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• National Integrity Systems 2003

  National Integrity Systems

  Transparency International

  Country Study Report

  Papua New Guinea 2003

  Lead Consultants
  Alan Doig and Stephanie McIvor
  Fraud Management Studies Unit
  Teesside Business School
  Middlesbrough
  TS1 3BA
  UK

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• National Integrity Systems 2003

  Report Authors
  INSTITUTE OF NATIONAL AFFAIRS
  March 2003

  Prepared by
  Albert Mellam & Daniel Aloi
  School of Business Administration,
  University of Papua New Guinea,
  PAPUA NEW GUINEA

  In conjunction with Michael Manning,
  Institute of National Affairs

  The National Integrity Systems TI Country Study Report Papua New Guinea 2003 was
  made possible with the funding of the UK Government’s Department for International
  Development.

  © 2003 Transparency International

  Transparency International Secretariat
  Otto-Suhr-Allee 97-99
  10585 Berlin
  Germany
  http://www.transparency.org

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  Contents
  List of Tables ………………………………………………………………………………………………………… 4
  Abbreviations ……………………………………………………………………………………………………….. 5
  Executive Summary ………………………………………………………………………………………………. 6
  Country Overview………………………………………………………………………………………………….. 8
  Corruption Profile………………………………………………………………………………………………… 11
  Causes of Corruption……………………………………………………………………………..11
  Culture………………………………………………………………………………………………11
  Party Politics ……………………………………………………………………………………….12
  Private Investors and Corruption ………………………………………………………………14
  Levels of Corruption………………………………………………………………………………14
  Costs of Corruption ……………………………………………………………………………….15
  The Impact of Change on Corruption………………………………………………………….18
  The National Integrity System………………………………………………………………………………. 20
  Executive …………………………………………………………………………………………..20
  Legislature………………………………………………………………………………………….21
  Electoral Commission …………………………………………………………………………….22
  Political Parties…………………………………………………………………………………….22
  Supreme Audit Institution……………………………………………………………………….23
  Judiciary…………………………………………………………………………………………….24
  Civil Service………………………………………………………………………………………..25
  Police and Prosecutors …………………………………………………………………………..27
  Public Procurement ……………………………………………………………………………….28
  Ombudsman ……………………………………………………………………………………….30
  Investigative/Watchdog Agencies ……………………………………………………………..33
  Media………………………………………………………………………………………………..33
  Civil Society………………………………………………………………………………………..34
  Regional and Local Government ……………………………………………………………….35
  Anti-corruption Activities …………………………………………………………………………………….. 37
  Government Anti-corruption Reforms …………………………………………………………37
  Donor Anti-Corruption Initiatives ………………………………………………………………37
  Discussion of Key Issues …………………………………………………………………………………….. 40
  General ……………………………………………………………………………………………..40
  The NIS……………………………………………………………………………………………..40
  Priorities and Recommendations ……………………………………………………………….41
  Annex 1 – Tables ………………………………………………………………………………………………….. 44
  Endnotes …………………………………………………………………………………………………………….. 48
  References ………………………………………………………………………………………………………….. 50
  Legislation…………………………………………………………………………………………………………… 52

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  List of Tables
  Table 1 List of Leaders that had gone before the Leadership Tribunal ……………………….44
  Table 2 Leadership Referrals and Prosecutions for Misuse of Public Funds (1995–1998) …47

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  Abbreviations
  CAA Civil Aviation Authority
  CDC Constitutional Development Commission
  CSDRMS Commonwealth Debt Recording and Management System
  DPM Department of Personal Management
  FMC Fletcher Morobe Construction
  FMIP Financial Management Improvement Program
  GoPNG Government of Papua New Guinea
  ICAC Independent Commission Against Corruption
  KK Kinhil Kramer
  LAFIS Ledger Accounting and Financial Management System
  NA National Alliance Party
  NBC National Broadcasting Commission
  NCD National Capital District
  NEC National Executive Council
  NPO National Planning Office
  OLIPPAC Organic Law on Integrity of Political Parties and Candidates
  OLPLG Organic Law on Provincial and Local Governments
  PAC Public Accounts Committee
  PCI Pacific Consultants International
  PDM Peoples Democratic Movement Party
  PGAS Provincial Government Accounting System
  PNC People’s National Congress Party
  PNGEC Papua New Guinea Electoral Commission
  PNGOC Ombudsman Commission of Papua New Guinea
  POSF Public Officers Superannuation Fund
  PSM Public Service Management Act
  SPFMT Support for provincial Government Management Training
  TI Transparency International
  UNDP United Nations Development Program

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  Papua New Guinea

  Executive Summary
  Perhaps as suggested by a “bill board” at a busy inter-section in a Port Moresby Street,
  corruption is killing Papua New Guinea (PNG). Indeed corruption in many different forms
  has saturated many aspects of the public and private sectors of its society. Corruption is
  endemic and it happens at all levels of government and public sector organizations. There
  is also evidence of corruption in the private sector, although at less alarming rates.
  The performance of various components of the NIS in PNG has produced a mixed bag of
  results. Except for the judiciary, the media, the PNG Ombudsman Commission and civil
  society, most government institutions are perhaps tolerant and passive towards corruption.
  The code of conduct for all elected parliamentarians including the appointed ministers is
  determined by the Organic Law on Duties and Responsibilities of Leadership (OLDRL)1,
  which is enforced by the Ombudsman Commission. This code specifies that within three
  months of assuming office the elected leader has to submit to the Ombudsman
  Commission information pertaining to his or her incomes, assets, business connections,
  liabilities, etc. These submissions are made annually.
  This law also applies to executives and members of constitutional offices, heads of central
  and provincial government departments, the heads and board members of statutory
  organizations, ambassadors, the commanders of disciplinary forces and other senior
  executives.
  It is observed that there are adequate anti-corruption laws available in Papua New Guinea
  (Sections 87,88, 92 and 97 of the Criminal Code refer to fraud, undue influence, tendering
  and bribery.). The weakness is, however, in the effective implementation and policing of
  these laws. A related weakness is that organizations entrusted to fight corruption such as
  the Ombudsman Commission have not been given enough ‘teeth’ to deter corrupt
  practices.
  Interesting and welcome developments in recent years have been the establishment of
  Transparency International PNG and the increased campaign against corruption by the
  Media Council. It is observed that through efforts of such bodies the public is now
  becoming keener to become involved in the fight against corruption. Non-government
  organizations, including the churches, are now openly talking against corruption. There is
  now a push for parliament to pass a law to establish the Independent Commission Against
  Corruption. With the combined efforts of government organizations such as the
  Ombudsman Commission, the Courts, the Police, the Media Council, and Transparency
  International PNG and other Non Government Organisations, much can be achieved in
  terms of reducing corruption.
  A national anticorruption agency as suggested under the ICAC is also much needed,
  although there must be clear demarcation of powers and responsibilities between such an
  agency and the existing agencies. The establishment of a NACA (National Anti-Corruption
  Agency or Alliance) would require political will and sustained societal support to make it
  effective.

  Summary of Priorities and Recommendations
  There are still many things that need to be done to reduce corruption in Papua New
  Guinea. A number of priority areas need to be attended to immediately to improve the
  fight against corruption:
  First pressure from a wider community must be put on members of parliament to pass the
  bill for the establishment of the Independent Commission Against Corruption. The media

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  could play a bigger role in educating the voters to put pressure on their members to vote
  in favour of this Commission.
  Secondly, laws relating to increasing the powers of the Ombudsman Commission should be
  reviewed. This should be done with the view to giving more ‘teeth’ to the Commission.
  Thirdly, the interest and enthusiasm of the general public in the fight against corruption
  need to be strengthened and maintained. This can be done through media campaigns, the
  involvement of NGOs in awareness campaigns, and discussions and consultations with
  various sections of society. The media campaign should be further complemented by
  ensuring that those found guilty of corruption are prosecuted.

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  Country Overview
  PNG comprises half of New Guinea and a range of islands, one of which has sought to
  break away from the country (especially Bouganville Island which has stronger ties to its
  neighbouring Solomons Islands and whose copper mine accounted for some 40% of the
  country’s export revenues before its closure in 1989). PNG has been independent since
  1975; it is part of the Commonwealth. It has a Governor General acting as the
  representative of the constitutional Head of State (the British monarch) but executive
  power lies with the Prime Minister and the National Executive Council (the government).
  The Council is formally appointed by the Governor General on the recommendation of the
  Prime Minister (while it is the Council which recommends the Governor General); the Prime
  Minister is appointed by the Governor General on the basis of the majority support in the
  National Parliament. This latter institution is unicameral with 109 members, of which some
  20% are elected from provincial electorates. There are 20 provinces. There are some 6
  main parties (and 16 minor ones) but the biggest political grouping elected to the
  Parliament were are the independents who subsequently joined other political parties so
  there are only 2 left in the 2002 Parliament. The coalition government makes for a fragile
  tenure (with governments dismissed in 1999 and previous years in the face of votes of no
  confidence and allegations of misuse of office).
  PNG is a country with great potential from its natural endowments of minerals and
  petroleum, large tracts of unoccupied fertile land, large forestry and fishery resources and
  tourism potential. It has enjoyed unprecedented wealth from minerals and petroleum over
  the 1990s but has been unable to convert this into real development and giving it some of
  the worst human development indicators in the Pacific.
  Corruption in PNG cannot be discussed in isolation from development and politics.
  Explanations deduced from leaders dismissed as a result of misconduct and misuse of
  public funds alleged that their actions resulted from attempts to address, if not fast track,
  wealth-generating development activities in their electorates. This further enlightens the
  fact of widening disparities in development between ethnic groups, and between different
  geographical areas.
  The background to corruption in PNG is similar to other small island states. Comparisons
  reiterate issues and themes that connote corruption with underdevelopment and poor
  governance. Development policy objectives to generate wealth through developing natural
  resources coupled with communal ownership, amidst divers ethnic groups, and acute
  incapacity of the government, provide a susceptible nursery to germinate corruption.
  The question that is immediate here is that of how and why corruption is peculiar in PNG.
  In the political arena, cases of corruption portray reasons pertaining to a political leader’s
  desire to bring about immediate and visible development to his or her electorate, and
  especially those immediate to the leader. This justification also highlights a possible nexus
  between Melanesian communalism, personal greed and development. However these links
  could be rebutted, especially when traditional leaders were transparent in the distribution
  of wealth, a trait that is concealed in the dealings of today’s politicians.
  Related to this would be the misconception of politics as a means to personal wealth. This
  perception has historical validity. Absence of a strong indigenous capital base during
  colonialism would have fuelled the business aspirations of politicians. A browse through the
  political chronicles of PNG reveals an interesting trend. Politicians begin their political
  careers as ordinary persons, or civil servants, and graduate as business entrepreneurs
  after their discontinuation from office.
  In fact, most medium scale business activities in PNG are owned or partly owned by
  politicians and ex-politicians. The emergence of politicians-turned-businessmen or vice
  versa after 1975, and the difficulties in separating business from politics, had sent out
  false signals to aspirants to political office. Contesting elections today has become a god-
  sent opportunity to wealth accumulation. Cases of diverting public monies into personal

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  accounts or into those of the politician’s business associates, as cited in this report, allude
  to this assertion.
  The absence of a developed indigenous capital base has provided a vacuum in PNG’s
  economy, which in turn has impaired the government’s bargaining position against the
  multinational companies (MNC). The national government in PNG, by default, has become
  the business entrepreneur to partner MNCs in major development. And it is the dilemma of
  wearing ‘two hats’ that has compromised the government’s neutrality. Its participation as
  guarantor and as joint-venture partner has also facilitated avenues for corruption by
  exposing civil servants and politicians to be vulnerable to bribes and commissions from
  foreign companies.
  It is also an alternative to the market as a producer and distributor of goods and services.
  Hence businesses are conducted with government resources and through government
  institutions guided by political prices more than market prices. Corporate clients of
  business houses are public officials and organizations. The little that is left of the market is
  secured through political affiliations and networks. These factors are susceptible to
  corruption and further make it difficult for business entrepreneurs pursuing political careers
  to separate politics from their business interests.
  Finally there is the issue of political exploitation of natural resources and ‘generous’ levels
  of aid in terms of “‘windfall’ incomes (economic rents) that have led to waste and
  corruption. Rent-seeking has subsidised the rise of a small political elite and overblown
  central government at the expense of investment in infrastructure and diversification of
  the economy” (Windybank and Manning, 2003: p2). The political arena, as will be noted
  below, becomes a goal for inside economic gain rather than for the promotion of the public
  interest.
  Attempts to take government away from the business through privatisation, liberalization
  and deregulation have been dragging, and at times have been derailed, with mass
  demonstrations that ride on the emotions of public ownership of the state owned business
  (SOE) entities. The fears of job losses and the likelihood of the economy being
  denationalised were reflective in the government’s prolonged delays in implementing
  privatisation. Even now, attempts have been immersed in Commissions of Inquiry
  revealing allegations of defaults in the bidding process. The delays in selling SOEs reveal
  their unprofitable nature and perhaps the undeveloped indigenous capital base. The focus
  has then shifted across to superannuation funds as the alternate capital base. However
  these too are now inundated with allegations of corruption. Commissions of Inquiry reveal
  investment decisions that were submerged with tendering flaws and political pricing.
  Political influence in appointments of board members and influencing of the procurement
  process were also rampant in the superannuation funds, as revealed in the 2001 Inquiry
  into the National Provident Fund.
  Unlike Fiji, which is more of a homogeneous society through its chieftain system, PNG is
  made up of many nation-states that are diverse in culture and language. Except for certain
  parts of Milne Bay and New Ireland provinces, the traditional political systems have little
  impact on PNGs political configurations. However it is the abuse of the traditional system
  that matters in relation to corruption.
  Traditional leaders have earned and legitimised their mandate through ownership and
  distribution of wealth with transparency (‘for many Melanesian traditional societies, a
  credible leader is often defined by the volume of wealth in his disposal and power that he
  is able to wield’ (Kavanamur and Okole, 2001: 6)). They spoke for and on behalf of their
  clans, such that land and its resources had been a communal asset. Modern political
  leaders of PNG today do not ask for their voters’ consensus nor give an account to their
  voters when distributing electoral development funds. They divert funds to family
  businesses that are registered under a clan name and symbol.
  Political power may be equally shared in Papua New Guinea, but it is the high turnover rate
  at the national parliament that has a lot of implications for corruption. Almost 80% of
  elected leaders fail to remain in power for more than a term in parliament. Such
  uncertainty exerts pressures on the parliamentarians to maximise all available

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  opportunities to establish themselves by using public office and resources to remain in
  power through vote buying and building their power base.
  Diverting public funds outside of the scope of appropriations onto politically expedient
  projects or buying of capital goods like banana boats and land cruisers that rapidly
  depreciate become the norm of first-time (and perhaps last-time) politicians. Others invest
  public funds into trust accounts and corporative ventures under the name-tag of the
  constituencies. Of course these are often conduits for wealth accumulation by individual
  MPs.
  Upon attaining independence in 1975, PNG adopted the Westminster system of
  government with a national parliament whose members are elected for a five-year term
  through a secret ballot by the voters in the 109 constituencies throughout the country. It
  has a three–tier political system comprising of the national government, 20 provincial
  governments and about 267 local and municipal governments. Governors who are elected
  as provincial members to the national parliament head the provincial governments.
  The Organic Law on Provincial and Local Level Government (OLPLLG) defines that the
  provincial member assumes the office of a governor of the province. However the
  government of the day may appoint other elected members of constituencies within the
  province, should the provincial member be appointed as a minister in the National
  Executive Council (NEC). Apart from the governor, provincial government comprises the
  presidents of the all local governments in the province and other nominated members, and
  all the members of the national parliament from the province. The third tier of government
  is local level government, which is made up of elected ward councillors.
  The national parliament is a single house assembly, from which the National Executive
  Council (NEC) is chosen. The NEC is headed by a Prime Minister who comes from a political
  party that commands majority of parliamentarians on the floor of the parliament. So far in
  PNG’s political history there has been no single party that comprises the executive or
  dominates the parliament. On average the government is been made up of five coalition
  parties plus assorted independent members. The current Somare–Marat government, for
  instance, is a coalition government that is made up of six political parties, together with a
  handful of independent members (though all the independents have subsequently joined
  parties). The national parliament is also empowered to appoint a women’s representative
  outside the ballot box. However this power has rarely been used. Unlike Tonga and Fiji, the
  configuration in PNG’s political system has no formal ties with the traditional political
  system. The parliament in PNG is not subject to any traditional political institutions or
  practices.
  Except for matters related to Foreign Affairs and Defence, the administration of the
  country is divided between some twenty-five national departments some of whose
  functions and responsibilities are decentralized to the provincial departments. These
  responsibilities are then delegated to a number of districts and sub-districts. The districts
  comprise of Local-Level Governments (LLGs) which are political units made up of elected
  councillors each representing a ward, which are in turn made up of several villages and
  hamlets.

