From the Chair
A year and a half ago, Transparency International New Zealand (TINZ) was enthusiastic about our country’s direction with its anti-corruption strategy.
After the release of the Panama Papers, the Shewan Inquiry progressed policy change at a faster pace, including speeding up of the Phase 2 Anti-Money Laundering legislation (AML). There were also signs of greater support for the Open Government Partnership (OGP) through a more transparent consultative process.
Now just 18 months later, New Zealand is falling behind when compared with other countries’ anti-corruption initiatives.
Transparency International’s global Secretariat recently released a report tracking the commitments of all countries made at the 2016 global Anti-Corruption Summit (ACS) in London. It found that while New Zealand made seven ACS commitments, only one - New Zealand developing partnerships with international sporting bodies for combatting corruption in sport - is complete. The rest are either under-action or inactive. See New Zealand Government's pledges tracked from the Anti-Corruption Summit London 2016 in this newsletter.
New Zealand is falling behind global standards and needs to do more. For example little direct progress has been made addressing the important commitment of "exploring the establishment of a public central register of company beneficial ownership information.” Meanwhile the UK launched a public beneficial ownership register in 2017, and now all European Union countries are in the process of implementing a beneficial ownership register of companies. See Public register of beneficial owners saves time and money.
The lack of progress on the world stage is inconsistent with international perceptions that New Zealand is a leader in addressing corruption.
While lack of awareness and complacency remain, anti-corruption and transparency issues are now regularly discussed in the media and Government. We call on the new Government to turn the talk and commitments into action. Make New Zealand both the least corrupt public sector in the world and the world leader in corruption prevention.
Suzanne Snively, Chair
Transparency International New Zealand Inc.
6 October 2017
In This Issue
New Zealand Government's pledges tracked from the Anti-Corruption Summit London 2016
TINZ Board Member
Delegated authority for Parliamentary Relations and Co-Editor Newsletter
In May 2016, 43 countries and six international organisations were convened at the Global Anti-Corruption Summit in London (ACS). The Summit encouraged the pursuit of ambitious individual action plans by asking countries to make specific commitments or pledges.
Following the Summit, Transparency International (TI) and a network of partner organisations including TINZ, began monitoring the implementation of ACS pledges: 384 made by governments and 69 by international organisations. Transparency International UK (TI UK) published in September 2017 a high-level report “Promise to Practice: Monitoring Global Progress of the 2016 Anti-Corruption Summit Commitments" based on TI’s pledge-tracing database.
Of the New Zealand Government’s total of seven ACS commitments, one is reported to be completed namely:
INTERNATIONAL SPORT INTEGRITY PARTNERSHIP: “NZ will work with the international sports bodies to develop a partnership for combating corruption in sport.” (with no ongoing pledges).
New Zealand has five ACS commitments reported to be ‘Underway’ as follows:
- TRANSPARENCY AND INTEGRITY (Public Procurement): “NZ will continue and intensify efforts to develop procurement capability, including initiatives that safeguard integrity in the procurement process”, as evidenced by the NZ Government Electronic Tenders Service (GETS).
- PUBLIC REGISTER (Beneficial Ownership): “NZ commits to exploring the establishment of a public central register of company beneficial ownership information.” No evidence is offered (For details of TINZ concerns, refer to "Public register of beneficial owners saves time and money" in this newsletter).
- FINANCIAL ACTION TASK FORCE (Anti-Money Laundering): “NZ will also explore how to appropriately incorporate the FATF standards on preventing money laundering in the non-financial professional services sector into domestic legislation”, as evidenced by The Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Amendment Bill passed in August 2017, establishing "Phase 2" of New Zealand's AML/CFT laws. Work is underway.
- DENIAL OF ENTRY (Denial of Entry): “NZ will also, where appropriate under New Zealand law, deny entry to specific individuals who are identified as being involved in grand scale corruption.” No evidence is offered.
- ACCESS TO INTERNATIONAL LAW ENFORCEMENT (Beneficial Ownership): “NZ will also continue to implement bilateral arrangements that will ensure law enforcement in one partner country has full and effective access to the beneficial ownership information of companies incorporated in the other partner country.” – No evidence is offered.
New Zealand’s remaining ACS commitment is deemed “inactive”, namely:
DEBARMENT DATABASE (Public Procurement): “NZ will explore establishing an accessible and central database of companies with final convictions for bribery and corruption offences, and ways of sharing information on corrupt bidders across borders.”
For comparison, global progress is summarised across 453 pledges (comittments) within status categories as follows:
The role of TINZ has been to:
- Select the New Zealand ACS commitments for Transparency International to monitor, after eliminating any which were too vague to track.
