'Corrupt' payout in mercenary deal

THE FORMER deputy prime minister of Papua New Guinea may have received a "corrupt and improper" payment in connection with the contract to employ the British mercenaries Sandline International, an inquiry has found.

An investigation of a deal between Sandline and the government of Papua New Guinea concluded that Chris Havieta received up to pounds 75,000 via a Swiss bank account. The payment was made three months before Sandline won the pounds 22.5m contract to supply arms and men to recapture a copper mine taken by rebels on the island of Bougainville in 1997.

"The commission believes that [the transfer of funds] may have been connected to that contract," said a report presented to the Papua New Guinea government yesterday. "The commission has reached the irresistible conclusion that the money was a corrupt and improper payment."

The inquiry found that a payment was made in 1996 to the account of a doctor in Cairns, Australia, from whom Mr Havieta - a "strong proponent" of hiring Sandline - was buying a house.

Sandline, which earlier this year triggered a crisis within the Foreign Office after supplying arms and men to help restore the ousted president of Sierra Leone, last night strongly denied making any payments to the deputy prime minister and said only one part of the commission of inquiry's report had been public.

"Sandline believes this selective and restricted release is designed to effect maximum political advantage," a spokeswoman said. "The report makes clear that the alleged transaction took place 'some three months' before Sandline was engaged by the state and the state has offered no evidence to support this allegation."

While profitable, Sandline's involvement in Papua New Guinea was less then entirely successful. A team of mercenaries led by Sandline's director, Lt Col Tim Spicer, was thrown out of the country after the contract backfired. At one point Mr Spicer, a former special forces officer, had his life threatened and was beaten up.

Mr Havieta said the allegations were "simply untrue".