Gaming regulator under cloud
PRACTICALLY, everyone on the street knows that the National Gaming Control Board has, at one time or another, acted as an extra cash dispenser for the government and its allies over the years.
The office, established in 1995 to regulate a fledgling industry, was brought about by the passing of the Gaming Machine Act (1993). Poker machine gaming began in May of 1995 after its introduction was approved by parliament through a Private Members Bill in 1994.
Since then, the industry has grown rapidly to become a major revenue earner for the state.
In the decade (1995-2005) since its inception, K928.624 million has flowed through the NGCB coffers.
This money was generated through gaming taxes, licensing fees and site fees for operators.
For a period, operators were required by law to pay 50% of their revenue in taxes.
This, perhaps, explains why in spite of initial public resistance to the gaming industry, parliamentarians knew they were sitting on a veritable gold mine and pushed through the necessary legislation.
It is also indicative of the huge profits operators and vendors are making despite the steep taxation policy of the government.
The estimated annual contribution made by the NGCB to the state is more than K100 million.
One of the tenets of the gaming office is that it has a specific profit-sharing arrangement that enables all stakeholders to benefit from the proceeds of gambling.
The community benefit fund (CBF) is tailored to ensure the public exacts some of the money from the industry as it is rightfully entitled to since it is the source of pokies’ revenue. This is usually in the form of sports sponsorship and funding.
Over the years, the NGCB has underwritten major sporting events (rugby league’s Pacific Cup in 2009 and the Four Nations tournament in 2010) and has been a major sponsor of teams to international events (Hekari to the FIFA Club World Cup in 2010, PNG Commonwealth and Pacific Games teams 2010 and 2011).
The other stakeholders are site owners, provincial governments, NGCB, operators, Internal Revenue Commission and the government.
At one point, the NGCB had as much as a 74% slice of this profit-sharing arrangement.
The problem with the NGCB is that with so much money available and lying idle, the temptation is always there for abuse.
Compounding the situation is the structure of the NGCB office itself. It has, apart from a regular staff working to channel, disburse and direct the funds it is charged with, positions in its top management structure that the government or National Executive Council appoints its people to sit on.
They basically oversee the operations of the office and make decisions on how best to use the funds it controls and sign off on payments.
Over the years, the chairman and chief executive officer’s post have been political appointments.
This, as we all know, is a recipe for disaster or, at the very least, leads to questionable acts by those put in these positions.
The appointment of cronies and associates of those in power has seen funds misused and misappropriated.
Accountability and transparency seem to have taken a back seat as the head of the NGCB office and board chairman okayed the payment of millions of kina in CBF money to companies at least one of them had a direct link to without following due process and an independent vetting method.
With the release of the findings of an investigation into the gaming board’s use of funding and acquittals between 2007 and last year, it is clear that very little has changed in the way the CEO and chairman managed the state funds garnered from the industry over this five-year period.
The investigation, commissioned by the O’Neill government and carried out by Frank Benabo and Associates, has found numerous discrepancies, ignorance of public management policies and procedures in the disbursement of gaming funds and apparent conflicts of interest on the part of the CEO and chairman in who those monies where paid to and for what purpose.
There is evidence, according to the 124-page report released on Feb 27, that K40 million was paid to various companies and individuals but with little in the way of acquittals and reconciliation for those transactions.
The recommendations of the investigator, among others, called for the immediate termination of the CEO and chairman’s services and that of a third board member for their complicity in mismanaging NGCB money. The investigator asked that these men be investigated and criminal proceedings be brought against them for their part in rotting the system.
If the government can learn anything from this and other instances of abuse over the NGCB’s 17-year history, it is that the management of the NGCB is best left to a highly-competent and uncompromised private sector firm and not to politically-appointed “yes men”. We have lost untold millions in money that should and could have been put to better use in improving the lives of the majority rather than a select few.
OP/ED
The office, established in 1995 to regulate a fledgling industry, was brought about by the passing of the Gaming Machine Act (1993). Poker machine gaming began in May of 1995 after its introduction was approved by parliament through a Private Members Bill in 1994.
Since then, the industry has grown rapidly to become a major revenue earner for the state.
In the decade (1995-2005) since its inception, K928.624 million has flowed through the NGCB coffers.
This money was generated through gaming taxes, licensing fees and site fees for operators.
For a period, operators were required by law to pay 50% of their revenue in taxes.
This, perhaps, explains why in spite of initial public resistance to the gaming industry, parliamentarians knew they were sitting on a veritable gold mine and pushed through the necessary legislation.
It is also indicative of the huge profits operators and vendors are making despite the steep taxation policy of the government.
The estimated annual contribution made by the NGCB to the state is more than K100 million.
One of the tenets of the gaming office is that it has a specific profit-sharing arrangement that enables all stakeholders to benefit from the proceeds of gambling.
The community benefit fund (CBF) is tailored to ensure the public exacts some of the money from the industry as it is rightfully entitled to since it is the source of pokies’ revenue. This is usually in the form of sports sponsorship and funding.
Over the years, the NGCB has underwritten major sporting events (rugby league’s Pacific Cup in 2009 and the Four Nations tournament in 2010) and has been a major sponsor of teams to international events (Hekari to the FIFA Club World Cup in 2010, PNG Commonwealth and Pacific Games teams 2010 and 2011).
The other stakeholders are site owners, provincial governments, NGCB, operators, Internal Revenue Commission and the government.
At one point, the NGCB had as much as a 74% slice of this profit-sharing arrangement.
The problem with the NGCB is that with so much money available and lying idle, the temptation is always there for abuse.
Compounding the situation is the structure of the NGCB office itself. It has, apart from a regular staff working to channel, disburse and direct the funds it is charged with, positions in its top management structure that the government or National Executive Council appoints its people to sit on.
They basically oversee the operations of the office and make decisions on how best to use the funds it controls and sign off on payments.
Over the years, the chairman and chief executive officer’s post have been political appointments.
This, as we all know, is a recipe for disaster or, at the very least, leads to questionable acts by those put in these positions.
The appointment of cronies and associates of those in power has seen funds misused and misappropriated.
Accountability and transparency seem to have taken a back seat as the head of the NGCB office and board chairman okayed the payment of millions of kina in CBF money to companies at least one of them had a direct link to without following due process and an independent vetting method.
With the release of the findings of an investigation into the gaming board’s use of funding and acquittals between 2007 and last year, it is clear that very little has changed in the way the CEO and chairman managed the state funds garnered from the industry over this five-year period.
The investigation, commissioned by the O’Neill government and carried out by Frank Benabo and Associates, has found numerous discrepancies, ignorance of public management policies and procedures in the disbursement of gaming funds and apparent conflicts of interest on the part of the CEO and chairman in who those monies where paid to and for what purpose.
There is evidence, according to the 124-page report released on Feb 27, that K40 million was paid to various companies and individuals but with little in the way of acquittals and reconciliation for those transactions.
The recommendations of the investigator, among others, called for the immediate termination of the CEO and chairman’s services and that of a third board member for their complicity in mismanaging NGCB money. The investigator asked that these men be investigated and criminal proceedings be brought against them for their part in rotting the system.
If the government can learn anything from this and other instances of abuse over the NGCB’s 17-year history, it is that the management of the NGCB is best left to a highly-competent and uncompromised private sector firm and not to politically-appointed “yes men”. We have lost untold millions in money that should and could have been put to better use in improving the lives of the majority rather than a select few.
OP/ED
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