Transparency Times April 2016

Unregistered shell companies have no place in New Zealand

The Panama Papers created a clarion call drawing attention to the specific actions New Zealand needs to take in order to prevent corruption in monetary transactions and asset exchanges.‎ The ease of setting up companies and trusts in New Zealand has earned us an international reputation as a safe haven for criminals and deposed governments to launder money and to store illegally acquired assets.

There is no way of finding out about shell companies or foreign owned trusts unless they earn an income that is taxable in New Zealand. Lawyers and accountants who establish these entities are not required to do due diligence to identify the beneficial owners.

Existing tax-information-exchange agreements with other countries follow an on-request model — if a tax authority elsewhere gets wind of a trust in New Zealand, then the courts might require information exchange.

The Government's initial response was to dismiss the 60,000 references in the Panama Papers as irrelevant, apparently in a misguided attempt to protect the ‎$26 million earned by local professional advisors involved in the foreign trust industry.

From this perspective, rather than impinging New Zealand's reputation, it appears that the Government saw the first wave of the Panama Papers as advertising for a potential burgeoning industry. Just think, there are estimated to be around 12,000 foreign trusts in New Zealand. Why not attract 100s of thousands of trusts as the Panama Papers fallout forces trusts to move from enhanced scrutiny in places like Panama and the British Virgin ‎Islands? Then, New Zealand professional advisors could bring in as much as half a billion a year!

So far New Zealand has only taken collateral damage from the Panama Papers. Mossack Fonseca document researchers have yet to uncover illegal activities in New Zealand or the involvement of high-profile New Zealand citizens or companies.

Just the same, according to the Panama Papers, New Zealand is included on a list of countries identified as a “Tax Haven”. At best this is fair warning and calls into question our international citizenship and the laxity of our laws.

Just prior to being pushed from the media by the Panama Papers, a story was published about a Monaco company called Unaoil, run by the jet-setting Ahsani family. Fairfax Media revealed “that billions of dollars of government contracts were awarded as the direct result of bribes paid on behalf of firms including British icon Rolls-Royce, US giant Halliburton, Australia's Leighton Holdings and Korean heavyweights Samsung and Hyundai”. Unaoil is owned by UNA Energy Group Holding of Singapore, and that in turn is owned by UnaEnergy Trustees based in Auckland which is owned in turn by Fleetwood Trustees, based in the tax haven of St Kitts and Nevis.

Three weeks later and it is China testing New Zealand's integrity. China is happy to consider important changes to dairy in our free- trade agreement as long as New Zealand agrees to an extradition treaty and that China has jurisdiction over contested islands in the China Sea.

The same week we were reminded again that New Zealand was knowingly using phoney carbon tax credits from Russia and the Ukraine tarnishing its “New Zealand Pure” brand.

For years and in many forums, TINZ has been asking for a national conversation about New Zealand values. In the absence of this discussion, it is unsurprising that elected governments reliant on public polling, show little backbone in front of deep challenges to our country's integrity.

Perhaps corruption is already more embedded here than is perceived. Take the case of Donald Scott, who through his appointment to the Greyhound Racing Board, learned about a performance-enhancing drug that couldn't be discovered in pre-race testing. Through the honesty of his staff, Scott was found out, dropped from the Board and fined $10,000. Go figure. The integrity of a dying sport is impugned and that's the only penalty?

Throughout this very busy corruption-news month, the media has been tenacious. Despite lack resources and in the case of TV, limited prime- time showing of current affairs‎, the press has found ways to bring alive the long overdue debate of what values New Zealand stands for.

This debate is important because it is these values that bring legitimacy to government and returns to business.

China is an important economic partner. It is doubtful, however, that having discovered the attraction of our welcoming tourism and international education sectors, that Chinese immigrants and tourists are going to stop coming.

It's time to have the courage of our convictions and stick up for New Zealand's value of integrity. This will attract customers — both for trusted advisors and dairy. Such trade is worth far more to New Zealand's future than an increasingly competitive commodity trade with China or the ill-gotten gains from setting up secret trusts for money-launderers, corrupt government leaders and criminals.

From the Chair

Suzanne Snively

Suzanne Snively
TINZ Chair

This newsletter brings especially good news.

Several of the core public sector agencies (the State Services Commission, the Department of Prime Minister and Cabinet, The Treasury, Ministry of Education, Ministry of Building, Employment and Innovation, Ministry of Foreign Affairs and Trade, the Ministry of Justice and Serious Fraud Office) – have grouped together to contribute to TINZ a combined $200,000 each year for the next three years.

This is a third of the minimum amount required by the New Zealand Chapter of Transparency International to build a viable and effective organisation. When combined with the $40,000 contribution from Local Government New Zealand and the Auckland Council, it is now possible for TINZ to employ a paid full-time Executive Officer.

