Transparency Times August 2019

FISA Self-Assessment joins FISA methodology

Photo by Eva Caprinay

Suzanne Snively
TINZ Chair

From the Chair:

New independent FISA Self-Assessment tool targets integrity of Kiwi based financial institutions.

On 2 August 2019, TINZ’s Financial Integrity System Assessment (FISA) methodology was completed by the launch of its voluntary and comprehensive FISA Self-Assessment.

The FISA is designed to gain an objective and independent view of the integrity of a country’s financial system. It provides customers, citizens, communities, civil society organisations, government and businesses with detailed information about the way that the financial system conducts itself.

The FISA Self-Assessment

The FISA Self-Assessment offers financial organisations a mechanism to avoid additional regulation, improve stakeholder confidence and demonstrate leadership on the world stage. It provides a consistent framework for senior executives of New Zealand financial institutions – banks, financial services firms and insurance companies – to evaluate the strengths and weaknesses of their integrity systems and how they are applying their strengths to grow their business.

The anonymised results from the FISA Self-Assessment will be published. They will provide evidence for Assessors carrying out an independent assessment of the whole financial system.

The FISA Self-Assessment comprises 9 sections that are aligned with the different topics in the FISA methodology including policy, governance, accountability, information & communication, human capital, customers, operations, risk management & monitoring and procurement.

Its straightforward design is an easy way for financial organisations to check up on how well they are doing to strengthen integrity systems that support trusted conduct and culture throughout their organisations. It is structured to be carried out annually, to provide an opportunity for financial services providers to prioritise their examination of their integrity systems regularly.

The self-assessment is a succinct and straightforward reflective tool that can be completed within an hour. In that short time, it provides the basis for a comprehensive review of internal policies and systems that contribute to conduct and culture as well as addressing corruption.

The FISA Self-Assessment boosts the drive to ensure our financial system is future-proofed to combat bribery and corruption. It is designed to motivate financial organisations to continuously improve their systems and in doing so, to enhance the strengths of New Zealand’s financial system as a whole. Bernie McKendrey’s article in this newsletter describes the steps that create a virtual cycle of learning and continuous improvement in the processes that make up an organisation’s integrity system.

Business Case

Improving trust in our financial systems is a critical objective of FISA.

The findings of the Australian Royal Commission of Inquiry into Misconduct in the Banking, Superannuation and Financial Services Industry was a wake up call for New Zealand financial organisations, raising awareness about the critical need for this assessment.

Regulators here, the FMA and RBNZ, have found that there are weaknesses in conduct and culture in New Zealand’s registered banks and insurance companies too. It’s not an issue that has been confined to Australia.

This point was brought out at the launch both by Finance Minister, Grant Robertson, and FMA CEO, Rob Everett at the FISA Self-Assessment launch.

Evidence about the conduct of New Zealand’s major Australian-owned banks is currently filling the financial pages of our newspapers. A recent book about Australia’s banking culture, Adele Ferguson’s Banking Bad, has generated media attention about the Bank of New Zealand’s treatment of kiwisavers and whistleblowers.

Whistleblowers were thwarted as the channels for communicating inappropriate behaviours didn’t work and the careers of staff who tried to report on conduct were not protected.

A report just off the press on whistleblowing is covered in the first article in this newsletter. It is important to note that no private sector organisation in either Australia or New Zealand participated in the survey that has informed this research. The is despite considerable effort on the part of researchers and support from organisations like Business NZ, CAANZ and the IOD to gain information for what is the largest research project on this topic ever carried out in this part of the world.

Last month, there were media stories about the conduct of the ANZ.  This month, it’s been revealed that misconduct at the Commonwealth Bank of Australia was developed from customer-selling behaviours first tested at the ASB in New Zealand. Westpac has been drawn out by the FMA to voluntarily repay fees over- charged on student loans and other consumer products.

Enhance Customer Confidence 

From a transparency lens, there is simply not enough evidence provided by the New Zealand financial organisations themselves to prove they have cultures based on integrity. Without this, customers are unable to gain the reassurance that contributes to the building of public trust.

Indeed, surveys of New Zealand consumers show that there is considerable dis-satisfaction about their treatment by banks and insurance companies.

Partaking in the FISA Self-Assessment provides financial organisations with an independent indication to their customers that steps are being taken to improve their own integrity and to provide leadership to the financial sector.

This will help ensure that the financial system is future proofed to combat bribery and corruption and to demonstrate to depositors, investors and other stakeholders, the changes in practices that lead to increased resilience.

Benefits of doing a FISA Self-Assessment

Some financial organisations contend they have been over-reviewed and customers and regulators are failing to recognise their good qualities.