- Contact and work with our Government to: (i) identify the government department responsible for delivering each ACS commitment; (ii) inform the responsible department that their progress will be monitored; and (iii) identify the expected timeline for delivering each commitment.
- Track the ACS commitments by: (i) looking for and providing public evidence for each commitment where progress had been made; and (ii) making a note of which commitments were ‘inactive’, ‘overdue’, ‘ongoing’, ‘underway’ or ‘complete’.
Public register of beneficial owners saves time and money
By Suzanne Snively
Chair Transparency International New Zealand
It is useful to explore how New Zealand’s seven commitments (see previous article) were set at the London Anti-Corruption Summit (ACS) held in May 2016.
In 2015, the Commonwealth Secretariat and UK Government decided to take a world leadership role in anti-corruption, hosting two events in London in May 2016.
These events just so happened to begin on 11 May, the same date that Transparency International New Zealand (TINZ) hosted a Forum in Wellington at Parliament’s Banquet Hall. The purpose of this Forum was to learn more about the omnibus anti-corruption legislation which resulted in 15 new Acts passed (with cross-party support) in Parliament in November 2015. Amongst other things, the legislation was designed to implement practices to protect New Zealand from the impact of international organised crime and corruption.
All of these events had been organised prior to the publication of the Panama Papers just over a month earlier in early April 2016.
Eventful 11 and 12 May 2016
Commonwealth Leader Baroness Scotland hosted a packed Anti-Corruption Conference.
Former UK Prime Minister David Cameron at the 2016 London Anti-Corruption Summit.
Corrections Minister, Judith Collins
New Zealand First MP Tracey Martin describes her Party's position in regards to the importance of addressing corruption during the Accountants and Lawyers World Cup 20 Forum held at the Parliamentary Banquet Hall 11 May 2016. Also on the panel left to right as Marama Fox, NZ Party, Paul Foster-Bell, National Party, Grant Robertson, Labour Party, James Shaw, Greens.
(At exactly 2pm, the panel broke up as the MPs all walked next door to the Parliamentary Chambers where the Prime Minister John Key was sent out by the speaker for disrespectful responses during the Panama Papers debate)
Prime Minister John Key about to be thrown out of Parliament
Imagine the show if viewers could have viewed four video cameras screening in four different locations over the 48-hour time frame of 11 and 12 May 2016.
- One camera could have focused first on Commonwealth Leader Baroness Scotland hosting a packed London Anti-Corruption Conference for Civil Society on 11 May and then on former UK Prime Minister, David Cameron, hosting world Presidents and Prime Ministers at the London Anti-Corruption Summit (ACS) on the 12th.
- The second camera could have followed Corrections Minister, Judith Collins, who was New Zealand’s representative joining world leaders at Cameron’s ACS. Minister Collins’ involvement had been kept secret and was a surprise because less than six months earlier she returned to Cabinet after being on the back-benches because of emails she sent the Minister for the Serious Fraud Office. She also had an unexplained relationship with Oravida (a Shanghai based NZ export company) while Minister. At the time of the ACS, the seven commitments New Zealand made were a weak reflection of her Government’s robust anti-corruption legislation passed back in November 2015.
- Minister Collins’ surprise selection meant that TINZ representatives in London were unable to provide background material that might have led to stronger leadership from New Zealand, the country with a world-wide reputation for integrity and whose public sector consistently is regarded as number one for its anti-corruption policy.
- Meanwhile in New Zealand on 11 May 2016, another camera might have been focused on the top lawyers and accountants who were with TINZ members at the Forum in Parliament’s Banquet Hall listening to a panel of Parliamentarians and public servants presenting details of the omnibus anti-corruption legislation that Parliament passed in November 2015.
- The fourth camera could have been focused right next door on Parliament. This is where all the action was. As public servants described aspects of the Government’s new anti-corruption legislation at the TINZ Forum, Parliamentarians were arguing about the Panama Papers.
- Shortly into the debate, Speaker of the House, David Carter, threw out Prime Minister John Key for his un-parliamentary behaviour. Apparently poorly advised, the PM had responded defensively to questions about New Zealand’s vulnerability to harbouring the foreign proceeds of crime and corruption as had been revealed by the Panama papers.
Back to 11 May 2016, several TINZ directors stayed up all night - after hosting the Forum in Parliament - to provide background that would help shape the choice of the Government’s ACS commitments the next day. We were enthusiastic about our country’s direction in progressing anti-corruption policy. After all, Parliament had finally, unanimously, ratified the United Nations Convention Against Corruption (UNCAC) in November 2015 (10 years after committing to it). This was in conjunction with passing into law the comprehensive omnibus anti-corruption legislation. Unfortunately we were unable to deliver the background information to Minister Collins in time.
