Global Transparency International Chair, José Ugaz, to visit New Zealand
José Ugaz, Chair of Transparency International
For the first time, Global Transparency International Chair José Carlos Ugaz is visiting New Zealand. The Peruvian lawyer with a history of taking on grand corruption, has been chair of Transparency International since 2014.
While in New Zealand, José will participate in a Transparency International Asia Pacific region review and speaking engagements throughout New Zealand. We invite you to join us.
José and grand corruption
José will be speaking on “The state of grand corruption in our world and how to fight it”
“Corruption is rampant everywhere and we want to see much more being done about it. We must address the way the corrupt are getting away with it, unmasking them, drawing attention to corrupt schemes such as the abuse of offshore companies, impeding their enjoyment of ill-gotten gains travelling freely and leading a life of luxury while the poor have to pay their bills,” said Ugaz.
Choose from the following events to engage with Jose and others sharing your values.
- 28 July, Wellington, Talk with José, facilitated by Dr Bryce Edwards (TINZ Director and Political Commentator), 4:00pm-5:00pm, VUW, Rutherford House, room MZO3. Numbers are limited so please RSVP firstname.lastname@example.org as soon as possible.
- 31 July, Palmerston North, Japan Lecture Theatre, 12:15pm.
- 1 August, Wellington public lecture, Ian Fraser Interviews José, Rutherford House Lecture Theatre 1, Pipitea Campus, Victoria Business School, 6:00pm. RSVP by Tuesday 25 July to Brian Picot Chair in Ethical Leadership email@example.com .
- 2 August, Wanaka, Armstrong Room at Lake Wanaka Centre, 4:30pm–6:30pm.
- 3 August, Christchurch, Room Laws 105, University of Canterbury Law School, 6:00pm-7:30pm.
Details and additional RSVP information will be sent to our email subscribers and posted on our Website and Facebook pages.
In This Issue
From the Chair
It all started with an email from somebody called "Tony Night". That email, sent to the executives at Fuji Xerox and Xerox Corporation on July 8, 2015, pointed out instances of "inappropriate accounting" at Fuji Xerox in New Zealand.
According to Hamish McNicol of the Sunday Star Times, 2 July, 2017, an audit, completed just three weeks later, confirmed what the mysterious whistleblower had said: revenue had been over-stated at Fuji Xerox New Zealand (FXNZ).
“Inappropriate accounting" was revealed at FXNZ and later, Fuji Xerox Australia (FXA). In total it had caused losses of more than $350 million, $230 million in New Zealand and $121 million in Australia.
“The New Zealand Serious Fraud Office said last December it would not be pursuing an investigation into the company, but a spokeswoman said last week it was obtaining additional information.”
Japan-based Fujifilm Holdings set up a special committee. Near the end of its 89 pages on FXNZ, Tony Night's whistleblower email, the one which started it all, appeared again.
The report said "Tony" used none of the whistleblower systems the FX Group had in place.
"It appears that prospective whistleblowers either did not know the existence of the FXNZ or FX Group whistleblower systems, or had doubts about the trustworthiness or effectiveness of the whistleblower systems, or for other reasons."
Last month saw the launch of the latest Deloitte Bribery and Corruption Survey 2017. As was the case for the last 2 surveys, bribery and corruption are rarely noticed by Australian and New Zealand organisations.
The Deloitte Survey found that very few organisations had processes in place to detect, report or monitor bribery and corruption.
Tip offs were by far the most common means for bringing bribery and corruption to the attention of an organisation. Be aware that subtle tips outside of formal whistle-blowing systems can be the tip of an iceberg and might surface just once.
This month will see the publication of survey results from the joint Griffiths University/ Victoria University of Wellington/ State Service Commission study focused entirely on whistleblowing. While we’d all like to see a better narrative about how whistleblowing can work effectively, a challenge for the survey is that very few businesses put their hand up to participate.
Tone at the top sets the scene for the organisation’s code of conduct to be both an internal challenge committing all staff (Board directors, management and employees) to ethical behaviour as well as being a framework for developing ethical external relationships where those connecting with the organisation according to clear ethical principles.
Based on experience and observations, your team will like this once they try it!
Tone at the top is also a basis for implementing a set of policies that are effective at promoting ethical behaviour, a strong means of preventing bribery and corruption.