Financial organisations will benefit from FISA because:

  • The FISA Self-Assessment is easy and essential. It is designed to enhance financial firms’ viability by monitoring ways that they can be more sensitive to customers, staff and their shareholders.
  • Through the FISA Self-Assessment, financial organisations can develop knowledge about ways that they can be more productive and more sustainable.
  • Voluntary uptake by our financial organisations will demonstrate determination to improve conduct and culture.
  • If regulators are convinced, less costly regulatory intervention is required.
  • If customers are convinced, those organisations with good conduct will attract greater deposits, premiums and investment.
  • If foreign investors are convinced, it will attract deposits from responsible investors.
  • The FISA Self-Assessment is a valuable tool for management to engage their teams in the drive to strengthen integrity – as such it will become an indispensable tool for boards and their shareholders.

Financial organisations who are serious about good conduct and culture will be continuously learning about ways to refine their practices. The FISA Self-Assessment includes a process to ensure the improved integrity practices are embraced by their Boards and shareholders.

Aggregate Information

Cameron Smith of Omni Risk has developed the comprehensive FISA Self-Assessment tool.

Information from financial organisations will be aggregated anonymously for publication.

The FISA Self-Assessment is designed to provide evidence for the three assessors whose job it is to examine the entire financial system. The Assessors are: former Banking Ombudsman, Liz Brown; former PwC Financial Sector Leader, Paul Mersi; and, Insurance Specialist, Michael Littlewood.        

Dame Alison Paterson leads the group performing the quality review of the assessment of the entire financial system.    

Conclusion

We New Zealanders all care about fairness and trust. Our banks, insurance companies, and other financial firms say that they do too. The FISA Self-Assessment is a way of continuously improving on ways they walk the talk.

Suzanne Snively, ONZM

Chair

Transparency International New Zealand Inc.

Clean as a whistle: a five step guide to better whistleblowing policy and practice

Michael Macaulay MA (Hons), MSc, PhD
Professor of Public Administration
School of Government
Victoria University Business School

A report advising on best practice for whistleblowing procedures – including establishing new forms of oversight – was launched this week.

The report, titled Clean as a whistle: a five step guide to better whistleblowing policy and practice in business and government, is the result of a major three-year study that has already produced numerous other reports on the state of play in New Zealand and Australia. The study is one of the largest pieces of research on whistleblowing ever undertaken and the first of its kind to compare public, private and not-for-profit sectors.

The New Zealand component was led by Professor Michael Macaulay from the School of Government at Victoria University of Wellington, while the overall study was led by Professor A.J. Brown from Griffith University in Australia.

“The publication of our work could not be timelier for New Zealand,” says Professor Macaulay, “especially as the legislative reforms around the Protected Disclosure Act have been slightly delayed. The State Services Commission has made good progress on whistleblowing in the past few years with its ‘Speak Up’ standards and public consultation on the Act. I hope our report can add valuable insights to the discussion.”

This report presents key findings and actions flowing from the research project Whistling While They Work 2: Improving managerial responses to whistleblowing in public and private sector organisations – one of the world’s largest studies into whistleblowing, and the first large-scale project to focus on management of whistleblowing across business and government.

Key actions for success

According to the document’s preface:

“Coinciding with  proposals for further reform of whistleblower protection laws by governments from New Zealand to the European Union, the research helps pinpoint key actions which will make the difference for successful implementation of whistleblowing policies – at organisational and whole-of-government levels.

This guide works as a companion to new regulatory requirements, guidance and proposed standards for whistleblowing policies, programs and reform.

Whistleblowing is a vital pillar in the integrity, governance and compliance systems of every organisation, and healthy, corruption-free institutions across society as a whole. These key findings and actions identify what needs to be done, at practical and policy levels, to ensure this positive role is realised for all our benefits.”

Source: Brown, A J et al, Clean as a whistle: a five step guide to better whistleblowing policy and practice in business and government. Key findings and actions of Whistling While They Work 2, Brisbane: Griffith University, August 2019

The five steps to better whistleblowing policy are summarised as:

  • Recognising and assessing whistleblower disclosures
  • Supporting and protecting whistleblowers
  • Roles, responsibilities & oversight
  • The regulatory role: meeting new challenges
  • Public interest: respecting whistleblowing’s third tier

The report is timely given that the State Services Commission just published the recent submissions to the Protected Disclosures Act. The summary of submissions is available online, with links to all the submissions listed under Protected Disclosures Act 2000 on their Proactive Releases page (scroll towards bottom of page). (TINZ’s Protected Disclosures submission is here.)

Professor Macaulay is working on a New Zealand version to be released shortly.

Elections 2019 Questions to ask candidates

Transparency International New Zealand (TINZ) has designed sets of questions that can be used when talking with a local body candidate.

