Using the c-word: Australian anti-corruption policy in Papua New Guinea

Crowds demonstrating against PNGs Prime Minister in July 2014. Photo - Elvina Ogil.Around the world international donors have become more and more comfortable with the ‘c-word’ – corruption that is. During the Cold War, corruption was largely absent from international aid discourse – both sides of the iron curtain were more interested in gaining the support of ‘Third World’ governments, than monitoring how they spent their aid. Corruption was a word not muttered in polite company, not in front of one’s friends (strategic allies) anyway. That changed in the 1990s with the rise of Transparency International, and the World Bank signaling – through President James Wolfensohn’s now famous ‘corruption-as-cancer’ speech – its intention to fight corruption through its projects and programs.

Following international trends, Australia’s foray into the anti-corruption world can be traced to 1997, when ‘governance’ first became a budget priority for AusAID. Initially, the agency was rather coy about directly talking about corruption (preferring the term ‘good governance’ instead); but over time, corruption moved from the margins into the limelight. In 2007 AusAID brought out its first anti-corruption policy entitled, Tackling Corruption for Growth and Development: A Policy for Australian Development Assistance on Anti-Corruption (PDF here).

AusAID worked hard to show that Australian aid was not being misused. In October 2012, Australia and PNG jointly signed a zero-tolerance policy on fraud in Australia’s aid program to PNG.

Fast-forward to 2014 and anti-corruption has moved into the aid program’s top ten. The Coalition’s aid policy’s new(ish) targets feature a call for fresh fraud and anti-corruption strategies, at the country and regional levels, by July 2015. According to the policy, these plans:

… will detail the measures we [Australia] will adopt to protect Australian Government aid funds and how [Australia] will support our partner country’s anti-corruption efforts. Support may include public financial management reform programs, funding of civil society organisations that champion anti-corruption and funding other anti-corruption bodies (p. 30).

To promote effective governance, the Development Assistance Budget (2014-2015) commits to tailoring ‘support to the political context’, and conducting political economy analysis to help address ‘challenges in fragile and conflict affected situations, including unequal access to the benefits of economic growth and employment, political alienation and a sense of injustice, which can lead to conflict’ (p. 15).

This approach is to be welcomed, as it appears to signal a move away from the more technical assessments and responses to corruption that have sometimes dominated the Australian aid program. However, when it comes to addressing political corruption and its resulting ‘sense of injustice’, Australia has already found that it is difficult to meaningfully move beyond mere analysis.

This was highlighted at the Coalition’s recent aid policy launch. As the policy was introduced by Minister for Foreign Affairs, Julie Bishop, PNG’s Prime Minister, Peter O’Neill, was trying to avoid arrest over his alleged role in the ‘Parakagate’ corruption scandal. Not only that, but he was in the process of decommissioning Taskforce Sweep – the country’s successful anti-corruption taskforce, established by and much praised by PM O’Neill, until it turned on him.

After her presentation, Bishop was asked by the media whether the escalating crisis could affect Australian aid to PNG. The Minister emphatically stressed that PNG was ‘family’, and that Australia would continue to pour $500 million of aid into the country. She did, shortly later, go the extra step of ‘register[ing] our concern’ but only about political volatility in PNG. Being concerned about corruption, or abuse of process, or undermining the rule of law, was apparently one step too far.

Australia’s silence over Parakagate and the subsequent decommissioning of Taskforce Sweep has been deafening.

This is in part due to Australia’s diminishing leverage in PNG. With strong revenue growth due to the resource boom, PNG is long past relying on Australian aid. In agreeing to house Australian-bound refugees, Australia is more indebted to PNG than it ever has been.

Like it was for donors during the Cold War, talking meaningfully about corruption with Australia’s strategic allies (through PNG’s politicians) is difficult.

Yet, as PNG’s political elites have become bold, so too have their critics. Economic growth has led to a burgeoning middle class [pdf], who are becoming increasingly outspoken about corruption. The internet has allowed this middle class to share information about, and form alliances against, corruption like never before. Ordinary Papua New Guineans have come out on to the streets to protest against corruption, particularly in relation to the Parakagate affair.

Public servants have also become emboldened. Head of Taskforce Sweep, Sam Koim, fought against the government in the National Court, resulting in a permanent stay order on the government’s decision to disband the successful anti-corruption agency. He travelled to Australia to raise his concerns about O’Neill’s actions with Ms Bishop. Sections of the police have resisted orders by the government appointed Police Commissioner, Geoffrey Vaki, that favour the government.

