Transparency Times April 2017

From the Chair


Suzanne Snively

Suzanne Snively
TINZ Chair

This year’s 47th Earth Day had an added impetus because of the US Government’s attitude to transparent evidence-based debate and science in general.

Fifty years ago, demonstrations in the United States led by radical activists concerned about one thing or another, were almost a weekly event. It was the near death of dirty Great Lake Eerie, and, the state of Ohio’s Cuyahoga River’s spontaneous combustion that activated the public, led by conservationists and scientists.

This resulted in World Earth Day, on 20 April 1970. Records from the time reported that 20 million Americans, then around 20% of the US population, took part in events across the country, including marches, other demonstrations, workshops and teach-ins. World Earth Day has been recognised on a Saturday close to 20 April every year since.

The US Government’s dismissal of research and backing down on climate change initiatives has caused scientists to once again become activists, demonstrating through street marches with the Global March for Science on 22 April 2017.

New Zealanders were the first in the world to march. A collaboration, joined together by the NZ Association of Scientists, marched under the banner of:

“Science, not silence. We, the people, march for science and knowledge to be reaffirmed as fundamental to the democratic decision making that supports society in Aotearoa New Zealand.”

Demonstrations were held in six New Zealand locations, preceding the more than 600 marches throughout the world. The International March for Science was a non-partisan movement to celebrate science and the role it plays in everyday lives. Thousands turned out in most major US cities as well as in Berlin, Munich, Gottingen, Bonn, Heidelberg, London, Sydney, Melbourne, Canberra, Toronto, Ottawa, Vancouver, Montreal, Halifax, Dublin, Zagreb and Kangerlussuaq.

Stanford University Science Historian, Robert Proctor, was quoted by Wikipedia as saying that the march was “pretty unprecedented in terms of the scale and breadth of the scientific community…” and was rooted in “a broader perception of a massive attack on notions of truth that are sacred to the scientific community.”

While promoting the role of science was the international theme, the New Zealand Government’s support for scientific research has grown, both through its research policy and its increased investment in research through Crown Research Institutes, tertiary educators and other scientific research programmes.

Scientists marching in New Zealand wanted to ensure the wider public understands why the Government’s support for research policy is important. A number also voiced issues with science policy and funding.

Generally, (except for politically-sensitive topics like climate change, housing, water quality and sugar-reduction), this Government’s objective has been to maintain and improve the standards that exist for quality research.

The Government’s Chief Science Advisor, Sir Peter Gluckman, has played a major role in defining the criteria for evidence-based research to underpin government policy. This is important, whether the research is carried out by physical scientists, social scientists, engineers or any other area where data is examined to better understand how things work.

Prime Minister, Bill English, has been a proponent of connecting social policy research across government agencies and is a supporter of making integrated data available to trained data analysts through Statistics New Zealand. Next month’s 2017/18 Budget will include funding to set up a new agency, with Amy Adams as Minister, to lead government-wide connected-up social policy research about vulnerable New Zealanders. This agency will largely operate in the “space” where the Social Policy Evaluation and Research Unit (SUPERU) has been.

In December 2015, SUPERU, published a protocol with 5 principles for agencies to carry out, commission and/or communicate social science research and evaluation. The principles, originally drawn up in the United Kingdom, are:

  1. The outputs of social science research and evaluation conducted or commissioned by government are made publicly available.
  2. All government social science research and evaluation outputs are released promptly.
  3. The way government social science research and evaluation outputs are released promotes public trust.
  4. Clear communication arrangements are in place for all outputs.
  5. Responsibility for the quality and release of social science research and evaluation is clear.

With the advent of “alternative facts” by the US presidency, these straightforward principles are critical for directing social science research.

Research done in different contexts, based on different concepts can lead to contrary conclusions. These principles ensure that there is transparency in the reasoning behind conclusions and to the data and analysis, all of which provide politicians, policy-advisors and the public with sufficient information to think for themselves without having to do the original research.

Implementation of the SUPERU Principles, will contribute to building resistance to any trend to replace good evidence with alternative facts. By staying ahead in this way, our country is well-placed to keep its researchers here and to attract others wishing to move to a place where quality research is valued.