They are applicable to all positions (Council and Regional Council, District Health Board and community boards). We strongly encourage local body candidates to consider these questions themselves, and citizens to ask candidates to answer them.   

Our questions focus around integrity, transparency and accountability, including encouraging broader community participation in decision-making. 

TINZ is non-partisan. It is up to the public and individual citizens to form their own view on responses.

Here are some questions that you may wish to ask your local candidate for Council, board, Community board, DHB or trust

  • Personal motivation
    1. Why are you standing for election?
    2. What does integrity in local government mean to you?
    3. Tell me about conflict of interest and how you manage it.
  • Access to information
    1. Do you think that the Council (or Board or Trust) gives the public the right amount of information and access to meetings?
    2. Tell me what you know about the Local Government Official Information and Meetings Act and the Official Information Act?
  • Public participation
    1. What are your ideas for getting more public participation in local decisions? Who do you think is missing out?
    2. What are your ideas for helping people who don’t have good internet access to be involved and have their say?
    3. What are your plans for engaging with young people
  • Tangata whenua
    1. What do you think are the main issues that are important to local tangata whenua?
  • Fair representation/diversity
    1. Does your Council (or Board or Trust) Council have fair representation of women as councillors and employees, including leaders?
    2. What is your opinion about diversity on and in the council (eg gender, ethnic, disability)?
    1. Accountability
    2. How will you balance economic, social and environmental issues?
    3. When it comes to a decision, what will you prioritise?
    4. How can I trust you will follow through on your promises?

Download these questions as a handy reference.

Midday “Brain Food” Seminars

Attendance fee:

  • $40 per forum
  • Members $30 per forum

CPD Certificates Available


Venue:

  • Victoria University of Wellington
  • Lecture Theatre OGB LT3 (ground floor)
  • Old Government Building
  • Pipitea Campus
  • 55 Lambton Quay

Register online

No Door Sales

Bring your lunch and feed your mind

Three events in Wellington 12 September, 3 October and 10 October

TINZ is facilitating three midday learning and discussion forums central to our mission of promoting integrity and transparency as antidotes to corruption.

Each Brain Food forum will have two speakers offering information or perspectives, followed by an opportunity for people to discuss the issues in the context of ethics and evidence.

Modern Gangsters in New Zealand

Thursday 12 September 2019, 12:30pm-1:30pm

Who is doing the crime? Are they doing the time? Insights into the modern underworld, and fraudsters – what are they doing, who are they targeting and what actions are being taken to reduce their impact on people, businesses and communities.

Presenters: Paul O’Neil, General Counsel, Serious Fraud Office New Zealand, and Detective Superintendent Greg Williams, National Manager Operations Organised Crime, NZ Police

Register Now!

Where in the World are We?

Tuesday 3 October 2019, 12:30pm-1:30pm

The centre of economic geography is re-aligning to Asia. New Zealand is close to the action, and close to risks. How can we maintain our reputation and values of integrity, fairness and pragmatism whilst making the most of our opportunities?

Presenters: Vangelis Vitalis, Deputy Secretary Trade and Economic, MFAT, and Colin Keating, former Permanent Representative of NZ to the United Nations, Senior Research Fellow Columbia University, former Executive Director of Security Council Report.

Register Now!

Hate Speech or free Speech

Tuesday 10 October 2019, 12:30pm-1:30pm

Most people who think about this topic sit on and off fences, wanting to enable freedom of expression, but not wanting the result to be discriminatory or dangerous. This is an opportunity to think more deeply than clickbait. Hear different points of view and offer your view in respectful discussion.

Presenters: Distinguished Professor Paul Spoonley, College of Humanities and Social Sciences, Massey University, and Liam Hehir, Partner, Fitzherbert Rowe Lawyers, and regular blogger on this and other social topics.

Register Now!

Venue: Victoria University of Wellington, Old Government Building, 55 Lambton Quay, Pipitea Campus, Lecture Theatre OGB LT3 (ground floor)

Registration is required for each event, there will be no registration at the door. There is a modest charge per forum ($40) which goes directly towards supporting the work of Transparency International New Zealand.

 

Launch of the FISA Self-Assessment Tool

Henry Lynch

TINZ Director

Business Integrity and Ethics

The Minister of Finance, Hon. Grant Robertson,  launched the Transparency International New Zealand (TINZ) FISA Self-Assessment tool [insert link] on 2 August 2019 in Wellington. 

This world-first financial tool joins the FISA Assessment Methodology hand book to complete the FISA framework, both components of which are now publicly available for final feedback and consultation.

Henry Lynch, TINZ Director,
Financial Sector / Integrity in Sport

The FISA Self-Assessment was introduced by TINZ Chair and FISA Project Director, Suzanne Snively, before its launch by the Finance Minister. He noted the importance of financial organisations’ social licence.  If they demonstrated their commitment to their customers, there may not need to be a Royal Commission as was required in Australia.   

