THE ARREST of two Australian bankers in the country is not surprising for those who know or have followed the machinations of controversial businessman Peter Yama.
The arrests and the reasons behind them come amid claims that PNG's international standing in the business world is at risk.
Australians Robin Fleming and John Maddison, senior executives of PNG's leading financial institution, BSP, are on bail after being arrested for conspiring to defeat the course of justice reports the Australian Associated Press (AAP).
An arrest warrant has been issued for James Kruse, a Deloitte PNG senior accountant who worked for BSP.
These arrests come after Mr Yama last month won K7.6 million against a motor vehicle insurance company and BSP moved to secure the money, claiming Mr Yama had outstanding debts.
A senior BSP executive said that Mr Yama owes several million kina from unpaid loans dating back to the late 1990s, plus accumulated legal fees and unpaid interest.
"I don't think Yama understands these actions are threatening how banks do business in PNG, that there is a systemic risk for banks and other businesses in terms of making loans," he said.
"If people are able to claim fraud charges against bank officers who execute documents in a normal course of duties with absolutely no personal profit, then it undermines the system and clearly could have a major impact on banking in PNG."
No judge has been willing to preside over the civil case due to Mr Yama's influence, the BSP executive said.
"These matters (unpaid loans) have been pending for some time," he said.
Furthermore, the bank's chairman Noreo Beanke on Friday released a statement saying the "threat to personal safety of Bank staff has now increased significantly and the reputational damage immeasurable".
The copy of the statement which was sent to the PoMSOX, Mr Beanke said: "The Board, Management and staff are extremely concerned at the level public comment and heightened media attention levelled at various Bank executives who have been charged by the Police Fraud Squad."
"We maintain that our Bank officers are acting in the normal course of banking business and carrying out their duties in a professional manner in the Bank. The Board and Executive Management stands by the integrity and honesty of these staff members."
He said the bank management is gravely concerned that while civil proceedings are in progress - these criminal charges laid are to distract fair hearing of matters before the courts. However, the bank is confident justice will prevail and the truth will be made known to all.
Mr Bean ke also noted that the recent prison break out has further escalated safety and security of the bank's Branch premises and staff and various security initiatives have been established.
The bank has publicly announced a new Security 24 Hour Information Hotline - 3009634 via public notice in the daily newspapers and firmly believes that a "High level" of community support of any local BSP Branch is critical,
Mr Yama, a former police officer, former government minister and former provincial governor is a serial litigator who has won a raft of multi-million kina compensation pay outs from various sources, especially the PNG government.
The backdrop to the current case is that the Transparency International corruption index last year rated PNG the 151st worst country out of 180 ranked countries while the World Bank's 2010 Doing Business report ranked the country 102nd worst out 183.
Institute of National Affairs think tank director Paul Barker said police integrity and PNG's international standing for business are at stake.
"The current spill over of a dispute between a major bank and one of its clients or debtors, with the arrest or apparent intimidation of bank staff is unacceptable, when there are normal processes which should be followed," he said.
"The police should be careful to avoid being drawn into commercial disputes, and maintain effective control over all their units, and avoid at all times being seen to be partisan or appear to affiliate with factions or mafia-style threats and intimidation."
It is understood that five shots were fired outside the house of one junior lawyer this month, and another lawyer was car-jacked and bashed outside his home while another senior lawyer is in hiding for fear of his life.
All are involved in the BSP case.
Mr Yama denies any involvement or intimidation in the arrests.
He said BSP, their lawyers and their two employees tried to defraud him because of a vendetta dating back to 2001 when BSP bought the defunct PNG Banking Corporation.
"I was the main man against the sale of the bank in 2001, I called an inquiry against the bank (now BSP)," he said.
"No (it's not intimidation) they are arrested because it's very clear they have defrauded me.
"The law is on my side, I will beat them. I win every case.
"I owe BSP nothing, I told the court, I owe them nothing."
The powerful Mr Yama made a great deal of his money from security companies he ran when a minister in the late 90s and early 2000's. He has a large property portfolio and owns the "Smugglers Inn" hotel.
Yama's connections are wide-ranging from police to judges with the latest arrests demonstrating his sphere of influence.
And it is not the first time individuals in a court case with Mr Yama have ended up in jail.
Last year and in 2008 New Zealand-born lawyer Erik Anderson was twice arrested on fraud charges after BSP paid him from money the bank recouped from Mr Yama's account.
Mr Anderson, a senior partner of Gadens Lawyers, was alleged to have conspired and defrauded the Yama Group of Companies after representing BSP since 2002.
Numerous sources provided information about Mr Yama's background and history but the common thread was that no one wanted to be named.
One senior government official outraged at Mr Yama's latest move told AAP: "This police action is designed to threaten, harass and intimidate BSP staff and their lawyers."
A senior police officer said: "Yama has strong connections in police, politics and the courts and that's how he does business."
In March 2003 the Ombudsman Commission, corruption watchdog, appealed against the court's decision to quash misappropriation allegations brought against Mr Yama.
The Ombudsman said Mr Yama paid himself electoral development funds; used family companies to buy government housing and attempted to purchase two ships from the State at "well-below market price".
Mr Yama was also accused of using his official position to "obtain a private bank loan to purchase a ship that was then leased back to the government".