Performance Audit on the Effectiveness of the Management of the Log Export Development Levy

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    Performance Audit on the Effectiveness of the Management of the Log Export Development Levy for the fiscal years
    2012 – 2015.

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  • Performance Audit Report on the Effectiveness of the Management
    of the Log Export Development Levy in Papua New Guinea

    Auditor-General’s Office of Papua New Guinea

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  • Performance Audit on the Effectiveness
    of the Management of the Log Export
    Development Levy for the fiscal years
    2012 – 2015

    Auditor-General’s Office of Papua New Guinea

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  • Telephone: 301 2203 Fax: 325 8295 Website: www.ago.gov.pg Email: agopng@ago.gov.pg

    OFFICE OF THE AUDITOR-GENERAL
    29 September, 2017

    The Honourable JOB POMAT, MP
    Speaker of the National Parliament
    Parliament House
    WAIGANI

    National Capital District

    Dear Mr. Speaker,

    In accordance with the provisions of Section 214 of the Constitution of the Independent
    State of Papua New Guinea, and the Audit Act 1989 (as amended), I have undertaken an
    audit examining the effectiveness of the management of the Log Export Development Levy
    within key government agencies in Papua New Guinea.

    I submit the report of this audit and the report is titled “Performance Audit on the
    effectiveness of the management of the Log Export Development Levy in Papua New
    Guinea.”

    Following its tabling in Parliament, the report will be placed on the Auditor-General’s Office
    Homepage-http://www.ago.gov.pg

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  • Contents
    CONTENTS ………………………………………………………………………………………………………………………………………………… 7
    ACRONYMS AND DEFINITIONS ……………………………………………………………………………………………………………………………………………………………………………10
    SUMMARY AND RECOMMENDATIONS ………………………………………………………………………………………………………………….11
    INTRODUCTION ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………….11
    OVERALL CONCLUSION ………………………………………………………………………………………………………………………………………………………………………………………..11
    KEY AUDIT FINDINGS BY CHAPTER …………………………………………………………………………………………………………………………………………………………………….12
    Administration and Processing of the Log Export Development Levy (Chapter 2) ……………………………… 12
    Project Funding Requirements and Processes (Chapter 3) ……………………………………………………………. 13
    Monitoring and Reporting (Chapter 4) ………………………………………………………………………………………………… 14
    RECOMMENDATIONS …………………………………………………………………………………………………………………………………………………………………………………………………………………………..14
    1. INTRODUCTION ………………………………………………………………………………………………………………… 16
    POLICY FRAMEWORK……………………………………………………………………………………………………………………………………………………………………………………………………………………………16
    National Forestry Policy …………………………………………………………………………………………………………. 16
    LEGISLATIVE FRAMEWORK ………………………………………………………………………………………………………………………………………………………………………………….16
    Forestry Act 1991………………………………………………………………………………………………………………………………. 16
    Customs and Tariff Act 1990 and Customs Act 1950 …………………………………………………………………….. 17
    Public (Finances) Management Act …………………………………………………………………………………………………….. 17
    Administrative Guidelines for the Management of the LEDL …………………………………………………………. 17
    PNG Forestry Authority (PNGFA) ……………………………………………………………………………………………… 18
    Society Generale de Surveillance Group (SGS)…………………………………………………………………………….. 18

    THE AUDIT………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..19
    Audit Rationale ………………………………………………………………………………………………………………………………… 19
    Audit objective, scope and criteria …………………………………………………………………………………………… 19
    Audit Methodology …………………………………………………………………………………………………………………………… 19
    2. ADMINISTRATION AND PROCESSING OF THE LOG EXPORT DEVELOPMENT LEVY ………………………. 20
    LEDL CALCULATIONS AND BILLING PROCESSES ……………………………………………………………………………………………………………………………………………..20
    LEDL Calculation Rates ………………………………………………………………………………………………………………………. 20
    LEDL Billing Processes …………………………………………………………………………………………………………………………………….. 21

    LEDL Collection and Transfers …………………………………………………………………………………………………………….. 22
    LEDL Collection Procedures ……………………………………………………………………………………………………………….. 22
    LEDL Transfer Procedures …………………………………………………………………………………………………………………. 22
    LEDL Revenue Collections ………………………………………………………………………………………………………………… 22

    CONCLUSION ………………………………………………………………………………………………………………………………………………………………………………25
    RECOMMENDATION 1………………………………………………………………………………………………………………………………………………… 26
    Agency Response ………………………………………………………………………………………………………………………………. 26
    Auditor-General’s Office of PNG| Performance Audit Report – Log Export Development Levy
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  • RECOMMENDATION 2………………………………………………………………………………………………………………………………………………….. 26
    Agency Responses ………………………………………………………………………………………………………………………………. 26
    RECOMMENDATION 3………………………………………………………………………………………………………………………………………………….. 26
    Agency Response ………………………………………………………………………………………………………………………………… 27
    RECOMMENDATION 4………………………………………………………………………………………………………………………………………………….. 27
    Agency Response ………………………………………………………………………………………………………………………………… 27
    3. PROJECT FUNDING REQUIREMENTS AND PROCESSES ……………………………………………………………..28
    LEDL PROJECT PROPOSALS AND FUNDING ………………………………………………………………………………………………………………………………………………………. 28
    PROCEDURES FOR PROJECT SUBMISSION AND APPROVAL…………………………………………………………………………………………………………………………….. 28
    Project Submission and Documentation ……………………………………………………………………………………………….. 28
    Approval of LEDL Project Submissions ………………………………………………………………………………………… 29
    Meeting Minutes of LEDL Committee …………………………………………………………………………………………………… 30
    Accounting Records…………………………………………………………………………………………………………………………….. 30
    APPLICATIONS OF LEDL TRUST FUNDS FOR PROJECTS …………………………………………………………………………………………………………………………………. 31
    Applications of funds inconsistent with LEDL requirements ……………………………………………………………. 31
    Details of LEDL Payments made missing ……………………………………………………………………………………… 32
    K5 Million LEDL funding limit ……………………………………………………………………………………………………………….33
    LEDL Payments in 2015 ………………………………………………………………………………………………………………………..33
    CONCLUSION …………………………………………………………………………………………………………………………………………………………………………………………………………. 35
    RECOMMENDATION 5………………………………………………………………………………………………………………………………………………….. 35
    Agency Response …………………………………………………………………………………………………………………………………35
    RECOMMENDATION 6………………………………………………………………………………………………………………………………………………….. 36
    Agency Response ………………………………………………………………………………………………………………………………… 36
    4. MONITORING AND REPORTING ……………………………………………………………………………………………37
    Project Monitoring and Evaluations …………………………………………………………………………………………… 37
    Project Completion Certifications ………………………………………………………………………………………………. 37

    Log Export Development Levy Committee …………………………………………………………………………………… 37
    PNG Forest Authority ………………………………………………………………………………………………………………………….. 38
    District Administrators ………………………………………………………………………………………………………………………… 38
    RECOMMENDATION 7………………………………………………………………………………………………………………………………………………….. 38
    Agencies Response……………………………………………………………………………………………………………………………… 38
    APPENDIX 1: LEDL COLLECTION FOR THE YEARS 2012 – 2015 ………………………………………………………………………39
    APPENDIX 2: FLOW CHARTS – PROJECT SUBMISSION AND APPROVAL …………………………………………………………40
    APPENDIX 3: FLOWCHART – PROJECT TENDERING AND PAYMENT ………………………………………………………………41
    APPENDIX 4: LEDL PROJECT PROPOSALS EVALUATED BY PNGFA TEC AND SUBMITTED TO LEDL TRUSTEES …..42
    APPENDIX 5: SUMMARY OF TRANSACTION EXTRACTED FROM BANK STATEMENT LEDL PAYMENTS FROM
    THE TRUST ACCOUNT FOR THE PERIOD 2012 – 2015 ……………………………………………………………………………………43
    TABLES
    Auditor-General’s Office of PNG| Performance Audit Report – Log Export Development Levy
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  • Table 1: Inflation and the Log Export Development Levy ………………………………………………………… 21
    Table 2: Total LEDL Collections during the years 2012-2015……………………………………………………… 23
    Table 3: Total LEDL Collections from PNGCS Collectors Statements and total Receipts from Trust
    Account Records – 2012-2015 ………………………………………………………………………………………………………. 23
    Table 4: Records of LEDL Collections 2012-2015…………………………………………………………………….. 24
    Table 5: LEDL Collections – AGO Comparison of PNGCS Collector’s Statements and SGS (PNG) Ltd for
    the years 2012-2015 ……………………………………………………………………………………………………………………. 25
    Table 6: Schedule of LEDL Projects approved by LEDL Trustees………………………………………………… 30
    Table 7: Summary of Payments from the LEDL Trust Account 2012-2015 …………………………………… 31
    Table 8: LEDL Payments with Insufficient Details 2012-2015…………………………………………………….. 32
    Table 9: LEDL Trust Payments over K5 Million 2012-2015 ……………………………………………………….. 33
    Table 10: LEDL Trust Account Payments – 2015 ……………………………………………………………………… 34

    Auditor-General’s Office of PNG| Performance Audit Report – Log Export Development Levy
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  • Acronyms and Definitions
    AGO Auditor General’s Office

    ASYCUDA Automated System for Customs Data

    BSP Bank South Pacific

    CSTB Central Supplies Tenders Board

    DoF Department of Finance

    DPN&M Department of National Planning and Monitoring

    DSIP District Services Improvement Program

    Joint District Planning and Budget Priority Committee. Now called the District
    JDP&BPC
    Development Authority (DDA)

    Joint Provincial Planning and Budget Priority Committee Now called the Provincial
    JPP&BPC
    Development Authority (PDA)

