Arctic Yearbook 2014 - Page 215

  215   The NWT Heritage Fund is currently managed by the GNWT Department of Finance. GNWT Legislation states that the Financial Management Board is authorized to act as trustee of the Fund (GNWT 2012c). The Financial Management Board, composed of Cabinet Ministers and Chaired by the Minister of Finance, is responsible for monitoring the performance of the Heritage Fund and, on an annual basis, for directing and supervising the Secretary of the Financial Management Board. The Secretary, a member of the public service, is responsible for carrying the administration and maintenance of the Heritage Fund as directed by the Board. The Need for Clear Rules and Independent Oversight of Natural Resource Funds The current structure of the NWT Heritage Fund’s governance omits an independent layer of oversight and lacks third party separation from the government. However, best practice in fund management suggests that a separate operational management entity, with full delegation to manage investments under a strict mandate, be appointed (Bauer 2014a). Given the small amount of revenues deposited into the Fund to date (as of February 2014), a separate independent oversight entity may be costly to implement at this time, though the Supervisory Council could be established to meet the growing size and importance of the fund as royalties accumulate (such as in a five-year plan). In the immediate term, a minimum of two additional independent observer members should be appointed in order to provide independent assurance: one to the Financial Management Board and one to the Secretariat. Some of the world’s most successful natural resource funds, including Norway, Chile, and Alaska, have independent oversight bodies. Chile, Ghana, and Chad all provide excellent examples of oversight bodies, which can inform building an oversight body in the NWT. For example, in Chile, a law established a new Advisory Financial Committee for Fiscal Responsibility Funds (AFCFRF) to advise the Minister of Finance on investment regulations and decisions related to Chile’s two sovereign wealth funds (Schmidt-Hebbel, 2012). The Ministry of Finance selects six independent members, usually academics, from the local community of macroeconomists and financial experts; their overlapping tenure is two years. The Secretariat of the AFCFRF is part of the Ministry of Finance. AFCFRF members discuss financial developments and their implications for the performance of the funds, evaluate fund management, and issue non-binding recommendations about fund investment policy and regulation to the Ministry of Finance. AFCFRF publishes an annual report on the funds’ financial results and the Committee’s investment policy recommendations to the Minister. Their report is separate from the Ministry of Finance’s report. In addition, the fund is externally audited to international standards, with reports available to the public (Schmidt-Hebbel, 2012). Another relevant model can be found in Ghana. In 2011 the Parliament of Ghana passed the Petroleum Revenue Management Bill, which established a Public Interest and Accountability Committee (PIAC) (Bauer 2014a). PIAC represents the only legislated petroleum revenue management oversight body consisting entirely of civil society members and as such, is completely independent. The 13 civil society members who make up the committee include representatives of the unions, traditional chiefs, journalists, lawyers, chartered accountants, and religious groups who Daitch, Schwann, Bauer, Dias & Fan Li