Tone is also a means of building a “safe” environment where people feel protected when they blow the whistle or provide a tip off.
During this election, Transparency Internatonal New Zealand will be asking all political party leaders probing questions on their knowledge of bribery and corruption. This is both a means of informing the public of their views, and, at the same time, educating them. Replies as anecdotes can carry powerful messages.
CEO, Janine McGruddy and Dunedin-based Director, Conway Powell, have started the discussion.
Here are their preliminary questions:
- Election process “How will you inform the public of the election funding that your political party receives disaggregated to show what comes from supporters, donors and lobbyists?”
- Transparency “How will you strengthen the Official Information Act process and ensure that Government entities provide information without delay or withholding, to the NZ public?”
- Anti-corruption “What measures will your party take to expose corruption in public and private organisations - and actively promote a wide-spread anti-corruption culture in New Zealand?”
Based on the latest narrative on whistleblowing further questions could be based around:
- What will you do to set the tone at the top to ensure a safe culture in the public sector?
- How will you facilitate the development of well-publicised, safe, whistleblower channels designed for protective disclosure?
- How will you make your team responsive to informal tip-offs?
Please go to the TINZ website and add your questions for our political leaders by filling the contact form using "election question" as the subject. If your question is picked, you will win a copy of Max Harris latest book, “The New Zealand Project”.
Suzanne Snively, Chair
Transparency International New Zealand Inc.
6 July 2017
Message from the CEO May 2017
TINZ Chief Executive Officer
by Janine McGruddy
TINZ Chief Executive Officer
This will be my last message as the CEO of TINZ. I am sad to be leaving, but as a wise woman once told me, it is always good to know when to go. That time is now. I hope I leave a legacy of truthfulness, integrity and talking truth to power.
I will continue to work on stronger integrity systems and greater transparency no matter what area I end up working in, as these are very core to my concerns about New Zealand's direction.
As we have always known, there is no room for complacency in godzone when it comes to keeping a watchful eye on corrupt or less than transparent behaviour – especially from our leaders.
How do we explain "Tone at the Top" to politicians who defend their behaviour by saying they are no more honest than 'any other politician'? What message is this sending the populace? We must insist our democratic representatives have integrity and be truthful at all times.
It is not good enough to say that you were honest because you answered all the questions you were asked, if the asker was asking the wrong questions. Integrity is about "doing the right thing even when no one is looking". It is about owning your mistakes, learning from them and regaining trust.
It is election season and we will soon be bombarded by the usual rhetoric of promises. TINZ is sending out a list of questions to the leaders of all the political parties to gauge their commitment to integrity and transparency. We will be publishing their responses on our website and will send out a reminder when these are available.
I will continue to watch TINZ with great interest, to see how it continues to work to grow New Zealanders’ understanding of what corruption is, how it harms us all, and most importantly growing a culture of lived integrity.
E noho ra
He aha te mea nui o te ao? He tangata, he tangata, he tangata
What is the most important thing in the world? It is the people, it is the people, it is the people
Open Government Partnership Announcement
URGENT – Have your say on progress of the Open Government Partnership’s National Action Plan 2016-18
Progress reporting on the New Zealand Open Government Partnership’s National Action Plan 2016-18 is now online. It will be updated quarterly.
The recently appointed Open Government Partnership (OGP) ‘Independent Reporter’ for New Zealand, Keitha Booth, is tasked with reporting to OGP headquarters in Washington. These reports are the main way stakeholders can track OGP progress in individual countries.
You can provide feedback to firstname.lastname@example.org:
- By 26 July, on the development of New Zealand’s National Action Plan.
- By 30 September, on progress being made on this year’s plan commitments.
Public consultation and feedback is separately being sought by the State Services Commission (SSC) on their mid-term ‘self-assessment of progress’ on the Action Plan. You can provide this feedback
- From 19 July until 1 August 2017 either online via OGPNZ, or alternatively in writing to OGP National Action Plan, State Services Commission, PO Box 325, Wellington 6140.
SSC’s finalised mid-term self-assessment for New Zealand will be published on the international Open Government Partnership website by 30 September 2017.
