By OCCRP

A Manila-based multinational paid millions of dollars into the offshore account of an Australian consultant around the time it won lucrative contracts to operate Papua New Guinea’s biggest ports. Senior PNG Ports officials — including one who was recently killed — then received money and apparent benefits.

Key Findings

• Senior officials at Papua New Guinea’s state ports company received apparent financial benefits from an offshore bank account in Singapore controlled by an Australian businessman with a checkered past.
• The account set up by the businessman, Don Matheson, received millions of dollars from a Philippines-based ports operator, International Container Terminal Services (ICTSI).
• The funds landed around the time ICTSI received a lucrative contract from PNG Ports.
• Matheson’s Singapore company account sent money, which was apparently used to pay for perks for PNG Ports’ boss, Fego Kiniafa. They included a racehorse and medical equipment.
• Kiniafa was murdered last September in what police are treating as an unrelated case.

John Chevis, a former Australian Federal Police officer who advises Papua New Guinea’s financial authorities, said the transactions should prompt investigations to check for any kickbacks to influence PNG Ports, including in its contracts with ICTSI.

“Payments coming out of an account into which money had come from a winning contractor, appearing to go back to people who may have been able to make decisions about who won that contract –– that is a reason to go and have a bit of a closer look,” Chevis said.

OCCRP and the ABC did not find any evidence connecting any of these dealings to Kiniafa’s killing. But the seemingly unrelated findings — of questionable offshore dealings, and a possible murder plot — point more broadly to the risks for Australia as it seeks to counter China in the Pacific, said Paul Barker, the executive director of the Institute of National Affairs in Port Moresby.

“It is critical that one is not going in blindly, that one is aware that when it comes to the state-owned enterprises, including PNG Ports, there has been a long track record of misappropriation [and] malpractice,” Barker said.

The port expansion deal reached between the late Kiniafa and Australia “needs to be reviewed to make sure that no component of the Australian program has gone down the wrong track or has been implicated in this,” he said.

‘A Promising Leader’

Kiniafa’s murder put a sudden end to a meteoric career. Hailing from a hardscrabble valley near the bustling highlands town of Goroka, he built a national profile, working in both private business and senior government positions. He was appointed head of PNG Ports in 2019 after having served as its chief commercial officer.

“He was a promising leader who … would make a very good politician, I will say,” his widow, Sarah said in an interview.

By the time he rose to the top of PNG Ports, the company had already had some disappointing experiences with Chinese state firms. An Asian Development Bank-backed project by one Chinese company to revamp the country’s biggest port, in the city of Lae, ended up costing more than double the originally budgeted amount and was marred by delays and defective work.

PNG Ports had also entered into a deal with the local subsidiary of another Chinese state company to build a Port Moresby high-rise, known as the Noble Centre. The building, touted as Papua New Guinea’s biggest real estate investment, has since completion been plagued by structural defects and stands unoccupied.

Once in charge, Kiniafa moved to fix both botched projects. He refused to honor a deal for PNG Ports to purchase floorspace in the Noble Centre, and sought funding from Australia to redevelop both the Lae port and other facilities around the country.

Kiniafa’s big-ticket deal with Australia deftly played off the rivalry between China and the West. China’s growing presence in the region had prompted Australia — a close U.S. ally that administered PNG until the country became independent in 1975 — to create a multi-billion-dollar development fund known as the Australian Infrastructure Financing Facility for the Pacific.

The PNG port redevelopment is the largest single project in Australia’s regional financing plans. Just weeks before he was killed, Kiniafa told the ABC that the project had been born out of a conversation he’d had over coffee with Australian officials in PNG’s capital, Port Moresby. But, he said, “It was really a PNG Ports-driven initiative.”

‘Bigger Than Ben-Hur’

But years before pursuing his deal with Australia, Kiniafa was involved in other questionable dealings tied to Papua New Guinea’s rich southern neighbor, OCCRP and the ABC have found. They also involved a predecessor as the head of PNG Ports, Stanley Alphonse, and the colorful Australian businessman, Don Matheson.

