Profiting from Sickness: The Dark Economy of Public Health in Papua New Guinea

September 6, 2017 Leave a comment

PNGi has released the first instalment of a three-part investigation into the abusive commercial transactions that are leading to the circulation of overpriced and substandard medicines and medical supplies and the waste of millions of Kina in desperately needed funding.

Life expectancy in PNG is twenty years lower than in Australia and the lowest in the region. Eight million people in Papua New Guinea live without access to decent health care and everyone feels the impacts.

If ever there was a sector which should be safeguarded by political leaders to ensure that services are provided in an effective and efficient manner, free from malfeasance, it is public health, but as the the PNGi investigation reveals, that is far from reality.

Profiting from Sickness focuses on controversial medical goods supplier, Borneo Pacific Pharmaceuticals Limited, its principal, Sir Sang Chung Poh, and a network of business people, former public servants and doctors, connected to him.

Part I of Profiting from Sickness puts the spotlight on Borneo Pacific Pharmaceuticals Limited itself.

It reveals allegations made against Borneo Pacific from a range of credible authorities, including the Medical Association of PNG, The Global Fund’s Inspector General, a Special Parliamentary Committee, the Australian Department of Foreign Affairs and Trade, the Solicitor General’s Office, the National Doctor’s Association, front-line medical workers, Professor Glen Mola, Governor Gary Juffa, and Sir Mekere Morauta.

The general pattern common to all these allegations, is that Borneo Pacific benefits from rigged or flawed tender processes, which come at a significant cost to donors and the public. Furthermore, the goods being provided through these flawed tenders, it is claimed, have been found wanting.

All of which, it is argued, result in Borneo Pacific make engorged profits at the public’s financial and physical expense.

The consequences of this alleged abusive behaviour could not be more serious. Rather than the public health system eroding health inequalities, it is exacerbating them and missing the opportunity to make inroads into primary health care that could make a significant impact on the quality and quantity of life enjoyed by ordinary citizens. This comes at an enormous cost to family life and the national economy.

Part II of Profiting from Sickness, to be published next week, will turn the spotlight on some of Sir Sang Chung Poh’s business partners. These include some of the country’s top physicians; some of who have been investigated for abuse of position in the health system, with extremely worrying results.

Part III will look at Poh’s wider business interests, which extend into many sectors of the economy and provide some interesting connections, even reaching as far as the Prime Minister himself.

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The Midas Touch and Papua New Guinea’s kleptocracy

August 30, 2017 2 comments

Papua New Guinea’s new investigative website, PNGi Central, has published an in-depth examination of the career of Peter O’Neill that has largely escaped notice in the chaos of the elections.

Published in three parts – Secret Millionaire; The Big Skim; and Lift OffThe Midas Touch lifts the lid on how corruption thrives in Papua New Guinea and how politicians abuse their positions and milk the system to build considerable private fortunes.

The Midas Touch shows Papua New Guinea as a classic kleptocratic state ruled by a small elite or oligarchy, who exploit the nations natural resources and steal. They enrich themselves at the expense of the majority. This kleptocracy is currently led by Prime Minister Peter O’Neill.

Over the last twenty-years, O’Neill has abused his various political positions to enrich himself by building a network of companies that have benefited from government and foreign aid contracts, soft loans and broader policy decisions.

While in public office it is estimated that O’Neill has amassed a personal fortune of well over K150 million, all the while juggling complex conflicts of interest as his companies have benefited from government policy and spending decisions.

In addition:

  • O’Neill liquidated assets valued at more than K100 million in the lead up to this year’s national  elections;
  • His hidden corporate interests include shareholdings in more than 30 companies including hospitality, real estate, finance, retailing, air transport, communications, information technology, mining support, funeral services and construction;
  • His companies have been given contracts by the Australian government and Asian Development Bank, among others, and are frequently used by the mining and other foreign-owned industries;
  • He has directly benefited from fraudulent land and property dealings documented in two Commission’s of Inquiry; and
  • O’Neil has completely failed to comply with companies legislation on the timely, proper and complete filing of financial returns.