PNG’s anti-corruption warriors are brave citizens and public servants. Given that Australia has made such a song and dance about corruption, they look to Australia for leadership on the issue. But they’re not finding it.

Indeed, many in PNG are, as blogger Keith Jackson has said, judging the Australian government by its response to these events. Unsurprisingly, few are impressed. Martyn Namorong, another PNG social commentator, tweeted at the time of Sam Koim’s sacking: “next time DFAT wanna talk about good governance in PNG remind them of their silence now”.

Somewhere in Port Moresby a committee will be forming (if it hasn’t already) to write DFAT’s PNG anti-corruption strategy. We don’t envy them their task. Somehow they need to plan a meaningful response to corruption in PNG, while skirting accusations of political interference, keeping PNG politicians onside, and including non-state actors. No doubt they will be guided by past Australian strategies, the PNG government’s own anti-corruption strategy, as well as existing agreements between PNG and Australia.

They should certainly be looking to increase support to those PNG organisations working against corruption. But, whatever the bureaucrats come up with, it will be worth little unless it is backed up by political commitment. When a PNG government disbands an anti-corruption taskforce, Australia should be ready to voice its condemnation, and loudly.

Given that fraud and anti-corruption are front and centre in the new aid program, Australia should remember that corruption is no longer a dirty word.

Grant W. Walton is a Research Fellow at the Development Policy Centre, and Stephen Howes is the Centre’s Director.

Grant Walton

Grant Walton is a Research Fellow at the Development Policy Centre. He received his PhD from the University of Melbourne. His thesis compared anti-corruption actors and citizen perspectives on corruption in PNG. Over the past decade Grant has conducted research in PNG, Liberia and Afghanistan. In 2015 Grant was appointed Deputy Director of the Transnational Research Institute on Corruption, a Research Associate of the University of Birmingham’s Developmental Leadership Program, and an ANU University House Early Career Academic Fellow.

Stephen Howes

Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.

17 Comments

  • The first step in dealing with the ‘C’ issue in PNG is understanding the cultural differences, as – like it or not – when it comes to anti-corruption efforts, context is king. There then needs to be sufficient political will to put money where the mouth is and turn-the-tap-off! That being said, with 10 politicians having stood aside due to the recent NSW ICAC investigations, along with the ongoing Royal Commission into union corruption, it begs the question as to whether Australia really is genuine about the topic. To avoid being accused of “do what I say not do what I do” it needs to clean up its own act as well.

  • Great comments Grant. I would only add that in the PNG-Australia Law and Justice Partnership for Development [pdf] one of the four “headline results” against which progress will be measured is PNG’s “enhanced ability to prevent and combat corruption.” (see Annex 2). Abolishing Taskforce Sweep clearly takes the country in the opposite direction. So, if we are serious about mutual accountability in our aid program, there need to be repercussions.

  • The first step donors can take in combating corruption is to ensure the projects they fund have sufficient corruption controls: regular, unannounced audits both financial and technical; screens in place to review bids on all procurements for signs of collusion. Donors should require that firms implementing their projects have anti-corruption compliance programs along the lines required by the new U.K. law. These programs should be audited to ensure they are not simply window-dressing. Donor agencies should have an inspector general or integrity unit dedicated to investigating complaints of corruption in projects. Companies and individuals found to have corrupted a project should be prosecuted, either in the donor country’s courts or those of the recipient.

    • I totally agree with you Rick. Problems arise however when the agency concerned is either the recipient nation’s government or an entity tacitly supported by the recipient nation’s government.

      If Australia offers aid on the basis that each program will be funded only if it is transparently administered and audited, logic suggests that we may be shunted into only funding projects the corrupt aren’t interested in.

      The key element however aught to be easy: Transparent administration of all our aid projects where ever they are funded. To prevent an explosion in public servants monitoring all these projects, perhaps there should be a mandatory element of each project’s funds allocated to auditing from an independent auditor.

      The issue is then: How does the Australian Government ensure those who have been found to have their metaphorical ‘hands in the till’ will be successfully taken through the justice system of the recipient nation? This is where the current impasse in PNG exists at the moment. Look at the lack of any real progress over the Finance COI Report. Even go back to the Barnett Report into illegal logging. The effective prosecution of any public figure has been effectively stalled or obfuscated by those in power at the time and for one must assume, their own selfish purposes.

      Australian sources however could be more effective on a clandestine level with the implied threat of public exposure through independent audit reports. Those found guilty should then be politely informed that they are not welcome in Australia based upon publically released information from the auditor.

