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PNG implicated in $4 billion foreign aid fraud

NEWS LIMITED newspapers across Australia this morning are splashing a story revealing something that will come as no surprise to PNG Attitude readers.

An article by journalist Steve Lewis discloses that Australia’s $4 billion foreign aid program is “plagued by fraud” and that there are 134 "active" investigations into possible corruption in 16 countries.

Most cases of fraud are in Indonesia and Papua New Guinea, writes Lewis, whose investigation showed that at least $100,000 has been possibly siphoned off on one project in PNG's overflowing jails.

AusAID head Peter Baxter has conceded many countries receiving Australian money don’t have sufficient legal and police enforcement to properly pursue fraud.

But Mr Baxter would not comment on particular cases of fraud “while investigations continue”.

Steve Lewis reveals that a flagship $160 million PNG Law and Justice Sector Program is under serious scrutiny after misuse of funds.

An investigation by the PNG Department of Correctional Services has uncovered "serious weaknesses" with the project, which has been backed by AusAID since 2003.

And he said it was possible some money had been stolen or siphoned off by corrupt government officials.

This was leading to "great risk in the movement of prisoners".

You can link to the full story here.

Source: ‘Australia's great foreign aid rip off’ by Steve Lewis, Brisbane Courier-Mail, Sydney Daily Telegraph, Melbourne Herald-Sun and other newspapers, 14 July 2010.   Spotter: Murray Bladwell


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Bruce Copeland

We read in the media that the PNG government is looking at an expatriate to administer Corrective Services.

The National refers to the need for an outsider with no hang-ups and no skeletons in the cupboard.

Reference was made to nepotism and corruption in the disciplined services. We hope that the first act of such a person is the restoration of pensions.

The most successful business in this country is NASFUND under the leadership of Rod Mitchell.

This is followed by Nambawan Super led by Leon Buskens. Both are doing their best to maximise returns for the benefit of superannuants.

Bonuses have been paid and massive profits declared largely unheard of in this country in years past.

Let us hope that decisions are made in the future to centralis superannuation of PNG workers largely under these two organizations.

PNG citizens do not need to have their lives destroyed on retirement to find the superannuation biscuit barrel is empty.

They do not have to plead. It is their right. Employment of qualified, experienced expatriates is the only option.

I undertake never to criticise this country on PNG Attitude without a positive alternative suggestion or acknowledged plans to rectify in place within PNG.


Bruce - when I was in Port Moresby I had the experience of several people surreptitiously trying to get hold of my bank account number.

I wondered why, as I assumed you need more than an account number to withdraw money, but I suppose they could have forged my signature on a withdrawal slip and the banks are pretty slack at checking identities.

Bruce Copeland

There is an enormous problem in this country in the theft of money by cheques being diverted to private accounts.

Surely the answer lies in making banks responsible to ensure that the depositor is the person claimed and the cheque rightfully belongs to that person.

And the person has the responsibility to provide details of the source of the money. Surely it is obvious that PNG workers do not generally receive millions of kina from lawful sources.

Money diverted into private accounts has to be done with knowledge of bank officials. Much money is stolen by chairmen and other officials in landowner groups and NGOs.

It has to be obvious to banks that official cheques to private accounts have a certain ring of corruption about it.

The bank officers should be held responsible for all cheques made payable to private accounts. Money sent out of the country should be authorized and checked. And the paperwork held by the bank.

We hear that members of parliament have overseas accounts. Since the discretionary funds are no longer acquitted, it is a reasonable bet that much of parliamentarians’ funds have been diverted overseas.

That probably accounts for why such a provision will never be legislated into law.

Robin Lillicrapp

Bruce: your comment of the 15th re .."localisation. It no longer exists".... and the confirming responses adds weight to my words below posted in another forum
The loss of traction by locals in the implementation of aid programs .could also be illustrated by reflecting on negative aspects of the recent project debacles in Australia; ala, the roof insulation rorts and related damages much of which emanated from centralised and remote administration not unlike the scenarios in your comment. A process which ultimately leads to disinterest and disaffection on the local scene but aids the systemic need for power and control by the "big-men" due to the way that developed nations interact with the all-encompassing arms of the international money business.
Think Milton Friedman (Free-Market Economics) and reflect on all those refugees from the South and Central American nations that imploded in the 70's and 80's. They fled, migrated, or were driven out during a reign of socio-political meltdown resulting in; essentially, the same loss of local control, and transfer of influence to outside parties: hereafter known as GLOBALISM.
A seminal text on the free-market economics effects on various nations is Naomi Klein's: Shock Doctrine. The Rise Of Disaster Capitalism. (2007)
What you describe is the outcome of that same process gradually insinuating itself upon PNG.
A definition for many of the projects undertaken by governments around the world now in respect of those works formerly done by local bodies, might be termed: "Public- Private Partnerships.
If you are able, view the videos below and analyse where the info there correlates with your observations.
If you are unable to view them online, tell me, and I'll burn them for you and post. catch me on [email protected]
13th July--There is in play a series of events that are way beyond anything most of us dreamed let alone talked about in the 60’s and 70’s.
Joan Veon is an author, journalist and expert on globalisation. A couple of videos here:

