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Improved transparency can reduce corruption IN the recent past, this column has discussed the issue of corruption; only days before the publicity of another fiasco at the Department of Finance regarding landowner funds.There have been no responses to the concerns expressed with regard to fears that a large proportion of supplementary budget funds may get embezzled in the same way that funds raised for Boram General Hospital are largely unaccounted for. The lack of a response suggests little or nothing may be done to provide additional safeguards to spending of the nation’s so-called windfall revenues. We just have to hope that most will be in good hands. This week, I would like to address a related issue that gets a frequent mention but attracts very little meaningful discussion – the issue of transparency. Transparency is closely linked to accountability which, in turn, is a major deterrent to corruption. For example, recent columns have mentioned that an additional K70 million from the supplementary budgets were spent on the Highlands Highway and a similar amount on rehabilitation of hospitals over the past two years. For transparency to be apparent, there would have been announcements made on projects to be undertaken, tenders that are called and work eventually carried out, all highlighted by a nice opening or dedication ceremony. Transparency operates at several levels. From a Government perspective, we might say that at the topmost level we get various decisions of the National Executive Council that are conveyed to the general public via the national media. But, of course, the NEC cannot and does not deal with everything. It was the Budget 2008 papers that gave us the information that K70 million had been spent these past two years on rehabilitation of some of the nation’s hospitals. Even though the buck for such decisions, and their implementation, does stop at the NEC, in this case, a large part of the responsibility would fall on the Department of Treasury and Finance to make sure that funds are properly disbursed and utilised. The Ministry of Health would be the next relevant authority. It would have made the initial submissions on projects it wanted funded and eventually had to call tenders and monitor project implementation. For the sake of transparency it has to inform the public, usually via the media, of what has been done and possibly tell us some of the benefits that might be anticipated. That is the way things are supposed to work even if the country is not a democracy. Governments of all kinds of ideology usually want to impress the public that they are doing a good and competent job, the only two likely exceptions to this case being Myanmar and North Korea. The question of transparency is not important just for governments. It is a major concern within the private sector, particularly for publicly listed companies that often have hundreds or thousands of shareholders. Regulations covering companies listed on the Australian Stock Exchange or the Port Moresby Stock Exchange are clear in this regard and require that companies and their directors immediately inform the market of any development that could potentially impact on their share price. Companies can cop what is termed ‘a speeding ticket’ when their shares make sudden gains with a ‘please explain’ demand, or if there is a sudden drop in their price. Beyond this, all mining companies have to put in quarterly reports about their activities and financial position in the previous quarter, with other companies reporting every half year. Shareholders react to dramatic announcements very quickly. A similar situation should apply to State-owned enterprises (SOE), which conduct various types of business activities on behalf of the Government. The statutory requirement for most SOE’s is for these bodies to provide Parliament with an annual report of their performance and, of course, a lot of things could easily have gone wrong in a particular year before the public is aware. Generally, in PNG most SOE’s such as Telikom PNG, PNG Power and others, with the possible exception in recent years of PNG Post, are very late with these annual reports although there was a big catch up effort made just before 2002. Until these annual reports and duly audited accounts are presented to Parliament, all statements about their financial performances have to be treated with a grain of salt, especially by the media. Creative accounting can be very much the bane of these organisations, as in the case of private enterprises. Another important check and balance within the private sector is the vast array of analysts – there is none of any standing in PNG – who analyse and publicise the performance of listed companies. They often provide signals when things are changing for the better or getting worse. The authorities here put up a wild witch hunt recently suggesting there had been insider trading in Credit Corp shares, but went suddenly quiet after their investigations were conducted. Another interesting case in the future will be public reporting on the performance of the Tolukuma gold mine in Central province, which is being purchased by the Government-owned Petromin. The severe downturn of operations at the mine, and mounting financial losses, has been well recorded in the quarterly reports of the current owner, Emperor Mines, but it is likely to be a long while before the public will hear how Tolukuma performed this year. This will depend on when Petromin eventually submits its annual report to the PNG Parliament. It will, of course, be a totally different story if Petromin takes the unlikely step of listing a small percentage of Tolukuma’s equity on POMSoX.
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