Sustainable Public Financial Management

Doug Hadden, VP Products

Independence Day in the United States reminded me of recently independent countries like Timor-Leste. The struggles for independence and sustainable development in the former Portuguese colony has been well documented. I’ve collected a few of these documentaries and news programs ahead of the July 7 parliamentary elections.

Some of these documentaries are disturbing. Discussions are frank. Words or not minced. Some of the footage is raw. There are points of view taken in the heat of the moment that you may disagree with.

These documentaries are useful for understanding the development context: what has been accomplished and the challenges that remain.

I’ve used the descriptions used by the content providers.

Documentaries

The Diplomat

Screen Australia via Culture Unplugged

“The Diplomat follows East Timor’s freedom fighter and Nobel Peace Prize winner José Ramos Horta in the final tumultuous year of his campaign to secure independence for his country. The former Portuguese colony was invaded by Indonesia in 1975. Exiled soon after, José Ramos Horta exchanged his gun for the suit and tie of a diplomat. He spent 24 years as a roving ambassador, fighting to ensure the world did not forget East Timor’s desire for freedom. His is a life driven not by personal political ambition but by the debt of blood he owes to fellow Timorese who have died in the conflict, including two brothers and a sister. “The Diplomat” takes up Ramos Horta’s story in the final dramatic stages of his long journey – the fall of Indonesia’s President Suharto, the referendum to determine East Timor’s future, the overwhelming vote for independence, the devastating carnage that ensued, the intervention of United Nations peacekeepers, and Ramos Horta’s final triumphant return to his homeland. José Ramos Horta allowed the film-makers extraordinary access to his public and personal life. The film reveals his strengths and weaknesses, his moments of doubt and frustration, his anger and disappointment, his elation and triumph, his charm and his dry humour. Ramos Horta emerges as a tenacious and beguiling character whose role as a diplomat and peacemaker was crucial to achieving independence for his country.”

Women on Patrol

National Film Board of Canada

“This feature documentary follows Canadian police constables Martine LeRoyer of Montreal and Debbie Doyle of Edmonton on a 9-month tour of duty in East Timor with the United Nations Civilian Police. Combining intimate interviews, up-close footage and diary cams, the film documents the enormous challenges LeRoyer and Doyle face, from adapting to a new culture and gaining the trust of frightened communities to performing perilous and heartbreaking police work.Women on Patrol is a riveting look at the rebuilding of a nation, and how the experience profoundly transforms these women – as police officers and as humans.”

http://www.nfb.ca/film/women_on_patrol

Death of a Nation

“An act of genocide on the East-Timorese people carried out by Indeonesian Troops with the backing of Western Nations ie., Australia. East-Timor is a country with substantial resources such as oil, which naturally, sparked controversy on the intentions behind the brutal genocide of its people.”

Capacity Development

“This short documentary showcases UNDP support to the government of Timor-Leste to develop the capacity of newly established institutions, namely the Judiciary system. In particular, the documentary looks at the work of the Judiciary Training Center, established under a UNDP project to train Timorese law graduates to become judges, public defenders, layers, etc. for an effective and efficient judiciary system. The documentary also touches upon UNDP support for the introduction of systems and processes to improve the performance of judiciary institutions in Timor-Leste.”

East Timor Documentary – Noam Chomsky

‘In the mid-1970s, the United States was completing a painful retreat from Indochina. A staunchly anti-communist Indonesia was considered by the United States to be an essential counterweight, and friendly relations with the Indonesian government were considered more important than a decolonization process in East Timor. The United States also wanted to maintain its access to deep water straits running through Indonesia for undetectable submarine passage between the Indian and Pacific oceans.

On the day before the invasion, U.S. President Gerald R. Ford and U.S. Secretary of State Henry A. Kissinger met with Indonesian president Suharto and reportedly gave their approval for the invasion. In response to Suharto saying “We want your understanding if it was deemed necessary to take rapid or drastic action [in East Timor].” Ford replied, “We will understand and not press you on the issue. We understand the problem and the intentions you have.” Kissinger similarly agreed, though he had fears that the use of US-made arms in the invasion would be exposed to public scrutiny, talking of their desire to “influence the reaction in America” so that “there would be less chance of people talking in an unauthorised way.” The US also hoped the invasion would be swift and not involve protracted resistance. “It is important that whatever you do succeeds quickly,” Kissinger said to Suharto. Kissinger’s main fear appears to have been that a violent take-over by the partly communist FRETILIN party might inspire similar Communist victories throughout Asia and possibly even lead to secessionist revolts threatening the very survival of Indonesia as a state.