Thanks to the initiative taken by Auckland Council CEO, Stephen Town, to develop a process transparent to ratepayers and taxpayers, State Services Commissioner Iain Rennie and LGNZ CEO Malcolm Alexander have taken steps to collect together contributions from across central government and throughout New Zealand. TINZ can now realise its goal to be an effective provider of quality evaluation and research about the application of measures to prevent corruption and of advice to organisations about the best way to harvest the benefits of strong integrity systems.

In accepting this funding we have made it clear that we will not compromise our positions or independence to avoid criticising funding partners. Our primary mission remains to advocate fundamental reforms that foster corruption prevention and create a culture devoid of bribery in any form.

News of the 3-year funding from the State Services Commission came just in time as TINZ pro-bono Executive Officer had a month earlier accepted a permanent full-time role‎ as the CEO of the National Council of Women. Lynn McKenzie made a huge contribution to TINZ, raising the professional standards of TINZ governance, employment processes, risk management, events organisation, project management, report writing, media releases, submissions, affiliations, photographs…the list is a long one.

Lynn McKenzie

Lynn McKenzie
Thank-you Lynn for your professionalism, governance skills, and dedicated management of the Pacific Programme

Keep an eye out ‎for our advertisement for the TINZ Executive Officerand be sure to bring it to the attention of anyone you think has the enthusiasm to work with one of the most supportive public sectors in the world. While there is much work still to be done across central and local government, the courage of its leaders to empower an organisation to describe and evaluate areas of weakness in transparency is remarkable.

With the deepening of relationships across the public sector and growing affiliations with NGOS, TINZ next priority is relationship building with the private sector‎, including exporters and the financial sector.

This newsletter describes the Business Integrity workshop I attended in March in Berlin. TI's Siemen’s sponsored Business Integrity System has been resourced to develop core tools for businesses to apply to prevent corruption and also to monitor and expose corrupt business practice.

TINZ is equally focussed on working with the NZ STORY to provide tools to build on the strong integrity systems of many of our businesses and through the increased customer base it brings to them, to expand the number of quality ‎jobs and careers available here.

So how amazing it was to meet Emmanuel Lulin, the Vice President Ethics at L’Oreal, who shared TINZ belief that businesses can succeed best with strategies built strong integrity systems. The results of this belief are demonstrated by L’Oreal, one of the world’s most ethical businesses and one of its most successful. L’Oreal employs 80,000 staff in 70 countries with a customer base of 900,000 and is on the path to having a customer base of 2 billion by 2020.

Suzanne Snively, Chair
Transparency International New Zealand Inc.

Submissions sought for foreign trust rules Inquiry

John Shewan

John Shewan
Former PWC chairman chosen by the Government to head the government inquiry into foreign trust disclosure rules

As a result of the recent release of documents known as the Panama Papers the Government has established an Inquiry into New Zealand’s disclosure rules relating to foreign trusts registered in New Zealand. I have been appointed to conduct the Inquiry.

Terms of Reference for the Inquiry are attached here: Establishment of the Government Inquiry into Foreign Trust Disclosure Rules

I understand that you and/or your organisation have an interest in this area. If you are able, I would welcome your contribution to the Inquiry in the form of a written submission.

Matters you may wish to comment on include-

  1. Whether you consider the existing foreign trust disclosure rules are adequate to ensure that New Zealand’s reputation as a country that cooperates with other jurisdictions to deter abusive tax practices?
  2. Concerns have been raised that foreign trusts may be used as vehicles to hide investments that might not have a legitimate source. Do you consider that the existing anti-money laundering/countering foreign terrorism legislation is able and sufficient to address such concerns?
  3. If no to either of the above questions, is this because the law is not adequate or because the enforcement is not sufficiently rigorous?
  4. What changes to the foreign trust disclosure rules or their enforcement do you recommend?
  5. What other actions might be taken?

Please feel free to comment on any other matters relevant to the Inquiry.

The Inquiry is required to report its findings and opinions by Thursday, 30 June 2016. To assist in meeting this timeframe, if you plan to make a submission please do so by 5pm, Friday 20 May 2016.

Please email your submission care of the Inquiry’s Secretariat to or post it to the Secretariat:

Mr John Shewan
C/- Suzy Morrissey
The TreasuryPO Box 3724
Wellington 6140

London summit manifesto

Shining a light on foreign corporations and trusts,
guiding our professionals

TINZ Statement published in conjunction with the 12 May London Anti-corruption Summit

The Panama Papers have identified that there are hundreds of thousands of offshore corporate entities domiciled in countries other than the principal residences of the beneficial owners. However, in many countries, depending on the type of offshore vehicle that is registered, the only formal, and often limited, records are held at a lawyer’s office in the relevant offshore financial centre.