The Chief Executive of the Financial Market’s Authority, Rob Everett, then commented that the complacency of the New Zealand banking and life insurance sectors in the face of the Australian Inquiry into misconduct was “frustrating” and “difficult to comprehend.”  He thought that the New Zealand industry would have prepared itself for the reviews by the FMA and RBNZ into misconduct.

Regarding the Review of bank conduct and culture (report published in November 2018) and that of life insurance companies (report published January 2019), Rob Everett “…found it hard to comprehend that the industry didn’t get its act together and have a perfect story to tell.”

At the same time, the FISA ‎Self-Assessment tool will enable financial organisations to test their systems aimed at preventing bribery, corruption and fraud.

TINZ Director Brendon Wilson talks with FISA launch attendees

Instead, as a result of the evidence which found inattention to misconduct, there is new legislation being written that is expected to require reporting against higher conduct standards than at present.  Also included in the new legislation will be sanctions for misconduct.

Rob Everett said that good conduct is “about building processes and designing your organisation…”

TINZ Chair and FISA Project Director, Suzanne Snively, described how the FISA Self-Assessment was designed to assist financial organisations in building processes that motivated good conduct. The self-assessment is a learning tool that would annually engage their staff and board to think about ways of strengthening internal integrity systems to better meet the requirements of regulators and the expectations of customers.

At the same time, the FISA Self-Assessment tool will enable financial organisations to test their systems aimed at preventing bribery and corruption.

Launch host, Neil Paviour Smith, CEO of Forsyth Barr, said that the work of TINZ and FISA were important to the reputation of New Zealand’s capital markets. 

Both the Minister and the CEO of the FMA acknowledged that FISA was a very good step in the right direction and looked forward to the results. 

By participating in the FISA Self-Assessment, financial organisations will demonstrate that they care about their conduct and culture and that they take their obligations  seriously under their social license.

FISA Self-Assessment

Bernie McKendrey, Deputy Chair, The Institute of Internal Auditors New Zealand

Bernie McKendrey

FISA Project Team Member and IIANZ Deputy Chair

Transparency International New Zealand’s (TINZ) online FISA Self-Assessment is part of a ‘toolkit’ of Financial Integrity System Assessment (FISA) resources designed to safeguard the integrity of our country.

Why the FISA Self-Assessment is needed

Back in 2015, then IMF Chair, Christine Lagarde said:

“Despite the break down in public trust caused by the global financial crisis, only 2% of the world’s banks have focused on rebuilding public trust…”/em>

Instead banks went back to short-term business models focussed on fast revenue growth. This was driven in part by the short tenure in Board and Executive positions and stimulated by staff financial incentives. Business planning was set over a 3 to 5-year horizon without focussing on building and maintaining good long term customer outcomes.

International banks restructured in a way that reduced their attention to the requirements of most of their customers. Their interest was in products that committed customers to regular payments and increased cash flow.

FISA can show where things as different here

FISA provides an opportunity to demonstrate the unique features of our financial institutions and financial system. It will show whether our financial institutions are mature enough to self-regulate and provide the level of governance, assurance and accountability required.It has the potential to reduce the need for an increase in burdensome regulation. 

Virtuous Cycle

The TINZ toolkit, including the FISA Self-Assessment process, is designed to support financial organisations in demonstrating their integrity and create a virtuous cycle of continued improvement with 5 key steps:

  1. The online FISA Self-Assessment is completed by financial organisations, e.g. banks, finance companies, Kiwi-Saver providers, credit unions, building societies, and insurance companies
  2. Anonymised results of the of the FISA Self-Assessments are published
  3. These aggregated FISA Self-Assessment results provide evidence for an independent assessment of the entire financial system
  4. Further development of the toolkit and artefacts to address weaknesses found in the self-assessment results, through TINZ working alongside professional services firms, who can then provide independent advice to their financial sector clients about ways to enhance their integrity systems
  5. Annual reassessment, where financial organisations again undertake the FISA Self-Assessment, provides an opportunity to monitor whether outcomes have improved for customers and whether public trust and confidence has increased

While the results of the voluntary self-assessment will be anonymised and published in aggregate, financial organisations who take part will be able to receive their own results to compare with their industry peers and the overall sector.

Restoring trust

Financial services affect every single New Zealander. It is vital we can trust financial organisations as they are our financial partners in life. Their social licence requires a long-term strategy for good customer outcomes as a key driver to their way of doing business. 

