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UN Water Quality Reader

Wednesday, April 7, 2010

Quick blogging.

Click here for the links to publications by UN Bodies on Water Quality issues.

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EPSCA 10 list of speakers (update 2)

Tuesday, April 6, 2010

To give you an update, this is the list of speakers for the upcoming EPSCA 10:

  1. Dr. Evita Legowo, Director General Oil and Gas, ESDM (tent.)
  2. Trijana Kartoatmodjo, Deputy Operations, BPMIGAS
  3. Benny Lubiantara, Fiscal Policy Analyst, OPEC (as Advisor)
  4. Tariq Shafiq, Founding Executive, Iraq National Oil Company (also author of new Iraq oil law, Forum Chairman)
  5. Ittiporn Boonpracong, Deputy Director-General, Department of Treaties and Legal Affairs (Malaysia-Thailand Joint Authority)
  6. Faiz Shahab, Commissioner, PT Prime Petroservices
  7. Joseph Amudi Tobing, Senior Legal Counsel, Hess Limited
  8. Peter Godfrey, Vice President (Commercial), Arrow Energy International (on CBM development with PT Medco)
Click here to download the brochure. In order to claim 10% discount from indolawreport, fill in this promotional code  “82410PM-ILR-4Q" in the booking form.

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Another 149 companies may be implicated in tax crime?

Monday, April 5, 2010

According to the Jakarta Post:

There are at least 149 companies with tax issues related to Gayus, lawmaker Bambang Soesatyo said Thursday after a meeting with National Police chief Gen. Bambang Hendarso Danuri.
“I have a list [of the problematic firms]. They relate to Gayus’ case, as indicated by Gayus’ bank account transactions,” Bambang said as quoted by Antara. He said the case, which involves Rp 28 billion (US$3.08 million) in Gayus account, was only a part of a larger crime.
Gayus is likely involved in tax crimes along with hundreds of companies, Bambang added.
Chief detective at the National Police Comr. Gen. Ito Sumardi said his detectives had begun investigating into hundreds of companies that evaded tax with Gayus’ assistance.

Yesterday, Adnan Buyung has agreed to take on the case on the condition that Gayus opens up. Today, detikcom quoted Constitutional Court chief judge Mahfud MD saying that there is another major corruption case 'ready to blow'. 

Looking at the list, some of the 149 companies are indeed giant businesses with strong political connections.
What do you think?

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Water Governance in Malaysia

A new paper from Chan (2010) about water governance in Malaysia argues the importance of stakeholder participation, transparency and accountability. Chan opined that the current move towards the centralisation of water services provision in Malaysia should be reconsidered as it well have an impact towards participation and transparency in the water services sector. 

Below is the abstract:

Currently, it is widely believed that many water companies are linked to powerful politicians, making the awarding of contracts, tariffs and other management aspects non-transparent and ineffective. Ideally, politicians that govern should act on the professional advice of the water managers and not the other way around. Another area of water governance that needs to be intensified is the war against corruption. In the water sector, there should also be an all-out war on corruption at all levels of governance, in both the public and private sectors. Government should make all contracts in the water sector awarded through open tender with public consultation to ensure professionalism, fairness, transparency, accountability and good governance. Equally, all contracts and other relevant documents drawn up between the government and private companies should not be "classified" but instead be public documents available to the public for discussion, review and improvement. Another area to ensure better governance is for the government to engage and actively involved all stakeholders in the water sector, especially civil society and NGOs. Finally, the Federal Government should reconsider its plans to centralize the water sector by taking it over from State Governments. This is because, centralization would be contradictory towards involvement of all stakeholders and also pose problems to many states that had already privatized the water sector. Finally, governance of the water sector should be based on Integrated Water Resources Management which is the logical way forward in ensuring sustainable development. 

In my paper for the Journal of Water Law (forthcoming), I discuss in specific the problem of transparency in the water sector and explore how institutions and legal framework could tackle them. I agree with Chan that tarrifs, contracts and tender should be transparent. At page 151 he argued:

To achieve the above objective, the government should make all contracts in the water sector awarded through open tender with public consultation. This would ensure professionalism, fairness, transparency, accountability and good governance. Equally, all contracts and other relevant documents drawn up between the government and private companies should not be “classified” but instead be public documents available to the public for discussion, review and improvement.

The condition is similar in Indonesia. In my March 30th newspaper article, I wrote:

When a Jakarta citizen asks to what rights are they entitled as a water customer, there’s not much that the 1992 and 1993 bylaws can answer because the 1998 privatization has changed the landscape of accountability from Jakarta’s local government and PAM Jaya to its concessionaires.

Some of the answers could be provided in the concession contracts. Unfortunately, the concession contracts are said to contain a confidentiality clause and therefore are never to be found in the public domain.

It appears that both Malaysia and Indonesia faces similar problem with respect to the transparency of contracts and operations. Fortunately, Indonesia have a Freedom of Information Law which will be enforced starting from next month and we do not have (yet-- and hopefully never will have) an Official Security Act  (OSA). I red in Malaysiakini that some of the water deals are actually covered by OSA. 

Read Chan's full paper here





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Why busy with the right to water instead of 'governance'?

Saturday, April 3, 2010

Right to water skeptics normally pose this typical question: Why the right to water instead of governance?

Here's a short answer: you can't go to the court asking for good governance.

Illustration:

If you are disconnected from the services, you can't say to the judge:

"For the sake of good governance, please, reconnect me to the network."

compare with this statement:

"There is a human right to water in the constitution, I should, at least be permitted to pay in arrears, the disconnection is illegal."
 