According to The Midas Touch, the story of O’Neill’s business empire starts in 1997, when O’Neill was plucked from obscurity and appointed to positions in various State Owned Enterprises by the notoriously corrupt Prime Minister, William Skate. O’Neill immediately started to use these positions to enrich himself and his his business partners.

It wasn’t all plain sailing though, O’Neill flirted with disaster when many of his early scams became the subject of two major Commission’s of Inquiry into the National Provident Fund and Investment Corporation. O’Neill survived however, and used his election as an MP and subsequent appointment to various Ministerial positions to substantially grow his business empire, an empire that has flourished since O’Neill seized the Prime Ministership in 2011.

Along this journey, O’Neill has surrounded himself with a small group of close associates, many of them Australian’s, who run his companies and with a coterie of businessmen and lawyers who have profited from his abuses and protected him from scrutiny.

Here is a quick summary of what you will find in the three parts of The Midas Touch.

Part 1. Secret Millionaire: How Peter O’Neill and associates have made a killing 

In the space of 20 years, Peter O’Neill has built a business and political empire. Secret Millionaire introduces us to the businesses and the players behind O’Neill’s rise and his early years as a student, accountant and struggling businessman before his big break when he is appointed head of various SOEs.

Part Two. The Big Skim: Peter O’Neill Inc meets Don Sawong and Tos Barnett

In 2003 and 2007 the O’Neill empire was rocked by two COIs. Part II of The Midas Touch looks into the unwieldy scams, and shams, it is alleged Peter O’Neill became an expert in.

Part Three. Lift Off: Prime Minister, Millionaire

As O’Neill’s political career went from strength to strength after 2011, so did his business empire. Part III of The Midas Touch looks into some of the more controversial deals and contacts that led O’Neill to become one of the richest men in PNG.

The faces behind some of PNGs illegal logging

August 18, 2017 2 comments

Chih-hao Chang, Hung Chin Ng and Sie Miew Tiong are the owners of Achim Agro Limited, a company accused by locals of illegally logging in East Sepik Province – see story below. The reports of SGS, the company that is supposed to monitor all log exports from PNG, contain no record of Achim Agro Limited.

Chang, who is Chinese, Ng and Tiong, who are Malaysian, are also the owners of two other PNG registered companies, Grace Foremost Limited and Wewak Cocoa Limited. All three companies were registered in 2016.

via Facebook

There is a Chinese Timber company “ACHIM ECO FORESTRY COMPANY” who has destroyed Turubu and has shifted their operations to Kauk in West Coast Dagua in East Sepik. They have destroyed and stolen a great deal of timber without paying the landowners and are now looking at grabbing our land by conning some of my relatives and KAIKAI man from SMAIN and BUT villages.

ACHIM have paid them lousy thousands of Kina to go in and harvest the timber. We have taken out a preventative order to stop them and we will be in court with them next week.

Governor Allan BirdKevin Isifu & Richard Maru, we need your help in removing this illegal company, grabbing land from ignorant land owners and making false promises to them.

Promises, promises: a decade of anti-corruption budgets and spending in PNG

August 18, 2017 1 comment

Anti-corruption suggestion box, Mombasa, Kenya (Marcel Oosterwijk/Flickr CC BY-SA 2.0)

by Grant Walton and Husnia Hushang on DevPolicy Blog

In Papua New Guinea, government responses to corruption have received a great deal of media attention over the past decade (see here and here). Despite this coverage, there is still much we don’t know about the state of the country’s anti-corruption agencies. Indeed, many struggle to provide the public with basic information about their activities. We could not obtain a copy of recent annual reports from the Ombudsman Commission, despite a request (frustratingly, you can view the covers but not the content of recent annual reports here).

