From the Chair
The doors are opening as people and organisations increasingly see the value of strong integrity systems and transparency. The exposure is also showing that there’s still a lot to do.
Each sector has greater clarity about what is required to prevent corruption.
- There is now recognition of delayed maintenance in the public sector.
- Civil society organisations acknowledge the need to be active on behalf of their members in providing explicit integrity systems around accountability and transparency.
- The private sector is waking up to the value of New Zealand’s strong reputation for integrity, and recognising lax practices that need tidying up.
While the comprehensiveness of the Shewan Inquiry recommendations are impressive given its scope, we will applaud once they are implemented.
Further effort is necessary to fully address factors making New Zealand attractive as a conduit for corruption. This need has been given further impetus by the EU Parliamentary Committee’s initial response to the Panama Papers which is to highlight deficiencies in New Zealand’s tax legislation.
I am excited to welcome Janine McGruddy and the energy she brings to the new TINZ Chief Executive Officer role. Her focus on the public sector means that we can face up to the long-overdue improvement required of Transparency International’s Corruption Perception Index. While it is always good to score well on such indices, it is also important that they are robust and more importantly, provide information not just about how we rank, but how we can improve.
It’s time for TINZ to engage more effectively with the private sector.
Earlier this year TINZ facilitated a workshop led by Emmanuel Lulin, Chief Ethics Officer of L’Oréal, and winner of the prestigious 2015 Carol R. Marshall Award for Innovation in Corporate Ethics. The workshop focused on values and principles that enable business to maintain strong integrity systems, the basis for reputation.
The workshop produced a document—still in draft form and awaiting wider discussion—we are calling the Whangaroa Statement.
New Zealand organisations pride themselves on their high regard for human rights. They are aware of their role and responsibilities associated with human rights and its importance both for maintaining strong environmental, cultural and social standards while improving productivity and effectiveness.
Emmanuel Lulin presenting to business leaders in New Zealand 3-4th April 2016
- Cultural and social responsibility
- Environmental sustainability
PRINCIPLES OF ORGANISATION INTEGRITY
- Culture of open discussion and active listening
- Organisational justice
- Open communication and information sharing
- Clear expectations
- Top down commitment "to do the right thing"
- Lead by example
- Trusted, trustworthy colleagues
Suzanne Snively, Chair
Transparency International New Zealand Inc.
In This Issue
Message from the CEO
TINZ Chief Executive Officer
by Janine McGruddy
TINZ Chief Executive Officer
It is not often that someone gets to do their “dream job” so I am feeling very grateful and humbled by the opportunity to serve as CEO of TINZ. The first month in the role has been a very eventful one. Here are some of the highlights.
International Anti-Corruption Academy
Day one in the role coincided with the first day of the International Anti-Corruption Academy’s (IACA) Summer Academy 2016 in Laxenburg, Vienna. The IACA Summer Academy is an intensive programme with eight days of rich discussion and interaction with around 80 peers and world-leading experts. Participants came from more than 40 countries and represented the public and private sectors, international organisations, academia, media, and civil society.
It consists of approximately 55 lecture hours, roundtable discussions, group work, team-building activities, and social events. The interdisciplinary programme blended theory and practice, addressing topical anti-corruption and compliance issues from multiple perspectives: politics, compliance and collective action, integrity and corruption prevention, law, psychology, economics, good governance, and development.
One of the many new friendships to come out of IACA — Abubakar Jalloh "Abu", a journalist from Sierra Leone.
Our lecturers came from a wide variety of leading institutions, including IACA, the World Bank, Transparency International (featuring TI's very own Peter Eigen – co-founder of Transparency International), London Business School, University of Passau (Germany), Flinders University (Australia), and the International Institute for Applied Systems Analysis (IIASA).
This was an invaluable opportunity for me to shift my thinking from the strategic role on the Board of TINZ as Deputy Chair to the operational role of CEO. The classroom hours were wonderful and the range of topics covered impressive. Just as helpful however was the time spent networking with practitioners from all over the world and making new like-minded friends.
Transparency International United Kingdom
Following on from the Summer Academy I spent a few days in the UK (an interesting place to be post Brexit) and caught up with the TIUK Chapter, led by the very competent Robert Barrington. It was fantastic to spend a day in their office and see how they operated. With a staff of around 30 it was an inspiration as well! We have much in common with the UK; I intend to collaborate with them when beneficial to the TINZ agenda. I also spent an hour at the Institute of Business Ethics with their inspiring Director Philippa Foster-Back whom I had met previously in New Zealand.
