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Tuesday, May 02, 2006

Solomons leaders ran slush fund

By: Russell Skelton and Craig Skehan, Honiara
Published: April 29, 2006
Source: The Age (Melbourne, Australia)

Successive Solomon Islands prime ministers have been running a secret slush fund, reputed to be worth about $10 million a year, to dispense political favours.

The existence of the fund, topped up regularly by the Taiwanese Government, confirms that Taipei's vote-buying in Honiara has been far more extensive than earlier thought and involves tens of millions of dollars over at least five years.

The Solomon Islands is one of six Pacific states that recognise Taiwan — therefore giving vital votes at the United Nations to the largely isolated Taiwanese Government, a regime founded by the Nationalists who fled the Chinese mainland after the 1949 communist victory.

This loyalty is maintained at an estimated cost of several hundred million dollars in public projects and private political kickbacks. China is equally lavish in its support for Pacific islands that recognise it, or that might be tempted by rewards from Taipei.

Finance industry sources said that former prime minister Sir Allan Kemakeza operated a secret slush fund during his term, buying cars, boats and funding regional projects to secure electoral support for pro-government candidates.

Sources said the fund had attracted the attention of authorities, including the Central Bank and Australian officials, who are part of a three-year-old law-and-order intervention force, because of the regular surge of unaccounted money into the banking system. "We know the fund exists because of the profligate way money is being spent," one source said. "It has been very damaging to the financial system."

It is believed the Central Bank has repeatedly asked the Prime Minister's office to explain the origins of the money.

Australian police and security agencies are believed to be investigating Taiwan's vote-buying in the troubled Solomons. They suspect Taiwanese money may have played a role in the political instability that led to last week's riots and the destruction of Chinatown. More than 300 Chinese have fled Honiara for China.

Taiwan has already received much criticism, from within the Solomon Islands and outside it, for its generous aid program in Solomon Islands. The aid is paid in cash hand-outs and is never audited. It includes a regular $80,000 hand-out to MPs to spend in their electorates.

Senior political figures in the Solomon Islands, including a former foreign minister and the frontrunner for the prime ministership, have been involved in secret negotiations to shift diplomatic recognition from Taiwan to China. The negotiations began in Beijing last September and continued this month at the Chinese consulate in Brisbane.

Manasseh Sogavare, the leading candidate for the prime ministership, said this week that it was time to end diplomatic recognition of Taipei. "The situation has changed internationally, it is time for us to look at the international realities," he said.

The Federal Government has told Beijing and Taipei of its concerns that chequebook diplomacy is destabilising the Solomon Islands and other small Pacific states. Taiwan ambassador Antonio Chen yesterday denied that Taiwan was involved in money politics, saying it was up to the Solomon Islands government to decide how it spent its aid money.

News source: The Age (


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