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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.

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Australia’s aid policy and Papua New Guinea: Tackling cultures of corruption

September 23, 2015 1 comment


lobbying corruption

Introductory Statement to the Senate Committee on Foreign Affairs, Defence and Trade

Kristian Lasslett | International State Crime Initiative

The concern that my colleagues and I have with respect to Australia’s aid policy in Papua New Guinea, is that it is strongly driven by ideology and lacks a firm grounding in the empirical reality of PNG. In short, Australia’s current strategy appears to accept that aid should be directed towards creating policies and infrastructure that would make PNG a more attractive environment for business, which in turn will create the levels of growth and income essential to the country’s human development goals. However, this aspiration needs to be tempered with a much greater acknowledgement of the market distorting factors currently operating in Papua New Guinea, which the private sector is deeply enmeshed within, rather than a remedy to.

The reality is regardless of the sector you want to name, many businesses have no intention on providing goods and services at a price that would be dictated by a healthy functioning market economy. Rather, businesses are supplying goods and services in order to charge exorbitant prices that in effect defraud the Papua New Guinea government and Papua New Guinea citizens of their finite revenues. These contracts, projects, services and goods frequently contravene the Public Finance (Management) Act, the Criminal Code, the Land Act, the Investment Promotion Authority Act and various other laws, with impunity.

For example, we have seen numerous Commissions of Inquiry launched in Papua New Guinea, led by esteemed members of the judiciary, which have reached damning conclusions about the cultures of corruption currently pervading the private and public sector.

Most recently, the Commission of Inquiry into Special Agricultural and Business Leases concluded, and I quote:

‘With corrupt government officials from implementing agencies riding shotgun for them, opportunistic loggers masquerading as agro-forestry developers are prowling our countryside, scoping opportunities to take advantage of gullible landowners and desperate for cash clan leaders’.

Of similar concern, a Commission of Inquiry into the Department of Finance found that the legal industry in Papua New Guinea was working hand in glove with state officials to settle out of court vexatious claims, for many of millions of dollars, with the proceeds being shared among the criminal conspirators.

And before that inquiry, we had the well-known Commission of Inquiry into the National Provident Fund, which in this case uncovered criminal conspiracies to defraud workers of their superannuation. Corporate managers, private sector consultants and government officials were all involved, a number of whom have been found guilty of misappropriation under the Criminal Code and sentenced to prison.

If we turn our attention to the often judicious reporting provided by the Public Accounts Committee and Auditor General’s Office we find similarly damning conclusions. For example, following an inquiry into the Department of Lands and Physical Planning, the Public Accounts Committee concluded in 2007, and I quote again:

‘The Department of Lands and Physical Planning has become an arm of private enterprise [who is] responsible for allocating Leases regardless of the Law and to the very considerable cost of the State and the citizens of Papua New Guinea’.

So it might be said, in contrast to the thrust of Australia’s aid policy, Papua New Guinea does not suffer from a lack of private sector involvement, it suffers from a surplus of private sector involvement, which has led to a breakdown of functioning markets, massive price distortion, misallocation of resources, misappropriation on a grand scale and grave human rights abuses, particularly in the extractive industries. And I should emphasise here, Australian businesses are heavily involved in the graft and abuse.

So at present Australia’s aid policy places the cart before the horse. Serious attention needs to be devoted to the delivery of aid in ways that can build capacity and environments that rid both the private and public sector of these pervasive cultures of corruption and lawlessness, that lead to misappropriation, price distortion and human rights abuse. This will require a significant investment in civil society, a sector which can legitimately claim to be desperately underfunded and weak. It is our experience that a strong civil society helps keep the public and private sector to account, in a way that can support both human development goals and markets that are more responsive to consumer needs and human rights.

This agenda will demand significant aid investment in education and capacity building at all levels, it will also require the development of new and meaningful connections with different elements of civil society, ranging from NGOs through to higher education institutions and the media. And of course, there is a deep reservoir of experience within the Auditor General’s Office, the Public Accounts Committee and the Ombudsman Commission that could be drawn on. All in all, it will require an extensive process of consultation, which is sensitive to the genuine efforts being made within the PNG government to address these issues.