      Imagine some threats that would really hurt.

      1. Refusing medical treatment of family and friends in Cairns.
      2. Barring ownership of any property in Australia and any property so purchased through clearly embezzled funds to be seized and the proceeds used to fund reputable projects in the future. What about the necessary cooperation of Australian banks I hear you say? Yes! Exactly!
      3. No more visits to casinos and public ‘amenities’. Visas blocked by publically advertised personal sanctions.
      4. Public humiliation through the local media when auditing reveals malfeasance. Ads taken out in local media and news could well be funded from a guaranteed amount of the project’s funding allocated to auditing.

      All sanctions would be made at the behest of the independent auditor and not directly attributable to any identified decision by the Australian government.

      Of course the downside could be the possible alienation of our aid program by those who are corrupt. Other more indulgent nations might then try to fill the gap left by this increased integrity. That’s an unfortunate but inevitable possibility however so what?

      At least we wouldn’t be funding corrupt practices and I’ll bet other donors won’t necessarily be interested either although you only have to review the recent case of the Borneo Pharmaceuticals contract pushed through by the PNG PM, Health Minister and his Secretary to see what can and does happen.

      Yet where is the public humiliation and vilification of what actually happened with this BPP debacle?

    • Rick, these are important first steps, but addressing corruption in an aid program doesn’t root out corruption per se.

      Australia has made efforts towards reducing corruption in the aid program (including zero tolerance agreements with the PNG government, as we note). Even though PNG is, apparently, one of the most difficult aid programs in terms of corruption of aid monies, corruption within the aid program is relatively low (there is always room to improve, however). The problem is that the real money is not coming from Australian aid, it comes from PNG’s economic boom. According to forecasts, PNG will see GDP growth by around 20% next year. So the question is, what role can Australia play to help ensure that this largesse gets through the government system to benefit the grassroots, rather than being siphoned off by elites?

      • Thanks to Grant and Paul for their thoughts on my comment.

        Paul the utility of my recommendations because he says (no doubt correctly) that it is highly unlikely that PNG would prosecute its nationals for stealing Australian aid money. He thus suggested other ways Australia could sanction those who corrupt its aid projects.

        Australia should prosecute PNG nationals in its courts for stealing Australian aid monies. I would be surprised if Australian law does not permit such prosecutions, and if it does not, I would add a fifth recommendation to those in my initial comment: amend the Australian criminal code to allow it. Of the measures Paul suggests instead of prosecution, three should be added to mine — deny those who corrupt an assistance project from: 1) buying Australian assets with the proceeds of corruption (which may already be the case under Australia’s Proceeds of Crime Act) and 2) visiting Australia (the U.S. has refused to issue visas to corrupt foreign officials since 2004), and 3) publicly humiliate them by widely publicizing their wrongdoing.

        Grant says that while my recommendations were “important first steps . . . . addressing corruption in an aid program doesn’t root out corruption per se.” It is critical to address the larger issues in PNG, he notes, because thanks to a growing economic boom fueled by the exploitation of its resources. Australian influence over PNG will diminish sharply in the coming years as revenues from resources outstrip aid dollars. Grant fears that the PNG is about to catch a serious case of the resource curse, enriching elites while leaving the rest of PNG’s citizens no better off than they are now. “What role,” he asks, “can Australia play to help ensure that this [resource] largess gets through the government system to benefit the grassroots, rather than being siphoned off by elites?”

        My response is twofold: One, don’t underestimate the spillover effects from rooting corruption out of aid programs. A vigorous anticorruption program will not only set a salutary example of what can be achieved but will require training and employing hundreds of accountants, auditors, and other corruption prevention and enforcement personnel. Their skills can later be put to use by the Ombudsman, Auditor General, and other PNG agencies to arrest abuses generated by the resource boom.

        Two, be realistic. The cure for the resource curse lies primarily with PNG citizens and the strength of their governing institutions. But Australia can certainly help. Aid dollars should be targeted on strengthening the critical institutions of governance, and if this money is actually spent for the purposes intended, rather than siphoned off into corrupt officials’ pockets (another reason anticorruption controls on aid dollars is critical), it can make an important contribution to institution building. PNG’s Ombudsman and Auditor General have made enormous strides in recent years thanks in no small part to Australian support and the justice sector SWAP is beginning to pay dividends.

        This reply to Grant and Paul appears in a longer form that explains the context on GAB: The Global Anticorruption Blog. I hope the cross-fertilization enriches the discussion on both blogs through.