    Log Export Development Levy. A customs duty imposed at the rate of K8/m3 on the
    total volume of logs exported and is applicable to all exported logs under the
    LEDL
    Customs and Tariff Act 1990 except for the plantation logs and payable by the
    exporter to the Customs Office

    MODACC Accounting Module of the Automated System for Customs Data (ASYCUDA)

    MODCBR Customs Module of the Automated System for Customs Data (ASYCUDA)

    ORD Office of Rural Development

    PNGFA Papua New Guinea Forest Authority

    PNGCS Papua New Guinea Customs Service

    PPET Provincial Project Evaluation Team

    PSTB Provincial Supplies Tenders Board

    SGS Societe Genarale de Surveillance

    TEC Technical Evaluation Committee

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  • Summary and Recommendations
    Introduction
    1. The Log Export Development Levy (LEDL), (the Levy) was established by the
    Government in 2006, in response to concerns that many areas of the country that had been
    logged were being left without any tangible or durable developments after logging
    operations were complete. The primary objective of the Levy is to provide funds to assist in
    the provision of basic infrastructure and facilities for services such as health, education, law
    and justice, infrastructure and agricultural projects in the logging areas of PNG.
    2. The Levy is a customs duty imposed on the exporter at the rate of 8 Kina per cubic
    metre (K8/m3) of the total volume of logs exported, and is applicable to all logs subject to
    the Customs and Tariff Act 1990, except plantation logs. Funds collected under the levy are
    paid into a trust account for subsequent disbursement. The Forestry Act 1991 (as amended
    in 2006) establishes the Governance arrangements for the management of the trust fund,
    including a Committee which has responsibility for managing the trust account. The Act and
    related guidelines also provides the criteria for the Committee in the approval of
    expenditure from the Levy trust fund.
    Overall Conclusion
    3. The Levy is potentially a large investment in local, logging communities. Between
    2012 and 2015, more than 14 million cubic metres of logs were exported from PNG and
    more than K105 million has been paid into the trust account for future expenditure on
    projects in the logging districts. However, since the establishment of the Levy trust account
    in 2006, the rate of collection at K8/m3 has not been reviewed or adjusted. At the same
    time, the rate of inflation over the last ten years means that the purchasing power of 8 kina
    has fallen by almost 40 percent, notwithstanding that overall levy collections have increased
    over the period.
    4. A total of eighty-four project proposals were received and registered for Levy
    funding between January 2007 and January 2015. However, out of this total, the Papua New
    Guinea Forestry Authority (PNGFA) has only evaluated and considered twelve proposals
    with a total value of K24.52 million. This means that less than 25 per cent of the funds raised
    over the last four years have been committed to projects since the program’s inception. On
    this measure alone, the Log Export Development Levy program is falling short of its
    objectives.
    5. A key aspect of program design is that exporters pay the levy to the Papua New
    Guinea Customs Service (PNGCS) which deposits the funds into a withholding trust account.
    Funds from the withholding trust account are then transferred to a main trust account. The
    transfer from one trust account to another appears to be an unnecessary step and there has
    been an unexplained leakage of funds in the transfer process. The amounts deposited into
    the withholding account do not reconcile with the amounts received in the main trust
    account either cumulatively or individually in any year since 2012. The overall shortfall in
    the main trust account is almost K4 million. There are other weaknesses and leakages in the
    Levy collection system which requires immediate attention. Overall, there has been a lack of
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  • coordination between the key agencies involved in the reporting of log export volumes and
    levy collections.
    6. The responsibility for monitoring and reporting performance of the Levy program is
    shared by the Levy Committee, the PNGFA and the Provincial and Local Level Governments
    in the logging areas. The design of the monitoring and reporting arrangements set out in the
    legislation and guidelines adequately reflects the devolved nature of the project
    implementation and recognises that detailed monitoring at the project level is most suited
    to arrangements between local authorities and government agencies. However, under
    current arrangements, authorities at all levels have not provided the required data and
    central agencies have not been able to effectively monitor or report on the projects or the
    Levy program more broadly.
    7. The conduct of this audit has been significantly influenced by one of its findings;
    recordkeeping and documentation. There was a lack of adequate documentation
    maintained by the responsible departments in relation to deposits and withdrawals from
    the trust fund and transfers between the funds. Neither the responsible departments nor
    the Committee were able to provide documentation that showed recommendations as to
    which project applications should be approved, and those that should be rejected. The
    responsible departments and the Committee also did not undertake any value for money
    analysis in respect to the claims made by project proponents in their applications. Such
    documentation is generally accepted as a key element of sound administration and
    accountability, and the minimum that should be maintained.
    8. The AGO has made seven recommendations to improve the systems and
    management of the Log Export Development Levy, but there are broader lessons for all
    agencies in the findings. To support agency business, and meet legal and policy
    requirements, entities need to manage information and processes need to operate so that
    records can be proven to be genuine; are accurate and can be trusted; are complete and
    unaltered; are secure from unauthorised access, alteration and deletion; are findable and
    readable; and are related to other relevant records. Such documentation also would have
    assisted in better informing Government of the progress with the implementation of the Log
    Export Development Levy and is the first line of defence against allegations of
    maladministration or fraud.
    9. In addition, in light of experience as to how the Log Export Development Levy has
    operated over its first ten years and the findings of this report, there would be benefit in the
    relevant departments and entities reviewing key elements of the program design and
    making recommendations to Government so as to confirm their continuing commitment to
    the program and also the relevance and effectiveness of program objectives.
    Key Audit Findings by Chapter
    Administration and Processing of the Log Export Development Levy (Chapter 2)
    10. The AGO considers that since 2012 and the demerger of PNGCS and IRC, the
    Customs service now has well-documented processes for assessing and examining LEDL
    statements and the collection of funds into the withholding trust account. However, the
    delays in setting up signatories to the main trust account following the demerger reflect
    poorly on the administrations of both departments, as there are unexplained discrepancies
    in accounting for transfers in the years prior to 2012. The overall amount involved is almost
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  • 4 million kina. The existence of a withholding trust account and a main trust account is an
    unnecessary duplication of effort and could be contributing to the discrepancies.
    11. Between 2012 and 2015, more than 14 million cubic metres of logs were exported
    from PNG. The AGO attempted to further analyse the volume and value of the levy that
    should have attached to these exports. However, the data was not readily available from
    PNGCS and analysis of the volumes exported needed to be conducted using third party
    records from SGS Limited. Although the SGS records are not matched against PNGCS
    records, the AGO identified significant inconsistencies in collections data from both entities,
    with levy collections somewhere between K6 million and K7 million lower than expected
    when compared to the volume of logs exported.
    12. The levy was introduced by the Government in 2006 and set at 8 kina per cubic
    metre (K8/m3) and has not been adjusted since it commenced. However, the rate of
    inflation has significantly eroded its purchasing power, notwithstanding that overall
    collections have increased over the period. The AGO considers that a review of the levy
    would be beneficial to include the addition of an outturn factor to adjust for inflation
    particularly as the LEDL Committee has considerable influence on the direction of the
    projects and the funding capacity needed to support them.
    Project Funding Requirements and Processes (Chapter 3)
    13. The LEDL was intended to address the problem that a significant amount of logging
    was taking place in various communities in PNG with little or no compensation to those
    communities to compensate them for the natural resources given up. The levy was a way
    that these communities could fund agriculture and infrastructure projects that would
    otherwise have been beyond the capacities of provincial and local level government. It was
    for this reason that the funding provided under the program was to be additional to existing
    funding provided under DSIP or Function Grants.
    14. The delivery of these projects was intended to be progressed through the
    development and implementation of new legislative and inter-agency funding
    arrangements. Under these arrangements and as noted above, between 2012 and 2015,
    more than K106 million has been collected and paid into the trust account for expenditure
    on authorised construction projects. From January 2007 to January 2015, the PNGFA
    received and registered a total of eighty-four project proposals for LEDL funding. However,
    out of this total, PNGFA has only evaluated and considered twelve development project
    proposals to the value of K24.52 million. Direct comparisons between these two data sets
    are not reliable, but it can be seen that less than 25% of the funds raised in the last four
    years has been spent over the eight years that has elapsed since the program’s inception. In
    part this is due to the lack of awareness of the program in the logging regions and the funds
    available through the levy, and in part the administration of the fund by the LEDL
    Committee has been ineffective, due to inadequate administrative practices.
    15. Examples of inadequate administrative practices included decision making records
    not being completed, maintained or retained; the required documentation not being
    provided; breaches of trust account provisions in relation to withdrawals; and failure to
    follow program guidelines. The AGO notes that weaknesses in these matters extends to
    record keeping generally and a low standard of accountability and transparency by the
    agencies involved.

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  • Monitoring and Reporting (Chapter 4)
    16. The responsibility for monitoring and reporting performance of the LEDL program is
    shared by the Treasury, the LEDL Committee, the PNGFA and the Provincial and Local Level
    Governments. Section 121A of the Forestry Act 1991 (as amended in 2006) and the
    administrative guidelines for LEDL establishes the monitoring and reporting framework. The
    framework requires administering agencies and relevant entities to monitor and report
    compliance with funding conditions and project implementation.
    17. The design of the monitoring and arrangements set out in the legislation and
    guidelines adequately reflects the devolved nature of the project implementation and
    recognises that detailed monitoring at the project level is most suited to arrangements
    between local authorities and central government agencies. However, under current
    arrangements, authorities have not provided the required data and central agencies have
    not been able to effectively monitor or report on the projects or the LEDL program more
    broadly.
    Recommendations
    Set out below are the recommendations identified during the course of this performance
    audit and the department’s responses.
    Recommendation 1 The AGO recommends that the PNGFA considers an amendment to the
    legislation to include an outturn estimate for the LEDL, as an adjustment
    Paragraph 2.26
    for inflation and to be reviewed annually, to protect the purchasing
    power of the levy.
    PNGFA Response: No response

    Recommendation 2 To ensure consistent and verifiable reporting of LEDL collections, the
    AGO recommends that PNGFA in consultation with SGS Ltd and
    Paragraph 2.27
    members of the LEDL Committee, regularly reconcile their log and levy
    records with PNGCS to provide decision makers with accurate and up to
    date data.

