Papua New Guina’s Inter-Government Relations Minister, Peter Barter, said that former Fijian soldiers training the Bougainville army will never get the money promised them.
Last month an attempt by 12 other ex-Fijian soldiers to set up an army for con-man and self-proclaimed king Noah Musingku in Bougainville was foiled.
Musingku is the alleged mastermind behind the fraudulent U-Vistract pyramid scheme and Mr Barter said he should be arrested and charged as soon as possible.
He called on five Fijian ex-servicemen who are with Musingku at Tonu, in southern Bougainville, to stop their training activities, pack up and leave.
"The reality is they will not be paid. The money promised to them does not exist."
The Fijian trainers’ work experience includes missions in Iraq, Afghanistan and other hotspots and they have reportedly been promised $US1 million ($A1.37 million) each by Musingku.
Mr Barter's comments follow warnings raised in a Bougainville police report last week that Musingku planned to recruit up to 1,000 soldiers to overthrow the island's new autonomous government.
Under President Joseph Kabui, that government was granted wide powers of regional autonomy last year by the PNG government.
But Mr Kabui's government has had trouble imposing its authority in no-go zones held by armed but fractured elements of the Meekamui separatist movement.
Musingku, who calls himself King Peii II, sparked concerns late last year after hiring eight Fijians to train his private security force in his Meekamui enclave on the island.
The five Fijians still with Musingku have defied efforts to coax them out by Bougainvillean, PNG and Fijian authorities, who fear their presence could destabilise the island's return to peace after years of bloody secessionist conflict.
Pyramid scheme
Mr Barter said Musingku's fraudulent pyramid scheme had duped thousands of innocent if "ill-informed and greedy" people in Bougainville, the rest of PNG, the Solomons and Fiji.
"The best Noah Musingku and his associates can do is to take money from people entering the scheme to pay out those who have put their money in before," Mr Barter said.
PNG Foreign Minister Rabbie Namaliu is expected at the Vanuatu meeting, to urge a tightening of visa arrangements following last month's attempt by 12 Fijians to join Musingku by crossing illegally from the Solomons.
The 12 were detained in the Solomons capital Honiara and sent back to Fiji.
Mr Barter said the situation in Bougainville was relatively fragile and Musingku and his supporters had created uncertainty and threatened security on the ground.
The PNG government remained ready to cooperate with Bougainville's autonomous government and police force to resolve the issue by peaceful means, he said.
Former combatants in Bougainville have suggested to the government they could organise a force to go in and take on Musingku and his men.