Matheson, 60, moved into business in Papua New Guinea around 2010 after experiencing business setbacks in Australia and incurring an A$640,000 ($582,000) tax debt. (The case was resolved in 2018). He had previously gained some notoriety as the owner of a short-lived soccer team, the North Queensland Fury, that went belly-up amid financial difficulties.

A golf course Matheson co-owned in the city of Townsville was also ill-fated. In 2011, a federal court found he had misled his business partners and Australian regulators by transferring land away from investors without telling them, and failed to share hundreds of thousands of dollars in profits. One partner’s widow filed a criminal fraud complaint with the Queensland police, who initially showed interest in opening an investigation. But she said the police did not take the case any further. Former associates describe Matheson as a fast talker with grand plans.

“He makes out he’s bigger than Ben-Hur,” said Jason Driscoll, the Fury’s former operations manager, who was among those who lost money on the golf course investment. “Everyone thought he was big time.”

Meanwhile, Matheson had shifted his focus to a company he had recently established in PNG called CSG International, which billed itself as a consulting service on major developments, including financing, planning, and construction.

From the beginning, PNG Ports was a major client. Since at least 2010, CSG International has done work for the port operator, such as redesigning and rebranding its offices and renovating its staff housing.

Matheson and Kiniafa’s professional relationship eventually grew into a personal friendship, Sarah Kiniafa said.

In 2016 — while Matheson’s company was a contractor for PNG Ports — the two men became co-owners of a champion racehorse, Mihany, racing sale records and form guides show. The horse was trained in a top Australian stable and won more than A$500,000 in prize money over his career. Mihany’s victories included a win during the prestigious Melbourne Cup Carnival.

“Fego always loved to bet on horses,” Sarah said of her husband. In 2018, Sarah was made a co-owner of a racehorse named Gorokan Express, a nod to the Kiniafas’ home district, alongside Matheson’s wife, Susan.

Payments and Contracts

By early 2017, Matheson had engaged the services of Hong Kong-based Asiaciti Trust, one of 14 offshore company formation agents to have its files leaked in the Pandora Papers.

Among the files, ABC and OCCRP reporters found a trove of letters, invoices, and bank records that detailed a money trail connecting Matheson, PNG Ports officials, and the multinational ports operator ICTSI.

Despite Matheson’s public business troubles in Australia, Asiaciti took him on as a “low-risk” client. 

Matheson’s application was supported by a letter of recommendation from Kiniafa, who was then serving as PNG Ports’ chief commercial officer.

Asiaciti helped Matheson set up a Singapore company, Coral Seas Planning Consultants, as well as company accounts with Singapore-based OCBC Bank.

Bank statements obtained by reporters show that Coral Seas Planning Consultants soon received a windfall. In June 2017, at least $643,000 in cash and check deposits from unknown sources had landed in the company’s accounts.

Days later, it received the first of nearly $4.3 million in wire transfers from the Manila-based ports operator, ICTSI. In total, seven payments labeled as “professional fees” or “consultation fees” were sent from ICTSI to Coral Seas Planning Consultants between June and December 2017, the records show.

Right in the middle of these payments, in September 2017, PNG Ports and ICTSI finalized agreements for ICTSI to operate the country’s two biggest container terminals, in the city of Lae and at Motukea island near Port Moresby.

Shortly before his death, Kiniafa told ABC that ICTSI was chosen in a competitive bid of “around three to four serious contenders.”

The 25-year contracts grant ICTSI the right to charge shippers for freight handling. In return, the company estimates it will pay a total of A$667 million ($455 million) in rent to PNG Ports.

Matheson originally agreed to an interview with reporters, but later canceled plans to meet in person. In earlier conversations with an ABC reporter, Matheson claimed to be a close family friend of Papua New Guinean Prime Minister Marape, and to regularly play golf with the country’s leader. OCCRP has found no evidence of any wrongdoing by Marape.

An ABC reporter waited outside a golf tournament in Brisbane last November in an attempt to ask Matheson questions about the transactions, but he refused.

When asked why he was paid over $4.3 million by ICTSI, he said, “You’ve done your research… well done,” but declined to elaborate. He asked for reporters to send him questions by email before walking away.