The Government has taken positive steps to combat the misuse of companies and trusts in recent years and TINZ applauds this work. The tightening of company director rules in 2014 and the introduction of AML reforms following the Panama Papers, are great examples of the Government taking action. The May 2015 events accelerated several additional, positive initiatives:
- The implementation of phase 2 anti-money laundering (AML) practices that make it harder to hold bank accounts and assets in anonymous accounts or using fictitious names,
- Very quietly, the Inland Revenue Department (IRD) is implementing a Common Reporting Standard devised by the Organization for Economic Cooperation and Development (OECD). The new code aims to ensure automatic information sharing between tax authorities globally.
- The Government's implementation of tougher disclosure requirements for foreign trusts as a result of the Shewan Inquiry. These requirements have produced a significant drop in registrations, strongly suggesting that there were a number of foreign trusts involved in activities that don't stand scrutiny.
Now, just over a year and a half on from May 2016, the record shows that New Zealand is falling behind when compared with other countries’ anti-corruption commitments as indicated the New Zealand Government's lack of progress in meeting its ACS commitments.
A particular shortcoming is the Government's progress on developing a public register of beneficial ownership. Its latest direction is to implement recommendations from the Shewan Inquiry which are limited to creating a central (unpublished) registration of beneficial owners of foreign trusts. There is no action on the ACS comitment to create a company beneficial ownership register or a strategy for making both public.
A wider database, including a public register of beneficial owners of all overseas legal entities (companies and trusts) will save costs and be much more effective in protecting New Zealand from the impact of offshore grand corruption.
Corrupt officials, drug dealers, fraudsters and tax evaders are increasingly using foreign companies and trusts to move their illicit funds anonymously. The implementation of AML practices has made it harder for them as explained above. As a consequence, criminals have turned to corporate vehicles to avoid detection when laundering their proceeds of crime.
A beneficial ownership register of all legal entities including companies as well as foreign trusts is the solution for New Zealand. It is a key tool for piercing the corporate veil. A beneficial ownership register increases transparency deferring criminals initially and then helping law enforcement agencies to trace criminals and their assets during investigations.
For over 14 years, TINZ has called on the Government to introduce a public beneficial ownership register. High profile scandals that provide visibility to the issue include the use of New Zealand companies to avoid North Korean sanctions in 2009, and to funnel $2 billion of corrupt funds out of Kyrgyzstan’s largest bank in 2012.
The Companies Office should be given sufficient resources to take a proactive role in this area.
The direct costs to the taxpayer involved in setting up a public register would be offset by significant costs savings to businesses through reduced duplication where, currently, every organisation dealing with foreign depositors or investors must keep a separate register. It would also make it easier and more cost effective for New Zealand organisations to comply with existing AML laws.
Most importantly, though, there are massive benefits to all New Zealanders.
Ultimately, a public register of beneficial ownership is necessary to send a strong message to corrupt officials and other criminals that they are not welcome in New Zealand. This message protects all New Zealanders from crime that contributes to higher priced goods, housing shortages and reduces the potential harm from the drug trade.
A public beneficial ownership registry will send a message reinforcing New Zealand’s reputation as a good country and as a good place to do business.
Political party survey responses add value
TINZ Board Member
Delegated authority for Parliamentary Relations and Newsletter Co-Editor
TINZ sought responses to six key questions from the ten multi-issue political parties standing for election on 23 September about their policies to address corruption. These questions spanned issues of transparency, access to information, anti-corruption and protection for whistleblowers.
The questions and responses were fully reported in our September Issue of the Transparency Times. In addition, TINZ (as an apolitical, non-partisan organisation) evaluated the parties’ responses and offered brief analysis of their diversity.
The TINZ survey reached the front page of the 15 September 2017 issue of National Business Review (NBR). Page 4 was entirely devoted to three of these questions and corresponding responses from six parties, together with commentary from NBR’s interview with TINZ Director, Conway Powell. See Political parties struggle with corruption test and Which political party takes the best stance on corruption? both by Duncan Bridgeman (paid content with 30 day free trial).
Further commentary on broader issues was provided from NBR’s earlier interview with José Ugaz, International Chair of Transparency International. NZ should toughen up political financing rules, Transparency International head says National Business Review (paid Content) Fiona Rotherham and Susan Wood.
The article concluded with “TINZ’s questions also provide a lead into its 2017 New Zealand Finance Integrity System Assessment (FISA), which is designed to gain detailed information about how the financial system identifies and seeks to prevent corruption, reinforces core ethical values and strengthens integrity systems”.