Our support and appreciation of quality scientific inquiry has led to hundreds of scientists making inquiries about immigrating to New Zealand!

Suzanne Snively, Chair
Transparency International New Zealand Inc.

Message from the CEO

Janine McGruddy

Janine McGruddy
TINZ Chief Executive Officer

by Janine McGruddy

TINZ Chief Executive Officer

Kia ora TINZanites!

I recently was invited to give a couple of procurement focused presentations to Chartered Institute of Procurement and Supply Australasia (CIPSA) events. I first spoke at the CIPSA New Zealand Conference 2017 and the following week at a breakfast meeting of their Wellington branch. I felt fortunate to be invited and had a wonderful experience.

Procurement in the public sector is a topic dear to my heart. Getting it right is important, and an intrinsic part of building strong integrity systems.

At the conference I started by asking the 150+ procurement professionals from both the private and public sectors how many of them had personally witnessed corruption in the workplace. Every single one of them raised their hand. Was I surprised? Sadly, no.

For a discussion of recent corruption in New Zealand, see Fiona Tregonning’s article later in this newsletter on acceptable bounds for gifts and hospitality for public officials based on the judgement from the Auckland Transport procurement corruption case.

How does this compare with New Zealand’s Corruption Perceptions Index (CPI) ranking? The CPI is a decent index on a broad scale. It tells us accurately (and expectedly) that Denmark, New Zealand and Finland have comparatively lower levels of corruption than the rest of the world. To compare the relative rankings of the top 3 (or 4 or 5) countries from year to year is not a particularly useful exercise other than as a point of pride.

Corruption in New Zealand is a different beast. It is not as blatant as in more corrupt countries but still an abuse of entrusted power for personal gain – just not the gains we traditionally think of. Think more of “I’ll scratch your back if you scratch mine” relationships but at the cost of business integrity. That is why many people react in disbelief to the “corruption free” image that the CPI is often interpreted to imply.

Work done by TINZ, such as the National Integrity Systems assessment, Financial Integrity Systems Assessment (FISA), and in 2018 the Council Integrity Systems Assessment (CISA) are essential to creating our own benchmarks, relevant to our own environment.

Trading in influence, conflicts of interest, funding of our political parties, nepotism (non-kin ties via “mateship” included), and lobbying are all areas that need a closer lens. Interestingly these are the same concerns a fellow activist cited for Denmark when I discussed this with her in Vienna in 2016. Awareness of this does not negate that New Zealand is among the least corrupt countries in the world, to a degree it supports it – but only if we are willing to address these issues.

Yes, it is great that we are relatively free of corruption in our public sector, but a closer look, more research and education are needed if we are to really be as good as we are perceived as a country. But we can get there.

There is a lot of work to do on whistleblowing as this is definitely a stumbling block pointed out by those who shared their experiences with me. Brendon Wilson’s Whistleblowing article later in this newsletter expands on this.

Join us in this work – ask what you can do to contribute!

Nāku noa, nā

Janine

“Kia ū kit e pai – Cleave to that which is good”

Koha Policy and Practice Guidelines

Karen Coutts

Karen Coutts

by Karen Coutts

TINZ delegated authority for Tiriti—O—Waitangi

E ngā iwi, e ngā reo, e ngā karangaranga maha o tātou, tēnei te mihi atu ki a koutou katoa.

E tika ana hei poropororaki i a rātou mā. Me pēnei ake te kōrero, tukuna rātou kia okioki i runga te moenga roa.

āpiti hono, tātai hono, rātou ngā mate katoa ki a rātou,

āpiti hono tātou hono, tātou te hunga ora ki a tātou mā,

Tēnā koutou katoa.

To the people, the leading speakers, greetings to you all.

It is appropriate that we acknowledge the past, those who have made things possible for us. We remember them as those who have been encompassed in the passage to the sleep of all sleeps.

May those who have passed on continue on that journey.

We who inherit the lands, bind together as one.

Greetings to you all.

