Fraudsters in suspected collusion with Solomon Islands government officials have embezzled an estimated $10 million in Australian foreign aid funds destined for hospitals and clinics, some through a fake company called Joke Shipping Services.
The Department of Foreign Affairs and Trade has tried to hush up the theft of AusAID funds, which occurred over the course of a year from September 2012.
The Weekend Australian can reveal that without making it public, in September last year when the fraud was discovered the federal government froze all Australian funds within Solomon Islands government systems while it improved financial controls and compliance measures.
Foreign Minister Julie Bishop told The Weekend Australian “this matter took place under the previous Labor government”, and declined to comment further.
The revelation of the scam represents a significant embarrassment, since Australia has spent $2.6 billion over the past 11 years on the Regional Assistance Mission to Solomon Islands, which is designed to bring stability to the country and stamp out corruption and lawlessness.
A Solomon Islands national, John Poloso, was recently jailed for 2½ years over the fraud. The case of another Solomon Islands national is before the courts, and several officials are subject to an investigation.
A Solomon Islands court heard that, in late 2012, the procurement unit of the Ministry of Health and Medical Services put out tenders for the reconstruction of two health clinics, both to be funded by AusAID.
Poloso, a taxi driver described by his lawyer as a “toy boy” who was a junior player in the conspiracy, admitted he had registered a company called Joke Shipping Services which, the court heard, had “no shipping facilities”, and set up a bank account in its name. Joke Shipping won the tender, and the court heard AusAID made two payments for the projects, of $716,467.60 and $878,467.50.
Poloso collected the payments in June last year at the government’s Treasury division, deposited it in the bank account, and withdrew the money as cash. Police prosecutor John Adifaka told the court “there was no record of recovering the amount of money involved in this scheme”.
While Poloso was convicted of fraudulently processing the $1.6m for the two AusAID projects, the court heard a total of $10m in AusAID funds had been stolen.
DFAT did not put out a press release on the theft, and, while spokesman Jonathan Muir yesterday said it was mentioned in the department’s latest annual report, the only reference is one line saying “the Solomon Islands government responded swiftly to a large-scale fraud in the health sector”, with no mention that they were funds provided by AusAID.
Muir said the investigation was being led by local police, but Australia was “providing investigative and forensic assistance”.
He would not say whether DFAT had made up the stolen aid funds, or whether Solomon Islanders due to receive the improved medical services would go without.
Source: Weekend Australian