The US supplied weapons to Indonesia during the invasion and the subsequent occupation. A week after the invasion of East Timor, the National Security Council prepared a detailed analysis which found that the vast majority of the military equipment was U.S. supplied. While the US government said they had suspended military assistance from December 1975 to June 1976, military aid was actually above what the US Department of State proposed and the US Congress continued to increase it, nearly doubling it. Between 1975 and 1980, when the violence in East Timor was at its climax, the United States furnished approximately $340 million in weaponry to the Indonesian government. US military aid and arms sales to Indonesia increased from 1974 and continued through to the Bush and Clinton years until it was stopped in 1999. US arms provisions to Indonesia between 1975 and 1995 amounted to approximately $1.1 billion.

The UN’s Commission for Reception, Truth and Reconciliation in East Timor (CAVR) stated in the “Responsibility” chapter of its final report that U.S. “political and military support were fundamental to the Indonesian invasion and occupation” of East Timor between 1975 and 1999. The report (p. 92) also stated that “U.S. supplied weaponry was crucial to Indonesia’s capacity to intensify military operations from 1977 in its massive campaigns to destroy the Resistance in which aircraft supplied by the United States played a crucial role.”

Evidence presented by Fretilin suggests that the degree of U.S. support for the Indonesian government’s efforts in East Timor may have extended beyond that of diplomatic support and material assistance. A UPI report from Sydney, Australia dated June 19, 1978, quoted a Fretilin press release, which stated: “American military advisers and mercenaries fought alongside Indonesian soldiers against FRETILIN in two battles … In the meantime, American pilots are flying OV-10 Bronco aircraft for the Indonesian Air Force in bombing raids against the liberated areas under FRETILIN control.”‘

The Shadow Over East Timor (1987)

“Summary: In December 1975, 20,000 Indonesian troops launched a takeover of East Timor. Australia turned a blind eye and the United States increased its military aid to Indonesia. This conflict is the least reported in modern history and this film brings to light eyewitness accounts of the real events. The people of East Timor are still continuing their struggle for independence.

Producers and directors: Denis Freney, James Kesteven, Mandy King.

Produced with the assistance of the Australian Film Commission.

http://trove.nla.gov.au/work/19493912?selectedversion=NBD6305478“

News Reports

Timor Sea hides fight for taxes and royalties

July 05, 2012 ABC

“The Timor Sea is rich with oil and gas but East Timor is struggling to get the taxes and royalties it feels are due to it”

http://www.abc.net.au/news/2012-07-05/timor-sea-hides-fight-for-taxes-and-royalties/4113242?section=business

101 East : East Timor’s independence

“Is East Timor ready for a future without the foreign influence of the UN and other international forces?”

01 East – East Timor oil – Nov 13

“Six years after independence, East Timor is mired in poverty. But it also sits on a future oil and gas boom. But will it be a blessing or a curse?

Fauziah Ibrahim interviews Xanana Gusmao, the East Timor prime minister.”

Part 1

Part 2

Capturing Xanana

“Dateline obtains unseen footage of the 1992 capture of guerrilla leader, and now East Timor’s Prime Minister, Xanana Gusmão.

For more on Mark Davis’s report, go to the SBS Dateline website…http://bit.ly/iHkKYf“

East Timor: 10 Years On

“The BIR travels to East Timor to examine nation-building in Asia’s newest country, 10 years after its people voted for independence from Indonesia. Part of the Fragile States series with PBS Newshour and the Pulitzer Center of Crisis Reporting.”

Blue Berets: ‘Welcome to Timor’

‘Graffiti in East Timor reads “I love you military kanada.”‘

Doug Hadden, VP Products

The Government of Timor-Leste has taken another step towards leading-edge government transparency with the launch of an eProcurement portal. The Timor-Leste transparency portal was first launched in March of this year with budget transparency. The World Bank has commended the government commitment of revenue transparency as the first country in Asia/Pacific to fully support and be certified for the Extractive Industries Transparency Initiative (EITI).