Tēnā koutou katoa – greetings to all

The Treaty of Waitangi, as our founding document, provides a bi-cultural constitutional basis for our nation. It does this by providing a framework of principles for national governance based on partnership, protection of the rights (of Māori) and equity of citizenship between the indigenous population and those that Māori agreed to share governance with.

TINZ seeks to explore contemporary treaty engagement, and how this can bring forth the greater benefits of being a truly bi-cultural nation. This is another step in our journey.

We have woven responses to and with Māori throughout our work, as they are part of us, as can be seen in the Integrity Plus 2013 New Zealand National Integrity System Assessment.

As part of its work on strengthening integrity systems TINZ is seeking to clarify the practice of koha for non-Māori. This can be a challenging area for some non-Māori, as it sometimes involves the transfer of cash. Importantly, while on one hand integrity means the quality of being honest and having strong moral principles it also means the state of being whole and undivided. Translating a practice such as Koha – which is a personal expression of your deep gratitude and respect to your hosts, into a guideline for business practice requires a shift in thinking from the business world that goes beyond the monetary value of the exchange.

TINZ has therefore developed draft Koha Policy and Practice Guidelines which we now release for consultation. This is a richly diverse area so we do not expect to have got it right straight away. Consistent with our purpose in supporting strong integrity, we offer this tool to help support businesses and organisations improve their practices.

We welcome your feedback! Please visit the Koha policy page on our website.

Nā reira, tēnā koutou, tēnā koutou, tēnā koutou katoa. – thus, greetings and farewell thrice times to all.

Is New Zealand doing enough to combat money laundering, profit shifting and tax avoidance?

Josephine Serrallach TINZ Director

by Josephine Serrallach

TINZ Director

Monday, 3 of April, marked the first anniversary of the publication of the Panama Papers. During the past year, these have attracted a great deal of media attention which provoked international condemnation of fiscal fraud.

A week long global campaign by the Global Alliance for Tax Justice was held to coincide with this anniversary. The purpose of the Global Action is to increase public pressure on governments around the world to end global tax avoidance and evasion.

The high human cost of corruption and tax evasion highlights the urgent need for country to country reporting to stop profit-shifting by multinational corporations.

A report recently launched by Transparency International “Doors Wide Open” identifies that despite international commitments, current rules and practices are inadequate to detect money laundering, as anonymous shell companies and secret trusts allow corrupt cash to flow to real estate markets without undergoing proper due diligence by the professionals involved in the deal. The report states that real estate accounted for up to 30% of criminal assets confiscated worldwide between 2011 and 2013.

New figures published by the Tax Justice Network provide a global estimate of tax loses of $500 billion a year, while the IMF researchers estimated even a higher figure of $600 billion per year. According to these sources, New Zealand is annually losing between 0.52 and 0.76 billion dollars equal to 0.29 % to 0.42% of its GDP.

New Zealand's role surrounding trusts was highlighted by the following:

  • The Panama Papers themselves exposed the use of New Zealand trusts for laundering money and hiding assets.
  • Tax avoidance in the case of Maurinho, the soccer coach, who moved millions of dollars into a New Zealand Trust.
  • Money laundering and luxury asset purchases in the case of Jho Low, a Malaysian financer and billionaire.

What has been the New Zealand response after having been labelled as a tax haven? After an initial dismissal by the Government, an Inquiry into Foreign Trust Disclosure Rules was quickly conducted leading to fast tracking of Phase 2 of New Zealand's legislation on anti-money laundering and combating the financing of terrorism legislation. The proposed Bill requires trusts to publish annual financial statements and register of beneficial owners for the use of Police and Regulators.

Lawyers and accountants that set up companies for customers will need to identify their customers and beneficial owners, as will real estate agents when they represent clients. (Transparency International New Zealand has been tracking the progress of this bill. See AML Phase II Detailed Submission (September 2016), TINZ recommendations on the Phase 2 AML/CFT, and our submission of 20 April 2017.

New Zealand is one of 100 countries that are adopting a code of Common Reporting Standards (CRS). The new code was devised by the Organisation for Economic Cooperation and Development (OECD) and aims to ensure information sharing between tax authorities. The NZ Inland Revenue Department has adopted the OECD 15-point plan designed to tackle profit shifting.

