While the government seems to be taking some steps towards improving the accountability of the trust funds set up to handle windfall mineral revenue.....it remains a concern that significant expenditure pools are reported via disclosure of opening and closing balances with no insight into the expenditure in between.

The spectacular spending in 2009 (K2,365.9 million, about $1BN AUD) has been stemmed in 2010 (K696.6 million to end of September) but with additional deposits scheduled for 2011 the issue has not gone away.

Problems await even the best of governments with these unique features:

1. billions in windfall revenues from mining and LNG contracts
2. windfall money dropping into "expenditure pools"
3. accounts that show only annual opening and closing balances, and
4. A Big 5 accounting firm which chooses the rare GAAP term "spectacular spending" to describe the result.

In November 2009, PNG's Year of Spending Spectacularly, Somare's budget included a sneaky little $20M allocation that should have had a watermark "please investigate me for fraud" running through it.  No one said anything about it until February 2010 when the Grand Plan was revealed.

Here's part of the Secretariat of the Pacific Communities report:

23 FEBRUARY 2010 PORT MORESBY (POST COURIER) ---- A world class, fully equipped modern hospital is to be built in Papua New Guinea (PNG) in a partnership involving the Government, the private sector and not-for-profit organisations around the world.

It will be known as the Pacific Medical Centre (PMC) and will be located on 2000 hectares of land between Port Moresby’s Six-Mile area and Bautama in Central Province. Plans are for the project to be launched in April. Construction of the hospital will take two years.

At the weekend, a team from the United States, including the key senior officials on the planned K500 million hospital, travelled to Papua New Guinea to meet with senior officials of the Department of Health, senior doctors and officials of the Port Moresby General Hospital and the University of Papua New Guinea to begin work on the Cabinet-endorsed project.

The overseas team includes specialist doctors from Stanford University Medical Centre, Loma Linda University Medical Centre as well as experienced hospital architects and engineers from hospital design firm, Fletcher Thompson. Health Minister Sasa Zibe, when announcing the project on Friday, said he was fully aware of the criticisms that would be coming against this initiative but PNG had to move forward by setting higher benchmarks for its people to aim for rather than moving around in a circle as it had for more than 30 years.

“It will be developed as the nation’s first world class, fully serviced modern hospital and one of the Asia Pacific Region’s leading centres of excellence in providing first rate tertiary health care services, medical education, capacity building and training programs for local hospital administrators, doctors and nurses,’’ said Mr Zibe.

He said to show its commitment the NEC approved K20 million in November for the project, which will improve and revolutionise health care services, hospital administration, medical education/training and outreach programs for the people.A key component of the project will be education and training which will begin in June.  

ENDS

The Clintons take an extraordinary interest in Papua New Guinea

In January 2010 Hillary Clinton started her second year as US Secretary of State with a team planning session.   Most of the things they discussed were run of the mill - but where there's a Clinton there's always an angle! 

Some of the Hillary freakiness included giving a staffer 6 months to find warring parties for Hillary to bring together using her conflict mitigation powers.  It's hard to imagine the mentality that seeks out warring parties as a backdrop for self-promotion bereft of any interest in the nature of the dispute.  Just as long as it's a war and the pictures are good Hillary wanted in. It must have grated that Bill got Yasser Arafat and great optics at Camp David.

The US State Dept uses heaps of acronyms - S is Secretary of State, Hillary Clinton.  

A condition of her being given the job was her total dissociation from the Clinton Foundation, the creation of an Ethics Team to seek out and adjudicate on conflicts and a requirement that the Clinton Foundation submit all proposed activities for approval to that Ethics Team prior to getting involved.   Looking back now on Hillary's initial planning session for the US Government's overseas aid and the like for 2010, it's pretty clear the Clinton Foundation was magically developing many of the same priorities as Hillary was doing in her day job.

Indonesia, climate change and the Clinton Foundation's "Mr Vietnam"' with his trade treaty all featured.

The Muslim Brotherhood efforts to create the offence of defamation of religion was there.........

But one strange inclusion for 2010 stands out now like a sore thumb.  While the DRL (Bureau of Democracy, Human Rights, and Labor) team was sorting out the US's priorities on developing countries, Hillary had already decided that her first trip for 2010 would include PNG.

On 14 January 2010, Hillary (and the Clinton Foundation) got a better offer from Haiti while she was literally en route to PNG.   So what would a responsible US Secretary of State with appointments in a range of Pacific nations do?