Transparency International Secretariat Berlin
Next stop on the itinerary was at the Transparency International Secretariat in Berlin. Despite the fact that they were in the middle of a restructuring process, they kindly arranged a day of meetings for me with the various directors of areas of interest to TINZ, ranging from the Open Government Partnership to Public Sector Integrity systems.
I was very fortunate to spend an hour with Peter Eigen, whom I met when he lectured at IACA. Peter has very fond memories of New Zealander Jeremy Pope, who was a co-founder of Transparency International with Peter and its first ever CEO. We shared our hopes and our dreams for the world. He offered his friendship and support where needed for my work as CEO of TINZ.
My first day back in New Zealand culminated in my first Board Meeting as CEO. Despite the jet lag making this seem a little like a dream too, my feet are now firmly back on NZ soil and walking steadily in the direction of making the dream a reality. I look forward to you all joining me on that journey.
Evening panel featuring Smokin Wanjala (a judge at the Supreme Court of Kenya) and Daniel Li (retired Deputy Commissioner of Operations for the Hong Kong Independent Commission against Corruption)
Peter Eigen, co-founder of Transparency International
Mayoral election events
Need reasons to get engaged in local politics? Brexit - Trump - Turkey - Terrorism - What do all four of these have in common? Disenfranchised populations!
- Be part of the movement empowering local populations to determine how we will live in OUR communities.
- As part of the 2016 Local Government Elections, TINZ is providing platforms around New Zealand for mayoral candidates to discuss subjects such as managing diversity, preventing corruption and progressing economic development strategies that harvest the benefits of New Zealand's international reputation for integrity.
- Voter turnout has been declining since the 1980s. This is especially challenging at local levels where 42% of New Zealanders voted in the 2013 local elections. We are working with central and local government to achieve a better voter turnout for 2016 of more than 50%
- At the last election 31% of people didn't know enough about the candidates. This platform is an opportunity for more New Zealanders to know about their mayoral candidates.
TINZ is hosting events featuring Mayoral candidates in local elections around the country. Events are confirmed for Wellington(18 August 18), Palmerston North (1 September) and Auckland (7 September). TINZ is working with its members to schedule events in other locations.
These functions are being organised locally with local knowledge. Look out for an event near you!
Thursday 18 August 2016, 5:30pm - 7:00pm, Old Government Buildings Lecture Theatre 2, Victoria University of Wellington, Pipitea Campus
Join TINZ and the Institute of Governance and Policy Studies (IGPS) in the move to put the local back in local politics. Come and meet the candidates for the 2016 mayoral election and hear them speak on transparency, strong integrity systems and what they mean to them and YOUR community.
Old Government Buildings, Lecture Theatre 2, Victoria University of Wellington, Pipitea Campus
18 August 2016
5:30pm - 7:00pm
Wednesday 31 August 2016, 5:30pm - 7:00pm, Palmerston North City Library
Join TINZ and Massey University in the move
to empowering us—local people—to determine how we want to live in OUR communities. Come and meet the candidates for the 2016 mayoral election and hear them speak on transparency, strong integrity systems and what they mean to them and OUR community.
Palmerston North City Library
1st September 2016
5:30pm - 7:00pm
Wednesday 7 September 2016, 6:30pm - 8:00pm, at the Fisher and Paykel Appliances Auditorium, Level 0, Owen G Glenn Building, University of Auckland, 12 Grafton Road.
Come see Auckland mayoral hopefuls discuss the future of Auckland. On 7 September, the University of Auckland School of Architecture and Planning will be hosting the Auckland Mayoral Debate: Mayoral Candidates Discuss the Future of Auckland. The debate, chaired by Rod Oram, is part of the Fast Forward lecture series, and will include specific questions for the mayoral candidates from Transparency International New Zealand.