In our submission to the committee, the International State Crime Initiative has attempted to the sketch some ideas for constructive paths forward that can create the type of context and environment which will ensure future investment and private sector involvement aids human development, good governance and human rights objectives, rather than hinders them. And I should emphasise these suggestions and reflections are built off over a decade of trenchant research into the criminal forms of misappropriation and human rights abuses, which I noted earlier.  Thank you.

Download the International State Crime Initiative’s full submission to the Senate Committee:

Addressing development by challenging impunity: The social impact of state
and corporate crime on Papua New Guinea – Sub 27_ISCI (400kb)

Public Consultation on the Review of Laws Governing the Auditor General

September 1, 2015 Leave a comment

The Office of the Auditor General has a vital role to play in combatting the corruption that plagues our public finances. The AG’s primary function is to inspect, audit and report at least once every year on the public accounts of Papua New Guinea and the use of all public moneys and property.

But how well is the AG doing its job?

Now is your chance to have your say: Auditor General DISCUSSION PAPER August 2015 [pdf file – 2.3MB]

Executive Summary

“Auditing for impact” is a compelling statement encompassing the directive goal and vision assurance of the Auditor-General to the People of Papua New Guinea. The output of the audits of Auditor-General is more than a validation of financial statements or the effectiveness of internal controls. It extends beyond that. It is a formidable measure for the People, to ensure that Parliament can hold and call managers of the people’s resources to account for their stewardship and effective, efficient and economic management of these resources. The People of Papua New Guinea deserve the very best.

“Auditing for impact” ensures the constitutional guarantee conferred on the Auditor- General to perform the audit tasks for People is secured and the obligation on the government to be accountable to the People is imposed. “Auditing for impact” allows the Auditor-General to contribute to fostering greater public trust and confidence in all levels and institutions of government. The lives of the People will improve for the better and accountability and good governance realistically measured. You are entitled to know that the government can be held to account for the public resources entrusted to them on your behalf. The Auditor-General is that critical link in the chain of accountability. It is a key pillar of a healthy nation. Today, the focus is on achieving beneficial change. That change is now.

That being the vision, the Office of the Auditor-General mission is “to provide independent and quality assurance over the financial management of government and public entities through our audit activities.

A robust, strong and properly resourced Office of the Auditor-General is needed, in order to be credible and independent. Your participation and responses to the Discussion Paper will assist in the process of our legislative review which is aimed at strengthening the audit mandate of the Auditor-General by having in place proper structures and resources necessary to ensure that appropriate and necessary audit toolkit is in place.

Ways You Can Participate In Our Discussion Forums

In order to achieve the above objectives, the Office of the Auditor-General intends to consult broadly and widely within and external to the National Government. The nation has been notified through selected national mediums of the Consultation Timelines and forums happening in selected regions.

Given funding constraints, the Auditor-General and the Office of the Auditor-General are unable to cover all Districts and Local Level Governments (Urban and Rural). However, the invitation is open and extended to those of you there to join the discussions at the selected locations.

In responding, you may wish to highlight other potential reforms, not identified in the Paper which could improve public audit by the Auditor-General and enable the Office of the Auditor-General to perform effectively and efficiently in discharging functions, duties and powers conferred on him.

How to Participate and Have Your Say: Comments and Submissions

This Discussion Paper officially commences the Consultation process. The period begins on the 24 August, 2015 and ends on 23 November, 2015.

You are invited to make comments and submissions and provide any other relevant information in response to this Discussion Paper. Where appropriate, please provide evidence to support comments.

The closing date for providing comments on this discussion paper is 24 November, 2015.

All feedback to the issues highlighted for discussion, will form part of the Auditor-General’s evaluation in his submission to the relevant authorities.

Former Public Curator loses defamation case against The National

July 24, 2015 1 comment

In 2005 the Auditor General’s Office published a damning report on the Public Curator’s Office. It found that private estates were being serially mismanaged by the office, and as a result a range of predatory companies were stealing the inheritance of Papua New Guinea citizens.

The National published a story on the Auditor General’s findings, drawing specific attention to the incompetence of the then Public Curator Paul Wagun.

Key statements contested by Wagun in a recent defamation action include:

“Wagun should go”

“Curator incompetent, says Auditor-General’s Office”; and

“The Auditor-General’s Office (AOG) has urged the Justice Minister and Attorney-General to replace the Public Curator Paul Wagun with someone competent.”

The National Court has rejected Wagun’s claims and upheld the The National’s assessment and the report’s findings.

