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Focus: Recent anti-corruption developments in Papua New Guinea

8 April 2014

In brief: The Papua New Guinean Government has continued to take significant steps in progressing its anti-corruption agenda in the first quarter of 2014. Partner Allan Mana , Senior Associates Sarah Kuman and Michael Gomm and Lawyer Anthony Graham report on recent developments in Papua New Guinea and their implications. 

How does it affect you?

  • Companies that operate in Papua New Guinea (PNG) need to ensure that they have procedures and policies in place that maximise compliance with both Papua New Guinean anti-corruption laws and other global anti-bribery or corruption laws that have extra-territorial reach.
  • Personnel should be trained to both comply with anti-corruption frameworks and to recognise behaviour directed toward them that may breach these laws.
  • Extractive companies in PNG can expect to be required to be more transparent in their affairs, particularly where they involve dealings with the Government. This may involve the public disclosure by the Government of information relating to their dealings.
  • Further proposed Government initiatives, including legislative amendments, may inform legal compliance and company responses to anti-corruption risk in PNG.

Introduction

The first quarter of 2014 has brought with it a heightened focus on anti-corruption efforts in PNG. The Pacific nation of more than 7 million people has followed a world-wide trend in increased resources and attention on anti-corruption enforcement, and shows no sign of slowing down.

Transparency International's 2013 Corruption Perceptions Index ranks PNG 144 out of 177 countries and territories, receiving a similar rating to countries such as Iran and Nigeria. PNG is notorious for being a 'high-risk' jurisdiction, primarily due to the perceived prevalence of corruption within its Government and a perceived failure in enforcement of anti-bribery and anti-corruption laws.

In response to these concerns, the PNG Government has implemented a number of anti-corruption measures over the past few years, including ratifying the United Nations Convention Against Corruption (on 16 July 2007), approving a National Anti-Corruption Strategy in 2011 and establishing what has essentially become the country's anti-corruption watchdog – Task Force Sweep – also in 2011. This anti-corruption agenda has been significantly progressed in the first quarter of 2014.

PNG Constitutional amendment: Independent Commission Against Corruption

One of the key anti-corruption platforms of the PNG Government has been the creation of an Independent Commission Against Corruption (ICAC). A significant step toward achieving this milestone was reached in February this year, with the country's Parliament unanimously passing legislation introduced by Prime Minister Peter O'Neill to amend the country's Constitution and provide for the creation of, and basic framework for, the ICAC.

The amendments to the Constitution provide that the ICAC, which will be headed by a Commissioner and two Deputy Commissioners, is to contribute, in cooperation with other agencies, to preventing and combating corrupt conduct. The functions of the ICAC include to:

  • receive and consider complaints regarding alleged or suspected corrupt conduct;
  • conduct investigations into alleged or suspected corrupt conduct; and
  • encourage, cooperate and coordinate with other public and private sector agencies in relation to anti-corruption measures.

The amendments to the Constitution clearly establish the independence of the ICAC, stating that it is not subject to the direction or control of any person or authority, or to judicial review on the ground that it has exceeded its jurisdiction. The Government has also stated that the ICAC will complement the work being undertaken by the PNG Ombudsman Commission and Royal Papua New Guinea Constabulary.

Having passed the amendments to the Constitution, the next step for the Government will be passing an Organic Law, which will provide further detail on the operation of the ICAC and will likely formally establish it.

PNG candidacy for Extractive Industries Transparency Initiative

In March, PNG, alongside the United States and Ethiopia, had its application to become an Extractive Industries Transparency Initiative (EITI) candidate approved by the Oslo-based coalition. The EITI is directed at increasing transparency and accountability in the extractive sector. There are presently 26 EITI compliant countries and 18 candidate countries.

PNG now has three years to implement all the requirements of the EITI Standard in order to become EITI compliant. The EITI Standard imposes significant disclosure requirements on EITI countries, including to publish its EITI reports, the first of which, in respect of its implementation efforts, is to be published by March 2016. These reports are to be accompanied by certain information about PNG extractive industries, including: the industry's contribution to the economy (including in size, government revenues, exports, and employment), payments made by extractive companies and received by government, production data, revenue allocations, licence registers and allocations, applicable provisions relating to the beneficial ownership of extractive companies, and contracts.

Due to the PNG Government's steps toward becoming an EITI compliant country, companies active in the extractive industries can expect increased transparency in relation to PNG-based operations, particularly regarding dealings with government.

Judicial developments

Former Minister sentenced for misappropriation

On 28 March 2014, the National Court delivered Paul Tiensten's sentence for misappropriation of property under section 383A of the PNG Criminal Code.1  Mr Tiensten's activities had been the subject of investigation by Task Force Sweep.

During his time as the Minister for National Planning and Monitoring, Mr Tiensten had approved the release of K10 million to Travel Air. At the time of the release of funds, Travel Air was a non-active domestic airline owned by a 'political friend' of Mr Tiensten.2 The court described the release of these funds, which avoided proper processes, as a serious case of misappropriation. The former Minister was sentenced to nine years' imprisonment with hard labour, with four years suspended upon restitution of the K10 million.

Announcement of creation of specialised court track for fraud and corruption

In the days following the sentencing of Mr Tiensten, the Chief Justice of the National Court, Sir Salamo Injia, launched a new specialised court track for fraud and corruption. The new track was established under the Criminal Practice (Fraud & Corruption Related Offences) Rules 2013, which were made on 4 November 2013.

The rules apply to offences involving theft, fraud, dishonesty, misappropriation of property and corruption, and are intended to provide for the quick, fair and efficient disposition of such cases. It has been reported that Deputy Chief Justice Salika will administer the track, which will operate in Waigani, Port Moresby.3

Conclusion

Since the start of the year, PNG's anti-corruption agenda has rapidly progressed at the policy, legislative and enforcement levels. This pace is set to continue with the Government foreshadowing that in the next month it intends to introduce into Parliament the ICAC Organic Law, which will likely implement the formal establishment of the ICAC, and whistleblower and freedom of information legislation.

The increased focus on anti-corruption in PNG reflects a global movement of development and enforcement of anti-corruption laws.

Companies with operations in PNG should ensure that they implement effective anti-corruption and anti-bribery policies and procedures that target compliance with relevant legal obligations imposed by PNG and with the company's home jurisdiction. Among other things, this should include adequate due diligence on third parties with whom the company engages and effective training of directors, officers and relevant personnel.

Footnotes
  1. The State v Paul Tiensten CR 402 of 2012; CR 403 of 2012.
  2. Ibid [48].
  3. The National, 'Launching fraud track', 31 March 2014.

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