        • Appreciate the insights here. Rick, I do like the steps you outlined on your blog and I think it could be the first concrete step forward. Yes corruption is a big issue and as Grant pointed out, a holistic approach is needed from Australia but first, Australia must work on what it can really control/have the upper hand and that is the aid money and how it is used. Investing a good number of years cracking down on its trail and who is responsible for its misuse will, among other things, create expertise and assist in drafting a more elaborate approach.

          In the wake of the resource boom, corruption is undoubtedly here to stay. Australia need not plan grand strategy or articulate superficial approaches it cannot fully manage. Instead, it must work on small tangible strategies where it can control and effectively enforce if necessary.

          That said, Grant reminds us that one should be doubtful as to the extent of seriousness on the part of Australia given its current interests in the country. Australia must be prepared to make some sacrifices if the anti-corruption movement in PNG is to progress. But is Australia prepared for that?

  • Thank you for this excellent outline of Australia’s compromised position. I had been under the impression that Prime Minister O’Neill came to Australia and offered Manus in Australia’s hour of need rather than Australia going to him. Is that correct? My recollection was that the expropriation of PNGSDP’s shares in Ok Tedi occurred shortly after the Manus arrangement had either been announced or signed. There seems little doubt that PNG’s Administration is well aware of the leverage they have by means of this arrangement and are employing it with increasing impunity. I feel sure that a great deal is happening outside of the public gaze here in Australia but there must be a range of rather more subtle means by which Australia can help ensure that PNG’s anti-corruption agencies and officers are supported and provided with platforms to the wider world.

  • Thanks Grant for your excellent blog. I think your analysis is solid and well-founded. The ‘song and dance’ you mention reminds me of the ‘dog and pony show’ idiom. That is, a highly promoted, often over-staged performance, presentation, or event designed to sway or convince opinion (http://en.wikipedia.org/wiki/Dog_and_pony_show).

    Given your analysis, the big question is “what is the appropriate role for the Australian bilateral aid program in promoting good governance in PNG?” Can anti-corruption programming in a bilateral aid program like Australia / PNG maintain its coherency and integrity if it is perpetually playing second fiddle to the main game of preserving power relations? Or is the aid program better off sticking to delivering public goods like health and education, whilst trying its best to minimize fraud, and not wasting its time and money with good governance promotion? Will history judge good governance programming to be largely a ‘dog and pony show’? Or are we getting better at it, learning our lessons, and reaching higher levels of effectiveness?

    Do you think we should continue to call donor technical support for state agencies in PNG ‘promoting good governance’, even when the political commitment isn’t there? Or should we adjust our nomenclature to the apparent reality? Would the good governance agenda be better served if we removed it from the structural shackles of the bilateral program, and handed it over to a more ‘independent’ body? Or is that a futile exercise that will end up in the same place?

    Your blog provokes some difficult questions, but certainly these questions go to the nub of the issue of the effectiveness of the Australian bilateral aid program in furthering human development in PNG. Surely, a worthwhile exercise.

    • Marcus, these are big questions.

      In my view (Stephen may want to comment on this separately), I think there is a role that Australia can play in helping PNG address political corruption, and that these efforts should compliment other work that is focused on improving governance. Addressing corruption requires a myriad of responses – including engaging with civil society, helping to enforce (rather than just write) laws, and supporting state anti-corruption agencies. These initiatives should be led by Papua New Guineans; but Australia can and should help. Getting the balance right is not easy, and there are sure to be setbacks along the way.

      As a part of the response, Australia should be ready to call a spade a spade – when the occasion arises. This does not mean that Australian politicians should start calling leaders of the Pacific corrupt (especially when you consider what the NSW ICAC has been finding); I think that is absolutely the wrong way to go. But when there is such a clear case of contravening due process (Parakagate) and dismantling an anti-corruption agency (Sweep), Australia should speak out.

      This should not be left to the diplomats behind closed doors. The aid program has made its intentions to fight corruption public, as a result it should show the public how it is achieving its aims.

      Delivering public goods is a crucial part of any aid program. Given this, anti-corruption shouldn’t be viewed as an end in and of itself, but a means to reducing poverty and the constraints that cause it. (Particularly because corruption can be ‘reduced’ by changing laws without changing unjust transactions.) Often the link between anti-corruption and reduced poverty is assumed; I think that aid programs should try to make that link more explicit with the programs and projects they support. Showing how development outputs and outcomes (functioning schools, trained teachers, better literacy/health, etc) are improved by donor efforts should be a key part of the good governance/anti-corruption agenda.

