04-10-2013, 02:53 AM
I got to thinking about this reorganization and how it has accelerated since O'Neill was elected and the coalition has formed and strengthened. It's obvious that PNG is taking direction from someone. I believe that someone is an entity which supplies them with a lot of aid; ADB. I pointed out last week that ADB had done a study of the Pacific Island SOEs and for the first time PNG elected to participate. This was welcomed by ADB and they have commended PNG for taking part. It appears PNG is taking the results of the study seriously and in it one can see the need for the reforms PNG is undertaking. The study mentions IPBC and states:
"When the IPBC Act was passed in 2002, the intention was that IPBC would operate entirely independent of the state; and not be subject to any direction or influence by the state, ministers, or the Parliament, except where explicitly set out in the IPBC Act, the SOE’s empowering legislation (where it exists), the GBT’s deed, or elsewhere in legislation.13 It is
understood that this high degree of separation was introduced in response to concerns over the endemic corruption within the PNG government."
The problem was:
"Indeed, the IPBC Act has both strengths and
weaknesses, and it would appear to a large extent
that since 2002 the weaknesses have been exploited
and the strengths ignored:
• Accountability and transparency. For most of
the period FY2002 to FY2010, the IPBC failed
to provide publicly available audited fi nancial
statements or annual plans. Similarly, the
SOEs failed to produce annual plans and
IPBC made no eff ort to publicly disclose the
audited accounts of the SOEs.
• IPBC governance. The 2002 IPBC Act
stipulated that the IPBC board should
comprise representatives from organizations
such as the PNG Trade Union Congress, PNG
Chamber of Commerce, a person nominated
by the National Council of Women, a person
appointed by Transparency International
(PNG), and others as listed in Section 11 of
the Act. This list had been carefully compiled
to ensure not only the independence of
IPBC, but also transparency, accountability,
and confi dence in the board’s decision
making. The requirements of Section 11 were
subsequently amended but on the whole have
been largely ignored.
• IPBC mandate. The original IPBC Act required
the board of IPBC, in exercising its powers
and functions, to act in accordance with
sound business principles; and the care, diligence, and skill that a prudent person
of business would adopt or exercise. This
provision was removed in 2007, leaving IPBC
with no overarching principle to guide the
board in its management of the SOEs.
• SOE governance. In the past, the government
has sanctioned political involvement in the
selection of SOE directors, contrary to the
requirements of the IPBC Act.15 While the Act
authorizes IPBC to select and appoint SOE
directors with the National Executive Council
(NEC) having veto powers only, in practice
the Minister of Public Enterprises appears
to have acted virtually alone in appointing
the directors.16
• Management of the GBT. The SOEs are owned
by the GBT. The IPBC is the trustee of the
GBT. However, since the establishment of the
GBT no trust deed has ever been formalized,
which would defi ne, among other matters,
the terms of the trust, the obligations of the
trustee,17 and the benefi cial owner of the
trust’s assets.
• SOE mandate. The 2002 IPBC Act and
subsequent amendments lack a statement
establishing the primary focus of the SOEs,
which should in turn guide all decisions
made by the board of directors and senior
managers. In most SOE legislation, this
statement—often called the “primary
objective”—requires the SOE to operate as a
successful business; and is then reinforced
by clear accountability statements that set
out the consequences for not meeting this
primary objective.
• Investment oversight. Section 46B of the
IPBC Act, introduced in the 2007 amendment,
states that no majority-owned SOE can enter
into any contract involving the payment or receipt of an amount, or of property to
a value exceeding K1 million without fi rst
seeking the approval of the minister of
public enterprises on the recommendation
of the IPBC managing director. The National
Development Bank—the poorest-performing
SOE over the period of this study—and
Telikom PNG (Telikom) have undertaken
projects with values over K100 million, in
breach of Section 46B."
So high corruption begat seperation from government, which begat high corruption because of lack of accountability. Now PNG is trying to get it right by having a balance of public and private governance and accoutability. This paper is worth a read as it gives insights to where PNG is headed, and ADB supports what they are doing. China is the champion of SOEs and they are not always done correctly. Petronas is one of the largest SOEs, but it is also considered one of the most corrupt by Amnesty International.
