Does globalisation drive New Zealand’s corruption perception ranking?

Trade

Ferdinand Balfoort

By Ferdinand Balfoort, from Poland

About the author: Ferdinand C Balfoort (MCA,CA,CIA) is an international governance expert with academic and professional expertise and interests in cross-cultural impacts on corruption, fraud and financial reporting. He has lived and worked in more than 40 countries globally and has written this article from Poland where he has been working over the past three years.

New Zealand's slide from perennial number one position globally to fourth is in the recently released Transparency International 2015 Corruption Perception Index (TI-CPI) is not a cause for panic. As marketers and athletes know, being in a number one position is always tough because there is only one way to go from there. We are still ranked in the top 10 globally, and we still score extremely well on a number of components that underlie the TI-CPI ranking calculations.

We should, however, treat the result positively and take away some learning to ensure we remain comfortably in the top five. Good governance, in both a corporate and national sense, is the basis for high levels of social capital, happiness, and future wealth. It is not a surprise that the quality of living and society in New Zealand are also ranked very highly globally, as are other countries that rate highly in the TI-CPI index.

A number of cases in the past years are proposed to have affected international perceptions of corruption in New Zealand. One common factor in all of the cases is their cross-cultural nature. This is no doubt driven by our export-oriented focus and our openness to foreign investments and immigration. Cases noted include a minister of the Crown implicated in possible conflicts of interest in China, a less than transparent deal completed with a Saudi sheep farmer, and a casino empire with unclear ties to our Prime Minister, as well as a substantial client base from East Asia. There are potential implications for the future, based on the increasingly global world we live in.

TI-CPI 2015 rankings for Saudi Arabia and China are 48th and 83rd respectively. Cultural practices naturally influence business practices. A possibility to explore is whether our increasing exposure to relatively poorly ranked countries with distinct business practices and high levels of relative corruption influences New Zealand’s own business practices and levels of corruption. If this hypothesis is true, as my personal experience, academic literature and law enforcement professionals indicate, the lessons we may learn include:

  • Perform due diligence on counterparties from other cultural environments. Just like any business, vetting of investors or business partners is always essential, to assess their background and to determine deal and image risks, both personally and nationally. This is even more important where counterparties originate from countries whose public sectors are scored as having high levels of corruption by the TI-CPI.
  • Understand the culture(s) of business partners to avoid being put in sensitive positions that would be acceptable in one cultural setting but not in ours.
  • Understand what constitutes corruption and misuse of public (and corporate) positions, both through international conventions and legislation.
  • “When in Rome do as the Roman’s do…” does not apply in the context of corruption. This is even more important if you are abroad and you are by implication an ambassador for New Zealand.
  • If in doubt, perception is reality, especially in positions of public and corporate governance. Any hint of impropriety should be avoided to set the correct “Tone from the Top”.

The key question we need to always ask ourselves is whether, at any stage, any business or investment deal is worth the long-term impact on our TI-CPI rankings and the ultimate degradation of our collective social capital.

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