Sydney businessmen the Elomar brothers were busy in 2014.
Mamdouh Elomar was publicly decrying the actions of his son Mohamed, an Islamic State fighter in Syria who would go on to be photographed holding severed heads.
Mamdouh was also vying for Iraqi construction contracts with his brother Ibrahim, arranging a $US1 million bribe for which they would both be jailed last year.
But the pair struck another deal that year, paying $6 million for a logging company only to end up negotiating a $9 million payment from the previous owners after a dispute.
The case, now before the courts, involves the forests of Papua New Guinea and a development fund meant to help lift locals out of poverty and it hinges on claims that another businessman stole more than $10 million in assets belonging to the Papua New Guinean people.
Mamdouh, 64, and Ibrahim, 61, were raised in Lebanon in a family of 12 children and worked manual jobs in Australia before building a large construction company, Lifese.
The firm counted a former Supreme Court judge as its chairman and completed projects worth hundreds of millions of dollars. In time, though, the Elomar brothers became better known for the extremist activities of their relatives.
Mamdouh’s brother Mohamed Ali Elomar is serving 21 years’ jail for his role in planning attempted terrorist attacks in Melbourne and Sydney in 2005. Mamdouh’s son Ahmed was jailed for four years for assaulting a policeman at the 2012 riots in Sydney’s Hyde Park, after carrying a sign that said “our dead are in paradise, your dead are in hell”.
Then his son Mohamed, formerly a promising boxer, travelled to Syria to become one of Australia’s most infamous IS fighters, before he was killed in an airstrike in 2015. Terrorism headlines were hurting the Lifese business in 2014, shrinking revenue.
But the Elomars found money in February that year to buy a timber operation called Cloudy Bay from the PNG Sustainable Development Program, a charitable trust part-run by Australians.
Managing $US1.3 billion in assets, PNG SDP funds local development projects with proceeds from the Ok Tedi mine that was once owned by BHP, which handed over its stake in return for immunity from environmental lawsuits.
The Elomars were joined by another Australian, 25 per cent shareholder Nick Roniotis, in buying the Cloudy Bay timber operation – including logging permits, production plants and a commercial building in Port Moresby – for 40 million kina, about $17 million at the time. They paid $6.5 million up front, but then defaulted on the rest.
As they faced charges over the bribery in Iraq, the Elomars were negotiating hard over the PNG business to strike a new and unusual deal. It would have allowed them to keep control of the company while receiving millions of dollars more than they ended up paying for it. The deal, signed last February, was meant to put an end to a murky dispute.
PNG SDP could have taken back all of the timber operations’ assets, but it decided to forgive the $11 million debt in return for the Port Moresby property alone.
On top of this, PNG SDP said it would pay the Elomars’ company $9 million.
Once the property was transferred back to the development program and the money paid, both sides would relinquish any right to sue over the initial sale. The deal was fair, according to PNG SDP’s Australian chief executive John Wylie, because it compensated the Elomars for a massive theft on the timber operation. A former public servant and management consultant, Mr Wylie said the theft was committed by someone working within the development fund before the sale to the Elomars and was only discovered later.
“Physical assets” were allegedly stolen and funds siphoned off to pay for personal expenses, including school fees in Australia.
“The validated quantum of the theft was much more than $9 million,” he said.
The alleged thief, who cannot be named for legal reasons, has been reported to an anti-corruption body in Singapore, where the company was incorporated, Mr Wylie said.
“The PNG authorities are in the process of being informed,” he said. “This is being done carefully through lawyers and has yet to be fully executed.”
Deeds sighted by The Sun-Herald refer not to a theft but “disputes” between the buyer and seller. Asked why the $9 million payment was to go to the Elomars personally, not the Cloudy Bay company, Mr Wylie said Cloudy Bay had given a written executed authority for it.
“How they divvied up the spoils, as it were – we didn’t want to get involved in that. None of our business.” The deal has yet to go through.
The Elomars’ former business partner, Mr Roniotis, claimed he was cut out of the $9 million payment. He launched action in PNG’s National Court of Justice to have the sum paid to the timber company, not the Elomars’ venture. Mr Roniotis also questioned the idea of compensation for a theft, saying he and the Elomars conducted due diligence on the company before buying it and found nothing untoward. His lawyer, Stewart Levitt, has questioned the negotiations between PNG SDP and the Elomars, who at the time had been facing foreign bribery charges for more than a year.
“It would be extraordinary for the trustees of a public trust to want to continue to do business with people known to be facing serious criminal charges which had been widely reported,” Mr Levitt said.
The Elomars, who pleaded guilty to the Iraq bribery last July, will be first eligible for release in September next year. Their lawyer at the time of the PNG deal negotiations, Abdul Reslan, did not return calls. The establishment of PNG SDP and environmental damage from the Ok Tedi mine is now under investigation after PNG Prime Minister Peter O’Neill announced a public inquiry in parliament this month.