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  Corruption Profile

  Causes of Corruption
  Corruption is found in underdeveloped, developing and developed economies but in
  varying degrees. On the same tone, rich leaders and underpaid government workers alike
  abuse their authority to make and access wealth. This suggests that poverty cannot be the
  only cause of corruption, neither is there a single cause of corruption. In PNG there are
  several factors that have connotations as causes of corruption. These are: culture, failure
  of government institutions to use the controls available, inadequacy and incapacity of the
  institutions, demands of supporters, introduction of large scale logging, circumvention of
  government regulations like work permits, visas, and reserved activities.

  Culture
  Sharing and caring is synonymous with leadership in Melanesian culture. Amongst
  traditional leaders, mobilization and distribution of wealth is an essential component of
  their responsibilities. It further enhances their status within the tribe. However upon being
  elected, leaders and appointed officials fail to draw differences between traditional culture
  and the rules and regulations governing public office and public resources.
  It is common to hear voters selecting a particular candidate on the basis of his or her
  attributes of sharing and caring. This in turn compels elected leaders to return favours to
  their voters through goods and services. Observations on voters’ and candidates’
  behaviour during the 1987 and 1992 elections alluded to such reciprocal relationships
  between voters and candidates based on leadership traits of sharing and caring2. (Oliver,
  1989; Saffu, 1996) The same reasons were later observed in the 2002 national elections,
  and especially in electorates that had the traditional chieftain system.
  The traditional culture of PNG does not sanction corruption but it is its compulsion and its
  incompatibility with the bureaucratic and democratic norms and its abuse that denotes
  corruption. Skewing and manipulating proper tendering procedures to award contracts to
  family companies, or facilitating appointments with disregard to merit, carry implications of
  contrariety in the communal culture that exists within the PNG society. Payani’s diagnosis
  of the composition of a country’s public sector, for instance, alluded to a domination of one
  ethnic or provincial group depending on the provincial origin of an executive or the human
  resource personnel within the organization. (Payani, 2000)
  His diagnosis was based on examples drawn from the PNG Electricity Commission and
  PostPNG, which at the time of his studies were largely dominated by employees from the
  East New Britain province. Interestingly, PostPNG witnessed phenomenal employment of
  the workforce from one province at its central headquarters by 1998. Even the security
  guards guarding the premises had affiliation with the CEO of the company and his political
  party. The Chief Executive Officer (CEO) of the company was also an unsuccessful
  candidate who contested the Enga regional seat in the 1997 national elections.
  These trends are of course debatable especially when compared with cases where leaders
  have diverted funds outside of procedures and laws to fund their own self-interest. The
  majority of the referrals of leaders by the PNGOC for prosecution is due to misuse and
  abuse of procedures in applying public funds. For instance, between 1995 and 1998 there
  were twelve leaders referred by the commission for prosecution. Nine of these leaders had
  charges related to misappropriation of Electoral Development Funds and other public
  infrastructure development funds. Their transgression included diverting funds into their
  private accounts or funding political expediency projects outside the scope of the
  prescribed appropriations. (Ombudsman Commission of PNG, 2000:67-88) These cases are
  cited in Table 2, Annex 1.
  But this individualistic behaviour has a nexus to culture when considered in the context
  that almost all leaders conduct their campaigns and earn their votes through strong ethnic

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  and genealogical ties than the primacy of policies as it would be in developed democracies.
  Hence the abuse of culture arises when the conduct of their actions becomes ostentatious
  with the use of communal name tags, or communal trusts, which in reality act as conduits
  to personal wealth.
  Culture in PNG is one factor that can give an explanation to the causes of corruption. While
  it can be argued that there are certain attributes of the culture which seem to be more
  compatible with corruption, this does not mean that PNG has a corrupt culture. In many
  parts of the country, sharing and caring is synonymous with a clan leader or an elder of a
  family. Amongst traditional leaders, mobilization and distribution of wealth is an essential
  component of their responsibilities. Such activity further enhances their status in the clan
  or the tribe.
  Such leadership traits are said to continue amongst elected leaders and appointed officials
  who facilitate their cultural responsibilities and their social obligations through their access
  to public resources. It is common to hear voters selecting a particular candidate on the
  basis of his or her attributes of sharing and caring. This in turn compels elected leaders to
  return favours to their voters through goods and services. For instance, observations on
  voters’ behaviour in Madang Open during the 1997 and 2002 elections showed that people
  voted for candidates on the basis of their leadership traits of sharing and caring.
  During the same observation, candidates stated that it was part of their culture to
  distribute resources to their tribal groups3. (Oliver, 1989, Saffu, 1996) These actions, they
  claimed, boost the social status of the leaders in society. They argued that as leaders they
  are expected to provide for their people, which they consider as normal. However the
  problem arises when favours and social obligations conflict with rules and procedures
  underlying bureaucracy and democracy.

  Party Politics
  In party politics corruption has been evident in maintaining the shifting political alliances;
  the 1999 World bank report noted that, despite the rhetoric of reform, knowledge of the
  misuse of discretionary powers was ‘often used to engineer political alliances rather than to
  reduce such behaviour and build credibility’ (World Bank, 1999: 105). Further, there are
  instances were leaders negotiated with foreign business entrepreneurs to gain financial
  support for their respective parties to fund their election campaigns. This transaction is
  corrupted when funds become personal rather than party donations. But much more
  alarming in this regard is when party donations are tied in with business concessions and
  favours pending a successful election. A first case of this kind was documented in 1991
  involving the Deputy Prime Minister, who was also the national Minister for Forestry, and a
  Malaysian Timber Company.
  The Barnett Inquiry revealed that there was a fraudulent deal in the award of log
  harvesting rights to a Malaysian company. The business transaction was between a local
  landowner company, in which the minister had substantial interest, and the foreign
  company, which gave financial donations to the minister’s Peoples Action Party to fund its
  1987 national election campaign. In return, concessional log harvesting and exporting
  permits were granted to a Malaysian company.
  Political nepotism is another factor that facilitates corruption. Appointment of party men to
  senior positions within the bureaucracy or to head government institutions is a common
  trend in PNG’s politics: “nepotism is entrenched at the high levels. The arbitrary
  appointment of clan members or political cronies to public office, regardless of merit, has
  politicised and destabilised the bureaucracy and state-owned enterprises, most of which
  are running at a huge loss” (Windybank and Manning, 2003: 4)
  Changes amongst heads of government departments has become almost the norm in
  PNG. Retrenched public officers, ex-heads of departments with terminated contracts, and
  unsuccessful party-sponsored candidates comprise a bandwagon of party-loyalists who are
  then given jobs in return for their loyalty and support. The appointments of the acting
  administrator of the Southern Highlands Province in 2001, and the Chairman of

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  Constitutional Review Commission (CRC) and later to the Privatisation Commission are
  only some examples of appointees with political connotations4.
  The former was an unsuccessful PDM-sponsored candidate for the Southern Highlands
  provincial seat, while the chairman of CRC was a PPP strong man, who also lost his seat in
  the 1997 national elections. This may be a common trend elsewhere, but the aftermath of
  this kind of appointment does little to conceal either corruption or its traits in PNG.
  Apart from compromising and disregarding procedures and merit, such appointments were
  made to fast track the implementation of political objectives. The appointment of the CRC
  chairman followed by the Privatisation Commission appointment put into motion major
  policy changes on privatisation that were initiated by the PDM-PPP led coalition amidst
  strong opposition from the unions.
  The controversy between 2001 and 2002 regarding appointments of a CEO to the National
  Capital District (NCD) portray a good example of party politics and corruption in PNG. The
  tussle between the appointees of the Peoples’ Democratic Movement (PDM) and the
  People’s National Congress (PNC) would go down on record as controversial appointments.
  The highlight of this saga was that these changes were confirmed and revoked within a
  week with little regard to appointment procedures, let alone the manner in which hand-
  over and take-over changes were made.
  In fact, the changes were almost like a movie scene with appointees entering and exiting
  the city hall, each with their deputies and a band of supporters. The later awarding of a
  contract to expand the city’s road system to a Global Construction company (GC)
  immediately after the appointment of the PDM-sponsored CEO, Mr. Kipit, raised several
  implications, including that of manipulation of the tendering procedures. GC had
  experience only in the Southern Highlands province and had little exposure to civil
  engineering in urban cities like Port Moresby. There were also established companies like
  Curtin Brothers and Barclay Brothers, who had wealth of experience of civil engineering in
  PNG, but were overlooked for the construction job in the city. GC is also a company
  rumoured to have substantial share ownership among some members of the ruling PDM
  party.
  The project was disrupted in October of 2002. Interestingly this disruption coincided with
  PDM’s defeat in the 2002 national election. Dogged with controversies, including expansion
  of the project outside its original scope, the project came to a halt due to non-payment by
  the city authority. Interestingly there was no immediate commitment from the Somare led
  government by the end of 2002 to complete the project. At the time of this report, there
  are major scars on the city’s main trunk routes depicting this discontinuation, and the
  city’s CEO post had been advertised after a change in the governing board of NCD.
  However, the NCD saga may have not ended here with the recent vote of no confidence in
  the chairman5.
  Such cases reflect to the extent in which the political world has penetrated the
  administrative world. As the World Bank noted: ‘Papua New Guinea’s system provides for a
  clear separation of the roles of the legislature and civil service, with the legislature
  predominantly responsible for oversight and policy and the civil service for administration.
  These roles have become blurred, however, with ministers directly influencing
  administrative decisions, policy implementation, resource allocations, and staff
  appointments. The independence of the public service has all but vanished. Despite
  contractual arrangements, over the past two years the previous government replaced most
  agency heads. Thus it is no surprise that Parliament’s oversight function has evaporated as
  politicians focus on direct intervention in the administration’. (World Bank, 1999: 229)

  In early 2003 the country passed an organic Law which guarantees due process in the
  appointment of Departmental heads and which effectively removed the power of politicians
  to make their own appointments. The power was returned to the Public Services
  Commission and procedures for appointment and dismissal clearly spelt out.

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  Private Investors and Corruption
  The private sector is also equally responsible for corruption in PNG. The forestry sector in
  PNG records evidence of anomalies and bribery in the signing of contractual agreements
  between resource owners and resource developers. The Barnet Inquiry records
  controversial deals between Asian timber companies and elected leaders, with promises to
  financially support political parties during elections in return for permits to harvest timber.
  In other instances the tribal and clan leaders of landowner companies are funded to go on
  sight-seeing trips to Cairns or Singapore as appreciation in return for agreements to
  harvest logs. The Inquiry also highlights instances where government officials and the
  resource harvesters have blatantly abused procedures in harvesting and exporting of logs.

  Levels of Corruption
  Corruption in PNG happens at all levels of government and private organizations, although
  at a less alarming rate amongst private organizations.
  Common amongst Ministers and Heads of Departments and Statutory bodies is the abuse
  and exploitation of contractual benefits and authority: the 1999 World Bank report had
  noted that ‘the institutionalisation of numerous discretionary powers to officials and
  ministers has produced an ad hoc approach to applying policies and regulations and
  increased the scope for corruption’. (World Bank, 1999: 105) This includes executives:
  • Using their position and powers to appoint friends and cronies to the
  bureaucracy. And, furthermore, using their positions of authority to award
  themselves benefits in excess of their entitlements;
  • Contracting government businesses to themselves or to front companies and
  partners; and
  • Gaining additional assets (houses and vehicles) through contractual provisions.
  This practice is facilitated in the first instance when heads of government
  organizations are allowed to dictate their own contracts6. (Tsiamalili, 2000b)
  The former Secretary for Foreign Affairs and former member for Yangoru/ Sausia in 1997
  was dismissed from holding public office after being found guilty under the Leadership
  Code. He was charged on seventeen counts relating to improperly requesting and
  obtaining payments of his housing allowances that exceeded his proper entitlement while
  acting as the Secretary of the Foreign Affairs Department. These counts included diverting
  and irregularly obtaining monies from the department in the form of salary advances to
  fund private contractors to maintain his private home. Additionally, monies from different
  votes within the department were improperly obtained to fund a holiday trip in Australia.
  (Papua New Guinea National Court, 1997).
  The Sandline saga stands out as another example of disregard of proper tendering process
  that transpired at the level of the executive government and amongst the heads of
  important government bureaucracies. It was alleged by the former commander of PNG
  Defence Force that a total of K166 million would have been spent on acquiring the military
  hardware to be used in Bougainville operations that were either obsolete or not in high
  demand. These arsenals were acquired at cheap prices but later sold to the PNG
  government at an exorbitant price. Most alarming was that the negotiations were
  conducted between the government and Sandline (outside the public procurement
  process). Even the government’s chief legal adviser’s opinion was not sought.
  The Sandline case in 1997 involved the Government hiring a group of mercenaries named
  London-based Sandline International, but part of a firm called Executive Outcomes, to try
  and bring the civil war on Bougainville to an end after 8 years of fighting. A blockade on
  the island caused thousands of civilian deaths, the closure of schools and all government
  services. The Defence Force Commander rebelled, captured the Sandline troops and sent
  them packing. There was rioting in the streets for a short while and then the Defence Force
  accompanied by thousands of civilians blockaded Parliament until they terminated
  Sandline’s contract.

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  As a result the Government was defeated at the upcoming election, the Commander was
  dismissed but was not court martialled because of the widespread public support for his
  actions. He was later discredited for receiving a large gift from a military equipment
  supplier. The military hardware destined for the project was diverted to Tindal Airforce
  Base in Australia where it was left to rust away until it was disposed of in the last few
  years. Sandline forced the Government to pay the remainder of their contract by taking a
  lien on moneys owing to it from the European Union.
  Further down the hierarchy of the public bureaucracy, the supervisors and their
  subordinates employ ‘carrot and stick’ culture when attending to their clients. Some of the
  common trends of such irregular practices include:
  • Providers of public service hinting their willingness to be bribed, either an
  invitation for lunch or “six-packs”7 and “bus fares” in return to speed up
  inquiries and service delivery processes;
  • Law enforcement officers extorting money for themselves by threatening to
  impose fines (eg. abuse of on-spot fines by police traffic officers and anti-litter
  officers);
  • Officials using their position and networks to seek employment for relatives and
  friends. Positions and networks are also used to cater for other requests for
  friends and networks. Education officers sniffing out schools for admission
  spaces, or arranging moves of children to areas favoured by parents, children
  repeating grade six in different schools to matriculate into high schools);
  • Service providers giving priority to wantoks (the informal reciprocal relations
  between friends and kin groups) and family members where there is high
  demand for services instead of following queues and merit; and
  • Service providers using state assets, vehicles and communication networks to
  pursue their or their affiliates’ business interests. In PNG, it is not uncommon to
  sight a ‘Z’ plated government owned vehicle dropping off and picking up
  vendors with their cooler boxes and marketing tables at strategic locations.
  Elected leaders at almost all levels of government are also directly and indirectly involved
  in almost similar corrupt activities, but in varying degrees. At national government level
  the following would be some of the most common activities pertaining to corruption.
  Political appointments whereby cronies, a party man, family members and relatives are
  appointed to public offices, either as chief executives or as junior officers. For example, it
  was observed in Enga Province at one time that almost all public officials, even as low as
  drivers and the janitor man were related to the political leader (provincial governor) on the
  basis of their tribal affiliation8. On the same note, a former deputy leader of the opposition
  was dismissed from office as a result of not declaring his interest in the cabinet when his
  brother was appointed into the PSC. It was alleged that he facilitated the appointment
  during his time as the minister responsible for the DPM. More recently the appointment of
  four top civil servants lacked transparency despite public assurances by the new
  government to follow merit and due processes in appointments. These ‘back door’
  appointments were made without any advertisements, nor were there any consultations
  with appropriate bodies like the PSC.

  Costs of Corruption
  There are several categories under which the cost of corruption is discussed. The economic
  cost of corruption stands out as the number one category. In general, the economic cost of
  corruption is associated with the decline in growth as a result of bad investments. Firstly,
  public funds (including foreign aid), which elected leaders access, are committed to capital
  spending on the premise that this would foster growth. Major categories of public funds in
  this regard include the Rural Transport Development Fund, Minor Transport Program funds,
  and Transport Sectoral Funds. These are in addition to the National Development Fund and
  the Electoral Development Funds.

