Edna Oai, Annie Smerewai and Boston Kassiman, all directors of the Ok Tedi Fly River Development Foundation Limited (OTFRDF), have also been arrested and charged with 15 counts of financial crime including misappropriation and false pretence.

Police described the allegations, if proven, as the “single biggest fraud that has ever been investigated in the history of the Royal Papua New Guinea Constabulary”.

They are still seeking to arrest and charge the chief executive officer, Samson Jubi, and others.

In January, Sheppard’s law firm, Young & Williams Lawyers, and the trust fund board, rejected the charges against him as “politically motivated” and an “unlawful attempt by powerful forces in PNG” to keep control of money intended for communities affected by mine pollution.

A spokesperson for Sheppard’s law firm said at the time it had always acted on the advice of OTFRDF and “all transactions have been in accordance with the PNG court order”. The Guardian has again approached them for comment.

On Wednesday, police commissioner David Manning denied the investigation was politically motivated.

“The fact that significant funds have [allegedly] been expended by ‘trustees’ with no actual benefit to the ‘beneficiaries’ ought to loudly speak for itself,” he said.

Police allege K268 million kina was misappropriated from the Western Province People’s Dividends Community Mine Continuation Agreement trust fund and improperly paid into the accounts of the Ok Tedi Fly River Development Foundation and Sheppard’s law firm.

The trust fund was established with profits from the Ok Tedi copper and goldmine to fund development projects, such as roads, schools and health clinics for villages in Western Province affected by the mine.

But for years residents of those villages, and politicians in Port Moresby, have complained that none of the money has ever reached Western Province, which remains one of the most impoverished regions in the country.

Sheppard is also manager of the chart topping indie-pop group Sheppard performing in 2018 (Kevin Mazur)

According to Young & Williams’ website, Sheppard has been in PNG since 1990 and counts “prime ministers, ministers and businessmen” among his clients.

Sheppard was also manager of Brisbane indie-pop group, Sheppard, of which three of his children are members. Last year the group had a No 1 Australian hit single, Geronimo, and performed at the AFL grand final in October.