Fisher and Paykel Appliances Auditorium, Level 0, Owen G Glenn Building, University of Auckland, 12 Grafton Road
7 September 2016
6:30pm - 8:00pm
OGP National Action Plan 2: Under Urgency to Raise Awareness
Recent international events have dramatically demonstrated that disenfranchised citizens are finding that they can use voting processes to be heard. Issues such as Brexit and the impact of the global financial crisis on jobs have brought out numbers of angry voters. They have voted to drag Britain out of the European Union after 30 years, and the US Republicans to nominate a candidate who stands for keeping America for Americans. In Australia, disgruntled voters have elected a government whose coalition threatens to strangle new initiatives.
The crucial urgency of an effective grassroots-led National Action Plan for New Zealand’s engagement with Open Government Partnership (OGP) is clear. With this in mind, the State Services Commission, the official OGP Point of Contact has refreshed its approach to production of the second National Action Plan due in October.
- Deputy Commissioner, Al Morrison and Principal Advisor, Amy White have been appointed to lead a newly constituted Experts Advisory Panel (EAP)
- TINZ Chair, Suzanne Snively, and TINZ Director, Fuimaono Tuiasau, were invited on the EAP panel
- The plan is to engage New Zealand communities with an interest in Open Government in the second National Action Plan (NAP2)
- The SSC is managing engagement with government officials
- The services of an independent consultation organisation, engage2, have been commissioned to manage engagement with civil society organisations. Civil society includes community organisations (such as Hui E!) and professionally based associations (the Law Society). These are neither government agencies nor private sector firms.
For this second NAP, the intention is to involve and collaborate with New Zealand communities in order to develop future processes to hear their views. A small number of individuals and organisations knowledgeable about OGP (such as ECO, the umbrella group for environment and conservation organisations in New Zealand) have held their own consultations and surveys. ECO, through its democracy and transparency working group, launched the survey of NZ people and organisations from the non-government and not-for-profit sector in July. The ECO survey has been completed with survey results to be shared with the SSC and published on their website soon.
On a more formal basis TINZ is pleased to hear that OGP’s own community engagement was launched online on the 4th of August via a dedicated OGP website. Take the opportunity to log in and comment using the address below, and please share this widely with your networks.
The Public Good's ECO survey has been completed with survey results to be published on their website soon.
This time around, the SSC is geared up both to identify those already knowledgeable about OGP and to raise awareness about OGP more widely throughout New Zealand. They will be setting up a website, promoting online engagement and conducting workshops during August in Auckland (17th), Christchurch (23rd) and Wellington (26th).
Engage2 offers individuals and civil organizations the ability to find out more about the process and ways to get involved on their website or sign up for regular email updates by emailing email@example.com. People can also follow the process on Twitter @ogpnz and through their blog (engage2.co.nz/kia-ora/).
There are processes available for people who want to participate and have their say. These are designed to capture and analyse input in an open and transparent way, and to develop channels to encourage collaboration between the Government and its citizens.
This will have to happen quite quickly as the New Zealand Government’s deadline for the second NAP to go to the International OGP offices is 30 October 2016. This means that the draft needs to be with Cabinet and signed off by ministers in early September.
In other words, New Zealanders have a little over a month to have their say for NAP2. “Under urgency, the major lever that can be exercised is how NAP2 will employ modern communication tools to hear what citizens have to say”.
New Zealand accelerating Phase II Anti-Money Laundering
Prime Minister John Key and Justice Minister Amy Adams have announced accelerated plans to implement Phase II of the Anti-Money Laundering and Countering Financing of Terrorism Act.
“Our laws aim to detect and deter money laundering and financing of crime and terrorism. By flushing out financial transactions stemming from the proceeds of crime, we can stop criminals funding and profiting from illegal activities. I announced in mid-2015 that we had kicked off the early stages of work on the next phase of AML to include other professions, such as lawyers, accountants, and real estate agents. It’s my intention to fast-track these reforms and introduce a Bill to Parliament later this year, which I aim to pass by July 2017, with implementation to follow as soon as practically feasible,” said Adams.
Phase II was promised shortly after the passage of the initial AML act in 2013. It was pushed to the back burner until the furore caused by the Panama Papers forced it to the front. There are expert officials and consultants actively involved in drafting this legislation.
TINZ will monitor progress and advocate for solutions that deter criminals and corrupt individuals from using New Zealand as a conduit for cleaning their assets and reputations.