Offshore trusts and companies can, and have, been misused for criminal purposes including tax evasion, money laundering and corruption. For example, the World Bank Puppet Masters report found that over 70% of grand corruption cases involved the use of offshore vehicles. This finding was also highlighted by Transparency International. In spite of these observations and other reports, we should equally recognise that offshore vehicles can also be used for legitimate asset protection or other purposes.

The Financial Action Taskforce (FATF) has been working for over 25 years to make the beneficial ownership of offshore entities transparent, to prevent their illegal misuse. However, implementation by jurisdictions needs improvement as many countries do not have effective mechanisms to identify the ultimate beneficial ownership of corporate vehicles set up in their jurisdiction. For example, anti-money laundering (AML) legislation in many countries doesn't currently apply to lawyers and accountants. In New Zealand, the professional coverage of accountants and lawyers is planned to be included in Phase 2 of the AML reforms.

The development of beneficial ownership registers is equally being pushed globally, to varying degrees. Unless all countries globally are aligned we will experience a race to the bottom whereby arbitrage will occur between jurisdictions for the registration of offshore entities that are used for inappropriate and illegal purposes.


  • The New Zealand AML/CFT Act (2009) should be extended to cover all professionals, including lawyers and accountants that are engaged in setting up New Zealand corporate vehicles.
  • New Zealand should establish a corporate registry that includes beneficial ownership of relevant corporate to enable review and audit by law enforcement and compliance bodies.
  • The entity operating the corporate registry should be adequately resourced and funded to be effective.
  • New Zealand should equally ensure similar transparency of trusts to understand the ultimate beneficial owners. To achieve this, New Zealand should consider establishing a similar registry for trusts.

Building an anti-money laundering culture

By Tim Goodrick, Senior Manager, Forensic, KPMG, TINZ Board Member with Delegated Authority for AML, OECD, UNCAC

The implementation of effective anti-money laundering and countering financing of terrorism (AML/CFT) controls are part of the requirements of the new organisations crime and anti-corruption legislation – 15 Acts that passed into law last November. Even once they are formally implemented, they can be undermined by a poor culture of compliance.

Tim Goodrick

Tim Goodrick has developed expertise on the issue of anti-money laundering over a number of years at a global level. He was on the 2014 G20 anti-corruption working group in Australia and this was a fundamental issue for that group which includes representatives from the UN, World Bank, FATF, and OECD

In contrast, a strong AML culture can help to prevent shortcomings, identify issues before becoming a concern and lead to more efficient compliance solutions.

But what does it mean to have a strong AML culture? Although ‘AML culture’ is not a defined term, it generally refers to refers to the beliefs and behaviours of a company that determine how its employees and management interact and do business.

This concept is gaining increasing attention from AML/CFT regulators globally. A review of significant enforcement action for violations of sanctions and AML laws globally has identified common issues with the culture of compliance and management oversight. The importance of this is highlighted by the growing number of corporate scandals relating to issues such as such as sanction violations, financial misconduct, Libor rate rigging, bribery and corruption.

Actual experience with financial institutions in New Zealand has found that a strong AML culture leads to successful compliance outcomes.

The following seven building blocks assist in building a strong AML culture and have been identified as milestones that can be measured and improved:

  1. Tone from the top: Setting the tone for a strong AML culture comes from the top – with C-suite leaders promoting a positive and consistent message.
  2. Leadership engagement: Ultimate responsibility lies with your leadership team – so they must understand the risks, and ensure robust compliance structures. Board members play a key role by asking the right questions.
  3. Quality monitoring: Ongoing monitoring and compliance management is an AML requirement. It should cover all AML activities and be fit-for-purpose and clearly articulated.
  4. Balanced interests: In pursuing markets or clients, risk personnel should be at the table to balance the business case against risk appetite tolerances.
  5. Sufficient resourcing: It’s essential to allocate sufficient resources to AML/CFT compliance – including technological resources, process management, and expert personnel.
  6. Business as usual: Effective AML/CFT controls should be integrated into business processes, so that compliance becomes BAU. For example it’s more efficient to collect all relevant information from a customer at the on-boarding stage (rather than follow-up later).
  7. Training and communication: It’s important that staff understand both the ‘what’ and the ‘why’ of compliance. Communicating the real value of their work will lead to enhanced compliance.

These seven building blocks work are for all types of organisations. Through this, it’s possible to generate increased returns, higher profitability and productivity.

