Papua New Guinea's Office of Climate Change (OCC) director Dr Theo Yasause has been suspended while an internal investigation of the office is carried out.
PNG's cabinet decided last Friday to sideline Yasause after much speculation surrounding his role.
A PNG government source told AAP a statement would be made on the matter next week.
Yasause has vehemently denied any wrongdoing after a series of media reports highlighted anomalies with the OCC issuing multi-million dollar carbon trading deals without any policy or legislation in place.
Yasause denied any money had exchanged hands in the deals but documents obtained by AAP showed Australian company Carbon Planet paid $1.2 million for projects in PNG.
Leaked documents to The Economist magazine showed Yasause had made deals on a range of other projects throughout PNG.
When AAP asked Yasause about the deals at a news conference in Port Moresby on June 15 he said even though the leaked documents appear to carry his signature, the OCC's official seal and another colleague's signature, they did not represent real deals.
"It's not a false document but a sample," he said.
Asked why he would make sample documents, he said: "We want to see what it looked like."
PNG Department of Environment and Conservation secretary Dr Wari Iamo will become acting OCC director while an investigation is held, the National newspaper reported.
AusAID has announced a corporate planning adviser will be placed in the OCC office for three months as part of the $3 million pledged under the Australia-PNG carbon initiative.
PNG has the world's third-largest rainforest and the government has great interest in turning the asset into carbon trading revenue, but at present no such policy or legislation exists in PNG nor under UN guidelines.
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