In his judgement, Justice Kandakasi observes:

“Since, Mr. Wagun was the Public Curator during the period of the Auditor’s investigations and its report; he was covered and included in the Report and its recommendations. If he was an exception to what the Report was critical of and that he had the necessary credentials, experience and more so the competence and a person of integrity to deliver on the powers and functions of the Public Curator’s Office, I have no doubt in my mind that the Report could have made that clear. The fact of the matter however is that, the Report made no such exception”.

Justice Kandakasi continues:

“If the Report was wrong as against Mr. Wagun, it was in Mr. Wagun’s interest to have that corrected before the Report could be made public or soon thereafter by taking the appropriate steps. Mr. Wagun adduced no evidence of having done that. It therefore remains a fact that, the Auditors Report has been accepted as accurate or correct by all concerned or affected or had an interest in the Report, in absence of any evidence seriously challenging the accuracy of the Report”.

Justice Kandakasi concludes The National were right to convey the Auditor General’s findings. He also observes The National fairly represents the Auditor General Office’s conclusions:

“The wording in paragraph 1.3 [of the audit report] was also capable of conveying the meaning or understanding or impression that the Public Curators, which included Mr. Wagun, were not appropriately qualified, experienced, competent and trustworthy enough to occupy the position. Hence, the position and or Office of the Public Curator needed a person, other those who have occupied the position up to time of the Report and one who has the necessary qualification, experience, competence and integrity, to properly carry out the powers and functions and duties and responsibilities of the Public Curator to restore confidence and integrity in the office”.

As a result, costs were awarded to The National and Wagun’s defamation claim was dismissed:

“Ultimately, I find that Mr. Wagun has failed to establish his claim in defamation against the Newspaper. Accordingly, I order a dismissal of his claim and that he pays the Defendants’ costs, which cost be taxed if not agreed within 14 days from today”.

Auditor General: DSIP ineffective and of limited value, payments should be suspended

October 6, 2014 2 comments

The Auditor General has presented to Parliament his report on the District Service Improvement Program for 2012/13.

The report concludes there has been “ineffective spending of DSIP grants”, “potential misuse of DSIP funds”, “limited accountability” and “likely instances of fraud and misappropriation”.

The Auditor-General says these problems are the result of “a pervasive breakdown in the DSIP governance framework”.

“The widespread and pervasive problems… show the program needs significant changes to its management and implementation”.

The Auditor’s key recommendation is that no further finds should be released to individual Districts until they can show a process of strategic planning and implementation of a sound governance structure.

Download the full Auditor Generals Report [1.9MB]

Other key findings include:

  • “There has been limited value from the DSIP funds granted when compared against the original investment criteria”
  • “Significant underspending on water supply and sanitation, law and justice, rural communication and electrification and health”
  • “Pressure from local MPs to ignore governance procedures to distribute funds to politically expedient projects”

The DSIP was introduced in 2007 to take a holistic approach to service delivery at a District level. The program was to include all stakeholders including MPs, National Departments and Agencies, Provincial Administrators, District Administrations and the people themselves.

The Auditor General recommends

  • “Substantial amendments are needed to the framework for administering and governing funding of the DSIP
  • “Education and assistance is needed in the Districts…to reinforce the need for good governance and planning in spending pubic funds”
  • “Better processes of accountability are needed to ensure DSIP funds are well pen incuding the application of penalties for non-compliance

The auditors report is based on an audit of 22 of the 89 Districts and tracked the spending of DSIP funds totalling K532 million.

Over 25% of the spending, over K116 million, was “on projects  where expenditure is unsupported or projects incomplete / abandoned”

“Over K39 million spent on other non-DSIP related expenditure. Over K58 million spent on vehicles and heavy equipment with limited application towards DSIP objectives”

According the the national budget each Disrict is supposed to revive K14 million in DSIP funds each year, K66 million in total 2008 – 2012. However the Auditor General found DSIP amounts received by each of the 22 District’s studied varied significantly – from K16 million (South Bougainville) to K36 million (Goroka) – see graph below.

No explanation was found by the auditor for the discrepancies and the report does not draw any conclusions on the reasons for the apparent discrimination between Districts.

graph

Some Districts have also received substantial “unidentified deposits” into their DSIP bank accounts totally outside the DSIP. The largest of these unidentified deposits are K4,278,580 (Usino Bundi) K5,291,500 (Yangoru Saussia) K4,200,060 (Kainantu) K1,299,500 (North Waghi) and K1,000,000 (North Fly).

