this feeling as he sees that the public makes very little response. He has effectively and proudly destroyed an effective political opposition and even when they come up with real dirt on him, he can brush it aside. The most recent example was the revelation that he had paid Ialibu grassroots K50,000 out of public funds to lie under oath that Chief Justice Injia was corrupt and playing Somare's side when, in fact, that evidence was fabricated by these Ialibus.

O'Neill sees every challenge as part of a game. He doesn't for a moment think he will ever see jail time, with his NPF court trial success being his main evidence. At worse, he reckons he might be kicked out of office. But that isn't such a bad outcome because if it happens at all, he and his cronies will easily have more than enough money to live the rest of their lives in luxurious comfort.

PNG thus seems firmly dominated by the Waigani Club mafia and the likelihood of a very few people getting super rich while the majority of Papua New Guineans find themselves working harder for less and having less wealth overall, is the most likely future for the country.