    PNGFA Response: No response
    PNGCS Response: Agreed. We agreed that there was no close consultation with PNGFA
    and SGS concerning revenue records and reconciliations of LEDL
    collections. Revenue records and reconciliation were done based on
    PNGCS actual revenue collections for the period under review. We
    discussed and resolved that we will implement proper coordination with
    agencies concerned to ensure future LEDL collections are up to date and
    reconciled to each other records so there is proper reporting of LEDL
    revenue to the public.

    Recommendation 3 The AGO recommends that the PNGFA;
    Paragraph 2.28 (a) Establish and maintain accurate and reliable recordkeeping
    systems relating to the volume of log exports at provincial
    headquarters to ensure an adequate audit trail; and
    (b) Report the volume of log exports and levy collected to the
    PNGFA website so that stakeholders, including government
    agencies, the private sector and resources owners can observe
    the management of the country’s resources in close to real

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  • time.
    PNGFA Response: No response
    Recommendation 4 The AGO recommends that PNGCS examines the functions of the two
    LEDL Trust Accounts and consider closing the Withholding Trust Account
    Paragraph 2.29
    as it duplicates the functions of the LEDL Trust Account instrument.
    PNGCS Response: Agreed. We agree that we will review the current trust inst
    LEDL Withholding Trust Account by writing to Department of Finance to
    amend the current trust instrument to revoke this account and transfer
    the administration and reconciliation of LEDL Trust Account to PNGFA
    Recommendation 5 The AGO recommends that the LEDL Committee and Trustees:
    Paragraph 3.33 (a) Strictly follow LEDL administrative guidelines for project
    submission, screening and approval before committing LEDL
    funds;
    (b) Commit LEDL funds only to its intended purpose specified in the
    Forest Act and the trust instrument; and
    (c) Establish an effective communication system with key agencies,
    trustees and other stakeholders for proper management and
    control of disbursement of LEDL funds.
    Agencies Responses: No response
    Recommendation 6 The AGO recommends that the Department of PNG Forest Authority:
    Paragraph 3.34 Establish an internal control and management mechanism in place
    to specifically manage LEDL funds;
    (b) Undertake an awareness campaign in the respective logging
    centres in the country in conjunction with District
    Administrations to provide information about the development
    projects that can be funded under the LEDL program; and
    (c) Carry out its roles and responsibilities in accordance with the
    relevant provisions of the Forestry Act, and Public Finance
    (Management) Act, and other relevant legislative, policies and
    guidelines.

    PNGFA Response: No response
    Recommendation 7 To facilitate effective implementation and management of the LEDL
    projects in the logging areas, the AGO recommends that the LEDL
    Paragraph 4.13
    Commi ttee coordi nates cl osely wi th the PNGFA and the
    Provincial/District Administrators to ensure all development projects
    funded through the trust funds are monitored on a regular basis and
    monitoring reports are submitted on a regular basis as required by the
    Governing Legislation and the LEDL Administration Guidelines.
    Agencies Response: No response

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  • 1. Introduction
    The chapter discusses the legal and policy framework for the establishment of the Log Export
    Development Levy and the institutional arrangements.
    Policy Framework
    National Forestry Policy
    1.1 The National Forestry Policy issued by the National Executive Council (NEC) in
    September 1991 covers areas of the forestry management, including the forestry industry,
    forest research, forest training and education, and forest organisation and administration.
    This National Forestry Policy prescribes all the charges which may be imposed on the
    forestry industry, including the Log Development Levy.
    Legislative Framework
    1.2 There are three main pieces of legislation which provide the legal basis for the
    establishment and collection of the Log Export Development Levy (LEDL); the Forestry Act
    1991 (amended in 2006); the Customs Act 1950 and the Customs and Tariff Act 1990. The
    Forestry Act establishes the trust accounts and provides for their management, while the
    Customs Acts impose applicable rates of the levy, specifies the goods on which the levy will
    be imposed and provides for its collection.
    1.3 In addition to the governing legislation, the Public (Finances) Management Act
    (PFMA) provides the parameters for the management of trust funds and empowers the
    Minister for Finance with the establishment of trust accounts. The trust instruments issued
    by the Minister provide the guidance for the management of trust funds. The specific
    provisions in the relevant sections of legislation which establish the LEDL trust account are
    briefly discussed below.
    Forestry Act 1991
    1.4 The LEDL was established through a 2006 amendment to Section 121A of the
    Forestry Act 1991. This Section fixes the rate of the levy at 8 kina per cubic metre (8K/m3)
    and sets out the collection and application procedures, in particular that the LEDL is
    applicable to all logs (except plantation logs) exported under item 44.03 of the Customs and
    Tariff Act 1990.
    1.5 The 2006 amendment to the Act also provided for the levy to be paid into the trust
    account established by the Finance Minister. It also identified the government agency that
    would be responsible for the collection of the LEDL and specified that the levy will be paid
    by an exporter to the Commissioner General concurrently with the log export duty
    applicable under the Customs Tariff Act. The Commissioner General is then responsible for
    paying the levy into the LEDL trust account.
    1.6 The Forestry Act also establishes the Governance arrangements for the management
    of the LEDL trust funds, including a Committee which has responsibility for approving
    expenditure from the LEDL trust account. The Committee members are the Secretaries of
    the Departments of Finance and National Planning & Monitoring, and the Managing
    Director of the Forestry Authority, or their nominees. The Act also provides the criteria for

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  • the Committee in the approval of expenditure of the LEDL trust funds, namely that
    expenditure from the trust account shall be made only in accordance with plans for
    agricultural or infrastructural development projects in the logging area submitted by the
    relevant local level Government or Provincial Government.
    1.7 The LEDL Committee members act as trustees of the LEDL trust fund.
    Customs and Tariff Act 1990 and Customs Act 1950
    1.8 The responsibility for collection of the log levy is assigned to the Papua New Guinea
    Customs Service (PNGCS) under the Customs Act 1950 and the Customs and Tariff Act 1990.
    Section 80 of the Customs Act 1950 (as amended in 2006) stipulates that export duties
    including the LEDL are payable when the goods are actually exported and the payment shall
    be lodged at the Customs Office.
    1.9 PNG Customs Service is the agency responsible for the administration of the LEDL
    Withholding Trust Account which holds the LEDL collections paid by the Log Exporters.
    PNGCS undertakes pre-shipment inspection jointly with Papua New Guinea Forestry
    Authority (PNGFA) in close consultation with an independent third party (discussed at
    paragraph 1.19 below) and the Log Exporter to ensure all logs exported are in accordance
    with the Exporter’s Statement of Logs to be exported and also verifies the amount of log
    export duties including LEDL payable by the exporter on each shipment of logs. The PNGCS
    is responsible for the collection of the LEDL at its various ports in the country.
    Public (Finances) Management Act
    1.10 The provision of Public (Finances) Management Act (PFMA) details the procurement
    procedures for the expenditure of public monies for the payment of goods and services. The
    LEDL Administrative Guidelines note that this provision applies to the expenditure of LEDL
    funds. Further, the PFMA also empowers the Minister for Finance to issue trust instruments
    for the establishment of trust accounts to hold public monies for specific purposes. The
    instrument for the establishment of the LEDL Trust Account was issued by the then Finance
    Minister in July 2007.
    1.11 The Department of Finance (DoF) was initially assigned the responsibility for
    administration of the LEDL Trust account through the 2007 trust instrument. This
    responsibility was transferred to the Papua New Guinea Forest Authority (PNGFA) by NEC
    Decision in March 2013 and the subsequent issue of an amended trust instrument by the
    Finance Minister. As noted at paragraph 1.6 above, the Secretary of the Department of
    Finance remains one of the members of the LEDL Committee.
    1.12 A revised trust instrument was issued by the then Finance Minister in April 2013 and
    a third revision was issued in July 2013. The July 2013 version is the current Trust
    instrument. The Finance Minister also established a LEDL Withholding Trust Account. The
    purpose of the LEDL Withholding Trust Account was to hold the LEDL collections and
    transfer the collections to LEDL Trust Accounts.
    Administrative Guidelines for the Management of the LEDL
    1.13 To assist the agencies involved in the management and implementation of the LEDL,
    administrative guidelines for the Management of the levy were approved and issued by the
    LEDL Committee in 2009. The guidelines expanded on the provisions of the Forestry Act for