There is no doubt that New Zealand is moving in the right direction; but that isn't enough.

The New Zealand Government has not yet committed to a beneficial ownership register for companies. The current companies register lacks the details on the natural person pulling the strings and controlling the company.

Furthermore, the current companies register and proposed trust register are not to be publicaly available. Yet, public access to these registries would go a lot further to minimize the risks of money laundering, profit shifting, corrupt asset purchase and tax evasion.

Transparency International advocates for the establishment of public registers containing information on the beneficial owners of trusts and of any companies owning or purchasing property.

Business Integrity Programme 2017

Suzanne Snively on the importance of supply chain business integrity

Transparency International New Zealand’s Chair, Suzanne Snively, represented TINZ at TI’s Business Integrity Programme (BIP) in Berlin 21 – 23 March 2017.

The BIP brought together focused effort from attendees representing 45 Chapters to address business integrity. These representatives, from throughout the globe, were keen to deepen their understanding of ways of working with the business sector to address corruption and strengthen integrity systems. It was a reinvigorating experience at a time of uncertainty around the restructuring of the Secretariat and the future of the TI movement.

Siemen’s sentence for corrupt practice in 2014 included a requirement to provide funding to TI. This years was the last of three annual BIP workshops funded by this settlement. (TI's policy required due diligence to ensure that Siemen’s had stopped its corrupt practice prior to TI accepting the funding.)

At the beginning of the BIP workshop, participants were asked to group themselves on a spectrum between “All business is corrupt” and “Business can be motivated to address corruption”. Over two-thirds chose the latter.

This set the context for discussions about the information, tools and techniques required for business to be motivated to address corruption. Representatives from other low corruption countries partnered with New Zealand to describe developmental factors that contribute to strong integrity systems. They workshopped extra strategies to attract and engage businesses to become motivated to address corruption by adopting corruption-prevention processes.

TINZ led three “market place sessions” (small workshops) to gain feedback about the 2017 Financial Integrity System Assessment (FISA) methodology. FISA was listed in the BIP agenda as one of the available business integrity tools available to the TI movement.

The Transparency International Strategy 2020 states:

“In the private sector, we will work with business leaders, regulators and consumers to ensure there is a clean business environment. We will demand the private sector’s accountability to the societies in which it operates, identifying and promoting best practice. We will focus on strengthening corporate anti-corruption systems and prevention mechanisms, on a country level and internationally, including in key emerging markets.

Self-regulation of the private sector is not enough. Given the legacy of the financial crisis and the scale of illicit financial flows, we will focus on strengthening the anti-corruption efforts of the institutions that shape the global financial system, from regulators to banks to investors. We will advocate for leading financial centres to stop the flow of corrupt capital and to end money laundering. We will partner with expert organisations in this field to set a financial sector reform agenda around which we will campaign. We will push specifically to close existing loopholes in laws and regulations relating to beneficial ownership, country-by-country reporting, recovery of stolen assets, the luxury goods sector and secrecy jurisdictions.

In working towards reform, we will leverage international norms and institutions. This includes drawing on global and regional conventions, such as the United Nations Convention against Corruption and the Organisation of Economic Cooperation and Development Anti-Bribery Convention. Our focus will be on their implementation at country level.

Participants at the workshop were keen to take the movement with them, endorsing the idea that the private sector is an important partner in the coalition against corruption, consistent with TI’s long-standing support for multi-stakeholder approaches.

Workshop participants saw that it was important for companies, just like other organisations, to be held to account for corrupt behaviour in all its forms.

Workshop Outputs

The approaches discussed were In line with the specific aims of Strategy 2020, the TI movement's constitution and TI's guiding principles. These approaches were further developed through taking advantage of the movement's existing tools and indices focussed on business integrity.

Given the different cultural contexts and the local knowledge required to develop effective business partnerships, the consensus view was that each national chapter is best placed to decide how to work with the private sector within their national context, with regard at all times to protecting the wider reputation of Transparency International and supporting its fundamental Mission to promote transparency, combat corruption and bring an end to impunity.

