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National
Josh Robertson and Echo Hui for ABC Investigations

Murdered PNG official's secret deals raise questions over Australia's foreign assistance program

Fego Kiniafa's brutal murder has left unanswered questions about his business deals. (ABC: Luke Tribe)

Fego Kiniafa, a rising star among Papua New Guinea technocrats, was back in his highlands hometown and drinking late into the night.

He had cause to celebrate.

The boss of a powerful state-owned enterprise, the PNG Ports Corporation, Mr Kiniafa had just turned 43 years old.

He had also helped to secure one of the Australian government's biggest overseas investments, a $621 million upgrade of vital ports infrastructure.

Mr Kiniafa was at the helm of the massive project, and the gatekeeper to about $200 million in local contracts funded by Australian taxpayers.

But being a power player in PNG can be a dangerous business.

And Mr Kiniafa's role placed him between two big geopolitical forces — Australia and China.

It was PNG Independence Day, the day after his birthday, and the annual Goroka Show was in full swing.

But within hours of Mr Kiniafa's big night out in Goroka, his brilliant career would meet a macabre and sudden end at the blade of a machete.

Fego Kiniafa was in charge of a $620 million Australian government-funded project when he died. (Supplied: PNG Ports)

Images of her husband's mutilated body still haunt Sarah Kiniafa.

"He's not an animal. Why would he be slashed up like that?"

She's convinced there's more than meets the eye.

"The kind of position he has and the kind of decisions you make, not everyone is happy with you," she says.

"I believe that there was a plot to kill him."

This week, PNG's prime minister ordered the country's corruption watchdog to investigate the joint report by Background Briefing and the Organised Crime and Corruption Reporting Project exposing Mr Kiniafa's secret dealings while a senior official at PNG Ports.

In a statement, James Marape said he was "very concerned" by what he called "allegations of impropriety and corruption" at PNG Ports.

A bloody end in the bush

Fego Kiniafa was hacked to death with bush knives by this stream in the PNG Highlands. (OCCRP: Aubrey Belford)

Mobile phone footage taken hours before his death show a smiling Mr Kiniafa with friends, an empty bottle of scotch nearby, posing for happy snaps with a tourist and handing out a bilum, or traditional woven bag, as a souvenir.

The next morning, Mr Kiniafa's family say he became angry when he received a phone call about his close friend and business partner, Conrad Manove.

Police allege that Manove had crashed a car that he had hired in PNG Ports' name, leaving the corporation to foot the bill.

Mr Kiniafa went to confront Manove in a village on the outskirts of Goroka.

"[Fego] had his gun. He's always had a licenced gun with him. It's not uncommon, at least for a person of his calibre," Sarah says.

In an angry confrontation, Mr Kiniafa drew his gun and shot Conrad in the neck, wounding him.

In retaliation, Manove's relatives allegedly assaulted Mr Kiniafa, who fled into bushland.

Sometime later, Mr Kiniafa was cornered near a stream and hacked to death with bush knives.

A house burns in Goroka in the midst of tribal violence following Fego Kiniafa’s death. (Facebook: United Pentecostal Assemblies of PNG)

His murder prompted a wave of tribal violence.

Goroka went into lockdown as an estimated 3,000 villagers fled arson and revenge attacks.

Sarah Kiniafa says she was saddened by the violence and destruction but that she "saw the outpouring of the people more out of pain and frustration".

At Mr Kiniafa's funeral in Port Moresby weeks later, mourners included Australian diplomatic officials with whom he'd negotiated the more than half a billion dollars of funding.

Sarah Kiniafa says she believes there was a plot to kill her husband.  (Background Briefing)

Alleged murder conspiracy

Initially, PNG police said Mr Kiniafa's death was the result of an argument between friends "over a few bottles of beer".

His best friend Manove, one of 11 people now charged with murder, claims he is innocent — since he was in hospital at the time.

But PNG Police Crimes division director Joel Simatab says investigators have since been examining a potential murder conspiracy that went beyond the suspects in custody, including Manove.

"We are looking at it as a premeditated murder," he says.

"We've expanded the investigation now to records of phone messages, and phone calls … that were made to the late Mr Kiniafa prior to that incident and also after the incident.

"Already some of the text messages are indicating that … Fego was lured to his death.

"We are taking it seriously because of some of the numbers that appear to be persons of interest are very [prominent] citizens as well."

Fego Kiniafa's burnt out car following his murder near Goroka. (OCCRP: Aubrey Belford)

Chief Inspector Simatab says police found phone messages showing attempts to cover up the killing by paying off possible witnesses, and the hiring of a car "purposely to move the body".

He says the murder investigation is examining any links to Mr Kiniafa's role at PNG Ports "because some of the text messages saw some dissatisfaction [about] Fego and could be related to his job".