Panama cabals to Smurfing in NZ

From Panama’s cabals at the canal to smurfing in NZ

By Ferdinand Balfoort, from Northumbria

Some of us may have encountered some odd groups of Smurfs walking by in Auckland lately. Those sufficiently alert among us may have also noted the bulging briefcases they carried. The long-term impact of their activities in our Land of the Long White Cloud may in future include us collectively paying our rent to, well, Smurfs. Don’t complain that we didn’t tell you. But we should start at the beginning, taking us back four years and another continent.

Smurf less briefcase. They are not good news unless they are stationary and provide a perch for the birds in your garden. Note the appropriate whiteness of hat to allow bird guano to blend in. (

The Central Bureau of Investigations in India is not an agency to be trifled with. Think dark glasses and guys (or gals) speaking surreptitiously in microphones in pursuit of the black money trails around the world. After a brief interlude at the banks of the Panama Canal, CBI Director A P Singh decided to release a public statement about what had been bothering him for a while. According to our intrepid Director, 53 percent of the countries said to be least corrupt on the Corruptions Perception Index are in fact offshore tax havens. Even crooks want some security I guess.

No point parking your funds in Nigeria, because we all know what happens then. Accordingly, New Zealand features in the top five preferred destinations for Indian hot money, amounting to a part of US$ 500 Billion (and everyone else’s, not surprisingly.) Black money: Indians have stashed over $500bn in banks abroad, says CB

Singh’s comments bounced around the world, were quoted in various media publications for a brief while, and then fizzled out like a flaming star in a body of water. It could well have been the Panama Canal. I happen to have a good memory and I can remember tending to the roses when the news came over the radio. This is why I have linked these distant events for the benefit of our readers, to provide a perspective in time. I hasten to add that my historical review does not attempt to shift time back, as Ramon Fonseca allegedly did, on a sliding scale. The US$ 8.75 his firm charged for each month of backdating legal documents for clients just doesn’t interest me. Considering the millions he saved his clientele I would have wanted a percentage of the inflated cake. Just kidding.

Ramon Fonseca – Once compared his company to a car factory on Panama TV. Cars and time-shifting were in the DNA of his Panamaniac firm of dodgy advisors. (Courtesy

My immediate thought on reading about the latest Pananamania was to silently congratulate whoever leaked the information that allowed the report to be produced by the ICIJ. My next thought was basically “so what”. Have we not known about this long back? As I noted, the CBI was already ringing the alarm bells in 2012, and nothing has happened. Transparency International published our report titled Integrity Plus 2013 New Zealand National Integrity System Assessment in 2013, and nothing happened.

In fact, because nothing happened, matters are getting worse over time, and well, a bit backwards I suppose. In our fair country the impact is most obviously felt in property prices. These are being pushed out of our reach by foreign buyers, willing to secure their ticket to paradise, and out of reach of their national tax and other agencies (or their divorce proceedings). Stratfor notes, in their contribution to the Panama debate, “The average citizen usually lacks the motive and the resources to make use of such facilities.” Panama Papers: A Rude Awakening for the World’s Wealthy

Equally, the average and increasingly poor New Zealanders lack the motive and energy to focus on this critical issue. I hope this article contributes to us all coming out of our slumber.

This feral Smurf mostly grunts to communicate because he couldn’t afford a decent education. For similar reasons he swings around trees and lives in caves and wears oak leave bandanas.

The People’s Republic of China (PRC) government method to stop their citizens from exporting their OIC (Often Ill Conceived) wealth was to impose currency controls. Equally, they are keen to show a strong will to stop corruption, motivated by reasons that may paradoxically not necessarily relate to corruption. The PRC has a regulation that prohibits the carrying of cash outside the country amounting to more than US$ 50,000 per person per year. In echoes of a Columbian drug opera, centre stage to the Smurfs. A Smurf is someone who is paid by an Evader to carry up the limit of US$ 50,000 and deposit it in a bank account desired, for example a bank branch in Auckland. By employing 100s of Smurfs (and Smurfettes), large amounts of cash can so be transported from one Evader. How Moving Funds from China to Vancouver Often Mirrors How Columbian Drug Lords Move their Money

Buying a property is a natural part of the scheme to establish a quiet escape, a fall-back position, and to launder the Smurfed dollar bills. If you Smurf enough you might even become an economic immigrant and get some official papers from our government to confirm you are a Kiwi Smurf. Unfortunately, as economists will tell you, inflation is the result of too many Smurfs chasing too few houses.

And this is why, my dear fellow Kiwis, we should be highly concerned and active when we get any Panamanian news. The uncontrolled passage of Smurfs (and Smurfettes) through our airport immigration, to our banks and then into our society means we will soon be living like Wild Smurfs in our own country.

