Transparency Times March 2016

Global Corruption Report: Sport

Transparency International released its Global Corruption Report: Sport in late February.

The report provides a comprehensive overview of the root causes of corruption across sport, presenting key participants' perspectives side by side, as well as the work of TI national chapters on the ground. This report offers recommendations of what can be done to fix corruption within sport, covering areas such as governance, match-fixing and big events, and the role of athletes.

Transparency International aims to mobilise wider audiences in the fight against corruption by connecting the sports community to the wider movement against corruption. This “Corruption in Sport Initiative” includes partnerships with experts, supporters and sponsors through new research, analysis, dialogue and key recommendations. The release announcement and report are available on the Transparency International website.

Netball New Zealand praised for its governance structure

Ensuring corruption-free sport starts at the very top of the organisation. Netball New Zealand earned international recognition in the Global Corruption Report: Sport for the outcome of its comprehensive governance modernisation undertaken in 1999. Of note was the organisation’s decision to build the foundation for good and effective decision-making by creating a skills-based, eight-person-strong board with no or few conflicts of interest and with transparent financial compensation to board members.

New Zealand reactions

TINZ Chair Suzanne Snively says, “The report is a reminder that eliminating corruption is vital to all forms of life, from business to government and sport.  And it’s reassuring to see that New Zealand can lead the way internationally.”

Sport NZ Chief Executive Peter Miskimmin stated that maintaining the integrity of sport is “particularly important for New Zealand because sport is such a big part of our national identity. We have to continue to do our best to ensure nothing undermines that.”

He welcomes the report especially as his organisation “works across the sport system and government to ensure we have appropriate measures in place to protect the integrity of sport including guidance, policies and education programmes in areas including good governance and match fixing. It’s great to see to the work that New Zealand is doing in these areas being recognised.”

FIFA trust survey

Concurrently, the anti-corruption group is also announcing the results of a poll showing how little fans trust FIFA, football’s governing body with 69% of fans indicating that they have no confidence in FIFA, and 43% saying the scandals are affecting how they enjoy football.

Links

Transparency International media release.

Global Corruption Report: Sport is available online at transparency.org/news/feature/sport_integrity.

Executive summary.

Chief Ombudsman Judge Peter Boshier

Judge Peter Boshier Chief Ombudsman

Chief Ombudsman
Judge Peter Boshier

Janine McGruddy
TINZ Deputy Chair

I first met Peter at the UN HeForShe Campaign launch on 27 November last year, before he had started in his new role as Chief Ombudsman. HeForShe is a solidarity campaign for gender equality initiated by UN Women. Its goal is to engage men as agents of change for the achievement of gender equality and women’s rights, by encouraging them to take action against inequalities faced by women. Peter was there as one of the HeForShe Champions. I remember thinking, this bodes well!  So an excellent start. Peter began his five-year appointment as Ombudsman on 10 December 2015.

I could go into Peter’s background, but that is available on the Office of the Ombudsman website for those who enjoy history.

I am far more interested in what our Chief Ombudsman does than who they are, and so far I have to say I am impressed.

One of his first acts in the role was to take up where Dame Beverly Wakem had left off, on the complaints laid with the Chief Ombudsman about the Prime Minister’s refusal of Official Information Act requests for communications that he or his Office had with a journalist for the New Zealand Herald, Ms Rachel Glucina. This was regarding the pulling of a waitress’ hair by the Prime Minister at Rosie Cafe, a cafe in Parnell. At issue in this case was a single text message that was sent by Ms Glucina to the Prime Minister on 22 April.

After a thorough investigation into the complaints, his decision was that good reason did not exist to withhold the text message. The Chief Ombudsman recommended that the Prime Minister release the content, timing and circumstances of the text. The Prime Minister accepted the Chief Ombudsman’s final opinion and agreed to release the information.

