By Dylan Welch*

Australia may be sheltering hundreds of millions of black dollars funnelled out of South Pacific countries by corrupt politicians and public officials, with the money laundering being tolerated by a disinterested federal government.

Papua New Guinea, in particular, is believed to suffer from the avarice of some of its officials and politicians, with a senior police officer recently claiming the country loses as much as 50 per cent of its budget - about $1.9 billion - through fraud and corruption every year.

The claims have been made at a Queensland conference by a governance expert, Jason Sharman.

Professor Sharman called on the Australian government to drop its ''nonchalant attitude'' towards the problem, which he said hamstrings regional aid, governance and security policies.

''Recent research on grand corruption has emphasised the importance of following the money trail to determine where corrupt senior officials hide their stolen assets".

''The answer is often that wealth looted from poor countries is held in rich countries with large, stable financial centres and which share historical ties with the victim country.''

But he said the government had displayed a lack of interest in pursuing foreign corruption here.

An example of this, he said, was the bribery scandal enveloping the Reserve Bank in relation to foreign bribes allegedly paid by employees of its part-owned subsidiaries, Note Printing Australia and Securency.

The government has ignored that case and has three times blocked a move in the Senate to launch a parliamentary inquiry.

''The government doesn't care about Australia playing host to the proceeds of foreign corruption".

He said he first became concerned about the role of Australia in embezzlement and corruption in the South Pacific while undertaking research for the World Bank about the problem in Africa.

''If you're a corrupt leader and you're stealing millions … through embezzlement or taking bribes, then you don't want to keep it at home, you want to put it somewhere international.''

He said his research showed that money tended to flow to the former coloniser, or the nearest thing. Given that many South Pacific politicians and officials study in Australia and have family and friends here, Australia would be the closest thing to a coloniser.

Evidence gathered by several international organisations had also made particular claims about politicians from Papua New Guinea - which has undergone a minerals boom in recent years - buying property in Queensland with their corrupt profits.

* First published in Fairfax newspapers