A special investigation on Dateline reveals senior lawyers detailing how to avoid detection when laundering money into Australia and beyond.
A private investigator filmed secretly at a leading law firm in Papua New Guinea, revealing a trail of corruption and influence peddling involving politicians, bureaucrats and lawyers.
The investigator posed as a fund manager looking to invest in PNG during an initial appointment with Young and Williams Lawyers.
He was working for the NGO, Global Witness, and later handed the footage to SBS and Fairfax.
The law firm is owned by Australian Greg Sheppard and his business partner Harvey Maladina.
They have represented high profile clients, including the current PNG Prime Minister Peter O’Neill.
Several of their clients have faced corruption charges, so the investigator is looking to find out if their practices are above board.
“All those sorts of mobilization fees really ought to originate from off shore,” Sheppard tells the investigator when asked about politicians looking for bribes over the sale of land.
“It’s something that needs to be handled very, very carefully.”
“You’ve got to make sure it’s not going to be attacked as money laundering… if you were to pay seven figures to anybody, the world would fall in on top of you,” he says.
“Small dribs and drabs are the only way to go… anyone who says seven figures, they are inviting prosecution.”
Greg Sheppard is the father of three members of the popular Brisbane band Sheppard, and owns the business behind it.
He was until recently a director of Wilson Protective Services, a subsidiary of Wilson Security, which is the company that runs the Australian detention centers on Manus Island and Nauru.
His resume also says he’s a former Queensland Crown Prosecutor and his website says he was awarded an OBE and the Companion of the Star of Melanesia for his distinguished service to PNG.
He’s lived and worked in PNG for more than 25 years.
In conversation with the investigator, he states that he’s not advising the potential investor to break the law.
“I’m approaching it from a lawyer’s point of view, I don’t want to advise you to do anything illegal,” he says.
“It would have to be something that didn’t raise suspicions, something that was ostensibly commercial.”
The Australian Federal Police estimates more than $200 million of corrupt money is laundered from Papua New Guinea into Australia every year.
Sheppard’s business partner Harvey Maladina is even more bold in explaining how to do business PNG-style.
“Just look after the top guy, normally it’s the minister,” is his advice re payments. “It shouldn’t be [normal], but it is.”
“If you’re a politician, it’s the quickest route to being a millionaire here.”
Maladina is from a highly influential family – his father and brothers were involved in politics.
The conversation turns to how bribes are disguised – Maladina discusses using inflated legal bills.
“If you engage us, we engage him,” he says. “We do our bills… you pay us, and we send his money off to Australia, to his Australian account.”
“Is he happy to adjust the bill so that it’s higher so you can get the money out to Australia?” asks the investigator.
“Sure,” replies Maladina.
He also mentions a high profile Australian QC who helps facilitate the process.
“Normally it’s through the law firms, they don’t usually question that,” he says.
“The door is pretty wide open if you’re a foreign corrupt official looking to move your dirty money into Australia,” says Jason Sharman, a money laundering expert at Griffith University in Queensland. “The risks of detection and being caught are almost zero.”
“Australia is complicit in this through its inaction or through turning a blind eye,” he says.
And there’s speculation Canberra doesn’t want to rock the boat because of the detention centre on Manus Island.
“I think the recent deal over Manus Island… has added another element there where the Australian Government definitely doesn’t want to irritate the PNG Government for fear of that deal unravelling.”
Dateline put a series of questions about bribery and money laundering to both lawyers.
Harvey Maladina replied saying, “The allegations are not true… at no time did I make or insinuate that illegal payments can be made through my firm.”
Greg Sheppard told us he considers the allegations to be false and that any comments would be given within the overarching requirements of PNG laws.
Watch the full investigation above.
Greg Sheppard’s Response
I do not recall meeting with anybody identifying themselves as a representative of “New Botany Fund” on the date you mentioned, or at all.
I have since receiving your email checked all of my firm’s records and can confirm that New Botany Fund was never at any time a client of this firm and therefore, no legal advice was given to it through its representative.
I am often approached informally by a variety of people who are not clients to share aspects of my knowledge and practical experience in PNG, and in these areas of the law. My comments on these occasions are by the very nature of the exchange, general, hypothetical and merely descriptive. I always assume that those who ask me for this kind of information are doing so to broaden their understanding of the issues and practices here under the relevant laws. It is illogical to think someone would be looking for this type of information to ensure their conduct is illegal. Any information I share, is in the context of the overarching requirement to comply with the laws of PNG.
If your anonymous source was one of these people, I regret that he did not clearly understand this.
I consider the allegations contained in your letter to be false and highly defamatory, and you ought not to publish them.