To address this knowledge gap, our recent Development Policy Centre Discussion Paper tracks ten years of budgetary allocations and spending on key anti-corruption agencies: the Ombudsman Commission, the National Fraud and Anti-corruption Directorate, Taskforce Sweep, the Auditor-General’s Office and the Financial Intelligence Unit. In this blog we examine one of the three research questions we answer in the paper, namely: how have allocations for and spending on anti-corruption organisations changed over time? By comparing budgetary allocations and actual spending, we highlight the degree to which governments have fulfilled their budgetary promises.

PNG’s Ombudsman Commission is one of the few agencies in our analysis where budgeted and actual spending have mostly been in sync – that was the case until 2015 when allocations outstripped spending (Figure 1). Budgetary allocations for 2017 suggest the organisation’s funding will decline even more; on current projections the organisation will end the decade in the same financial position it was at the beginning.

Figure 1: Ombudsman Commission allocations and spending (2016 prices)

Located with PNG’s police department, the National Fraud and Anti-Corruption Directorate (Fraud Squad) plays a significant role in fighting corruption. Figure 2 demonstrates that spending on the Fraud Squad, despite its role in attempting to arrest the Prime Minister Peter O’Neill and other senior ministers, increased between 2008 and 2015. Yet there has been significant variation. Between 2011 and 2015 there were large gaps between allocations and spending, although the gap has been declining. Reduced spending in 2012 and 2013 is likely due in part to resources being reallocated to Taskforce Sweep, which was established in 2011. Budget allocations declined by 23 per cent between 2016 and 2017.

Figure 2: National Fraud Squad allocations and spending (2016 prices)

The third anti-corruption agency we examine is the Financial Intelligence Unit (FIU) – now known as the Financial Analysis and Supervision Unit – an agency with a mandate to investigate money laundering and terrorist financing. At the time the 2015 budget was announced, the media made much of the fact that the FIU was allocated less than the police band’s budget. Our analysis (Table 1) shows the difference in spending between these organisations was even worse. In 2015, in real kina 1.07 million kina was spent on the PNG police band and the FIU received 264,364 kina – so the police band received almost four times more than the FIU. For the two years data is available (2014 and 2015), spending on the FIU was less than half of allocations.

Table 1: Financial Intelligence Unit allocations and spending (kina, 2016 prices)

The Auditor-General’s Office is tasked with inspecting, auditing and reporting on accounts, finances and properties of government departments, agencies, and public corporations. Figure 3 shows that in 2012 the agency’s allocation rose above spending, and 2013 spending rose above allocations. By 2015, spending had declined to 21 million kina, and then increased slightly in 2016 to 22.3 million kina. However, funding is set to decline, with allocations reducing to 16 million kina by 2017; in real kina this is less than the agency was allocated at the start of the decade.

Figure 3: Auditor-General’s Office allocations and spending (2016 prices)

Figure 4 depicts the PNG government’s budgeted and actual spending on the short-lived but relatively successful Taskforce Sweep and the yet to be established Independent Commission Against Corruption (ICAC). After Taskforce Sweep’s role in the attempted arrest of Prime Minister Peter O’Neill, spending slumped sharply to 5 million and zero kina in 2015 and 2016 respectively. However, the amounts reportedly spent are far lower than allocations. While the O’Neill-Namah government quickly spent 7.5 million kina (non-budgeted) on the agency in 2011, since then the difference between allocated and actual spending has been significant. Just under one million (real) kina was allocated for the yet to be established ICAC in 2017. Thus, our analysis shows that the meteoric rise and fall of Taskforce Sweep was accompanied by unfulfilled spending promises.

Figure 4: Taskforce Sweep and ICAC allocations and spending (2016 prices)

To get a sense of the relative spending on each organization, Figure 5 compares actual spending over time (and allocations where spending data is not yet available) of each of these organisations. It shows that out of the agencies we examine, the Ombudsman Commission and Auditor-General’s Office are by far the most heavily funded. Traditionally, more has been spent on the latter than the former, although in 2017 this appears set to change, with the Auditor-General’s Office facing severe funding cuts. In comparison, other agencies receive paltry sums.