Here's a link to the PNG SOE study by ADB:
http://www.adb.org/sites/default/files/p...rmance.pdf
"When the IPBC Act was passed in 2002, the intention was that IPBC would operate entirely independent of the state; and not be subject to any direction or influence by the state, ministers, or the Parliament, except where explicitly set out in the IPBC Act, the SOE’s empowering legislation (where it exists), the GBT’s deed, or elsewhere in legislation.13 It is
understood that this high degree of separation was introduced in response to concerns over the endemic corruption within the PNG government."
The problem was:
"Indeed, the IPBC Act has both strengths and
weaknesses, and it would appear to a large extent
that since 2002 the weaknesses have been exploited
and the strengths ignored:
• Accountability and transparency. For most of
the period FY2002 to FY2010, the IPBC failed
to provide publicly available audited fi nancial
statements or annual plans. Similarly, the
SOEs failed to produce annual plans and
IPBC made no eff ort to publicly disclose the
audited accounts of the SOEs.
• IPBC governance. The 2002 IPBC Act
stipulated that the IPBC board should
comprise representatives from organizations
such as the PNG Trade Union Congress, PNG
Chamber of Commerce, a person nominated
by the National Council of Women, a person
appointed by Transparency International
(PNG), and others as listed in Section 11 of
the Act. This list had been carefully compiled
to ensure not only the independence of
IPBC, but also transparency, accountability,
and confi dence in the board’s decision
making. The requirements of Section 11 were
subsequently amended but on the whole have
been largely ignored.
• IPBC mandate. The original IPBC Act required
the board of IPBC, in exercising its powers
and functions, to act in accordance with
sound business principles; and the care, diligence, and skill that a prudent person
of business would adopt or exercise. This
provision was removed in 2007, leaving IPBC
with no overarching principle to guide the
board in its management of the SOEs.
• SOE governance. In the past, the government
has sanctioned political involvement in the
selection of SOE directors, contrary to the
requirements of the IPBC Act.15 While the Act
authorizes IPBC to select and appoint SOE
directors with the National Executive Council
(NEC) having veto powers only, in practice
the Minister of Public Enterprises appears
to have acted virtually alone in appointing
the directors.16
• Management of the GBT. The SOEs are owned
by the GBT. The IPBC is the trustee of the
GBT. However, since the establishment of the
GBT no trust deed has ever been formalized,
which would defi ne, among other matters,
the terms of the trust, the obligations of the
trustee,17 and the benefi cial owner of the
trust’s assets.
• SOE mandate. The 2002 IPBC Act and
subsequent amendments lack a statement
establishing the primary focus of the SOEs,
which should in turn guide all decisions
made by the board of directors and senior
managers. In most SOE legislation, this
statement—often called the “primary
objective”—requires the SOE to operate as a
successful business; and is then reinforced
by clear accountability statements that set
out the consequences for not meeting this
primary objective.
• Investment oversight. Section 46B of the
IPBC Act, introduced in the 2007 amendment,
states that no majority-owned SOE can enter
into any contract involving the payment or receipt of an amount, or of property to
a value exceeding K1 million without fi rst
seeking the approval of the minister of
public enterprises on the recommendation
of the IPBC managing director. The National
Development Bank—the poorest-performing
SOE over the period of this study—and
Telikom PNG (Telikom) have undertaken
projects with values over K100 million, in
breach of Section 46B."
So high corruption begat seperation from government, which begat high corruption because of lack of accountability. Now PNG is trying to get it right by having a balance of public and private governance and accoutability. This paper is worth a read as it gives insights to where PNG is headed, and ADB supports what they are doing. China is the champion of SOEs and they are not always done correctly. Petronas is one of the largest SOEs, but it is also considered one of the most corrupt by Amnesty International.
Here's a link to the PNG SOE study by ADB:
http://www.adb.org/sites/default/files/p...rmance.pdf