The Open Government Partnership (OGP) is an international initiative where the governments of 75 countries have committed to becoming more open, accountable and responsive to citizens. New Zealand joined the OGP in 2014 and is now implementing its second National Action Plan. This second National Action Plan for Open Government was co-created with New Zealanders and was released by the New Zealand Government on 20 October 2016. Work is underway in seven areas: open budget; official information; open data; ongoing engagement for OGP; access to legislation; and improving policy practices
Ernie Ko Chair TI Chinese Tapei
TINZ Travels in Taiwan
by Janine McGruddy
TINZ Chief Executive Officer
One of the many joys of being the CEO of TINZ has been the opportunity to share our experiences in New Zealand on a global level. In June, the Transparency International -Chinese Taipei chapter hosted me for a series of presentations to engaged groups within the defence and local government sectors.
My first afternoon upon arriving in Taiwan was getting to know Adam Foldes from TI Head Office in Berlin and Ernie Ko, Deputy Chief Executive Officer TI – Chinese Taipei (TI-CT). We spent a wonderful afternoon at the National Palace Museum with an excellent guided tour.
That evening we joined more of our TI-CT colleagues at a formal welcome dinner at the Army Association – a delightfully traditional building – with the host, General Bo, Vice Minister of Ministry of National Defence and members of the Ministry of National Defence: Director General Wen of Political Warfare Bureau, Director General Lin of Department of Judicial Affairs, Deputy Chief Wu of Inspector General Office, Director Huang of Defence Procurement Office and Director Xu of Ethics Office.
This was my introduction to the first of many 10-11 course Chinese style banquets to come. We clearly received the VIP treatment; it was very impressive. Despite only being in Taiwan for 5 days, I sampled a very wide variety of their cuisine. Proudly, I can now eat peanuts with chopsticks… always good to learn new skills.
The next morning our first stop was at the Ministry of Justice, hosted by the Minister Chiu Tai-San. We were joined at our meeting by Agency Against Corruption, Ministry of Justice, Director General Lai Jer-Shyong, Senior Executive Officer Ji Jia-Jhen and Ministry of National Defence Director of Ethics Office, Xu Zhi-Yun.
There is a great interest from the Taiwan defence organization as to how to move from the "B Band" to join New Zealand in the "A Band" of the TI Government Defence Anti-Corruption Index (GDACI). My advice was simple, and from what I know of their government, is possible to adopt with the right political will – work with your civil society to grow your transparency and strengthen your integrity systems.
Our next meeting with more Agency Against Corruption staff involved questions and answers along similar lines as the first meeting. This session was hosted by Lai Jer-Shyong, Director General.
After taking a very fast afternoon train from Taipei to Kaohsiung, we attended the International Conference on Defence Anti-Corruption. There I presented my paper on Peer Learning – New Zealand Performance on the Government Defence Anti-Corruption Index (GDACI), and joined a panel for Q & A.
Then on to another banquet! This one was hosted by the Taiwan Association for Schools of Public Administration and Affairs (TASPAA).
The next day, we traveled from Kaohsiung to Penghu Island for the International Seminar on Local Governance and Integrity Capacity Building, There I shared my thoughts in a presentation on New Zealand Transparency – the Lesson of No. 1 in CPI 2016.
The afternoon and the following day were for relaxing and playing tourist. Included were a visit to the Penghu Living Museum, a lovely walk around the quaint streets of Kaohsiung, time to try cactus flower ice-cream — delicious! And a wonderful dinner by the sea (more of those incredible ranges of food) hosted by Chen Guang-Fu.
Ernie and his team were fantastic hosts. We had seen, discussed... and eaten a lot over the 5 days. Like every opportunity to interact with others on transparency and integrity it was of great mutual benefit. They have a lot of work to do (as also here at home) but as with everything—where there is a will, there is a way.
TINZ to host Asia Pacific regional planning meeting
Transparency International New Zealand will be hosting a mid-year Asia Pacific region planning meeting from 28–30 July 2017 in Wellington for the International Chapters of the region.
Transparency International Chair, José Ugaz, will be in New Zealand for this meeting.
Other activities are also planned including lunch at the Office of the Auditor-General, a visit to Parliament, visit to see Te Tiriti O Waitangi and the Women’s Suffrage Petition that resulted in all New Zealand adults having the right to vote from 1893.
Deloitte Bribery and Corruption Survey 2017
by Suzanne Snively
Chair, Transparency International New Zealand
Deloitte launched its annual bribery and corruption survey "One step ahead—Obtaining and maintaining the edge Deloitte Bribery and Corruption Survey 2017 Australia and New Zealand."
