BRIBERY AND CORRUPTION

LAW REFORM COMMISSION

OF PAPUA NEW GUINEA

BRIBERY AND CORRUPTION

REPORT N0.13

NOVEMBER l988

The Law Reform Commission of Papua New Guinea was established by the Law Reform Comnission Act 1975 and began functioning in May, 1975.

The Commissioners are:

Dr Tony Deklin, Deputy Chairman
Stephen Pokawin
Anne Kerepia
Ano Pala
Sam Kemaken
Fr Robert Lak

Josepha Kanawi is Secretary to the Commission.

The Research Staff are:

Sao Gabi
Christine Bradley
The Administrative Staff are:
Thomas Resena
Jack Uke-e
Ari Heai
Airi Oika
Raphael Marawa

The Commission's Office is in the 4 Mile Government Office in Boroko.

The postal address of the Commission is:

Law Reform Commission
P O Box 3439
BOROKO
Papua New Guinea
Telephone: 258755/258941

The Honourable Bernard Narokobi, M.P.
Minister for Justice.

Dear Minister

In the Reference to the Commission dated 2nd January, 1982 we were asked to enquire into and report on bribery and corruption among other things. Many of the matters covered in the Reference are cases of theft, fraud and misappropriate of public funds by a variety of people. They are not cases of bribery and corruption in the narrow legal sense. This Report is strictly on bribery and corruption. In the Report we recommend creation of a number of new offences.

Yours faithfully

DR TONY DEKLIN, Deputy Chairman
STEPHEN POKAWIN
ANNE KEREPIA
ANO PALA
SAM KEMAKEN
FR ROBERT LAK

INTRODUCTION

On 2nd January 1982 the then Minister for Justice the Hon. John Yaka, MP., called for the Law Reform Commission to enquire into the legislation governing corruption and bribery and in particular –

In October 1982 Working Paper No. 19 entitled "What Should be done about Corruption and Bribery?" was prepared and circulated for comments. In January 1983 Report No.13 on Bribery and Corruption was approved by the Commissioners for presentation to the Parliament at its June meeting later that year. As the Commission did not have a legislative draftsman at the time, it was agreed to send the drafting instructions for a Bill to the Office of the Legislative draftsman. Drafting Instructions were in fact sent but to date no Bill was drafted and sent to the Commission. Furthermore, when the Commission raised the matter with the Office, it was found that Drafting Instructions were also missing.

After January 1983 the file and the Report on Bribery and Corruption mysteriously disappeared from the office. A temporary file was created and later that year Mr Jim Ross continued work on the Reference by investigating loans to political parties for purposes of 1982 elections. This investigation was temporarily suspended as it was considered not a priority by the then Minister for Justice and all work on the Reference ceased. Again the temporary file disappeared in 1984.

Early this year (1988) the then Minister for Justice the Hon. Albert Kipalan, MP., requested the Commission to revive work on the reference. Without the files the task became some what difficult. In the process of putting together a work plan, it was discovered that in 1978 the Department of Justice proposed a draft Bill on corrupt practices to the Cabinet. After a series of discussion with the Public Prosecutor's Office, the Office of the Secretary for Justice and the Ombudsman Commission, the Law Reform Commission submitted the proposals to the new Minister for Justice the Hon. Bernard Narokobi, M.P. In addition to the proposals, the Law Reform Commission makes a number of recommendations in this report to indicate its view on the current debate on bribery and corruption.

THE EXISTING LAW

The Criminal Code, the Organic Law on Duties and Responsibilities of Leadership, the Electoral laws 1 and the Customs Act use the terms "Bribery" and/or "Corruption" without defining them. In the ordinary legal sense "bribery and corruption", means giving or offering any reward to any person to influence 'his conduct; or the receipt of such reward. 2 A person is said to "act 'corruptly' if he offers a fee or reward deliberately and with the intention that the person to whom the offer is made should enter into a corrupt bargain even if the offer or himself has no intention of carrying out the transaction and accepting the favour which he has sought".3 Bribery is used in the Criminal Code only in relation to members of Parliament and electoral offences.

1. Criminal Code Chapter No.262.

SS.61-62, 87-136 deal with a number of offences relating to bribery and corruption. Bribery 'of members of Parliament, official corruption and abuse of office, electoral corruption

and corruption in the administration of justice are included in the Code. These categories may be useful in their respective fields, but they do not cover all the cases of bribery and corruption that give rise to concern at present. The provisions of the criminal code relating to theft, misappropriation of public funds and fraud seem more relevant. At present the code has very narrow application in that it covers only public servants and members of the National Parliament. It does not, however, cover such persons as the members of provincial governments, employees of statutory bodies, employees of the business arms of provincial governments or the private sector employees.

