Research School of Pacific and Asian Studies State, Society and Governance in Melanesia State Society and in Governance Melanesia DISCUSSION PAPER Discussion Paper 2009/5 PARALLEL STATES, PARALLEL ECONOMIES: LEGITIMACY AND PROSPERITY IN PAPUA NEW GUINEA This discussion paper presents two a major gold mining project since 1995. Elite NICK BAINTON related discussions on different aspects Lihirian leaders were inspired by Personal & JOHN COX of contemporary Melanesian economic Viability philosophies as they renegotiated engagement. We consider the case of the community compensation and benefits U-Vistract, a mass pyramid scheme which package with the mining company throughout not only promises limitless wealth to its 2000-2007 and as they tried to develop investors but even envisages a new global strategies to achieve greater self-reliance economic system, blessed by God and and financial independence to address the centred in Bougainville under the leadership so-called resource dependency syndrome. of a self-proclaimed king. This is followed by a discussion on a contrasting movement While apparently obscure and even called “Personal Viability” which is based deceptive or ridiculous, these movements upon self-help philosophies that aim to have offered alternative accounts of states cultivate an entrepreneurial persona. and the global economy, and the place of Melanesian states and communities within In the first section John Cox addresses them, which are sufficiently convincing to the recent wave of “fast money schemes”, draw thousands of followers. In Bougainville, discussing institutional and ideological they can involve direct challenges to the links between these scams and Christian legitimacy and authority of the state, and in churches, particularly Pentecostal prosperity Lihir they have been crucial to the generation gospel teachings. He also explores the of local plans for economic and political tensions between Pentecostal views of autonomy. By studying these movements, morality, millennialism and the state which we hope to uncover insights into wider may have contributed to the spread of fast concerns of state and nation building (and money schemes in PNG. In the second legitimacy), and also into understandings section Nick Bainton concentrates upon the of economic development and of prosperity uptake of the Personal Viability movement within Melanesia. in the Lihir Islands which have been host to Parallel States, Parallel Economies: Legitimacy and Prosperity in Papua New Guinea FINANCING THE END-TIME U-VISTRACT 2 HARVEST: PYRAMID SCHEMES AND PROSPERITY GOSPELS “U-Vistract Financial Systems” was founded IN PAPUA NEW GUINEA by Noah Musingku, from Tonu in South Bougainville. It emerged in 1998 at the close of the Bougainville crisis and initially promoted John Cox itself as the “Bank for Bougainvilleans”, drawing on Bougainvilleans’ sense of having been exploited by international capital. At the Leading up to the millennial year 2000, peak of U-Vistract’s influence, the President of Papua New Guinea experienced a rush the Bougainville People’s Congress, Joseph of “fast money” schemes: pyramid scams Kabui, described U-Vistract as a “window promising returns on deposits of 100% within 1 of hope” for Bougainville and asked for tax a few weeks or months. While returns of relief for U-Vistract and related schemes this magnitude might seem self-evidently (Post-Courier, 26 August 1999).2 Kabui “too good to be true”, the public response subsequently become a fierce opponent of was remarkable. The schemes spread “like a U-Vistract and more recently described the bushfire”. Thousands raced to make deposits scheme as “lies and bullshit” (National, 23 hoping to make it rich. Some “investors” put May 2004). their National Provident Fund or other long term savings into the schemes while others U-Vistract’s early membership largely sold real estate for fear of missing out on the consisted of Bougainvilleans living, working “fast money” payments. Churches, women’s or studying in Port Moresby. Several high groups and schools all put money into the level Bougainvilleans received large payouts schemes, wanting to cash in on the high from the scheme, the best known being the returns. The Bank of Papua New Guinea then Chief Ombudsman, a Bougainvillean (BPNG), alarmed at the scale of withdrawals highly regarded for his integrity and support from private bank accounts, warned that of governance reform (Australian, 13 May fast money schemes “had the potential to 2000). Others, even students, made a lot destroy the financial system” (National, 22 of money and became notorious for their Oct 1999). Long queues formed outside the extravagant lifestyles. Often money was sent larger schemes’ makeshift offices. Initially from relatives in