Ferdinand Balfoort with his son Coenraad in front of their ancestral castle

About the author: Ferdinand C Balfoort (MCA,CA,CIA) is an international governance expert with academic and professional expertise and interests in cross cultural impacts of corruption, Smurfs and financial reporting. He has managed numerous forensic investigations, including corruption and fraud reporting. He is known to wear funny hats on occasion.


New Zealand shell company involved in multimillion-dollar bribery operation

Shortly before news about the Panama Papers broke, a leak of Unaoil’s email cache revealed “that billions of dollars of government contracts were awarded as the direct result of bribes paid on behalf of firms including British icon Rolls-Royce, US giant Halliburton, Australia’s Leighton Holdings and Korean heavyweights Samsung and Hyundai.” (Fairfax Media)

Unaoil bribery scandal: New Zealand shell company linked to Unaoil scandal. The leaked evidence of its own internal email cache demonstrated that the multimillion-dollar fees Unaoil takes from its clients were funnelled into an industrial scale bribery operation which further entrenches corruption among the powerful few.

The ownership wiring diagram appears to show Unaoil is owned by UNA Energy Group Holding of Singapore, and that in turn is owned by UnaEnergy Trustees based in Auckland.

But the Auckland company is just a link in the chain, and it is owned in turn by Fleetwood Trustees, based in the tax haven of St Kitts and Nevis.

The Auckland company’s only New Zealand-based director is Richard Gordon Wilson, who is a foreign trusts expert from Jackson Russell Lawyers, a Shortland Street law firm.

Wilson said: “UnaEnergy Trustees Limited is a trustee of a trust established for UNA Energy, and holds the shares in a holding company based in Singapore.

“We just act on instructions from an outfit in Monaco which runs family offices for wealthy clients.” Source:

This case demonstrates the problem with the New Zealand system — it is impossible to identify the beneficial owner of the New Zealand company whose ownership is off shore without New Zealand tax obligations. There is no register of beneficial owners of companies, there is no requirement on companies themselves to know their beneficial owners, and lawyers are outside of the anti-money laundering laws so no due diligence was required when the company was established. This case does not necessarily mean that the lawyers or the company were engaged in any criminal activity, however, it shows that the system is broken. New Zealand companies are set up without any checks; the lawyers who set them up don’t necessarily even know the beneficial owner.

It is virtually impossible for police to pierce the corporate veil to determine who actually controls a shell company and to trace the funds back to the corrupt official. Anti-corruption and anti-money laundering experts are now working globally to make trusts and companies more transparent. Countries are taking action at a national level.

NZ carbon credits a farce

New Zealand's carbon credits scheme a farce, says Morgan Foundation report

According to the media release, “New Zealand is being accused of cheating to fulfil its international climate change obligations.

“A new report by the Morgan Foundation, released today, says foreign carbon credits which New Zealand bought to reach its climate targets were fraudulent.

“It says that New Zealand was the world’s biggest buyer of Russian and Ukrainian credits which did not represent any reduction in greenhouse gas emissions.

“That meant New Zealand, despite achieving its target on paper, had done little in reality to reduce global emissions.”

For more information visit the Morgan Foundation Website or download the report.

Bribery and corruption

fastest growing economic crimes

By Brendon Wilson Board Member Transparency International New Zealand for EMA ‘BusinessPlus’

Bribery and corruption are particularly insidious to prevent and to address, and there is serious concern that they are among the fastest-growing economic crimes reported by New Zealand companies. Compared to other economic crimes (for example asset misappropriation, procurement fraud, cybercrime, accounting fraud, money laundering), in a recent report quoting New Zealand experience, PWC show that in New Zealand companies reporting fraudulent activity, the proportion experiencing bribery and corruption more than doubled between 2011 and 2014, the fastest growth category.

Bribery and corruption – what are they?

Bribery and corruption can broadly be thought of as “unlawful inducement, either offer or acceptance, in cash or kind or other value, for personal or business benefit”. Of course, inducement may involve gentle suggestion right through to aggressive intimidation. Whether only suggestive or downright nasty, if it is a benefit and could alter business possibilities, it is probably illegal – and once started will be very hard to stop. This culture spreads, and there is no easy going back for an individual or organisation.

With a definition this broad, it is obvious that it can occur in virtually any part of an organisation’s operations or administration, however some high-risk areas are in procurement processes, and in the sales and distribution chains. Individuals under pressure to perform, or with high incentive to increase business, are at risk of being approached or may even think it up for themselves, but these are not the only risk areas. We strongly suggest that in addition to a strong ethics and anti-corruption policy, you look for the points in your business operation which offer vulnerable opportunity or temptation to take a “short cut to success”.

