A scandal about an expensive yoga program has triggered a criminal investigation involving the Governor of Port Moresby in Papua New Guinea.

Key points: The council's money goes to a company wholly owned by Fazilah Bazari

The council's money goes to a company wholly owned by Fazilah Bazari Ms Bazari denies being in a relationship with the Governor

Ms Bazari denies being in a relationship with the Governor Mr Parkop denies the allegations and welcomes the investigation

Governor Powes Parkop is being investigated by anti-corruption police, after a former official revealed the city council, the National Capital District Commission, was paying $1.2 million a year to a company run by his alleged partner.

Mr Parkop took up yoga in 2014 after a serious health scare and promotes its benefits to Port Moresby residents.

But his flagship Active City program is now being investigated by anti-corruption police, after a covert video caught the former city manager admitting that the council pays $100,000 a month for the program of walks, yoga classes and other health activities.

The money goes to a company wholly-owned by Malaysian yoga teacher Fazilah Bazari, who denied being in a relationship with Mr Parkop.

"No I am not in an intimate relationship with the Governor," she said.

"I mean we are close, professionally and by Papua New Guinean standards if people are seen together and it is assumed we are intimately close with each other, no, we are not."

Mr Parkop has praised the yoga program for the health benefits it brings to the community. ( Supplied: Facebook )

Ms Bazari has attended official functions with the Governor and travelled with him on a trip to Indonesia, where local media referred to her as his wife.

"They just assumed that I was the wife but no one asked me if I was really the wife or no so I was surprised myself when I saw that," she said.

Ms Bazari's yoga program had been applauded for helping the city's poorest people, but that acclaim has now turned to outrage about the program's cost.

"It's kind of sad because we promote ethical living, healthy living, non-stealing, non-violence… it is reaching out to a lot of people, it has given a lot of people inclusivity, participation, a voice," she said.

"We have expenditures that we acquit every month, it's a very ethical program where we give them a report every month before we are paid."

Ms Bazari said she paid herself a salary of $2,000 per month, plus accommodation, transport, a food allowance and flights to see her family.

Mr Parkop has denied the claims against him in a statement. ( Supplied: Facebook )

Opposition MP Bryan Kramer, who lodged the corruption complaint with police, said Ms Bazari had not complied with corporate regulations when she registered her company.

"This company was set up illegitimately," he said.

"The records confirm it had been receiving funding from the NCD Governor, NCD Commission, before it was even legally allowed to operate."

Mr Kramer said the records of PNG's Investment Promotion Authority, which regulates companies, show Fazilah Bazari's firm did not have enough money to qualify for registration, until the city council paid her.

"So she had zero funds that she put into this company and then our governor literally helped her fund a foreign company that was from the ratepayers' money."

The Active City program is focused on improving fitness levels across the country. ( Supplied: Facebook )

Ms Bazari said she had initially intended to work as a consultant and was unaware of the funds requirement for registration at the time.

"We were not even thinking about starting our own company… or being a foreign enterprise, we were consultants hired to manage the program," she said.

Governor Powes Parkop provided a statement in response to the claims, saying he had done nothing wrong and welcomed the investigation.

"We have followed all procedures to award the contract and also all funds have been used for intended purpose and fully acquitted so there is no fraud committed," the statement said.

"We have achieved a lot for the city in this program and I am just focused on extending and expanding it because without behaviour and attitude changes we will continue to fail in all sectors of development."