The Workshop attendees agreed that the principles for continuing to connect and work together on business integrity were:

Business Integrity Workshop Participants Berlin 2017

Business Integrity Workshop Participants Berlin 2017

  • Be Chapter-driven: because they know best!
  • Be agile and flexible
  • Embed tools in strategic approach
  • Share success stories / learnings
  • Keep it light
  • Be opportunity driven! Don’t impose new structures

Whistleblowing – your ultimate protection

Brendon Wilson TINZ Director

by Brendon Wilson

TINZ Director

Writing for Employers and Manufacturers Association

BusinessPlus Magazine

‘Whistleblowing is an opportunity not a threat. Whistle-blowing about possible corruption is a sign of the greatest commitment and loyalty, not disloyalty; so employers need to provide channels for it and write it into their Code of Conduct.’ – Julie Read, CEO, Serious Fraud Office

More than ever, it’s hard to make a profit, it’s hard to keep cashflow positive through cyclic business needs, it’s hard to keep good staff who are loyal, committed and contributing all they can to your business potential. It’s harder still to recover when you are defrauded of funds, assets or IP.

Whistleblowing – Good or Bad?

One important protection policy which addresses all these issues is the concept of whistleblowing, a practice whose time has truly come. The days when someone is ‘letting the side down’ by raising a red flag about something or someone in the business, are truly gone. It is not disloyalty, but instead your ultimate protection against disloyalty and fraud.

Whistleblowing in the workplace has traditionally been seen as grizzling and divisive, and has often marked out the complainant for rough treatment by management and colleagues, but in recent years it is being seen in a totally different light. The view in enlightened companies and agencies is now to recognise the enormous value of empowering staff and management by saying ‘we trust you to tell us about any way we can do things better, and anything we are doing badly, and especially anything we need to know about to keep our business profitable and reputable’ – and then walking the talk.

Listening to and encouraging your people at all levels to express their concerns is just good sense, showing they are respected for their responsibility, integrity, loyalty, specialist knowledge and their ownership of their piece of your enterprise. To ignore them or discourage them, or to fail to support them when raising concerns, is turning your back on one of your greatest assets. Not listening to whistleblowers leads to greatly lessened loyalty, commitment and contribution by employees and management at all levels, and can lead to some of your most valued people considering moving to a better work culture elsewhere.

If you were being systematically defrauded of say a million dollars as was the case, for example, of Auckland Transport, you'd want to hear about it!

Whistleblowing in a healthy business culture

Two points immediately become obvious – whistleblowing cannot exist alone in a company culture, it needs to be a part of a robust inclusive environment which encourages staff participation and trust, and shares information and values across the organisation, sitting within your adoption of an effective integrity and compliance system, as part of your risk strategy.

Secondly it must be committed to and scrupulously upheld by the organisation’s governance, from Board, Chief Executive and all management, down through teams in every part of the business. Supporting whistleblowing is just another way to support a healthy company culture and ensure you reap the benefits you should expect from your strong integrity system:

  • your employees’ loyalty, commitment, pride and satisfaction
  • their more thoughtful, effective effort for you
  • keeping your valued staff longer, preventing their being lured to competitors
  • encouraging their skills, ideas and enthusiasm
  • improved efficiency and safety record
  • higher levels of compliance, and lower risk of your company acting illegally or corruptly
  • bringing to your attention practices and activities costing your company business or money
  • and importantly, as a deterrent to fraudulent action, as tempted staff realise their colleagues may suspect them and use the whistleblowing channel – and be listened to.

Peer attitude and expectation, and a culture of ethics and integrity are the strongest deterrents to fraudulent activity. Relying just on auditors as your only line of defence to prevent bribery and corruption is unrealistic and misses an opportunity to strengthen your company’s integrity culture.

Setting up whistleblowing and protective disclosure

Whistleblowing in practice is not hard to set up, as long as top management and the organisation’s culture are committed and integrity-based. It will involve:

  • Enabling any staff member to anonymously raise a concern on any subject through a website, phone or email blind message box, in a reporting mechanism enabling non-threatening assessment backed up by a protective disclosure policy that ensures a reassuring path for employees who have a question or even a niggling doubt
  • Appointment of a suitable senior manager to act as a non-judgemental confidential earpiece for those raising a concern
  • Assurance that there will be no retribution or ridicule, that matters investigated will be treated seriously and in confidence, and results (positive or negative) reported back to the complainant – a critical part of that is building a whistleblowing culture where staff can raise concerns without fear of reprisal.
  • Visibility of investigated matters to staff and management if they hold water – including always taking criminal behaviour to the Police or Serious Fraud Office – never sweep criminality under the carpet.

