Country Study Report for Papua New Guinea 2003

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    Assessment of PNGs National Integrity Systems and their effectiveness

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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
    TS1 3BA

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    Report Authors
    March 2003

    Prepared by
    Albert Mellam & Daniel Aloi
    School of Business Administration,
    University of 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

    © 2003 Transparency International

    Transparency International Secretariat
    Otto-Suhr-Allee 97-99
    10585 Berlin

    Papua New Guinea 2

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    List of Tables ………………………………………………………………………………………………………… 4
    Abbreviations ……………………………………………………………………………………………………….. 5
    Executive Summary ………………………………………………………………………………………………. 6
    Country Overview………………………………………………………………………………………………….. 8
    Corruption Profile………………………………………………………………………………………………… 11
    Causes of Corruption……………………………………………………………………………..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
    Electoral Commission …………………………………………………………………………….22
    Political Parties…………………………………………………………………………………….22
    Supreme Audit Institution……………………………………………………………………….23
    Civil Service………………………………………………………………………………………..25
    Police and Prosecutors …………………………………………………………………………..27
    Public Procurement ……………………………………………………………………………….28
    Ombudsman ……………………………………………………………………………………….30
    Investigative/Watchdog Agencies ……………………………………………………………..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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    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
    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
    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

    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
    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
    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
    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

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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.

    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
    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
    • 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
    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:

    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
    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
    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

    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
    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.

    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
    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.

    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-
    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
    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
    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
    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
    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
    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
    • 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
    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
    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
    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.

    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
    • 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.

    ‘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,
    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
    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
    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
    • 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

    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

    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

    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
    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

    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.

    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
    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

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

    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
    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

    1988 John Kaputin (MP) Details not available Not guilty

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

    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
    adhere to procedures, spending funds
    outside its scope of appropriation

    Susuve Lamaea (Chief of
    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
    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
    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
    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
    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
    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
    Affairs) appropriation, placing funds from Rural
    Agriculture Development into his personal
    account, Accepting benefits from a foreign

    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,
    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
    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
    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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    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.
    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.
    ‘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
    ‘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
    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.
    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.
    “Six-Packs” connotes an afternoon social drink party that is synonymous with PNG’s communal
    culture of sharing betel nuts and fellowship.
    An observation by a political science graduate of the University of PNG on difficulties in being
    employed by the provincial government of his province.
    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.
    ‘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.
    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.
    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.
    The Free Education Policy has been discontinued by the present government.
    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.
    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.
    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
    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.
    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
    The details of this process can be seen in Kavanamur and Okole’s paper on ‘Corruption’ as
    indicated in the reference.
    The latest date for which published reports are available
    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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    Aloi, Daniel and Brook, Matthew. 2002. Elements of Public Administration. Port Moresby:
    Institute of Distance and Continuing Education, University of Papua New Guinea
    Auditor –General of Papua New Guinea. 1998. Report of the Auditor General-1997, Port
    Moresby: Government Printing
    Axline, Andrew M. 1993. Approaches to Institutional Reform. Port Moresby: Institute of
    National Affairs
    Ballard, John. A. 1981. Policy Making in a New State. Brisbane: University of Queensland
    Dorney, S. 2000. Papua New Guinea: People, Politics, and History. Sydney: ABC Books.
    Kavanamur, D, Mawuli, D. Pera, G and Malipu, Al. 1997. Partial investment liberalization
    and price Control in PNG’. A Report for the World Bank, National Research Institute
    Kavanamur, David and Okole, Henry. 2001. Corruption in Papua New Guinea
    Kolma, F. 1996. ‘Reporting in the Developing World’ in Millet J (ed), Freedom at the Cross
    Roads. The Media and The Constitution. Institute of National Affairs Discussion Paper No.
    66. Port Moresby: Institute of National Affairs
    Manning, Mike, 1999. Factors Contributing to Lack of Investment in PNG. Port Moresby:
    Institute of National Affairs
    Manning, Mike and Levantsi, Theodore. 2002.The Business and Investment Environment in
    PNG: the Private Sector Perspective. Port Moresby: INA
    Millet, John. (ed). 1996. Freedom at the Cross Roads. The Media and The Constitution
    (Discussion Paper No. 66). Port Moresby: Institute of National Affairs
    National Parliament of Papua New Guinea. 2002. An Interim Report on the Public Accounts
    Committee Based on the Investigation Report of The Auditor General into the Department
    of Works and Transport. Port Moresby
    National Parliament of Papua New Guinea, 2000. The Organic Law on the Integrity of
    Political Parties and Candidates. Port Moresby
    National Parliament of Papua New Guinea. 1992. Information Paper on the Permanent
    Parliamentary Committee on Public Accounts. Port Moresby
    National Parliament of Papua New Guinea. 1996. Forty-Ninth Report of The Permanent
    Parliamentary Committee on Public Accounts Relating to the Reports of the Auditor-
    General from 1994 to 1995 on Provincial Governments. Port Moresby
    National Parliament of Papua New Guinea. 1997. Forty-Eighth Report of the Permanent
    Committee on Public Accounts. Report of The Auditor-General for 1996 on Telikom and
    Department of Health
    Okole, Henry, 2002. Evolution of Political Parties (Unpublished Seminar Paper.)
    Oliver, M (ed). 1989. Eleksin: the 1987 National Election in Papua New Guinea. Port
    Moresby: University of Papua New Guinea Press.
    Ombudsman Commission of Papua New Guinea. 1992. Report of an Investigation into the
    Spring Garden Road Poreporena Freeway Project. Boroko: Hebamo Press
    Ombudsman Commission of Papua New Guinea. 1999. Investigation into the Purchase of
    the Conservatory Cairns by the Public Officers Superannuation Fund Board, Final Report.
    Port Moresby: PNG Printery
    Ombudsman Commission of Papua New Guinea, 2000. Report to the Parliament for Period
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    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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