"We are trying to connect him to persons both in country, and as well as people who have interests in PNG Ports abroad."

Police investigate Chinese development links

Lines of police investigation include Mr Kiniafa's role in preventing the opening of the Noble Centre, Port Moresby's tallest building and once a symbol of the blossoming friendship between China and PNG.

When it was unveiled in 2015, the $100 million-plus Chinese government-backed project was touted as the largest foreign property investment in PNG.

Fego's Port Corporation owned the land and was meant to be one of the main anchor tenants.

But he pulled staff out of the building due to safety concerns.

"Fego did not sign off for occupancy of the building due to … electrical specifications that were not up to standard," Chief Inspector Simatab says.

The building is still sitting empty.

The Noble Centre had been hailed as the largest foreign property investment in PNG. (Facebook: The Noble Centre)

Chief Inspector Simatab says Mr Kiniafa was also "in charge of large contracts for and on behalf of the government of Papua New Guinea [and] he would be connected to some certain people that would want a piece of the contracts".

"He is a prominent citizen. The position that he holds requires us to properly investigate his death. If it's got anything to do with his job, we're looking at it.

"But because we believe that … it was a premeditated murder and there are a lot of people involved, we are slowly doing it properly because some of them are persons of standing in the country."

Chequebook diplomacy in the Pacific

Papua New Guinea is an emerging geopolitical battleground for foreign powers including Australia and China. (Wikimedia Commons)

Experts say the case of the PNG Ports boss highlights the perils of chequebook diplomacy as Australia looks to shore up relations with its nearest neighbour in the face of rising Chinese influence.

In January last year, then-foreign affairs minister Marise Payne announced a half-a-billion-dollar finance package to support the repair and upgrade of several key ports in Papua New Guinea.

This strategic investment followed a perfectly timed pitch from Mr Kiniafa.

PNG Ports had previously teamed up with Chinese state-owned companies — with mixed results.

These included big cost blowouts, missed deadlines and limited involvement of PNG contractors.

The PNG auditor-general found PNG Ports had agreed to "unfavourable" payment plans with a Chinese partner and shelled out millions that "did not reflect the amount of work done".

Weeks before his death, Mr Kiniafa told the ABC that "we probably failed as a country" by not involving local contractors in the Chinese-built expansion of PNG's biggest port at Lae.

Australia's $621 million funding for PNG Ports was part of the much-touted Australian Infrastructure Financing Facility For the Pacific (AIFFP), a program designed to bankroll infrastructure programs across the Pacific, to improve "stability, security and prosperity" of the region.

Of its half-a-billion dollars in funding for PNG Ports, $200 million was to go to local contractors — a key part of the deal for Mr Kiniafa.

"For me, as head of PNG Ports, my interest is my infrastructure, rehabilitation of my infrastructure for the benefit of my country," he said.

"And I'm open to partnership with anyone."

The former A-League team owner

Don Matheson was the face of the North Queensland Fury, before the football team went bust. (Getty: Ian Hitchcock)

One of Mr Kiniafa's PNG Ports business dealings which is not linked to his murder but under scrutiny for other reasons has ties back to one man: his former friend, Gold Coast-based businessman Don Matheson.

Don Matheson is a former A-League soccer team owner who reinvented himself in PNG, where he became a government consultant with friends in high places — and a middleman in secret transactions.

Mr Matheson boasts of close ties to PNG Prime Minister James Marape, with whom he plays golf.

He has called up Queensland state Opposition Leader David Crisafulli to try to arrange a meeting on the PNG PM's behalf.

He's told the ABC he had to travel to the Philippines at the PM's request to arrange payment for medical treatment for Mr Marape's brother Larsen.

A big man with a gift of the gab, Mr Matheson was the face of two high-profile sports ventures in Australia just over a decade ago: the Northern Queensland Fury soccer team and the Willows golf course in Townsville.

Both ventures collapsed.

Matheson failed to pay taxes and burned investors who lost their life savings when a deal went bad.

"His ability to convince people that he's top shelf, it just blows me away," former Fury football operations manager Jason Driscoll says.

"We lost $250,000. It's just all gone. We had to go bankrupt. That hurt.

"It's not a good thing, losing a quarter of a million dollars."

The Fury went broke within a year of kick-off and Mr Matheson owed the Australian Taxation Office $640,000.

Former Gold Coast deputy mayor David Power says he has never worked with Mr Matheson or his company. (ABC: Tom Hancock)

While creditors pursued him for millions in Townsville, Mr Matheson set his sights on government planning contracts in PNG.

His new company CSG International touted former Gold Coast deputy mayor David Power as a key advisor.

