By Gabriel Neely-Streit, Impact: Global Poverty Contributing Writer
This latest ASAP Impact Story profiles Prof. Jason Sharman of Griffith University in Brisbane, Australia, whose recent work has been instrumental in exposing widespread corruption among Papua New Guinea (PNG) government officials. Millions of dollars, Sharman has found, are being siphoned from PNG government accounts into private bank accounts and investments in Australia, many of which belong to government officials.
Sharman and Sam Koim, Papua New Guinea’s Anti-Corruption task-force coordinator, continue to work to expose both these corrupt PNG officials and actions by Australian banks and government agencies that allow money laundering to continue. More broadly, Sharman is one of the world’s foremost scholars on shell companies and international money laundering, issues with increasingly important implications for global poverty and governance in virtually all states. Here, he discusses his research on PNG corruption, Australian money laundering and international shell companies, and his efforts to bring his findings to a public audience.
GNS: How did you first get started studying corruption and the shadow economy? What motivated you to focus on money laundering?
JS: I first developed an interest in tax havens because in studying international politics I was interested in how small, weak countries (most tax havens are small places) relate to big, powerful ones. Tax havens led to an interest in money laundering as the two are commonly associated in policy pronouncements and the media, though the partial evidence we have actually suggests that most laundering takes place in big, rich countries.
How did you become aware of Papua New Guinea\’s money laundering issues? How did you get involved with Sam Koim and Taskforce Sweep?
I was alerted to the problem of corruption proceeds from PNG being laundered in Australia by people who did the international assessment of PNG’s financial system. When I first did interviews with people in the Australian government they recommended I get in touch with Sam Koim, and so I flew him over to a workshop in Brisbane in October 2012, we have stayed in touch since.
How much of PNG budget siphoning/ money laundering is being done by government officials?
The local police estimates that something like 40% of the total PNG budget is stolen by politicians and bureaucrats in the government.
How do you go about gathering statistics on money laundering and other under-the-table financial practices? I know that to research corporate shell companies you had to actually create some yourself…
In a smaller project I bought some shell companies from Nevada, England the Seychelles as well as opening bank accounts in the US, Cyprus and Somalia. Later with my co-authors Mike Findley and Dan Nielson we impersonated a range of high- and low-risk individuals and made over 7,000 email solicitations to firms in 180 countries for exactly the sort of untraceable shell companies that are prohibited by international law. The results are available at globalshellgames.com.
In which ways are Australian banks complicit in PNG money laundering? Are they doing due diligence to ensure that customers with PNG ties are banking legitimate money? What should they be doing?
The Australian banks have improved their procedures for screening out corruption funds from PNG, though there are still problems. The real problem is the Australian government, which continues to turn a blind eye to these flows of dirty money.
Your work with PNG has gained a fair amount of media attention in Australia. How did you and your partner bring your findings to the media/ general public? Why did you feel it was important to do so?
Crime is a media-worthy story. When it comes to corruption, the Australian government has no interest in taking action unless they are embarrassed in the media first. After taking no action for years there was a public direction to the head of the Australian Federal Police to look into the problem less than 24 hours after the main TV program aired. Cause and effect.
In what sorts of ways does presenting your findings to the media differ from presenting in an academic journal/at a conference?
Predictably, the media has no interest in method and theory, so all this had to go. The media does have an interest in hurting people and institutions, which can be turned to advantage, e.g. in pressuring the government.
Did you have to take precautions against any sort of backlash by the PNG government, for example being sued by officials who were implicated? Did you feel threatened at any point during your research/presentation of your findings? What has the fallout been?
The Australian government has now cut off my access to some key officials, which is annoying, and tried to prevent people in the PNG government talking to me, unsuccessfully. Getting sued for libel/defamation is certainly a worry, I’ve taken precautions but the risk remains. People in PNG tackling this problem certainly face much bigger dangers, including assassination.
What’s next for the PNG case? Has Koim made any prosecutions? Have Australian banks/government institutions stepped up their vigilance?
Koim has made good progress is getting a lot of publicity, political pressure, arrests and has also got a lot of money back, but the problem is huge. He is also in a great deal of danger personally.
How important is stopping these corrupt financial outflows to PNG’s stability? How serious are PNG’s financial and humanitarian issues?
Having 40% of your budget stolen is a serious problem, PNG seems to be a classic case of the resource curse, with great wealth but also very large sections of the population living in poverty. Elsewhere this type of problem has led to serial political instability and even state collapse.
What advice do you have for academics who want to take a more active role in fighting corruption?
Don’t expect any help from local or foreign governments, though individual officials are often incredibly helpful, and NGOs and the media are also crucial.