I reserve all of my rights pertaining to this matter, and have forwarded a copy of your email and this reply to my solicitors.
Harvey Maladina’s Response
These allegations are not true.
I met an American businessman at the Airways Hotel in Port Moresby last year but at no time did I make or insinuate that illegal payments can be made through my firm or through my Partner Mr Greg Sheppard.
I told him that yes through the media I have read that this was common in PNG but that was it.
We (Greg & I) have been in practice now for over 30 years and we have never assisted anyone bribe or facilitated an illegal payment from the firm or through my partner Greg Sheppard. I recall this expatriate asking me how he could bribe the Minister for Forest. I declined to comment for the reason because I have never made or assisted in this illegal practice before and never will in future.
I have never introduced this person to Greg; any suggestion that I introduced this person to Greg through me is an outrageous lie. I met him once for a short meeting and have never met him again since.
It is quite extraordinary that you have been able to make a story line from this meeting that implicates my partner and me of these ludicrous bribery and money laundering insinuations.
AUSTRAC (Australian Government Transaction and Reports Analysis Centre) Response
Papua New Guinea is a near neighbor and important bilateral and regional partner.
We treat seriously any allegations that Australia is harboring proceeds of corruption from PNG or that such proceeds are being laundered in Australia.
Australia has a robust anti-money laundering framework to deter and detect money laundering, based on international standards. We are committed to ensuring Australia is not a safe haven for the proceeds of corruption.
Banks and other regulated businesses are required to have appropriate controls to counter the money-laundering risk posed by corrupt foreign officials and politicians, including customer identification and financial transaction and suspicious matter reporting requirements.
Consistent with our commitment to tackle corruption domestically and overseas, Australian agencies work closely and cooperatively with PNG authorities to combat corruption.
Australia is investing considerable resources to strengthen PNG’s capacity to combat corruption, including assistance to strengthen PNG’s anti-money laundering framework to comply with FATF standards and its capacity in the area of proceeds of crime and investigation. This includes support to build PNG police capacity to detect and investigate cases of fraud and corruption.
Q1: What processes are in place to track the flow of money from PNG to Australia?
Australia’s AML/CTF regime includes a range of measures to address and mitigate the risk of overseas entities (including individuals) misusing the Australian financial system.
Australia’s regime is based on international Financial Action Task Force (FATF) standards which require businesses to adequately identify customers and to determine whether those customers should be subject to additional checks.
Customer identification requirements
Australia’s AML/CTF laws require reporting entities (including banks and casinos) to have in place rigorous customer identification procedures appropriate to their particular business. These procedures are designed to identify overseas customers who may pose an increased money laundering risk and include appropriate systems to detect and report any suspicious transfer undertaken by their customers.
AUSTRAC closely regulates reporting entities in Australia to promote compliance with these customer identification obligations.
Financial transaction and suspicious matter reporting requirements
AUSTRAC’s reporting entities are required to report certain threshold transactions, as well as international funds transfers and suspicious matters.
Reporting entities are required to report to AUSTRAC any suspicious activity undertaken if the entity has reasonable grounds to suspect that the activity may be related to a money laundering or any other offence under a Commonwealth, state or territory law.
Where AUSTRAC receives intelligence relating to possible instances of corruption, bribery and money laundering, AUSTRAC refers the information to relevant partner agencies, including the Australian Federal Police, intelligence agencies and, where appropriate, the Department of Foreign Affairs and Trade (DFAT), and/or relevant international partners.
Q2: Is cracking down on money laundering between PNG and Australia a priority? Experts have told us Austrac and other authorities are turning a blind eye due to sensitivities between Australia and PNG due to Manus Island.
The Australian Government is working to enhance our joint disruption efforts to ensure that Australia is not a safe haven for the proceeds of corruption.
Domestically, agencies such as the Attorney-General’s Department (AGD), the Australian Federal Police (AFP) and the Australian Transaction Reports and Analysis Centre (AUSTRAC) collaborate closely to ensure that Australia has a robust anti-money laundering framework to deter and detect money into Australia.
Australia is also committed to assisting our foreign partners such as PNG.
The Australian Government supports Papua New Guinean authorities to detect, investigate and prosecute cases of corruption.
The Australian Attorney-General’s Department and AUSTRAC are helping to harden the PNG financial system against money laundering, corrupt activity and terrorist financing through the Combating Corruption Project.
Australia’s Attorney-General’s Department, AUSTRAC and the Australian Federal Police are providing specific expertise to strengthen PNG’s anti-corruption efforts.
This work is part of Australia’s increased commitment to supporting good governance in PNG through Australia’s aid program.
Source:Dirty Money: How corrupt PNG cash is reaching Australia