But Mr Power says he never worked with CSG and it was "disturbing" to learn it had used his name.

"I certainly haven't done any work on anything in PNG," Mr Power told the ABC.

Racehorses and a reference

Mr Matheson's company won contracts with PNG Ports Corporation, where he befriended Fego Kiniafa.

The pair became co-owners of a champion racehorse called Mihany in 2016. Their wives later had shares in a racehorse called Gorokan Express.

In March 2017, Mr Kiniafa wrote a reference on PNG Ports letterhead endorsing Mr Matheson's company CSG as a "credible and reliable business client".

That reference helped open doors for Mr Matheson to set up an offshore company.

That company, based in Singapore, was called Coral Seas Planning Consultants.

Documents obtained by the International Consortium of Investigative Journalists in 2021 as part of the Pandora Papers leak raise questions about whether Mr Kiniafa and another top official — then-ports boss Stanley Alphonse — had serious conflicts of interest.

They reveal Mr Matheson's company was paid millions of dollars in consulting fees by a massive PNG Ports contractor — at the time it won the right to run the country's international shipping terminals.

A lucrative deal for Matheson

 ICTSI finalised a deal to run two of PNG's biggest ports in 2017. (Supplied: OCCRP)

In 2017, a multinational port operator called ICTSI was vying for a once-in-a-generation opportunity with PNG Ports — to run its two biggest ports for 25 years.

ICTSI also runs a terminal in Melbourne.

But its senior managers have declared the best profits are in developing countries where there is "very little competition and they need the investment badly".

At the same time ICTSI was bidding on the PNG contracts, it was also paying fees of millions of dollars from Manila to Don Matheson's new offshore company, Coral Seas Planning Consultants.

These "professional fees" and "consultancy fees" were the offshore company's only source of income for the second half of 2017, about $6 million all up.

ICTSI clinched the contract in September 2017.

Later that year, Mr Matheson's company made payments that appeared to be directed to the two top PNG Ports executives.

It wasn't a good look for either Fego Kiniafa or Stanley Alphonse — and raised the possibility that both were seriously conflicted.

Just a few days after ICTSI's final payment to Mr Matheson, the documents show his company transferred $30,000 to an account in the name of Stanley Alphonse.

Stanley Alphonse was then the managing director of PNG Ports.

He told the ABC: "I do not personally know Mr Matheson … I completely deny receiving any benefit from him."

A LandCruiser, dental chairs and a house

If Mr Kiniafa had some kind of side venture with Mr Matheson's company, there are questions about whether this was a good idea — given his conflicts of interest.

A series of payments also appeared to benefit Fego Kiniafa and his family: about $16,000 to a top Australian stable that was training Mihany, a $670 payment labelled "f kiniafa", and about $120,000 in payments to Australian car dealers labelled "TOYLANFEG", "LANDFEGECHUC", and "FEGOLANDCRUISER".

Sarah Kiniafa says she recognises one of these transactions.

She says she remembers her husband bringing home a new LandCruiser.

"I did ask him, 'Who bought the LandCruiser?' He said, 'I did, with my own money.'"

When shown a spreadsheet of the payments, Ms Kiniafa, who owns a dental clinic in Port Moresby, recognises a medical equipment seller paid about $20,000.

"I think [it's] dental chairs. They must have bought it for my clinic," she says.

"I know these things were there, but where it came from, I don't have any idea, you see. So I was either being fooled in the middle to believe something else or it was my husband giving me all these things."

Don Matheson pictured with Mudmen from the PNG Highlands. (Supplied: Don Matheson)

One payment record suggests Mr Matheson may have used his offshore company to help pay for a Gold Coast property owned by his wife's company.

Ms Kiniafa says her family used it for free as a "holiday house".

"Don was a friend up in Port Moresby. We thought, he's a friend, you know?" she says.

"We decided, there's a house there so we could come down and spend a holiday there … sometimes the kids come for a month, or at least during the Christmas break."

Asked why Mr Kiniafa and his family appeared to benefit from payments by Don Matheson's company, Ms Kiniafa says: "I wouldn't know."

"Now I'm seeing all this here, I really want to get to the bottom of this."

'There may have been kickbacks'

Money laundering expert John Chevis, a former Australian Federal Police financial crimes analyst, has examined the leaked documents for ABC Investigations and the OCCRP.

He says they raise questions about possible conflicts of interest concerning the awarding of PNG Ports contracts to port operator ICTSI.

"If you have amounts that are going to PNG Ports officials and those officials have had the opportunity to decide who gets the contract … then you potentially have a conflict of interest," he said.

"It appears that Fego Kiniafa and Stanley Alphonse, who were both senior officials in PNG Ports, received money out of this account.

