Some criticisms of the Australian Banking System, and Government
by MICHAEL J PASSINGAN
Recent attempts to transfer money from Papua New
Guinea to Australia highlight growing concerns about money-laundering between
the two countries.
The Prime Minister, Peter O’Neill, transferred K200
million to Australia late last year, and shortly afterwards one of his special
lady friends, Ni Cragnolini, transferred K50 million.
Some years before more than K100 million of public
funds was washed through the Commonwealth Bank in Lismore, NSW, in a
self-evidently illegal transaction.
The Australian authorities refused to take action
on this transfer when requested to do so by PNG. Indeed, the then Australian
Treasurer, Wayne Swan, did not even bother to reply to requests for action.
It is not known whether AUSTRAC, Australia’s
money-laundering watchdog, stopped the latest transfers, or whether it even
knew about them.
It is not known whether the PNG and Australian
banks involved reported the transactions as possibly suspicious.
The chances are that the answer is no on all
counts.
The transfer by the Prime Minister should certainly
have been reported. It is known to have been “expedited” through the PNG
banking system. Due process was not followed.
The reason for the inaction is that the Turnbull
Government in Australia, like its predecessors, is hopelessly compromised by
the need to keep the Manus refugee centre open for business no matter the cost.
This has given comfort to PNG politicians and other
criminals, and the PNG authorities with whom they are aligned.
Numerous commentators have pointed out the failure of
the current Australian Government to act on bilateral money-laundering and
other crime and official corruption, including the misappropriation and
misapplication of Australian aid.
Meanwhile, with immunity from international
scrutiny and action, O’Neill regime corruption reaches epic proportions as the
Prime Minister uses Australia’s weakness to further undermine accountability
and transparency.
Anti-corruption watchdog Transparency International
is increasingly concerned about the Australian Government’s failure to act.
Late last month its Australian branch produced a
position paper on Illicit Financial Flows, which explicitly mentioned
money-laundering between Australia and PNG.
The
paper said: “According
to evidence from PNG (Operation Task Force Sweep), corrupt senior officials
have used opportunities through regular travel to Australia, business
relationships, or their relatives in Australia to invest corruptly obtained
funds in Australian real estate.”
The paper rightly questions Australia’s
commitment to tackling the problem.
It said
there are “significant questions as to whether AUSTRAC … has been delivering on its mandate; and whether
the Australian Federal Police has an effective mandate to
investigate money laundering offences committed by entities such as banks and
other entities ‘regulated’ by AUSTRAC.
The
incoming chairman of TI Australia, Anthony Whealy QC, recently told the ABC
that lack of action by successive governments to curb public sector corruption
was the reason Australia continued to slide down international corruption
rankings.
"The
delay in responding to these issues has now made reform critical and a
commitment to ramp up efforts to tackle foreign bribery, which has particularly
impacted perceptions of Australia, is now urgent," Mr Whealy said.
The
inflow of illicit foreign funds into Australia's property market is also cited
as a problem.
Mr
Whealy said unless Australia strengthened its anti-money laundering regime it
would continue to fall in the corruption rankings.
"We
need to have better vision and control of where money is coming from, he
said."
Banks in
Papua New Guinea and Australia are a major problem. There are only three major
banks in PNG, and two of them are Australian (the ANZ and Westpac). Sectoral
capacity and regulation are weak.
Because of
the small PNG market and the dominance of the domestically owned Bank South
Pacific, the attractions of international business are obvious.
The volume
of bilateral transactions and the revenue and relationships involved are very
significant - the ANZ has been notable for its loud support of the corrupt
O’Neill regime in its efforts to drum up more of this lucrative business.
And there
is evidence to suggest that the central bank, the Bank of Papua New Guinea, is
increasingly compromised.
It was
involved in a highly questionable commercial arrangement devised by Prime
Minister O’Neill and one of his advisers, Dr Jacob Weiss, himself an adviser to
the central bank, for the K145 million ($A 70 million) purchase of power
generators for the Government.
The
illegal $1.1 billion (K3 billion) state borrowing from UBS Australia to finance
the Government’s purchase 10 per cent of Australian-listed Oil Search shares
should also have required central bank approval.
The
central bank should also have considered the Prime Ministerial transfer of K200
million to Australian under standard forex transaction procedures. However
these procedures are known not to have been applied properly, at the very least
so as to avoid PNG’s tight forex rationing.
A
paper written in 2012, Applied Forensic Accounting – Experiences from the Papua
New Guinea Financial Intelligence Unit, highlights the many weaknesses in the
PNG banking system.
Its
authors, PNGFIU commander Bernard Barrum and AFP secondee John Chevis, proposed
a number of initiatives to reduce official fraud, corruption and
money-laundering.
The banking system was a primary concern,
but the PNGFIU’s proposals were
hampered by a number of factors – the sheer volume of potentially corrupt
transactions, strong opposition from the commercial banks, and a focus on
public servants.
Politicians
led by the Prime Minister and his cronies, are at the heart of official
corruption, but other beneficiaries include a coterie of corrupt Australian
businessmen and women alongside a growing number of new Asian businesses.
Nevertheless the PNGFIU had a
significant impact with the measures that it was able to implement against
public service fraud and money-laundering.
However their paper makes it clear that
banks in markets such as PNG, or transacting large volumes of business with
regimes known to be corrupt, must take a higher level of responsibility for
preventing corrupt dealings.
“A bank in a developed country like Australia that
fails to prevent the placement of drug proceeds into the banking system is less
likely to impact on the viability and
stability of the nation and health and welfare of its citizens,” they
say.
“For a bank that facilitates (or is used to
facilitate) grand corruption in a country like PNG, that risk is considerably
higher, particularly where such transactions are repeated week after week, year
after year.
“Banks in such environments should arguably be held
to a higher standard of accountability.”
This is a strong argument relating to
Australian banks domestically and in Papua New Guinea given their position in
the PNG market, the volume of transactions between the two countries, the
extremely high levels of corruption in PNG, and the influence that Australia
could bring to bear were it not for the Manus imperative.
Meanwhile, TI Australia notes that
Australia’s international corruption reputation continues to tumble.
“Today it was revealed that world-wide perceptions
of the level of corruption in Australia’s government sector continue to worsen,
with Australia’s CPI score falling to 79, down from 85 in 2012, 81 in 2013 and
80 in 2014,” it said in a media release last month.
“Australia is now ranked 13th out of the 168
countries included in the Index – down six positions since 2012, and joining
countries like Libya, Brazil, Spain and Turkey as big decliners over that
period.”
Australia’s most pressing corruption problem is
right on its doorstep, but the PNG Government has shown how little it has to
fear while the Turnbull Government is compromised by Manus.