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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 DEMANDS HARSHER PENALTIES AGAINST CORRUPT LEADERS

June 6, 2015 1 comment
ombudsman

Ombudsman Phoebe Sangetari says many feel that penalties are insufficient and they want harsher penalties imposed upon leaders who err

From Scott Waide, My Land My Country

Public forums being held by the Ombudsman Commission to seek views on changes to their enabling legislating have drawn strong calls for harsher penalties on corrupt leaders.

The Ombudsman Commission is holding the forums all over the country to seek public input on changes to the laws that govern them. The OC, also the arm of government that administers  leadership tribunals, has received wide ranging calls for stronger penalties on leaders found guilty of offences including theft of public money.

Ombudsman, Phoebe Sangetari, points out that it’s a reflection of  general public sentiment stemming from laws that have not evolved with the changes in the country.

“many feel that the penalties are insufficient and they want harsher penalties imposed upon leaders who err.”

The laws governing the Ombudsman Commission were made 40 years ago and are still being used today despite their ineffectiveness in the 21st century.

Given the financial muscle of today’s public office holders, some sections of the laws are useless.

For instance if a leader is found guilty but not dismissed, the leadership tribunal can fine him a maximum of K1000 for each offence or impose a K500 kina “good behavior” bond.

The first challenge is to get the legislative changes finalized. Challenge number 2 – and perhaps the most important is to get the politicians to agree to laws that may come back to bite them  sometime in the future.

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.

The baobab tree infested with Corruption

June 28, 2013 2 comments

pkay

The whole Independent State of New Guinea Papua, the country, the nation, is a baobab tree infested with Corruption (with a capital “C”). And like a baobab tree the National Government with the national leaders are the base and thick trunk and the Provincial Governments led by Governors and provincial leaders are the rotting angular branches that are infected because the trunk is infected..

WHAT to do? Well, corruption of the kind we see in PNG has developed a life – a growing industry – of its own. So much so that the practices we see are so blatantly blurred that it is probably no longer possible to determine what is right from wrong; or good from bad; or what we knew as grand corruption from a daily, seemingly acceptable transaction.

It is awfully difficult to weed out corruption if the leaders, authorities and the institutions that are supposed to guard against it are in fact the worst perpetrators and promoters. Their lack of will and decisive actions and evasive explanations almost give legitimacy at every level of government and in all aspects of governance.

Don’t let’s allow politicians to fool us by well sounding statements that they are trying to do something to stem corruption. NOT only is corruption here to stay but it has found fertile ground in willing participants and can only grow. It will keep growing because the powers that be and all the mongrels that facilitate and enhance it and who benefit from it know that it pays to be corrupt in PNG.

It seems it pays to be corrupt until the People, the masses, get sick and tired of it. That is what the Arab Spring was all about. May a Melanesian Dawn is in the offing somewhere down the bush track.

ICAC is a red herring.

The Ombudsman Commission can’t possibly see or notice what is going on at ground level because they are perched in the Ivory Tower in the middle of Port Moresby CBD.

Auditor-General is a “dohore” body of 8am to 4.06pm PNGns and Asians that awaken their survival instincts only after the horses have bolted out of the corrals and their reports are essentially compliant reports that only hurt any offenders over the knuckles.

It makes you feel like crying when you see women, mothers in the market stalls from Boram to Buin and Buka; from Malaoro at Gordons to the Goroka Market; from Tari to Telefomin or from the street vendors trying to pawn Chinese made items to the ladies with dishes of scorns, omelettes on their heads at refueling service stations trying to make a quid.

Corruption is a disease. If it is not cured it will eat PNG’s heart and soul away. It’s a disease far worse than HIV-AIDS because it affects even those that do not participate or come into contact with the one’s involved in it. It also leaves the country in a very sad predicament because at least with

Corruption we can take legislative, criminal and policy actions and do something about it. With HIV-AIDS there is no known cure really.

Corruption is right up there with three most “profitable” and noticeable growing industries in this country:

  1. Security Services
  2. Corruption
  3. 
Prostitution

Seventeen months but still no justice for the people of Oro

June 4, 2013 2 comments

It is now 17 months since we first exposed the criminal misuse of Restoration Funds in Oro Province but, despite the attentions of the police, Ombudsman Commission and local politicians, there has still been no justice for the long suffering people.

This is how we first exposed the scam:

Within days we were told the police were to make arrests: Sacked financial controller to be arrested for fraud

But still the revelations about the extent of the corruption kept coming:

The police stepped up their investigation: Oro duo wanted for stealing property

Within weeks the of the exposure, the Ombudsman Commission promised an investigation: Ombudsman Commission to probe Oro disaster funds.

There was even a short documentary on the scandal: Rising from the Rubble.

Yet we are now 17 months on and there is still there is no justice for the people of Oro Province and our politicians are still crying their  crocodile tears:

Spending questioned at PNG Authority tasked with cyclone rehab

Radio New Zealand

Questions have been raised about a body set up to help fix damaged infrastructure in Oro Province after the devastating Cyclone Guba hit Papua New Guinea in 2007.
The Oro Restoration Authority was established by the government as a result of the cyclone, given nine million US dollars and tasked with restoring basic services to the villages.
The MP for Sohe in Oro Province, Delilah Gore, says the cyclone, which killed at least 170 people, destroyed many bridges, roads, and basic services.
She says in her electorate they haven’t seen any improvements.
“The Restoration Authority was put in place by the previous government, nothing has been done so far so I raised it on the floor with the hope that this government will take note of that and revive the restoration and do new appointments, give money so they can restore services, especially the infrastructure.”
The Governor of Oro Province, Gary Juffa, says he has already taken steps to investigate the Authority and says if people are found to have misused funding, they’ll be dealt with accordingly.