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  • the management of the LEDL funds and provided details of the processes and procedures to
    be followed for project proposal, approval and procurement.
    1.14 The AGO noted that the initial version of the guidelines were issued in February 2009
    after the LEDL became operational in 2007. The guidelines were amended in February 2014
    and again in October 2015. However, the two latest amendments to the guidelines were not
    approved by the governing bodies; the National Forest Board and LEDL Committee. The
    approved 2009 version of the guidelines adequately covered the principles of the LEDL, the
    purpose of the fund, the criteria for the eligibility of LEDL funding, procedures for the
    submission and approval of the project proposals and, the monitoring and evaluation of the
    its implementations. However, the 2009 version does not adequately delineate the roles
    and responsibilities of the parties involved in these processes.
    1.15 The 2014 and 2015 revised guidelines have attempted to clarify the roles and
    responsibilities of agencies involved in processing submissions and the procurement
    process. As well, the 2015 revision was to incorporate NEC Decision Nos 163/2014 and
    307/2014 on the approval for the use of the management contractor to assist the LEDL
    Committee in the implementation of the trust fund projects, including the provisions of
    secretariat services to the Committee.
    1.16 The AGO has suggested that the amendments to the guidelines be approved as soon
    as practicable, to avoid misunderstandings in the management of LEDL projects.
    PNG Forestry Authority (PNGFA)
    1.17 The PNGFA is a statutory body responsible for the administration of the Forestry Act
    with the objectives of providing a single, integrated authority for consultation with resource
    owners and for the regulation of forestry harvesting. Amongst its other responsibilities, the
    Forestry Authority is responsible for regulating and approval, and monitoring of the export
    of logs in the country. The PNGFA also coordinates with the PNGCS and an independent
    third party (discussed at paragraph 1.19 below) to ensure the Log Exporters pay the
    appropriate rates of LEDL to PNGCS before shipments of the log exports are made from
    each provincial shipping port.
    1.18 The Authority is also undertakes independent project monitoring visits to project
    sites to verify reports from districts and provinces on the implementation of the LEDL
    projects. A Technical Evaluation Committee (TEC) has also been established within the
    PNGFA to assist the LEDL Committee in the evaluation of LEDL project proposals. As noted
    above, the Managing Director of PNGFA is one of the members of the LEDL Committee
    responsible for the approval of expenditure from the trust fund.
    Society Generale de Surveillance Group (SGS)
    1.19 SGS (PNG Limited) is part of the world wide Society Generale de Surveillence Group,
    an organisation that specialises in inspection and verification services and providing
    independent third party verification of custody transfers of all types of commodities,
    including logs and sawn timber.
    1.20 SGS was contracted by PNGFA to undertake inspections of log exports under the
    LEDL at PNG ports.

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  • The Audit
    Audit Rationale
    1.21 The Log Export Development Levy (LEDL) came about upon the realisation that after
    the expiry of the logging projects in many areas of the country, over the years very little by
    way of tangible and durable development was achieved in the logging localities.
    1.22 In almost all instances, following the cessation of commercial logging operation
    logging roads disappeared, school buildings deteriorated, people faced diminished
    opportunities for earning cash income, loss of employment associated with logging
    operations, communities suffered from poor and worsening health status including increase
    in incidences of malnutrition especially in children, increase in mother and child mortality
    rates, etc.
    1.23 To address these issues faced by people in the logging areas, the Government
    through the PNG Forestry Authority has established this project financing facility to provide
    tangible and durable benefits to the people whose natural forests have been acquired by
    the State for commercial logging.
    Audit objective, scope and criteria
    1.24 The objective of this performance audit was to assess the effectiveness of the
    management of the Log Export Development Levy (LEDL) with particular emphasis on:-
    • the legal and policy framework to establish the LEDL;
    • the effectiveness of the Levy collection and transfer procedures;
    • the effectiveness of project proposal and approval procedures in the application of
    LEDL funds; and,
    • The monitoring, evaluation and reporting arrangements.
    1.25 The audit was focused on the Log Export Development Levy and did not examine
    other government revenue derived from Log Exports such as Royalties, the Project
    Development Benefit, the Log Export Tax, the Restoration Levy or other Agricultural levies.
    The AGO consulted with responsible agencies; the PNG Forestry Authority, PNG Customs
    Services, Department of Finance and the LEDL Trustees.
    Audit Methodology
    1.26 In order to meet the audit objective the audit took the following approach:
    • examined the legislations, policies and guidelines that governs the establishment,
    operations and management of the trust account;
    • reviewed the export procedure documents, PNG Customs Services reports and
    documents including documented reports from the SGS. Documented reports from
    the PNG FA were also reviewed including the management guidelines;
    • interviewed relevant officers from the audited entities including field inspections and
    observation on the procedures involved in the actual revenue collection on the port
    sites and the project sites funded under the LEDL.

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  • 2. Administration and Processing of the Log
    Export Development Levy
    The chapter discusses the calculation of the Log Export Development Levy and the billing
    process, as well as methods of collection and transfer procedures.

    LEDL Calculations and Billing Processes
    LEDL Calculation Rates
    2.1 As noted above, the Log Export Development Levy is calculated at the rate of
    8 kina per cubic metre (K8/m3) of the total volume of round logs exported, excluding
    plantation logs. The rate was established by the 2006 amendment to Section 121A of the
    Forestry Act 1991 and is reflected in the LEDL Trust Instrument.
    2.2 The calculation of the LEDL for all exported logs is automated through a system
    known as the Automated System for Customs Data (ASYCUDA). ASYCUDA is an electronic
    reporting and data processing system used by PNGCS for all import, export and excise
    entries lodged with Customs. However, calculations can also be done manually to confirm
    whatever that has been captured in the system is correct. AGO recalculations of a sample
    of the LEDL revenue collected at Kimbe and Vanimo Custom Ports indicated that the
    correct levy rate was being applied in the calculations of the LEDL received at these
    locations, during the years under audit review.
    2.3 The formula used for calculating LEDL has been consistently applied every year,
    and the AGO noted that the K8/m3 rate has not been reviewed since it was established in
    2006. The application of funds raised is discussed in more detail in Chapter 3. However, it
    is important to note here that LEDL funds are intended to be used for infrastructure and
    agriculture projects. A characteristic of these projects is that particularly for
    infrastructure, prices change over time due to inflation.
    2.4 Table 1 below shows the inflation/deflation effects on the value of 8 kina since
    the levy was introduced in 2006 (using 2006 as the base year).

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  • Table 1: Inflation and the Log Export Development Levy
    Rate of Inflation (%)1 Adjusted Value
    Year of 8 kina
    2007 0.91% 7.93 kina
    2008 10.76% 7.07 kina
    2009 6.92% 6.58 kina
    2010 6.01% 6.1 kina
    2011 8.44% 5.67 kina
    2012 2.25% 5.54 kina
    2013 3.55% 5.34 kina

    2014 5.20% 5.06 kina
    2015 6.00% 4.76 kina
    Average 5.56%

    Source: AGO Analysis of Bank of PNG data

    2.5 The analysis in Table 1 suggests that K8 in 2006 would purchase less than K5
    worth of goods in 2015, or another way of saying it is that the value of the levy has fallen
    by more 40 per cent over the period. This is only an illustration of inflationary effects, as
    in the actual economy the prices of materials will vary from published general purpose
    Consumer Price Index figures. However, it is equally important to note that the
    inflationary effects are greater than zero. A more realistic escalation factor should be set
    approximately in line with the long term average of inflation; in this case about 5 and a
    half per cent per annum.
    LEDL Billing Processes
    2.6 The LEDL billing process is an integral part of the Log Export Procedures. A
    commercial invoice is generated from the Statement of Logs to be exported, prepared by
    the exporter and accompanied by the Inspection Report issued by SGS. The commercial
    invoice is issued to the exporter by SGS after the pre-shipment inspection carried out
    jointly by the Forestry and Customs officers to verify the details in the statement of logs
    to be exported.
    2.7 To ensure logs are exported at the prevailing market price, and that export
    shipments are correctly declared with respect to log volume and species, the PNGFA has
    developed internal procedures for exporting logs. These procedural guidelines are
    important because it sets out the processes involved in the control and monitoring of logs
    exported, and assists in the LEDL calculations and billing processes. Shipping
    documentation provided during the audit site visits of Kimbe and Vanimo Ports revealed
    the log export procedures were being followed by the responsible agencies as detailed in
    the PNGFA Log Export Procedures.

    1 Source: Bank of PNG at www.bankpng.gov.pg/statistics/quarterly-economic-bulletin-statistical-tables/ QEB Table 9.27

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  • LEDL Collection and Transfers
    LEDL Collection Procedures

    2.8 The LEDL collection process begins after the requirements set out in the
    procedures for exporting logs are fully completed to accord with the Customs Act 1951,
    the Forestry Act 1991, and its regulation. The process provides that the Levy will be paid
    by an exporter together with the log export duty payable under the Customs Tariff Act
    1990 to the Commissioner General who pays the levy into the LEDL trust account. To
    facilitate the collection of export duties, Customs Ports have been established by the
    PNGCS in several locations throughout the country.
    2.9 The collection controls are in place whereby Custom Trade Officers who are in
    charge of Customs ASYCUDA system module called MODCBR to access the custom entry
    send online by the custom broker to confirm against the export documents produced.
    The ASCUDA system then allocates a receipt number for that particular customs entry
    and this is the final stage of all types of duties and taxes collected. During the site
    inspections of Kimbe and Vanimo, the AGO noted that LEDL levies imposed on a shipment
    of the total volume of logs exported were remitted to the PNGCS Office in accordance
    with the procedures.
    LEDL Transfer Procedures
    2.10 A LEDL withholding trust account was established in 2007 through a trust
    instrument issued by the Finance Minister to hold LEDL collections. The withholding
    account is held with the Bank of South Pacific (BSP) and administered by the PNGCS. The
    daily remittances of LEDL revenue from the Customs Ports are held in the LEDL
    Withholding Trust Account and at the end of each month; the funds are transferred into
    the LEDL operating Trust Account (also with BSP) through a direct bank transfer.
    2.11 The AGO found that there were delays in transfers of LEDL funds from the
    Withholding Trust Account to the LEDL Trust Account by the PNGCS for a period of two
    years between 2012 and 2013. The LEDL Trust Account bank statements for the above
    two years showed no funds were transferred for this period from the withholding trust
    account.
    2.12 The delay in transfer of funds was as a result of an administrative error. On 31st
    December 2013, the responsibility for collection of the levy was transferred from the
    Internal Revenue Commission (IRC) to PNGCS following a demerger of functions.
    However, there was a two year delay in transferring management responsibility for the
    fund, including signatories for the withholding account. This reflects a lack of
    coordination between the IRC and PNGCS which adversely affected the flow of Levy funds
    into the trust account, with consequential impacts on the amount of funds available for
    projects.
    LEDL Revenue Collections
    2.13 Review of the PNGCS monthly collector statements shows that LEDL revenue
    totalling K105.8 million was collected during the years 2012-2015. A summary of the LEDL
    revenue collected for each year are shown in Table 2 below, and a monthly distribution
    of LEDL collections for the four year period is shown in Appendix 1.