This is exactly the type of action required to rebuild the public’s faith in the Official Information Act, a cornerstone of our democracy and essential to transparency of governance. I look forward to getting to know Peter in my role as TINZ Director, Public Sector, and supporting him in his no doubt often difficult work as our Chief Ombudsman – so in this instance perhaps a case of She for He?

Independent assessment of New Zealand’s Open Government Partnership Action Plan progress

A draft of the independent review of New Zealand's Open Government Partnership National Action Plan is now available for public comment.

This report is part of the Independent Review Mechanism (IRM) established by the Open Government Partnership.

The draft report is critical of the progress made. It states that at midterm, New Zealand has made some progress in achieving its commitments. In general, however, the goals could have been more clearly focused and ambitious with regard to key challenges in open government. Government will find its action plan more coherent and easier to implement if it is not as multi-faceted and relates directly to partnership values.

The report is available for public comment on the Open Government Partnership website until Thursday, 3 March. Readers are encouraged leave comments on the report either on the report page (above link) or by emailing comments to:irm@opengovpartnership.org.

The IRM report provides a good basis to start conversations around the development of the next action plan.

Daniel King’s perspective on the CAANZ transparency and corruption poll

Daniel King

Daniel King
TINZ Director

In my opinion, one of the biggest strengths of the chartered accountants poll is that it is based on a national survey, rather than a regional one. Now we know for a fact that bribery is a real issue for businesses here in this country — there is irrefutable evidence. And although I was not surprised that 6% of the respondents reported having had an illegal demand made of them, I did find it disconcerting that only 51% of businesses say they would definitely report an illegal demand.

The survey also shows that bribery is not just an issue for large companies, but also SMEs. The results show that smaller businesses are more likely to have had an illegal demand made than companies with 11 or more staff.

It seemed logical that Auckland businesses had the highest level of illegal demands. As it is the commercial hub of New Zealand, it was concerning that it was also where businesses were less likely to have an anti-bribery policy in place. Only 11.6% of the businesses surveyed from there had a formal anti-bribery policy, compared to 21.8% in Wellington and 13.9% in Christchurch.

The survey shows that it is necessary for the government to take the lead in both raising awareness of the new anti-corruption legislation, as well as the systems and policies that businesses should have in place. Furthermore, a strong signal should be sent to the business community that illegal demands will not be tolerated and perpetrators will be punished.

Pervasive corruption has serious results

Brendon Wilson

Brendon Wilson
TINZ Board Member

Chartered Accountants Australia and New Zealand’s recent survey into New Zealand business’ experience of corruption is comprehensive and a good starting point for understanding the pervasive nature of corruption and its effects on NZ businesses – and its serious results.

Among a lot of valuable lessons from this study, two important points may be drawn:

The low level of New Zealand businesses adopting formal anti-bribery/corruption policies and processes indicates an easy-going attitude to these possibilities. Within this unethical and fraudulent practices can only prosper, likely undetected and it is not just an organisation’s trading and brand reputation which is at risk – it can be their very ability to stay in business which is endangered by a serious internal or external attack.

  1. It is entirely appropriate that CAANZ is the body which commissioned this survey: Their trained, principled approach to ethical administration and risk is emphasised in their qualification training and throughout their members’ professional careers. Their members (whether internal company managers, or externally contracted) should be doing more for businesses than just accurately reporting financial activity and results to the board – they should be expected to recommend on risks and the processes and structures to prevent risk, especially in financial terms. Financial risk comes no more serious than bribery and corruption. Without measures being adopted to prevent these risks – this report makes it clear they largely aren’t – the culture and expectation in a company will likely be lax and vulnerable to small and large risks; staff are just not going to react in a trained way to “suggestions” which start them down the slippery slope of bribery and corruption.

    The takeaway – use internal and external accountants and other skilled individuals in an ethical culture, to actively seek out, monitor and report on risk areas in which corrupt practice could develop. Without this, the risks are high and uncontrolled.

    Then don’t tell the accountant or others to stick to his/her knitting when they raise uncomfortable matters – they are your best friend.

