PNG 'dirty money' trail leads to Australia

Millions of dollars allegedly corruptly obtained from the PNG government have been siphoned to Australian banks, confidential banking documents reveal.

Fairfax Media has also confirmed that Australian bank NAB recently increased its due diligence on some money transfers from PNG due to corruption concerns.

The allegedly dirty money stems from a corruption scandal gripping PNG that has led to the suspension of senior government officials and Prime Minister Peter O'Neill last month asking the Australian Federal Police and Interpol to help investigate.

Mr O'Neill also threatened to sack all staff in the country's Finance Department after allegations in Parliament implicating top officials and prominent lawyers.Law enforcement sources believe up to $500 million may have been stolen from PNG government legal aid funds over several years.

A NAB spokesman said on Tuesday that the bank late last year ''heightened our due diligence relating to some funds from PNG, as a result of information that became available to us through official channels in PNG''.

''Payments that NAB deems as suspicious will be blocked and reported as required by law,'' he said.

Fairfax Media has obtained documents that show the leading lawyer named in the PNG Parliament as one of the architects of the alleged corruption scheme, Paul Paraka, has been regularly transferring large sums of money to several contacts on the Gold Coast and in NSW.

It is understood that one of Mr Paraka's PNG banks has a business relationship with NAB. The NAB spokesman said the bank could not comment on payments made on behalf of individual customers.

On one day in October last year, a bank account linked to Mr Paraka wired about $80,000 in three transactions to his Australian-based wives and girlfriends, including one who lives in Sydney's Star City casino complex. Between February 2012 and February this year, almost $3 million was transferred to Australia from bank accounts linked to Mr Paraka. PNG investigators believe most of these funds were corruptly obtained.

The ability of Mr Paraka - who denies any wrongdoing - to transfer suspicious amounts of money raises questions about what Australian banks, the federal police and the anti-money-laundering agency, Austrac, are doing to block or investigate dirty money.

The ease with which allegedly corrupt PNG officials and businessmen can transfer money to Australia is becoming an increasing concern for law enforcement officials in both countries.

Last month, AFP senior liaison officer Superintendent Steve Mullins reportedly told a conference in PNG that tens of millions of corruptly obtained money was being deposited in Australian banks each year. An AFP spokesman said Superintendent Mullins was working with PNG authorities ''on a range of complex issues''

The Age