The EU and New Zealand tax transparency post Panama Papers
Following the Panama Papers release, New Zealand’s foreign trust tax laws came under intense international scrutiny. This week the European Union turned up the heat through its 65-member Panama Papers Committee of Inquiry into tax evasion and money laundering. The committee is expected to report on its findings next June, which gives New Zealand time to address what many consider to be inadequate legislation in this area.
Recent analysis by TINZ in the July Transparency Times identifies that some of these inadequacies will be addressed when recommendations from the Shewan Inquiry are implemented, but additional steps will need to be taken to ensure our tax laws promote transparency and are fit for purpose.
European Union calls for tax transparency
Below is a recap of what the EU wants, what Shewan has addressed and what is still to be done:
- No anonymity-trust settlers and beneficiaries are identified and changes are recorded.
New Zealand will meet this standard when Shewan's changes are introduced.
- Collection of information about financial assets-where the funds came from, the current assets, where they are, and the income earned in the past year.
New Zealand will meet this standard when Shewan's changes are introduced.
- No tax exemption of foreign income.
New Zealand will NOT meet this standard even when Shewan's changes are introduced.
- Automatic exchange of information with foreign tax authorities in the jurisdictions where the settlers and beneficiaries are resident.
New Zealand will NOT meet this standard even when Shewan's changes are introduced.
- A public register of trust ownership and details.
New Zealand will NOT meet this standard even when Shewan's changes are introduced.
Read more at newshub.co.nz: EU considers blacklisting NZ over tax laws.
Fundamental issues brought to light by the Panama Papers
As TINZ has said from the start, by limiting the Shewan review terms of reference to focus only on the Foreign Trust Disclosure Rules, the Inquiry failed to address a number of fundamental issues brought to light by the Panama Papers.
The transparency of all corporate vehicles, not just foreign trusts, is essential to prevent and detect serious crimes such as money laundering, tax evasion and corruption–this includes both trusts and companies. Countries and NGOs globally are discussing strategies to combat the misuse of trusts and companies.
New Zealand has committed to implement the standards set by the Financial Action Task Force (FATF) and Organisation of Economic Development (OECD).
These include measures for corporate transparency. For example:
- UK G20 Beneficial Ownership implementation plan
- Transparency International calls for immediate action by world leaders to stop secret companies
TINZ said previously that the Inquiry will have a material impact on the future of New Zealand's standing in the world and on our collective prosperity. Recent European Union actions go even further than was envisaged when TINZ advised the Shewan Inquiry to dig deeper in its May submission.
Early in May British Prime Minister David Cameron hosted an Anti-Corruption Summit in London to step up global action to expose, punish and drive out corruption in all walks of life. New Zealand Prime Minister John Key was represented by Police Minister Judith Collins
“We have made a number of commitments which build on the work New Zealand has done in recent years and will help to maintain our reputation as one of the least corrupt countries in the world,” said Minister Collins.
The table below outlines an updated assessment of New Zealand's comparatively modest commitments.
TINZ continues to push to make New Zealand inhospitable to corruption
The Shewan Inquiry recommendations are a step in the right direction. They have a significant potential to impact on New Zealand's reputation. There is still much to do though, especially if New Zealand wants to stay ahead of the pack.
TINZ recommendations in regards to the Shewan inquiry continue to be:
- The New Zealand AML/CFT Act (2009) should be extended to cover all professionals, including lawyers and accountants that are engaged in setting up New Zealand corporate vehicles. The next step is to ensure the Shewan recommendations on the AML are implemented as quickly as possible.
- New Zealand should establish a corporate registry that includes beneficial ownership of relevant corporate to enable review and audit by law enforcement and compliance bodies.
- The entity operating the corporate registry should be adequately resourced and funded to be effective.
- New Zealand should equally ensure similar transparency of trusts to understand the ultimate beneficial owners. To achieve this, New Zealand should consider establishing a similar registry for trusts.
Pacific corruption ‘like cancer’ — needs treating, says TINZ Pacific director
Tongan publisher Kalafi Moala ... Tonga's population is broken-hearted because their hope for something different has eroded. Image: Del Abcede/PMC
Kalafi Moala (Taimi o’ Tonga Network Chief Executive (from left), Alex Rheeney, Editor-in-Chief of the PNG Post-Courier, Dr Shailendra Singh, Head of Journalism at the University of the South Pacific; and Convenor Fuimaono Tuiasau, Pacific Director of Transparency International NZ. Image: Del Abcede/PMC
By Ami Dhabuwala of the Pacific Media Centre
14 July 2016
Each Pacific country is dealing with its own issues, but one of the major common issues is corruption.