What does this mean for Corporate Social Responsibility (CSR)? How does it align with being a social enterprise?

Real Social Responsibility

There is a debate about CSR. Critics suggest that CSR is fake, just feel-good marketing. Others see CSR as a cost with few benefits. My sense is that what we understand as CSR is maturing to something else. There is a significant difference between how social enterprises like FreeBalance approaches the world compared to companies who sell similar software.

For example, there is a well-known software company sponsoring a yacht in a famous yacht race. (FreeBalance sponsored a 5K run to raise money for cancer research). Another well-known company uses some social responsibility to purchase modern art. (FreeBalance collects art from children as SOS Children’s Villages). Why the difference? Social responsibility is at the core of what we do: helping country growth through improving governance.

Making a Difference as an Innovation Motivation

Umair Haque has made a strong case of meaningful and sustainable capitalism. Followers of his blog entries and twitter feeds often disagree with this notion. Yet, I see it almost every day at FreeBalance.

A colleague at a company I worked for previously confided in me: “what am I going to tell my grandchildren, that I helped insurance companies become more profitable?” Don’t get me wrong, my time with that company was rewarding. I learned a lot and made some lifelong friends. However, the motivation to innovate was intellectual. We didn’t internalize the angst of insurance company executives. Working long hours, as we often did, was not a cause of celebration. I rarely woke up at 3 in the morning with eureka moments. (Mostly nightmares.)

Yet at FreeBalance, we’re actually doing something meaningful. Our teams in Canada, Portugal and Timor-Leste worked around the clock. They did so because they believe that this contribution will have a cumulative effect in making the lives of the Timorese better. And, consequently, the world a better place.

Yes, but what about the Business?

Our transformation from a traditional software vendor to a For Profit Social Enterprise (FOPSE) has resulted in more profit and rapid growth relative to the industry. It seems to be superior to the traditional notion of “the business of business is business.”

And, it’s not because people are motivated to work harder – rather to work smarter.

What happened to that company I worked for? After a series of acquisitions, they are part of that software company that sponsors the yacht.

Doug Hadden, VP Products

Coincidence?

The governments of Timor-Leste (May 20, 2002), Kosovo (February 17, 2008) and South Sudan (July 9, 2011) use the FreeBalance Accountability Suite for managing public finances. (Also, the newest Canadian Territory, Nunavut (April 1, 1999).

And, post-conflict countries who run FreeBalance software have shown better public financial management reform results than those that do not.

Unfair Reputation in Post Conflict?

Many have remarked that FreeBalance is the de facto standard for post-conflict government financial management. And, the de facto standard for fast implementations. (Kosovo: 26 days, South Sudan: 30 days).

These remarkable successes can give a false impression about FreeBalance. Many observers wonder about the ability of FreeBalance software to operate in more advanced economies. Here are some interesting facts:

• FreeBalance software is used by more Government of Canada departments than any other financial management vendor.
• The ability to work under stressful conditions makes FreeBalance a low-risk solution in any emerging economy.
• FreeBalance software is progressively activated – without the need for expensive software code  customization to meet government needs.
• Unlike enterprise ERP vendors, the latest version of FreeBalance software is fully web-based: no client/server.

Prognosis for Government Resource Planning (GRP) in South Sudan

Like many countries, development in South Sudan should follow increasing government capacity and be based on country-specific needs. PFM modernization is enabled through the FreeBalance Accountability Suite through the addition of functional modules, activation of more advanced functions and decentralization. The experiences in Timor-Leste and Kosovo bode well:

• Modules: Kosovo expanded into Revenue and Purchasing, Timor-Leste to Human Resources, Budget Management, Dashboards, Procurement, Assets and Transparency Portals
• Progressive Activation: Kosovo and Timor-Leste have advanced functionality to support international standards and improve decision-making
• Decentralization: Kosovo has rolled out FreeBalance software to all government entities and decentralized decision-making. Timor-Leste is moving forward with decentrlization.

Doug Hadden, VP Products

Over 200 people gathered at the Transparency Camp managed by the Sunlight Foundation yesterday to talk about trends and lessons learned in government transparency (twitter hashtag #tcamp11). I was lucky enough to present a case study about Timor-Leste that generated some interesting discussions.

