The chairman behind Papua New Guinea's NRL expansion team has been forced to stand down after being linked to a corruption scandal.

Wapu Sonk resigned after allegations that he sought to financially benefit from another position he holds in charge of a multibillion-dollar national oil company.

The order for Sonk to step aside from the NRL's 19th team came directly from the country's Prime Minister, James Marape, who earned the backing of the Australian government with a $600 million package to establish and operate the new club, to develop the game's grassroots in the Pacific, and to cover the cost of the NRL licence fee.

The Australian Government investment is also being used to politically curb the rising influence of China following sovereignty concerns across the Pacific.

Corporate records and personal documents of Sonk link the PNG oil company to suspect dealings with a Chinese government firm, with evidence suggesting it funnels its contracts from China back to another venture which the businessman owns in Australia.

Sonk has declined to respond publicly to the allegations associated with PNG's state-owned and the nation's biggest company, Kumul Petroleum Holdings Limited.

He is also facing questions over his personal use of a Brisbane house, whose homeowner were given contracts with Kumul Petroleum.

But Sonk's lawyers have said their client "denies any and all allegations of improper or unlawful conduct".

Mr Marape addressed the conflict of interest on Friday which does not directly relate to or involve the expansion club entering the NRL in 2028.

"I have spoken to Mr Sonk and, while he is currently overseas, I've requested that he step down from his role as a director on the PNG NRL franchise board, effective immediately, and he has agreed to do so," the Prime Minister said in a statement.

"This reflects PNG's commitment to the highest standards of integrity, probity, and public trust."

Reports revealed a deal was made to upgrade a significant port in PNG with money from China, which would benefit Sonk's Australian business interests.

Australian Prime Minister Anthony Albanese has been implicated indirectly after backing the recommendation from Marape to appoint Sonk amid initial discussions to establish the new club between the two leaders last year.

The Australian Government backed the arrangement as a means of countering China's ongoing strategic, security and economic influence targeting PNG – which ironically has raised questions about Sonk's dealings with a communist-owned Beijing firm.

Mr Marape admitted the allegations were serious and "raise concerns that cannot be ignored".

"This is not a presumption of guilt," he said.

"Mr Sonk is entitled to due process and the opportunity to clear his name.

"Stepping down allows him the space to do so – without casting a shadow over the franchise process or compromising the confidence of our partners."

"I want to reassure the people of Papua New Guinea, the Australian government, and the ARLC (Australian Rugby League Commission) that my government is committed to full transparency and co-operation with any relevant investigations.

"The integrity of this national franchise is paramount. We will not allow it to be undermined by external controversy."

A formal letter will be issued to Mr Sonk seeking a written explanation of the perceived conflict of interest, Mr Marape added.

However Mr Marape said the PNG government has yet to receive a direct complaint "locally".

"Let me make it clear — no one is above accountability," he said.

"If impropriety is established, then appropriate action will follow.

"Kumul Petroleum must operate at the highest standards of transparency and ethical conduct, given its critical role in managing the state's petroleum interests."

A spokesperson for Australia's Minister for Pacific Island Affairs, Pat Conroy, has responded to Mr Marape's statement.

"We also welcome the PM's reiteration of PNG's commitment to a 'world-class NRL team built on trust, transparency and national pride'," the spokesperson told Nine Media.

The board of the PNG NRL team, which is set to be led by one-time Canterbury chairman, Ray Dib, was unveiled in June this year.

ARLC chairman and NRL boss, Peter V'landys, said he had full confidence that Australia's taxpayer dollars will be used appropriately "as monies are controlled by the NRL".

"We will have vigorous internal control measures in place," he said.

"No payment will be [made] unless we sought the service or product."