A preconference of the Journalism Education and Research Association of Australia (JERAA), AUT Pacific Media Centre (PMC) and Media Educators Pacific (MeP) in partnership with TINZ gave a platform to discuss the corruption in the Pacific and the role of the media in dealing with it.
Pacific Director of TINZ and facilitator for the session, Fuimaono Tuiasau said: “Corruption is much like cancer. It has to be treated early otherwise it will be massively expensive.” He said the world has become deeply interested in what is going on in the Pacific. The European Union, World Bank and Asian Development Bank are all taking interest in the Pacific. A number of international treaties have been signed but “where are all of these resources going?” he said.
“Corruption Prevention is fundamentally crucial to successful development in the Pacific.”
Safeguarding the public interest in research
Dr Andrew Cleland
Royal Society of New Zealand
by Dr Andrew Cleland
Royal Society of New Zealand
The term “ethics” is widely used, but can have a variety of meanings. The definition used by the professions is of a set of moral standards above the law, self-imposed on members of the profession. Professionals’ duty to the public interest can transcend their responsibilities to those who employ them. Knowing the profession itself will deal with poor performance amongst its members, the public choose to trust the profession.
The research community is not a profession. What researchers have in common is that they work to extend the frontiers of knowledge.
It takes time to assimilate the implications of new knowledge, and work out what a wider societal response should be. Centralised regulatory systems inevitably lag behind the discovery of new knowledge.
For example, driverless cars exist, but the debate about their regulation has barely begun. The ethical dilemma of choosing who to kill or injure (driver or pedestrian) when an unavoidable crash is recognised is one that needs a wider ethical debate than can be had in a regulatory organisation or ministry. It is an international issue, just as is the decision on how long gene-edited human embryos can be allowed to grow in the interests of science.
Given that regulation is not likely to protect the public interest when moral dilemmas arise in research, what actually does? Historically, we have relied on public institutions like universities and government-owned research organisations to make decisions that are in the public interest. The Cartwright Inquiry into the research at National Women’s Hospital is the best known example in New Zealand of where protection of the public interest in such institutions was questioned. Protective systems are now in place to ensure good standards when researchers work with human subjects and animals (researchers obtain permission from what are called ethics committees).
However, global statistics on research integrity are disturbing – the number of paper retractions steadily increases, and there are concerns about the repeatability by others of reported results. These are symptoms, in part, of an intensely competitive world for research funding and for personal recognition. Whilst a competitive system is by no means bad, there is a need to ensure that good quality research practices are not circumvented.
Worldwide, compared to the professions, the self-regulatory approaches in research communities are relatively weak. Often the role of protecting the public interest is often vested with the employer of the researchers concerned, or their publisher. Whilst they may in fact do a good job, their performance may well be enhanced by the inclusion of independent lay people in investigations with the power to issue dissenting opinions.
Fortunately in New Zealand, reported failures are still rare but we cannot assume New Zealand is immune. The Royal Society of New Zealand works with others to maintain the integrity of New Zealand research.
Procurement and transparency
by Margaret Gilbert
Corporate Contracts Management Ltd
Margaret Gilbert specialises in procurement principles, practice and processes
“Ministry of Transport staffer sacked, fraud investigation over missing $700,000”
“Schools can learn from recent high-profile cases of fraud; principal says”
“Businessman slams culture of kickbacks”
The above headlines suggest that there is still a lot to learn about how we do procurement in New Zealand. We can no longer ignore this matter and say that it is not a ‘problem’. Ethical behaviour, procurement principles and transparency are essential, as is the need to take action when issues such as above are known.
Corruption and fraud have a significant effect on the ability of governments to provide high-quality public services and on the healthy functioning of market economies. They cause higher prices and lower-quality services. The price of delivering services will be increased to meet the cost of corruption and fraud. Further such practices reduce competitiveness in the marketplace as a result of predetermined outcomes of tendering processes.
Procurement processes that have a clear direction and code of conduct protect an organisation and its staff from abuse of the procurement system.
Procurement practitioners are in a position of trust; they have a significant role to play to ensure procurement is and remains transparent. They provide education and guidance to their organisation and suppliers, ensuring that the process is transparent and fair.