Here are examples of some of the failed projects uncovered in the audit:

1

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3

 

4

5

Who is going to deliver us from corruption?

September 13, 2013 2 comments

pkay

Well guys. We can talk and shout and fret in such beautiful prose all we like. The thing is, if the relevant authorities do not do anything, this and similar swindles will just continue and get better, not worse. Corruption is worse than HIV and AIDS. At least with HIV-AIDS them that suffer and die from it inflict the curse upon themselves and others unknowingly in most cases. With corruption, a few culprits afflict and affect the curse, suffering and injury upon the whole population in the country, including babies and those yet to be born.

So, who do we look to for redemption and deliverance?

What’s Ombudsman Commission doing? Every indication is the Commission is dying slowly but surely from euthanasia. There is no cure for euthanasia because it is self-inflicted, a death by one’s own voluntary choice.

Is Auditor-General going to look into this? May be not because all foreign and national employees need their jobs. And anyway, they do compliance audits for the past years which is stale and almost history by the time their reports are tabled in Parliament.

And the Public Accounts Committee? The Chairman has been rather boisterous recently, otherwise it is a silent and timid fiefdom. The Chairman’s timidity only explodes in the face of helpless public servants, including females that cannot defend themselves. Every inquiry by PAC has been but a slap on the elbows of corrupt heads of departments and other public and statutory bodies. Elected leaders are hardly implicated in AG’s Reports. Em compliance audit work taxol ia.

What about the CID? I think we all know the answer to this and the Sweep Team. Allegations against some leaders are more likely to be swept under the carpet than make and build cases to prosecute the culprits in tribunals or courts.

TI-PNG. These initials stand for This Is Papua New Guinea, a country where you can get away with murder and corruption in broad daylight. Transparency International PNG chapter has gotten a bit too long in the tooth. Occasionally they come out from the crevice to say something or other almost as a perfunctory exercise.

And PNGexposed? We can talk until the cows come home. Or wait until mother duckling lays a golden egg. In the mean time the two legged human beings get more robust, better and smarter but may be not elusive. The only reason why they may be elusive is because our oversight agencies, bodies and authorities are not doing their job. Some of these bodies and authorities are mentioned above.

PNG National Parliament: the Parliament with 111 MPs we send there every five years is potentially the most portent and powerful institution and a single body of people that can best scrutinise and hold the Executive to account. But we all know that over the years the Executive has cannibalised and diminished the role of the Legislature to a rubber stamp. The Parliament has become impotent almost to the extent that it has lost it’s visibility and legitimacy. The bulk of the MPs are horded, huddled and sat on one side of the House. They are singing from the same hymn book, drinking from the same chalice and are stirring and eating from the same wok. The back-bench member is an extinct species. The Opposition is but just a voice in the wilderness no matter how loudly or how often Belden or Sam might shriek or shout.

Without serious, proper and deliberate scrutiny of the Government by Parliament the people’s voice is silenced. And the silence has been deafening not just with this Parliament but many past Parliaments as well. The Executive rules the roost. It can’t be put or seen any more clearer than this – and therein lies the problem including the beginning and any possible end of corruption.

The colour and smell of money is to a corrupt leader what the sight and smell of blood to a shark is under water. They can’t resist being attracted to it and they can never have enough of it. I guess the only differences are one is under water and the other is under the sun for all of us to see. And the shark does not cause any menace to its species whereas in our case the whole country and the people suffer.

I don’t want to talk about Peter O’Neil or the Cragnolinis or LNA. May be O’Neil is not the problem. The people that elected him and the system that gave him a landslide victory is the real problem. So too for other MPs. We must cop the blame more equally than MPs because we put them there in the first place. Something must be done to improve the flawed system which is taken advantage of or abused.

In the competive business world the Cragnolinis and LNA may not see getting contracts as corrupt but, rather, as winning a business advantage over others however unfair it might be.

If PNG was a ship it would be easy to pull up anchor and sail to calmer, more pristine, peaceful waters. Unfortunately we may be stuck for a long time for the reasons we all know well. May be there is a good Captain in waiting somewhere that will deliver us like Moses in the Bible did his people.