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  • Table 2: Total LEDL Collections during the years 2012-2015
    Year LEDL Revenue % Growth Year on
    (PGK,000) Year
    2012 24,408 –
    2013 24,699 1.23%
    2014 27,042 9.31%
    2015 29,656 10.00%
    Total 105,805

    Source: PNGCS monthly Collector’s Statements from 2012-2015

    2.14 Table 2 shows that total annual collections of the levy have increased every year
    from 2012 to 2015, and the rate of growth has been significant since the demerger of IRC
    and PNGCS in 2012, reaching 10 per cent growth in 2015. Notwithstanding this rate of
    growth in collections, internal controls over the recording and accountability of the LEDL
    revenue are is weak. In particular the AGO found there were differences between the
    PNGCS Total LEDL Collections and corresponding transfers from the LEDL Withholding
    Trust Account.
    2.15 Table 3 below provides a comparison between the total LEDL Collections from the
    PNGCS Collectors Statements (withholding account) and the total receipts recorded in the
    LEDL Trust Account Bank Statements. There are differences between years and an overall
    difference of K3.97 million over the period.
    Table 3: Total LEDL Collections from PNGCS Collectors Statements and total Receipts from
    Trust Account Records – 2012-2015
    Year LEDL Witholding Trust Account LEDL Trust Account Difference
    (PGK,000) (PGK,000) (PGK,000)
    2012 24,408 – 24,408
    2013 24,699 – 24,699
    2014 27,042 81,246 -54,204
    2015 29,656 20,586 9,070
    Total 105,805 101,832 3,973

    Source: AGO 2016

    2.16 The AGO was unable to locate records that adequately explain the discrepancy of
    K3.97 million. The most likely explanation is that prior year receipts were held in the
    withholding Trust Account and were transferred during the period under audit review. At
    the same time, the lack of proper records of the receipt of the levy at various Customs
    Ports has contributed to an understatement in the LEDL Collectors Statement.
    2.17 As noted above, currently the levy is banked into the withholding account and
    then transferred to the main trust account. This duplication of effort is unnecessary and
    the evidence suggests there are leakages from the system. If the levy collections were
    accurately and consistently recorded in a single trust account, there would be no need for
    transfers and verification and reporting processes.

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  • 2.18 A comparison of total LEDL Revenue collected and compared to PNGCS records as
    well as SGS Ltd records revealed further differences in recordkeeping between the two
    organisations. The comparison is shown in Table 4 below.
    Table 4: Records of LEDL Collections 2012-2015
    Year
    SGS Limited PNGCS Differences in Levy
    Records Records Collected SGS v PNGCS

    Log Levy Log Levy
    Collected Collected (PGK’000)
    (PGK’000) (PGK’000)

    2012 23,708 24,409 -701

    2013 24,923 24,699 224

    2014 28,884 27,042 1,842

    2015 29,251 29,656 -404

    Totals 106,766 105,806 961

    Source: PNGCS Monthly Collector’s Statements and SGS (PNG) Ltd Revenue Statement Summary

    2.19 Table 4 above shows that LEDL revenue was under-stated by 961 thousand kina2
    in the PNGCS records compared to the records of SGS Ltd over the audit period.
    2.20 The audit found there were few PNGCS records available showing the volume of
    logs exported. Records of the logs exported were from SGS Ltd, a contractor to PNGCS.
    Table 5 below shows the total volume of logs exported and the amount of levy that was
    calculated by SGS and PNGCS (difference in levy amounts is also shown in Table 3 above).
    However, neither the SGS record, nor the PNGCS amounts could be reconciled with the
    K8 per cubic metre calculation from the total volume of logs exported. AGO calculations
    of the amount of levy that was due to the trust fund are also shown in Table 4 above.

    2 Whole number differences due to rounding.

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  • Table 5: LEDL Collections – AGO Comparison of PNGCS Collector’s Statements and SGS (PNG)
    Ltd for the years 2012-2015
    Year
    LEDL Collections Differences

    Total Volume of
    SGS Records of PNGCS Records of AGO AGO AGO
    Logs Exported
    Levy collections Levy collections at Calculation of compared compared to
    (m3)
    at 8K/m3 8K/m3 Levy at 8K/m3 to SGS PNGCS
    (PGK’000) (PGK’000) (PGK’000) (PGK’000) (PGK’000)

    2012 3,154,266 23,708 24,409 25,234 -825 -1,526

    2013 3,297,384 24,923 24,699 26,379 -1,680 -1,456

    2014 3,800,185 28,884 27,402 30,401 -3,359 -1,517

    2015 3,869,271 29,251 29,656 30,954 -1,298 -1,703

    Total 14,121,106 106,766 105,806 112,969 -7,163 -6,203

    Source: AGO Analysis

    2.21 The LEDL receivable on each shipment of logs is dependent upon the total volume
    of logs exported and the correct application of the levy at the rate of K8 per m3. However,
    the differences in LEDL revenue reported by SGS Ltd on behalf of the PNGFA and the
    PNGCS for the years under audit review against the audit calculations reflected significant
    weaknesses in the system. Table 4 suggests that on average 1.5 million kina for each year
    between 2012 and 2015 was not paid into the trust fund due to these weaknesses.
    2.22 The AGO noted there was a lack of coordination between the key agencies
    involved in the reporting of log export volumes and prices. The AGO suggests that each
    agency should report and monitor LEDL revenue collections and reconcile their respective
    records with each other to facilitate uniformity in the reporting of LEDL collections to the
    public.
    Conclusion
    2.23 The AGO considers that since 2012 and the demerger of PNGCS and IRC, the
    Customs service now has well-documented processes for assessing and examining LEDL
    statements and the collection of funds into the withholding trust account. However, the
    delays in setting up signatories to the main trust account following the demerger reflect
    poorly on the administrations of both departments, as there are unexplained
    discrepancies in accounting for transfers in the years prior to 2012. The overall amount
    involved is almost 4 million kina. The existence of a withholding trust account and a main
    trust account is an unnecessary duplication of effort and could be contributing to the
    discrepancies.
    2.24 Between 2012 and 2015, more than 14 million cubic metres of logs were exported
    from PNG. The AGO attempted to further analyse the volume and value of the levy that
    should have attached to these exports. However, the data was not readily available from
    PNGCS and analysis of the volumes exported needed to be conducted using third party
    records from SGS Limited. Although the SGS records are not matched against PNGCS
    records, the AGO identified significant inconsistencies in collections data from both

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  • entities, with levy collections somewhere between 6 million and 7 million kina lower than
    expected when compared to the volume of logs exported.
    2.25 The levy was introduced by the Government in 2006 and set at 8 kina per cubic
    metre and has not been adjusted since it commenced. However, the rate of inflation has
    significantly eroded its purchasing power, notwithstanding that overall collections have
    increased over the period. The AGO considers that a review of the levy would be
    beneficial to include the addition of an outturn factor to adjust for inflation particularly as
    the LEDL Committee has considerable influence on the direction of the projects and the
    funding capacity needed to support them.
    Recommendation 1
    2.26 The AGO recommends that the PNGFA considers an amendment to the legislation
    to include an outturn estimate for the LEDL, to include an adjustment for inflation and to
    be reviewed annually, to protect the purchasing power of the levy.
    Agency Response
    At the time of finalising this report no response was received from the primary client –
    PNG National Forest Authority.
    Recommendation 2
    2.27 To ensure consistent and verifiable reporting of LEDL collections, the AGO
    recommends that PNGFA in consultation with SGS Ltd and members of the LEDL
    Committee, regularly reconcile their log and levy records with PNGCS to provide decision
    makers with accurate and up to date data.
    Agency Responses
    PNGFA response: At the time of finalising this report no response was received from the
    primary client – PNG Forest Authority.
    PNGCS response: We agreed that there was no close consultation with PNGFA and SGS
    concerning revenue records and reconciliations of LEDL collections. Revenue records and
    reconciliation were done based on PNGCS actual revenue collections for the period under
    review. We discussed and resolved that we will implement proper coordination with
    agencies concerned to ensure future LEDL collections are up to date and reconciled to
    each other records so there is proper reporting of LEDL revenue to the public.
    Recommendation 3
    2.28 The AGO recommends that the PNGFA;
    (a) Establish and maintain accurate and reliable recordkeeping systems relating to
    the volume of log exports at provincial headquarters to ensure an adequate audit
    trail; and
    (b) Report the volume of log exports and levy collected to the PNGFA website so that
    stakeholders, including government agencies, the private sector and resources
    owners can observe the management of the country’s resources in close to real
    time.

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  • Agency Response
    At the time of finalising this report no response was received from the primary client –
    PNG National Forest Authority.
    Recommendation 4
    2.29 The AGO recommends that PNGCS examines the functions of the two LEDL Trust
    Accounts and consider closing the Withholding Trust Account as it duplicates the
    functions of the LEDL Trust Account instrument.
    Agency Response
    We agree that we will review the current trust instruments of LEDL Withholding Trust
    Account by writing to Department of Finance to amend the current trust instrument to
    revoke this account and transfer the administration and reconciliation of LEDL Trust
    Account to PNGFA.

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  • 3 . P r o j e c t F u n d i n g R e q u i r e m e n ts a n d
    Processes
    This chapter considers the Log Export Development Levy Project funding requirements and the
    procedures for project submissions and approval, and including project implementation and
    management processes.