A common problem with many of the offences related to bribery and corruption under the Criminal Code is one of proof. The illegal bargains are usually done secretly. The proof of corruption is a detailed process that requires meticulous investigation by the police and professional prosecution by the Public Prosecutor. It is usually a slow process.

In addition to the Criminal Code, the Customs Act (Chapter No.10) and the Public Services (Management) Act deal with bribery and corruption. The Customs Act contains provisions regarding the bribery of customs officers (s.154). The Public Services (Management) Act does not use the word "bribery" or "corruption"; however, it makes it a disciplinary offence for a public servant to solicit or accept a fee, reward, gratuity or gift other than his official remuneration (s.45(h)).

2. Leaders.

The Constitution (Leadership Code SS.26-31) defines a class of person called Leaders who are subject to the Leadership Code and the Organic Law on Duties and Responsibilities of Leadership. The Organic Law does not deal directly with bribery and corruption, although, it creates a number of offences arising out of misconduct in office, which include use of office for personal gain (S.5); acceptance of bribes (S.11) acceptance of loans (S.12) and disclosure of official information for personal gain (S.14).

Prosecutions for misconduct in office are carried out before a Leadership Tribunal and not a court of law. The proceedings before a Tribunal are not judicial proceedings and therefore, although they are subject to the principles of natural justice, the strict evidentiary rules relating to criminal law do not apply. No proceedings before a tribunal are a bar to any other proceedings provided by law (Constitution, S.28(5), Organic Law on the Duties and Responsibilities of Leadership, S.30(1) and (2)) . A leader therefore can be prosecuted for the same act under the Criminal Code as well as under the Organic Law on the Duties and Responsibilities of Leadership.

A leader can avoid the jurisdiction of the Tribunal by tendering his/her resignation from office before the decision of the Tribunal is given: Joseph Auna (1980) PNGLR 500 and Opai Kunangel (Unreported Supreme Court Judgment S.C.231 of 6th August, 1982). Mr Opai Kunangel, a Minister of the State was charged for breaches of the Organic Law on Duties and Responsibilities of Leadership. He resigned as a Member of Parliament under S.l04(2)(c) of the Constitution. The Court held that where a Member resigns, he is no longer a Leader and the Tribunal has no jurisdiction to deal with him. Mr Justice Andrew observed in the same case: 4

The case not only shows the need to amend the Organic Law, but also the need to prosecute leaders under the Criminal Code as well as under the Organic Law.

THE PROPOSED BILL

The Bill extends the provisions of the Criminal Code to cover such persons as public servants, constitutional office holders, employees of constitutional offices, politicians,
Ministerial staff and employees of business arms of provincial governments.

A new division entitled "secret commissions" is proposed. It is the same as the "secret commissions" provisions of the Queensland Criminal Code (Chapter XLIIA, ss.442A-442M). This group of offences are similar to the kind of offences found under the anti-corruption laws of singapore5 and Hong Kong6.

The new offences proposed are:

Under the Singapore legislation and the proposed Bill possession of unexplained property or pecuniary resources may be taken as evidence of bribery and corruption. In the Hong Kong legislation possession of unexplained property or pecuniary resources is an offence (s.10) .

Under the proposed Bill evidence is inadmissible to show that gratification is customary in a trade, vocation or calling (Clause 97D). In addition to fine and imprisonment a convicted person may be ordered by court to repay the amount or value of consideration received or given by him (Clause 97M).

RECOMMENDATIONS

Below are additional proposals of the Law Reform Commission on the subject of bribery and corruption:

LAW REFORM COMMISSION DRAFT

THE INDEPENDENT STATE OF PAPUA NEW GUINEA.

CRIMINAL CODE (AMENDMENT) BILL 1988
No. of 1988

Arrangement of Clauses.

Interpretation (Amendment of Section 1).

New Division III.IA.

THE INDEPENDENT STATE OF PAPUA NEW GUINEA.

A BILL

for

AN ACT

entitled

Criminal Code (Amendment) Act 1988,

Being an Act to amend the Criminal Code (Chapter 262).

MADE by the National Parliament to come into operation in accordance with a notice published in the National Gazette by the Head of State, acting with, and in accordance with, the advice of the Minister.

INDEPENDENT STATE OF PAPUA NEW GUINEA.

A BILL

for

AN ACT

entitled

Criminal Code (Amendment) Act 1988.

Being an Act to amend the Criminal Code (Chapter 262),

MADE by the National Parliament.

1. INTERPRETATION (AMENDMENT OF SECTION 1 ) .

2. NEW DIVISION III.1A.

Part III of the Criminal Code is amended by inserting before Division 1 the following new division:-

Explanatory Note:

Definitions of "gratification" and "public body" are new inclusions. The definition of "persons employed in the public service" is altered to cover a wide range of people including National and provincial politicians.