Secrecy and denial may seem a pragmatic course in the interests of reputation and business relationships, but in the long run your business will be given credit for your firm open stance if you take the matter seriously enough to advise external agencies and make the seriousness known to your staff. Don’t bequeath an ongoing chain of crime to another business owner by just severing the employment of staff involved in bribery or corruption.

Public panel on whistleblowing

Transparency International New Zealand (TINZ) with Victoria University of Wellington’s Institute of Governance and Policy Studies, recently held a public panel on whistleblowing ‘Hero or Traitor? The Role of Whistleblowing in Our Society’, featuring experts

  • Rebecca Rolls from the Serious Fraud Office
  • John Perham of Crimestoppers
  • and Dr Michael Macaulay of Victoria University’s IGPS, who is co-leading research on the largest formal whistleblowing research project in Australasia.

The panel discussed whistleblowing and its challenges in New Zealand, and how we can manage and strengthen whistleblowing in practice. Victoria University's recording of this informative event is available here.

Research Findings

Evident in ‘Whistling While They Work 2’, the Australasian research done by Dr Macaulay with Professor A.J Brown of Griffiths University, is that many grapple with the whistleblowing dilemma, but nevertheless whistleblowing is shown as essential to uncover corruption and preserve strong integrity systems.

Your Participation

This research is ongoing—would businesses who can take part and share their experiences, please get in touch with Dr Macaulay at Victoria University – Michael.Macaulay@vuw.ac.nz

Transparency International Papua New Guinea Executive Director stepping down

Farewell and tenkyu tumas (thank you) to Emily George Taule!

After 12 years at the helm of Transparency International Papua New Guinea (TIPNG) as the Executive Director, Emily George Taule has stepped down for a well-earned break. One of the longest serving Executive Director’s in the movement, Emily has served TIPNG and the Transparency cause with much commitment, passion and inspiration. 

During her time with TIPNG, Emily was instrumental in devising the Sir Anthony Siaguru Walk Against Corruption – TIPNG's annual flagship fundraising and outreach event. The first Walk Against Corruption was held in 2007 in the country's capital, Port Moresby, and later garnered interest in various provinces in Papua New Guinea. The walk has been so successful year-after-year that it has often been used as a practical example of citizen mobilization and fundraising across the TI movement. Some chapters have adopted the idea and have organized walks in their own countries.

Emily was a strong asset to TIPNG having had well-grounded management experience from serving government for over 22 years followed by 4 years in private sector.

Emily’s outside interests are predominantly in sports. She is a recognized figure in the PNG sports community, having given considerable sports development services especially in netball and softball. This culminated in her being awarded the British Empire Medal for distinguished service to sports and the community in 1995. She was also awarded a Silver Medal for Distinguished Services to Sports Administration in 1996. Emily has represented Papua New Guinea in netball and softball during her yester years.

Pacific Chapter Representatives 2015 IACC from the left: Joseph Veramu (TI Fiji), Kate Hanlon (TI Secretariat), Peter Batchelor (UNDP), Lawrence Stevens (obscured, TI PNG), Suzanne Snively (TINZ), Josephine Serrallach (TINZ), Emily George Taule (TI PNG), Lynn McKenzie (obscured, TINZ), Sir Anand Satyanand (TI Advisory Council) and Willie Tokon (TI Solomon).

Acceptable bounds for gifts and hospitality for public officials

Fiona Tregonning Bell Gully

Fiona Tregonning Bell Gully 2nd sep. 2015

The following table is © Bell Gully and reproduced with permission. It was produced by former TINZ Director and current Bell Gully Senior Associate Fiona Tregonning who works with organizations in managing corruption risks. The full article is here: New Zealand public sector on top – but fight against corruption real.