    LEDL Project Proposals and Funding
    3.1 The requirements for the LEDL project proposal and funding are set out at
    Section 121A(7) of the Forestry Act 1991. It provides that LEDL funds can be used to
    finance infrastructure and agriculture projects and activities within an area where logging
    and export of logs from a natural forest and from which the LEDL levy has been derived.
    The same requirement for the application of LEDL funds is also provided in the LEDL trust
    instrument issued by the Minister for Finance and the Administrative Guidelines for the
    Management of the LEDL.
    3.2 This means that the eligible beneficiaries of the LEDL funds are resource owner
    groups, Local Level Governments (LLGs), Districts and Provincial Governments from
    logging areas. Funds are not to be used for projects outside a timbered area. The LEDL
    administrative guidelines also provide that project funding is dependent on the
    availability of funds held in the trust account for the respective timber area. The
    maximum threshold established of the project cost totals is less than K5 million. As well,
    in order to qualify for LEDL funding, project proposals submitted by the eligible
    beneficiaries of the fund should meet the project specifications provided in this
    guidelines and the DSIP Guidelines.
    3.3 The AGO noted that the requirements for the application of LEDL funds are
    adequately provided in the legislation and guidelines. However, during the site visits to
    Kimbe and Vanimo, the land owners of timber project areas informed the AGO there was
    a lack of awareness at the local level, of the availability of this project financing facility
    and the requirements to qualify for access to these funds.
    Procedures for Project Submission and Approval
    3.4 The procedures for LEDL project submission and approval are detailed in the
    Administrative Guidelines for the Management of the LEDL. It requires applicants from
    the timber areas to prepare project proposals and make submissions to District
    Administrators through the Joint District Planning and Budget Priority Committee
    (JDP&BPC) or the Provincial Administrator through the Joint Provincial Planning & Budget
    Priority Committee (JPP&BPC) for preliminary screening and evaluation.
    Project Submission and Documentation
    3.5 In the preliminary screening and evaluation of the project proposals, the
    JDP&BPC/JPP&BPC is expected to play a major role in ensuring that project specifications
    are met and necessary measures are undertaken to ensure the LEDL project proposal
    complies with the procurement procedures provided in the Public Finance Management

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  • Act (PFMA). The Project Tendering and Payments procedure for the LEDL Trust funds is
    shown in the flowchart at Appendix 2.
    3.6 A Technical Evaluation Committee (TEC) has also been established at the PNGFA
    to assist the LEDL Trustees with screening and evaluations, and the recommendations of
    the TEC are submitted to the LEDL Trustees for their consideration and approval. The
    LEDL project proposal approved by the District/Provincial Administrator is submitted to
    the LEDL Committee for consideration and final approval. If the project proposal meets
    the LEDL project specification and criteria for funding, the LEDL Committee approves it
    for funding. A simplified version of the Project Submission and Approval procedures are
    shown in the flowchart at Appendix 3.
    3.7 The AGO requested copies of project submission documents, endorsements from
    the various committees, tender documents and evaluation reports from PNGFA. This
    information was not readily available and, for reasons that were not explained, PNGFA
    did not provide the necessary records for this audit. These documents are expected to be
    maintained by PNGFA and the Department of Finance as agencies responsible for the
    administration of the trust account and are an essential part of accountability for public
    funds. This has emphasised the need for clear guidance on what information is to be
    recorded and where it is to be recorded.
    Approval of LEDL Project Submissions
    3.8 From January 2007 to January 2015, the PNGFA received and registered a total of
    eighty-four project proposals for LEDL funding. Out of this total, PNGFA has evaluated
    and considered twelve development project proposals to the value of K24.52 million
    submitted for LEDL funding. The detail of the twelve LEDL project proposals considered
    by PNGFA is shown in Appendix 4. These project proposals had passed through the
    PNGFA TEC for screening, evaluation and endorsement and were forwarded to the LEDL
    Trustees together with their recommendations for final evaluations and approval.
    3.9 Of the total project proposals received by the TEC and submitted to the LEDL
    Trustees, only one project proposal with a value of K1.2 million was approved by the
    Trustees in 2014. However, the project has yet to be funded at the time of audit in 2015.
    The balance and a large majority of the LEDL project proposals were not approved due to
    non-compliance with the requirements of the LEDL guidelines.
    3.10 The rate of non-compliance with the guidelines reflects that, as discussed at
    paragraph 3.3 above, applicants were not adequately informed of the requirements for
    project proposals to access LEDL funding. It is clear that there is a lack of awareness of
    residents in the timbered areas about the availability of the project funding facility and
    the project proposal requirements and specifications. This could lead to eligible
    beneficiaries of the trust fund missing out on development in their respective localities
    from the harvesting of their natural resources.
    3.11 In addition to the twelve projects endorsed for LEDL Trustees approval, there
    were nine other project applications with the total value of K36.84 million that had been
    approved by the LEDL Trustees. The details of the projects are presented in Table 6
    below.

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  • Table 6: Schedule of LEDL Projects approved by LEDL Trustees
    Project Name Recipient Amount
    (PGK’000)
    1 Hoskins VOP Road Project Keveloho Inc Land Group, Hoskins, WNBP 1,900
    2 Timber Processing Project-Wewak Manibem Timber & Earth Moving Construction 3,200
    Ltd
    3 Cocoa & Coconut Rehabilitation Tavak Investment Ltd, Namatanai, NIP 240
    4 Cocoa Processing & Export Project Tavak Investment Ltd, Namatanai, NIP 2,500
    5 Cocoa Processing & Export Project Asaule Development Corporation Ltd, 500
    Kandrian, WNBP
    6 Rabaul Queen Inquiry Asaule Development Corporation Ltd, 8,000
    Kandrian, WNBP
    7 Watut Timber Processing Project Maya Holdings Ltd, Bulolo, MP 5,000
    8 Agroforestry Oil palm Project Alaba Development Ltd, Bialla, WNBP 5,500
    9 Kusha Pasi Road Sealing Project Global Construction Ltd 9,990
    Total 36,830

    Source: PNGFA 2016

    3.12 The AGO was unable to determine whether all of the project proposals set out in
    Table 6 were approved in a formal LEDL committee meeting, comprising all of the
    committee members, as there were no records kept of committee proceedings. The
    approval of project submissions without the full attendance of the LEDL Committee and
    the failure to keep records of committee meetings reflected a lack of transparency in the
    approval of projects and the application of trust funds. This is a significant risk to the
    program as the LEDL Committee cannot demonstrate that it has managed the trust
    account effectively.
    Meeting Minutes of LEDL Committee
    3.13 To effectively discharge their responsibilities in the approval of expenditure from
    the trust account, the LEDL Trustees are expected to approve the payments in a formal
    meeting of the trustees and to maintain proper records. However, as noted above,
    minutes and other records of the trustees meetings were not available as they were not
    prepared and retained.
    Accounting Records
    3.14 The initial trust instrument issued in July 2007 allocated responsibility for
    administration of the trust account to the Department of Finance. However, this
    responsibility was transferred to the PNGFA through a 2013 NEC Decision (No 96/2013).
    An amended trust instrument to reflect the revised administrative responsibilities was
    issued in July 2013, to reflect the NEC Decision.
    3.15 There has been a lack of adequate documentation maintained by both the
    Department of Finance and the PNGFA in the administration of the trust fund. Accounting
    records (such as cashbook, revenue and expenditure ledgers) and supporting documents
    (such as paid vouchers, and registers of approved projects) could not be located by either
    entity and made available for audit purposes. As a result, there is also a lack of adequate

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  • documentation in relation to the development of approved projects, specifically about
    the merits, risks and alternative options in relation to the approval or non-approval of
    projects under consideration. Such documentation is generally accepted as a key element
    of sound administration and accountability. As noted at paragraph 3.13 above, official
    records were not taken or maintained of LEDL Committee meetings and decisions. As a
    consequence, there is limited departmental documentation on the development of the
    key elements of the LEDL, and in particular measurements of effectiveness or value for
    money cannot be made.
    3.16 The lack of documentary evidence shows that the administrative arrangements in
    place lack structure and clarity sufficient to generate the confidence of all stakeholders in
    the LEDL scheme and the public. Without documentation, there is a risk that LEDL funds
    are being applied for unauthorised purposes.
    Applications of LEDL Trust Funds for Projects
    3.17 Analysis of bank statements revealed a total of K169.6 million was expended
    during the four year period (2012-2015) from the LEDL trust account. A summary of the
    payments made for each year are shown in Table 7 below. Additional payment details are
    shown in Appendix 5.
    Table 7: Summary of Payments from the LEDL Trust Account 2012-2015
    Year Payments (PGK’000)
    2012 44,800
    2013 3,800
    2014 80,000
    2015 41,000
    Total 169,600

    Source: 2012-2015 LEDL Trust Account Bank Statements

    Applications of funds inconsistent with LEDL requirements
    3.18 As noted in paragraph 3.1 above, expenditure of funds from the trust account can
    only be made in accordance with the requirements of S121A(7) of the Forestry Act 1991
    and the related guidelines that broadly provide funding for infrastructure and agricultural
    projects from the logging areas. However, there were two payments totalling K85 million
    made from the trust account which were inconsistent with the criteria for LEDL funding.
    The payments were;
    • On 29 February 2012, K5 million was paid to the Morobe Disaster and Emergency
    Committee; and
    • On 17 December 2014, K80 million was transferred from the trust account to the
    Bank of Papua New Guinea (BPNG).
    3.19 With regard to the K80 million transfer to the Bank of PNG, the AGO noted that
    this was to fund the Supplementary (Appropriation) Bill passed by the NEC in 2014.
    However, this transaction was in breach of the trust instrument, as the LEDL trust
    account is not part of the Consolidated Revenue Fund.