Put it simply, the right to water creates rights and obligations. It can even create obligation for a good water governance. Remember, governance does not stand by itself. One of the indicator is the rule of law.

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The Pertamina Bribery Case: R v Innospec Limited

As you might be aware, the Indonesian Commission for the Eradication of Corruption (KPK) recently investigated the alleged bribery of former Indonesian's Pertamina (State owned oil company) top officials for delaying the enforcement of TEL-free gasoline policy and securing the TEL supply contract to Pertamina. 

The bribery was allegedly conducted by Innospec subsidiary in Indonesia through a series of ad-hoc funds and financial engineering. Some of the important points in the UK's Serious Fraud Office document:
65. It is not known how many ad hoc funds there were, nor responses for one off payments, though there is reference to a number within documentation provided to the SFO by Innospec. These additional payments were variously referred to as the “Lead Defense”4 fund; “Lim WS account”5; “compensation fund”6; “extraordinary costs”7; “cumulative costs”8; “special funds”9; “promotion fund”10 or “exceptional promotional work”11; “special bonus”12; “cranes” 13 and the “Rachmat Sudibyo fund”.
 66. This fund was conceived and largely operated during a period predating the Indictment. In the first instance between 2000 until his departure in August 2002, a recipient of ad hoc bribes was Rachmat Sudibyo (“Sudibyo”). The “Rachmat Sudibyo Fund” was a corrupt vehicle to pay Sudibyo, the Indonesian Director General of Oil and Gas at the Ministry of Energy and Mineral Resources. He was in post until August 2002, whereupon he was appointed Chairman of BPMigas – the newly established oil and gas authority.
69. The Special Committee retained KPMG to examine all payments made to PTSI. KPMG found two large payments, one in 2001 ($265,000) and one on 8 January 2002 ($295,150) with invoices stating that they were: “For payment all Pertamina/Migas & Lemigas Personnel (sic) travel, hotel, daily expenses overseas during the year 2001 spent in promotion of OCTEL’s products, as earlier agreed.”.

76. Innospec’s agents therefore made corrupt payments to public officials at Pertamina which were not dependent upon or related to specific orders for TEL being made. Corrupt payments were made as general sweeteners “to clear the air”, through various mechanisms including the agents’ general commission, to “buy of [sic] some Pertamina people”, to maintain or increase market share.

77. Furthermore, Innospec’s agents also requested further funds in order to make corrupt payments to a rival agent – Wisnu – who had apparently been tasked with marketing Chinese-sourced TEL to Pertamina.

83. In 2003 and 2004, Innospec’s agent, Sebastian, targeted Suroso, who became the Refinery Director of Pertamina. It is believed that this position was second only to the President or CEO of Pertamina. In effect Suroso had authority, at least until 2005, to sign and agree purchase orders on behalf of Pertamina. Even after the creation of MIGAS, individual refineries and Pertamina more generally had certain autonomy to enter into contracts with particular suppliers.


Read the full document at the SFO's web here.


The UK's Innospec had pleaded guilty to the offence. The UK's DoJ is currently carrying criminal investigation into the matter.





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What do we mean by 'regulatory governance'?

Thursday, April 1, 2010


The origin of this whole governance debate can be found in the 'grandfather-paper' of this topic written by Levy and Spiller (1994). The 1994 paper distinguishes "regulatory content" (as in technical regulation dealing with the input, process and output) from "regulatory governance arrangement "which focuses on restraining the regulator's discretion. The governance arrangement deals with among other, how predictable the regulatory law is and the track record of the courts in hearing and settling disputes impartially. So the focus of the governance debate is on the commitment of the state in regulating and in constraining the discretion of the regulator. It appears to me that the focus is more on the investor side of the regulation, and not really on the consumer side. 

When privatization was carried out in the UK during the 90s, experts considered that in practice, it is hard to stick to the black letter of the regulatory mandate. The mandate, according to them, has to be continuously reinterpreted. In fact, as we can see many English legislation, regulatory mandate always contain some 'public interest' clause, which broadens the scope of discretion.

Legal scholars such as Graham and Prosser thus considered that the regulator is responsible for, not only in performing regulation in technical sense, but also in furthering social objectives. This duty is both implicit (such as found in the public interest clauses) and explicit in the regulatory mandate. 

Back to the governance debate.

When Levy and Spiller (1994, above) argued that regulatory governance is primarily about restraining regulatory discretion, 1997 papers onward (for example, this one) considered that some discretion is inevitable instead, especially when it comes to the regulation of industries with rapid tech-changes. Of course, these papers still focus on the investor protection side of the debate. 

However, recent literature on governance pays more attention to the consumer side of the regulation, rather the investor side. Consider for example, Dunleavy's seminal paper "New Public Management is Dead -- Long Live Digital Era Governance" which argued that people are no longer a passive recipient of a public service, but also an actor and a partner. Other literature argued that the case where customer has no say on how the store is run, is no longer the trend. Disempowering customer from regulation has, in many instances, produces failures. For example, a steep increase in water tariff results in inability to pay. Inability to pay leads to disconnection. Disconnection leads to unpaid investment (in installing water meters and extending  pipelines to household) and in water theft. Water theft and unpaid investments leads to even higher tariffs. Finally, in the end of the day, the whole system collapse. 

Thus, the literature suggests the shifting trend from customer paradigm-- where they are a passive recipient of the service into citizen paradigm, where people are involved in the decision making process in service delivery (for example, in setting tariffs). How this is done (see paper), is through accountability, transparency and participation mechanisms. This is the new focus of the recent regulatory governance debate.