  2. Absence of a proper anti-corruption policy covers a wide spectrum of culture ranging from lax attitudes to preparedness in order to flout legal and regulatory requirements. Lessons which will rebound seriously against a company are easily learnt by staff who are not managed and trained to be more vigilant.

    In a climate where only 51% of companies will report illegal demands, the likelihood is that the other numbers reported on in this survey for, say, suffering from fraud, are themselves under-reported – this is borne out by daily evidence in the New Zealand courts and media with widespread serious cases of hitherto undetected fraud, which will have often brought the company to its knees – fostered in a climate of lax unmonitored absence of corruption policy and process. Many more serious cases must remain undetected.

This absence of focus is risk-taking on a breath-taking scale compared to the planning, sign-off and risk-mitigation observed in most companies for their marketing plans, or product development, or asset acquisition – why the difference?

The takeaway – focus and set expectation where the risks demand.

New Zealand public service tops global Quality of Government survey

University of Gothenburg's Quality of Government Institute in Sweden has published the second edition of it's comprehensive four-yearly report and matching codebook & dataset.

The survey measures the structure and behaviour of the public service across 159 countries through the assessment of 1,294 unpaid experts from a pool of 7,096, typically PhD-level academics, across 71 substantive topics. There was an additional new focus on corruption and transparency in this round.

Quality of Government aggregate their data into three key performance indicators: Impartiality, Professionalism and Closedness.

The New Zealand public service was ranked the most professional, the second most impartial after Sweden, and the least closed of all nations.

The report is very detailed, and has introduced new measures to more closely determine quantitative measures for differences in governance among nations. They examine, for instance, whether public sector employees risk severe negative consequences for passing on information about abuses of public power to the media.

This is a proud achievement for New Zealand public servants, and is a testament to our nation's ongoing commitment to high standards, for the benefit of all New Zealanders and the nations we interact with.

2015 Corruption Perceptions Index a wake-up call for New Zealand

The reaction in New Zealand to the release of the 2015 Corruption Perceptions Index (CPI) and the country’s drop in rank is broader and stronger than ever. We are encouraged by the media coverage. More than ever, senior political officials expressed awareness and contributed to the dialog thereby becoming engaged New Zealand anti-corruption efforts, including:

  • increasing global pressure to fight and prevent corruption
  • organisations increasingly measured by their behaviors; reputations are critical
  • recognition that New Zealand can no longer be complacent and will have to take action to repair its reputation.

Online Media Coverage

Some of the coverage we have seen:

The general consensus of the media is the fall in ranking reflects the complacent behaviour of Government.

Getting back to #1

TINZ is focused on working with the public sector to restore our number one position.

  • Politicians and senior public officials need to commit corruption awareness and prevention, making it a resourced strategic objective.
  • The recommendations of the Integrity Plus 2013 New Zealand National Integrity System Assessment (NIS) need to be broadly and more aggressively addressed. Current initiatives lack executive support and proper funding.
  • We call on The State Services Commission and other affected agencies to embrace the Open Government Partnership Grand Challenge with new and innovative ways to foster open government rather than repackaging existing programs and offering lip service to the process.
  • TINZ continues to analyze CPI data sources to determine where we perform at less than best in world levels. As we better understand the data we will recommend viable actions using the NIS, Open Government Partnership and global best practices as guidelines.
  • We call on Business and non-government organization leaders to not only demand action from the public sector but to look inside their organizations and ensure that proper training and controls are in place to prevent corrupt practices and protect their reputation.

What’s New Zealand’s reputation worth?

By Daniel King and Brendon Wilson

Having a strong international reputation is critical to the New Zealand Inc. brand and our ability to drive terms of trade. We like, and need, to be perceived by the outside world as honest, trustworthy people living in a country where bribery and corruption are virtually non-existent.