The FISA Project Team is heartened and encouraged that so many of our financial organisations want to demonstrate their integrity to New Zealanders by undertaking the self-assessment. Participation in the FISA Self-Assessment will show objectively that they are actively doing the right things year on year in an independent and demonstrable manner.

The FISA Self-Assessment has been reviewed by people from over 20 organisations, with several financial organisations approaching us to be included in our final round of testing.

The wider public is invited to comment now prior to the self-assessment commencing in about 2 months’ time.

At that time, the FISA Self-Assessment will be sent to over 800 financial organisations who deal with New Zealanders as depositors, savers and contributors via regular premiums. The assessment will cover registered banks, insurance companies as well as a range of other forms of deposit takers.

Four Banks Dominate New Zealand’s Financial Services

While the assessment will cover the diverse financial services provided in New Zealand, by far the largest amount of capital held by financial firms in New Zealand is held by our 4 major registered banks.

These banks between them have over 80% the market share of New Zealand’s depositors and they are all owned in Australia.

It is critical that they respond to the recent spate of bad press by embracing a regime of integrity and accountability.

Australia’s 4 major banks own New Zealand’s registered banks. 

  • Australia’s biggest bank, the Commonwealth Bank of Australia (CBA), is the parent to ASB in New Zealand.
  • Westpac and ANZ have similarly named registered banks in New Zealand. 
  • The BNZ is the registered New Zealand bank owned by the National Australia Bank.

These banks are big in Australia too. Of the 7 Australian companies to make it into the Fortune Global 500 are the same 4 banks who control 80% of New Zealand’ financial resources. (See table Australian Companies on the Fortune Global 500.)

To put the size of Australia’s 4 major banks in further context, their combined revenue would rank them among the largest and most profitable banks in the world. The revenues of the Bank of China, Citigroup, the China Development Bank and Russia’s SBER Bank were smaller than the $115,304.8 million combined revenue for the ANZ, CBA, NAB and Westpac in 2018. (See table World’s Most Profitable Banks).

Australian Companies on the Fortune Global 500

Rank Company Headquarters 500 Rank Revenues US$ millions
1 WESFARMERS Perth 195 53,985.3
2 WOOLWORTHS GROUP Bella Vista 233 47,842.1
3 BHP GROUP Melbourne 246 45,809.0
4 COMMONWEALTH BANK OF AUSTRALIA Sydney 373 33,186.3
5 WESTPAC BANKING Sydney 433 29,027.9
6 AUSTRALIA & NEW ZEALAND BANKING GROUP Docklands 457 27,147.9
7 NATIONAL AUSTRALIA BANK Docklands 479 25,942.7
  TOTAL   262,941.2
  TOTAL OF 4 BANKS   115,304.8
Source: Fortune Magazine, August 2019, the Fortune Global 500 for 2018

World's Most Profitable Banks

Rank by
bank profit
Bank Profit rank all companies Profit (US$ million) Revenue Rank all companies Revenue (US$ million)
1 China Construction Bank 5 38,498.40 31 151,110.8
2 JP Morgan Chase & Co 6 32,474.00 41 131,412.0
3 Agricultural Bank of China 8 30,656.50 36 139,523.6
4 Bank of America Corp. 9 28,147.00 58 110,584.0*
5 Bank of China 10 27,225.20 44 127,714.1
6 Wells Fargo 13 22,393.00 69 101,060.0*
7 Citigroup 18 18,045.00 71   97,120.0*
8 China Development Bank 20 16,744.30 67 103.072.9
9 Fannie Mae   23 15,959.00 49 120,101.0
10 SBERBank 38 12,790.0 255   44,898.4*
  Revenue Australian 4 G500 banks (combined) 115,304.8
The total revenue for Australia's top four banks (combined) is greater than that of three of the world's banks who are the most profitable.
Source: G500 The World's Largest Companies, Fortune Magazine, Asia Pacific Edition, Number 8 August 2019, data for 2018.

 

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Ethical leadership discussed at Leaders Integrity Forum

Anne Gilbert

TINZ Public Sector Project Manager

Culture and Conduct: Creating a culture of integrity and code of ethics, was the theme of the June 2019 Public Sector Leaders Integrity Forum. This was chaired by Debbie Francis who recently completed an independent external review of the workplace conduct of Parliament. She noted in her introduction that changing an established organisational culture is more powerful than strategy and more difficult to change.

Rhys Jones, Chief Executive of Fire and Emergency New Zealand (FENZ) spoke exactly on this point.  He took on the challenge of amalgamating 40 urban and rural fire services to create one entity, and changing organisational culture to generate respect, and inclusion.  A review had found “that bullying and harassment is a feature of the FENZ workplace at all levels and across all regions.”  Rhys and his team have started and are still on the journey towards culture-change with the question, how do we create a respectful environment, not just within but looking out?