Findings by Judge Sally Fitzgerald in the Auckland Transport case of R vs Borlase & Noone provide insight about what falls within the acceptable bounds for gifts and hospitality for public officials. The Judge made clear, there are no ‘hard and fast rules’ and in each case the value and the context will have to be considered.

Gratuity examples from the Borlase & Noone case

Acceptable?

Payments for travel, accommodation and attendance at industry-related conferences in Australia and New Zealand by the official (even where accompanied by the official’s spouse), were consistently found by the Judge to be acceptable, despite a range of views having been put forward at trial about what conference costs were acceptable. The context was that much of the travel was ‘partnered’, i.e. the conference was attended also by a representative of the supplier.

Paying for business class upgrades for the official, even to an industry conference in Singapore, was not acceptable. The Judge considered there was no reason to pay for such an upgrade other than to influence the official in respect of future management of the supplier’s work; given its value and context it was a bribe.

Payments for personal overseas travel (for leisure) by the official (including travel with or solely by family members) crossed the line: they were consistently found to be bribes, without any legitimate rationale for payment. The value ranged from NZ$1,748 per trip to over NZ$10,000.

Payments for repeated (over 50) overnight stays in Auckland hotels were, in the context, inappropriate. It was clear that the hotel stays were because of the official’s marital difficulties, rather than being needed for work reasons.

A ‘long lunch’ or dinner – if relatively infrequent or for a specific celebration, and particularly if disclosed in compliance with the organisation’s gifting policy – may be acceptable, and may in some cases fall within the ‘de minimis’ exception to the Crimes Act offence (i.e., being just one of the ‘usual courtesies of life’). The meals in this case, none of which exceeded NZ$304, were found to be unobjectionable.

However, the Judge noted that meals on a very regular basis and for no apparent reason may be an offence under the Crimes Act.

Three sets of nine or ten taxi charges over several years, each set totalling just over NZ$1,000, were not considered bribes.

But 47 taxi charges totalling almost NZ$3,500 were found to be a bribe. The frequency and scale of these taxi charges, and the lack of any control over the official’s use of taxi vouchers, meant this was a bribe and did not fall within the ‘de minimis’ exception.


Various gifts, including the occasional bottle of wine or whisky, were considered to be acceptable and fell within the ‘de minimis’ exception.

Cases of wine, including a case of Chardonnay sent to the official’s wife at home – were considered a bribe. The context and value of the cases of wine pushed them outside the ‘de minimis’ exception.

Technology gifts of iPads, and an iPhone for the official’s daughter, were considered bribes. The Judge found that their nature and value made them inappropriate and there was no logical reason to supply them, other than in an attempt to influence the official.

Payment of the official’s personal phone bills (totalling almost NZ$15,000) were also bribes. The Judge considered that there was no legitimate reason someone would pay the personal phone bill of an official.

Managing your organisation’s corruption risks

Having appropriate policies and procedures in place to deal with corruption risks is essential – despite New Zealand’s good CPI ranking and generally ‘clean’ image, recent cases show the importance of avoiding complacency. Factors your organisation should consider in relation to whether it is appropriately managing its corruption risks, whether at home or abroad, include:

  • Whether your organisation has assessed its corruption risks?

  • Does your organisation have an anti-bribery and corruption policy in place and internal procedures to back it up?

    • Is the policy appropriate for your industry/sector, the people you do business with and the jurisdictions you operate in?

    • Does the policy cover your organisation’s agents or intermediaries?

  • Does your organisation have a gifts and hospitality policy, and declarations register? Is it consistent with the approach to what is/is not acceptable as set out in R v Borlase & Noone?

  • ​Are staff aware of and do they understand the policies and what they can/cannot pay, offer or receive?

    • ​​Do they know from whom to get any necessary internal approvals?

  • Do you monitor compliance with the policies?

  • Do you have mechanisms to encourage internal reporting of suspected breaches of the policies?

Short takes

Ethisphere names 2017 most ethical companies

Since 2007, Ethisphere has honoured those companies that recognize their role in society to influence and drive positive change in the business community and societies around the world. These companies also consider the impact of their actions on their employees, investors, customers and other key stakeholders and leverage values and a culture of integrity as the underpinnings to the decisions they make each day.

