$300m pillaged in PNG graft

Rowan Callick; 28/4/10

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.

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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.