      I am not sure if Australia is getting better at anti-corruption, but there are some encouraging signs. On the plus side, many I talk to associated with the aid program have a grasp on the cultural, political social and economic issues that frame issues of corruption in PNG. There seems to be more cooperation between PNG and Australia around issues of transnational corruption (http://devpolicy.org/anti-corruption-on-the-front-line-an-interview-with-sam-koim-20130611/). And, as we mention, there has been a greater emphasis on understanding and responding to the political environment, in policy documents at least. On the other hand, efforts are stymied by Australian politicians’ reluctance to speak out for fear of upsetting powerful people.

      The delivery of the anti-corruption strategies mid next year should give us a better sense of how serious Australia is about fighting corruption in PNG and elsewhere. Hopefully they will include sections on what diplomatic options Australia has when a country shuts down anti-corruption initiatives (such as Sweep or the press).

  • There is a fine dividing line over publically discussing the policies and practices of another nation without these comments coming back to bite you in the bum.

    Just look at Clive Palmer’s latest outburst about the country who helped make his fortune. Look at the reaction in some quarters about Tony Abbott’s recent public comments about the upcoming Scottish referendum.

    The Australian government’s responsibility to the taxpayers who elected them and who provide the aid monies is however not to be taken lightly. Neither is our national interest.

    PNG like Indonesia, is a sovereign country. There have been questions raised about Australia funding schools in Indonesia that actively promote Islamic fundamentalism. Is this in out national interest?

    Australia cannot publically support the corrupt use of our overseas aid and Julie Bishop’s decision to withdraw funding of the PBG pharmaceutical purchase and distribution operation after two very successful years was based purely on stopping Australia funding continuing corrupt practices of the PNG government. That decision should send a clear message to the PNG government yet look what happened? Those responsible for public health (read PM, Minister and Departmental Head) simply ignored the decision and went ahead with what they wanted to do anyway.

    PNG Minister Malabag, who personally intervened to ensure the pharmaceutical tendering process was corrupted was a guest speaker at a recent conference in Melbourne. Did anyone at the conference think or want to challenge the Minister about his decision over the PNG pharmaceutical contract as he strutted the stage?

    Behind closed doors however is a different ballgame. Who knows what is said between our Foreign Minister and other national governments? The problem is simply one of leverage. Australians are clearly not seen as having much due to our past history of non accountable generosity to others.

    The clear problem is not what we say but what we do. The Chinese are reportedly able to gain significant leverage in the Pacific by picking up projects others don’t fund. Even New Zealand has a better ‘bang for their relatively small buck’.

    Perhaps the time has come to be ‘no more Mr Nice guy’ but that has to be behind closed doors. The public must be given no chance to actually find out what has been said. The only way the public will therefore ever find out there has been a change in the wind is through results then starting to happen.

    It is axiomatic that weak kneed apologists will demonstrably never be given any credence where thieves, bullies and the corrupt are concerned.

  • The recent events project the ‘c-word’ both as a sword and a shield. It seems the expectation has always been among many people – “please help,” either it be aid or interventions in the affairs of rule of law. But as Australia realign its commitment to confront its own challenges, the Pacific states are awaken to a new reality – the limitations of Australia’s commitment to their needs. The task then falls on the frail domestic institutions. The recent actions by the Ombudsman Commission and the Courts shed some hope but to what extent remains to be seen. Australia may have a duty but it would be a mistake for the people of the Pacific to rely on that assumption.

  • In considering Canberra’s ‘deafening silence’ over the Parakagate scandal and O’Neill’s extraordinary and profoundly damaging antics to evade justice and subvert legal process, there is a rather prominent elephant in the room that is not mentioned. Namely, the Australian-initiated detention centre in Manus. O’Neill is only too well aware of the leverage this provides him in dealings with Canberra and has played – and will continue to play – this gift to maximim political advantage. A vivid illustration of one area of Australian policy (border control) undermining another (anti-corruption in foreign/aid policy)

    • Hi Sinclair,

      As we mention, Manus is one of the reasons why Australia found it difficult to speak up against Parakagate and the disbanding of Taskforce Sweep. PNG’s economic boom also reduces Australia’s leverage. Still, Australia needs to find ways to speak up about corruption at this critical time. With a surge of money soon to flow to the government, the stakes are only getting higher.

      Cheers

      G

  • Thanks for this post, it is important and timely. Australia’s ‘deafening silence’ in this space mirrors equally concerning non-engagement in other areas where supposedly ‘Australian values’ are being disregarded, including (but not limited to) the dismantling of the rule of law in Nauru.

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