Unmasking Corruption and Mismanagement in PNG: NPF vs. UBS

 In the heart of the Pacific, Papua New Guinea (PNG) grapples with a persistent challenge: corruption and mismanagement. These issues, while not unique to PNG, have been the focal point of intense scrutiny and debate within the nation. In this blog, we will explore the themes of corruption and mismanagement as they manifest in PNG through two contrasting cases: the National Provident Fund (NPF) inquiry and the controversial UBS loan.

Theme 1: Corruption and Mismanagement

Corruption, the buzzword in PNG's political discourse, is a multifaceted problem. It encompasses a wide spectrum of illicit activities, from bribery and embezzlement to nepotism and bid-rigging. The NPF inquiry sheds light on how these practices can undermine an institution's integrity. As we delve into the NPF case, it becomes apparent that both fraud and mismanagement played pivotal roles in the fund's enormous losses.

The NPF board had approved the purchase of shares, but their decisions were often ignored or misrepresented. Such behavior reflects a dangerous pattern where those entrusted with managing public funds can act with impunity, demonstrating how corruption can permeate even well-regulated organizations.

Theme 2: Trust in Outsiders

The UBS loan controversy presents an entirely different facet of corruption, emphasizing trust in outsiders. In an effort to participate in resource enterprises, PNG's government entrusted outsiders like Peter Botten of Oil Search and the UBS bank. The deal appeared promising, but it heavily relied on external actors, leaving PNG vulnerable.

This reliance on outsiders without a comprehensive understanding of the consequences demonstrates a dangerous willingness to cede control over critical decisions. The UBS loan case reveals that trusting external actors too implicitly can lead to unfavorable outcomes, ultimately affecting the nation's economic stability.

Theme 3: Disregard for Controls

Both the NPF and UBS cases share a common thread: a disregard for controls. In the NPF inquiry, controls were frequently ignored, and expert advice was not sought. Likewise, the UBS loan was executed without proper consultation or scrutiny, undermining vital checks and balances. This neglect highlights the need for stronger governance and oversight in PNG.

Theme 4: Denial of Reality

Another recurring theme is the denial of reality. The UBS loan deal, in particular, assumed an abundance of government resources, ignoring the possibility of changing market conditions. This over-optimism can have devastating consequences, putting immense strain on the nation's financial stability.

In the NPF case, there was a similar denial of reality as financial woes were brushed aside, leading to catastrophic financial losses. Such denial not only damages the nation's financial health but also erodes public trust.

Comparing NPF and UBS

While both cases involve corruption and mismanagement, the NPF case primarily reflects internal issues within PNG institutions. In contrast, the UBS loan case illustrates how external actors can exert influence over the nation's economic decisions.

The NPF case demonstrates the urgency of addressing corruption and mismanagement within PNG's public institutions. Strengthening internal controls, ensuring transparency, and holding individuals accountable are essential steps forward.

Conversely, the UBS loan controversy emphasizes the need for greater self-reliance and careful consideration of the consequences of trusting external entities. PNG must protect its interests and carefully evaluate the potential risks associated with external agreements.

In conclusion, corruption and mismanagement pose significant challenges to PNG's development and stability. The NPF and UBS cases serve as cautionary tales, highlighting the importance of addressing these issues at both internal and external levels. By learning from these cases, PNG can pave the way for a more transparent, accountable, and economically secure future.

The blog was written as a summary to paper as per the link here  

Jan Kees van Donge, Corruption: a plea for more analysis or moving from big words to precise meanings