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  • 3.20 Similarly, the nature of the payment of K5 million made from the trust account to
    Morobe Disaster & Emergency Committee in 2012 appears to be not related to a project.
    However, as discussed in paragraph 3.16 above, in the absence of supporting documents
    such as the paid vouchers, or evidence of LEDL Trustees approval, the AGO was not able
    to determine the nature or purpose of the payment.
    Details of LEDL Payments made missing
    3.21 In fifteen instances, there were limited, and in some cases, no records of payees in
    relation to payments made from the trust account totalling K48.55 million. Thirteen of
    these payments were made in 2012 and two payments in 2013. The details of LEDL
    payments with insufficient documentation are shown in Table 8 below.
    Table 8: LEDL Payments with Insufficient Details 2012-2015
    No Date Description Amount1
    (PGK’000)
    1 20 Feb 12 Cheque details not recorded 781
    2 8 Feb 12 Cheque details not recorded 503
    3 10 Feb 12 Cheque details not recorded 3,000
    4 10 Feb 12 Cocoa Processing and Export Project 2,500
    5 29 Feb 12 Morobe Provincial Disaster and Emergency Commit 5,000
    6 2 Mar 12 Cheque details not recorded 494
    7 19 Mar 12 Maniben Timber and Earthmoving 975
    8 24 Apr 12 Watut Timber and Processing Project 5,000
    9 7 May 12 Cheque details not recorded 4,500
    10 25 May 12 Cheque details not recorded 6,000
    11 1 Jun 12 Agro Forestry Oil Palm Project 5,500
    12 13 Jul 12 Global Construction 9,996
    13 4 Sep 12 Cheque details not recorded 517
    Sub Total 2012 44,766
    14 8 Jan 13 Cheque details not recorded 285
    15 15 Jan 13 Cheque details not recorded 3,500
    Sub Total 2013 3,785

    Total 48,552

    Source: AGO Analysis
    Note: 1 Figures Rounded to nearest whole number.

    3.22 In the absence of source records and supporting documents relating to the
    application of trust funds, the AGO could not determine whether approval was granted
    by the LEDL Trustees for the payments and the funds were applied for the purposes
    intended.
    3.23 A key element of sound public administration and accountability is adequate
    recording or documentation of the business of government. There has been an absence

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  • of suitable recording by the PNGFA and previously by the Department of Finance in the
    management of the trust fund which is not consistent with good administrative practice.
    K5 Million LEDL funding limit
    3.24 The LEDL administrative guidelines state that for an infrastructure and/or
    agricultural project to qualify for funding, the total project cost should be below
    K5 million. The AGO identified six payments totalling K117.37 million that were over the
    K5 million threshold. The limited details of the payments that were available are shown in
    Table 9 below.
    Table 9: LEDL Trust Payments over K5 Million 2012-2015
    No Date Description Amount1
    (PGK’000)
    1 25 Feb 12 Cheque details not recorded 6,000
    2 1 Jun 12 Cheque details not recorded 5,500
    3 13 Jul 12 Cheque details not recorded 9,997
    4 17 Dec 14 Fund Transfer to BPNG 80,000
    5 8 Dec 15 Kand/Gloucester District 10,293
    6 9 Dec 15 Aitape District 5,582

    Total 117,372

    Source: Extracts from 2012-2015 LEDL Trust Account Bank Statements
    Note 1 Figures Rounded to nearest whole number.
    :

    3.25 The data in Table 9 indicates that a substantial number of payments from the
    trust account were not consistent with the requirements of the LEDL trust instrument.
    There may have been good reasons for the K5 million threshold to be exceeded on these
    occasions. However, in the absence of records there is a low level of confidence that
    controls over the account are working as intended.
    LEDL Payments in 2015
    3.26 Payments totalling K41.05 million were made to fifteen logging districts from the
    LEDL trust fund during 2015. Details of the 2015 payments are shown in Table 10 below.

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  • Table 10: LEDL Trust Account Payments – 2015
    No Date Description Amount1
    (PGK’000)
    1 26 Nov 15 Namatanai District 2,242
    2 1 Dec 15 Soe District 895
    3 1 Dec 15 Abau District 3,345
    4 2 Dec 15 Madang District 2,810
    5 2 Dec 15 Talasea District 3,364
    6 3 Dec 15 Security Electronic Service 227
    7 3 Dec 15 Kavieng District 4,013
    8 8 Dec 15 Finscafen District 255
    9 8 Dec 15 Telifomin District 416
    10 8 Dec 15 Kandrian District 10,293
    11 9 Dec 15 Pomio District 3,360
    12 9 Dec 15 Aitape District 5,582
    13 11 Dec 15 Gazelle District 2,678
    14 18 Dec 15 Middle Ramu District 409
    15 22 Dec 15 Wewak District 1,160

    Total 41,049

    Source: AGO Analysis
    Note: 1 Figures Rounded to nearest whole number.

    3.27 The payments listed in Table 10 were made to the respective District Treasuries as
    LEDL grants consistent with Section 3.2(c) of the LEDL Administrative Guidelines issued in
    2013. This particular section in the guidelines allows the Trustees or the Managing
    Director of PNGFA to pay to each District Treasury from which the timber area is located,
    the monies receipted and derived from the LEDL for the previous year on or before
    31 March each year. It also requires that these payments should be conveyed with an
    administrative note to the District Administrator nominating the timber area(s) from
    which the LEDL has been paid from and the level of funding.
    3.28 However, the AGO noted that the 2013 LEDL Administrative Guidelines was not
    endorsed and approved by the LEDL Trustees/Committee for implementation as
    discussed at paragraph 1.13 above. The Administration Guidelines in effect at the time
    was issued in 2009 and this version of the guideline did not provide for this arrangement.
    Although the LEDL Committee clearly intended to change the guidelines, the committee
    processes and procedures have been poor, and as a result, these payments made from
    the trust account to the District Treasuries in 2015 were made in breach of the guidelines.
    3.29 In addition, the respective payment vouchers were not supported with the
    Administrative Notes to the relevant District Administrators as required by the 2013 LEDL
    guidelines. Moreover, the payment vouchers were also not supported with documents
    such as the project proposal submissions from the respective District Administrators for

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  • LEDL to validate the release of the trust funds, the endorsement of JDP&BPC, or LEDL
    Trustees approval.
    Conclusion
    3.30 The LEDL was intended to address the problem that a significant amount of
    logging was taking place in various communities in PNG with little or no compensation to
    those communities to compensate them for the natural resources given up. The levy was
    a way that these communities could fund agriculture and infrastructure projects that
    would otherwise have been beyond the capacities of provincial and local level
    government. It was for this reason that the funding provided under the program was to
    be additional to existing funding provided under DSIP or Function Grants.
    3.31 The delivery of these projects was intended to be progressed through the
    development and implementation of new legislative and inter-agency funding
    arrangements. Under these arrangements and as noted in Chapter 2, between
    2012 and 2015, more than K106 million kina has been collected and paid into the trust
    account for expenditure on authorised construction projects. From January 2007 to
    January 2015, the PNGFA received and registered a total of eighty-four project proposals
    for LEDL funding. However, out of this total, PNGFA has only evaluated and considered
    twelve development project proposals to the value of K24.52 million. Direct comparisons
    between these two data sets are not reliable, but it can be seen that less than 25% of the
    funds raised in the last four years has been spent over the eight years that has elapsed
    since the program’s inception. In part this is due to the lack of awareness of the program
    in the logging regions and the funds available through the levy, and in part the
    administration of the fund by the LEDL Committee has been ineffective, due to
    inadequate administrative practices.
    3.32 Examples of inadequate administrative practices included decision making records
    not being completed, maintained or retained; the required documentation not being
    provided; breaches of trust account provisions in relation to withdrawals; and failure to
    follow program guidelines. The AGO notes that weaknesses in these matters extends to
    record keeping generally and a low standard of accountability and transparency by the
    agencies involved.
    Recommendation 5

    3.33 The AGO recommends that the LEDL Committee and Trustees:
    (a) Strictly follow LEDL administrative guidelines for project submission, screening and
    approval before committing LEDL funds;
    (b) Commit LEDL funds only to its intended purpose specified in the Forest Act and the
    trust instrument; and
    (c) Establish an effective communication system with key agencies, trustees and other
    stakeholders for proper management and control of disbursement of LEDL funds.
    Agency Response
    At the time of finalising this report no response was received from the primary client –
    PNG National Forest Authority.

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  • Recommendation 6
    3.34 The AGO recommends that the Department of PNG Forest Authority:

    (a) Establish an internal control and management mechanism in place to specifically
    manage LEDL funds;
    (b) Undertake an awareness campaign in the respective logging centres in the country in
    conjunction with District Administrations to provide information about the
    development projects that can be funded under the LEDL program; and
    (c) Carry out its roles and responsibilities in accordance with the relevant provisions of
    the Forestry Act, and Public Finance (Management) Act, and other relevant legislative,
    policies and guidelines.
    Agency Response
    At the time of finalising this report no response was received from the primary client –
    PNG National Forest Authority.

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  • 4. Monitoring and Reporting
    This chapter considers the Monitoring and Reporting arrangements for Log Export
    Development Levy Projects.