To launch its survey, Deloitte organised panel events in Christchurch, Wellington and Auckland. These events were well-attended, with informed questions from the audience following the presentation of the survey results.
The Panama Papers and the Auckland Transport procurement case have brought corruption much more into the public’s consciousness.
Roughly 22% of the respondents experienced corruption over the past 5 years.
According to the survey, more than 1 in 5 organisations reported recent incidents of corruption in their organisation, slightly up from 2015.
An important insight from the survey is how organisations found out about corruption. The main source of information was from “tip-offs”, from people generally referred to as whistleblowers. The 2017 survey found an increase in tip-offs from external parties being reported as a corruption detection method.
The survey provided a comparison of the types of corruption. The types that have changed the most since 2015 are:
- An increase in undisclosed conflict of interest
- An increase in excessive commissions
- A reduction in supplier kickbacks
By far the most respondents named undisclosed conflict of interest as the form of corruption they observed.
Consistent with the 2015 survey responses, 80% of the respondents do not see domestic corruption as one of the top 5 risks to their organisation. This meant, however, that 20% of respondents did regard corruption as one of their top 5 risks.
The question remains as to whether this low percentage reflects actual levels of corruption and/or to the light-handed approach to identifying, monitoring and reporting corruption. Given the limited detection methods reported by organisations, it’s interesting that any corruption has been found.
Reputational risk is seen as the key downside impact from the failure to address and mitigate corruption.
Two-thirds of the respondents regard reputational risk as a key impact, making this the top risk. The downside risk of fines and imprisonment was only chosen by approximately 10% of respondents.
Conflict of interest is the most common form of corruption over the last 5 years by the Deloitte survey responders.
Four out of five respondents considered organisational culture as a key in preventing domestic corruptionn–nslightly up from 2015
Consistent with the results for domestic bribery and corruption, 20% of respondents see foreign bribery and corruption as one of the top 5 risks to their business which is a slight decrease from 2015.
Less than half of the organizations surveyed have conducted a foreign bribery and corruption risk assessment. This is particularly concerning and a decrease since 2015.
Deloitte reports greater international cooperation, collaboration and benchmarking between law enforcement agencies to facilitate cross-jurisdictional investigations.
It noted that in recent years, New Zealand has progressed in its detection of fraud earning the reputation for providing companies with a low corruption marketplace.
The launch attendees gave the impression that a turning point has been reached. Greater awareness of the nature of corruption and reputational risk is resulting in more effort going into "tone at the top", codes of conduct, and bribery and corruption risk assessments.
There is a growing appreciation that the costs of bribery and corruption are high and investing in professional prevention is worthwhile.
Reassessing corruption in New Zealand: Trading in Influence
Michael Macaulay Associate Professor
The School of Government, Victoria University
by Michael Macaulay, Associate Professor
The School of Government, Victoria University
TINZ delegated authority for Open Government Partnership
As we all no doubt appreciate, overt and explicit corruption is, thankfully, not much of an issue in New Zealand. Even recent high-profile recent cases of bribery are outliers. The country should be proud of its well-won reputation in this regard. But this does not mean that issues of concern don’t exist.
There are, arguably, far more subtle forces at play in New Zealand and these revolve around trading in influence: literally the buying and selling of influence in public life. Ongoing research by VUW PhD candidate James Gluck is unearthing examples of trading in influence, and will attempt to assess just how worrying the problem might be.
It should be noted that New Zealand is just like every major developed democracy in this respect. Influence markets can be found in all such nations and they essentially cover forms of potential corruption that are not only legal, but have industries built around them.
They exist wherever and whenever influence can be either sought or exerted by those with money and access. The classic examples include political party donations and funding mechanisms; honours systems and patronage; corporate hospitality; lobbying; revolving door public appointments, especially post-Ministerial appointments; and many others.
There is a myriad of assumptions around the merit of current regulations in these areas but very few facts. What does a party donation of, say, $5000 actually generate? Does it really buy you a seat at the table, or is membership of the Cabinet or President’s club or is it simply a way of buying status and an ego-massage? The truth is that we don't know, although we all probably have a strong view.