 New Guinea Dejected at Hillary Cancellation

SYDNEY, Australia — When U.S. Secretary of State Hillary Clinton canceled plans to visit Papua New Guinea's ramshackle, crime-ridden capital Port Moresby last week, many locals will have experienced deja vu.

An isolated country of 6.5 million sandwiched between Australia and Indonesia, it is normally well down diplomats' list of concerns. Most of its territory was first brought into contact with the modern world in the 1930s. Locals are only a few generations away from a near-stone age existence, and bloody inter-tribal feuds are still an everyday part of life.

With a population the size of Arizona, its economy is only as productive as that of Charlottesville, Va., and its chronic internal instability has never seriously spread beyond its borders.

The only other time a U.S. secretary of state had scheduled a visit was in 1998. Then, Madeleine Albright dropped in for a whirlwind afternoon of talks, in part thanks to the relief effort for a tsunami that had killed more than 2,000 people on Papua New Guinea’s remote north coast.

This time, Clinton canceled her trip at the last minute to deal with the aftermath of the Haiti earthquake. The implication was clear: in the hierarchy of diplomatic attention, a major natural disaster will always trump the slow-motion crisis of a country’s faltering development.

Hopes of national transformation brought by Albright’s visit, in which the then U.S. secretary of state not only made promises of short-term relief aid but also discussed investment in Papua New Guinea's most-treasured resource — a complex of oil and gas fields under its rugged Southern Highlands province — proved largely illusory.

Chevron, the U.S. oil company that opened up the highlands fields, found its dream of a pipeline to export natural gas to the state of Queensland in Australia scuttled by objections and demands from an array of local landowners and doubts about whether the Australian market could absorb the gas. Having spent more than $1 billion on development and built much of the infrastructure in the local area, it pulled out of Papua New Guinea in 2003 after profits from the facility declined and the Southern Highlands descended into a drawn-out tribal war over the allocation of the proceeds.

However, the country may finally be on the brink of a second chance as a major energy exporter — a fact of which Clinton, despite her decision to postpone, would be well aware.

In December, an ExxonMobil-led consortium agreed a $15 billion, 20-year deal to liquefy the Southern Highlands' natural gas and export it to China, Taiwan and Japan. The project will produce 6.6 million tons of liquefied natural gas each year, equivalent to nearly a quarter of Australia's entire production, and is tipped to double the size of Papua New Guinea's economy.

Read more: New Guinea Dejected at Hillary Cancellation

Somare was apparently quite touched when Hillary made a personal phone call to explain her decision.

Fyi - from your ambassador in papua new guinea.

From: Taylor, Teddy B

To: Abedin, Huma

Sent: Wed Jan 13 22:07:31 2010

Subject: Trip Postponement

Huma, I wanted to relay to you the sincere sentiments of appreciation expressed by the PM's Office and the MFA for the very personal touch by the Secretary notifying the PM about postponement of the trip. Not lost on the GPNG is the fact that the entire trip was postponed, not the PNG portion. As you can imagine that is politically very significant. Naturally, we stand ready to reconstitute the program or enhance it should the trip move forward at a later date. We got luck today w/the weather—not a rain cloud in sight. Safe travels, and hopefully we will work together at a later date. Best of luck with the Haiti recovery effort!

Regards,

Teddy B. Taylor

Ambassador Papua New Guinea 

And Hillary meant it when she said she'd be back, later that year.

Somare's plans for the super-hospital were by then starting to leak.   The medical community was outraged, particularly as it had not been consulted at all over the initiative.  

But Somare showed not the slightest concern.   Even the absence of a budget to build the hospital didn't phase him.  He behaved like a man with a plan and backers to carry it out.

In April 2010 Somare visited Clinton in New York for discussions  "relating to the PNG LNG project and other issues/matters of bilateral significance".  Money.

Later that year Somare's ever discreet Minister for Health Sasa Zibe released this grand statement reporting Clinton's verbatim comments at the April 2010 New York meeting.

There may be a taste of sour grapes in Minister Zibe's public release of that private conversation as you'll see later in this article.

But Zibe's isn't the only account of the Clinton meeting.

Here is PNG's Ambassador Evan Paki writing to a senior public servant to inform him of the outcome of his Minister's meeting with Clinton in New York.

Dear Mr. Hulape,

It was a pleasure to see you, along with Planning Minister, Planning Secretary and the rest of your colleagues from Waigani.