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  Under the guise of bringing development, elected leaders commit much of these funds to
  the building (and maintenance) of roads and bridges, rural health centres and schools. The
  realities of the deteriorating state of infrastructure, some of it virtually non-existent,
  together with the isolation of the majority living in rural areas, justify these commitments.
  However much of these investments are misused and diverted to private accounts or to
  fund bogus companies and projects. The actual misuse and abuse of these funds are the
  cardinal sins underlying the number of referrals of elected leaders for prosecution by the
  OC (PNG) for breaching leadership code (see Table 2, Annex 1).
  Jeffery Balakau, while governor of Enga province in 1991, misappropriated K150,000.00 by
  depositing the money into the private cheque account of a close associate. This was then
  drawn out in untraceable cash. The issue of growth is further complicated by the fact that
  capital spending is redirected towards funding politically expedient projects. Mr. John
  Nilkare, while being the elected member for Gumine and the Minister for Village Services
  and Provincial Affairs in 1992, for instance, was charged with diverting K20, 000.00 under
  the Minor Transport Program to build roads under his sponsorship. He was also charged
  with using most of K250, 000.00 under the Rural Transport Program, which was intended
  to build four roads, to purchase plant and equipment.
  Similarly Mr Andrew Posai, who was the Minister for Forests in 1992, altered the scope of
  the K40, 000 that was allocated to purchase a workboat for his electorate by purchasing
  11 dinghies and outboard motors, which he gave to selected individuals in his electorate.
  He was also charged with applying and allocating substantial amounts of public money to a
  company of which he was the chairman.
  Concentration of public funds on capital projects diverted many resources away from other
  needy areas. Education Reform since 1988 increased ribbon-cutting ceremonies marking
  the opening of new classrooms by elected leaders who had actually sponsored the
  projects. But nothing is mentioned about the lack of maintenance of existing but
  deteriorating classrooms, let alone the need for maintenance of new classrooms during
  their lifespan. Electoral Development Funds are used to purchase new Toyota Land
  Cruisers for local level governments, and ambulances for rural health centres. Bearing
  slogans stating that the vehicles had been donated by ‘so and so’ honourable members,
  they are then driven on roads that carry the scars of torrential rains and lack of
  maintenance. These roads can be disrupted by rivers without bridges or connected with
  bridges that are scavenged by villagers who have dismantled and removed parts of the
  bridges to show their frustration at the lack of development. New rural health centres are
  built amidst acute shortages of community health workers and drugs. Lack of maintenance
  has become synonymous with capital projects in PNG and there is no guarantee that these
  new projects will be maintained. Against such a background there is less opportunity for
  capital spending to increase growth.
  These features were also evident in The Cairns Conservatory Building Deal in 1994 when
  the Public Officers’ Superannuation Fund (POSF) purchased a building in Cairns for a price
  that was two and a half times more than the market value. This building was also
  purchased outside the proper tendering process without any feasibility studies with
  significant political interference (see Box 1). The building was supposed to house all PNG
  government offices in northern Australia. Cairns Conservatory was an office building that
  was sold within the same group of people for $A3m, $6m and $9m. (approximate figures)
  within a 12 month period, it was then sold to the Public Officers’ Superannuation fund for
  $A18 million. The government guaranteed the full rental of the building which remained
  half empty for five years. The POSF ensured that the government of PNG lease the
  property over ten years at a market rent of A$900 per square meter. The government also
  met the operating cost of the building. (Kavanamur & Okole, 2001; Ombudsman
  Commission, 1999 & 2000).

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  Box 1: Politics and the Cairns Conservatory Building

  ‘The key people identified by the investigations included the Prime Minister at
  that time and his deputy, the Secretary for Foreign Affairs and Trade, POSF’s
  managing director, the deputy controller of foreign exchange with the Central
  Bank of PNG, and business associates. It was apparent that correct procedures
  were circumvented to get the building purchased. Under intense pressure from
  the vendor, a special POSF board meeting was convened primarily to approve
  the deal. And to maneuver around the K1 million limit on off-shore
  investments stipulated in the POSF Act, the managing director had to request a
  waiver from the PM who was coincidentally the acting Minister for Finance and
  Planning in the absence of the incumbent who was overseas.
  ‘The building was intended to house all PNG government offices in the northern
  part of Australia. However, the state was inadvertently led by POSF and
  business cronies to take out a very costly ten-year head-lease over the entire
  property comprising 3,018 square meters. This included a commencement
  base rental of $A980 per square meter so that POSF would not bear the
  vacancy risk. Before purchasing the property, POSF ensured that the
  government met several important conditions (Auditor General of PNG, 1998):
  • the state must take out a head-lease over the entire property;
  • the term of the head-lease would extend for ten years with the
  option to renew;
  • the state must pay the market rent of A$900 per square meter, the
  state must bear responsibility of all of the operating costs; and
  • the rent must be annually adjusted in accordance with movements
  in the Consumer Price Index (CPI) or the rental market whichever is
  higher.
  The Auditor General found that a discernible connection between politicians,
  public servants, and business associates existed. The then Managing Director
  of the POSF, Mr. Ereman Ragi, testified before the Ombudsman Commission
  that political pressure was applied from the top’. (Kavanamur and Okole, 2001:
  16)

  It was later valued as part of the Commission of enquiry at around $8m. The Commission
  established gross incompetence and alleged fraud which was not proven. A civil case was
  prepared and the state spent around $1m in its preparation to the stage that summons
  were to be served. The Attorney General failed to serve the warrants and no action has
  ever been taken against the culprits. At the end, the cost of this bad investment decision
  was subsidised by contributors to the fund. The deal diverted monies that may have been
  used to finance productive spending elsewhere. In the final count, the returns are minimal
  or nil. Here the spiralling costs of corruption matter most as they beef-up the total
  financial cost and drain the public purse.
  On the other hand, frequent changes in heads of department to reward political loyalty has
  imposed a lot of constraints on the public purse. Not only have the terminated contracts
  needed to be honoured to avoid legal consequences9, but payments have to be made to
  additional assistants (such as chauffeurs, executive officers, bodyguards or even janitors).
  Otherwise the costs of extra personnel are accrued by the respective organization. By then
  these personnel may have formalized their employment status and made their way into
  the public bureaucracy. The existence of ghost names revealed by the Minister for Public
  Service towards the end of 2002 was only the ‘tip of an iceberg’ regarding extra personnel.
  The unanswered question remains as to how they got onto the government’s payroll.

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  On the political front, legitimacy and the integrity of elected leaders are disparaged to an
  extent that civil society has little or no faith in the government. Plans announced in former
  Prime Minister Morauta’s maiden speech to restore national institutions and eliminate the
  abuse of ‘seed money’10 never got off the ground. Instead, the opposite occurred which
  resulted in widespread disenchantment of society. Allegations of appointments of cronies
  and the selling of the PNG Banking Corporation at a deflated price were held against the
  Morauta government. Even the violent deaths of three students of the University of PNG
  were misinterpreted as silencing the voice of the society. The political cost was, of course,
  the very poor performance of the PDM Party in the 2002 elections in which 80 sitting
  members lost their seats. In the final analysis there is lack of political stability and
  continuity of political executives.
  Public perception against the Morauta government’s disrespect for merit and procedures
  led to the election of the Somare-Marat government in 2002. But there are already
  indications of the appointment of top civil servants outside due process and merit, despite
  announcements that all appointments were to be made on merit. The Independent Public
  Business Corporation Act was the first to be changed by the new government, allowing the
  Board to be re-constituted and removing its powers to appoint, at arms length and
  according to specified procedures, Boards of state owned enterprises (SOEs).
  By November of 2002 there were four appointments of departmental heads that were
  made in isolation from the PSC, fast tracked through the DPM. At the same time, six of the
  top civil servants in the central bureaucracy were from the Prime Minister’s province. This
  attracted reactions from the public accusing the government of being inundated by ‘Sepik
  Tsunami’ or Sepik Mafia11. Political consequences could include possible split within the
  ruling party and between the coalition partners, a characteristic that has become a trait in
  PNG’s parliamentary democracy.
  In summary, it can be deduced from these cases that the cost of corruption falls on the
  taxpayers, the business houses and ordinary Papua New Guineans. Public funds spent on
  politically expedient projects or diverted into private accounts only increase the poverty
  gap amongst Papua New Guineans.

  The Impact of Change on Corruption
  Democratisation, decentralisation and good governance have been some of the changes in
  PNG that have had considerable impact on levels of corruption. Democratisation has lead
  to the opening of the state. Over the past decade, the level of societal participation,
  especially of interest groups, has increased considerably. Apart from mobilizing their
  members and increasingly articulating their interests within society, these interest groups
  have joined forces, as in the Community Coalition Against Corruption (CCAC) and the
  Consultative Implementation and Monitoring Committee (CIMC), to influence the decision
  making process of the government.
  The PNG chapter of Greenpeace, for instance, has been very active in exposing sinuous
  deals between foreign log harvesters, government and landowners. It has mobilised
  successive landowners by articulating information on unfair disparities in log pricing and
  environmental degradation, even to the extent of influencing the government’s policies on
  forest development.
  A most recent example of the impact of change can be deduced from the Inquiry initiated
  by the Morauta government in 2001 into the National Provident Fund (NPF). This inquiry
  revealed serious allegations of abuse of management and investment of funds contributed
  by private sector employees in PNG. The report and the press carried allegations of how
  politicians, managers of NPF and other prominent leaders plundered the fund through poor
  investment deals. The NPF Tower project, in particular, was plagued with fraudulent deals
  in tendering and construction of the tower. But it is the aftermath of the report that shows
  the impact of change, especially the mounting pressure by contributors through the CCAC
  to have those implicated tried.
  The Somare government in October of 2002, through the floor of parliament, publicly
  referred all those who were implicated, including members and leaders of its coalition

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  partners, to the respective authorities to be further investigated. This act in itself was
  nonexistent in past parliamentary sittings. It is also a testimony to the increasing impact of
  democratisation.
  Others, like the Landowners (resource owners), trade unions and non-government
  organizations like Melanesian Solidarity have even gone to the extent of forming political
  parties with the intention to participate in the decision making process. Increased
  participation has opened up the state machinery and has improved its transparency and
  accountability.
  It has allowed for more consultation, and the government has gone to the extent of
  inviting representatives from stakeholder groups onto the boards of state institutions. The
  attributes of good governance, in particular, are antidotes to, or are at least minimizing,
  corruption. The participation of societal groups in the forestry sector and, lately, the TI
  sponsored mobilization and awareness campaign for legislating for merit in public sector
  appointments, are examples of the impact of change on corruption.
  The recent decentralization reform has further allowed for transparency in the decision-
  making process and the distribution of scarce resources to be determined at the
  community level. This reform has its legal framework defined in the Organic Law on
  Provincial and Local Level Governments (OLPLLG) that was passed and initiated in 1995.
  This law in essence reduced the decision-making powers of provincial governments by
  placing more emphasis on local level governments.
  One of the most significant features of the 1995 OLPLLG is its emphasis on planning and
  budgeting. It is now law that projects requiring public funding have to be part and parcel
  of a district development plan which, in turn, must be consistent with the provincial and
  national development plan. The district plan is reflective of development needs identified
  and approved by the Joint District Budget Planning and Priorities Committee (JDBPPC)
  comprising of elected local government councillors from a district.
  In so doing, the OLPLLG has minimised the opportunities for national politicians to divert
  public investment funds into their personal accounts12. It has minimised unplanned
  spending and the diversion of public funds towards politically expedient projects. It has
  reinstated transparency and accountability in the use of public funds. Despite the
  drawbacks resulting from acute bureaucratic incapacity, the workings of JDBPPC is
  restoring the importance of procedures and processes by ensuring that distributions of
  resources are done in the light of a district plan. The reform had also enhanced the
  establishment of provincial audit service and the provincial and local level service
  monitoring authority, whose function also involves ensuring that appointments to offices in
  a provincial and local government are based on merit.
  On the other hand, democratisation has allowed for increasing pressures to be applied on
  the ailing state machinery. This change in many ways opened avenues for increasing
  demands from society on the state machinery. While this would be legitimate, the acute
  incapacity of the state to respond to these demands facilitates opportunities for officials
  and recipients alike to disregard procedures, rules and regulations.

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  The National Integrity System

  Executive
  Like most political systems the Executive holds effective political power in PNG. It has
  access to the bureaucracy and dictates the allocation of funds and resources. It has the
  opportunity to practice corruption.
  There are a maximum of 29 ministers allowable under the Constitution and they are
  appointed from members of Parliament. Most governments have appointed the full
  complement of Ministers since independence. 42 political parties contested the last
  election (2002) but many of these have since amalgamated with larger parties: 24 parties
  won seats. There are 22 National Government Departments, 14 non-commercial statutory
  authorities and 9 commercial state owned enterprises.
  The Executive in PNG is in many ways distanced from the public. Although there are
  constitutional provisions protecting the civil rights of the people, suing the government or
  its agents is an expensive exercise, as it requires a considerable amount of legal fees.
  Citizens are also ignorant about their rights, and the avenues to sue the government
  should these rights be contravened.
  The code of conduct for all elected parliamentarians including the appointed ministers is
  defined in the Organic Law on Duties and Responsibilities of Leadership (OLDRL),
  commonly referred to as the Leadership Code, which is enforced by the PNG Ombudsman
  Commission (PNGOC). The details of the OLDRL are discussed in the later part of this
  report under the section on PNGOC. But in general this code defines monitoring and
  disclosures of assets by the leaders, their conduct and the rules and registries concerning
  gifts and hospitality. It sets out the responsibilities and obligations of leaders in the PNG
  body politic and other public posts. Amongst other things it compels leaders to make an
  annual return to the Ombudsman Commission setting out a statement of wealth and
  sources of income.
  In addition to the leadership code, there are other Acts of Parliament, especially the Public
  Finance Management Act (PFMA), which was first passed in 1986 and later repealed in
  1995, and the Public Service Management Act (PSMA). These laws act as administrative
  checks and balances, under which ministers perform their tasks.
  The performance of the Executive in PNG has produced a mix bag of results in this regard.
  Examples and trends are compelling enough to argue that leadership and political will is
  very difficult amongst the political executive. Frequent votes of no confidence, splits in
  political parties resulting in the emergence of new parties struggling to establish their
  identities, and party disloyalties are strong testimonies of an Executive lacking in
  leadership.
  On the other hand, political will is lacking when we find incoherent policies that are lacking
  in continuity. Apart from policies on provincial government and public sector reforms
  where executives have scored a mark, other policies have legitimised and nursed misuse
  of resources and positions.
  The recent success in passing the Free Education Policy by the Morauta led PDM
  government in 1998 had a lot of political connotations13. It had in many ways paved the
  way for the executive to abuse public funds under the disguise of building classrooms and
  teachers’ houses. Hence it may have been a display of political will from the executive’s
  perspective, but with a different motive. And most important of these has been their
  inability to pass anti-corruption related measures. Several cases can be cited here. Firstly,
  there have been numerous unsuccessful attempts raised on the floor of parliament to
  abolish the electoral development funds due to gross abuse.
  In 1987 the Prime Minister made known his intention to abolish the ‘slush fund’, the
  National Development Fund (NDF)14. His justification was that the members of parliament
  were behaving irresponsibly and becoming dependent on the fund. However, Wingti was

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  outvoted, especially by his cabinet, although his intentions received support from civil
  society at large. In addition, there were moves to have the national parliament pass a law
  to establish the Independent Commission Against Corruption in 199815.
  This proposal was tabled in parliament but lacked Executive support and that of the
  legislature at large for it to be passed. The forestry saga also registers as another
  testimony of the Executive lacking political will. The recommendations of the Barnett
  Inquiries and the need to encourage sustainable development in the sector were all noble
  concerns that were widely endorsed and agreed even amongst the parliamentarians, yet
  these were not implemented by the government.