In our last article, we hoped that our ratings wouldn’t slip, but unfortunately the recent Transparency International Corruption Perceptions Index (CPI) now out, indicates that things aren’t as rosy as we think. The CPI, a composite index based on international studies and surveys, scores countries on how corrupt they are seen to be. New Zealand fell in the ranking from number two spot as the second least corrupt public sector in the world in 2014, to the number four spot in the now-calculated 2015 rankings. This may not seem like a drastic fall, but the trend is very worrying:  we are sliding while others are improving.  In 2013, New Zealand was considered to be the least corrupt, along with Denmark.

Corruption and bribery certainly do exist in New Zealand, made clear in a survey recently conducted by Chartered Accountants in Australia and New Zealand (CAANZ), which looked at corruption faced by Kiwi businesses. The survey, involving 1,000 New Zealand businesses of different sizes across industries countrywide, reported that overall, 6% of respondents reported having had illegal demands or bribes made by customers or suppliers – in some sectors as high as 11%. In addition, only 51% of businesses stated they would definitely report an illegal demand.

Even more worrying from Transparency International’s perspective, is that by “not getting around to it”, companies are living in denial, and don’t have robust systems in place to detect and combat bribery and corruption risks. Only 16% of businesses in the CAANZ survey had a formal anti-bribery/corruption policy in place, with Wellington businesses most likely to at 21.8%, and Auckland least likely at 11.6%. A 2015 survey conducted by Deloitte of New Zealand and Australian companies showed that 40% of respondents with offshore operations did not have a formal compliance programme to manage corruption risks.

This comes at a time when New Zealand has tightened its anti-corruption and bribery legislation to ratify the UN Convention Against Corruption – a legally binding global agreement to address corruption in the private and public spheres. Penalties for bribery offences have increased in New Zealand, courts can impose extremely hefty fines and imprisonment for up to seven years. Companies can be held culpable for the actions of employees or agents acting on their behalf.

How can companies avoid ending up in court and facing fines and/or imprisonment? It’s important to note that under the new legislation, taking “reasonable steps” (such as having a compliance system in place and functioning) to prevent incidents can be a defence in court. So feigning ignorance or “burying your head in the sand” is not a viable option if your company is investigated by New Zealand or overseas authorities.

Developing a system

There is an overwhelming business case to be made for taking measures to reduce your company’s bribery risks. There are also a number of tools available to assist you in this process:  The Ministry of Justice has developed guidance material for companies to meet the new legislative requirements, and Transparency International has developed best practice tools with its international business partners.

The essentials of a robust compliance programme include:

  • adopting a policy addressing bribery/corruption, fraud, gift-giving, entertainment, conflict of interest, etc
  • board commitment and responsibility for the programme and its ongoing measures
  • due diligence of agents, distributors, and others and their inclusion in monitoring and reporting
  • a thorough risk assessment of your company’s operations – including relevant agents and business partners
  • engaging with and communicating this commitment to relevant staff and business partners
  • training of key functions (for example sales, procurement staff)
  • accountability – knowing who is responsible for ensuring compliance, and responsible at all levels 
  • risk reporting – a mechanism so staff or business partners can report any concerns without fear of derision or retribution
  • measurement and reporting – requirement for regular measurement and reporting in all areas of possible risk.

We highly recommend establishing these commitments as a central part of a committed Integrity Culture – make it your Point of Difference.

Establishing ethical reporting mechanisms (in our last article) within all areas of your operations, and making these visible in your internal and external reporting, will mean intending trading partners or investors in your business can build reassurance in future trade commitment.

It is sensible then to widen this Integrity Culture and process to include your trading partners and supply chain, so you have a mutual tangible basis for trusted business together, with benchmarks of expectation – so binding your partners more closely to your business future, giving you the same reassurance in their operations that you are showing them in yours. We all believe in “no surprises” – here is a way of building this principle into workable daily practice and making it a reputational advantage.

Establishing any of these measures when a crisis occurs will be far too late.

To improve our country’s reputation in the same way, you should expect these same standards from the agencies and non-business structures you deal with, and those which govern your activities. In some cases they have let us all down.