South Pacific Prime Ministers will have reason to raise a quizzical eyebrow when Australian Prime Minister John Howard starts lecturing them on corporate governance at this week’s South Pacific Forum meeting in Fiji. Leave aside any scepticism that Michael Somare and Manasseh Sogavare might have about the way Australian civil servants turned collective blind eyes to the evidence that AWB was in the graft and corruption business. The most glaring example of an Australian double standard when it comes to governance involves an Australian government instrumentality aiding and abetting the rorting of money collected on behalf of the Solomon Islands government.
The Australian Auditor-General gives chapter and verse of how Airservices Australia used its corporate credit cards to give cash advances to Solomon Islands ministers and officials in its recent report Airservices Australia’s Upper Airspace Management Contracts with the Solomon Islands Government. Behind that rather bland title is an extraordinary story of the lengths to which our nation’s public servants went to ensure that they obtained and maintained a lucrative little earner to guide aircraft high in the sky above Vanuatu.
Between July 1998 and April 2006 when Australia collected money from airlines on behalf of the Solomon Islands (SI), $4.1 million was paid in to the SI government bank account specified in the contract. A further $825,000 was sent to other SI government bank accounts. A total of $2.1 million went not to the SI at all but was paid to third parties – $588,339 to an adviser contracted to the government, $391,478 on student education expenses, $306,162 on travel expenses with $809,685 on 66 “other third party payments.” To round matters off there were 17 cash advances and payments totalling $28,558 on an Airservices Australia corporate credit card.
Airservices Australia went to considerable length to convince the Australian Auditor-General that things have changed in its organisation since those bad old days when the organisation was concerned that “air traffic service providers from countries such as the United States, New Zealand and Fiji were actively marketing their services within the Pacific” and “there was a concern within Airservices Australia that, unless it became more active in its marketing efforts, it may not win contracts to provide air traffic services outside of Australia.” The organisation certainly had plenty of time to prepare its case. The audit report says the first time concerns were raised about the use of air navigation fee revenue was in June 2001.
This was in an article in the Solomon Star newspaper on 8 June 2001 alleging misuse of funds. Specifically, the article suggested that funds held by Airservices Australia on behalf of the Solomon Islands Government were not being properly accounted for and had been misused by three senior Solomon Islands Government officials.
On 12 June 2001, the Airservices Australia contract manager prepared a brief in relation to the Solomon Star article. This was used by the then Airservices Australia Company Secretary to provide a brief to the then Minister. The brief to the then Minister concluded that Airservices Australia had minimal legal exposure as all expenditure from funds held by Airservices Australia was approved by a senior member of the Solomon Islands Government. No further action was taken by Airservices Australia at this stage to conduct a thorough examination of the management of the contract.
Between July 2003 and November 2005, there were three internal audits by Airservices Australia of the management of air navigation fee revenue collected on behalf of the Solomon Islands Government. “Over the period since concerns were first raised in 2001,” said the latest audit report, “there has been a considerable change in Airservices Australia’s assessment of its performance in administering payments made from air navigation fees collected on behalf of the Solomon Islands Government.”
I wonder if Mr Howard will be as charitable as the auditor when he reviews current Solomon Islands and Papua New Guinea governance measures.