3. NEW SECTION 97A.

Division III.2 of the Criminal Code is amended by inserting after Section 97 the following new section:-

"97A. - CORRUPTLY PROCURING WITHDRAWAL OF TENDERS.

A person who –

Explanatory Note:

Offering or soliciting gratification as an inducement or reward to influence a person to refrain from making a tender is not an offence. It may be wise to do so.
4. NEW SECTION 97B.

Division III.2 of the Criminal Code is amended by inserting after Section 97A the following new section:-

"97B. BRIBERY OF MEMBER OF PUBLIC SERVICE.

(2) An offence under Subsection (1) is committed notwithstanding that the person employed in the Public Service had no right or opportunity to show or refrain from showing favour or that the inducement was not in relation to the affairs of the public body.

5. NEW SECTION 97C.

Division III.2 of the Criminal Code is amended by inserting after Section 97C the following new section:-

(1) A person employed in the Public Service who is corruptly offered or given a gratification shall report the offer or gift at the earliest opportunity to a commissioned police officer.

(2) A person who, without reasonable excuse, fails to comply with the provisions of Subsection (1) is guilty of an offence.

Penalty: A fine not exceeding K1,000.00 or imprisonment for a term not exceeding 12 months, or both".

Explanatory Note:

The Duty to report bribery or corrupt practices is imposed on the employees of the Public Service, not employees of the private sector.

6. NEW SECTION 97D.

Division III.2 of the Criminal Code is amended by inserting after Section 97C the following new section:-

"97D. EVIDENTIARY PROVISIONS RELATING TO THIS DIVISION.

(1) In proceedings for an offence under this Division evidence is not admissible to show that a gratification is customary in any trade, vocation or calling.

(2) A gratification received or solicited by –

an agent from a person having business relations with the principal of such agent, is deemed to have been received or solicited by the agent, unless the agent proves that the gratification was received without his consent or knowledge.

(3) A gratification given or offered to –

an agent with the consent or knowledge of the agent, or given or offered at the request of the agent to a person having business relations with the principal of the agent, is deemed to have been offered or given to the agent.

(4) In proceedings under this Division, where a person accused –

(5) Where the resources or property referred to in Subsection (4)(a) or an accretion thereto referred to in Section (4) (b) are held by a person whose relationship to the accused gives reasonable cause for believing that he is holding the resources, property or accretion thereto in trust or as a gift from the accused, then the accused shall be deemed to be in possession of those resources or that property or that accretion thereto.

(6) Where, in any proceedings under this Act, it is proved that a gratification has been paid to or received by a person employed in the Public Service, that gratification is deemed to have been paid and received corruptly, as an inducement or reward, unless the contrary is proved".

7. NEW DIVISION III.2A.

Part III.2A of the Criminal Code is amended by inserting after Division 2 the following new division:-

"97E. INTERPRETATION.

In this Division, unless the contrary intention appears -

'advice given',	or words to the like effect includes every report, certificate, statement and suggestion intended to influence the person to whom the same is made or given and every influence deliberately or expressly exercised by one person over another;

'agent'	includes a person (whether natural or corporate) acting or having been acting, or desirous or intending to act, for or on behalf of a person (whether natural or corporate) whether as agent, partner, co-owner, clerk, servant, employee, banker, broker, auctioneer, architect, clerk of works, charterer, master mariner, purser or any crew of a vessel, engineer, lawyer, surveyor, buyer, salesman, foreman, trustee, official assignee, executor, administrator, liquidator, trustee in bankruptcy or of a deed of assignment, receiver, director, manager, or other officer or member of the committee or governing body of a corporation, club, partnership or association, or in any other capacity, either alone or jointly with any other person (whether natural or corporate) and whether in his own name or in the name of his principal or otherwise, a Minister and a person employed in the Public Service;

'contract'	includes a contract of sale or employment or any other contract whatsoever, including an order for any commodity;

'in relation to the affairs or business of his principal' implies the additional words 'whether within the scope of his authority or course of his employment as agent or not';

'person having business relations with the principal' includes – (a) the State, a Minister, a corporation representing the State, a local authority, public body or any Board or authority established under an Act of Parliament; and (b) a person whether natural or corporate), whether as principal or agent, carrying on or having carried on or desirous of carrying on or intending to carry on any negotiation or business with a principal, or engaged or interested or having been engaged or interested in the performance of a contract with or in the execution of any work for or business in the supply of any goods or chattels to a principal; and (c) an agent or employee of any person or body referred to in Paragraph (a);

