From the Chair

Suzanne Snively

Suzanne Snively
TINZ Chair

With daily news from the United States of yet another case pushing the boundaries of impunity and corruption, the Auckland Transport Case was a re-assuring example that New Zealand is instead gaining valuable experience about the identification and prosecution of white collar crime.

With last month’s sentencing, a key question is: “Does the punishment fit the crime?” The answer is a resounding no!

The case

Showing leadership and courage, held to account by a tenacious media, and working to support the Serious Fraud Office, Auckland Transport (AT) invested $2.5 million in the case. In addition, there are costs to the taxpayer of the work of the SFO to prepare the case.

The case was complex, being brought against three people in regards to a rich tapestry of bribes including entertainment, taxis, overseas trips, hotel nights, liquor, extravagant dinners and payment of personal phone accounts.

Former senior Auckland Transport and Rodney District Council (RDC) Manager, Barrie George was the first to be sentenced.

George pleaded guilty to two charges of accepting bribes relating to roading contracts Projenz carried out for RDC and AT between 2006 and 2013. He was convicted on 3 August 2016 for accepting bribes of gifts including travel vouchers, entertainment and liquor worth over $100,000 between 2005 and 2012.

Murray Noone and Stephen Borlase stood trial for over 8 weeks in 2016 after pleading not guilty to bribery and corruption charges brought against them by the SFO. On 9 December 2017, they were found guilty of corruption worth more than $1 million relating to Auckland roading contracts.

Noone, a former Director of Transportation at RDC and later an AT employee, was found guilty of all six charges of corruption or bribery. As an official, he made up "consultancy" payments of $1.1 million with gratuities of $56,000.

Despite a clear policy at RDC, Auckland Council and AT, neither George nor Noone disclosed the payments that they were receiving.

During the trial, Auckland Crown Solicitor, Brian Dickey, described how by overseeing, authorising, managing and receiving benefits with Projenz, George and Noone led the development of a culture tolerant of corruption within the Council’s roading maintenance divisions.

Projenz Director, Borlasse was found guilty of eight charges of corruption or bribery of a public official (in this case, a local government employee) and not guilty of four charges of obtaining a document of pecuniary advantage.

Findings

Justice Sally Fitzgerald’s process and judgment are an important case study for all those involved in procurement. Her findings provide a ground-breaking resource for both private sector contractors, as well public officials, for determining acceptable bounds for gifts and hospitality for public officials. Bell Gully Senior Associate and former TINZ Director Fiona Tregonning provides a nice recap table in her article: New Zealand public sector on top - but fight against corruption real

Sentencing

Judge Fitzgerald faced a major challenge because of the lack of precedent, internationally as well as nationally, for sentencing white collar crime.

George was sentenced to 10 months home detention, having pleaded guilty to the two charges against him. Noone, whose behaviour was described as “a gross breach of trust”, was sentenced to five years jail. Borlase was sentenced to five years, six months jail.

Commentators have made comparisons with life sentencing for murder, or reparations for fraud.

Corruption has the potential to be even more dangerous.

While nobody directly loses their lives, the environment created and the exchanges through bribery and corruption reduce the focus and productivity of public officials. In just about every form of public service, be they road maintenance or health provision or airline safety, breaches of duty may have a major impact on the safety of many more people than the total number murdered each year.

Further as Judge Fitzgerald said when sentencing Noone and Borlase: “Put simply, the public trust in the manner in which officials carry out their duties is seriously undermined.”

But even this is only a part of the damage corruption brings.

As Julie Read of the Serious Fraud Office (SFO) said at the trial, “It appears within the road maintenance division during this period [2005 – 2013] the acceptances of gratuities was considered the norm. That sort of behaviour cannot be tolerated if we are to continue to promote New Zealand as a safe place to invest and do business.”

Noone’s defence lawyer, Simon Lance, defended the allegations about the impact of his client’s behaviour on New Zealand’s reputation by saying there was no way to measure such an effect. He clearly has a lot to learn both about the importance of the reputation of organisations like AT that rely on the trust of 99% of its community of rate payers who honour their tax obligations and the importance of a reputation for integrity as a driver of a modern economy, including the value of brand.

New Zealand’s reputation for trusted public officials and being a good place to do business can be directly measured in terms of the continuing strong growth in tourism numbers, in inward investment, in the price of our wines offshore, the pricing of our imports and the premium value many of our locally produced/products receive offshore. These amounts alone justify the direct costs to the taxpayer for the Justice system's involvement in this case, as wall as that of the SFO, Auckland Transport and others.

The clarity of Justice Fitzgerald’s convictions of the three individuals in this case adds to the growing awareness that doing the right thing can add even more to New Zealand’s GDP and in turn, to its tax base, the efficiency of public services and ultimately, the availability of jobs. It is because of this that criminals such as George, Noone and Borlase should receive sentences that suit the crime. That would include satisfactory completion of training in civics, the rule of law, teamwork, project management and economics prior to being released from prision after a lenghty sentence.

Suzanne Snively, Chair
Transparency International New Zealand Inc.

Actions

Recent Activity

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Transparency International 25 Jan, 2017

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Transparency International New Zealand (TINZ) submitted recommendations for New Zealand’s second Open Government Partnership (OGP) National Action Plan (NAP). Among the recommendations were a call for more ambition in creating NAPs and developing channels of communication for improving engagement with citizens. 19 Aug, 2016