Political Donations and Misappropriation

In this Court Report PNGi reveals how one convicted criminal purchased the right to misappropriate K500,000 by making a K50,000 donation to the conspiring Minister’s political party. 

It is not enough to expose individual cases of corruption. We must understand how corruption works as a system, so the system can be disrupted and destroyed.

To do that cases are indeed needed. Many cases. Each a keyhole into this system of corruption in Papua New Guinea. As the keyholes accumulate, we begin to get a window.

Looking through this window it is apparent that political office has been made into a prime launchpad for criminal racketeering.

Politicians once in senior posts can extract bribes, rig procurement, and commit illegal acts in favour of their own businesses, or the businesses of allies and corporate clients.

To get into this profitable position, we find numerous politicians had an apprenticeship as fixers and fraudsters in business or as agents for senior politicians.

With the money they realised from their apprenticeship, they are able to assume senior positions within the party political system, get elected and then use their ill-gotten gains to lure newly elected MPs into their numbers, and to forge coalitions.

What has been difficult to document is the role which the political parties play in this process.

Unlike more transparent and robust democracies, Papua New Guinea does not have effective laws ensuring political parties publicly reveal the sources of their campaign funds. The website of the Integrity of Political Parties and Candidates Commission is a black hole and provides little evidence the Registrar is actively policing the rules in the Organic Law.

Media reports on lavish fund raising dinners do though reveal one way that political parties raise their funds. Other avenues are not quite so above board. The National Intelligence Organisation for example, has produced reports alleging foreign logging companies fund political campaigns in return for easy access to logging permits.

Now a criminal court case has revealed how the National Alliance Party received K50,000 as part of a K500,000 scam involving a disgraced former Minister for the Department of National Planning, and a former National Planning Departmental officer.

In July, Tracey Tiran was found guilty of misappropriating and dishonestly applying to her own use K500,000 belonging ultimately to the people of Papua New Guinea, through their government.

The court found the accused, together with Minister Paul Tiensten, who is already serving two heavy sentences for misappropriation, and the convicted criminal Chris Halupe set up a scam in 2011 to obtain K500,000. This would be achieved by falsely representing that the monies would be used for a coconut processing project on Manus

The K500,000 was deposited into the account of Tiran’s company, Sit’s Up Services Limited on 4th March 2011. It was not disputed in court that K100,000 was then returned to Hulape, and K50,000 to Paul Tiensten’s National Alliance Party, in return for the Minister illegally facilitating the payment. The remainder of the K500,000 was used, the court found, by Tiran for her personal expenses.

Follow the money! K50,000 of criminal proceeds goes to the National Alliance Party.

The National Alliance Party was, of course, led for 20 years until 2017, by Michael Somare. Somare is a man who the Singapore courts claim received US$784,000 in kickbacks, for a contract awarded to Chinese corporation, ZTE.

It is unclear in Tiran’s case whether National Alliance Party officials were aware of the scam, or whether it was a conspiracy between Tiran and Tiensten only. However, the court decision does suggest at the very least that 10% of the criminal proceeds from this conspiracy went into National Alliance’s coffers.

This raises serious questions over the need in Papua New Guinea for a properly policed public register of party donations, and a clear set of regulations governing contributions that meets international standards and is effectively enforced.

In the case of Tracey Tiran, the court found Sit’s Up Services Limited was a shelf company with no assets, employees or accounts books. It was set up specifically to facilitate the fraud. The court found the company had filed three annual returns on the same date, 30 May 2012, ‘to add to the sham but corroborating the truth that of deliberate calculated attempt to deceit and lie to cover a serious dishonest application of government and State funds in breach of the law’.

The company was not even an agriculture orientated business. Instead the company described its activities as supplying office stationary, procurements, catering and short-term and relief secretarial and reception staff and labourers. The court found the defendant had falsely represented she had the necessary skills and experience to set up an agriculture project.

Payment was approved based on a footnote to a letter provided by the Minister, Paul Tiensten. The proper finance forms were not signed and the whole process used to pay the monies was ‘in breach of the law’. 

The court concluded that Tracey Tiran was guilty of misappropriation.

There is no indication in the court decision on whether any attempts have been made to recover the K50,000 from the National Alliance Party or whether, indeed, the party has voluntarily returned the stolen money.

However, it does raise the question, how common is this practice of political donations for the right to misappropriate?

If we assume just for a moment this is a widespread practice – although further evidence is needed to verify this – once linked to other data reported via PNGi, a system emerges.

First, the party machines which help get hopeful candidates elected, are powered in part by criminal proceeds. These hopeful candidates have themselves frequently done an apprenticeship in graft; or in the case of incumbents, have got their hands dirty in political corruption while in office.

Once the party machine gets them elected or relected, candidates pay their dues by ensuring kickbacks are made through donations. They then begin exploiting political office to engage in rackets that grow their own fortune, and the fortune of their friends and allies.

A prototype corruption model for PNG

Such a model echoes a wide range of cases presented by PNGi. It portrays a political system that selects for high office those skilled in the arts of graft and market fixing.

Once in high office their allegiance can be acquired for any commercial transaction, no matter how illicit or antithetical to the interests of the country or its people. This system also therefore creates a framework for corporate plunder.

Furthermore, this system crucially is designed to exclude and marginalise those who wish to change it – or indeed it persuades them to play the game, abandon their integrity, and become big.

Clearly this is stripped down and introductory explanation. And it is one also bound to the limits of the windows we have been able to get so far on the corruption system. But as PNGi investigates more and more cases, the detail and accuracy of this model will grow.

Then the question becomes, where and how to best dismantle it!