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power to sack dishonest or ghost staff more quickly. At the same time, however, these powers could be used for nepotism if not adequately monitored and audited by the DPM, and the payroll system’s integrity could be at risk if it is not protected. ● In December 2007 parliament passed two sets of amendments to the Forestry Act 1991 without debate: the Forestry (Amendment) Act 2007 and the Forestry (Timber Permits Validation) Act 2007.5 In the view of NGOs such as the Papua New Guinea Eco-Forestry Forum, this change legitimises illegal and unsustainable logging.6 Non-governmental observers concur that the amendments were drafted without broad stakeholder consultation.7 The legislation appears to serve the interests of the logging industry more than the community landowners (see below for further information). ● The Financial Intelligence Unit (FIU) was established in July 2007 and is working from the National Fraud and Anti-Corruption Directorate. The role of its team of specialists is to receive reports from financial institutions that handle cash transactions, identify and provide training to these cash dealers, analyse trends and statistics, and investigate financial crimes. The directorate can also arrest and charge offenders, as well as retain assets in collaboration with the Public Prosecutors’ Office and issue guidelines to cash dealers, conduct on-site inspections and penalise cash dealers for non-compliance. In 2008 training on the Proceeds of Crimes Act 2005 was
provided to police investigators and cash dealers. Suspicious Transactions Reports have been sent from commercial banks to the FIU since December 2007. The reports give the police a means to identify emerging trends and patterns associated with financial crimes, as well as the ability to initiate investigations or supplement criminal cases. The unit does not have the capacity to carry out all its responsibilities, however, due to a lack of resources, skills and manpower. For example, there is an acute lack of capacity in the area of forensic auditing. Australia’s Anti-Money Laundering Assistance Team is providing training and support for the staff of the FIU, and is planning further assistance for prosecutors and the judiciary.8 Over time, the FIU is expected to increase the police’s capacity to prosecute increasingly complex financial crimes successfully. ● The Intergovernmental Financing Act is based on a proposal developed by the National Economic and Fiscal Commission (NEFC). A bill was tabled in the first half of 2008 and passed in July 2008.9 The reform is based on extensive empirical research carried out by the NEFC in each province to calculate the actual cost to deliver services, taking into account factors such as the physical distance between administrative centres, schools and health clinics.10 The new legislation lays out an intergovernmental financing system for recurrent goods and services budgets. The formula-based funding system is expected to increase accountability.11
5 Available at www.fiapng.com/fia_library_acts.html. 6 See, for example, the media release in Eko-Forestri Nius, vol. 9, no. 3/4 (2007), at www.ecoforestry.org.pg/ikoforestri/Vol.%209%20Iss.%203-4.pdf. 7 Personal communication by the author with staff from PNG environmental organisations, 17 October 2008. 8 See www.ag.gov.au/www/agd/agd.nsf/Page/InternationalDevelopmentAssistance_Anti-MoneyLaundering AssistanceTeam_Countryprojects#PapuaNewGuinea. 9 Post-Courier (Papua New Guinea), 17 July 2008. 10 National Economic and Fiscal Commission, ‘It’s More than Numbers’, Port Moresby, September 2008. 11 National Economic and Fiscal Commission, ‘Explanatory Memorandum for Organic Law on Provincial and Locallevel Governments’, Port Moresby, 2007.