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‘Australia over a barrel’: PNG official sought K20 million ‘donation’

Manus from the air - looks peaceful but corruption, greed and exploitation roil beneath


MELBOURNE  - An Australian government contractor on Manus Island was asked by a senior Papua New Guinea official in 2017 for a multi-million-dollar donation to the ruling party of prime minister Peter O’Neill.

When the company, which was working for the Home Affairs department on the offshore detention regime, refused the request, the company's senior managers began to encounter problems with visas for staff to enter or remain in PNG.

The contractor, which asked that its name not be used to protect the welfare of its Manus Island-based staff, rejected the donation request and reported it to senior department officials in late 2017. It's understood more than one contractor has experienced similar problems.

If the company had made the donation of K20 million to the People’s National Congress party, it would have likely committed a criminal offence under Australia’s foreign bribery laws. There is no suggestion Mr O’Neill was aware of the donation request.

Home Affairs did not address questions on how it responded to the political donation request. A spokesman said contractors were required to abide by the laws of Australia, PNG and Nauru, including compliance with foreign bribery legislation.

An investigation by The Age and Sydney Morning Herald has found serious problems with Australia’s exposure to corruption through the $5 billion offshore detention, as well as its wider interactions on PNG.

Australia’s law enforcement integrity watchdog has identified “corruption issues” within the Australian Federal Police’s procurement practices in PNG following a 2017 whistleblower complaint.

Despite finding two instances of possible corruption within the AFP's PNG procurements, the Australian Commission for Law Enforcement Integrity referred the matter back to the police to let the force investigate itself.

Serious doubts over the adequacy of the AFP’s subsequent investigation have since emerged, with no federal police agents, unsworn staff or contract winners questioned. Instead, a paperwork audit of the contracts was done.

The Age and Herald can also reveal that Australian agencies have experienced similar problems when providing payments to PNG to shore-up the revival of the Lombrum naval base to curb China’s regional influence.

The flow of money from Australia has created a culture of expectation among some senior PNG politicians and officials.

PNG government representatives also began to make demands in high-level meetings in Canberra for Home Affairs to order its Australian-owned and operated contractors to hire PNG companies on lucrative sub-contracts.

While Australian government agencies and departments refer to PNG as a “difficult environment” to operate in, an internal 2018 AFP report seen by The Age and Sydney Morning Herald is more direct and describes PNG as having “significant corruption issues”.

Australia’s offshore detention policy, supported by both Labor and Coalition federal governments since its operational revival in 2013, has cost more than $5 billion.

Huge contracts have been awarded to companies in cloudy circumstances. These are often then split into sub-contracts involving politically-connected PNG-based interests.

This flow of money, according to several well-placed sources working for Home Affairs and the PNG government, has created a culture of expectation among some senior PNG politicians and officials.

“With offshore detention and now the Lombrum base on the agenda there is an attitude in some senior levels in PNG that they have Australia over a barrel,” said one Australian contractor with long experience in PNG.

The Age and Sydney Morning Herald last week revealed emails from within PNG’s biggest bank where a senior manager wrote that he believed his client, a PNG landowner company called NKW Holdings, was inflating its invoices to the Australian government under an $82 million contract awarded by Home Affairs.

The AFP spent almost $50 million and had dozens of officers based in PNG as part of Australia’s commitment to help the country safely host last year’s APEC summit.

At least four former PNG-based federal police officers were concerned about procurement practices and alleged conflicts of interest involving millions of dollars worth of contracts.

The Australian Commission for Law Enforcement Integrity assessed information about the AFP’s PNG procurement arrangements and deemed that two corruption issues were identified.

It then referred the matter back to the AFP for investigation and an unsworn staff member began a paperwork audit of relevant PNG contracts.

This process found that the signatures of senior officials whose approval was required to award a $1 million building contract to Red Sea Housing Services — which had already won several federal police-funded tenders in PNG without competition - were copied and pasted in breach of procurement rules.

A handful of contracts had also not been registered on the AFP’s procurement database as required.

Several AFP officers formerly based in PNG are understood to be deeply disappointed with the way the federal police investigated their allegations. Among the allegations was the claim that direct approaches had been made to Saudi-owned building firm Red Sea Housing Services for the purchase of jet skis and provision of dogs for the PNG police.

No interviews were done with AFP officers or winning contractors and alleged conflicts of interest and a “drinking club” culture involving senior federal police based in PNG was also not investigated.

The overall finding of the paperwork audit was that nearly all the AFP’s PNG contracts were being documented properly and meeting procurement criteria. It did note that the AFP mission in PNG was extensively using exemptions in procurement rules to engage suppliers directly.

“Processes in Mission need to be looked at to ensure the justification for the items/services being procured are robust, justified and are the best use of Commonwealth resources,” the investigation report concluded.

An AFP spokesman confirmed complaints were raised and an investigation followed. But he was not able to discuss the nature of the investigation or its findings.

Lengthy written complaints by several former PNG-based AFP agents detail a broader story about the workplace culture of the federal police mission in Port Moresby and its effect on procurement practices.

The complaints raise questions about the process that led to a $1.1 million contract to provide bomb detection dogs and training to the PNG police force being awarded to a company part-owned by a former senior New South Wales policeman.

At least three former PNG-based AFP agents raised concerns about the canine contract, including the apparent loss of documentation authorising a direct approach to Queensland Police about its dogs and a subsequent directive to invite Dog Force Group Pty Ltd to tender for provision of dogs to PNG police.

Dog Force Group is part owned by former senior NSW policeman, who used to work with at least one of the AFP's PNG-based officer. There is no suggestion of any wrongdoing by Dog Force Group nor doubts about its ability to carry out the contract.

However, there were contrasting opinions about whether Dog Force Group or a competing company were best qualified to fulfil the needs of the contract.

A decision by an unsworn AFP coordinator in PNG to overrule the position of the force’s maritime advisers to buy six jet skis at the cost of $100,000 at extremely short notice was also raised in the whistleblower complaint.

The jet skis were gifted to PNG police who were not trained to operate them.

“No one in mission, including Maritime advisers are qualified to operate these jet skis let alone train RPNGC members … it is irresponsible and dangerous,” the complaint stated.

The AFP spokesman said staff deployed overseas underwent special governance training. If an investigation raised issues with procurement practices overseas, action was taken to ensure to prevent future problems, he said.


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Niko Leka

It appears that bribery and corruption is now Australia's foreign policy instead of diplomacy. What began as a tool to serve domestic political ambitions has developed into a method for influencing the Pacific generally.

Wilson Pakalu

Please name the senior government official so we can weed out corruption. Otherwise it’s all talk, no action.

John Kupini

The media need to name those PNG high ranking officials so that all taxpayers know who are those criminals running this country dry. Hate these so called leaders.....

Francis Nii

Corruption in high places involving high ranking government officials is a serious problem in PNG. The name of the PNG government official who requested for the K20 million bribery should be named as a deterrent.

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