An inquiry into Papua New Guinea's Department of Finance may investigate a 2.8 million US dollar claim the Prime Minister Sir Michael Somare had apparently instructed the Attorney General to pay out in 2004.
Lawyers representing the state had described this claim as null and void and taken the matter to court.
The inquiry, headed by retired Judge Maurice Sheehan, received evidence that between January 2000 and July 2006 the Department of Finance paid out more than 1.3 billion US dollars for 2,677 individual claims.
The National newspaper reports the inquiry was told some of the claims were fraudulent, illegal or improper.
The claim the Prime Minister appeared sympathetic towards, was lodged against the state by Manorburn Ltd, a company engaged for road construction in Oro province between 1996 and 1998.
The company claimed the state failed to honour the contract, and sued for breach of contract in March 2000.