Mari Ellingson

Thanks Trevor, Reg and others who are concerned about the cockeyed way in which the aid relationship with Australia continues to be viewed and handled.

I honestly think that if ten PNG and Australian aid managers were to get together for a fortnight on Samarai Island, for instance, some real truths will emerge in this continuous blind-leading-the blind saga.

Believe me, both sides would need to eat humble pie and start all over again in terms of re-thinking the management of Australian aid to PNG.

This is the key issue - the area of contention, confusion, controversy and uncertainty. Nothing else. Tingim gut and you'll actually find that the issues relating to the management of Australian aid to PNG regrettably lets both countries down.

For starters, keep the bilateral relationship well away from the aid relationship - in my humble opinion, therein lies the candle that will light the way to the end of the tunnel.

It is never too late to do things correctly and smartly. It ultimately saves precious days!

Tenkyu tru Keith for a place to air our views.

Trevor Freestone.

Mari - I look forward to the time when the clouds clear and we can see those wonderful stars shine brightly.

Yes, Viva PNG.


Bruce - you are right. We had an AusAID project officer come to work with us one day on some HIV/AIDS research. She had an office that had just been renovated, so she was on her own for the first few days.

One morning some boys came and knocked on her office door, in all innocence - they were inquiring about moving in some furniture.

However she was so frightened by this "encounter" that she rang the Australian High Commission, who sent a car around and took her back to her hotel. We never saw her again!

Reginald Renagi

Gudy, Mari. Agutoi. Great comments by Mari and I fully support and share her sentiments.

We need more supporting comments like this from the PNG expatriate in London. I look forward to her comments in PNG Attitude.

Keep up the great work that you do in the land of the Queen of PNG. PNG is proud of you.

Bruce Copeland, AIDS Holistics

In earlier times, the eight-point plan referred to localisation. It no longer exists. Now that the foreign aid projects are controlled by private companies, the objective seems to be to remain in the country forever.

That means PNG people are no longer trained to take over positions. They are kept in subordinate positions.

The consultants we see are no longer the helpful Australians who become friends with their PNG opposite numbers and quietly supports them.

Consultants today may well be authoritarian, more than slightly racist, unhelpful and ready to recommend that PNG people have their contracts not renewed for not toeing the line - the company line.

They are not interested in learning Tok Pisin and understanding and appreciating the PNG culture.

They would not dream of going into villages and talking to the people in Tok Pisin. The nearest four star hotel is as far as they go.

In the area of HIV/AIDS awareness, consultants are not in the least concerned that they are paid K500,000 with house and car and the PNG workers are volunteers in poverty.

Peter Warwick

Mari, well said. It must be remembered that Oz has reduced its aid interest in PNG, and so it should after 34 years of independence (is it to go on forever?).

Australia is providing aid to satisfy certain UN criteria and to assuage the consciences of the punters in Oz, who feel we should do "something" without being sure of exactly what, but one suspects it is really about shovelling the dollars over the Torres Strait, so that we can silence our critics that "we are doing something", that is, spending money.

Most punters in Oz are a pretty genial lot and are generally happy if "something" is being done, without wanting any or much complex detail about targeting, cost effectiveness and efficiency. No complex X-Y scatter graphs, histograms or long paragraphs.

Have you noticed that the aid experts always speak about the X dollars Oz is providing.

It's the headline grab "AusAID to increase aid to Pacific to X billions" that placates the punters.

Scene 1... The breakfast room in a home in Sylvania Waters. Les is reading the morning paper. “Honey, good to see we are spending more on aid, the poor buggers need it”. Turns to sporting pages.

