17 Feb 2014

PNG resources boom could open way for ponzi schemes

7:41 am on 17 February 2014

Papua New Guinea's resources boom could leave the country more susceptible to fraudsters and ponzi schemes, according to new research by the Australian National University.

John Cox has been studying the effect of fast money schemes like the U-Vistract scheme a decade ago, and why PNG's educated middle class has paid over 208 million US dollars to such schemes since 1998.

He says the resource boom is creating high expectations of wealth that could create a sense of mistrust that people will prey on.

"So what I'm hearing from the people that I speak to is 'PNG's a rich country, we shouldn't need to have aid programmes, we shouldn't have poor people here, there's something wrong with our system' and they often blame it on corruption, but more often it become what we call a negative nationalist account. They say 'we're under-developed, it's because our politicians are corrupt.' "

John Cox says the system and government corruption is often used by ponzi operators in PNG as an excuse for why money hasn't shown up.