As discussed over the phone – and as you are aware, Prime Minister and National Planning Minister (accompanied by me) met President Clinton on Friday 2 April 2010 in New York for about 80 minutes; in the course of the discussions on the Pacific medical Center (PMC) project (among other matters relating to the PNG LNG project and other issues/matters of bilateral significance), President Clinton agreed to support PNG to accomplish the Pacific Medical Center (PMC) project in view of its transformative nature and importance to PNG’s national healthcare sector; this pledge of support came after President Clinton was convinced that the PNG government was committed to the PMC Project.

President Clinton indicated he would be making a major announcement of his support – and the Clinton Foundation’s support – for the PMC project in late September 2010 in New York City during the annual meeting of the Clinton Global Initiative.

President Clinton’s support for the Pacific Medical Center project would also see him reach out to other western governments and corporate leaders to support the PMC as a major healthcare initiative for our entire nation and other Pacific Islands nations; this would include President Clinton’s outreach – on PNG’s behalf – to the leaders of other nations that provide PNG bilateral development assistance, founders/CEOs of major foundations in the U.S. and  CEOs of major corporations that have various business interests in PNG and other major prospective partners to get them involved in supporting the PMC project would as well.

Now in terms of the way forward, we’ll be meeting with the Clinton Foundation’s health team and other US-based partners and supporters (mostly teaching hospitals, medical schools and universities etc) and members of the US-based  PMC project team in the coming days and weeks to, among other things, advance the PMC project from within the United States.

On the ground in Waigani (as discussed), we, as a government, need to do a number of things in the coming days and weeks to take advantage of the global support and interest that this Cabinet-endorsed significant healthcare project is generating:

(a) prepare for the proposed launch of the PMC project in Port Moresby sometime in May or June 2010 (to enable this major  healthcare project to gather more momentum in the lead-up to President Clinton’s public announcement in New York in September 2010); and

(b) work towards including the PMC project in the national government’s national budget or the government’s infrastructure development budget for 2011 (e.g. in the National Planning’s PIP Budget), as discussed with the Planning Minister and Prime Minister, in the wake of President Clinton’s commitment towards the PMC project).

While work in relation to (b) – the budgeting process – might require additional meetings/consultations (with the National Planning and/or Treasury departments) – as well as the PMC project team’s being able to produce more details with respect to the Project’s costs and ‘revenue’ projects (which I understand they’re working on) – I would ask you and your colleagues to urgently assist in relation to confirming the Planning Minister’s availability and the availability of other key leaders, including: the Prime Minister; Deputy Prime Minister; Treasurer and Finance Minister; Foreign Affairs Minister; Minister for Public Enterprises; and of course the Health Minister; and other Ministers for the launch in late May or early June 2010; and the respective secretaries of each of  the relevant departments.

Please note that the Prime Minister – when in New York – indicated that the third week of May 2010 would be an appropriate week for the launch of the PMC project (before he departs for Norway on or about 27 May 2010, as he told me). Based on that, interested U.S partners/supporters and members of the PMC project team are  tentatively considering Tuesday 18 May 2010 as the proposed date for the launch, hoping that date is also convenient to the PNG government. But we’ve just been informed that the Health Minister (and perhaps other leaders?) might be away on official engagements on that date (assuming that/those official engagement(s) could not be re-scheduled).

In view of this, please consult with the above-mentioned Ministers’offices/ Ministries  – as noted above – and specifically confirm the Prime Minister’s availability (I rang and left a message for Mr. Leonard Louma, PM’s Foreign Relations Advisor) and that of the Deputy PM, Planning Minister, Treasurer and each of the key Ministers referred to above during the third week of May and/or early June 2010; as discussed, if NOT May 18, 2010, we need to confirm a date within that week for the PMC project launch or a date within the mid-May to mid-June 2010 period when all (or most) of our key leaders are available, especially the Prime Minister.

The PNG launch would further demonstrate not only the national government’s commitments to this major healthcare initiative but also it would significantly enhance the positive momentum that has been created thus far in terms of the global support and commitments towards the PMC project(the most significant of which is President Clinton’s support and commitment to the PM that he will work with PNG to help ensure that it is successful).

Please let me know as soon as possible so we (through the Health Ministry and National Planning Ministry) can work on sending the appropriate invitations out to PMC’s local and global partners and supporters, as well as prospective or new partners/supporters in the U.S. and within PNG.

I look forward to your responses. I am also contactable via mobile phone 051(202) 391 4667 if you or Planning Minister or Planning Secretary (or anyone who is copied in on this email) need to discuss any aspect of this important matter.

Sincerely,

Evan