Ian Tarutia OBE FAICD on strengthening governance in Papua New Guinea

Bringing good governance leadership to Papua New Guinea is a challenge that Ian Tarutia OBE FAICD has embraced throughout his career.

Ian Tarutia originally thought about becoming a doctor like his father, who ran Papua New Guinea’s national health department in the 1970s. Instead, after post-graduate studies in Australia, he joined PNG’s national superannuation fund, where he spent more than 35 years, rising to CEO.

His directorship journey, which includes representing the Pacific on the board of Save the Children Australia, has been guided by the pursuit of good governance. Current directorships include Kumul Consolidated Holdings (which governs state-owned enterprises including Air Niugini, Post PNG, Water PNG and Telikom), Bank South Pacific and the PNG NRL 2028 board. He is chair of the National Broadcasting Corporation and software development company CloudApp Laboratories.

What’s different about PNG boardrooms compared to Australia?

Culturally, we have the “Big Man” mindset. If someone is more senior than you in a community or village setting, they have higher status. If someone in the boardroom knows others are more senior, they feel they don’t have the right to ask questions — which can lead to hard questions and discussions not being had. This hinders the constructive debate and critical thinking essential for effective governance.

In my experience on boards that subscribe to AICD standards, that sort of cultural subservience is not there. Everyone knows their role, everyone has one vote, everyone knows they’re there to contribute meaningfully, to have discussions and be unafraid to ask deep, probing questions.

In Australia, board committees are there to help with the work of the board, with decision-making and governance. Everyone is included. No-one is intimidated by the resume of the person sitting next to them or whether they have a few grey hairs on top of their head. No-one is inhibited by cultural subservience. Everyone understands their role, everyone speaks. You’re appointed in the first place because you’ve got something to contribute and value-add. It’s about good balance.

Describe your journey to the boardroom.

I started with National Provident Fund, today known as Nasfund, straight out of university. It’s a superannuation scheme looking after contributions for retirement for workers in the private sector. I’m proud of my “mailroom to the boardroom” story. I started at the bottom, which gave me a strong sense of what “good” looks like — and what “not so good” looks like — especially when it comes to decision-making and shaping the culture of an organisation.

Leadership is very important. Working your way up, you see what improvements can be made — and more importantly, you try to convince decision-makers to do things better. That was my first taste of governance, without realising until later in my career what governance actually was. It was a very educational journey.

To me, good governance is simply doing the right thing. Ensuring the decisions you make for the organisation translate into tangible outcomes for the key stakeholders. Having open communication with those stakeholders. Being transparent in all you do. Having internal rules that everyone understands and abides by. At board level, it is people appointed through a merit-based process, so they come with qualifications, experience and knowledge that will add value.

What have you taken from your experience of engaging with Australian organisations?

Some disciplines, like board committees, are taken for granted. In their absence, some of the disciplines of statutory and compliance requirements — like auditing accounts by a certain date, for example  — drop off. Some entities here have outstanding audit accounts dating back to 2018, and that’s unacceptable. If you don’t know the financial status of your entity from a governance lens, how do you know what decisions to make?

Getting everyone to sign a code of conduct is vital. Just because you have the title “director” next to your name doesn’t mean you can behave and act like an executive. You can’t walk in and demand an office space, a motor vehicle or dinner for entertaining friends. Sometimes, we forget this basic stuff. Understand your role as a director. You’re there to make strategic decisions and hold management to account through KPIs, not to try to do the work yourself.

It’s certainly improved since 2000. People like me, who get the opportunity to serve on a public entity, hopefully bring the discipline of what is normal in Australian organisations. Being exposed to Australian organisations and AICD teachings has had a huge influence on me. I see a lot of improvements in that area.

What happens when there are governance failures?

When I was a junior officer with the fund in the early 1990s, a lot of bad investment decisions were made that didn’t deliver outcomes, all because of governance failures. For example, members of the board had been appointed by politicians because they represented separate interests. The managing director was appointed by the government. We had union and employer representatives on the board.

When you have those kinds of appointments without a meritocracy process, the interests of the people you’re serving aren’t always achieved. For example, management would push for investment in a highly-speculative venture without proper due diligence and professional assessment. Consequently, the fund lost a lot of money and  members weren’t happy, as it resulted in a 15 per cent write-down of their savings.

Reforms introduced in 2002 outsourced fund administration to a professional fund administrator. Investment management was outsourced to a professional investment manager. The government removed itself from the appointment of board members and management, and it was run purely by the private sector on a commercial basis. People were appointed on merit. It’s still talked about as the greatest structural reform in the PNG financial sector.

How is the PNG boardroom landscape evolving in this time of global uncertainty? 

There is a push to build the talent pool of directors, because there is actually a limited number of individuals who meet a fit-and-proper assessment criteria to sit on a board. One strategy has been the establishment of the PNG Institute of Directors. We’ve worked closely with the AICD to get education programs running. I was involved in the creation of a Young Directors program, working with young professionals with no boardroom experience who were supported by their employers as potential leaders.

They sat on the Nasfund board, for all intents and purposes as directors. They signed a confidentiality agreement, participated in discussions and were assigned to board committees. They were provided with a senior director as a mentor and served for two years. That was all about improving governance in PNG and following best standards. I’ve always believed the AICD is the world-first standard in terms of directorships and governance. Those Australian standards are very important in trying to improve governance in PNG.

This article first appeared under the headline 'From mailroom to boardroom' in the July 2025 issue of Company Director magazine.