Papua New Guinea investigators now say they have uncovered a racket involving lawyers, bureaucrats and politicians colluding to defraud the state of hundreds of millions of dollars following the arrest of lawyer Paul Paraka.

Officers from the multi-agency anti-corruption unit Investigation Task Force Sweep arrested Mr Paraka in a small village two hours drive from Port Moresby on Wednesday.

On Thursday, Mr Paraka was charged with 18 offences including conspiracy to defraud, stealing by false pretence and money laundering.

As principal of one of PNG’s largest law firms, it was believed Mr Paraka was initially arrested over allegations he was paid $AU30 million by the finance department after submitting fraudulent legal bills for legal work performed for the state.

It says the bills submitted by Paul Paraka Lawyers were for cases that were not briefed out to the firm and others that simply do not exist.

During an address to his staff, Mr Paraka said the charges are politically motivated and he’s innocent.

“The fact that they arrested and charged me does not mean that I’m guilty in any way,” he said.

“I will prove to the court I’m not guilty.

“This firm has been running a business, doing work for clients, and we’ve been paid based on what we’ve been doing for clients over the years.”

But Task Force Sweep says it’s only getting started.

Its chairman, Sam Koim, alleges Paul Paraka Lawyers has been paid more than $100 million by the Department of Finance since 2007.

In a statement, Mr Koim says his investigators have uncovered a racket of lawyers, politicians, bureaucrats, court officials, financial institutions and media organisations all colluding to pillage public coffers.

He says more arrests will come as more suspects are identified.

Finance Minister James Marape says the taskforce’s investigation has shown how large sums of public money can be paid out without the Minister’s approval.

“It has exposed some systematic weakness we have in the finance department that is chronic for a long, long time,” he said.

“We here are the custodians of public funds and we are supposed to be the safest place in terms of what maintaining public funds are concerned.”

Papua New Guinea ‘big man’

Paul Paraka Lawyers is a law firm with 20 offices around the country and more than a thousand employees.

Its principle, upon his arrest, was unrepentant.

“This the biggest law firm in the country, hundreds of lawyers sit up in their offices right through the nation and do a lot of work and clock in-time, so when you have so much manpower doing the work then obviously you make more money than a one man law firm,” he said.

Mr Paraka is what is known in Papua New Guinea as a big man.

“I was never scared about the police, and still I’m not afraid of them,” he told staff.

It is one thing to arrest someone and lay charges, another to convict him.

The wheels of justice turn pretty slowly in Papua New Guinea, and it will be some time before Paul Paraka stands trial.

He appeared briefly for his first mention on Thursday morning, with the matter adjourned to December 13.