Rowan Callick - The Australian

A JUDICIAL Commission of Inquiry into corruption in Papua New Guinea's core public offices has revealed that a disturbingly large section of the country's legal profession has for years been plotting and reaping massive cash rewards from scam compensation claims against the government.
 
The commission's report recommends that 14 prominent lawyers be subject to criminal prosecution, and that they and a further eight lawyers be referred to the Lawyers' Statutory Committee.
 
Former solicitors-general and attorneys-general are among those named as prime movers in the cabal.
 
It operates by concocting false claims against the government which are approved by top bureaucrats, such as Finance Secretary Gabriel Yer, and payment is implemented rapidly.
 
Among the subjects covered by these false claims are land leases, police raids, civil works payments, job contracts, procurement of goods and services, and even cabinet decisions that have been altered and Prime Minister Michael Somare's signature forged.
 
The commission of inquiry, established by Sir Michael, was chaired by former PNG judge Maurice Sheehan (a New Zealander), Justice Cathy Davani, and senior businessman Don Manoa.
 
It was originally established in August 2006. But in the next two years it was suspended and re-established five times, due to ``active opposition'' from those ultimately named as the prime culprits in the cabal, says its report.
 
Sir Michael, who is now struggling to wrest back control of the nation's finances from its own top bureaucrats accused of being corrupt, said the work of the inquiry had faced ``frivolous legal challenges and administrative hurdles'', which were continuing.
 
He said in tabling the report in parliament, that ``public monies have been paid out falsely, fraudulently, improperly''.
 
Former solicitor-general Zacchary Gelu and lawyer Paul Paraka, who are named throughout the inquiry, obtained a court injunction from Justice Bernard Sakora in Alotau, in Milne Bay province, immediately after Sir Michael tabled the report last month.
 
This injunction bans its publication and distribution anywhere in PNG, and its implementation. But The Australian has obtained a copy of the 812-page report.
 
In all but five of the 783 cases investigated, the sham payments were made on default judgments or out-of-court settlements.
 
It is a crucial element of this rort that the claims are not tested in court -- without, the report says, ``any challenge as to whether they were founded on fact or fiction''.
 
The inquiry says ``the court has too often been the unwitting instrument legitimising settlements of wholly untested claims concluded unlawfully by officers within the departments of Finance, Justice and Attorney-General''.
 
Lawyers are prominent among the beneficiaries. Paul Paraka Lawyers received $16 million in ``brief-out'' fees, payments for handling such compensation claims from core government departments, from January 2003 to August 2006. A ministerial inquiry into the propriety of such brief-outs was itself injuncted three years ago, and the inquiry says ``it is a sad commentary on the Attorney-General's office that it has taken no steps to set aside that temporary order''.
 
The Attorney-General must, it says, ensure the cabinet is able to receive the report of its own inquiry into this unexplained practice.
 
Government compensation brief-outs ``have provided a sure income for small law firms which have now grown on state business to five and 10 times the staffing of the Justice Department''.
 
The inquiry describes a deterioration in ``the capacity and integrity of the Justice Department'', with solicitors-general ``assuming to themselves the authority to decide liability and compensation, to the detriment of the state''.
 
A typical case detailed in the report is that of lawyer Simon Norum of Mount Hagen, who organised the filing by 130 people of a claim over alleged losses from a police raid of Kulimbu village.
 
All 130 were heard on a single day by the district court, which awarded them $550,000.
 
Norum, whom the inquiry wants referred to the fraud squad, received an additional $186,000 costs, and set up another scam in which a district court in Mendi heard on one day 113 cases involving an alleged police raid, from which he was awarded $171,000 costs.
 
Controversial former politician Peter Yama has long been claiming $6m for alleged loss of business from leasing government land in Madang, where he runs a security company.
 
Yama's claim -- for compensation because disgruntled villagers occupied land he said he wished to develop -- was settled by the Attorney-General's office last week, while Sir Michael was out of the country, visiting New Zealand.
 
Acting Prime Minister Puka Temu said: ``There is a standing cabinet decision to fight this case. It would appear that it is being undermined.''
 
The $6m claim by Yama -- who engineered the arrest of two Australian Bank of South Pacific executives for allegedly hampering another payment over a compensation claim earlier this year -- is one of the cases highlighted in the report as ``baseless and patently flawed''.
 
The report says that the cabinet ruled in 2003 that it must approve all out-of-court settlements of more than 1 million kina ($400,000), and that the Attorney-General must take questionable claims, or those above $200,000, to the courts for judicial review.
 
It says: ``The directions of the cabinet, the government with the authority to administer the state and to control the funds budgeted by parliament, have been ignored by key officers. Public funds have accordingly been disposed of without lawful authority.''
 
The Claims Act, the commission says, ``specifically excludes the courts from making any order of execution against the state to enforce payments''.
 
Yet the national court has in several actions, ``contrary to the provisions of the act'', issued such orders -- including, the report says, in the case that involves the two Australian bank executives.
 
The commission says that state lawyers, ``having failed to defend a claim, whether for lack of instructions or otherwise, took upon themselves the settlement of those claims without instruction''.
 
The reliance on default judgments in all but five of 783 cases examined means the courts are by-passed and ``the claimant and state officials agree to a compensation figure themselves, leading to massive losses of public funds''.
 
Officers of the Attorney-General or Solicitor-General have regularly, the report says, accepted ``unproven assertions as fact''.
 
Although the Attorney-General is handling 11,000 claims against the state the department has a litigation staff of just 11 lawyers. ``Application of even a fraction'' of the $4m in excess of the budgets of the Justice Department and Attorney-General for law firms ``could have done much to ensure an effective and operational law office''.
 
 ----- Named and shamed -----
 
Lawyers recommended for criminal prosecution:
 
Dan Kakarya, Dawa AguKlewaki, Paul Paraka (over three cases), Kumuro Sino, John Goava, Peter Pena (over two cases), Simon Norum, Guguna Garo, Eric Kiso, Francis Damem (over two cases), Francis Kuvi, Mundua Kua, Zacchary Gelu, Joseph B. Nanei, and Paul Paraka's legal clerk Billy Bonner.
 
The above are recommended for referral to the Lawyers' Statutory Committee, as are also:
 
Nicholas Tame, Danny Gonol, Bob Marley Nani, Gaure Odu, Daniel Kop, Jeffrey Abone, Meville Devete and Laias Paul Kandi.