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Posts Tagged ‘Public Accounts Committee’

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)

Paki’s departure from PNGDP/OTML is a good thing Mekere!

October 4, 2013 2 comments

Is the government’s grab for PNGSDP/OTML a good thing? Its hard to say. What about the departure of Rex Paki from its Board of Directors? To this we can issue a much more definitive yes. While Sir Mekere Morauta may have slammed his replacement by Isaac Lupari, Papua New Guineans should breathe a sigh of relief.

In October 2012 PNGexposed raised serious concerns about Paki’s position on the board following the release of a report on the Paga Hill demolition by the International State Crime Initiative. For our efforts, we were slammed by Transparency International PNG Chairman, Lawrence Stephens, who is also a senior manager at PNGSDP.

He claimed:

“Come on oh nameless ones! Take some deep breaths and ask yourselves if you are really prepared to publicly defend the rights of Papua New Guineans and if it is really necessary for you to throw stones from the shelter of annoninimity. Much as you might like to claim the oppositie there is nothing astonishing in any loyal Papua New Guinean seeing the difference between accusations and convictions. Shame on you, whoever you are”.

The irony is we have men like Stephens and Morautu being held up in the international media as anti-corruption warriors, but what did they do about Rex Paki for all these years?

For those unfamiliar with Paki’s past, here is our original post from 2012:

Over the past 20 years Paki has appeared before two Commission of Inquiries (Finance Department and National Provident Fund), two Public Account Committee Inquiries, and a Supreme Court case where he was slammed by the full court.

Paki was intimately involved in the Paga Hill development in Port Moresby between 1997-2000, a development which has recently been making headlines for forced evictions and corrupt property deals – link.

In January 2004 the Public Accounts Committee reprimanded Paki’s company Ram Business Consultants (RAM) for issuing an “empty cheque” to the Accountants Registration Board, and then “practicing without … formal registration”.

Two years later in a separate investigation – which Paki attempted to block – the PAC found that over an 18 month period (1998-2000) the Public Curator’s Office had paid RAM K1,561,062 (approx US$640,000), without the existence of a contract, proper invoices, or evidence that any work had been done.

Two Commission of Inquiries (COI) also found reason to censure RAM. Following its first appearance, RAM was accused by the COI of receiving “improper benefits” and charging clients “excessive” fees; in the firm’s second appearance, the COI found that RAM had substantially inflated a cash-flow projection, so a prominent client could amplify his damages claim against the state.

In light of these PAC/COI findings, it is perhaps not surprising that most recently in an appearance before the Supreme Court, Salika DCJ, Gabi J and Hartshorn J, described Rex Paki as “evasive and dishonest”, following Paki’s extraordinary efforts to frustrate the process of discovery (Paki was being sued for allegedly overpaying himself as liquidator of Motor Vehicle Insurance Ltd).

Those interested can access the original story in full here:

A second article by Dr Kristian Lasslett:

The debate with Transparency International PNG can be viewed here:

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.

Madang Corruption Scandal: All laws, decisions null and void

August 20, 2013 3 comments

Jeffrey Elapa

ALL decisions, including laws, appointments and contracts by the Madang provincial government over the past 20 years are null and void, the Public Accounts Committee inquiry revealed yesterday.

The inquiry has uncovered irregularities and corrupt dealings of the Madang Development Corporation, the business arm of the provincial government, besides other serious financial discrepancies and illegal transfers and sales of land and properties.

Chairman of the inquiry, John Hickey, said the Auditor-General report of 2011-12 found that appointments of several boards such as that of the Madang Development Corporation and the Madang Cultural Bureau, any laws and legislation passed, appointments made and contracts awarded by the provincial government have never been gazetted as there were no copies of all decisions for the past 20 years.

“I’m told the Madang provincial government has not produced any provincial gazette since 1994,” Hickey said.

“This means any bills and laws passed by the provincial government that has not been gazetted is illegal and unenforceable.

“This puts you in a serious legally sensitive situation that would cost the provincial government millions.

“It is the gazettal that makes it become law and it is lawful to execute and therefore over the past 20 years any decisions are null and void, including the appointments of boards of Madang Development Corporation, other boards and contracts that have been awarded.

“The Madang Cultural Bureau board also is illegal although they claim themselves as a board. Now we direct you to tell them that they are not members of the board,” he told administrator Bernard Lange.

He said there was a recent Lands Board appointed by the provincial government and if there are no gazettal of the appointment, that board is also illegal.

PNG Inquiry Into Madang Government Uncovers Big Issues

August 18, 2013 4 comments

Update to on the corruption in the Madang Provincial Administration

Committee finds defects, failures, weaknesses largely unaddressed

By Jeffrey Elapa

The Public Accounts Committee (PAC) inquiry into Papua New Guinea’s Madang provincial government yesterday found a serious lack of accountability and reporting.

The inquiry, citing an Auditor-General report of 2011 and 2012, has found gross abuse of public funds while the province lacked accountability issues.

PAC chairman John Hickey said the province has breached the Public Finances (Management) Act, Appropriation Act and the Financial Instructions.

He said the committee has carefully studied the audit report for 2017-10 and found that the provincial government has made slight improvements in a few areas but generally the defects, failures and weaknesses  remain unaddressed.

“Today, we consider the state of provincial accounting and reporting and governance in 2011,” Hickey said when resuming the inquiry.

However he said the report indicated that the province failed to furnish financial statement.

A statement from the provincial government was not correct and has errors such as the statement of balance not being certified.

In 2011, the reconciled balances of the provincial revenue and grants revenues did not agree with the revenue fund balance, while other inconsistencies were identified.

The PAC found other irregularities such as funds totaling K805,000 [US$341,682] not being properly acquitted.

It was revealed that one officer in the provincial government was paid more than K388,508 [US$164,902] as advance but did not acquit the funds, which is illegal.

Hickey directed that those officers who received these funds be charged and repay the money within 14 days.

It was also found that funds have been used outside the budget while the province lacked monthly budget reviews and reporting, meaning that it failed to monitor the budget.

Hickey said the reports were not correct while the province lacked competent paying and receiving officers as casual and retired officers were engaged to carry out the duties.

He said revenue collection was not done properly as they do not have records while the 2011 records indicated an under-collection of K97,400 [US$41,341] from liquor licenses against the budget while there were not database to monitor fees.

“It seems clear that budget control, revenue collection and accounting is in a mess,” Hickey said.

“The law is not obeyed, criminal activities exist, no oversight is in force, public money and properties are treated with contempt and still the PA (provincial administrator) and treasurer hold the positions. All these are clear breach of financial instructions.”

Hickey has directed that a full report containing accounts of fees collected from each district is submitted to the committee.

The inquiry also announced that, because the provincial government failed to properly gazette decisions since 1994, all laws, appointments and contracts since that time are now null and void.