James’s latest article in the recent issue of Policy Quarterly illustrates New Zealand examples of these behaviours and sets out a research agenda for trading in influence. His next piece will be on the methodological problems that all of us in the field of anti-corruption work have faced.
Two final points are worth mentioning here. First, is that thanks to the changes in legislation wrought by the Organised Crime and Anti-Corruption Legislation Bill, trading in influence is now against the law. It is a new offence that can be found in 105(F) of the Crimes Act.
Every person is liable to imprisonment for a term not exceeding 7 years who corruptly accepts or obtains, or agrees or offers to accept or attempts to obtain, a bribe for that person or another person with intent to influence an official in respect of any act or omission by that official in the official’s official capacity (whether or not the act or omission is within the scope of the official’s authority).
It was included as part of the move towards ratifying the United Nations Convention against Corruption (UNCAC), which also highlights trading in influence as a no-go area.
Second, is that if New Zealand has one overarching issue it is the ‘cosyism’ or ‘mate ship’ that exists in a relatively small country. This does not have to be a problem if such relationships are managed properly with the appropriate levels of transparency and integrity. We would suggest that where trading in influence can be demonstrated, there is a corollary that the conflicts of interest inherent in these relationships are not being managed effectively.
For more information about the research, or if anybody would like to help James, please contact email@example.com
TINZ affiliation program
TINZ delegated authority for Affiliate non-profits
Transparency International New Zealand’s vision is a world with trusted integrity systems in which government, politics, business, civil society and the daily lives of people are free of corruption. In pursuit of that vision TINZ partners with like-minded organisations in the fight against corruption, in support of a society where transparency is the norm and organisations continuously seek best practice governance.
TINZ seeks affiliations with organisations which are committed to:
- Zero tolerance for corruption
- Good governance
- Robust codes of ethics
- Implemented integrity systems for the detection of corruption
- Seeking to have anti-corruption training systems for its employees (and members)
- Strong leadership committed to the prevention of corruption
TINZ and IIANZ enter into affiliation agreement
In June, Transparency International New Zealand and the Institute of Internal Auditors New Zealand (IIANZ) entered into TINZ's second formal affiliation agreement. Both organizations have zero tolerance for bribery and corruption and are committed to aggressive corruption prevention
Suzanne Snively from TINZ and Sylvester Shamy from IIANZ at the June 2017 TINZ Board meeting signing the affiliation agreement.
Benefits of affiliating with TINZ
The benefits of an affiliation with TINZ include the demonstration by respective leadership of their commitment to eradicate corruption, the continuous pursuit of best practice governance and a commitment to transparency. Affiliates have access to the resources of Transparency International and on the ground support from TINZ.
Purpose of the program
TINZ seeks to spread its message and influence through as many channels as possible including to the membership of other like-minded organisations. These organisations are likely to be predominately Civil Society Organisations/ Non-Government Organisations/ Not for Profit entities. We are also very keen to pursue our cause with Government and commercial organisations however, where there is an overlapping common interest.
Institute of Internal Auditors New Zealand becomes a TINZ affiliate
TINZ recently signed a Memorandum of Understanding with The Institute of Internal Auditors New Zealand (IIANZ). Both organisations have zero tolerance for violations of integrity and care about good governance, robust codes of conduct, and integrity systems for the prevention of corruption. Our strategic alliance expands the area of influence of both organizations for greater efficiency in the achievement of our common goals.
If you or your organisation would like further details on our affiliation programme please contact any of the following:
Constitutional Support for Public Service
Sir Geoffrey Palmer
Former Prime Minister Sir Geoffrey Palmer, when speaking at the May TINZ board meeting, made a case that there has been an absence of free and frank advice offered to ministers in recent for public servants from total ministerial control.
Sir Geoffrey noted that If ministers do not receive free and frank advice, there is a real risk that this will promote a tendency to politicise the public service and endanger its independence, thereby adversely affecting the quality of advice given and decisions taken.
“The public service should not be seen as a tool of the government of the day used to justify policy decisions; rather, an independent service working for the good of the country as a whole. The public service should serve up various options for dealing with issues and the ministers should choose between them. That is how a public service in the Westminster is supposed to work”.
In A Constitution for Aotearoa New Zealand, Palmer and his co-author Andrew Butler propose the following for the Constitution:
- The public service recognised by this Constitution is the public service in existence before this Constitution entered into force.
- The public service is a career-based service, where appointment and promotion is on professional merit.