  Legislature
  The legislature in PNG has not been very effective in performing its accountability function
  since independence. Marred by a volatile political party system, the legislature has been
  subjugated by the Executive and the conditions of its coalition alliances. Lack of party
  loyalty and party stability resulted in frequent votes of no confidence and the formation of
  smaller parties on the floor of parliament. This has tarnished the legislature’s ability to act
  as a watchdog against corruption. Worse, “democratic elections have become the primary
  means of accessing state finances; almost 3,000 candidates competed for 109 seats in the
  2002 elections”. (Windybank and Manning, 2003: 6)
  This environment has condoned ‘vote buying’, and frequent changes in ministries: “many
  (MPs) run as independents and join political parties during post-election ’horse trading’
  sessions, producing unstable coalitions held together more by patronage …than by party
  loyalty based on common policies or ideas”. (Windybank and Manning, 2003: 60
  Allegations of the government diverting funds from projects to suborn members of the
  legislature into voting for politically expedient bills, or to support the executive to hold
  onto power, imply that parliament legitimately condones the abuse of public funds.
  Parliament has now become an avenue for the transaction of favours and support between
  the legislature and the executive. In the end, public programmes and public funds have
  been handicapped as a result of the legislature’s self centred desire for favours.
  A notable feature in the legislature’s relationship to corruption can be further assessed in
  the use (or abuse) of the Electoral Development Fund (EDF), commonly referred to as the
  slush fund. The EDF has been gradually increased over the years from quite a small fund
  for MPs to K1.5m per member in 2001. It was initially entirely a discretionary fund
  theoretically using the government tender procedures for minor works and projects in their
  constituencies. It was roundly abused and the Ombudsman has prosecuted a number of
  members over misuse. Funds were allocated through the budget to each MP for his
  electorate. The fund has since been brought under tighter control. K1 m. is still allocated
  to each electorate but only released to larger projects that have been through a District
  Planning and Budget Priorities Committee and are then tendered through the government
  tender system. K250, 000 is allocated for smaller projects but still has to be agreed by the
  DPBPC and K250, 000 is still discretionary.
  The existence of this fund is very controversial as it is directly implicated in facilitating
  corruption. More than 90 percent of elected members that were dismissed under the
  leadership tribunal between 1976 and 2000 were found guilty on charges related to misuse
  of their EDF (see Annex 1, Tables 1 and 2). Either this is in terms of breach of procedures,
  spending outside the scope of allocations or even diverting funds into their private
  accounts and companies for which they hold shares. These funds were also being used by
  the Executive to buy members of the legislature by the simple expedient of withholding
  them from members of the opposition.
  This was evident during the last parliament sitting in 1998 when several members of the
  opposition raised questions as to when they were to receive their electoral development
  funds. Some even threatened to seek legal opinion on the government’s delays in paying
  their EDF. Apparently, at that time the PDM led a coalition comprising almost 80 percent of
  members of the parliament, which is a common feature of parliamentary democracy in
  PNG. Consequently, EDF funds and other resources were diverted to honour political
  agreements and maintain political stability between political parties.

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  The Auditor-General is responsible for auditing, but MPs have failed to report to Provincial
  Treasuries on how the money has been spent and the AG says he doesn’t have the money
  to carry out specific audits of each MP’s projects.
  Despite this gloomy picture, a certain development within the legislature is worth noting.
  The recent enactment of the Organic Law on the Integrity of Political Parties and
  Candidates (OLIPPAC) can be seen as a positive development towards addressing the fluid
  and unstable party system. The details of this law are discussed in the preceding
  paragraphs of this report. This impact of this law is yet to be felt, but if implemented it
  would remedy ‘favours’ and ‘vote buying’ which have become the symptoms of corruption
  within PNG’s parliamentary democracy. Secondly, the rejuvenation by the Somare-Marat
  government of the Parliamentary Public Accounts Committee (PPAC), which has been
  dormant for many years, is also a positive sign of the legislature’s response to corruption.
  The PPAC has begun a lengthy series of enquiries into financial activities of public bodies
  and departments. This is the supreme financial watchdog and combined with an effective
  staff and Auditor-General it is the strongest deterrent to corruption in PNG. In 2001
  several provincial governments and statutory bodies were summoned to appear before the
  PPAC due to anomalies in their transactions of public monies. Lacking over the past two
  decades, this action and its reinforcement after the 2002 elections again reinstated audit
  and accountability in the use of public monies.

  Electoral Commission
  The responsibility to conduct national and local government elections rests with the Papua
  New Guinea Electoral Commission. (PNGEC) Being a constitutional office, it is guaranteed
  an autonomous status. The Head of PNGEC is referred to as the Electoral Commissioner
  and is appointed by the Governor General on the advice of the Electoral Commission
  Appointment Committee headed by the Prime Minister as chairman16. Although the
  constitution guarantees the independence of the electoral commissioner, the irregularities
  and unusual happenings during the 2002 national elections raise doubts about this
  independence.
  Incomplete common rolls with ghost names and missing names17, declaration of certain
  seats ahead of others, and other defects in logistical support during the polling period has
  attracted a lot of finger pointing to the partiality and efficiency of the electoral
  commissioner. These deficiencies were reiterated in studies carried out by representatives
  from the Commonwealth Secretariat and the Australian government into the credibility of
  the 2002 elections. (AusAID has given “$6.5 million to the PNG Electoral Commission for
  ‘capacity building’ and improving the quality of the electoral roll, yet blatant vote-rigging,
  intimidation and electoral violence ensued…” (Windybank and Manning, 2003: 9)). A
  thorough audit of the election process has not been implemented despite assurances by
  the past and present Prime Ministers, and mounting pressures from community groups like
  Transparency International (PNG), the Community Coalition Against Corruption (CCAC)
  and the PNG Media Council.

  Political Parties
  Political parties in PNG rarely maximise their purpose and functions as expected in any
  democratic systems of government. They are seen only as election tools that emerge in
  great numbers prior to national elections but reduce significantly in quantity after
  elections. There are no distinctive ideological differences between the parties. In fact,
  almost all parties have the same policies and manifestos, which are distinguished by the
  wording and their place in the priorities of each political party.
  Slightly distinctive are the regional identities of parties. Lacking in resource capacity,
  together with coalition conventions and conveniences, most parties concentrate efforts to
  endorse candidates within the scope of their regions. Rarely would they endorse
  candidates in all of the 109 electorates. In 2002 there were 43 political parties that
  endorsed candidates to contest the national elections. There are currently 23 parties in
  Parliament. Several smaller parties (1-2 members) have applied to amalgamate with larger

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  parties, but this has not yet been approved by the Registrar of Political Parties. Less than
  20% of these parties commandeered the numbers to form the government, resulting in a
  coalition government that comprises several one-man political parties.
  Until recently, there has been no specific law on funding of political parties. By 1998 the
  Constitutional Development Commission (CDC) was given the responsibility of formulating
  an organic law on the integrity of political parties and candidates by the Governor General.
  On February 22, 2001 the Speaker of Parliament certified the legal document to become
  OLIPPAC. Within its fundamental intention to promote `party stability’, Part V of OLIPPAC
  outlines the arrangements on funding of political parties in PNG. The law firstly defines the
  establishment of the Central Fund Board of Management comprising the Clerk of
  Parliament, The Electoral Commissioner, the Registrar, the Chairman of national Fiscal
  Commission, a representative of National Council of Women, and a representative of
  National Council of Churches.
  The law provides for registered political parties to be funded by the government through
  the national budget each year and contributions by citizens, non-citizens and international
  organizations. All funds are to be channelled through the Central Fund Board of
  Management. The board is further empowered under the OLIPPAC to regulate, control and
  manage the fund. This means that it has powers to regulate monies from internal and
  external sources, and invest the funds in bonds and securities to achieve it purposes. The
  source of funding is divided under the separate categories of contributors. In this regard,
  OLIPPAC mentions that:
  • international organizations are not to contribute directly to a registered political
  party but through the Fund, and
  • citizens and non-citizens can also contribute amounts of monies that shall not
  exceed K500,000. This is to be paid into the fund and not directly to a member
  of parliament nor a political party.
  The monies from the Fund are to be distributed to registered political parties using the
  formula that each party is to receive K10,000 per elected member who is a member of the
  political party. And the amount payable can be increased depending on national economic
  factors and availability of monies in the Fund. Another important aspect of this Fund is the
  75% reimbursement for registered parties that endorsed a female candidate who mastered
  at least 10% of the votes cast in the electorate during the election.
  Although there is little mention about how political parties are to spend their monies, the
  OLIPPAC is specific about the financial returns by both the registered political parties and
  candidates. It states that these returns be submitted to the Fund within three months after
  the return of writs following a general election. Interestingly, these returns cover all the
  contributions, receipts and income of political parties, and details of expenditure which the
  party has incurred. These are to be further furnished with names and addresses of the
  contributors, the source and the nature of income, and the dates upon which the
  transaction occurred. These returns are then submitted to the Registrar of Political Parties
  who is appointed by the Board.

  Supreme Audit Institution
  There are two important audit institutions in PNG that fall under this category of NIS.
  These are the Auditor General (AG) and the Public Accounts Committee (PAC). The PAC is
  a parliamentary committee comprising elected members of the national parliament. This
  implies that their life span and the membership depend on the life span of a national
  parliament; hence they are not as permanent as the AG.
  Section 216 of the constitution and Section 86 of the Public Finance Management Act 1986
  set out the functions of the PAC. Its primary function is to examine and report to
  parliament on the public accounts of PNG and on the control of and on transactions with or
  concerning public monies and property of PNG. Functionally, the PAC acts and deliberates
  on matters recommended by the AG and especially on accounts that were defective by

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  discrepancies and anomalies. In its deliberation the committee can subpoena witnesses
  and take evidence under oath.
  On the other hand, the AG is a constitutional body whose function is empowered by
  Section 214 of the Constitution and Section 113 of the Organic Law on Provincial
  Government and Local Level Governments (OLPGLLG). It primary function is to inspect,
  audit and report on the Public Accounts of Papua New Guinea and on the control of and on
  transactions with or concerning public monies and property of PNG.
  This implies that the AG is empowered to audit the books of all government agencies that
  deal with public monies. These audits are carried out annually, which then culminate into
  reports that are submitted to parliament and especially to the PAC. The annual reports can
  also be debated by the legislature and accessed by the public. However, these functions
  have been restricted by lack of capacity and resources which have also prevented the
  annual report from being up-dated. On average, an annual report by the AG is delayed by
  a year, often determined by availability of resources. At the time of this report, the AG had
  only published the 1998 report with the 1999, 2000 and 2001 reports being in press. On
  the same note, the chairman of the PAC reported on several occasions between August
  and November of 2002 that many government agencies had not been audited for several
  years and it lacked the funds to carry out its functions (the 1999 World Bank report noted
  not only that by 1997 46% of audited bodies had not submitted financial statements and
  only some 20% of the audits were actually complete. but that one government solution
  proposed in the 1999 budget was to cut the budget to the AG and to outsource part of the
  audit function (a proposal that the government failed to discuss with the AG in advance).
  Having its origin defined under the national constitution, the office of the Auditor General
  is an autonomous body and is accountable to the national parliament. A parliamentary
  Auditor General Committee, headed by the Prime Minister as the chair, appoints the
  Auditor General. Despite this independence the office is financially dependent on the
  national government. This means that its operations and personnel are supported through
  the annual budget.

  Judiciary
  Section 99(2) of the Constitution of PNG spells out a structure of government consisting of
  three arms: Parliament, Executive and Judicial System. The Constitution also allocates to
  each of these arms specific functions: law-making, executive government of PNG, exercise
  of judicial authority respectively. The Constitution goes on to uphold the principle “the
  three arms shall be kept separate from each other” which is a common feature of a liberal-
  democratic system of government

  The Judicial System: Courts and Judges
  In PNG, the judicial system consists of the Supreme Court, the National Court, the
  Magistrates’ Courts and other courts (such as the Village Courts). There are two features
  of the PNG judicial system that should be noted: hierarchy and jurisdiction. The different
  courts form a hierarchy; each level is subordinate to the one above it so that the latter can
  overturn the decision of the former, until the final court (Supreme Court) is reached. The
  Governor General upon the advice of the NEC appoints the Chief Justice. All other judges
  and magistrates are appointed by the Judicial and Legal Services Commission. This
  Commission consists of the Minister of Justice (Chairman), the Chief Justice, the Deputy
  Chief Justice, the Chief Ombudsman, and an MP nominated by Parliament.
  Matters relating to the interpretation of the Constitution and whether any other law or act
  is consistent with it are the constitutional responsibility of the Supreme Court. This implies
  that the judiciary and especially the national and the Supreme Court can review the
  powers of the executive. This power enables the courts to declare the actions of the
  executive illegal and the laws enacted by Parliament as invalid should they contradict the
  constitution. When the National Court declared that the suspension of the Western
  Highlands Provincial Government in mid 1987 was illegal, it was both restraining the
  actions of the NEC and giving a finer interpretation to the OLPLLG. To the extent that it

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  was refining the wording of the OLPLLG, it could be said that it was an instance of rule-
  making.
  The overall performance of the judiciary against corruption is notably impressive. They
  have adjudicated cases by law with little regard to circumstances, culture, and political
  affiliation. Examples of the impartiality of the courts are very obvious as shown in the
  jailing of officers and soldiers involved in carrying out Operation Rausim Kwik
  This is also witnessed in their deliberations on leaders tried under the leadership and
  criminal code. Between 1976 and 2000, forty (40) appointed and elected leaders,
  regardless of their seniority, were found guilty and dismissed from their posts by the court.
  The only reservations on their impartiality lie with the law officers that prosecute leaders.
  Poor salaries and living conditions of state lawyers can be tempting and susceptible to
  bribery. Nevertheless the integrity of the judicial bench has been intact since
  independence.
  There has been a tendency for the Court system to make increasing awards to plaintiffs for
  what appear to be relatively minor grievances. This act can be interpreted as a cause of
  corruption. It becomes attractive for potential suppliers of goods and services to be
  appointed under contracts that stipulate large payments for variations of contract and
  often allow for payments to be made regardless of whether a satisfactory service has been
  received or not. However this is being addressed with the undertakings of the recent
  government to revise some laws and procedures that would discourage such practice.

  Civil Service
  There are no specific laws on corruption covering the entire civil service except the
  Leadership Code and other criminal laws. However there are laws on governing the
  management of public funds and appointments criteria. These are the Public Finance
  Management Act, The Public Service Management Act and the Auditor-General Act.
  However the implementation and impact of these acts have been impeded by incapacity
  and blatantly abused by public officers. These impediments led to Prime Minister Sir
  Michael Somare’s outburst of criticism that it is the civil service that is responsible for
  corruption and not the elected leaders. His criticisms may not be easily brushed aside,
  especially with the recent revelations on rampant misappropriation of public monies
  through fraudulent deals within the civil service.
  The citing of the provincial treasurer in Western Province, diverting around K30,000 of the
  provincial treasures to fund his personal interest and the fraudulent activities amongst
  senior public servants of the national Finance department warrants some justification to
  the Prime Ministers’ outburst.
  Within the hierarchies of the civil service there are checks and balances existing, however
  these have withered away as a result of lack of policing or frequent and widespread
  ignorance of these processes. The only time these processes are utilised are when policy
  decisions result in a major financial loss and when there are severe political consequences
  of a decision. Misappropriation in the country’s provincial government system requires a
  special mention in this regard.
  A survey on suspension of provincial governments highlighted that much of the financial
  errors came about as a result of ‘procedural errors’ that had accumulated over time. These
  included miscalculation, poor judgement and incorrect following of procedures. Sause
  (1992), in his analysis on accountability in provincial governments established that almost
  all suspensions of provincial governments were due to oversights and misunderstanding of
  provisions in the Public Finance Act.
  Against such findings, we can raise the question of what happened to the application of the
  checks and balances system? It is not an issue of whether or not there are checks and
  balances systems in place, notes a former secretary for Department of Finance. But the
  inability of supervisors and divisional heads to be stringent in policing these laws and
  responsibilities is a concern. It seems as though tribal affiliations and associated
  obligations, patron-client relationships within and between government organizations and

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  with outside entities, have withered and belittled the checks and balances within the civil
  service.
  Since 1986 and after the passing of Public Service Management Act (PSM), the civil service
  became more open to political interference. This law facilitated the establishment of the
  Department of Personnel Management (DPM). Both developments relinquished the powers
  and functions of the Public Service Commission (PSC). The PSC is a constitutional body
  that was responsible for personnel matters within the public bureaucracy, such as
  appointments, promotions, transfers, termination and reviewing the organisation of state
  services.
  The PSC comprised four commissioners who were appointed through the NEC. The
  Commission acted by itself and by representation on interdepartmental committees to
  approve matters of recruitment, selection, organizational changes, job classifications etc.
  It also carried out its mandate aggressively, in ensuring that recruitment standards and
  guidelines were properly adhered to. It also ensured that there was no political
  interference and nepotism in public service employment, including corruption. (Ballard,
  1981:77). The constitution guaranteed a wide range of powers and the independence of
  the Commission. However it also led to unnecessary delays and the removal of decision-
  making powers from departments and persons who were more familiar with the issues
  concerned.
  This then led to the establishment of the DPM which is also directly answerable to the NEC.
  With the backing of the PSM Act, the Secretary of the DPM can delegate to respective
  heads of departments, the day to day personnel decisions relating to appointments,
  promotions, discipline, and approval of allowances and other entitlements. Moreover the
  introduction of the 1986 Act has also led to separation of powers whereby the NEC18 is now
  responsible for determining personnel policies including the appointment of departmental
  heads and heads of statutory bodies. (Tsiamalili, 2002a).
  It is under this reform that the civil service has become more open to nepotism and
  political appointment and has been excessively abused almost to the extent that there is
  no longer appointment by merit. The high turnover in departmental heads, especially
  during the change of political regimes is the testimony to this. Further down the hierarchy,
  recruitment and/or career development rules are guided by nepotism and the ‘whom you
  know principle’. A survey conducted by students reading for the paper on Comparative
  Public Sector Management with the Public policy and Management program of the
  University of PNG showed that almost seventy to seventy five percent of its 2000 and 2001
  graduates’ entrance into the public service was made easier by ethnical alliances or other
  networks. (Ugaia and Kaukia, 2002: 7). Indeed, it is suggested that “10%-15% of the
  estimated 75,000 public employees are ‘ghosts’ – employees who are dead, who move
  from department to department collecting multiple paychecks, or who enter the public
  service under a number of different names”. (Windybank and Manning, 2003: 5)
  It has become almost a norm to see ‘heads rolling’ whenever there is change in the
  election of political executives. It is now common practice to change secretaries of
  individual departments in accordance with their respective minister’s political alliances or
  tribal affiliation. But a more alarming trend is the spiral effect of such changes whereby not
  only the bureaucratic executives change, but even their deputies change. In fact, a senior
  officer in the DPM acknowledged that the trickle down effect of changes go as far as
  appointments and promotions of third level executives. The recent efforts of the Public
  Sector Management and Reform Unit (PSMRU) to introduce a bill to restore merit based
  appointments is a long overdue development. This bill has gone past its second reading in
  November 2002 and will soon become a law unless the Somare government takes an
  about-turn from its promise to weed out corruption and restore meritocracy in public
  service.
  The difficulties in PNG’s civil service are further hampered by the inability of each
  department and statutory body to be more open, efficient and user friendly to the public.
  There is very little publicity activity or effort to increase the understanding level of the
  public about procedures within the bureaucracy. The civil service is almost a closed system
  that falls short in articulating to clients its products and the processes through which it