Bougainville to be invested. lines of people making deposits, they later became lines of angry unpaid investors Alongside U-Vistract ran other Bougainvillean wanting their money back. When the bubble schemes such as “Nekong” and “Millennium”. finally burst, millions of kina had been lost. “Money Rain” was another very large fast Yet the story of the fast money schemes did money scheme that was effectively an agency 3 not end with a salutary lesson concerning of U-Vistract for non-Bougainvilleans. There risk and greed. Almost ten years on, many were at least ten of these schemes running investors continue to wait for their payments in parallel, all relegitimating each other’s and believe that “the money is there” but that extravagant promises. As the pyramid it is being withheld by corrupt government expanded, Bougainvilleans invested on behalf authorities. of others. Soon the scheme was opened up to anyone willing to deposit money, regardless This section takes up the story of U-Vistract, of their origins. Within a few years, some the largest and most controversial “fast money” 70,000 Papua New Guineans had deposited K350 million into U-Vistract alone. U-Vistract scheme, exploring links between U-Vistract also attracted followers in Australia, Solomon and Christianity, particularly in the prosperity Islands and Fiji. In Australia, a small number theology promoted by Pentecostals. The of Queensland investors contributed some intention is to explain how this scam spread AUD500,000 between July and October using religious networks and ideas against 1999. Some were Bougainvilleans working the weak capacity, reach and legitimacy of or studying abroad. This drew the attention state institutions. of the Australian Securities and Investments Commission (ASIC), which stopped the Parallel States, Parallel Economies: Legitimacy and Prosperity in Papua New Guinea further spread of the scheme and required Returning to Bougainville, Musingku courted U-Vistract to return the money to its investors separatist leader Francis Ona by trying to 3 (ASIC, 1999). link the Royal Kingdom of Papala with Ona’s Meekamui. This proceeded as far as a Initially, U-Vistract had support from the coronation of Ona, overseen by Musingku PNG Government, led by Prime Minister (National, 23 May 2004). However, as his Bill Skate. Skate’s Treasurer, Iairo Lasaro, promises failed to materialise, Musingku fell exempted U-Vistract and nine other fast out with Ona and retreated to his own village, money schemes from the requirements of Tonu, where he also crowned himself “King the Financial Institutions Act. Skate and his David Pei II” of the Kingdom of Papala. In Deputy are said to have been large investors 2006, Musingku recruited Fijian mercenaries, in U-Vistract and Money Rain. Many Papua provoking the headline “U-Vistract Plots War” New Guineans believe it was their extravagant (Post-Courier, 9 Mar 2006), not to mention a investments (of public money) that exhausted diplomatic incident involving the Governments the schemes’ capacity to pay. In late 1999, of Fiji, PNG and Solomon Islands (whence the incoming Morauta government revoked the mercenaries had entered Bougainville).4 the exemptions and gave the schemes three From Bougainville, Musingku continues to months to pay their investors or be closed attract headlines, most recently for printing down. Morauta prepared a new Financial the “Bougainville Kina”, with the face of Institutions Act, partly in response to the Jesus Christ on the fifty kina note (Sydney unchecked spread of the schemes. The Morning Herald, 8 July 2009).5 new BPNG Governor attacked the schemes, initiating legal proceedings and issuing public warnings (Government of Papua New Guinea, 2000: para 32). These measures resulted in “INSIDE TRACKS” AND “UNRULY the collapse of the major schemes, who all COALITIONS”: paYOUTS AND blamed the government for their downfall. paTRONAGE Musingku defied court orders and continued “…If public gossip is to be believed, to operate. He was declared bankrupt (Post- the iniquitous U-Vistract net not only Courier, 15 June 2000) and subsequently enmeshed ordinary families, but dozens charged with contempt of court for continuing of institutional investors, the boards of to solicit deposits. Musingku attempted to management of schools, the elders of set up another money scheme, the “Royal churches, and perhaps most significantly, Reserve Bank of Papala”, but police and a considerable number of members of BPNG officials raided the new pseudo-bank Parliament. It seems possible that it is and closed it down. In 2002, Musingku fled to these elected or appointed leaders who Bougainville and thence to Solomon Islands. are the most unwilling to reveal their In Honiara, as the “Royal Assembly of Nations exposure