- The first duty of the public service is to act in accordance with this Constitution and the law.
- The public service must be politically neutral and impartial and must serve loyally the Government of the day.
- The public service must provide ministers with free and frank advice.
- The public service must uphold the concept of stewardship that is active in planning and management of medium and long-term interests, along with associated advice.
- The public service is headed by the State Services Commissioner, appointed by a resolution of the House of Representatives after receiving a recommendation from the appropriate select committee of Parliament.
- The Commissioner makes decisions independently of ministers and is the employer of chief executives of departments and ministries of the public service.
- An Act of Parliament in accordance with these principles, provides for the public service and the wider state sector and the purposes of that Act are to promote and uphold a state sector system that:
- is imbued with the spirit of service to the community
- provides free and frank advice to the Government/li>
- administers the policies of the Government:
- maintains high standards of integrity and conduct
- maintains political neutrality and impartiality
- is supported by effective work force and personnel arrangements
- is driven by a culture of excellence and efficiency
- fosters a culture of stewardship
- requires public servants to act within the law.
Other aspects of the draft Constitution that strengthen institutions include ensuring that there is sufficient regulation and oversight over political parties to ensure they do not develop corrupt tendencies in New Zealand.
Recommendations by the Royal Commission on the Electoral system in 1986 that led to MMP, should be revisited. This includes:
- The rules of parties need more outside scrutiny
- Minority rights and fundamental values need better protection. This respect for human rights would make an important contribution to transparency.
Sir Geoffrey concluded that his and Butler’s book makes a strong case that a written codified Constitution would improve New Zealand’s system of government.
“It would make it clearer who has what power. It would remove much of the mystery and uncertainty. It would improve knowledge of how our democracy works by providing a readable single document. It will enable the public to know what the rules are that apply to ministers, parliamentarians, and the public service”.
Speaking directly to the TINZ Board, Sir Geoffrey stated that “A Constitution can make an important contribution to achieving the aims of Transparency International New Zealand. A healthy democracy requires democratic renewal”. He asked for the Board to make a submission on the importance of public servants providing free and frank advice to transparency and to democracy. Similar to the submission he has requested of TINZ on freedom of information, he requested that the submission give thought to how a constitution would be best worded to guarantee these freedoms.
Please provide your contributions to this submission to Eva Lu at firstname.lastname@example.org.
Sir Geoffrey Palmer recognized bythe TINZ Board 22 May, 2017
Bridges Both Ways—Transforming the openness of New Zealand government
Bridges Both Ways
Transforming the openness of New Zealand government
Max Rashbrooke (2017)
Review by Michael Macaulay
Associate Professor at the School of Government, Victoria University
TINZ delegated authority for Open Government Partnership
Bridges Both Ways—Transforming the openness of New Zealand government written by Max Rashbrooke, is a new report that looks at New Zealand’s record on openness, public transparency, political participation and anti-corruption policies. It questions New Zealand’s long-standing international reputation for integrity and openness, and puts forward ideas to make government more open.
While New Zealand has much to be proud of, there are serious problems. These have been highlighted in previous research, including, TINZ’s Integrity 2013 Plus National Integrity System Assessment.
Max explains: “Political donations are badly regulated, official information laws very are being widely circumvented, and opportunities for deep citizen engagement with politics are very limited. New Zealand is also passing up the chance to get on board the latest global push for greater openness, which is being impelled both by advances in technology and citizens' growing expectations of greater transparency in all parts of their lives.”
Making government more open means ensuring that where possible, core political decisions are made in the full view of the public.
Max discusses his report at a recent seminar conducted by Victoria University of Wellington’s Institute of Governance and Policy Studies
“That means key information is available, political decisions are free from corruption, the public can hold its leaders accountable, and ordinary people are directly involved in making decisions as often as possible. Ultimately this makes government more honest, more effective and more democratic. It also builds trust between the governors and the governed, and gives political decisions more legitimacy.”
The report suggests there are many ways to improve New Zealand’s level of openness, from straightforward fixes to legislation, to more far reaching and innovative ideas.
Suggestions include crowdsourcing bills, so the public gets the opportunity to submit proposals for legislation, and democratising party funding by giving each voter a voucher to allocate to the party of their choice.