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  delivers. As a result its clients, the public, resort to short cut measures by jumping
  procedures and bending rules to access the services, while those who are ignorant about
  the processes are further isolated and marginalized. On the other hand, others who are
  frustrated by the lack of accessibility and information resort to demonstration and
  destruction of public property to gain attention.
  Procedures, in particular about accessing government services like loans, are not user
  friendly. Firstly, they are printed in English with little or no attempt made to interpret to
  other languages like pidgin or motu to enable better understanding of the decisions.
  Secondly, the decisions and instructions are often too lengthy and technical in their
  presentation. This is further complicated by a lack of time and interest taken by officials to
  explain decisions. The common trend in the public’s accessibility to administrative
  decisions is either by inquiry after citing the decisions in the local papers or through
  relatives working in the civil service.
  Even the feedback mechanism is non existent in the civil service. There are no apparent
  complaint sections within the departments, and even if there are sections of this kind, they
  are invisible to the public. Either out of ignorance or lack of faith in the civil service, the
  public does not pursue their dissatisfaction with government decisions and services
  through the respective departments. Those that are able to raise complaints go to the
  ombudsman commission or seek legal assistance, if they feel that they have been
  victimised by the government decisions.

  Police and Prosecutors
  The National Executive Council appoints the police commissioner in PNG. This implies that
  he or she is a political appointee. The independence of the police commissioner was first
  tested in the famous Bouraga versus Dutton Affair in 1981. Philip Bouraga was then the
  head of the police and had refused to give certain information to the then Police Minister,
  Warren Dutton, resulting in an unsuccessful sanctioning order by the minister. The
  Supreme Court ruled that the minister had no power to sack or discipline the
  commissioner, who was a constitutional office holder.
  Although this was a case of one person wearing two hats, it paved way for the opening up
  of the force to political appointments. Between 1997 and 2002 the police commissioner’s
  post exchanged between five persons. Four of these commissioners where from within the
  constabulary, while one was a former officer turned private lawyer who was practising law
  before being appointed. The frequency of these changes brings into question the
  independence of the police force.
  More specific was the case of Commissioner John Wakon. Prior to his appointment as the
  commissioner in July 1999, he was investigating allegations of corruption amongst certain
  elected leaders. By then he was the metropolitan police commander in Port Moresby.
  These investigations were widely published in Port Moresby and commanded public
  support. However they were never completed after he was appointed as the commissioner
  and later suspended
  All appointments of police commissioners are drawn from senior officers within the police
  force, especially at the rank of deputy commissioners. This implies that the appointees are
  career police officers. However this does not stop the NEC from recruiting outside the
  force, as in Peter Aigilo, who left the constabulary at the rank of superintendent to practice
  law before being recalled as a commissioner. Even Phillip Bouraga, one of the early
  commissioners, was a civil servant from outside the disciplinary forces.
  The overall performance of the police force against corruption is to a large extent watered
  down by lack of capacity, political influence, and regionalism. Leaders make threats
  against officers investigating fraudulent activities, although this is not often reported. At
  the same time lack of capacity impedes the work of police towards investigating
  corruption. This is further enhanced by regionalism.
  The lack of will to arrest the military personnel involved in the Sandline Crisis and the so
  called ‘Melanesian’ peace ceremony between politicians and members of the disciplinary
  forces after the crisis in many ways neutralised the rule of law. In so doing it forced the

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  police investigations to be swept under the carpet. In other instances, gifts and favours,
  are offered to the police to diffuse investigations. Cases of lack of evidence and out of
  court settlements can also imply corruption in the police force
  Prosecution stands out to be one of the major concerns of both police and public
  prosecutors. In fact it is not unusual for the courts to throw out corruption related cases.
  While the statistics of successful and unsuccessful prosecution cases were not available
  during the compilation of this report, interviews with officers in the public prosecutor’s
  office revealed the following as some of the common reasons amounting to lost cases:
  • That there was inadequate evidence due to failures by police and prosecutors to
  gather hard evidence.
  • There was no-show of police prosecutors on numerous court occasions, which
  resulted in continuous adjournment and subsequently no case.
  • Conflict of interest and allegations of bribery, which resulted in omissions of
  important evidence. These include missing files, missing relevant information
  and transfer of prosecutors.

  Public Procurement
  The public procurement process is the avenue whereby public and private sectors conduct
  their transactions. It refers to how and from whom the government purchases its goods.
  Essential attributes of this process include ensuring that it is fair and efficient to both the
  purchaser and the supplier. In this context it is argued that public procurement should be
  economical, fair and impartial, transparent, efficient, and accountable. In sum, the process
  begins with government bidding for supply of goods or contracts to implement specific
  projects. Upon receiving interest from potential suppliers, the government then selects the
  most economical and efficient suppliers or contractor.
  In PNG this process is selective and can be administered by different government
  organizations depending on the size and the scope of projects. The Public Finances
  (Management) Act 1995 (Consolidated to No 57 of 2000) lays down the procedures for the
  establishment of Supply and Tenders Boards, and the execution of contracts (Part VII).
  Section 39 of this Act specifies that any number of Supply and Tenders Boards may be
  established by the Minister for Finance as deemed necessary by the Departmental Head of
  the Department responsible for financial management.
  Such Boards are necessary to control and regulate:
  • the purchase and disposal of property and stores, and
  • the supply of works and services.
  A notice in the National Gazette establishing a Supply and Tenders Board necessarily
  specifies:
  • the limits of authority and jurisdiction of the Board,
  • the policy to be applied by the Board, and
  • the criteria for the evaluation of tenders to be employed by the Board.
  The Act also allows the Minister much leeway in making rules that may not be consistent
  with the PFM Act. Specifically, this relates to:
  • the procedures of meetings of Boards including fixing of quorum,
  • the manner of inviting of tenders publicly,
  • the method of dealing with tenders, and
  • the criteria to be applied in the evaluation of tenders, and
  • the appointment by the Boards of advisers in technical matters.

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  The Minister may also issue directions to Boards giving preference to national tenders
  and local manufacturers.
  The Act also empowers the Minister to appoint Board members by notice in the National
  Gazette. He or she may also appoint an officer to be the alternate of a Board member. The
  Minister may also remove a member or alternate and appoint another person in his/her
  place.
  Major projects related to infrastructure development are administered through the Works
  Supply and Tenders Board (WSTB). This board is suppose to be an autonomous body, but
  is administered by senior members of the public service and especially the Department of
  Works and Supply (DWS). Major infrastructure developments undertaken by the
  government are advertised with the endorsement of WSTB to potential developers and
  contractors. The WSTB then selects the most economical bidder. Other government
  departments have their respective tenders board comprising of senior executives of the
  organization.
  The public procurement processes in PNG have been inundated with excessive abuse.
  Either it is conducted at a local level between department and indigenous businessmen, or
  between the departments and multinational corporations. Evidence of misuse of the
  procedures and the whole ethics of transactions is alarming. The flaws in the procurement
  process first begin with interference of the number of pre-qualified bidders, where firms
  can pay off officials to restrict the list of potential bidders. This is often followed with
  paying for information and restructuring bidding specifications to favour a bidder. Towards
  the end of the process the contractor, who would have been the initial corruptor, will
  provide the service or sell the goods but at an inflated cost19.
  Two case studies highlight the anomalies in this regard. Firstly the redevelopment of Port
  Moresby’s Jackson’s Airport first announced in 1993. This project was administered
  through the Office of Civil Aviation Authority (CAA) at the cost of a US$57 million
  concessional loan from a Japanese foreign aid program. The business transaction
  transpired between the main organizations. These were: two government agencies, CAA
  and National Planning Office (NPO), and two private organizations – the independent
  evaluators Pacific Consultants International (PCI) and Kinhil Kramer (KK) – and the
  contractor, Fletcher Morobe Construction (FMC).
  A Ministerial Report to the National Executive Council in 1995 suggested that the tendering
  process, which led to the awarding of contract to FMC, was tampered with and lacked
  transparency. The report cited irregularities like CAA extending the deadline for tenders of
  only two companies of which one was the final contractor. It was further alleged in the
  report that the ranking of potential tenderers by the evaluators was ignored and that
  certain individuals in CAA tampered with the Japanese Aid donor’s tendering procedure
  after the selection of the contractor (FMC) and during the negotiation period.
  The Jacksons Airport case ‘demonstrates a certain degree of maneuverings that take place
  in a typical PNG tendering process. A sequence of steps is taken. After a tender is
  advertized, an elimination process starts by at least an extension of the tenderer deadlines
  so as to impose additional transaction cost on tenderers. Companies who cannot meet the
  added cost fall on the wayside. As the tenderer list shortens, the stringent requirements
  of the tendering process are thrown into disrepute. For one thing, the importance of the
  technical score – a certification criteria – becomes insignificant because those who would
  have ranked as less qualified tenderers under normal circumstances now “qualify” under
  inert and improper competition. Certain individuals now approach the remaining tenderers
  from the tender’s side with prospective deals, which ideally may be “negotiated” to benefit
  everyone. In this process bribery, extortion, and even collusion by both sides take place
  for agreed cuts. The damage is further widened when, assuming that a tenderer
  capitulates to the offer, the content of the required Contract Negotiation Report merely
  rubber-stamps the hidden agreement, which, sometimes goes without the knowledge of
  the national government’. (Kavanamur and Okole 2001: 15)
  Similar traits were also evident in the K18.72 million purchase of the Cairns Conservative
  Building (CCB) by the POSFB in November 1994, the construction of Port Moresby’s K65
  million Poreporena Freeway (PMPF) and Port Moresby’s K1.8 billion Water Supply Project

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  (ERWSP) in 1994 (in relation to the freeway, the project never came before the Works
  Supply and Tenders Board, an indispensable precondition for projects of this size while in
  relation to the water supply project the report compiled by the PNGOC revealed political
  involvement, absence of appropriate tender procedures and lack of a contract
  specification). Outstanding in the CCB deal was the exorbitant price paid for the building
  resulting from manipulation and withholding of information from the purchaser by the
  vendor about real value of the building. In addition to this, the POSFB and the Fund’s CEO
  failed to adhere to the requirements of PFM Act and PSM Act when deliberating on the
  purchase of CCB. (Ombudsman Commission, 1999).
  In sum, the purchase of CCB violated almost all the criteria of public procurement. On the
  same note, the contracting of PMPF and ERWSP were deluged with anomalies that were
  more than simple oversights. Manipulating the deadlines for expressions of interest to
  build the projects, bypassing the WSTB, interference by responsible ministers and even
  selecting bidders that lacked the relevant experience were cited in these projects. Both the
  purchasers and the suppliers in the project engineered these actions. Interestingly, there
  were no sanctions made against those responsible for circumventing and manipulating the
  process.
  Depending on the size of a project, public procurement procedures include advertisements
  in papers inviting bidding for tenders. Interested companies are then required to collect
  the necessary forms and lodge in their applications. However, some public agencies
  advertise through their internal newsletters. The procurement decisions are not always
  made public. In fact, most public organizations have established networks of contractors
  and suppliers who access information and documents through their tribal affiliates working
  within the organizations. Unlike the judicial system, there are no appeal avenues for
  reviewing procurement decisions. Moreover, public procurement officers are more open to
  bribery and their assets, incomes and lifestyles are not monitored.

  Ombudsman
  PNG’s Ombudsman Commission comprises of both the office of the ombudsman and the
  office administering the Leadership Code and making the leadership code enforceable. The
  legal basis of the commission is provided for in Sections 218-220 of the Constitution and
  the Organic Law on Ombudsman Commission. These sections state that:
  • The commission is an independent entity, but funded by the national budget.
  • Its functions are to investigate conduct relating to administration, which may be
  `wrong’, and enforce leadership code (section 219).
  • The commission may not inquire into `justifiability’ of NEC or ministerial policy
  (219 (3)) or court decisions (219 (5)).
  • Its enforcement is limited to publicity, reports and recommendations, except for
  leadership code (219 (6)).
  • It is required to prepare and submit its annual reports to parliament (220).
  When dealing with maladministration, PNG’s Ombudsman Commission (PNGOC) is
  empowered to:
  • investigate a wide range of official bodies
  • initiate investigations, as well as respond to complaints or referrals.
  • question decisions, as well as the process of decision-making
  • consider defects in law.
  In essence the PNGOC is empowered by the constitution to expose government actions
  and those of public officials that are detrimental to the public and its trust. These imply
  that it has a wider scope of responsibilities that extend between and beyond specific laws
  and administrative practices. (Kavanamur and Okole, 2001). The commission is made up
  of three members who are appointed by the Ombudsman Appointment Committee made

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  up of the Prime Minister as the Chairman, the leader of Opposition, The Chief Justice and
  the Chairman of Public Service Commission, and the Chairman of the Appropriate
  Permanent Parliamentary Committee.
  The PNGOC has been very vocal against corruption despite the acute incapacity and lack of
  resources that impeded its efficiency. The investigation and referral of leaders for
  prosecution itself is a testimony to its stance against corruption. Over the past two years
  the commission has further stretched its muscle in preventing leaders under its
  investigation from taking overseas trips.
  These actions even included preventing a delegation from the Morobe provincial
  government from travelling to Indonesia in early 2002. Apparently this trip was funded
  externally and not by the provincial government. By the same note, the commission
  successfully sought court orders after the last parliamentary sitting in 2001 to prevent
  members accessing and using the Electoral Development Fund. This in itself was a bold
  move that prevented national MPs from using the remainder of their funds towards a vote
  buying exercise. However, these moves are undermined by the fact that the commission
  can not easily prosecute leaders without the public prosecutor’s approval.
  The Ombudsman Commission received a budget of K8 million for the years of 2001 and
  2002, and this was increased to K8.9 million for 2003. Staffing levels for the Commission
  are not readily available from the annual reports. Nevertheless the general reason for the
  slowness of Ombudsman Commission to react to complaints is a lack of resources (it
  received 10,886 complaints of varying nature between 1995 and 1998).
  To further complicate matters, the Commission cannot use evidence used by the police to
  prosecute leaders. In the light of these constraints, the PNGOC is like a dog without teeth
  to bite. And as such, leaders can easily escape unless tried through the state prosecutor
  and the leadership tribunal. On this basis the commission’s efforts against corruption are
  watered down.
  Furthermore, the recent calls by members of parliament to bring the PNGOC before
  parliament suggest several points. First and foremost it implied that the commission’s
  efforts have been taking their toll on elected leaders, hence there is an impact on
  corruption. Secondly, it also raises the question of whether the Commission is becoming
  too powerful and is impeding the responsibilities of the legislature

  Leadership Code
  The definition of a leader covers ministers, members of national and provincial legislatures,
  members of local level governments, constitutional office holders, heads of national and
  provincial departments, heads and board members of SOEs, ambassadors, commanders of
  disciplinary forces, and defined executives. There are about 600 plus leaders and list of
  offices to which the code applies. Drawing from Section 26 of the PNG Constitution and the
  OLDRL, the code sets out the `responsibilities of office’. It specifies that a leader must not
  place himself in a `conflict of interest’. The examples of “conflict of interest” as cited by
  Constitutional Planning Committee are when the Leader’s, or his family’s, firm has a
  business contract with the government or when MPs have shares in a foreign firm that PNG
  is renegotiating with. In summary, the code and the OLDRL specify that leaders are
  obliged to disclose their assets and incomes, prohibit certain activities to be engaged in by
  leaders, and empower the PNGOC to investigate and make referrals to the Public
  Prosecutor of alleged breaches of the code by leaders. It also requires leaders to provide
  annual reports of their interests and to place their private business interests under trust
  arrangements whilst they hold leadership positions.
  The OLDRL define that a leader must not:
  • Demean the office he or she is occupying,
  • Allow his integrity to be called in question,
  • Diminish respect for government (27(1)(b)) Spouse (husband/wife), children
  and others `for whom he is responsible’ also covered (27(3)(b)).