2011-04-29 Government Financial Transparency in Timor-Leste

Governments in developing countries like Timor-Leste (aka East Timor) recognize the power of transparency to build stability and improve government performance. This appetite for transparency comes at a time where countries like the United States are cutting back on transparency funding.

Doug Hadden, VP Products

Many experts have warned developing nations for trying too many reforms at once. Governments need capacity: technical infrastructure and human capacity to make reforms sustainable. The “platform” approach is a practice that recognizes these constraints and provide a series of reform steps. The completion of a stage or platform enables the government to move to the next stage. Risk is mitigated. Reform follows a course set by the country context.

So why are so many countries accelerating PFM reform?

We are witnessing some remarkable reforms in FreeBalance government customers. Although, as a GRP provider, with PFM experts, we are supporting these initiatives – it is important to recognize that these are country-driven:

• Government of Afghanistan rolling out financial management to all provinces without any outside technical assistance, when it was thought by many experts to be impossible.
• Government of Kosovo decentralizing budget management and purchasing.
• Government of Timor-Leste rolling out a financial transparency portal with 10 years of budget data.

Should we Think of a New Platform Approach?

Projects tend to have preparation, pilot, production and sustainability phases. Should a government begin preparing of the next stage only after the previous stage has been fully rolled out and deemed sustainable? The skill sets necessary for each phase within a stage or platform differ.

PFM reform has a learning curve. Should the time required for a subsequent platform of the same scope be planned for a similar time frame? Should the roll-out of technology to line ministries or sub-national governments take longer than the initial stage with the Ministry of Finance?

A more agile platform approach is needed these approach should include:

• Overlapping phases or platforms based on government capacity.
• Recognition of planning can begin for a subsequent phase while completing the pilot of the previous phase.
• Focus on capacity building so that rolling out reforms will follow a learning curve and accelerate at a standard rate.
• Flexibility to adapt the goals of the next platform based on current results. For example, the outcome of Platform 1 may result in more information that adjusts the goals of Platform 3.

Portal enables citizens, the press, donors, NGOs and civil society to monitor government budget execution interactively and in real-time

Ottawa, Canada (March 15, 2011) – FreeBalance, a Government Resource Planning (GRP) software For Profit Social Enterprise (FOPSE), today announced that the Government of the Democratic Republic of Timor-Leste (RDTL) has launched the web-based Transparency Portal.

The Timor-Leste Transparency Portal allows citizens to access historical and recent government financial information to monitor RDTL state funds effectiveness. Detail provided includes amounts allocated expenditure location, and program data. Citizens can investigate projects further to view budget transactions to ensure the budget is being spent as intended. This ensures honesty and transparency to improve citizen and investor confidence. The Timor-Leste Transparency Portal provides 10 years of budget information: the budget that was approved and the actual budget spent. Reports and filtered results can be exported in PDF, Word, Excel, XML and HTML formats.

“With the launch of the FreeBalance Transparency Portal, the Government of Timor-Leste demonstrates worldwide leadership in transparency, trust and accountability,” said Manuel Pietra, President & CEO of FreeBalance. “Timor-Leste continues to modernize rapidly by adopting transparency initiatives, some of which have yet been implemented in more developed countries. Transparency and accountability are dominant themes in governance and are key factors at reducing corruption. Government transparency creates participation and confidence. Oversight improves government efficiency and effectiveness, strengthens capacity, and budget execution.”

The Government of Timor-Leste has leveraged rich web technology from FreeBalance so that it can integrate data from multiple sources, simplify finding information and make information externally available for other systems. The Governments now has the option to display information from multiple sources, including other government financial databases. The Transparency Portal integrates seamlessly within the FreeBalance Accountability Suite.

FreeBalance has been working with the RDTL since 2000. FreeBalance has provided GRP software and PFM services supporting improved governance, accountability, and transparency. The Government of the Democratic Republic of Timor-Leste uses FreeBalance Financials, Purchasing, Assets, Human Capital Accountability, Treasury, and Performance Budgeting modules. The RDTL and FreeBalance worked closely to implement a range of products including a Minister’s Dashboard.