When business is good and running profitably, the general view has been that this is when the guard may be down and the culture relaxed and vulnerable, but in fact there is plenty of evidence to show that it is when times are tough and pressures on individuals to perform are higher, that the temptations can become irresistible. Unfortunately, this is just when the temptation to try to secure business may also become a corporate attitude which turns a blind eye, or even actively condones corrupt practice. Don’t let this creep up on you, your organisation’s culture, or your employees or agents.

Two large-scale international examples can indicate the size these problems can grow to. In later articles we will discuss smaller-scale New Zealand cases.

Australian Wheat Board

The Australian Wheat Board, later AWB, was the Australian government’s single-desk handler of all wheat marketing for Australia. Towards the end of the 20th century they managed to capture up to 90% of Iraq’s wheat market, especially during the United Nations period of financial and trade sanctions against Saddam Hussein’s government. What started as innovative contract approaches intended to re-secure business against the threat of market loss, became a programme seemingly designed to circumvent international law and reward local Iraqi administrators to the tune of hundreds of millions of dollars in providing and delivering wheat to Iraq. Worse, some of the funds paid out in this way came through UN humanitarian funds under the Oil-for-Food programme.

After Hussein’s loss of Iraq, United Nations enquiries started, followed by a range of commissions and court actions internationally and within Australia. Individuals in responsible roles and senior management were the subject of serious cases, some of which continue to this day. Other outcomes were the dismantling of the single-desk role for AWB, the replacement of the main management, restructuring and then sale of the organisation to an international corporation. What started as innovative contract ideas to maintain business became a world-visible scandal, with damage potentially in the billions of dollars. Cultural attitudes within AWB at pivotal times in this sad story must have enabled the eventual result.


In this well-documented bribery scandal, widely regarded as the greatest in Germany’s history, Siemens strong corporate growth strategy around the turn of the millennium may have led to some managers paying bribes to ensure meeting performance targets. Decentralised reporting obscured these practices, but some informed opinion holds that central corporate attitudes accepted their necessity. Between 2006 and 2008 various enquiries and court actions found Siemens managers had given bribes in many world markets totalling at least E 1.3 b, resulting in fines of E 1.6 b. Associated legal and accounting costs added a further probably equal amount to Siemens pain.

In turning this unenviable corporate position around, at great cost, Siemens totally revised their structure and committed to successive remedial programmes to change ethical attitudes and introduce effective processes to support them. By 2011 Siemens seemed to turn the corner, but their losses to reputation, profit, investor values, future opportunity and individual lives can never be calculated.

These spectacular examples represent the high end of world corrupt practice, but sadly are only a tiny fraction of the worldwide problem. In New Zealand this level of illegality won’t occur, however the growth here of corruption, even from a low level, is a serious concern. Company attitude and vigilance is key, whether the stakes are high or low. We know this is just one plank in companies’ need to adopt responsible investment principles and seize the greater business opportunities and profitability high ground.

Emmanuel Lulin Chief Ethics Officer of corporate ethics leader L’Oreal addresses TINZ audiences

In these days of frequent high profile scandals showing depressing examples of integrity lapse in New Zealand and overseas, often lowering our cherished reputation, it is important to recognise organisations who do place a code of ethics at the pinnacle of their operations and by example show why it is important and worthwhile to do so.

TINZ L'Oreal Story Event. Ian Fraser interviewing Emmanuel Lulin

Emmanuel Lulin Chief Ethics Officer of corporate ethics leader L’Oreal interviewed by Ian Fraser

Fortunately we have many such examples in New Zealand eg the NZ Superannuation Fund. And recently we have had a visit by international shining light organisation L’Oreal, represented by their Senior Vice-President and Chief Ethics Officer Emmanuel Lulin. Emmanuel addressed a number of Transparency International New Zealand events in March and April, giving many examples of the core positioning of ethics and integrity in all aspects of the worldwide operations of L’Oreal, and the ways this strategy has had such positive results for their giant company.

  • L’Oreal has had an Ethics and Integrity focus for more than 30 years, with a formal code from 2006
  • They believe that their accounting methods must accurately show the true values of their ethics in all their operations and countries
  • L’Oreal have an ‘Ethics Day’ workshop every year for staff in all their 70+ countries of operation
  • Whistleblowers are encouraged to speak up at any time through an established channel without fear of retribution, with active open hearing and honest reporting and feedback in every case
  • ‘Trust’ is a central principle in all the company’s dealings from the highest to the lowest part of their operations, and adherence to these principles is tested by regular open staff forum in every location
  • The ways staff in every part of their company are bonded together by the respect and individual power and motivation this code gives them, brings a unity of purpose and focus which could not be created any other way
  • The universal language of ethics and integrity is proven as a break-through way of dealing with difficulties in so many differing cultures, languages and expectations, and gives them a solid non-negotiable platform to work from – no matter the complexity and pressure they are always on safe ground and never have to worry about challenges or local complexities, decisions are suddenly straightforward
  • If staff are sincerely applying these principles in their work, they will always be supported come what may
  • Four core principles: respect, integrity, courage and transparency.
  • ‘Without courage very little would happen. You need courage to speak up, and within any given organisation, that’s often not the virtue you find the most. You need courage to challenge the status quo.’
  • He credits their ethics strategy for multiplying the value of their brand by many times its previous potential – through this principled approach their next objective is to double their customer base from 900m to 2 billion.