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  On gifts and hospitality, the code prohibits ministers, their wives and children from
  attempting to and asking for franchises and gifts, and other benefits and advantages
  associated with gifts and benefits. The Ombudsman Commission is empowered to
  investigate or summon ministers and leaders to appear before the commission. In essence
  the declarations are registries of interests and assets to and by the commission. In the
  event that there is substantial evidence against the minister, he or she is referred to the
  public prosecutor who, in turn, informs the Chief Justice to appoint a Leadership Tribunal
  On disclosures the OLDRL specifically provides that:
  • Leaders must disclose income, assets and business connexions within 3 months
  of election or appointment, and then every 12 months. He or she must also
  disclose his or her interests in any official business transactions and
  appointments.
  • Ministers in particular and their spouses and children may not be directors of
  companies or any `foreign enterprise’. But, with permission of the ombudsman,
  they may be directors of family companies, and business or land groups.
  The disclosure is made to only to the PNGOC for the purpose of enforcing the code. The
  public only accesses the disclosures when a leader is in breach of the code and when it is
  used as evidence in a leadership tribunal’s deliberation and in court proceedings. The
  public can also access the annual reports by the Commission to parliament but which only
  summarises information about leaders that have defaulted against the code.
  Should there be an allegation of misconduct by a leader under any of these provisions of
  the code, then the Ombudsman Commission upon investigating would refer the leader to
  the Public Prosecutor. The prosecutor, in turn, uses his or her discretion under Section 177
  of the constitution to bring proceedings against a leader by requesting the Chief Justice to
  appoint an independent Leadership Tribunal comprising of judges and senior magistrates
  to investigate, inquire into and determine the alleged misconduct. The tribunal may have
  looser rules of conduct than the courts, and appearing before a tribunal does not stop the
  leader from being heard in court. The tribunal acts in many ways as a `disciplinary’ body.
  It is empowered to sanction the leader should he or she be found guilty under the code.
  On the other hand, and if the Public Prosecutor does not act, the ombudsman can also
  prosecute the leaders.
  A breach of these provisions can result in a lesser penalty than dismissal (penalties include
  reprimand, dismissal, suspension from office, fine, and imprisonment). Between 1975 an
  199720, there were thirty-five politicians and public officials that were hauled before the
  leadership tribunals. Twenty-one of these leaders where found guilty. Out of this twenty-
  one, thirteen were dismissed from their office while eight were fined. These figures are
  reflected in Tables 1 and 2, Annex 1. The effectiveness of the code is to a large extent
  determined by the capacity of the enforcing organization (the PNGOC), the vigilance of the
  public and the ability for compliance on the part of the leaders themselves. This means
  that the Commission would only blow its whistle in the event that a leader fails to make
  annual returns or disclosures.
  In most instances the Commission acts upon receiving formal reports from the public
  about irregularities in the conduct of a leader. These reports can come in the form of
  complaints lodged with the Commission. On the other hand the Commission is empowered
  to conduct its own investigations despite its incapacity to fully investigate corrupt leaders.
  A leader found guilty is dismissed from his or her office and is not eligible to be re-elected
  or appointed to public office within three years. The main weakness that the OC faces is
  that on many occasions leaders avoid prosecution and dismissal by immediately resigning
  before and after the commencement of the tribunal. However this does not stop the
  Ombudsman Commission from reopening the case should the leader resume office after
  serving his or her terms out of office. The effectiveness of the code as a deterrent
  mechanism against corruption is debateable. The leaders can escape penalties on technical
  grounds. Like in any other court system, allegations are contestable, and a leader is not
  guilty until proven by the tribunal. Furthermore, the sanctions amount to only dismissal

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  from public office with little or no effort to compel guilty leaders towards recouping the
  misused funds or recompensing for damage caused.
  It is very unlikely for disgraced ministers to be re-elected although the current Health
  Minister (Melchior Pep) in the Somare-Marat government, and Mr. Ted Diro returned to
  parliament after serving their terms under the leadership code. Both Mr. Melchior Pep and
  Mr. Diro were found guilty under the leadership code and dismissed in 1992 and 1991
  respectively. Mr. Diro was re-elected to the national parliament in 1997 while Mr. Pep was
  voted back into the national parliament in 2002.
  Unfortunately, the leadership code of only goes as far as recommending dismissals for
  leaders. It does little to pursue the allegations outside its establishment. The dismissed
  leader can apply for leave to seek a judicial review of the tribunal’s recommendations. The
  Minister for Village Services and Provincial Affairs, for instance, successfully applied for
  judicial review resulting in the Court reversing the tribunal’s decision for dismissal to a
  mere K7,000.00 fine.
  Those found guilty and dismissed from holding public office are open to further charges by
  the police under any criminal code, but using a different and new set of evidence that was
  not used in the tribunal. The options arising at the end of a leadership tribunal can water
  down the effectiveness of the leadership code.

  Investigative/Watchdog Agencies
  In May 1998, submissions from TI (PNG) and other watchdog or related agencies were
  made to the Parliamentary Select Committee to establish the Independent Commission
  Against Corruption (ICAC). However, to this date, these submissions have not passed their
  first reading in the parliament. The primary mandate of this Commission was to deal with
  criminally corrupt practices of leaders. It would complement the police to enforce criminal
  laws which leaders currently evade because of the lack of dedicated resources and the
  increasing sophistication of the criminals’ corruption, a factor that is outside the
  jurisdictions of leadership code and the PNGOC. As noted in the preceding paragraph, the
  PNGOC and the leadership tribunal can only dismiss a leader regardless of the criminal
  nature of the charge.
  Should an ICAC become functional, it will be a fully-fledged anti-corruption body that can
  investigate and prosecute leaders for criminal misappropriation both internally and
  externally. This would relieve the PNGOC to effectively perform its supervisory and other
  ‘non criminal’ functions. Corruption in PNG has intensified in number, volume and scope.
  Hence a proposal of this kind would relieve the PNGOC and the police who have for years
  lacked capacity to address this problem.
  To this date the PNGOC is performing the investigative function by default. The intention is
  to have an ICAC as autonomous constitutional body like PNGOC and the Auditor General.
  But its establishment can also duplicate the functions and responsibilities of existing
  institutions. Most likely it can be sabotaged by the government of the day to safeguard its
  practices by manipulating the appointment of the commissioners of ICAC and controlling
  the budgetary allocations to the commission.

  Media
  ‘The PNG media, daily, carry stories of alleged corruption in government or court reports of
  the convictions of those who have been found out. The constant exposure of corruption is
  a tribute to the country’s vigorously forthright media….’ These remarks by Sean Dorney
  summarise the role of media in relation to corruption in Papua New Guinea. (Dorney,
  2000)
  Papua New Guinea has a free and vibrant media, although there have been two
  unsuccessful attempts made by the national government to introduce legislation to limit
  media freedom. In fact it is further acknowledged that the PNG media has been growing
  since independence to be more robust and freer from government control. This view was
  further echoed by one of the country’s most recognised journalists, Frank Kolma, to the

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  effect that the media in PNG was only restricted by cultural sensitivity, its youth and its
  perceived wider responsibilities to the nation. (Kolma,1996:57)
  The freedom enjoyed by media here is guaranteed under Section 46 of the National
  Constitution. Framed in the light of the 1948 Universal Declaration of Human Rights, this
  section specifically mentions freedom of expression, which is further enjoined by freedom
  of press and mass communication. Also out of section 46 are other Acts of Parliament
  about information and communication21. Except for the Censorship Board Act, which is
  aimed to curb the dissemination of pornographic information by the media, all of these
  laws govern the establishment of media entities.
  Against this context, the media in PNG are not regulated and any person can start a
  company that is aimed at the dissemination of information. The only obstruction lies with
  the normal bureaucratic delays in getting registered, which is no different from any
  ordinary business establishment. This implies that there is no specific media regulating
  entity, although this idea was mooted in 1996 under the banner of an Information and
  Communications Authority. However this authority did not transpire as a result of firm
  opposition from the media and society at large. (Millet, 1996)
  There are six (6) major media organisations operating in PNG. Two of these, which are
  fully PNG owned, include the National Broadcasting Commission (NBC) with its subsidiary,
  the Kalang FM station, and the Word Publishing Company. While NBC is owned by the
  national government, the Word Publishing Company is owned by the mainline church
  denominations in PNG. The foreign owned media organisations include: the two daily
  newspaper companies, the Post Courier and The National, the commercial FM radio
  stations and the only television company, EMTV. The newspaper companies are
  respectively owned by Rupert Murdoch and Rimbunan Hijau, the Malaysian Timber
  Company. On the other hand the FM stations are owned by Fiji’s FM 96, while Channel
  Nine of Australia owns EMTV.
  The media in PNG is very vocal against corruption. In fact, most of the public know about
  corruption and the practices thereof through the media. Even the government owned NBC
  does not deviate in reporting on corruption either through its normal news bulletins or
  occasional talkback shows. The latter has been very much instrumental in facilitating the
  public’s perceptions on corruption or issues pertaining to corruption, including criticisms of
  government policies. Despite these efforts, journalists and media organizations are not
  immune to defamation threats and other abuses. Journalists investigating and reporting
  corruption were threatened, verbally assaulted and even sued for defamation. At one stage
  towards the end of 2001, a former MP and Chairman of the state’s privatisation
  commission threatened the Post Courier newspaper with a libel suit for allegedly
  misreporting on the former MP’s bankruptcy.

  Civil Society
  Civil society in PNG is very much passive towards corruption. The establishment of the TI
  chapter in PNG and the formation of Community Coalition Against Corruption (CCAC) are
  beginning to have some bearing on society’s response towards corruption, although it
  would be too early at this stage ascertain the degree of its impact. However this can only
  be confined to Port Moresby to a larger extent, while there is a lesser degree of
  involvement by society at the outer centres of PNG. Attempts to maximise societal support
  can also be seen in the formation of the Consultative Implementation and Monitoring
  Council (CIMC). This council is a consultative committee that was established by the NEC
  after the National Economic Summit in 1998. It is chaired by the Minister for Planning &
  Implementation and is comprised of heads of government departments, and
  representatives from the business and the non-government sector. CIMC’s primary goal is
  to ensure that recommendations made by the community are implemented through
  dialogue and on-going consultation between the government, the private sector and the
  community.
  To further enhance the participation of civil society, the Organic Law on Provincial and
  Local Governments (OLPLG) specifies that there must be representatives of women, youth,
  churches, and employers’ and employees’ organizations appointed to the provincial and

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  local government legislatures. This provision, in many ways, mandates the public’s
  accessibility to government information and documents. Through such provisions society
  makes submissions to the legislature to make laws and relevant policies. It also allows for
  the monitoring of the government’s performance in the delivery of services.
  Ethical issues are also addressed in PNG’s school system. At tertiary level, and especially
  at the University of Papua New Guinea, first year students are required to read for Civic
  and Ethics as a compulsory paper. There are also other papers that teach ethics and
  corruption as a subject or a topic. At primary school level, puritan and other noble values
  are taught under the curriculum of religious instruction. In high schools and secondary
  colleges, integrity and corruption issues are highlighted in courses on guidance and
  counselling. The school system is also open to visits by institutions engaged in
  anticorruption activities.
  In general terms civil society is a force against corruption in PNG. They can be relied upon
  to support anti-corruption statements and often initiate them. The forestry industry is one
  where corruption has been rampant and there has arisen a number of NGOs that have
  formed a loose coalition through the Eco-Forestry Forum which carries on a campaign
  against corruption and exploitation in the industry.
  The PNG’s chapter of Transparency International (TI-PNG) is one of those NGOs that is
  committed “to curb corruption by mobilizing a global coalition to promote and strengthen
  international and national integrity systems” (Transparency International 1997). It was
  launched in Port Moresby on January 24, 1997 under the leadership of former
  parliamentarian, Sir Anthony Siaguru.
  The impact of TI in PNG is better summarised by Kavanamur and Okole (2001:13) who
  asserted that “TI-PNG accorded great weight and international exposure to the depth of
  corruption in Papua New Guinea. For a country that had increasingly been under the glare
  of the foreign media for politically-driven issues ranging from criminal activities to national
  security policy blunders, it might have been comforting to law-abiders that an anti-
  corruption group of this reputation could possibly be the voice in the wilderness to try and
  stifle political leaderships that had gone hay-wire.”
  Although it is still too early to evaluate its impact on corruption, TI PNG had definitely
  roused and mobilised the society to speak out against government decisions and policies.
  Although it lacks power to prosecute corrupt leaders, it has within short time established
  and developed networks and capabilities to investigate, educate and raise awareness
  against corruption. (Ibid). This included organizing public seminars against corruption and
  even initiating anti-corruption laws, which did not get passed as a bill at the first reading in
  the national parliament.

  Regional and Local Government
  Until 1995, PNG had a three-tier system of government with provincial government, local
  government and the national government. A significant amount of power was removed
  from the provincial governments and given to the local governments thereby further
  decentralising decision making powers.. Moreover it has placed significant functions of
  service delivery to the districts levels. In doing so it has made allowed for people, through
  their councillors, to participate in decision making. By bringing the government more
  closer to the people, it was intended to increase accountability and transparency. Due to
  lack of financial and manpower resources this has happened more slowly than originally
  intended.
  Provincial leaders are elected and appointed . The political head of a province is a member
  of the national parliament. By law he or she is the regional member of the province who is
  elected by all voters in the province into the national parliament. He or she is then
  mandated as a governor of the province. In the event that the regional member is given a
  ministry, then another open member from the province is appointed by the legislature to
  be the governor. Provincial administrators, on the other hand, are appointees of the NEC.
  Heads of local governments are also elected by all eligible voters of the local areas, while
  voters within their respective ward elect councillors.

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  Overall this arrangement means that members of parliament ‘essentially control all
  planning and budgeting at the provincial and district levels. Furthermore. To the extent
  that a joint district planning and budget priorities committee is responsible for local
  government planning and budgets, members of parliament control local planning and
  budgeting as well’. (World Bank, 1999: p221) On the other the multiplicity of roles may
  mean that such committees are not established because of their absences and those of the
  provincial governors.
  There are two legal mechanisms that make reference to corruption in provincial and local
  governments in PNG. These are the Organic Law on Provincial and Local Government, and
  the Organic Law on the Duties and Responsibilities of Leaders, or the Leadership Code. The
  Code covers the elected leaders and the heads of provincial administration. As such they
  are required to declare their business interest and affiliations, and their assets, annually.
  They are also required to conduct themselves, both in public and private life, and in their
  associations with other persons, in a manner that does not demean and compromise the
  office, which the leaders occupy. These include ensuring that they do not put themselves
  in a position where there is conflict of interest when discharging their public
  responsibilities, nor where their actions could demean the integrity of the government.
  On the other hand, all other officials down the hierarchy of the provincial administration
  are to a larger extent guided by the Public Finance Management Act, 1985 and the Public
  Service Management Act, 1986. These are further substantiated with other Acts, and
  especially the Audit Act 1989, which inspects and audits their financial actions and the
  jurisdictions thereof. Under Section 113 of the new Organic Law on Provincial and Local
  Governments, the Auditor General is required to establish a Provincial Audit Service and a
  provincial auditor whose responsibilities are to maintain an effective and efficient audit
  service. The provincial governments as government entities are subject to the Ombudsman
  Commission, should there be violation of the Leadership Code. They are also subject to the
  Auditor General, meaning that their financial transactions and other related activities are
  open to annual inspection by the Auditor.
  There are no legal restrictions preventing the public or the press from accessing meetings
  of city and town councils, although circumstances can impose restrictions. Each provincial
  government has a public chamber in which the public can observe provincial meetings.
  Further down at the local level, there are local government chambers which provide the
  avenue for public observation. Other municipal authorities have newsletters and use radios
  to broadcast their activities. The National Capital District Commission, in particular, used
  thirty minutes of television time to inform the public about its activities. These laws have
  not been effective in deterring provincial governments from corruption. Several provincial
  governments were suspended between 1975 and 1995 as a result of offending against the
  Leadership code and Public Finance Management Act.