    Monitoring and evaluation of LEDL Project Implementation
    Project Monitoring and Evaluations
    4.1 Section 121A of the Forestry Act 1991 (as amended in 2006) stipulates that the
    LEDL Committee shall obtain information from the Provincial and Local Level
    Governments that receive funds from the trust account. This information is required so
    that compliance with the terms and conditions of the approval process can be monitored
    throughout the implementation of the projects.
    4.2 The Administrative Guidelines on the Management of the LEDL also identifies
    agencies that should be responsible for the monitoring and evaluation of the
    implementation of the projects funded through the LEDL trust account. The LEDL project
    monitoring responsibility is entrusted to the District and Provincial Administrators with
    the support from Provincial Works Managers.
    4.3 The Guidelines also require PNGFA staff to undertake monitoring visits to projects
    and carry out independent reviews and verify reports from the districts and provinces.
    PNGFA is also to assist Project Management Units (PMU) in the provinces in the
    monitoring of the LEDL contracts and activities under implementation.
    4.4 Notwithstanding the legislative and regulatory guidance in relation to monitoring
    and evaluation, there was no evidence that any kind of monitoring reports from
    monitoring agencies have been compiled. The lack of effective monitoring and evaluation
    of LEDL project implementation could lead to ineffective implementation of the projects
    and mismanagement of trust funds.
    Project Completion Certifications
    4.5 The 2009 Administrative Guidelines on the Management of LEDL provides that
    upon the completion of any project activity, the contractor shall submit a Project
    Completion Report to the Chairman (PMU)/District Administrator/executing agency and,
    in this case the District Administrator for PSTB executed projects and Managing Director –
    PNGFA for CSTB executed projects fulfilling all the terms and conditions of the contract.
    4.6 At the time of audit in March 2016, no single certificate of completion was made
    available to AGO for the projects approved and implemented since the establishment of
    the trust fund in 2007 to indicate that the LEDL projects were successfully implemented
    and the projects were completed in line with the scope planned and approved.
    Reporting Arrangements
    Log Export Development Levy Committee
    4.7 As noted at paragraph 4.1 above, the LEDL Committee or Trustees are required by
    Section 121A of the Forestry Act 1991 (as amended in 2006) to obtain information from
    LLGs and Provincial Governments in receipt of the monies from the LEDL trust account
    about the implementation of funded projects. Based on this information, the LEDL

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  • committee is required to provide reports each six months to the Secretary for Treasury
    for inclusion in a periodic report by the Treasury on budget outcomes.
    4.8 However, these reports were not provided and as a result, the AGO was unable to
    ascertain whether such reports were submitted to the relevant authority as required.
    AGO further noted that there were no physical project completion reports of the
    K48.5 million of projects detailed in Table 8 above.
    PNG Forest Authority
    4.9 The PNGFA is required by the LEDL guidelines to provide quarterly reports on the
    physical and financial status of the LEDL to the Committee; however, such reports were
    not made available to audit to suggest that this requirement was complied with.
    District Administrators
    4.10 The LEDL guidelines requires the District administrators from the logging areas to
    provide quarterly management reports on the physical and financial status of the LEDL
    activities to the JDP&BPC and PNGFA. However, there were no reports made available to
    the PNGFA and as a result, the LEDL requirements have not been complied with by the
    District Administrators in the logging areas where projects were approved and
    implemented.
    Conclusion
    4.11 The responsibility for monitoring and reporting performance of the LEDL program
    is shared by the Treasury, the LEDL Committee, the PNGFA and the Provincial and Local
    Level Governments. Section 121A of the Forestry Act 1991 (as amended in 2006) and the
    administrative guidelines for LEDL establishes the monitoring and reporting framework.
    The framework requires administering agencies and relevant entities to monitor and
    report compliance with funding conditions and project implementation.
    4.12 The design of the monitoring and arrangements set out in the legislation and
    guidelines adequately reflects the devolved nature of the project implementation and
    recognises that detailed monitoring at the project level is most suited to arrangements
    between local authorities and central government agencies. However, under current
    arrangements, authorities have not provided the required data and central agencies have
    not been able to effectively monitor or report on the projects or the LEDL program more
    broadly.
    Recommendation 7

    4.13 To facilitate effective implementation and management of the LEDL projects in
    the logging areas, the AGO recommends that the LEDL Committee coordinates closely
    with the PNGFA and the Provincial/District Administrators to ensure all development
    projects funded through the trust funds are monitored on a regular basis and monitoring
    reports are submitted on a regular basis as required by the Governing Legislation and the
    LEDL Administration Guidelines.
    Agencies Response
    At the time of finalising this report no response was received from the primary client –
    PNG Forest Authority.

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  • Appendix 1: LEDL Collection for the Years 2012 – 2015

    RECEIPTS (PGK) Total Revenue
    Years
    Month 2012 2013 2014 2015
    January 2,554,073.81 1,984,939.60 1,891,318.19 2,381,850.22 8,812,181.82
    February 1,705,178.27 1,954,528.47 2,004,825.72 1,653,689.27 7,318,221.73
    March 2,124,476.61 1,814,673.24 2,477,745.82 2,378,108.97 8,795,004.64
    April 2,221,335.30 2,302,893.67 2,536,783.07 2,029,922.56 9,090,934.60
    May 2,516,383.26 2,740,832.85 2,241,833.87 2,315,891.40 9,814,941.38
    June 2,072,364.50 1,985,739.90 3,039,812.83 2,299,805.48 9,397,722.71
    July 1,823,328.05 1,842,349.70 2,592,628.68 1,778,623.55 8,036,929.98
    August 2,068,306.17 1,611,726.54 1,558,199.40 1,940,746.66 7,178,978.77
    September 1,117,760.00 1,177,828.83 1,927,863.61 2,660,930.21 6,884,382.65
    October 1,728,642.62 3,085,627.31 2,521,721.60 2,455,127.73 9,791,119.26
    November 1,834,361.37 1,652,631.93 1,999,610.21 3,785,496.97 9,272,100.48
    December 2,642,374.05 2,545,307.68 2,249,247.04 3,975,330.03 11,412,258.80
    Total 24,408,584.01 24,699,079.72 27,041,590.04 29,655,523.05 105,804,776,82

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  • Appendix 2: FLOW CHA RTS – PROJECT SUBMISSION A ND
    APPROVAL

    The approval of funds from the log export development levy trust fund can be
    access by following the approved Administrative Guidelines for the Management
    and the Use of the Log Export Development Levy.
    A simplified version of the key steps involved in the processing of a project
    proposal and application for funding is illustrated by flowchart below.

    Project Feasibility and Survey by
    Applicants

    Project formulation, design & costing by
    Applicant

    Application received and appraised by
    District Administrator

    Compliant Reject

    JDP&BPC* approve or reject application

    Approve Reject

    Application submitted to Trustees

    Trustees approve or reject application

    Approve Not approved

    MD Forests and DA and JDP&BPC of
    Trustees Decision

    *JDP&BPC, now called “District
    Development Authority”

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  • Appendix 3: Flowchart – Project Tendering and Payment

    After a project application has been approved by the Trustees, procurement of
    Goods and Services may then proceed. For goods and services with total value up
    to K5 million is tendered by the Provincial Supply and Tenders Board (PSTB), and
    for total value of goods and services above K5 million is tendered by the Central
    Supply and Tenders Board (CSTB).
    A simplified version of the key steps involved in the tendering for goods and
    services is illustrated below.

    Approved application submitted to PDMT or DPMT

    PDMT or DPMT endorse to PSTB or CSTB

    PSTB or CSTB proceed to tender

    Tenders received, registered & referred to DPMT for evaluation Trustees Advice

    DPMT recommends to PSTB or CSTB

    PSTB or CSTB approve/reject recommendations

    Accepted Not Accepted

    Chairman PSTB or CSTB award and execute contract

    PDMT – Provincial Development and Management Team
    DPMT – District Project Management Team
    PSTB – Provincial Supply and Tenders Board
    CSTB – Central Supply and Tenders Board

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  • Appendix 4: LEDL Project Proposals Evaluated by PNGFA TEC and
    Submitted to LEDL Trustees

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  • Appendix 5: Summary of Transaction Extracted from Bank
    Statement LEDL Payments from the Trust Account for the period
    2012 – 2015

    Date Cheque No Description of Payment Amount (PGK)

    20/01/2012 CHQ 6 Chq payment – Unknown 781,056.67

    8/02/2012 CHQ 7 Chq payment – Unknown 503,032.00

    10/02/2012 CHQ 8 Chq payment – Unknown 3,000,000.00

    10/02/2012 CHQ 9 Chq payment – Unknown 2,500,000.00

    29/02/2012 CHQ 11 Chq payment – Unknown 5,000,000.00

    2/03/2012 CHQ 12 Chq payment – Unknown 493,674.14

    19/03/2012 CHQ 14 Chq payment – Unknown 975,000.00

    24/04/2012 CHQ 15 Chq payment – Unknown 5,000,000.00

    7/05/2012 CHQ 19 Chq payment – Unknown 4,500,000.00

    25/05/2012 CHQ 21 Chq payment – Unknown 6,000,000.00

    1/06/2012 CHQ 17 Chq payment – Unknown 5,500,000.00

    13/07/2012 CHQ 25 Chq payment – Unknown 9,996,855.00

    4/09/2012 CHQ 23 Chq payment – Unknown 517,000.00

    8/01/2013 CHQ 28 Chq payment – Unknown 285,440.00

    15/01/2013 CHQ 29 Chq payment – Unknown 3,500,000.00

    17/12/2014 Fund Transfer Fund Transfer to BPNG 80,000,000.00

    26/11/2015 CHQ 50 Namatanai District 2,241,793.00

    1/12/2015 CHQ 63 Sohe District 894,691.00

    1/12/2015 CHQ 38 Abau District 3,345,396.00

    2/12/2015 CHQ 48 Madang District 2,810,037.00

    2/12/2015 CHQ 54 Talasea District 3,364,226.00

    3/12/2015 CHQ 52 Security Electronic Service 226,600.00

    3/12/2015 CHQ 47 Kavieng District 4,012,853.00

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  • 8/12/2015 CHQ 42 Finschafen District 255,163.00

    8/12/2015 CHQ 55 Telifomin District 415,646.00

    8/12/2015 CHQ 46 Kand/Gloucester District 10,293,429.00

    9/12/2015 CHQ 51 Pomio District 3,360,016.00

    9/12/2015 CHQ 39 Aitape District 5,581,623.00

    11/12/2015 CHQ 43 Gazelle District 2,677,623.00

    18/12/2015 CHQ 61 Middle Ramu District 409,306.00
    22/12/2015 CHQ 59 Wewak District 1,160,320.00

    Total 169,600,779.81

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