Max argues that regardless of which policies are taken up, inaction is not an option. “While New Zealand's long-standing reputation as an open and transparent country should be a source of pride, it cannot be a source of complacency.”
The report should act as a spur to New Zealand’s continued concrete progress on international initiatives, especially the Open Government Partnership.
Download the report here http://igps.victoria.ac.nz/publications/publications/show/377
Wallace Chapman interviews Max Rashbrooke spanning five key ideas (2 July 2017): http://www.radionz.co.nz/national/programmes/sunday/audio/201849597/max-rashbrooke-towards-a-truly-open-government.
How internal audit can and should help prevent fraud
by Sylvester Shamy
Chairman of the Institute of Internal Auditors New Zealand
and 2016 New Zealand Internal Auditor of the Year
In a typical organisation, recruitment, procurement, contract management and financial processes and controls are usually compartmentalised and managed by Human Resource, Procurement, the business and Finance respectively. It is unsurprising, then, that fraudsters often exploit weaknesses inherent in reliance, assumptions and handover points between business units to perpetrate their fraud.
Internal audit’s key value-opportunity, therefore, is to act as “horizontal connector”. The ability to view the business cross-functionally is often unique to internal audit teams. I referred previously to modern auditing techniques. There can be no better demonstration of this than an auditor “looking across” and taking a “helicopter view”, end-to-end, spanning business units to assess the risk exposure posed by fraud, as opposed to what traditionally has been audits over individual teams and discrete processes.
Moreover, internal audit should focus on, and should advise on, prevention ahead of the need for detection. In other words, ensuring the cultural, architectural and design elements of a robust fraud prevention framework is in place, even before completing detective approaches in the aftermath of a fraud occurrence.
I have drawn on my experience with good practice cultural and framework elements to arrive at the following pointers. This is by no means comprehensive. The reader is encouraged to do their own research into the topic of fraud and fraud prevention.
Nevertheless, I intend for this to be a useful set of minimum standards to bring the various elements together.
These minimum standards should be found in all organisations.
- There should be clear messaging from the Chief Executive and senior leaders on an organisation’s zero tolerance to fraud and a commitment to anti-fraud behaviour and fraud awareness. This messaging should be formal and with appropriate frequency (an annual reminder as a minimum).
- Organisations may wish to consider confirming this tone with a written declaration of commitment. These might include:
- A letter from the Chief Executive to their direct reports that clearly states the organisation’s rules apply equally to them as they do to everyone else
- That matters of concern and/or potential non-compliance should be raised with them, or if preferred, with the organisation’s Chief Internal Auditor
- An instruction from the Chief Executive for all senior leaders to issue similar letters to their own direct reports.
- Organisations should maintain a whistle-blower mechanism (phone, email or personal disclosure) that enables employees to report their concerns safely and confidentially.
- The recipient of the disclosure should be knowledgeable in the Protective Disclosure Act, and its practical application in a work setting.
- Mechanisms should exist to ensure and safeguard the independence of the recipient of the disclosure, or alternatively, effectively workflow the disclosure while protecting the integrity of the disclosed information and that of the whistle-blower.
- The recipient of the disclosure should hold an office of sufficient authority (organisational hierarchy, reporting lines and mandate) to reassure the whistle-blower that the disclosure will be safeguarded and pursued.
- Organisations should possess a formal and up-to-date Code of Conduct. Amongst other things this should formalise (in print) the cultural “tone from the top”, including making specific mention of a zero tolerance to fraud, encouraging those with information to come forward and outlining the consequences of fraudulent action (including protecting disclosures under the Act).
- The Code of Conduct should be supported by specific policies on fraud prevention and consequence. Regular and independent internal audit assessments over fraud risk exposure and internal audits over “at risk” end-to-end processes.
- Teams should be encouraged to revisit and discuss, on a regular and cyclical basis, sections of the Code of Conduct, such that the entire document is covered at least once a year.
- A personnel risk assessment should be completed to identify and prioritise personnel security risks. The New Zealand public sector has Personal Security (PERSEC) / Protective Security Requirement (PRS) management protocols to guide this.