I wonder if there is an EFFIFT, an Efficiency and Effectivesness Index For Taxpayers, where efficiency and effectiveness are measured against the quantum of aid money provided for a particular project.

Those punters who have an interest would be then able to look up the project aid figure and read the index, a sort of score card. To make it simple for the punters, a score of 7 out of 10 means that 70% of a projects designed outcomes were achieved within cost and time budget.

We do it for refrigerators (you know "the more stars, the better" stickers).

The keepers of the index would be separate from AusAID.

This is not meant be some tongue in cheek piece, but honestly, the average punter in Oz is working so hard on their leisure, that issues like foreign aid are but a passing interest.

There are people, like those who are in or ex PNG, unrelenting bloggers, rabid letter writers, soap box spruikers, ex-kiaps, generals, admirals, and ordinary citizens, both PNG and Oz alike, who take a deep and abiding interest and action in these matters.

But as a percentage of the populace, it’s a fairly small number, and as a dispersed group they have little opportunity to effect change.

Their rantings though are heard and read and we must keep it up.

Without wanting to denigrate those public servants who do work hard and professionally on aid management (and there are some, I know them personally), most of the AusAID senior fraternity would not want the EFFIFT mentioned above, as evidenced by the recent criticisms of aid design and delivery.

I am not one of those "aid is a total and complete failure" types. There have been successes, and there will be further successes. But one suspects the successes can be attributed more to individuals that the designers. The individuals you speak of Mari.

Might I suggest a reading of the ANU's Cross Sections vol 5 - - for a fairly frank observation of Australian aid to PNG [it has to be purchased online].

Australia giveth, and Australia taketh away. Mari, maintain the rage !

Mari Ellingson

Trevor - Australia is not necessarily a benchmark in setting up an aid agency for PNG!

There are knowledgeable, dedicated people in PNG who were overlooked and have never been given any credit for setting up the Office of International Development Assistance (OIDA). The first of its kind in the Pacific!

It took clearheaded champions for true public service to take the ad hoc nature in which aid was given and used and put them into a well-coordinated body that coordinated and managed aid in the late 80s well into the first five years of the 90s.

This body gained international recognition as the benchmark for an aid agency, albeit an aid recipient agency. It was a great credit to the PNG government of the day, and a credit to those responsible, that this pioneering effort so clearly demonstrated the foresight and vision of Papua New Guineans. It had nothing to do with Australia!

If this spirit of true public service is still alive and well in PNG as I remember it, then we don't have to look elsewhere to do the best we can.

This was a great and striking example of Papua New Guinean strategic thinking, planning and mentoring in the highest degree, par excellence.

Unfortunately, as the way most great innovation goes in PNG, the tall poppy syndrome prevailed and we don't have that body anymore.

What you and others are seeing and commenting on now is the damning result of the ill-advised political decision that destroyed this innovation, which caught the attention of an internationally commissioned paper in the late 80s or early 90s, a study entitled "Does Aid Work?".

Please do not think that Australia has all the answers because it does not by any stretch of the imagination!

The sooner smarter thinking, public service-oriented, selfless, non-power intoxicated Papua New Guineans realise this, the better off PNG will be.

There are many, many smart and intelligent Papua New Guineans whose stars are barely twinkling at the moment, but with a responsible political climate you can bet your bottom dollar their stars will shine beyond compare.

Give these kind of Papua New Guineans the credit they deserve, for they deserve it more than any others I'll ever know. Viva PNG!

Reginald Renagi

Well said, Trevor, and I fully agree with the comments. Yes, PM Somare was in such a hurry to drive the State ship without first getting all the qualifications, and other relevant requisites, before saying to his predecessor (Australian PM and government), "I have the ship, sir".

I also agree with Odau. But when you are the boss, you get the best advice and also use your better judgement to make a final executive decision.

Somare cannot keep saying he got bad advice every time there is a public outcry about what he's done wrong. He must take full responsibility for any decisions taken by his government in all conditions.


Somare had a plan back then. He wanted to see him been the GO-TO-MAN come 2010... which is the case right now.
So in doing so, he had not time if not paid little attention to detail nitty gritty aspects of running an independent nation like PNG...

He was advised but advised wrongly..with an evil intent...

Trevor Freestone.

A proper system of providing aid to PNG should have been set up prior to Independence while Australia still had some influence. It should have included checks and balances that could have prevented corruption. Mr Whitlam and Michael Somare were just in such a hurry to get their names in the history books that they did not take time to plan the future of PNG.

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