  Overall, the centralisation resulting from the roles of members of parliament and the
  absence of a separately elected provincial government (provincial governments are made
  up of presidents of LLG and MPs who are all elected but not directly to the PG)diminishes
  local political accountability (even if it reduces levels and costs of additional political and
  administrative levels). ‘In the absence of political accountability, national departments
  must spend inordinate amounts to monitor subnational governments’, on the other hand,
  ‘few resources are available to monitor officials and investigate malfeasance. With little or
  no political accountability and insufficient capacity for monitoring at the national level,
  subnational officials answer to almost no one. Many local governments have asked the
  Department of Provincial and Local Government to investigate officials, but the requests
  have been denied for lack of funds. Further, the auditor-general is overextended and
  underfunded – and as a result, few audits have taken place. Problems with the misuse or
  mismanagement of funds are directly related to this unhealthy combination of inadequate
  political accountability at the subnational level and insufficient monitoring capacity at the
  national level’. (World Bank, 1999: 223)

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  Anti-corruption Activities

  Government Anti-corruption Reforms
  Since the inception of Ombudsman Commission and the leadership code, the government
  has fallen short in giving more teeth to the established procedures. It lacked the will power
  to reform and increase the capacities of existing mechanisms despite evidence for the need
  to enhance these mechanisms. However this does not thwart the increasing pressure from
  society and international aid donors that is applied on the government to address
  corruption. Amidst this pressure several developments had been made. Firstly there has
  been a vigorous effort by the current ombudsman commissioner and the commission itself
  to enforce the leadership code. In fact it was noted by the commission that the period
  between 1992 and 2002 had witnessed many referrals of leaders to the leadership
  tribunal. This was in response to increasing corruption activities and most importantly
  increasing participation by society to address corruption. This can be drawn from Tables 1
  and 2, Annex 1. The second development highlights efforts by the government to develop
  and legislate anti-corruption laws, like the proposed ICAC.

  Donor Anti-Corruption Initiatives
  Donor agencies are concerned about the level of corruption in the various levels of society,
  and especially public agencies involved in service delivery. This concern is manifested in a
  number of initiatives Donor agencies have undertaken in recent years to minimize the
  misuse of Donor aid to Papua New Guinea. An illustration commonly reported in the media
  was the shift in untied to tied aid on projects. What underpinned this shift in aid policy
  were attempts to encouraged ‘good governance’.
  Over the past decade, Donor agencies – there is a functioning Consultative Group led by
  the World Bank – have supported the Government of PNG (GoPNG) in developing its public
  financial management systems through matching funding. A phased investment began in
  1986 with the commitment of UNDP country program resources to the UN-executed
  project PNG/86/001 – Financial Management Development Project. In 1998, the project
  scope was expanded with matching funding from UNDP and additional funding from the
  Government of Australia.
  Over this period a number of other financial management system initiatives were
  undertaken by the Government and supported through counterpart funding by Donor
  agencies. Some of these initiatives are:
  • Department of works automation project to cater for special accounting and
  project management needs;
  • The Commonwealth Secretariat Debt Recording and Management System (CS-
  DRMS) was established in the Loans and Revenue Division to assist with
  budgeting public debt servicing requirements and monitoring the sovereign debt
  portfolio;
  • The Treasury-level general ledger application was replaced with a package
  known as the Ledger Accounting and Financial Information System (LAFIS);
  • A planning and Budgeting System (PBS) was introduced to replace the budget
  development tools running under the previous Treasury General Ledger system;
  • The major Donor Agencies have continued to support the initiatives taken by
  the Government to strengthen the philosophy of ‘good governance’ through
  support of the Financial Management Systems of Government programs. The
  Australian Aid program, Asia Development Bank, and the United Nations have
  continued to be key partners in this exercise. The Donor partners have, since
  1988, been involved in the Provincial Government Accounting System (PGAS)

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  through GoPNG “Financial Management Improvement Program (FMIP)”. The
  FMIP is an initiative of Government in response to identified financial problems
  at National and sub-national levels of Government.
  The current ‘Support for Provincial Financial Management Training’ (“SPFMT”) is a program
  developed to strengthened FMIP. This project focuses on:
  • Providing assistance to the short term and immediate needs of provincial
  treasurers in their role of providing support to Local level Governments (LLG);
  • Providing support to the AusAID PFMTP (another sub-component of the FMIP) in
  evaluation and monitoring of the impact and effectiveness of training programs
  delivered under the PFMTP project;
  • Providing assistance to PFMTP in the conduct of provincial diagnostic; and
  • Enhancing the integration of financial management training with training in
  planning and the budgeting process.
  What this project specifically entails are:
  • Formulating and enacting a new Public Finances (Management) Act;
  • Drafting a Financial Management Manual;
  • Improving provincial financial management systems;
  • Computerizing accounts; and
  • Decentralizing personnel management.
  The attempts by the Donor agencies to strengthen the financial management systems
  appear to be bearing some results, especially in the areas of effective reporting systems,
  communications systems and the training of human resource capacity in-country and
  abroad to manage the Financial Management systems established.

  World Bank
  The World Bank has provided a US$ 8.3 million loan allocation, and a US 0.2 million grant
  allocation under an institutional development fund facility. Part of this allocation was aimed
  at strengthening the Department of Personal Management (DPM) in its personnel
  management and payroll systems, and building departmental and provincial capacity to
  perform training functions thus strengthening the four regional training centres and DPM’s
  capacity to implement the National Training Policy. Another component is assistance to the
  Papua New Guinea Institute of Public Administration (PNGIPA) with infrastructure,
  equipment, curriculum development and fellowships to civil servants on financial
  management training.
  In fact, in 2002 the World Bank released $35million as part of its Governance Adjustment
  Loan. This includes “improvements to governance, through fiscal transparency and
  accountability, and steps to combat corruption including through institutional
  strengthening of oversight agencies…”. We need some information on what this means in
  practice.

  Asian Development Bank
  This organization is involved in strengthening the government’s FMIP and Information
  Technology (IT) Strategic Plan with grant of US$20m. This involved a number of sub-
  projects, viz a diagnostic study and support to the development of a strategic plan for
  FMIP, a systems reform project involving budgeting, accounting, IT systems and networks
  and associated training, an accounting professional development program, and a skills
  training program.

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  Government of Australia
  The Government of Australia through its AusAID program is involved in a US$ 11.3 million
  technical assistance program and parallel financing to the Department of Finance in
  expenditure control and a long-term strategic program of financial improvement. In 1999,
  AusAID proposed a ‘Provincial Financial Management Training Program (PFMTP) of
  technical assistance to the Department of Treasury and Planning (DTP) to improve capacity
  of DTP and the LLG personnel to plan and operate their financial management systems.
  The Donor agencies are effectively involved in preventing the practice of corruption
  (although there must be a question over “how effective Australian aid can be when the rule
  of law has broken down, infrastructure is dilapidated, government agencies are paralysed,
  the economy has stagnated, and the social fabric has frayed” (Windybank and Manning.
  2003: 12)). Their input is not direct, but through collaborative effort with GoPNG in
  strengthening government agencies in service delivery. In this regard, the key Donor
  agencies have assisted the government in strengthening its Financial Management
  Systems for public funds.

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  Discussion of Key Issues

  General
  The discussions on corruption in PNG in this report reaffirm the complex and interlocked
  relationship between the pillars of NIS and many different factors and sectors within the
  economy. This report discusses these relationships within the parameters of three major
  categories. The premises underlying this format is that corruption is perceived in and
  conceived during interactions between the different levels of government, society and the
  private sector. These entities are really the stakeholders in any analysis of corruption in
  PNG.

  The NIS
  The performance of the NIS in PNG has produced mixed results. This implies that the
  nation’s integrity is imperfect. Most of its components are severely lacking in essential
  factors. Firstly, public awareness is dissipated by high levels of illiteracy, ethnic-based
  parochialism, and lack of a strong puritan attitude and will. These traits in turn are
  reflective of wide disparities in development between regions, culture and ethnicity.
  Government policies and decisions, for instance, loose their meaning and objective as they
  move away from the centre.
  The engagement of Sandline International by the government to quell an ethnic uprising
  on Bougainville island and the subsequent opposition and call for resignation of the prime
  minister by the Defence Force drummed up a lot of reaction from the public. But the
  reaction was based on misinformation and lacked rationality. The majority of the masses
  that were mobilised in Port Moresby came out of shantytown and settlements, which had
  their own dissatisfactions against the government.
  This was mirrored by the rowdy and violent demonstration that was smeared with
  destruction and looting of properties. Pamphlets carrying anti IMF and World Bank
  sentiments, and misinformation on land mobilization were somehow tied in with the
  Sandline issue. (Melanesian Solidarity, 1996) Clearly the public did not understand and
  deduce the truth about the issue prior to the demonstration. The public may have been
  misled, especially after the revelation by the Commission of Inquiry into the Sandline Affair
  in 1997 that the commander of the PNGDF had illicitly received payments totalling K68,000
  from a foreign military supplier and had bypassed defence procurement procedures in
  arranging for the supply of military goods. (PNGOC, 2000:49) This implies that the
  tensions and demonstrations may have been a smokescreen to conceal the illicit
  payments.
  Amongst the NIS pillars, the judiciary stands out in being ruthless against corruption. It
  has interpreted laws against corruption without fear or favour, and with disregard to the
  political or economic costs of its decisions. Frequent admission by political leaders to
  uphold a court’s decisions is a testimony of its independence. On the other hand the
  scorecard of the legislature and the executive show lack of political will in legislating
  against corruption. Their inability to reform the EDF and the delays in getting anti-
  corruption initiatives put forward by various stakeholders in society throw doubt on their
  commitment against corruption. On the other hand the Prime Minister has referred those
  implicated in the NPF saga to the PNGOC and the Police for prosecution. These actions,
  together with mounting pressures from civil society through PNGTI and CCAC, have put
  pressure on the government to effect anti-corruption measures.
  Civil service integrity as a merit based neutral entity that functions within the parameters
  of rules and procedures has been seriously undermined by increasing revelations of
  fraudulent activities towards the end of 2002 and in January of 2003. Cases of officials in
  the Department of Finance and Treasury collaborating with officials in the Judiciary to

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  counterfeit court orders to solicit funds from the state do little to uphold the fight against
  corruption. (The National 26th January 2002).
  On the same note, there were allegations that a portion of land was improperly allocated
  to a church group in Port Moresby. This allegation suggested that the secretary of Treasury
  used his position to bypass procedures in allocating lands. (Ibid). These may be only
  allegations, however they predict and highlight existing and emerging trends of behaviour
  amongst service deliverers. This has also shifted more attention to the civil service as the
  breeding ground for corruption.
  Such exposures of corruption can be attributed to the free and vibrant media in PNG. In
  fact it is the print media in PNG that initiates reactions and responses against corruption
  from other stakeholders in the society. This is despite a lack in investigative reporting that
  is yet to become a feature of the media. Complementing the media is civil society.
  Emerging trends imply the need for civil society to be more articulate and vigorous in
  taking up the fight against corruption. This should in no way detract from the coalitions
  that have already been formed by organizations of civil society. Entities such as CIMC and
  CCAC require support from society at large. Currently, they are only Port Moresby based
  organizations in membership and identity.

  Priorities and Recommendations
  What needs to be done about corruption in Papua New Guinea must be deduced by
  understanding the complexities underlying the phenomenon. This automatically reinforces
  the need for an integrative approach. Corruption in PNG is more of an attitude and
  behavioural issue. Reckless attitudes towards laws, especially the Public Finances
  (Management) Act, and the principles of prudent public administration underlying it are
  major traits underlying cases pertaining to corruption.
  These are further followed by flagrant disregard of the legal tendering processes and the
  methods of calling and evaluating proposals for multimillion kina projects funded by the
  state. More alarming is that these practices have descended to the lowest level of the civil
  service, to an extent that it has become the norm to give incentives for a service.
  Moreover, PNG’s situation is compounded by the fact that corruption has accumulated over
  time. This implies the need to revisit the basic and the simplest means and methods that
  must first prevent corruption from further expanding. This must then be followed by
  curative means. The priorities and recommendations suggested here are based on these
  premises.

  Administrative Reform
  The recent move to have the parliament pass a bill restoring appointments by merit is a
  significant development in administrative reform. This would imply the restoration of the
  PSC under the old PSM Act. Engineered by the PSRMU of the Prime Minister’s department
  and overwhelmingly supported by TI and CACC, this piece of legislation would eradicate
  political nepotism by ensuring that public service appointments are advertised and done on
  merit. However, the hurdle at this stage for the bill is parliament’s endorsement.
  Such merit-based processes in civil service recruitment have to first begin with the process
  of appointing the head of a department. As recommended by Kavanamur and Okole
  (2001), the PSC should be empowered to play a major role in deciding on the appointment
  of heads of department. This might require reviewing the Public Service Management Act
  with the intention to restore appointment powers and decisions to the PSC. This might also
  reinforce and police performance evaluation, promotions and terminations, factors that are
  currently being worked at through public sector reform. These exercises must be further
  complemented with establishing reasonable salary levels and reinforcing proper checks and
  balances in the public sector.
  Administrators and decision-makers alike must be articulate on the principles of prudent
  public administration underlying the Public Finances (Management) Act. They must also be
  proficient in the expectations of the following documents and the expectations thereof.
  These are: Public Finances (Management) Act, Public Works Committee Act, Loans

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  (Overseas Borrowings) Act, Public Services (Management) Act, Organic Law on the Duties
  and Responsibilities of Leadership, Leadership Code, and the Public Service General
  Orders. (Kavanamur and Okole, 2001). This process can further be enhanced to minimize
  corruption should the DPM, the PSC and the PNGOC be capacitated to induct public officials
  in these Acts.

  Procurements
  Transparency and accountability seem to be the major concerns in this regard. Consistent
  with the recent efforts of the Public Accounts Committee, it is recommended that there is a
  need to review and audit the government procurement procedures. This might require a
  societal representative to be appointed to the Central Tenders Board. Similar appointees
  can be recommended for other levels of tendering. It is further suggested that there be
  inclusion of an Integrity Pact in all-bidding documents. Those involved in the transaction
  must be compelled to sign and honour a “No Bribery Pledge”.
  Regarding the investment environment, some of the often-repeated impediments to
  economic growth and development are the long delays in securing land, high wages, small
  and fragmented domestic market, shortage of skilled manpower, cumbersome
  administrative regulations, and lawlessness in society. It is of little wonder that secret
  payments and close alignment with people in government are viable options for those
  wanting to venture into business activities.
  A survey by Kavanamur and others (1997) on the manufacturing and construction sectors’
  attitudes towards current partial investment liberalization and price decontrol in PNG
  revealed that discriminatory policies such as “selective tendering” and “special favours”
  only benefit those big and powerful companies directly linked to politicians and
  bureaucrats, or those large and significant enough to be recognized as such by the
  government.
  To protect the state from interest groups, such as big and powerful businesses, and to
  reduce the temptation of corruption by bureaucrats, politicians and private citizens, a
  number of measures have to be given saliency and the case studies revealed certain areas
  that require attention. First, public tendering through the Works Supply and Tenders
  Board, as required by the Public Finances (Management) Act, must be enforced by the
  state without fear or favour.
  The power to waive such lawful procedural requirements must be exercised strictly with
  restraint and should only be applied to genuine cases as specified by law. This has often
  been abused by successive NECs. According to the Ombudsman Commission, there is
  nothing in the Constitution of PNG or an Act of Parliament, which stipulates that the NEC
  has the power to waive tender procedures (PNGOC 1992:413-414).
  The Works Supply and Tenders Board should be established as an independent statutory
  body, with its members having security of tenure for a fixed term of three years on a full-
  time basis. There is no rationale behind such a board if its members are constantly under
  pressure to make decisions in favour of the government of the day. Such boards are
  supposed to render objective assessments of competing bids for government contracts.
  The Works Supply and Tenders Board is too important to be left to part-time members of
  the public service who already have other onerous responsibilities to perform.
  The powers of a Minister to appoint or terminate Board members as (s)he sees fit should
  be checked against possible abuse and collusion by those with vested sectional interests.
  The Minister’s powers may be deemed excessive and not in the best interest of continuity.

  Anti-Corruption Agencies
  There is an immediate need to review and amend the leadership code, with special
  emphasis on eliminating the provisions for leaders to resign from office when referred to
  the tribunal. The length of time before entering leadership roles should further be
  extended to five years. The jurisdiction of the leadership code be expanded to investigate
  and refer leaders for prosecution after their resignation to avoid tribunals.