Matheson, via his lawyers, declined to answer questions later sent by reporters. In an email, the lawyers described the questions as “nothing short of obfuscatory [and] containing fictional scenarios, without any, or any real, factual foundation.”

PNG Ports did not respond to questions. Asiaciti declined to comment on the specifics of its business with Matheson, but said the company maintains a “strong compliance program and each of our offices have passed third party audits for Anti-Money Laundering & Counter-Financing of Terrorism practices in recent years.”

A spokesperson for ICTSI, Jupiter Kalambakal, confirmed that the company had engaged Matheson’s Singapore company on an “arm’s length basis to support projects and business development outside of PNG.”

“We were not specifically aware of any work done by Mr. Matheson for PNG Ports at that time. We are not aware, nor were we ever aware, of any payments made to any of the individuals mentioned,” Kalambakal said.

“Lae and Motukea were tendered out in a well-run, transparent, and public international process.”

The bulk of the money that Coral Seas received was then transferred back out via a series of large overseas wire transfers.

A few days after ICTSI’s final payment, Matheson’s Singapore company paid A$30,000 ($22,992) directly to a beneficiary listed as “STANLEY ALPHONSE” — the name of the chief of PNG Ports at the time.

Former PNG Ports head Alphonse denied personally knowing Matheson or receiving any benefit from him.

He declined to comment on the tender process for ICTI’s contracts but said “there was a team assembled with included experts in various fields… which included the late Fego Kiniafa to undertake the process and report to the senior management and the Board.”

Another series of payments also appeared to benefit Kiniafa and his family.

In June 2017, the company sent A$10,000 to another of Matheson’s accounts in Australia in a transaction labeled as “MIHANYFEGDON.” Mihany was the name of a racehorse the two men co-owned. In October that year, the company sent another A$15,000 to the stable where Mihany was being trained.

In January 2018, nearly A$20,000 was sent to a dealership in the city of Brisbane in a transaction labeled “FEGOLANDCRUISER.” It followed nearly A$94,000 sent to another car dealer in the town of Echuca the previous month in two transactions labeled “TOYLANFEG” and “LANDFEGECHUC”. It is unclear if the payments were related to one or more vehicles.

Kaniafa’s widow Sarah told OCCRP and the ABC that the transactions apparently labeled for vehicles reminded her of the time her late husband suddenly brought home a Land Cruiser for the family.

“I did ask him, ‘Who bought the Land Cruiser?’ He said, ‘I did, with my own money’.”

She said she had no idea at the time about payments from Matheson’s company. But when shown a spreadsheet of transactions, Sarah, a dentist who owns a clinic in Port Moresby, recognized nearly $15,000 sent to a medical equipment supplier that appeared to be for her benefit.

“I think [it’s] dental chairs. They must have bought it for my clinic,” she said.

Another transfer to Australia appeared to be labeled with the address of a Gold Coast house recently purchased by a Matheson family company. Sarah Kiniafa said her family stayed at the house rent-free for up to a month at a time while in Australia.

Chevis, the former Australian Federal Police officer, said the payments warranted more scrutiny.

“They may have been made in order to obtain the contract that ICTSI got to run PNG ports. It’s a possibility that should be explored,” he said.

PNG’s police criminal investigations head, Chief Inspector Joel Simatab, told OCCRP and the ABC he would further examine the transactions.

“Yes, we will look at it. Contracts amounting into millions, government contracts that go out, are subject to scrutiny when there are, you know, kickbacks or irregularities involved. Yes, we will definitely look at it.”

Australia’s Department of Foreign Affairs and Trade said in a statement: “Papua New Guinea is Australia’s closest neighbor. PNG’s economic prosperity, security and sovereignty is key to the region’s peace and stability.”

“The Australian Government does not tolerate fraudulent or dishonest behavior.”

Prime Minister Marape’s office has this week ordered the PNG’s National Intelligence Organisation and internal revenue commission to investigate the matter, following the OCCRP report.

Meanwhile, Kiniafa’s widow Sarah mourns her husband while she comes to terms with his past. She said she was haunted by the “hatred in the way he was killed” by the mob that slashed him to death.

“The kind of killing that he had — he didn’t deserve that,” she said. “They wanted him to feel pain.”