TINZ notes that its FISA survey questions will be launched after the new government is formed. The anonymised answers to the survey will be used as evidence for the FISA assessment to take place in the first half of 2018. The Assessment findings are expected mid-year.
An immediate intention of TINZ is to get the message out so that policies of the as yet unknown new Government, contain effective initiatives that progress transparency, open government, anti-corruption measures and protection for whistleblowers.
Once the government has been formed, TINZ plans to hold coalition parties to account on their pre-election responses while also encouraging their remedy of any shortfalls revealed. TINZ will also bring to their attention the importance of a public register of the beneficial owners of all foreign entities operating in New Zealand and the six incomplete commitments made following David Cameron’s 2016 London Anti-Corruption Summit (ACS). (See New Zealand’s pledges tracked from the 2016 global Anti-Corruption Summit).
While answers to TINZ six questions about anti-corruption policies could be improved in many instances, it was heartening that all ten political parties took the time to provide feedback. This harbours well for re-energising GOPAC (Government Parliamentarians Against Corruption), and encouraging a Parliament wide focus on New Zealand’s reputation for integrity. A precedent for this was Parliament’s unanimous vote for New Zealand to ratify the United Nations Convention Against Corruption (UNCAC) in November 2015.
Open Government Data Dashboard prototype now available for public feedback
One of the milestones within New Zealand’s Open Government Partnership (OGP) National Action Plan (NAP) 2016-18, requires development of a public ‘data dashboard’ for reporting against NAP goals. A prototype dashboard is now available on the data.govt.nz website to initiate public discussion including a request for feedback by 20 October 2017. Elements of OGP Commitment 4, which this is a component of, include:
- Objective: To help drive the government agency culture change required to gain value from open government data.
- Ambition: Government agencies will be knowledgeable about what data they should and should not publicly release and why, how to remove obstacles to reuse, and will consistently apply these filters to their data holdings. This will increase the amount and quality of data released.
- Helps government agencies: To improve public access to, and outcomes of, non-personal, government-held data by openly tracking progress on efforts to open up data stores.
In 2014, New Zealand joined the OGP initiative. Since then, the governments of over 75 countries have committed to becoming more open, accountable and responsive to citizens. Transparency International’s Secretariat long ago encouraged New Zealand to join and continues to push for expanded engagement, and ambitious but achievable objectives.
TINZ's Board members involved with OGP activities are reviewing the data dashboard and will respond to this invitation for public feedback about it. TINZ wishes to ensure that the dashboard is easily understood by members of the public, that it is clear how it relates to relevant other milestones within the NAP and that, once operational, it will provide drill-down detail to the scoring and progress rankings of individual New Zealand government entities.
TINZ encourages everyone to review the prototype dashboard and offer feedback by 20 October 2017. This is the start of constructive public engagement in building a government data infrastructure that is widely accessible and understandable.
TINZ connects with Taiwan’s Audrey Tang to accelerate transparency
Audrey Tang visited New Zealand in the last week of September as a keynote speaker for the Social Enterprise World Forum (SEWF) held in Christchurch.
She is the Digital Minister (Taiwan) and is in charge of Social Enterprise. She is known world-wide for revitalizing global open source communities such as Perl and Haskell.
Ākina Foundation Chief Executive Alex Hannant notes that:
“Hosting the SEWF in New Zealand in 2017 is an opportunity to further accelerate the development of our emerging social enterprise sector. It will give us exposure to the best international practice and strengthen relationships with the global movement. It also gives us a target to work towards in developing a cohesive and ambitious national strategy for the sector,”
“New Zealand has made significant progress in the last couple of years; however, our sector remains young, fragmented and underserved – we still have a way to go in terms of optimising the social and economic benefits on offer. The momentum amongst Kiwi social entrepreneurs and enterprising communities, plus their knowledge and effectiveness, will grow through this conference.”
The theme for SEWF 2017 is “Ka koroki te manu – creating our tomorrow”. The former phrase is derived from a traditional Māori prayer about the bird songs of the morning chorus. As New Zealand is the first in the world to see the sun rise, the dawn birdsong symbolises a wake-up call and welcome to the challenges and glories of a new tomorrow.
We know the dawn of every day is ripe with opportunity – a chance to create, explore, innovate or simply just try again. Backed by Christchurch’s brave spirit of positive disruption, this year’s forum theme is a call-to-action, an invitation to create a global legacy of positive change and to take an active role in prototyping the world’s future.
In the public sector, Tang served on Taiwan National Development Council’s open data committee and K-12 curriculum committee; and led the country’s first e-Rulemaking project.