Issues that lead to poor procurement behaviour include:
- lack of oversight, controls and approvals in the procurement process
- suppliers circumventing the process by offering product directly to buyers
- buyers awarding contracts to suppliers and expecting personal benefits in return
- suppliers offering trips or other perks to the buyers' personal benefit.
What is acceptable for the buyer or procurement practitioner to accept?
Offers from suppliers to the buyer or procurement agent—even minor ones—risk crossing the ethical line. Once the line has been crossed, what then? The question becomes: what is acceptable for the buyer or procurement practitioner to accept?
The simple answer is: you do not want to be seen to be ‘beholden’ to the other party. You do not want there to be an expectation that the other party is ‘owed’ something. If there is the slightest doubt, the safe approach is to refuse the offer.
By setting the tone and direction of how procurement is undertaken, transparency can be achieved. Communication is key to transparency, accountability and acceptable behaviour in the procurement process.
While establishing sound processes with checks and balances is essential, developing an appropriate Code of Ethics is equally so. Recommended practice is that the Code of Ethics be separated out from a Code of Conduct and explicitly signed by staff to indicate that they have read and understood it.
The question all organisations should be asking themselves is: Is our house in order? How are our procurement processes measuring up against the procurement principles of transparency, fairness, equity and accountability?
Omertà in sports
Josephine Serrallach TINZ Director
by Josephine Serrallach
Is Omertà present in the changing rooms of New Zealand sports clubs and Olympic teams?
Omertà is a “code of honour” that places importance on silence, non-cooperation with authorities, and non-interference in the illegal actions of others. This code, often associated with the mafia, is an extreme form of loyalty and solidarity in the face of authority.
In sport, “Omertà” exists to some degree in all locker rooms as players feel strong loyalty to their mates and to their team. It is a serious problem connected to team spirit and “sporting mates” culture.
In this atmosphere, the tension for an individual player is that breaking silence affects the team's reputation and is likely to adversely affect team performance. It requires athletes to denounce or accuse their mates in public and the courts, and to endure retribution from their teammates.
A recent debate organised by the Office of the European Parliament concluded that illegal betting is going on in the changing rooms of football clubs and is a danger even greater than doping.
In Europe, there is evidence that every day there are five or six sporting events where the results are arranged. The betting mafias behind these illegal activities mostly operate from countries outside Europe. For example, Malta, a country where the second biggest business after tourism is betting, is thwarting the approval of an international agreement promoted by the European Union to counteract corruption in sport.
A key question is whether Omertà is present in the changing rooms of New Zealand sports clubs and in the Olympic national teams. Of even greater importance is the question of what happens to whistle-blowers after they courageously uncover match-fixing or doping practices. The laws of many countries, including New Zealand, offer some legal protection to whistle-blowers, but laws cannot prevent or protect them from the repudiation of their team mates. This is a matter of education and culture change.
According to Michael Woodside, Policy Manager of Sport New Zealand, “there is no evidence as far as we are aware of Omertà occurring within New Zealand sporting system. One of the key protections against Omertà is effective education of athletes, coaches and officials.”
Anti-doping education is led by Drug Free Sport NZ (click here for more details). Sport NZ has an education module on anti-match-fixing on their website. Individual National Sport Organisations also have their own educational programmes.
On the verge of the Olympic Games, world focus is on systematic state-sponsored doping. Currently making headlines and garnering media attention is the International Olympic Committee’s (IOC) controversial decision to not ban Russian athletes from the Rio Olympics, instead leaving the final call to individual sports federations. The New Zealand Olympic Committee has supported the IOC’s decision against the call from Drug Free Sport New Zealand to back the core principles of New Zealand sport.
Although systematic state-sponsored doping is of serious concern, it should not divert attention away from the threat of Omertà in our sports clubs, which is a long-term world-wide problem and only a strong focus on education can preserve the sporting culture of our country.
TINZ governance changes
A number of TINZ governance changes were approved at the July Board meeting. They include:
- James Brown was elected as TINZ Deputy Chair
- Conway Powell was appointed as Interim Director, replacing Janine McGruddy
- The Board accepted Daniel King’s formal resignation as a Director
- Brendon Wilson was appointed as Interim Director, replacing Daniel King.
In case you missed it
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