Emmanuel was interviewed at length in one event by the well-known media communicator Ian Fraser, who subjected him to a rigorous questioning of the reality of this strategy, which was later opened to the audience’s questions – all answered with fascinating open straightforward examples – many very serious and complex -from L’Oreal’s experiences around the world.

Emmannuel’s final message? ‘Above all respect your consumers, their culture, your other stakeholders, your staff, your brand and your company’s true values. With ethics and integrity at the core, everything else will follow.’

L’Oreal’s regular glittering international awards for their ethical and principled business code of operation shows the esteem and recognition their stand has brought them around the world

Business fighting corruption

Transparency International acknowledges the potential from business integrity programme

TI representatives from 40 chapters completed a three-day Business Integrity Programme (BIP) workshop in Berlin in March. The 48 Chapter Representatives who attended the Siemen’s funded programmememe are collectively excited about the potential for important work with business in their countries to improve integrity standards within companies but also through them to make a contribution to curbing corruption via collective action with civil society.

They strongly believe that if the movement is to be effective in addressing and preventing corruption, it needs the muscle of strong finance institutions, corporates, lawyers and accountants. Governments and civil society lack the resources to maintain effective structures to combat corruption without the funds and support which business provides in the form of tax revenues and established standards of good corporate governance.

An excellent initiative for TI to harness support from the private sector and now a reality in many countries, is the creation of Business Supporters’ Fora (BSF). These enable TI to engage with business, help them to benchmark against best practices and provide a safe space where they can learn from each others’ challenges. For many Chapters in the developed and developing world, where funding from government sources is not available, corporate membership of such BSFs provides a modest but important source of revenue to maintain a basic local capability to advance our anti-corruption work.

The depth of the above wide commitment to BIP stands however in contrast to strong views held by many in TI that we should not work closely with business. There remains a lack of an agreed harmonised approach to business and this makes the work of our BIP teams around the world difficult and at times demotivating.

This situation has become more acute in relation to TI’s strategy 2020. While the BIP teams fully understand the No Impunity campaign, they are disturbed that actions can be initiated relating to business scandals in a particular country without carefully listening to input from impacted TI chapters. Unless we follow this procedure we can be perceived as superficial in our condemnations and we can damage legitimate efforts in the countries concerned to develop dialogueue with newly installed managers who are driving for the implementation of anti-corruption standards, often in challenging environments where support from TI can be important. A case in point is the Petrobras situation where the company is both perpetrator and victim of corrupt schemes and where a completely new board, with assigned responsibility for ethics and integrity, supported by new compliance leaders, has begun its work.

Perhaps inevitably, business representatives at the Berlin conference reminded TI that they value precisely our focus on dialogueue and help, while at the same time understanding our need to speak out

Direct criticism of business will close many doors to TI for future positive interchange. The accent we send to the world will directly impact the ability of the BIP efforts around the world to be successful.

The BIP teams have developed a level of energy and enthusiasm for the impact that their work can generate in many countries and believe they can collectively make important contributions to the mission of TI.

In case you missed it

The release of the Panama Papers resulted in a flood of media activity with Transparency International, the Corruption Perceptions Index and Transparency International New Zealand being quoted and interviewed at an unprecedented level in New Zealand. Here are some of the more informative articles.


Editorial: NZ and China can settle on extradition

China suspends G20 anti-corruption task force – sources


Despite court order, PNG's anti-fraud unit ordered to close

Transparency International New Zealand

Unrelated to the Panama Papers

YouTube Video of Suzanne Snively at the Tackling Poverty NZ workshop December 2015

Suzanne Snively on transparency and anti-corruption measures and their role in reducing poverty

The price of a good name — Suzanne Snively Interview by Patrick Smellie


Unaoil bribery scandal: New Zealand shell company linked to Unaoil scandal

There’s A Huge New Corporate Corruption Scandal. Here’s Why Everyone Should Care

Authorities in Monaco raid oil firm HQ in corruption investigation

Panama Papers – TINZ

Panama Papers reports featuring Transparency International New Zealand

'This isn't simply about tax… it's about how we look' Televison report including Suzanne Snively interview