"We can't know for certain from what we see here, but certainly what we see here gives rise to the potential that there may have been kickbacks made."

Former PNG Ports managing director Stanley Alphonse ran as a candidate in last year's general elections. (Facebook: Stanley Alphonse)

ICTSI says it is "not aware, nor were we ever aware, of any payments made to" PNG Ports officials, and it won the contract through a "well-run, transparent and public international process".

It says it engaged Don Matheson's 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."

According to the company, the deal is worth an estimated $667 million to the PNG government through rent and fees paid by the port operator.

Stanley Alphonse says he can't comment on the process that led to ICTSI winning the contracts.

"But suffice it to say, there was a team assembled with included experts in various fields, both internally and externally, which included the late Fego Kiniafa to undertake the process and report to the senior management and the board," he said.

PNG corruption watchdog to investigate

In a statement PNG Prime Minister James Marape said the revelations had "serious implications on our PNG Ports Corporation, hence, I will direct a full investigation into the allegations by Independent Commission Against Corruption (ICAC)".

Mr Marape's statement said he had also "called for our National Intelligence Organisation and International Revenue Commission to investigate the allegations of impropriety and corruption".

"I am very concerned that this report implicates our best-performing State Owned Enterprise," he said.

"As I speak, Minister [for State Owned Enterprises] William Duma has started an internal review on this matter because we have a substantial infrastructure and operational improvement programme going on in PNG Ports."

James Marape said in a statement he's "very concerned" by the allegations surrounding PNG Ports. (Supplied: PNG Prime Minister's Office)

In his statement, Mr Marape confirmed he played golf with Don Matheson — but said he had no idea about his business background in Australia or his dealings with PNG Ports.

"As a senior member of the Royal Port Moresby Golf club, I meet and greet, and play with anyone who walks into the club, including Mr [Matheson].

"I have [not] much detail of his work or business, apart from the fact that he was a town planner and previously sponsor of Waghi Tumbe rugby league team.

"To set the record straight, I never knew Mr Matheson's other backgrounds … and am equally surprised as well."

DFAT lauds its 'historic investment'

Four years after the ICTSI deal, the Australian Government announced its $621 million AIFFP deal, calling it "an historic investment in PNG's critical economic infrastructure".

The ABC has been told that under the funding deal, PNG Ports will manage the contracting process but Australia will approve its decisions and typically pay contractors directly.

DFAT says the $621 million deal will "create jobs and support trade, growth and connectivity, with broad benefits for PNG's social and economic development".

In response to Mr Marape's announcement, Australia's Department of Foreign Affairs and Trade (DFAT) said in a statement it welcomed the corruption inquiry and noted that the allegations "do not involve Australian public finance and are historical".

DFAT did not respond to questions about whether it knew that the investigation into Fego Kiniafa's murder was looking at his business dealings.

DFAT defended its Pacific funding program, saying the AIFFP conducts "due diligence assessments of implementation partners it engages".

The Department said it was "committed to preventing, detecting and responding to fraud in all aspects of its business".

DFAT says its investment in PNG Ports will have broad benefits for the country’s social and economic development. (Supplied: OCCRP)

Under the AIFFP deal, Australia is giving 20 per cent of the money to PNG as foreign aid and the rest as a low-interest loan over 24 years.

John Chevis says suspicious payments involving PNG Ports officials "raise the bar for [Australia] to ensure that the money that it's putting into the infrastructure in Papua New Guinea is appropriately used".

"I think Australian taxpayer money should be spent in the way that it's intended to be spent — for the people of Papua New Guinea and not bled off, if that at all can be prevented."

Gold Coast villa and restaurants

Flush with cash again after his work for ICTSI, Mr Matheson sent money via his offshore company to his lawyers in Brisbane and finally settled his Australian tax debt, eight years after the Fury fiasco.

These days, Mr Matheson divides his time between PNG and Australia, where he lives with his wife in a multi-million-dollar villa backing onto a private golf course on the Gold Coast.

There, the couple have bought and sold another $5 million worth of properties and restaurants in the last five years.

They included a cafe and bar that served coffee from Goroka.

The ABC spent more than a month last year trying to arrange an interview with Mr Matheson in Port Moresby but he repeatedly cancelled.

Last November, the ABC caught up with Mr Matheson in Brisbane at a PGA golf tournament.

When asked why he was paid $6 million by ICTSI, he said, "You've done your research," but declined to elaborate.

Mr Matheson refused a follow-up request for an on-camera interview and declined to respond to written questions.

PNG Ports hasn't responded to questions from the ABC.

Sarah Kiniafa says she hopes the investigations bring answers, whatever dark secrets about her husband come to light.

"I just want the truth to come out. Maybe bad, maybe good. I just want to know the truth."

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