Cover Report
How Politicians Made Their Millions From Illegal Logging
It’s part of the core of the corruption that plagues the region
Melanesia’s hardwood forests are part of the core of the corruption that plagues the region. Illegal logging by mainly Asian timber companies made several Papua New Guinea politicians millionaires. It has cost the now indigent Solomon Islands hundreds of millions of dollars in lost development revenue.
In the Solomon Islands, Asian logging interests were instrumental in engineering a change of government by providing money used to bribe opposition MPs to government sides.
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Solomon Mamaloni, a former prime minister, now dead, granted extraordinary concessions including massive tax relief to his logging pals and was equally corrupt in handing out fishing licences.
In Papua New Guinea in the late 1980s, an Australian judge, Justice Tos Barnett, appointed to inquire into forestry corruption, uncovered it on a massive scale. An attempt to assassinate him nearly succeeded. He was badly injured.
One cabinet minister, Ted Diro, the former Papua New Guinea army commander, lost office after he was shown to have taken millions in bribes. But he is now back in political life as a self-proclaimed born-again Christian. In Fiji, nearly 50,000 hectares of maturing mahongany plantation were a root cause of a coup in 2000 that brought down the country’s first non-Fijian led government.
George Speight, a part-Fijian businessman now serving a life jail sentence for being the coup’s front man, claimed to be the saviour of the Fijian race from alien domination‹in this case the descendants of immigrants from India, who are about 42 percent of Fiji’s population.
But as Islands Business and other commentators maintained from the outset, Speight’s true motive was to enrich himself by endeavouring to move a mahogany concession to corrupt American businesspeople.
After fleeing from Australia, where he was a salesperson for a pyramid sales scam that got its Australian instigator a 10-year jail term, Speight’s contacts got him a job as manager of the Suva branch of an insurance company, Heath Insurance. Early in 1998 the company discovered that it was being defrauded by Speight and sacked him.
Speight had meanwhile become chairperson of the Fiji Pine and Fiji Hardwood corporations as the protégé of then finance minister Jim Ah Koy. The election of Fiji Labour Party leader Mahendra Chaudhry as the country’s first Indian prime minister terminated Speight’s stint as a big timber executive.
Islands Business was told that as mahogany chairperson Speight paid himself a $1000 fee for each board meeting. Documents given to Islands Business showed that Speight, as a “consultant,” was in the payroll of Marshall Petit, an American businessperson, whose company, Timber Resources Management, in association with another American company, Fahnestock, was in play for the mahogany.
Supported by strong pressure from the United States Embassy in Suva, the Americans wanted the mahogany concession as security for a loan of about US$100 million to be raised on the United States market for use in exploiting the mahogany.
The mahogany had been put out for international tender but after tenders were received, the Suva office of what was then the PricewaterhouseCoopers accountancy group appointed to advise the government on the tender, is understood by Islands Business to have become disturbed by political interference.
Speight made an inappropriate appearance at a meeting at which he announced, after tenders had been opened, that a fresh tender from the Americans was the most attractive. The unhappy accountancy firm withdrew its association with the process.
Speight’s tenure at the mahogany corporation was ended by the new Chaudhry government. This also was subjected to strong United States Government power to hand the mahogany concession to Speight’s American associates, but ultimately it rejected the Americans.
In January, the Fiji Sun newspaper published what it said was a leaked account by the United States Federal Bureau of Investigation (FBI) of an investigation into the mahogany deal. A United States Embassy official told Islands Business that the document quoted by the Fiji Sun was not of FBI origin; at the time the magazine went to press, the Suva embassy had not commented on an allegation that the document, whatever its origin, had been suppressed by it.
According to the Fiji Sun report, Speight was allegedly paid three US$5000 sums by the American businesspeople into his local and overseas accounts; Speight’s alleged sale of confidential Fiji Government documents to the Americans; and Speight’s alleged role in approving the United States bond raising deal. Pettit and Fahnestock would have collected US$5 million in fees for an initial US$45-million bond issue.
The document attributed to the FBI commented, “this bribery of George Speight led at least in part to Speight’s decision to join and lead the coup of May 19, 2000, against the legitimate Government of Fiji.”
On May 12, 2000, seven days before the coup, Speight is alleged to have discovered that Tim Nobriga, a consultant hired by the Americans, was assembling documents to prove bribery.
“On May 12, 2000, George Speight contacted Tim Nobriga in person and physically threatened bodily harm if he did not destroy the evidence of the bribery and immediately depart Fiji.”
The Fiji Sun said the FBI report, dated April 17, 2001, stated that Nobriga passed documented information to the United States Embassy on June 1, 2000. But the embassy, embarrassed by its role in the bond deal, suppressed it. Nobriga then went to the FBI. The report comments that “at a minimum, Pettit and Fahnestock are in violation of the United States Corrupt Practices Act of 1977.”