Panama Papers called 'huge blow' to NZ's reputation

Panama Papers tax haven leak blow to NZ 'corruption-free' image, says Transparency

NZ urged to act on Panama Papers

Govt ignored foreign trust threat for over 15 years – TINZ

Ali and Willie talk with Tim Goodrick from KPMG and Transparency International about the Panama Papers

“Tax Haven” structures risk damage to well being

Panama Papers: New Zealand's trusted reputation demands changes to foreign trust rules

Panama Papers Fallout: New Zealand Starts Probe into Foreign Trusts

Panama Papers – International

International reports and reaction on the Panama Papers Website all about tax havens

United States: U.S. readies bank rule on shell companies amid “Panama Papers” fury

Transparency International calls for immediate action by world leaders to stop secret companies

Panama Papers: global tax officials to launch unprecedented inquiry

Blaze of Sunshine on Secretive Offshore Businesses — Time for Beneficial Ownership Transparency Huffington Post

Panama Papers and the United States Following the release of the Panama Papers and the public outrage that followed, Transparency International-USA has set up a web-page to explain the Panama Papers and anonymous companies and also how this affects ordinary people in the United States.

Money laundering: New law planned to target corrupt officials

More countries sign up to beneficial ownership transparency

Panama Papers expose UK role in global corruption

Secret company ownership: A global solution for a global challenge

'So what if Putin is corrupt?': Russia remains unmoved by offshore revelations

UK says more countries join plan to tackle tax evasion


Yes, there are legitimate uses of shell companies They still shouldn’t be secret

3 steps to stop secret companies

Panama Papers and the United States — What Can You Do? Transparency International-USA is advocating for an end to secret companies because it allows corruption to flourish

Authorities press for transparency in wake of Panama Papers

Panama Papers

Selected articles related to the Panama Papers and New Zealand

Welcome to NZ — 100% Pure tax haven Leak exposes the blind eye government is happily turning

New Zealand to Review Foreign Trusts in Wake of Panama Papers

No Legitimate Reason for Secretive New Zealand Trusts

'This isn't simply about tax… it's about how we look'

The Panama Papers and New Zealand's Politically-Exposed Persons

New Zealand is not Panama

Leak leaves stain on New Zealand's name Whatever denials Govt makes, NZ will struggle to shake the tax haven tag, reports Hamish Fletcher.

Mike's Minute: The Panama Papers

Govt can help put boot into tax dodgers

Media Beat Up Tim Fookes – Opinion

Key's vision – Switzerland south

NZ is not a tax haven

The Panama Papers, NZ and 'tax haven' ridiculousness

Ron Pol says 'tax haven' misses the point: New Zealand’s reputation offers a competitive advantage, and opportunity

PM on shaky ground over weak tax rules

Tax for the goose and the gander Heather du Plessis-Allan

NZ POLITICS DAILY: The War on wealth Bryce Edwards

Ten days down the road on Panama papers and NZ is still stalled

Govt serving interests of the rich

Pattrick Smellie: We’ll miss trust after it’s gone

Govt must close down offshore trust rort

Shamubeel Eaqub: Panama Papers show NZ is complicit in criminal behaviour

New Zealand to Review Foreign Trusts' Transparency

New Zealand Prime Minister John Key said that the revelation that hundreds of world leaders have been storing assets in offshore accounts shows the need for more relaxed banking laws.

Panama papers: Mossack Fonseca 'bragged about lax New Zealand tax rules'

Kiwi at heart of Panama Papers leak ‘certain’ New Zealanders will be named interview with NBR,

New Zealand Continuing Tax Reform Push IRD Suggested Changes before Panama Papers

NZ linked to global tax evasion scheme

The International Consortium of Investigative Journalists Website of the consortium of journalists researching the Panama Papers

Ross Henderson: New Zealand's tax haven reputation an embarrassment

Tax havens aren't the problem, the lack of transparency is

Panama papers: Government under attack

You say tax haven, I say corruption port. Welcome to New Zealand

John Shewan joins Checkpoint

New Zealand Foreign Trusts: Chickens Coming Home to Roost

New Zealand cartoons about tax, transparency and the Panama papers

Political roundup: Remember Dirty Politics? Bryce Edwards

Foreign trusts hiding darker secrets than tax avoidance, says expert

John Shewan on Radio NZ (transcript)


TINZ engages New Zealand and New Zealanders in a broad range of issues related to building stronger integrity systems to mitigate the impact of bribery and corruption. TINZ Directors, Members with Delegated Authority and staff provide subject matter expertise in the topic areas of interest.