- Confirming the preventative elements (culture, architecture and design) are designed well and operating as intended
- Auditing key controls in end-to-end processes to confirm they continue to be designed properly and operate effectively
- Highlighting fraud indicators. Here, a combination of data mining and Computer Assisted Auditing Techniques (CAATs) can be used. Proxy indicators include:
- Frequent changes to vendor bank account details, or changes made shortly after the initial set-up of a vendor
- Cross-referencing vendor bank accounts to employee/contractor bank accounts
- Invoice payments just under delegation thresholds (i.e. instances of invoice-splitting).
Internal Auditors can prevent fraud
Internal auditors are now better equipped than ever with the mandate, knowledge, audit techniques and technology to reduce the occurrence of fraud. Where fraud has been perpetrated, internal auditors now also have the tools to help organisations identify and respond quickly and efficiently in order to minimise the damage.
A new politics for New Zealand
‘A New Politics for New Zealand’ is the title of the Michael King Memorial Lecture 2017 presented by Max Harris, author of The New Zealand Project, through New Zealand.
His book has sparked debate on a vision for deepening New Zealand’s political discussion, starting conversations, and confronting the challenges ahead including climate change, the future of work and social justice. He argues that academics and intellectuals have failed to deepen the political discourse, that politics is dominated by pragmatism, and that technocratic policies have replaced value-based ones.
Forthcoming presentations in July and August include Wellington, Auckland, Carterton, Hastings, Gisborne, Nelson and Paekakariki – details at http://bwb.co.nz/news/events.
New Zealand transparency, integrity and accountability
NZ failing its whistleblowers New research has raised concerns about how New Zealand organisations are protecting those who speak out about wrongdoing. Do we need to do more to look out for our whistleblowers?
Conflicts of interest on the rise in Australasia Deloitte ABC of bribery and corruption for 2017
New Zealand now 9th equal on world Social Progress Index New Zealand remains one of the best places in the world to live, according to a global survey that has us level pegging in the top 10 with our Tasman neighbours. In 2015, New Zealand was in the number one spot but bulging waistlines and soaring house prices pushed us down the rankings in successive surveys.
'Corruption is real in New Zealand, it's happening' New Zealand is not as honest and free of corruption as it likes to believe, according to a new report.
Outdated and increasingly toothless, the Official Information Act needs an overhaul Democracy around the world is under threat, and New Zealand is not immune. Here, government attitudes to official information are hampering democratic debate and accountability, writes Sir Geoffrey Palmer.
T&G celebrates 120 years in NZ Exceeding customers' expectations and innovating but with an honesty, integrity and transparency back to our suppliers.” Andrew Kearney, executive GM of New Zealand at T&G Global, highlighted the depth of the group's ...
The latest news from Superu with reference to TINZ (refer to 'Adding value to the sector').
Editorial: Thiel case shows need for transparency Citizenship is something to be treasured, not bestowed in secret. New Zealanders have the right to know who is being granted this gift, from the moment it is made.
Actions risked New Zealand’s reputation Press Release: Serious Fraud Office
Papua New Guinea election descends into chaos amid violence and claims of bribery Voting was suspended in the capital after three election officials were found to be carrying over US$50,000 in cash, suspicious documents and ballot papers.
NZ to help Pacific combat money laundering New Zealand Foreign Minister Gerry Brownlee has announced a significant boost to support Pacific island countries comply with international anti-money laundering standards.
Taking a lend: concerns over China aid to Pacific The head of Australia’s foreign affairs department has raised concerns about the transparency of tendering in China’s Belt and Road Initiative and about unsustainable lending to Pacific nations.
Australian doors wide open for money stolen in PNG Blog from PNG, New Zealand's position is similar to Australia's.
Activists and experts ridicule OECD’s tax havens ‘blacklist’ as a farce Ahead of the G20 summit of world leaders next week in Hamburg, Germany, the Organization for Economic Cooperation and Development (OECD) released on Wednesday a list of countries that are failing to meet international tax transparency standards.
Oxfam disputes opaque OECD failing with just one tax haven on transparency According to the Paris-based Organization for Economic Co-operation and Development, just one country fails to comply with international transparency standards, which Oxfam strongly disputes.
Transparency for intermediaries On 21st June 2017, the European Commission has proposed new transparency rules for intermediaries that design or sell potentially harmful tax schemes.
Transparency International New Zealand
P.O.Box 5548, Lambton Quay
Ensure New Zealand Remains as Good as it's Perceived
Renew Your Membership or Join TI-NZ NOW!
It is Easier than Ever to Join
Tell your friends and colleagues