LEADER OF THE OPPOSITION
Parliament House, Waigani, National Capital District
PAPUA NEW GUINEA
Ph 3277 631 Fax 3277 632
Corruption, Civil Society and Good Governance
10th Anniversary Dinner – Eco-Forestry Forum
19th November 2009, Crowne Plaza, Port Moresby
Thank you Ken, Board Members, Thomas, Effrey and members of the Eco-Forestry Forum for inviting me to speak at your 10th anniversary dinner. It is an honour and a privilege.
I am disappointed that my co-guest speaker, Tos Barnett could not be here. Apart from my missing out on catching up with an old friend, reminiscing about the satisfaction and fun we had working to put in place good systems and structures of government in the early days of Independence, we will all miss the story Tos might have told us tonight. The Forestry Inquiry that he chaired uncovered the first big cases of corruption in PNG.
The Inquiry report documented what Tos described as “widespread malfeasance” - pervasive bribery and corruption; large-scale transfer pricing resulting in the loss of millions of dollars of export income, government revenue and royalties; non-compliance with regulations; extensive violation of landholders’ rights; and serious environmental destruction. The industry was, in Barnett’s words, “out of control”.
Let’s for a moment reflect on the pre-Barnett Inquiry era of the 1970s and 80s, and then what followed.
Before the exposures of the Barnett Inquiry, we had seen some questionable land deals, some petty embezzlement, the famous public service Diary affair, and misuse by some ministers of sectoral funds, soon known by all as “slush funds”.
But in those days, the total amount in a slush fund was at most one hundred thousand kina, for the whole country. Now, each Member of Parliament is in control of millions of kina every year. In those days, we did not have procurement and payment officers of government departments and companies fixing their own deals on each item procured or paid for. We did not have political parties controlling Supply and Tender Boards. We had proper contractual processes and checks and balances that largely worked, and protected the integrity and transparency of the system.
We did not have trust accounts with billions of kina stashed away, and Ministers roaming the countryside manually writing cheques and dishing them out as if the funds were their private savings. We did not have government agencies like IPBC hoarding and spending revenue that belongs to the state, to the people of Papua New Guinea. We had an Ombudsman Commission that took action; and Police Commissioners and Public Prosecutors who did their work without fear or favour.
The Barnett Forestry Inquiry reported 20 years ago. To me it is a landmark, a dividing point in the history of our country. Because while at the time it had major repercussions, we did not seem to learn from, or implement, its excellent recommendations. It resulted in the dismissal of one MP, and the resignation of the Deputy Prime Minister, which itself led to the dismissal of the Governor General. Some administrative reforms were put in place, but the very clear and detailed evidence set out in the Report was not taken up by prosecuting authorities, nor did the structure of the industry change. Those described by Tos as “robber barons” were soon at work again.
How PNG has changed in the 20 years since the Barnett Report. What was then a total scandal seems monkey compared with what is going on today. Corruption now pervades all sectors of government. In turn it has spread to the private sector; it affects every one of us in our daily lives. A friend, a very big businessman who grew up here and knows the country inside out, recently made the comment to me that it is very difficult to do honest business in PNG these days. And sadly, he is right.
In 1999, when my government came to power, there was so much to do. The country was virtually bankrupt and the kina on the verge of inconvertibility. Decision-making had been high-jacked by people outside Government. My focus of attention had to be on re-establishing an orderly process of decision-making based on process and professional advice, on stabilising the economy and government finances, on reforming the financial sector, and laying the foundation for both sustainable economic growth and for major reform of the public sector. In short, it was a period of reconstruction and rehabilitation for development.
In the three short years I had, there simply was not enough time to undertake all the reform necessary in different sectoral areas. For forestry, all I could do was to impose a moratorium on all new licences, increase taxes on timber exports (especially on logs), extend the SGS monitoring and checking of exports – and appoint the Eco-Forestry Forum to the National Forestry Authority Board. Discussions were advanced with the World Bank to fund a comprehensive review of the structure of the industry, an audit of all existing licences, a review of the fiscal regime for forestry and, most importantly, a stock-take of the remaining forest resource so that a Plan for a sustainable industry could be laid. Interim studies were completed, but not yet translated into law.
