STAFF REPORTERS | PNGi Central | Edited extracts
PORT MORESBY - Michael Nali is Papua New Guinea’s Minister for Works and Implementation. Here we look at his unique private and public relationship with a Chinese state corporation implicated in a wide range of corruption and bribery scandals.
Nali was first elected to parliament in 1992. He is now in his fourth term as MP for the seat of Mendi in the Southern Highlands.
During a turbulent career, the MP for Mendi has faced two Leadership Tribunals, where he was accused of inciting a riot, misusing his position as a leader and misappropriating K650,000. Some of those allegations are still outstanding and have never been resolved.
Nali has also had a controversial role in one of PNG’s largest real estate development, the Paga Hill Estate.
Alongside his political career, Nali has developed a number of high profile businesses. They have kept him connected to some very influential political figures when out of public office between 2007 and 2017. During that period Nali’s companies also benefited from high-value and sometimes controversial government contracts.
We now turn our attention to Nali’s unique business relationship with one of China’s largest State corporations, the China Railway Group (CRG). The China Railway Group is majority owned by the Chinese government.
PNGi can reveal the works minister co-owns, in a private capacity, the company Nation Building Construction Limited with CRG, via one of its Papua New Guinea subsidiaries. This comes as CRG is being awarded massive construction contracts across PNG.
CRG is a company with a chequered international record which has seen the Chinese state corporation implicated in numerous cases of corruption and malfeasance, including using bribery to obtain government contracts, and human rights abuses.
Despite its international record, CRG has been the beneficiary of some extraordinarily lucrative contracts with the O’Neill government. These contracts date back to at least 2013, and are valued at over K1 billion.
In addition, at the end of 2017, the PNG government has signed an agreement with CRG for road upgrades costing a staggering K13 billion. This contract will fall directly under the responsibility of Michael Nali as the minister for works.
While PNG is apparently happy to sign billion dollar deals with the China Railway Group, other countries, such as Norway and Scotland have been more circumspect.
At the end of 2014 the Norwegian state pension fund decided to disinvest from the China Railway Group. This decision was based on recommendations made by its Council of Ethics relating to China Railway Group’s national and international activities. The Council was of the view that the company “did not meet national or international standards regarding compliance and anti-corruption”….
Of even more concern to the Norwegian Council of Ethics was that “CRG neither responded to the corruption allegations uncovered in the company nor did it seem to have implemented adequate measures internally to prevent corruption in the future”.
It noted “CRG and one of its subsidiaries have apparently bribed civil servants to secure contracts to build railways and housing projects. This is reflected in two Chinese legal rulings relating to the recipients of the bribes”.
The Council of Ethics also draws attention to Chinese press reports that CRG was one of the companies being investigated and sanctioned internally by the Communist Party for having paid bribes…..
The China Railway Group is not an ethical fit for Norway, Scotland or major human rights NGOs such as Amnesty International. It appears, however, to be of a high enough ethical standard for Michael Nali…..
The governance arithmetic is simple.
The China Railway Group has been linked to a wide range of corruption scandals, linked to its alleged propensity to bribe officials in order to win contracts.
The Norwegian and Scottish governments have cut all ties to the firm. Amnesty International claims the Group is implicated in serious human rights abuses.
China Railway Group subsidiaries are receiving enormous contracts to construct roads throughout Papua New Guinea.
Road procurement has been highlighted as being deeply impacted by corruption.
We have, therefore, a high risk firm in a high risk sector.
Then to top it off, the Works Minister has a private business relationship with the Group. PNGi has been unable to find any public record where Michael Nali discloses this conflict of interest.
This is not the first time Michael Nali has benefited a private business partner through the execution of his public Ministerial role.
In Part I it was noted that he lobbied for the Paga Hill Land Holding Company in the NEC, at a time when he was commercially tied to two of its shareholders. Later, once he lost office, Nali acquired a 9% stake in the property development.
However, arguably of greatest concern are outstanding allegations of misappropriation that are still evidently to be tried by a Leadership Tribunal.
Would the prime minister back such a measure against a man who is his private business partner?
All of which reminds us why the authors of the PNG constitution recommended politicians cut business ties when they enter public life.
The conflicts it involves create a high risk environment for graft, favours and impunity.