In the private sector, she worked as a consultant with Apple on computational linguistics, with Oxford University Press on crowd lexicography, and with Socialtext on social interaction design.
Tang actively contributes to Taiwan’s g0v (“gov-zero”), a vibrant community focusing on creating tools for the civil society, with the call to “fork the government”.
Named a minister without portfolio in the Lin Chuan cabinet in August 2016, she took office as the "Digital Minister" on 1st October, and was placed in charge of helping government agencies communicate policy goals and managing information published by the government. When appointed at age 35, Tang became the youngest minister without portfolio in Taiwanese history.
One of her tasks is to make the government more transparent, and making data about how it works available to all. She is also helping to form Taiwan’s “Asian Silicon Valley,” a new tech zone devoted to the “Internet of Things” industry.
TINZ, which aims for greater government transparency and stronger integrity systems throughout New Zealand, wanted to connect with Tang to learn about ways of engaging and gaining views from a public while ensuring it has access to information about its government.
Taiwan’s Representative to New Zealand, Dale Wen-chieh Jieh (Representative of the Taipei Economic and Cultural Office in New Zealand), hosted a lunch meeting for TINZ to connect with Tang on 26 September 2017. Attendees included TINZ ’s Chair, Suzanne Snively, Christchurch Board Member, Nichola Hodge with other attendees representing Taiwan’s government and New Zealand’s Open Government Partnership initiatives.
When appointed as Minister, Tang said: "My existence is not to become a minister for a certain group, nor to broadcast government propaganda. Instead, it is to become a "channel" to allow greater combinations of intelligence and strength to come together.”
Her communication channel is designed to collect information about people’s feelings and opinions about the government and its activities.
Taiwan’s democratic environment shares similarities to New Zealand’s democracy. Like New Zealand Taiwan is a new democracy on the global stage and, like New Zealand has until recently, typically enjoyed high levels of voter turnout for national elections. Both Taiwan and New Zealand have seen voter turnout noticeably drop in both the number of the population enrolling to vote and the number actively voting. Like New Zealand, the voter turnout of those under 35 in Taiwan is considerably below the turnout of those from older age cohorts.
One of Tang’s roles is to address these issues and to bridge the gap between the older and younger generations. Tang’s work could provide an answer to New Zealand’s declining voter turnout and political engagement.
TINZ is keen to keep in touch with Tang about her development of free software, for the public to access. She wants also to demonstrate that the new Taiwanese sharing economy is, in fact, a working system.
Dale Wen-chieh Jieh, Nichola Hodge, Suzanne Snively, Audrey Tang
Constitution Aotearoa: TINZ Submission
Board Legal Secretary
Transparency International New Zealand (TINZ) has made a submission in support of a proposal to be included in Sir Geoffrey Palmer’s “A Constitution for Aotearoa New Zealand”, to give constitutional status to the right to access official information.
Former Prime Minister Sir Geoffrey Palmer addressed the TINZ Board earlier this year on the proposed constitution for New Zealand, and invited the Board to make a submission on certain provisions relating to transparency. The proposed Constitution has been drafted by him and constitutional lawyer Dr Andrew Butler. It is set out in their book and available online.
In his address to the Board, Sir Geoffrey emphasised the importance of having a constitution that clearly establishes the functions and power of government. Without clear rules, he warned of the possibility for public power to be abused by those in government. The book therefore “proposes a new constitution that is easy to understand, reflects New Zealand’s identity and nationhood, protects rights and liberties, and prevents governments from abusing power.”
TINZ’s submission, which relates to Part 14, article 114 ( Integrity and Transparency, Official Information) of the proposed Constitution, strongly supports the proposal to codify the right to official information. As noted by TINZ Chair, Suzanne Snively, a “written Constitution, which gives the principles of open government and transparency constitutional status, directly contributes to TINZ’s vision for a world with trusted integrity systems”.
TINZ also supports the re-establishment of an Information Authority to oversee the operation of the official information legal regime. Such an authority was initially set-up to oversee the operation of the Official Information Act, but its functions expired in 1988 and were never transferred to another agency. TINZ would, however, prefer to see that the complaints investigation function not be transferred to the Information Authority as proposed, but rather remain with the Ombudsman to ensure robust protection.
Finally, TINZ supports the proposal to remove the power of Cabinet to veto recommendations issued by the Ombudsman in respect of official information. TINZ considers that “it is inconsistent with the principles of open and transparent government for the Executive to have the ability to override independent recommendations issued by the Ombudsman, or a newly established Information Authority, following an independent investigation”.
TINZ looks forward to the outcome of the consultation process for the proposed constitution, which ends on December 1st 2017.
Dr Andrew Butler and Sir Geoffrey Palmer