A commission of inquiry in Papua New Guinea has recommended an Australian-led company involved in obtaining leases over more than two million hectares of traditional land be investigated for criminal misconduct and conspiracy.

Landowners told the Commission hearings their land, much of it pristine rainforest, has been leased without their permission.

The Commission found evidence of fraud by a company called Independent Timbers and Stevedoring.

The plan could still become PNG's biggest ever logging project.

Presenter: Jemima Garrett

Speakers: Nicholas Mirou, commissioner, PNG Commission of Inquiry into Special Agricultural and Business Leases; Lawrence Stephens, Chairman, PNG Chapter, Transparency International; Reading of a statement by Independent Timbers and Stevedoring

GARRETT: Papua New Guinea is used to dodgy deals but one of the most audacious has been the rorting, mainly by logging companies, of a leasing scheme intended for small agriculture projects.

In less than a decade 11 per cent of PNG's land mass has been leased, mostly for 99 years.

In September, Prime Minister Peter O'Neill told parliament a Commission of Inquiry revealed a shocking trend of corruption and mismanagement.

The largest of the land grabs involved four leases for more than two million hectares belonging to tens of thousands of people in PNG's Western Province.

It was orchestrated by a small PNG-registered, Queensland-led company called Independent Timbers and Stevedoring.

The Commission report, which has just become public, found IT&S manipulated the supposedly independent lease approval process to obtain control over four Special Agricultural and Business Leases or SABLs.

Commissioner Nicholas Mirou found documents prepared by the company were 'deceptive and clearly fraudulent' and recommended that further investigation be undertaken to establish if international racketeering over land acquisition had been committed.

Commissioner Mirou spent two weeks in Western Province listening to testimony from landowners and found the majority did not give consent to the leases.

He says the leases should be revoked.

MIROU: One of the fundamental requirements under the Lands Act itself is consent. Now if you don't have consent of the landowners obviously it is the prerequisite for an SABL lease to be granted.

GARRETT: The IT&S project began life as a plan to build a road 600 kilometres from the Western Province town of Kiunga to the PNG capital Port Moresby and to pay for it by harvesting logs along a 40 metre road corridor.

Landowners were keen for the opportunities road access would bring and happy to lease a narrow passage through the forest.

But the Commission found that by the time all the paperwork was finished Lands department officials and executives of landowner companies, had unwittingly signed approval for the leasing of more than two million hectares.

Because the leases were an SABLs the usual forestry rules forbidding clear-felling, did not apply.

Lawrence Stephens, Chairman of the PNG Chapter of Transparency International, wants further investigation of Independent Timbers by Australian, as well as PNG authorities.

STEPHENS: Our reaction from the start with that case was that it was appalling. That it was almost a third of the land area of the province. That it was obtained under the pretext of being agricultural but even the name of the company involved made it quite clear that it was there for timber and it was just shocking, a shocking abuse of what was meant to be a process for getting land available for agriculture simply to steal what is in the forests.

GARRETT: The Commission found the four leases obtained for the IT&S project failed to provide reasonable access for hunting, fishing, gardening and other necessities of life.

Commissioner Mirou says many communities did not discover their land had been leased, until he took his hearings to Kiunga.

He was particularly touched by one woman who walked for more than a week to have her testimony heard.

MIROU: There was this woman. She is a nurse, and she worked somewhere in one of those remote parts in the Western Province or the North Fly area. She walked, she actually walked eight days to come to Kiunga, when she heard we were actually in Kiunga and holding our hearings on the SABL. And she came in and she gave her evidence, and she cried, and said "look nobody told me, my people about the lease itself and why our lease involved. We had no idea about this SABL process. Now our land is with the company".

GARRETT: The ABC sought a response from Independent Timbers & Stevedoring.

Its CEO Neville Harsley issued a statement saying that IT&S has not been able to review of all of the Commission's sources.

READER: The company has requested all of the supporting documents, transcripts and other related exhibits from Commission of Inquiry sources as they have not been made readily available.

GARRETT: The statement sought to distance IT&S sought from other logging operators.

READER: IT&S distinguishes itself from many of the other developers listed in the Commission of Inquiry by the simple fact that operations have not commenced.

GARRETT: For many landowners, the fact that their forest is still intact has given comfort, but it is clear the company is keen to proceed, with what could become Papua New Guinea's biggest ever logging project.

READER: IT&S has been working methodically in collaboration with landowners for over the last 10 years. IT&S remains committed to the customary landowners through the course of the project which will provide the local communities with access to medical resources, water treatment plants at villages, schools, community centres, infrastructure, job opportunities and significant landowner benefits and royalties.

GARRETT: Across Papua New Guinea the Commission identified 66 flawed leases.

Last year, Prime Minister O'Neill told parliament drastic action is needed.

As yet not one lease has been revoked.