Carbon Fraud & Illicit Networks: Risks in REDD+ by Babida David Sepmat Gavara-Nanu Bachelor of Laws (Hons) Master of Laws Thesis Submitted to Flinders University for the degree of Doctor of Philosophy The College of Business, Government & Law 01st July, 2020 CONTENTS CONTENTS ...................................................................................................................... I LIST OF FIGURES ........................................................................................................ IV LIST OF PICTURES ....................................................................................................... V LIST OF TABLES ....................................................................................................... VIII LIST OF ABBREVIATIONS .......................................................................................... IX ABSTRACT ................................................................................................................. XIII CERTIFICATION .......................................................................................................... XV ACKNOWLEDGEMENTS ........................................................................................... XVI PREFACE ................................................................................................................. XVIII I INTRODUCTION ........................................................................................................... 1 A THE RESEARCH PROBLEM ........................................................................................... 3 1 Research Aim ........................................................................................................ 4 2 Assumptions and Investigation .............................................................................. 6 3 Significance ........................................................................................................... 7 (a) Original contribution to Green Criminology ...................................................... 8 (b) Indigenous perspective through Grounded Theory........................................ 10 (c) Regional security ........................................................................................... 14 B RESEARCH TERMS, LIMITATIONS & OUTLINE ................................................................ 14 1 Research Terms: Bigmen, Wantok, Nationals, Gorgor, Masalai and Hausboi .... 14 (a) Wantok .......................................................................................................... 15 (b) Bigman .......................................................................................................... 17 (c) Gorgor ........................................................................................................... 19 (d) Masalai and hausboi ...................................................................................... 20 2 Research Limitations ........................................................................................... 20 3 Outline of the Thesis—Setting the Context.......................................................... 21 II RESEARCH DESIGN ................................................................................................. 24 A THE HYPOTHESIS ...................................................................................................... 24 1 The False Start .................................................................................................... 29 2 The Change in Direction ...................................................................................... 30 B THE INDUCTIVE APPROACH ........................................................................................ 33 C PAPUA NEW GUINEA ................................................................................................. 37 1 Sentral Niu Ailan: A Single Case Study ............................................................... 39 2 Challenges in the Fieldwork ................................................................................ 45 III THE DEVELOPMENT OF CARBON TRADING MARKETS ..................................... 60 A THE KYOTO PROTOCOL—1997 .................................................................................. 61 1 Emissions Trading Schemes, Joint Implementation and Clean Development Mechanisms ................................................................................................... 63 (a) The Paris Agreement—2015 ......................................................................... 66 (b) Against carbon markets ................................................................................. 67 2 Reducing Emissions from Deforestation and forest Degradation (REDD+) ......... 68 B REDD+ IN PNG ....................................................................................................... 74 1 Problems in REDD+ in PNG ................................................................................ 79 (a) Corruption and lack of political will ................................................................. 80 (b) Poor regulatory framework ............................................................................ 83 i 2 Logging and its conflict with REDD+ ................................................................... 92 IV CARBON FRAUD .................................................................................................... 95 A THE EMERGENCE OF CARBON FRAUD ........................................................................ 98 1 Carbon Fraud in the European Union Emissions Trading Scheme .................. 101 (a) Hacking and phishing ................................................................................. 103 (b) Value added tax fraud through the ‘carousel’ method ................................. 103 (c) Fraudulent accounting ................................................................................ 106 (d) Ponzi schemes ........................................................................................... 107 2 Corporate Carbon Fraud ................................................................................... 107 3 Carbon Fraud in REDD+ Schemes ................................................................... 108 (a) Peru ............................................................................................................ 113 (b) The Philippines ........................................................................................... 117 (c) Papua New Guinea ..................................................................................... 120 V ORGANISED CRIME IN PNG ................................................................................. 140 A TRANSNATIONAL ORGANISED CRIME GROUPS .......................................................... 142 1 Weak State Theory, Political Elites and Transnational Organised Crime ......... 142 2 Transnational Unorganised Crime .................................................................... 146 B SCRIPTS FOR REDD+ FRAUD IN PNG ..................................................................... 149 C RASKOLS—THREAT TO REDD+? ............................................................................ 155 1 Structure of Raskol Gangs ................................................................................ 159 (a) Factors needed to commit carbon fraud ..................................................... 161 (b) Other factors: Previous high-level fraud, longevity in gangs and structures 163 D RASKOLS AND CHINESE CRIMINALS ......................................................................... 164 1 Structure of Raskol–Chinese OCGs ................................................................. 167 (a) Planning, coordination and patience and carbon fraud ............................... 176 2 Financial Networks, Logistics and dealing with Law Enforcement .................... 177 E CHINESE CRIMINAL NETWORKS OR TRIADS? ............................................................. 179 1 Illegal Activities ................................................................................................. 186 2 Illegal Logging .................................................................................................. 191 VI REVEALING CARBON FRAUD IN NEW IRELAND .............................................. 197 A DATA & SIGNIFICANT FINDINGS ................................................................................ 197 B DISCUSSION OF FINDINGS ....................................................................................... 234 1 NIHT—Carbon Cowboys are Back ................................................................... 234 (a) False promises ........................................................................................... 235 (b) False representations and false marketing ................................................. 236 (c) (Traditional) Welcoming ceremonies and media marketing ........................ 242 (d) False official government endorsement ...................................................... 245 2 Corruption ......................................................................................................... 247 (a) Sentral Niu Ailan Local-level Government .................................................. 248 (b) New Ireland Provincial Government ........................................................... 250 (c) National Government .................................................................................