FreeBalance customers span the globe and the user community includes public financial management professionals in 18 countries. FreeBalance operates in 15 customer time zones. FreeBalance has more than 60,000 users around the world. FreeBalance software manages a global civil service workforce of 1,500,000, and also manages a quarter trillion ($US) annual budgets worldwide.

About the Democratic Republic of Timor-Leste
Internationally recognized as an independent state in 2002, Timor-Leste is located in South East Asia. After 400 years of occupation, 24 years of war, two years of a United Nation’s led transitional administration, Timor-Leste restored its independence. Timor-Leste has witnessed rapid development in recent years and has been ranked one of the top ten fastest growing economies in the world for the last three consecutive years. Tetum and Portuguese are the official languages.

About FreeBalance
FreeBalance helps governments around the world leverage robust Government Resource Planning (GRP) technology to accelerate country growth. FreeBalance software solutions for public financial and human resource management support reform and modernization to improve governance, transparency and accountability. Good governance is required to improve development results. For more information, visit www.freebalance.com.

Doug Hadden, VP Products

This is an update of the presentation from the FreeBalance International Steering Committee 2011 conference in Portugal – with script. 

Highlights:

• Globalization increasing competition and pressure to improve governance
• Budget transparency is a key opportunity to improve business and citizen confidence
• Challenges can be overcome and governments can begin to operate “in network”

Conference to explore the role of finance and public financial management reform to accelerate the transition out of fragility 

Ottawa, Canada (November 15, 2010) – FreeBalance, a global Government Resource Planning (GRP) software company, announced that it will be participating in the sixth annual conference on development finance and public financial management reform. The conference is jointly organised by the Centre for Aid and Public Expenditure at the Overseas Development Institute (ODI) and the International Monetary Fund (IMF) Fiscal Affairs Department. The sixth annual conference will focus on the practical and policy aspects of how to use finance to support fragile states in their transition out of fragility. The invitation-only conference will bring together government policy makers, international agencies, practitioners, and academics. The lessons learned will be captured in audio recordings, video footage and a conference report that will be disseminated after the conference.

Public Financial Management (PFM) discussion during the two-day event will be focused on delivering effective financial, developing local financial management capacity, the role of transparency and accountability, and lessons learned in PFM reform in fragile states. Guest speakers at the event include representatives finance ministries from FreeBalance customers including Afghanistan, the Democratic Republic of Timor-Leste, Sierra Leone, Uganda, and Liberia. Panelists and speakers will include representatives from the IMF, the World Bank, ODI, the African Development Bank and the Organisation for Economic Cooperation and Development (OECD).

“FreeBalance is pleased to have been invited to participate in the Cape Conference 2010 event,” said Manuel Pietra, President & CEO at FreeBalance. “Our mission as a company is to help countries around the world leverage technology to support economic growth and development. Many of our customers are participating in this event and we fully support the collaborative exchange of lessons learned and good practices.”

FreeBalance is a global provider of software solutions for PFM, where PFM is an essential part of the international development process. FreeBalance solutions support government modernization, fiscal decentralization, and public finance reform across all levels of government.

FreeBalance customers span the globe and the user community includes public financial management professionals in 18 countries, including Afghanistan, Iraq, Kosovo, Liberia, Mongolia, Namibia, Pakistan, Panama, Sierra Leone, Southern Sudan, Timor-Leste, and Uganda among others. FreeBalance operates in 15 customer time zones. FreeBalance has more than 60,000 users around the world. FreeBalance software manages a global civil service workforce of 1,500,000, and also manages a quarter trillion ($US) annual budgets worldwide.

About FreeBalance
FreeBalance helps governments around the world leverage robust Government Resource Planning (GRP) technology to accelerate country growth. FreeBalance software solutions for public financial and human resource management support reform and modernization to improve governance, transparency and accountability. Good governance is required to improve development results. For more information, visit www.freebalance.com.

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Excitement over Millennium Development Goals can Hide what Works!

Doug Hadden, VP Products

Bright lights and big stars in New York this week. Speeches at the United Nations. Explosion in social media discussion. Today is #socialgood day, so make sure your view is heard on this Millenium Development Goal - “MDG Idol”. What goal is best for you?  In the smorgasbord of causes. Advocates press their case for their chosen cause. And, it is hard to determine which cause to pick with such celebrities as Bono, Bill Clinton, Ed Norton and Gina Davis sharing stages. You can’t disagree with any of these points of view.