Stephen Walker, Executive Director of Audit NZ and the 2019 President of the Chartered Accountants of Australia and New Zealand (CAANZ) continued the theme discussing what it means to behave with integrity and be ethical in our everyday and professional lives. Ethical leadership is vital to build and maintain public trust and confidence and the fastest way to damage that trust is dishonest or unethical behaviour. Stephen also suggested the audience consider the possible unintended consequences of the pressures on staff that might lead them to compromise their own ethical standards.

For more on this discussion, view the OAG blog

Ethical leadership in a changing world

For use with VUW's Ethical Leadership Course items and related

Ethical Leadership in a Changing World is a massive open online course (MOOC) which launched on the edx online platform, at the beginning of July this year.

The six-week course, offered by the Brian Picot Chair in Ethical Leadership at Victoria University of Wellington, takes online learners on a journey through the theories and concepts of ethical leadership; values and moral character relating to the moral person; ethical decision making; organisational culture and the ethical climate; the moral manager and ethical performance and ends with lessons about ethical leadership for a sustainable future.

Transparency International New Zealand (TINZ) featured in week-one of the course. Learners were invited to rank countries in order of their apparent corruption levels and were then shown how their answers matched in reality. This encouraged some lively discussion and debate. While many learners recognised the unique position of New Zealand, it was also agreed that a good ethical reputation needs to be supported by good practice. As TINZ Chair, Suzanne Snively, said recently for the NIS Assessment 2018 Update: “Unless the tone at the top improves, our country remains vulnerable to overseas corruption and the trusted society of which we are so proud is at risk”.

The course answers key provocative questions at the heart of business ethics; why should business leaders and their organisations care about ethics, when their primary role is to maximise shareholder returns? And are there reasons for them to consider moral values and practices, as long as they stay within the parameters of the law?

The Chair of TINZ, Suzanne Snively, is highlighted as one of the New Zealand experts in the MOOC. She says, “Ethical leadership is a one-on-one relationship with the effectiveness of the business. The experience I’ve had in business, affirms that you can’t get the right things happening with either cash or profitability, if you haven’t started with reputation and ethics”.

At the mid-way point of the course, there were over 2000 learners from 130 countries enrolled. Professor Karin Lasthuizen, the Brian Picot Chair in Ethical Leadership and course instructor, says, “A big thank you to the many learners from the Transparency International community who have already enrolled and are currently taking the course. Your comments and engagement are benefiting our global learners”.

 “We believe that ethical leadership is a ‘good thing’ and that individuals, organisations and society all benefit from ethical leadership. In this course we want to show you how and why value-based leadership matters – or should matter – to all of us.”

The ‘live course’ (where the discussion boards remain available for learners to comment and exchange their views, with online input from the instructors) is open for enrolments until 21 August so there is still time to join up for free via: https://www.edx.org/course/ethical-leadership-in-a-changing-world. But note that the cutoff date to upgrade to the verified certificate route is 12 August 2019. After that time the course content will be archived but still available to view in a static form.

The Brian Picot Chair in Ethical Leadership at Victoria Business School, in Wellington, New Zealand, works towards facilitating a transparent and ethically sound business sector, a number of free workshops and events for local business people and scholars are advertised throughout the year. Visit www.victoria.ac.nz/ethical-leadership for more information.

School Leavers’ Toolkit: Increasing civics education for young people

Miriam Gibson

Principal Advisor,

Ministry of Education

We all want students to succeed beyond school. Being good with finances and having the skills and knowledge needed to engage in society, study and work are the key to success for our rangatahi. This aspiration is of particular interest to Transparency International New Zealand (TINZ), to improve awareness of citizenship roles and responsibilities, towards greater democratic participation.  

All young people need the practical knowledge and skills that allow them to take their place in the adult world. Some schools, iwi, and community groups provide this kind of education alongside subject learning, but the approach is ad hoc and varies across the country. This is where the School Leavers’ Toolkit comes in.

What is the School Leavers’ Toolkit?

The School Leavers’ Toolkit (Toolkit) is a commitment to provide all young people with the knowledge, skills and capabilities they need to transition successfully into further education, training or employment. This includes financial literacy, personal wellbeing, key workplace competencies and an understanding of civics and how our political system operates.

The objectives the Toolkit is trying to achieve are already embedded in the New Zealand Curriculum and Te Marautanga o Aotearoa (the curriculum for Māori medium settings). There are currently a wide range of resources and programmes available to support teaching of civics, financial literacy, wellbeing and employability skills. The Toolkit will provide additional support to schools to use these resources and encourage the increased integration of these experiences into their teaching programmes.