Figure 5: Spending on five anti-corruption organisations, 2008-2017 (2016 prices)*

*Actual spending solid lines; budgeted dashed lines. 2016 figures for Ombudsman Commission and Auditor-General’s Office from Final Budget Outcome (2016).

Figure 6 shows that overall spending on anti-corruption agencies has been less than allocations since 2012. Overall spending and allocations have been reducing since 2014; because budgetary allocations are made the year before (i.e., the 2014 allocation is made in 2013), this means that the PNG government was significantly reducing its commitment to anti-corruption agencies before Taskforce Sweep helped organise an arrest warrant for then Prime Minister O’Neill.

Figure 6: Total anti-corruption allocations and spending (2016 prices)*

*Total Anti-corruption Spending – Ombudsman Commission/National Fraud and Corruption/Auditor-General’s Office/Taskforce Sweep/FIU/Anti-corruption program Department of Finance

Amidst calls for the new government to establish an ICAC, these findings suggest anti-corruption activists and policy makers should be pressuring the PNG government to close the gap between budget promises (allocations) and actual spending. In addition, greater efforts are needed to ensure that spending on existing anti-corruption agencies does not continue to fall.

Grant Walton is a Research Fellow and Husnia Hushang is a Program Officer with the Development Policy Centre. This blog is based on the Development Policy Centre Discussion paper, ‘Promises, Promises: A Decade of Allocations for and Spending on Anti-Corruption in Papua New Guinea’ available hereCalculations for graphs and tables can be found here.


Note: We understand that it is now possible to get a hardcopy of recent annual reports from the Ombudsman Commission’s office.

Papua New Guinea land activist vows to battle for his people from Britain

August 9, 2017 2 comments

Leader of the Paga Hill seafront community Joe Moses, pictured in London, July 11, 2017. Thomson Reuters Foundation/Nicky Milne

Ruairi Casey for the Thomson Reuters Foundation

A land activist from Papua New Guinea at loggerheads with the police and developers in his home country has vowed to continue the fight for his community from Britain.

Joe Moses has accused PNG authorities of treating people unfairly in demolishing the Paga Hill seafront settlement in the capital Port Moresby to make way for a luxury hotel and apartments development and a ring road.

The government granted a lease to the Paga Hill Development Company (PHDC), a joint venture between local and international investors, to build on Paga Hill.

A Supreme Court ruling said the reclaimed seafront area was not included in the original lease but Moses said, unknown to the community, this land was leased by the state to developers during legal proceedings.

Moses, who features in a newly released documentary “The Opposition: Paga Hill“, said the settlement, dating back about 70 years, was home to about 2,000 people who had customary rights to the land and should have been allowed to stay.

“The whole community was a vibrant community,” Moses told the Thomson Reuters Foundation in London where he is seeking asylum while his wife and children remain in Port Moresby.

“I just miss home every day, every minute of the day when I’m here.”

POLICE DENY INTIMIDATION

Moses, a former university worker, said his clash with authorities dated back to May 2012 when he led a fight in the courts to stop development.

In October that year, he said a policeman arrived at his home seeking his arrest without charge and shortly afterwards he went into hiding in an army barracks with his family.

He stayed in Port Moresby but his concerns for his safety grew in 2014 when armed police forced out the remaining residents from the Paga Hill settlement and their homes were bulldozed.

“I realized they were still after me,” said Moses. “I was not free to go to public places, public gatherings; all my communications were tapped.”

The police, however, accused Moses of discharging a gun, resisting arrest and causing civil unrest.

In a statement to the Thomson Reuters Foundation, a police spokesman denied allegations of intimidation and accused Moses of seeking fame from an international audience.

“There is no threat whatsoever on Joe Moses. He can come home anytime he wants to. There has been and will be no intimidation,” the spokesman said in an email.