This where the lesson gets lost. For all the improvement in MDGs, there remains a group of survivors with limited improvements to date. “MDG Survivor.” So, we should be less concerned about what the G7 will do in aid and more about what the G7+ needs. Who is the G7+?  Burundi, Chad, Republic Democratic of Congo, Nepal, Salomon Islands, Sierra Leona, South of Sudan and Timor-Leste. What do these fragile states need?

Statebuilding and Governance and MDGs

‘”Aid is given based on MDG criteria, and from our experience we have found out that before we can get the MDGs, we have to do a few things first. We have to have peace and stability,” Timor Leste Minister of Finance Emilia Pires told IPS in Dili ”It means that you have to build peace and then you have to build a state to manage the whole thing. Peacebuilding and statebuilding must come before the MDGs and if you look at all the literature of the MDGs, it doesn’t talk about that.”‘ That’s why the G7+ have the Dili Declaration that states:

 ”Conflict and fragility are major obstacles for achieving the Millennium Development Goals (MDGs). We recognize that it will be extremely difficult to achieve the MDGs in most fragile and conflict-affected states by 2015. We urgently need to address conflict and fragility by supporting country-led peacebuilding and statebuilding processes. To improve the impact of our efforts we will take immediate actions and develop an International Action Plan on peacebuilding and statebuilding.”

As Daniel Kauffman of the Brookings observes: “there are many explanations for slow and uneven progress on the MDGs, ranging from insufficient donor commitments to the choice of indicators. But, as we have written about before a big part of the answer lies in the highly variable quality of governance across countries.” Good Governance is required to advance MDGs. The Dili Declaration shows “governance” as a key priority.

Transparency for Aid Effectiveness

As our friends at Publish What You Fund emphasize, aid effectiveness is as much about donor transparency as it is recipient government governance. Aid transparency improves aid effectiveness through improved aid harmonization and citizen oversight. That’s the intent behind the International Aid Transparency Initiative (IATI). That’s also why there will be a significant positive impact from the World Bank decision to provide open data at http://data.worldbank.org/.

What is FreeBalance doing about it?

As a For Profit Social Enterprise (FOPSE) whose mission is to bring tools for good governance around the world, the MDGs are critically important. Of course, it helps to have Government Resource Planning software that can be implemented and operated successfully in fragile states like Sierra Leone, Timor-Leste, Liberia, Afghanistan and South of Sudan. We remain active in IATI pushing for improved budget integration. And, we try to share lessons learned.

H.E. Mr. Jose Luis Guterres, Deputy Prime Minister of Democratic Republic of Timor-Leste spoke to the United Nations Security Council in New York on February 23rd of this year. Good governance and economic growth were key themes of his address.

According to United Nations Radio: “Speaking in the Security Council on Tuesday, Mr. Guterres said despite the current world economic and financial crises, Timor Leste’s economic growth of non-oil gross domestic product in 2008 was over 12 per cent. He added that preliminary estimates of economic growth for 2009 are around 12 per cent while the annual average inflation is less than 2 per cent.”

The Deputy Prime Minister explained to the Security Council how FreeBalance is helping Timor-Leste achieve governance objectives:

“The Government of Timor-Leste aims to make the Public Management of Public Finance among the most accountable and the most transparent in the world.

A few days ago, executives from a Canadian Management software company FreeBalance have visited Timor-Leste; they are providing accounting services to many countries; an agreement was reached in which they will provide software solutions for public financial and human resource management.

These new solutions will produce at least two portals for the public via a web-based interface; one is called transparency portal where the public can access real time information on how the state funds are being executed including details like amounts allocated, timing of the project, location of the project, and under which program the project is being implemented.

The other is a procurement portal that gives access to information on the procurement plans of the Government providing the business community equitable participation and adequate preparation time to complete and submit the process. Once the procurement process starts, it can be monitored and provide information to the public on how the procurement process was implemented which procurement method was utilized, the process of evaluation, the names of companies and bidders and the allocated to the successful bidder.

The citizens and organizations of my Country will be able to follow closely the budget execution and the procurement process in real time.”