Civics education in the Toolkit

One way the Ministry of Education (MoE) is doing this is by developing new civics education resources aligned to the Social Sciences Learning Area. These resources include teaching and learning guides, learning progressions showing how civics competencies map to the curriculum levels, and comprehensive lesson exemplars for use with students from year 7.

These resources have been developed with input from a cross-agency civics working group, which includes representatives from TINZ, as well as a civics reference group made up of social studies teachers and civics education experts, including representatives of the Pacific and Māori communities.

These new resources will be available to schools from October on the Toolkit’s schools-facing website https://school-leavers-toolkit.tki.org.nz/ with resources for Māori medium settings being developed for release next year.

Understanding the ‘why’ as well as the ‘how’ of participation

The civics resources will develop student knowledge on the processes and institutions of Government and the Treaty of Waitangi and its principles, as well as building on their interests and experiences to develop the capabilities and skills needed to actively participate in a democratic society.

The resources will also raise the confidence and capability of teachers to teach civics. They have been designed to complement and enhance the citizenship education programmes schools are already offering and avoid additional workload for either teachers or students.

The School Leavers’ Toolkit and the Open Government National Action Plan

New Zealand is a member of the Open Government Partnership (OGP), an international grouping of 100 member governments committed to increasing transparency, accountability, and public participation in decision-making.

Under its terms of membership, the New Zealand Government is obliged to adopt and implement a National Action Plan (NAP). The State Services Commission lead the development and monitoring of the NAP, working with government agencies and advised by an Expert Advisory Group, of which TINZ Chair, Suzanne Snively, is a member.

The ability of children and young people to contribute to the democratic process and wider community life was identified as a key sub-theme in the idea gathering phase of the NAP and the Toolkit is included as a contributor to Theme 1 – Participation in democracy.

The future of the Toolkit

In addition to a Toolkit website for teachers, the MoH is also developing a student website, with key information on the Toolkit topic areas and links to trusted sources of information on other sites. Designed for young people aged 16 – 24, this website is accessible to anyone, whether or not they are enrolled in school. It includes information on how MMP works, how laws are made and what to do if you have been unfairly treated by a government Agency. This site will go live in September this year.

Both the schools-facing and student-facing Toolkit websites have feedback functions, enabling users to provide suggestions for additional content or products. Our team at the MoE is also continuing to work with schools and students to better understand what is needed to embed Toolkit learning into school curricula.

Clinical trial transparency – TINZ influencing for positive change

Julie Haggie
TINZ CEO

Progress! In April this year, Transparency International New Zealand (TINZ), together with Mesh Down Under, advocated to the Ministry of Health and Health Research Council that one of them should sign up to the World Health Organisation (WHO) joint statement on public disclosure of results from clinical trials.

The Joint Statement requires signatories to:

  • Develop and implement a policy with mandated time frames for prospective registration and public disclosure of the results of clinical trials that are funded, co-funded, sponsored or supported by the signatory.
  • To monitor registration; share challenges and progress, agree that transparency is important and to publicly report monitoring outputs.

 The aim is to achieve harmonisation of national policy.

The Joint Statement is also aligned with the New Zealand Health Research Strategy and the draft National Ethical Standards for Health Research.

TINZ advocated this action in our submission to the Therapeutic Products Regulatory Scheme consultation run by the Ministry of Health (MoH).  The consultation proposed a Therapeutic Products Bill to replace the Medicines Act 1981, establishing a new regulatory scheme for therapeutic products including medicines and medical devices. 

The MoH has recently advised that it believes there is benefit to New Zealand in signing the Joint Statement as it would demonstrate leadership in the sector towards the principles of transparency.  The Health Research Council – the largest government funding body for clinical trials – is the appropriate agency to become a signatory. The MoH has extended its support to the Health Research Council in becoming a signatory, pending its board’s approval.

Zero Carbon Amendment Bill

Sarah Mead
TINZ Board Legal Secretary
with Delegated Authority for Environmental Governance

Sarah Mead
Member with Delegated Authority

When the draft Zero Carbon Bill was put to the House in 2018, 15,009 people and organisations made a submission, and that included 12,444 long submissions. This was a powerful piece of public engagement on an issue that has, or will have, serious consequences for each and every New Zealander.

The Climate Change Response (Zero Carbon) Amendment Bill is the outcome of that consultation as well as from economic modelling and cross-party negotiations. 

Click here to see Hon James Shaw and other MPs debate the first reading of the Bill. 

What do we say about the Bill?

Transparency International New Zealand (TINZ) strongly supports the creation of a comprehensive legislative framework for tackling climate change. Elements we support include the purpose of limiting global average temperature increases to 1.5°C above pre-industrial levels, and the monitoring and transparency provisions aimed to ensure this purpose is achieved. TINZ also supports efforts to assist greater monitoring in vulnerable countries, such as those in the Pacific, which are already experiencing loss and damage resulting from 1°C of global warming.

