A couple of years ago I walked into one of the foreign-operated timber companies to get a quotation for building materials.
After getting the quotation with the total value of K14,000 I enquired if I could use my bank card to pay for the purchase.
The supervisor (expatriate) declined my request saying the company policy was for all purchases to be made on a cash-only basis.
I tried to convince him to change his mind by pointing out the risk factors but he still insisted that I pay by cash. I left disappointed and did not understand this company’s policy but I later came up with this money laundering and company tax-avoidance theory.
I believe that the company discussed here uses bogus or dummy receipt and invoice books to hide large amounts of cash in private vaults and only puts small amounts in the bank for tax purposes.
The Internal Revenue Commission then assesses the tax based only on the company’s understated financial records and books, including banking records.
Money hidden in the underground vaults is taken to the bank to be exchange for foreign currency, particularly American dollars, on the pretext the person is travelling abroad, but instead the foreign currency is hidden in the private vault until it is convenient to shift the foreign currency offshore.
This is a typical money laundering scam which partly impacts on Papua New Guinea’s foreign exchange earnings.
I appreciate the work of the Government officials who investigated such businesses several weeks ago and I hope they continue their tasks relentlessly to catch more crooks.
James H. Avia