The debate about how AusAID funds are managed just got a whole lot more messy. Crikey has an expose by Wendy Bacon of the convoluted web of companies that are used to administer most AusAID projects.

http://www.crikey.com.au/2010/07/12/who-profits-from-our-foreign-aid-the-untold-story-of-grm-international/

From the introduction...

"We’ve studied the company records of one of Australia’s biggest foreign aid companies — GRM International Pty Ltd. Until December last year, GRM International was fully owned by the Bahamas-based company Consolidated Press International Holdings (CIPH) — a key company in the private empire of one of Australian richest families, the Packers.

"The central question at the heart of this web of complex company structuring is this: such set-ups for tax minimisation purposes are common in international company business — but is it acceptable for major recipients of Australian government contracts to operate in this way?

"GRM International handles hundreds of millions of dollars worth of government contracts each year. Yet, according to its most recent financial statements, GRM International Pty Ltd doesn’t make a profit and hasn’t had any employees since 2005."

To my knowledge GRM does not operate in PNG where other organisations such as Coffey international operate (I may be wrong), but they do administer RAMSI funds in the Solomons.

GRM does not employ people directly but sub-contracts projects to other companies, who in turn can sub-contract these like Russian dolls. Shells within shells, each getting a slice, with top profits going to offshore tax havens.

I think the s**t has just hit the fan.

Highly paid consultants may be the most visible target, but they are at the bottom of the heap (By the way, if on a 3 month or longer contract they don't pay any tax in Australia or the country in which they are based.)

It's the web of companies working above them who administer the aid that are the problem and the largely hidden scandal. Bacon's article strikes at the heart of how aid funds are administered, allocated and governed and I think this is where the attention should be focussed.

I belief, instead of the consultants, AusAID needs an overall review to improve on capacity building and manpower, eg send Australian doctors and nurses to PNG to solve the human resource problems in the rural and remote areas deteriorating health issues.

There are other ways AusAID can help as well.

MASKING FALSE ASSUMPTIONS IN AUSTRALIA’S AID

Sunday Chronicle 30 May 2010 Deb Chapman: It is an important
element of a right to transparency and accountability in governance
that there is outrage both in Australia and Papua New Guinea about
the recently publicized disgustingly high rates of tax free dollars that
are used to remunerate “consultants” in Australia’s aid program.

On a number of levels, I find “valuing” of work in this way obscene.
We don’t value and therefore remunerate community and family care
for children, differently abled, older people in our community or PNG.

Yet we would argue that this work which is dominated by women and
girls is of more value to the way our countries actually function day-to
-day than the terms of reference for many of these aid consultancies.

What is also disturbing is that these consultants pay no tax either to PNG
or Australia. Do they not drive their cars on PNG roads? Do they not use
taxpayer funded services in Australia? Why exemption from paying tax?

Let this not mask a deeper and more menacing problem. Australia’s aid
program has been increasingly commercialized in the last 25 years. As
the scourge of neo-liberalism has seen publicly controlled roles such as
prison management, local government surveying regulation and public
transport all fall into private hands.

So too our overseas aid program. And in private hands, the motive is
to make profit.

The system peddles many false assumptions in aid delivery that those
wh command the big bucks will run aid programs better than those
demanding less. Where does that leave the bulk of Papua New Guineans?
Implicit is the notion is they can not compete because their knowledge
is not valued.

And where is the accountability of those commanding the big bucks?
It is the shareholders of commercial contractors, not taxpayers who
contribute to the aid agency coffers.

Commercialism excludes the people with whom we should be
engaging. International research and wisdom tells us that people
who have to live by the decisions should be part of the decision-making.

We find ourselves in a kind of double-whammy in PNG. Aid we
have done has not improved life on the ground that we in Australia
and PNG have the right to demand from the billions spent there. As
well, we have undermined local development efforts by affecting the
context in which the aid is being carried out.

Ask any Papua New Guinean about housing costs in Papua New
Guinea. Perks such as housing for expatriate staff have driven the
house prices up. And put rental out of the reach of most Papua New
Guineans.

Our aid programs actually make things worse for the local people.
Papua New Guineans have plenty of their own issues to deal with. Let’s
not give them another job of cleaning up the mess that our aid program
leaves behind.

Let us use the scandal of these high consultancy fees to demand better
of our Government’s contribution to aid and development.

INVOICE TO K. JACKSON. Time for task 45 minutes.
Please remit k40,000. Pay peanuts and you get monkeys,
Keith.