'principal'	includes a person (whether natural or corporate) for or on behalf of whom the agent acts, has acted, or is desirous or intending to act, and includes the State, a Minister or corporation representing the State, or any local authority or other public body constituted by or under Act for or on behalf of whom the agent acts, has acted or is desirous or intending to act;

'solicit a valuable consideration' and 'valuable consideration solicited'
	and words to the like effect shall be construed with the following directions, namely, that an agent who diverts, obstructs, gives untruthful reports or interferes with the proper course of business or manufacture or impedes or obstructs, or fails to use due diligence in the prosecution of any negotiation or business with the intent to obtain the gift of a valuable consideration from any other person interested in that negotiation or business, or with intent to injuire any such person, is deemed to have solicited a valuable consideration from a person having business relations with the principal of such agent;

'trustee'	includes the public curator, an executor, administrator, liquidator, official assignee, trustee in bankruptcy, receiver, committee of the estate of an insane person, person having power to appoint a trustee, person entitled to obtain probate of the will or letters of administration to the estate of a deceased person, or any other person occupying a fiduciary position;

'valuable consideration' includes any real or personal property, money, loan, office,
	place, employment, agreement to give employment, benefit or advantage whatsoever, commission or rebate, payment in excess of the actual value of the goods or service, deduction or percentage, bonus or discount, forbearance to demand money or money's worth or valuable thing, detriment, loss or responsibility given, suffered or taken, the refraining from carrying out or doing something which lawfully should be carried out or done and the acceptance of any of the foregoing which shall be deemed the receipt of valuable consideration;

"97F. PROHIBITION OF INDIRECT ACTS.

An act or thing prohibited by this Division is prohibited whether done directly or indirectly by the person mentioned or by or through any other person.

"97G. RECEIPT OR SOLICITATING OF SECRET COMMISSION BY AN AGENT, ETC..

is guilty of an offence.

(2) A person who corruptly gives or offers to an agent a valuable consideration –

is guilty of an offence.

"97H. SECRET GIFTS.

(1) A valuable consideration received or solicited by –

"97I. FALSE OR MISLEADING RECEIPT OR ACCOUNT.

A person who, with intent to deceive or defraud the principal, gives to an agent, or an agent who receives or uses or gives to the principal, a receipt, invoice, account or document in respect of which, or in relation to a dealing, transaction or matter in which, the principal is interested and which –

and a valuable consideration is, without the assent of the person advised, given by such third person to the person giving the advice, the gift or receipt of the valuable consideration is an offence.

(2) Subsection (1) does not apply where –

and with the intent that the gift or receipt of such valuable consideration is not to be made known to the person advised, is an offence.

(4) Subsection (3) does not apply where the person first-mentioned in that subsection is the agent of the person offering or solicited.

"97K. SECRET COMMISSION TO TRUSTEE IN RETURN FOR SUBSTITUTED APPOINTMENT.

A -

without the consent of the persons beneficially entitled to the estate or of a Judge, as an inducement or reward for –

a person to be appointed in his stead or instead of him and any other person as trustee, is guilty of an offence.

"97L. LIABILITY OF DIRECTOR, ETC., ACTING WITHOUT AUTHORITY.

A director, manager or officer of a company, or an officer or member of the crew of a vessel, or a person acting for another, who -

an act or thing without authority, which if authorized, would be in contravention of a provision of this Division, is guilty of an offence.

"97M. PENALTY ON CONVICTION.

A person guilty of an offence against this Division is –

"97N. COURT MAY ORDER WITHDRAWAL OF TRIFLING OR TECHNICAL OFFENCES.

Where, in a prosecution under this Division it appears to the court that the offence charged is, in the particular case, of a trifling or merely technical nature, or that in the particular circumstances it is inexpedient to proceed to a conviction, the court may in its discretion and for reasons stated in the application of the accused, dismiss the case, but the court may, if it thinks fit, make an order under Section 97M(b).

"97O. CUSTOM OF ITSELF NO DEFENCE.

In a prosecution under this Division it does not amount to a defence to show that the receiving, soliciting, giving or offering of a valuable consideration mentioned or referred to in the prosecution is customary in any trade, business or calling.

"97P. BURDEN OF PROOF THAT GIFT IS NOT A SECRET COMMISSION.

Where, in a prosecution under this Division, it is proved that a valuable consideration has been –

a person having business relations with the principal of that agent, without the assent of the principal, the burden of proving that such valuable consideration was not received, solicited, given or offered in contravention of a provision of this Division is on the accused".

Explanatory Note:

In this clause the burden of proof is placed on the accused to show that a valuable consideration received, given or solicited was not in contravention of the division. This provision would come under the exception to the general rule laid down in section 37(4)(a) of the Constitution.

Constitutional and Law Reform Commission of Papua New Guinea