Wednesday 19 Sep 2018 | 13:58 | SYDNEY
Wednesday 19 Sep 2018 | 13:58 | SYDNEY

Governance in PNG: The case of the missing funds


Jenny Hayward-Jones


16 May 2008 14:43

A disturbing chain of events in Papua New Guinea has led me to wonder about the state of good governance there and whether the best remedy is better functioning institutions or just better leaders.

We heard a couple of weeks ago  that up to one billion kina (about A$400 million) had gone missing from the PNG Finance Department since 2000. This week Prime Minister Somare blamed bureaucrats for misunderstanding his intentions to terminate a Commission of Inquiry established in August 2006 to investigate these missing funds and preparing incorrect instruments for his signature to enable the termination in April. He said he had only intended a suspension while the parameters of the inquiry were broadened. Somare has announced the resumption of the inquiry and requested it be completed within nine months. The Prime Minister has called the findings in the Commission of Inquiry’s interim report 'not only staggering but frightening.' 

Meanwhile, the Prime Minister is under scrutiny from the ombudsman commission for allegedly failing to lodge his financial returns, as required by PNG’s Leadership Code, for three successive years in the 1990s and lodging other incomplete returns. The Prime Minister’s lawyers have applied for an injunction to halt the investigation, on the basis that the allegations were old and that there were legitimate reasons why financial returns were late or incomplete. Now the Chief Ombudsman, Ila Geno, has been accused of possible misconduct in the investigation by the Ombudsman Commission’s Director of Leadership. The Ombudsman’s investigations have been suspended temporarily.

If that was not enough intrigue, revelations of the Taiwan 'cash for recognition' scandal have created further doubts about the PNG Government’s commitment to good governance. Taiwan's vice-premier and foreign minister stepped down over the payment of US$30 million to two individuals who promised they could get PNG to agree to a formal diplomatic relationship. The money, intended as development aid for PNG, has disappeared. PNG Planning Minister Paul Tiensten and two other government officials who met Taiwanese officials in Taipei in 2006, and Somare, who met Taiwan's foreign minister in Singapore in 2007, have denied knowledge of the Taiwanese deal.

The PNG Opposition’s latest calls for Somare to resign are not likely to be heeded but have refocused attention on the importance of leadership. The Prime Minister’s strong position in parliament enables him to withstand much criticism and to blame institutional weaknesses for financial scandals. It is undoubtedly true that the development of more robust financial management systems in key PNG government institutions, which Australia is assisting, will help in preventing leakage of public monies. 

Institutions are important but so are leaders. Strong leaders who are able to demonstrate their personal integrity by public example might do more to inspire public servants to make their institutions work than those repeatedly put in the position of denying allegations and seeking injunctions to stop enquiries.