The 124 honourees selected for 2017 span five continents, 19 countries and 52 industry sectors. Among the 2017 list are 13 eleven-time honourees and 8 first-time honourees. This year there were no New Zealand businesses selected for the World’s Most Ethical list. L’Oreal, whose Vice President Ethics, Emmanuel Lulin, led TINZ 2016 Corporate Retreat, was selected for the 8th time.

Defence Force transparency

TINZ Media release Transparency needed to support the integrity of our Defence Force. Transparency International New Zealand supports the call for an inquiry into the 2010 New Zealand Defence Force raid on two villages in Afghanistan.

AML/CFT latest submission

Transparency International New Zealand's latest select committee submission (20 April) on the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill makes eight recommendations, two which are particularly important:

6. Caution is needed to ensure that de-risking does not lead to profiling of customers. Profiling has been seen by some entities as a way of de-risking transactions. This only shifts these clients to other vendors who may have less rigorous due diligence. Properly conducted due diligence is enough to ensure compliance.

8. New Zealand needs to establish a public register of beneficial ownership for all corporate vehicles (trusts, companies, co-ops, charities). A beneficial ownership registry which is administered by a registry with adequate resources and powers will ensure an effective and efficient mitigation of the criminal risks from large international transactions seeking a place to put assets or launder money. This will also assist businesses regulated by the AML/CFT laws to comply with their obligations. While this is not addressed in the Amendment Bill, TINZ recommends that this work be fast tracked to avoid being left behind internationally.

The Economist Intelligence Unit’s Democracy Index 2016

The Economist Intelligence Unit's Democracy Index provides a snapshot of the state of democracy worldwide for 165 independent states and two territories—this covers almost the entire population of the world and the vast majority of the world’s states.

The unit’s 2016 report ranked New Zealand 4th in the world. Refer to the online Democracy Index 2016 or download the Democracy Index 2016 .pdf.

In case you missed it

New Zealand transparency, integrity and accountability

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New Zealand continues to top polls of world's best countries. World Happiness Report 2017 ranks New Zealand 8th

Fraud Film Festival YouTube channel

New Zealand PM rules out probe into deadly Afghan raid

Kiwi companies come out on top in latest ethical fashion survey

Former Fisher & Paykel worker admits corruption

Money laundering – foreign owned assets

Open Ownership Registration Launch Worldwide Webinar

Transparency International: Only 1 in 5 London Homes Are Sold To Locals

Transparency International Netherlands: Unmask anonymous owners behind offshore structures

Secret companies allow corrupt cash to flood the biggest real estate markets

Report launch: Transparency International finds thousands of São Paulo properties are secretly owned

Report Launch: Transparency International shows luxury goods dealers cash in on corrupt customers

UK aims for more transparency with foreign owners' property register

Swiss watchdog: Probes of money laundering jump in 2016

International

Trump administration may have halted a second energy anti-corruption effort

Being an Ethical Business in a Corrupt Environment Harvard Business Review

Global Week of Action to #EndTaxHavens, 1-7 April 2017 was designed to encourage and promote diverse activities across our tax justice communities to increase public pressure on governments around the world to end the damaging practice of tax havens.

Corruption in Asia Pacific: what 20,000+ people told us

Australians lead worldwide support for political donations reform

Gulf Between Civil-Common Law Countries on Openness of Court Decisions Centre for Law and Democracy

Electronic Disclosure System Australia's Electronic Disclosure System for political donations

Finland's Justice Ministry to probe how courts deal with corruption Although Finland is regularly ranked among the least corrupt countries in the world, Finnish Minister of Justice Jari Lindström has called for an investigation into how the courts handle and identify bribery cases. Despite Finland's good reputation, a report issued last year by the OECD noted problems in investigations and legal proceedings of corruption cases in Finland.

Global Alliance for Tax Justice The purpose of the Global Action is to increase public pressure on governments around the world to end global tax avoidance and evasion.

Exposing Procurement Corruption: Ten Questions to Ask The Global Anticorruption Blog

How corruption affects climate change