Moses said with the assistance of international NGOs he was able to secure a flight from Papua New Guinea to Panama in November 2016 and then onto Britain.

“The most important thing is I need to get my family out … we need to be safe somewhere while waiting for the situation to change,” he said.

Moses said he hoped he will be able to return to Papua New Guinea someday to continue his fight to get fair compensation for his community, many of whom are still living in tents on a relocation site without suitable water and sewerage facilities.

A PHDC statement said the company was “proud of having achieved the first privately-funded squatter settlement relocation in PNG” with the site handed over in 2014.

“The fact that the relocation site was officially handed over almost three years ago, as well as that many settlers have since on-sold and moved on, PHDC can in no way be reasonably held accountable for the current state of the relocation site, or for those that PHDC relocated,” PHDC’s statement said.

Moses, however, vowed to press on with his campaign.

“I know that I will face consequences, but someone has to do something … If it means life and death I will have to do this – because someone has to do something to help the people,” he said.

Transparency International cries foul over appointment of Duma

August 7, 2017 4 comments

In February William Duma was suspended now he is back at the very heart of government

In February Prime Minister Peter O’Neill suspended Ministers William Duma and Fabian Pok and announced a Commission of Inquiry into their role in the Manumanu military base and land scandal.

That Commission of Inquiry has never happened, but in the meantime the revelations about Mr Duma and his connection to various corrupt land deals have only intensified, as these stories illustrate:

But now, in one of his first acts as Prime Minister since the controversial elections, Peter O’Neill has reappointed Duma a Minister in his caretaker Cabinet. The Mt Hagen MP and United Resources Party Leader, has his hands back on the Petroleum and Energy portfolio and will also handle Housing and Urbanisation, Public Enterprise and State Investments, Transport, Agriculture and Livestock!

Transparency International is outraged, as we all should be. TIPNG is calling on the Prime Minster to keep his promise to the people, and revoke the appointment of Duma.

In a statement, TIPNG says Peter O’Neill, is on public record as making a clear commitment to the people that the estimated K2m Administrative Inquiry will examine the details of the Manumanu land deal.

TIPNG says so far, Mr O’Neill has fallen short of his own standards with no publication of the findings of the inquiry, and now the reappointment of Mr. Duma with no consideration of his promise to the people.

It says Papua New Guineans expect leaders to be cleared of all alleged serious wrong-doings before they are entrusted to make decisions which will affect the people.

Petition calls for ICAC within 100 days

July 27, 2017 1 comment

Source: ACT NOW!

Community advocacy group ACT NOW! has launched a petition calling on newly elected MPs to establish an Independent Commission Against Corruption within 100 days.

“Everyone knows corruption is a massive problem in Papua New Guinea”, says Campaign Coordinator, Eddie Tanago. “People are dying unnecessarily every day because of the rampant stealing and the mismanagement it causes.”

ACT NOW! says well resourced, permanent and politically independent, Commission Against Corruption [ICAC] is desperately needed.

“This new petition is urging our newly elected MPs to take responsibility and do something effective by immediately establishing an ICAC,” says Mr Tanago.

ACT NOW! says the 100 day timetable is achievable as all the legislation needed for an ICAC has already been drafted and the necessary Constitutional amendment was passed by Parliament in 2016.

It has been estimated as much as 50% of the government’s annual development budget is stolen every yearand police have said K1.5 billion went missing in 2016 alone.2 PNG is ranked in the bottom 20% of all countries for corruption by Transparency International.3

“The consequences of this corruption are dire. Vital health and education services starved of money and mismanagement and abuse further impede service delivery. Then there are all the illegal land deals that keep happening and illegal logging”, says Mr Tanago.

“Existing anti-corruption mechanisms have proven to be ineffective and a new body with full powers of investigation and prosecution is urgently needed”.

“In 2012, the incoming government promised to establish an ICAC as a major step in the fight against corruption. But over the next five-years it failed to fulfil that promise. Our new MPs must ensure they do better”.