WILL AUSTRALIA ACT TO CURB PNG MONEY LAUNDERING?

by JACOB PARAKISAN

Australian Government inaction on money-laundering by corrupt Papua New Guinea politicians, their business cronies and government officials has once again been exposed by the spotlight of publicity.

Evidence given in a Singapore corruption hearing shows that former Prime Minister Michael Somare and his son Arthur used bribe money to pay off residential properties bought in Cairns a few years earlier.

The deal, in which Somare was secretly paid $US784,000 (K2.3 million), involved the laundering by Somare and his accomplices of $US3.6 million (K10 million) intended for setting up community colleges in PNG.

The court established that the $US784,000 was deposited in Somare’s Standard Chartered bank account in three payments, labelled “housing”.

One of those convicted in the Singapore money-laundering case told the court that "if you don’t pay to the PM PNG you will not be able to get business from PNG.”

 Singaporean Lim Ai Wah, who was sentenced to five years’ jail, said: "I wish to state that the three payments labelled ‘Housing’…were made for the purpose of helping PM PNG to pay for his house and his son to pay for a separate house (in Cairns, Australia)…Hence the $US280,000 and $US224.000…were meant for the PM PNG’s use of housing loans.

"Sometime in 2010, I received a call from the son of PM PNG asking me to send money to him. I told him the amount set aside for him was $US280,000 but since he did not have an account in Singapore, I wrote a cheque to PM PNG’s bank account and told him to pass the money to his son…”

SIR MICHAEL SOMARE

The Somares’ purchase of two properties,a  $350,000 inner-city apartment for the father and a  $700,000 house at Trinity Beach for Arthur, was long known to be crooked. Now clear evidence is staring the Australian authorities in the face.

There are other Australian links to the Somare scam - through lawyer Greg Sheppard, who was last year secretly filmed giving advice about how to launder the proceeds of PNG crime.

Sheppard, an Australian citizen, is a director of Quest Investments Ltd, a PNG company owned by Ms Lim and her American husband Thomas Doehrman, the two people convicted of money-laundering in Singapore.

He and Michael Somare Jr, along with Doehrman, are directors of another PNG company, ITE Ventures Ltd. This company is wholly owned by ITE Trust, a company set up by the Somare Government to build the community colleges.

GREG SHEPPARD

In total approximately K150 million has disappeared in the community colleges scam, and only the Somares and their cronies know where the rest of the money is.

It remains to be seen whether the Australian Government of Malcolm Turnbull acts on the clear evidence in the Singapore case that the Somare family has used Australia to launder the proceeds of crime.

The head of Task Force Sweep, Sam Koim, has long been frustrated by the inaction of Australia.

He said Singapore did not wait for PNG as the victim country, or any of the banks involved, to lodge a complaint. “They detected a suspicious transaction through their money-laundering regime that they have, and proceeded to investigate the case, and that's how it has ended up where it has,” he said.

TASK FORCE SWEEP BOSS SAM KOIM

Co-operation from other jurisdictions where the proceeds of PNG crime are transferred to is critical to the successful prosecution of corruption, Mr Koim said. He hopes Australia will follow Singapore's example because many of PNG's white collar criminals buy property or hold their money in Australia.

He believed the Australian Transaction Reports and Analysis Centre (AUSTRAC) picks up many suspicious transactions. “It's up to Australia to have the political will to actually take a step like what Singapore did. But as for the political will, I'm yet to see one that will push them to actually do something about it.”

Australia’s inaction has encouraged its use as a favoured destination for the proceeds of PNG crime. It is well-known that the Australian property market is a haven for millions and millions of kina stolen by politicians and their cronies.

PETER O'NEILL and THEO ZURENUOC

Leading investors start at the very top, with Michael Somare’s successor, Peter O’Neill, owning lavish properties in Sydney and the Gold Coast, where two of his children live.

O’Neill does not only wash money through the property market – he uses his companies, friendly lawyers such as Jimmy Maladina, and his business cronies to transfer money via the international banking system to Australia and other safe havens.

Despite there being only three main banks in PNG – Bank South Pacific, ANZ and Westpac – the monitoring of transactions is cursory at best, and the evidence suggests that Australia is no better.

A number of examples have been disclosed by PNG Blogs.

For example late last year Mr O’Neill transferred K200 million to Australia by using his influence to avoid official international banking procedures, and proper scrutiny at the same time, and shortly afterwards one of his special lady friends, Ni Cragnolini, transferred K50 million.

Some PNG politicians don’t even bother with the niceties of banks. One of the most corrupt Ministers in the corrupt O’Neill Government, Sports Minister Justin Tkatchenko, was stopped at Brisbane airport last year with K200,000 in cash.

He boasted later that the Australian authorities believed him when he explained that it was for a group of friends who were accompanying him.

Even when it is provided with evidence of illegal transactions, Australia refuses to act. Between 2009 and 2011 more than K100 million of public funds went missing from Motor Vehicle Insurance Ltd and was laundered through the Commonwealth Bank in Lismore, NSW, in a blatantly obvious illegal transaction.

The Australian authorities refused to take action on this transfer, which also involved Arthur Somare, 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, questioned any of these transfers, including those by the Somares, O’Neill and Cragnolini, or whether it even knew about them.

NII CRAGNOLINI - O'NEILLS MONEY CLEANER

It is not known whether the PNG and Australian banks involved reported the transactions as possibly suspicious.

Australia’s anti-corruption efforts are self-evidently inadequate, and getting worse.

PNG Blogs also revealed earlier this years that Australia had fallen in the international Corruption Perceptions Index (CPI) for the third year in a row.

Australia’s CPI score is now down to 79, from 85 in 2012, 81 in 2013 and 80 in 2014.

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.

Anti-corruption watchdog Transparency International is increasingly concerned about the Australian Government’s failure to act.

As also reported by PNG Blogs, its Australian branch produced a position paper earlier this year 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, 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."

Apart from the Somares, other prominent politicians with substantial Cairns properties, owned directly or through various subterfuges, include the Minister for State Enterprise, William Duma, Opposition Leader Don Polye, Agriculture Minister Tommy Tomscoll, Labour & Industrial Relations Minister Benny Poponawa and Southern Highlands Governor William Powi.

Southern Highlanders who are believed to be front-men for a sophisticated money-laundering operation based in the province (home province to the Prime Minister) have recently been buying up property in the Cairns suburb of Trinity Beach.

Many other prominent Papua New Guinea officials and businessmen, many of them known to be corrupt, have property investments in Queensland and elsewhere.