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  Where the tribunal has established that the leader has squandered state resources for
  personal gain, the leader should be forced by law to repay amount equivalent to that
  misused. Furthermore, it is suggested here that there be extra effort by the government to
  pass the ICAC bill. Otherwise there should be efforts to establish an equivalent
  anticorruption bureau to relieve the PNGOC to concentrate on policing the leadership code.
  Other agencies like the police fraud squad need to be backed with capacity and resources.
  Most importantly, officers engaged in investigating fraudulent activities of a leader must
  first be remunerated to be devoid of bribery. Their activities should be transparent and be
  monitored through affiliations and sharing of information with other anti-corruption
  agencies, especially the societal based agencies.
  There has been an on-going effort to create an agency within government to focus
  attention of existing agencies on corruption, known as the National Anti Corruption Agency
  (recently changed to Alliance) and bringing together other bodies from within and without
  the traditional law enforcement machinery to collaborate on specific cases or areas.
  Consisting of the police, attorney general, auditor general, public service inspectorate,
  finance inspectors, and provincial affairs inspectors, NACA is a loose alliance that comes
  together for a specific enquiry especially in a province. It means that all relevant agencies
  act to together and move together so that they do not have to keep referring back to each
  other in the course of their investigations which often take weeks. It also means that all
  relevant knowledge is assembled in one place and a much more thorough investigation can
  be carried out. This is currently being formalised within the government through the CIMC
  Law and Order Sectoral Committee. It recently brought Finance and Public Service
  Inspectors together with the Police, Auditor-General, Prosecutors etc to investigate people
  from one province and resulted in the conviction of most of them including the Governor.

  Civil Society
  The need for more interaction between civil society and the state is essential in this war
  against corruption. This is further justified by their ability and impartiality in whistle
  blowing activities. What is now required is to increase the engagement of civil society in
  governance. In the light of this we put forward the following suggestions:
  • At the political level, it is recommended that civil society be engaged to screen
  candidates contesting elections. This would be the first stop to eliminate people
  with dubious backgrounds from entering parliament.
  • Secondly, it is recommended that there should be provisions for civil society to
  be engaged in the procurement process. Their engagement should also be
  extended to the recruitment of senior executives of government departments.
  • Thirdly, it is recommended that CIMC and related agencies be integrated into
  evaluating the implementation activities of the government. This implies that
  they be engaged to assess and report on how government implements its
  development policies. Their recommendations should be considered by
  government as societal feedback, and towards improving its policy process.

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  Annex 1 – Tables
  Table 1 List of Leaders that had gone before the Leadership Tribunal

  Leaders (Elected MPs
  Year Summary of Offence Committed Results
  & Appointed Officials)

  Misappropriated EDF and other public
  funds. Allegations included: conflict of
  Moses Sasakila (Minister Guilty and
  1976 interest, failure to acquit funds, failure to
  for Culture) dismissed
  adhere to procedures, spending funds
  outside its scope of appropriation

  Brian Grey (GM National Guilty and
  1978 Details not available
  Airline Commission) reprimanded

  Ako Toua (Commissioner
  Guilty and
  1978 – PNG Electricity Details not available
  suspended
  Commission)

  Leo Morgan (A/Secretary
  Guilty and
  1981 – Dept of Works and Details not available
  dismissed
  Supply)

  Misappropriated EDF and other public
  Opai Kunagel funds. Allegations included: conflict of Resigned after
  1982 interest, failure to acquit funds, failure to appointment of
  (Minister for Commerce) adhere to procedures, spending funds Tribunal
  outside its scope of appropriation

  Misappropriated EDF and other public
  funds. Allegations included: conflict of
  Guilty and
  1983 Michael Pondros (MP) interest, failure to acquit funds, failure to
  dismissed
  adhere to procedures, spending funds
  outside its scope of appropriation

  Misappropriated EDF and other public
  funds. Allegations included: conflict of
  1985 Lennie Aparima (MP) interest, failure to acquit funds, failure to Not guilty
  adhere to procedures, spending funds
  outside its scope of appropriation

  Ezekiel Brown (CEO –
  1985 Details not available Guilty and fined
  National Provident Fund)

  Julius Chan (D/ Prime
  1988 Minister & Minister for Details not available Not guilty
  Finance

  1988 John Kaputin (MP) Details not available Not guilty

  Obum Makarai (Chairman
  Guilty and
  1988 PNG Banking Details not available
  dismissed
  Corporation)

  Kedea Uru (Chairman – Guilty and
  1988 Details not available
  Nat Broadcasting Comm) dismissed

  Misappropriated EDF and other public
  funds. Allegations included: conflict of
  Guilty and
  1989 Gerald Sigulogo (MP) interest, failure to acquit funds, failure to
  dismissed
  adhere to procedures, spending funds
  outside its scope of appropriation

  Susuve Lamaea (Chief of
  1990
  Staff – Office of the PM

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  Leaders (Elected MPs
  Year Summary of Offence Committed Results
  & Appointed Officials)

  Misappropriated EDF and other public
  funds. Allegations included: conflict of Resigned after
  1990 Gabriel Ramoi (MP) interest, failure to acquit funds, failure to appointment of
  adhere to procedures, spending funds Tribunal
  outside its scope of appropriation

  Misconduct in office which included conflict Resigned after
  of interest, misuse of EDF and other public Tribunal
  1991 Esorom Burege (MP)
  monies, failure to adhere to procedures commenced
  and failure to acquit funds. hearing

  Guilty of 81 allegations of misconduct in
  Guilty but
  Ted Diro (MP Deputy office. Offences included: Conflict of
  1991 resigned before
  Prime Minister) interest, accepting benefits & gifts from
  dismissal
  foreign companies

  Misappropriated EDF and other public
  funds. Allegations included: conflict of Resigned after
  1992 Tom Amaiu (MP) interest, failure to acquit funds, failure to appointment of
  adhere to procedures, spending funds Tribunal
  outside its scope of appropriation

  Misappropriated EDF and other public
  funds. Allegations included: conflict of Guilty but
  1992 Tony Ila (MP) interest, failure to acquit funds, failure to resigned before
  adhere to procedures, spending funds dismissal
  outside its scope of appropriation

  16 allegations of misconduct in office.
  These included: blackmailing the
  government of the day, failure to disclose Resigned before
  1992 Timothy Bonga (MP)
  annual returns as required under the code, dismissal
  failure to lodge tax returns, and failure to
  acquit school fee subsidy cheques.

  Misappropriated EDF and other public
  funds. Allegations included: conflict of
  Guilty and
  1992 Peter Garong (MP) interest, failure to acquit funds, failure to
  dismissed
  adhere to procedures, spending funds
  outside its scope of appropriation

  Misappropriated EDF and other public
  funds. Allegations included: conflict of
  Resigned but
  1992 Galeng Lang (MP) interest, failure to acquit funds, failure to
  died in the office.
  adhere to procedures, spending funds
  outside its scope of appropriation

  Misappropriated EDF and other public
  funds. Allegations included: conflict of
  Guilty and
  1992 Melchior Pep (MP) interest, failure to acquit funds, failure to
  dismissed
  adhere to procedures, spending funds
  outside its scope of appropriation

  Misappropriated EDF and other public
  funds. Allegations included: conflict of
  Resigned before
  1993 Philip Laki (MP) interest, failure to acquit funds, failure to
  dismissal
  adhere to procedures, spending funds
  outside its scope of appropriation

  30 allegations of misconduct. These
  included: allocating public monies outside
  Andrew Posai (MP & of the scope of appropriation, deposited Guilty and
  1995
  Minister for Forest) public monies into his private account, dismissed
  conflict of interest, not providing annual
  statements to the PNGOC,

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  Leaders (Elected MPs
  Year Summary of Offence Committed Results
  & Appointed Officials)

  31 allegations of misconduct. These
  included: allocating K20,000 without
  following proper procedures, did not acquit
  John Nilkare (MP & these monies, diverted K250,000 to fund
  Guilty and
  1995 Minister for Provincial projects outside of the scope of
  dismissed
  Affairs) appropriation, placing funds from Rural
  Agriculture Development into his personal
  account, Accepting benefits from a foreign
  company

  31 allegations of misconduct which
  included: attempting to obtain a
  commission for himself and his associates
  for a US$800 million of offshore loans for
  Paul Pora (MP & Minister PNG government, issuing of blanket
  1995 Guilty and fined
  for Civil Aviation) gambling licence to a company which he
  had an interest in, obtaining and defaulting
  bank loans as Minister for Finance, failure
  to provide annual statements, and
  distributing public monies to his associates

  15 allegations of misconduct which
  included: misappropriation of K150,000 to
  projects sponsored by him, diverting of
  Guilty and
  1996 Jeffery Balakau these monies into his private account,
  dismissed
  misuse of EDF funds in 1990, 1991 & 1992
  as payments to bogus, unregistered and
  non-existent groups

  17 allegations of misconduct which
  included: advances of allowances which
  contravened the PFM Act, diverting public
  Guilty and
  1996 funds outside of its appropriation and
  dismissed
  obtaining reimbursement, falsely obtaining
  and diverting an advance to repay his
  housing loan

  Misuse of EDF and RTIMPF for his own Lost office
  1996 Yaip Avini (MP) benefit, having large number of unsettled through criminal
  debts, failure to acquit public monies conviction

  26 allegations of misconduct which
  included: improper application of 1994 and
  1995 EDF, improper application of
  Resigned after
  Independence Day Celebration Funds,
  Joseph Onguglo (MP & tribunal
  1996 Unsettled debts, accepting benefits and
  Minister for Education) commenced
  improper application of departmental funds
  hearing
  for accommodation and personal expenses,
  conflict of interest, failure to lodge
  completed annual returns

  Allegations of misconduct which included:
  improper application of EDF, MTPF and Lost office in
  1997 Albert Karo (MP)
  NDF; conflict of interest, and failure to election
  acquit public funds

  Allegations of misconduct which included:
  improper application and failure to acquit
  EDF and other public funds, conflict of
  Peter Yama (MP & Miister Lost office in
  1997 interest, using his position to obtain
  for Transport and Works) election
  private bank loan and attempting to
  purchase 2 ships from the government
  below market price.

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  Leaders (Elected MPs
  Year Summary of Offence Committed Results
  & Appointed Officials)

  Allegations of misconduct which included:
  diverting and paying public funds to
  companies which he had interest in, Lost office in
  1997 Amos Yamandi (MP)
  improper awarding of contracts and not election
  following procedures, failure to acquit for
  funds, misapplying EDF

  Source: Ombudsman Commission of Papua New Guinea. 2000. Report to the Parliament. Pp90-92.

  Table 2 Leadership Referrals and Prosecutions for Misuse of Public Funds (1995–1998)

  Categories of Allegations Number of Leaders Charged
  Allocation of funds to private accounts Posai, Nilkare, Balakau, Yama (4)
  Allocation of funds to unidentifiable, Balakau, Nilkare (2)
  unregistered and non-existent groups
  Allocation of funds without proper Posai, Nilkare, Balakau, Dusava, Pora,
  procedures Onguglo, Karo, Avini, Yamandi (9)
  Allocation of funds to companies which the Posai, Balakau, Onguglo, Yama, Yamandi,
  elected leader had undisclosed interest Avini, Karo (7)
  Allocation of funds which were not Posai, Balakau, Yama, Yamandi,
  acquitted Onguglo,Karo, Avini (7)
  Source: Ombudsman Commission of Papua New Guinea. 2000. Report to the Parliament.

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  Endnotes

  1
  The OLDRL sets out the responsibilities and obligations of leaders in the PNG body politic and other
  public posts. Amongst other things it compels leaders to make an annual return to the Ombudsman
  Commission setting out a statement of wealth and sources of income. An Organic law is one which sits
  immediately under the Constitution and requires variously an absolute majority of Parliament or a two
  thirds majority of all members of the Parliament to be changed or adopted.
  2
  This behaviour is documented in the 1987 and 1992 election studies that were conducted by the
  Department of Political Science of the University of Papua New Guinea.
  3
  ‘Jobs for the boys’ is fast becoming a norm in PNG’s bureaucracy, even to the extent that elites
  within party supporters of the current NA-led coalition government petitioned the PM with a list of
  names bracketed against respective departments. For example, TI-PNG spoke out in support of
  rescinding of the appointment of Gabriel Dusava, who had been chosen to be the managing director of
  the Investment Promotion Authority (IPA). Dusava was a freshman MP for Yangoru-Saussia (East
  Sepik) after the 1997 national elections. Soon after entering Parliament, he was dismissed for
  breaching the Leadership Code in his previous office as the Secretary of the Foreign Affairs
  Department.
  4
  ‘Jobs for the boys’ is fast becoming a norm in PNG’s bureaucracy, even to the extent that elites
  within party supporters of the current NA-led coalition government petitioned the PM with a list of
  names bracketed against respective departments. For example, TI-PNG spoke out in support of
  rescinding of the appointment of Gabriel Dusava, who had been chosen to be the managing director of
  the Investment Promotion Authority (IPA). Dusava was a freshman MP for Yangoru-Saussia (East
  Sepik) after the 1997 national elections. Soon after entering Parliament, he was dismissed for
  breaching the Leadership Code in his previous office as the Secretary of the Foreign Affairs
  Department.
  5
  The instability in NCD did not stop after the defeat of the PDM led government. The Somare led
  government stripped Mr. Kipit of his powers by appointing a board that was headed by Mr. Jack Pidik
  who has a political affiliation with the prime minister’s NA and PPP led coalition. In February of 2003,
  Mr. Pidik was stripped of his financial powers through a coup, which was allegedly engineered by the
  speaker o the national parliament and the regional member for the NCD.
  6
  This view was considered as very unusual by the Secretary of the Department of Personnel
  Management. He further admitted that the provision was too liberal and provided avenues for abuse.
  7
  “Six-Packs” connotes an afternoon social drink party that is synonymous with PNG’s communal
  culture of sharing betel nuts and fellowship.
  8
  An observation by a political science graduate of the University of PNG on difficulties in being
  employed by the provincial government of his province.
  9
  These contracts typically specified that the incumbent be paid the full amount of salary and
  entitlements for the whole year of the unexpired portion of the contract, which could be for several
  years and be worth thousands of kina.
  10
  ‘Seed-money’ was an analogy used in a maiden speech by the former PM, Sir Morauta, to connote
  the inability of previous governments to prudently and effectively manage public funds. He himself fell
  short of this principle.
  11
  The Prime Minister comes from the East Sepik Province and the reference was made to the number
  of new appointments that were made to people from East Sepik.
  12
  The OLPLG specifically provides for and defines JDBPPC that regulates or at least attempts to tie
  down EDF Funds. Prior to this national MPs were free to allocate these funds which amounted to K1.5
  million at their own whim.
  13
  The Free Education Policy has been discontinued by the present government.
  14
  EDF has been known by a number of names since independence and has been a method of
  providing direct funding to members of parliament, ostensibly to allow them to provide benefits such
  as roads and bridges, aid posts and schools. It has also been known as the slush fund because
  members have tended to allocate the funds to themselves or their relatives and friends rather than to

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  their electorates. Hence the number of prosecutions for mis-use and the strong pressure to get rid of
  the funds from the community.
  15
  The recent call by CCAC for audit of the NAS Fund should also be extended to investigate
  allegations of executives embezzling funds to stay in power or to fast track political expediencies.
  16
  The Governor-General as Head of State appoints the Electoral Commissioner on the advice of the
  Electoral Commission Appointments Committee, which is made up of: The Prime Minister, or a Minister
  nominated by him, who shall be Chairman, The Leader of the Opposition or his Deputy, The Chairman
  of a related Permanent Parliamentary Committee, and the Chairman of the Public Services
  Commission.
  17
  More than double the number of people of voting age voted in the Highlands during the 2002
  elections. In the Western Highlands Regional Seat, the voting population exceeded the number of
  eligible and registered voters.
  18
  On occasion these powers are delegated to an individual minister or the Prime Minister. The details
  of this process can be seen in Kavanamur and Okole’s paper on ‘Corruption’ as indicated in the
  reference.
  19
  The details of this process can be seen in Kavanamur and Okole’s paper on ‘Corruption’ as
  indicated in the reference.
  20
  The latest date for which published reports are available
  21
  These Acts of Parliament include the News Papers and Printers Act, the National Broadcasting
  Commission (NBC) Act, the Post & Telecommunication Act, the Radio Communications Act and the
  Censorship Board Act.

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  Axline, Andrew M. 1993. Approaches to Institutional Reform. Port Moresby: Institute of
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  Ballard, John. A. 1981. Policy Making in a New State. Brisbane: University of Queensland
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  Legislation
  Auditor-General Act
  Censorship Board Act Audit Act 1989
  Criminal Code
  Independent Public Business Corporation Act
  Leadership Code
  National Broadcasting Commission (NBC) Act
  News Papers and Printers Act
  Organic Law on Ombudsman Commission
  Organic Law on Provincial Governments and Local Governments
  Organic Law on the Duties and Responsibilities of the Leadership
  Organic Law on the Integrity of Political Parties and Candidates
  Post & Telecommunication Act
  Public Finance Management Act, 1986 (repealed in 1995)
  Public Finances (Management) Act 1995 (Consolidated to No 57 of 2000)
  Public Service Management Act
  Radio Communications Act

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