LEGAL ASSESSMENT ON THE AUTHORITY OF MINISTERS AND MEMBERS OF PARLIAMENT TO DIRECT PUBLIC EXPENDITURE IN PAPUA NEW GUINEA

By Samuel Inisi Lawyers

Port Moresby

20th March, 2025

1. Introduction

The issue at hand is whether a Minister or Member of Parliament (MP) in Papua New Guinea (PNG) has the legal authority to direct or authorize public expenditure, particularly in cases where they issue footnotes or instructions to public servants such as departmental secretaries, Chief Executive Officers (CEOs) of District Development Authorities (DDAs), or other financial officers.

The cases of State v Paul Tiensten, State v Paul Paraka, and the ongoing trial in State v Yafai provide legal precedents affirming that MPs and Ministers do not have the authority to direct public funds. This legal assessment will examine the constitutional, statutory, and case law framework supporting this position.

2. Legal Framework Governing Public Expenditure in PNG

2.1. Constitutional Framework

The Constitution of Papua New Guinea establishes clear separations of powers between the Executive, Legislature, and Public Service.

Section 99: Outlines the three arms of government Legislative, Executive, and Judicial and their respective functions. Parliamentarians (MPs) belong to the Legislature and are responsible for law-making and policymaking, while the execution of financial and administrative duties falls under the Public Service and statutory bodies.

Section 209: States that no money shall be withdrawn from the Consolidated Revenue Fund except by warrant under the hand of the Minister responsible for finance, in accordance with an Appropriation Act. This means that financial authority rests with public servants acting under the law, not MPs.

Section 216: Establishes the Public Accounts Committee, which has oversight over government spending and financial management. It ensures that public funds are expended lawfully and for their intended purposes.

2.2. The Public Finances (Management) Act 1995 (PFMA)

This Act governs how public funds must be spent in PNG and explicitly outlines the financial powers and responsibilities of public servants.

Section 5: The Departmental Head (Secretary of Finance) is the chief accounting officer of the government and has primary responsibility for the control of public funds.

Section 32: Public money can only be expended through the proper procurement and appropriation processes, and any unauthorized direction to use funds may amount to an offense.

Section 46: Any person (including Ministers and MPs) who authorizes the spending of public money without legal authority commits an offense.

2.3. Organic Law on Provincial Governments and Local-Level Governments

Section 33: District Development Authorities (DDAs) and provincial governments have specific budgetary and financial procedures to follow. The CEO of the DDA has financial authority and must ensure compliance with national laws.

Section 36: MPs, though they sit on DDA boards, do not have direct financial control over funds.

3. Judicial Precedents Confirming MPs Lack Financial Authority

3.1. State v Paul Tiensten (2014) N5563

Paul Tiensten, a former Minister for National Planning, was convicted for directing payments amounting to K10 million without proper authorization. The Supreme Court held that:

A Minister does not have financial authority to direct payments.

Public servants, particularly departmental heads, are the legally responsible officers for government expenditure.

Ministers’ instructions on payments are not binding on public servants, and public servants should refuse any such directives.

3.2. State v Paul Paraka (2019 – Ongoing Proceedings)

Paul Paraka, a private lawyer, was allegedly paid millions of kina in fraudulent legal bills facilitated through Ministerial influence.

The case confirmed that public servants must not act on mere ministerial footnotes or instructions that bypass procurement and appropriation procedures.

The Department of Finance and Solicitor General must clear payments following lawful procedures.

3.3. State v Yafai (Ongoing Case)

This case reinforces the legal position that MPs or Ministers cannot legally instruct payments. It highlights the issue of MPs misusing their positions to influence financial decisions, a practice that is unlawful under the PFMA and the Criminal Code Act.

4. Legal Consequences for Unauthorized Payments

4.1. Criminal Offenses

The following criminal offenses may apply to both MPs and public servants who facilitate unauthorized payments:

Misappropriation (Section 383A, Criminal Code Act): Unlawfully directing or using public funds for purposes other than those legally approved.

Abuse of Office (Section 92, Criminal Code Act): Any public official who knowingly acts outside their legal authority for personal or political gain.

Conspiracy to Defraud (Section 407, Criminal Code Act): When two or more persons collude to divert public funds unlawfully.

4.2. Administrative and Civil Liabilities

Leadership Tribunal Proceedings under the Leadership Code (Constitution, Section 27) can lead to dismissal from office.

Civil litigation can be initiated for the recovery of misused public funds.

5. Conclusion: Ministers and MPs Do Not Have Financial Authority

Based on the Constitution, Public Finances (Management) Act, judicial precedents, and criminal laws, it is clear that:

1. Ministers and MPs are policymakers, not financial managers.

2. They have no legal authority to direct payments—public servants must follow financial laws.

3. Public servants who process unauthorized payments on Ministerial footnotes or directives may be criminally liable.

4. Court precedents (Tiensten, Paraka, Yafai) confirm that such actions are unlawful.

The legal duty to approve, process, and account for public expenditure rests solely with public servants following established financial laws and procedures. Any attempt by a Minister or MP to direct public funds is illegal and should be ignored by public servants to avoid legal consequences.