One of my greatest regrets in not being returned to power in 2002 was that I did not have the opportunity to undertake these more complex reviews and reforms.
Instead, the first thing the Somare Government did was to ingratiate itself to the forestry companies by reducing export tax. The moratorium on new licences was lifted. Section 59 of the Forestry Act, which provided for consultation with landowners on matters relating timber permits was repealed in 2005, and the Eco-Forestry Forum was removed from the Board to make way for a ministerial appointee. The Somare Government has conducted no audit of existing leases, to determine whether licence holders have fulfilled conditions of licences or not. There has been no analysis of ownership of forestry leases, to determine the real structure and ownership of the industry. No plan for sustainable exploitation has been developed. No action has been taken against lack of compliance with lease conditions, against violation of labour and immigration laws, abuse of human rights, or environmental damage. No monitoring of reforestation is taking place; indeed hardly any reforestation is taking place at all.
What Barnett detailed 20 years ago is not only relevant today – the situation is a hundred times worse. The control of the industry by one company is even more concentrated; the connections between timber companies and those in power have intensified; transfer pricing is still rampant; the majority of timber resource owners do not benefit from the industry; the environmental damage from uncontrolled logging has magnified.
Tos Barnett described the political accomplices of the timber barons 20 years ago as “corrupt, gullible and unthinking politicians”. I am not sure that today they could still be described as such. Corrupt yes, but not so gullible, and not so unthinking. Corruption has become, as I predicted in 1994, systemic and systematic. It is deliberate.
Removing export tax on logs is a deliberate act by the Government. Syphoning off timber revenue to Singapore bank accounts is a deliberate act. Corruption in forestry and throughout Government is systemic and systematic.
Every day we see it: politicians walking around with bagfuls of cash; their conspicuous spending on cars, houses, travel, gambling, women and drinking. We have a Prime Minister buying a private jet to spin around the world to sell more carbon credits; a Prime Minister negotiating to buy a satellite from India costing billions of kina; Ministers selling state assets cheaply, like the state’s shares in Oil Search; while children are not at school, aid posts are closed, health centres have no medicine, and roads have potholes like craters. It is all before our eyes. Who is taking action?
One shining light in this sad story of neglect and corruption is you, the Eco-Forestry Forum. You have shown through word and deed the importance of civil society in the quest for good governance. You actively engage in policy discussion, on forestry, environmental issues, on emissions reduction, carbon trading and on human rights. You campaign against illegal logging, and campaign for sustainable eco-forestry development. You involve landowners and rural communities in your work. You have taken the Government and companies to court, culminating in the landmark victories over Kamula Doso and East Awin. You have filed a constitutional reference challenging the validity of the Timber Permits Validation Act 2007 – another deliberate act by the Somare Government in support of questionable forestry activities.
You have a major role to play right now to protect forest resource owners from being seduced by the carbon credit cowboys who are carrying around their permits signed by the Prime Minister and his colleagues in the Kitchen Cabinet. What a paradox. On the one hand the Prime Minister, outriggered by his American and Italian logs, champions the REDD cause, while allowing uncontrolled exploitation of our forests by timber companies. On the one hand, we champion REDD and wish to trade our carbon credits, but we have no legislation or policy in place. In the face of chaos, we are vulnerable to sharks as well as cowboys.
To counter this and other misdeeds we need many more organisations to join you and speak out, engage in debate, draw out alternatives and options, protest about what we know to be wrong, and demand appropriate action by Government. Business people, workers, church representatives, media representatives, academics, students, professionals, community leaders all need to stop taking a passive role and play their part as responsible citizens. It is only when the people hold a government accountable, that it will be accountable.
Accountability requires commitment from the top, the leaders, and pressure from the people. NGOs, working together, drawing strength from each other, can make a difference for the silent majority to be heard.
I congratulate you on all that the Eco-Forestry Forum has achieved in its first ten years, and encourage you to keep up your fight. I assure you of my support.
Thank you.
Mekere Morauta KCMG MP
Leader of the Opposition and Member for Moresby North-West
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