TINZ also supports the inclusion of a legislative target for the reduction of greenhouse gas emissions by 2050 and the establishment of an independent Climate Change Commission, and especially its advisory and monitoring role. Important to the success of this legislation is greater transparency around information, such as Commission reports and advice, monitoring reports, risk assessments and adaptation plans.

Concerns

TINZ is disappointed with several elements of the Bill. First, there is a lack of enforcement measures to ensure that the 2050 target and interim budgets are adhered to.   A ‘soft’ framework discourages businesses operating in New Zealand from making the difficult choices and investing in effective low-carbon technology and risks ‘politicising’ the issue.   We have therefore recommended amending the bill to allow a court of law to enforce the carbon target and interim budgets, in a court of law.

We are also concerned that the Bill allows the Minister to reject advice from the Climate Change Commission on the setting of emission budgets.  This undermines the independence of the Commission.  We think that the Bill could, instead, include a narrow set of circumstances in which the Minister can depart from the Commission’s advice. 

View our submission Zero carbon bill final submission

More light needed in free trade agreements.

Free trade agreements need to include strong anti-corruption and transparency provisions and align with our commitments and policies on carbon emissions and biodiversity. This is the position Transparency International New Zealand (TINZ) advocated in its recent submission to the Ministry of Foreign Affairs and Trade on the update of the ASEAN-Australia-New Zealand free Trade Agreement (AANZFTA).

In making the business case for inclusion of deeper anti-corruption and transparency provisions in trade agreements, TINZ notes that:

  • The loss of customs revenue due to corruption, estimated by the World Customs Organisation, is at US $2 billion worldwide each year.
  • Trade agreements with extensive transparency mechanisms are found to have a greater positive effect on trade flows than those with shallow commitments to transparency.

A reason for the latter outcome is that the greater the transparency, the greater the number of businesses who can see the opportunities to improve trade their products and services.

While free trade agreements have been a major contributor to increased international economic growth, the cost to the environment of traditional international trade in resource intensive products has been severe.

The second major point made in TINZ’s submission was around climate change.  TINZ wants transparency in trade deals like the AANZFTA to ensure commercial and economic commitments take account of emissions and environmental sustainability. Workable climate strategies depend on free trade agreement negotiations that are integrated with policy and action on national carbon emissions, and biodiversity. 

This TINZ submission made a range of recommendations for improving environmental transparency to the benefit of all stakeholders.

In producing this submission, TINZ referred to findings of an excellent 2018 report from the Transparency International secretariat in Berlin ‘Anti-corruption and transparency provisions in trade agreements’. It sets out a broad range of improvements that can be made to FTAS and the reasons for these inclusions. TINZ internal experts include climate change specialist Ferdinand Balfoort (a Member with Delegated Authority) and economic strategies and trade expert Suzanne Snively. Julie Haggie held the pen on the submission.  

Links:

Public Finance Act: Extent of transparency

Ken Warren, Chief Accounting Advisor, Te Tai Ōhanga - The Treasury

Ken Warren

Chief Accounting Advisor

Te Tai Ōhanga – The Treasury

The Public Finance Act 1989 (PFA) provides the legal framework for the financial management system of the Government. It was extensively reviewed at the recent ‘The PFA at 30’ conference hosted by Victoria University of Wellington. This provided an opportunity to celebrate, reflect on and consider the lessons, achievements and future directions of the PFA as it celebrated its 30th birthday. While some might have thought this to simply be an event of self-congratulation for those involved in the reforms, the reality was different.  The event had a mood of restlessness rather than complacency.

Increased transparency

The PFA ushered in greater transparency. It did make the previously impossible, possible. For example: to determine which State Coal Mines were profitable, to determine the costs of government services including their cost of capital, and to understand the full balance sheet of the Government.  These were major achievements.

However, a major emergent theme of the conference was that the current level of transparency is necessary but not sufficient.  

  • The Minister of Finance described the lack of support Ministers feel the PFA provides to fulfil their vision for New Zealand, its struggle to deal with complex issues and longer-term opportunities and risks.
  • The Secretary of Justice expressed the view that repeated efforts to put the analysis into Treasury vote analysis, have failed.
  • The acting Treasury Secretary questioned if there is too much over-enthusiastic production of information that is too hard to use, and whether there has been an excess focus on outputs – with incentives’ structures not quite right to maximise value for money.
  • The Auditor General expressed a concern that this public management system creates performance information that is neither read nor understood.
  • A leading business journalist warned that often the spirit of transparency is not honoured. There can be a tsunami of information to bury journalists so they do not get to the kernel of issues.

Former Minister of Finance, David Caygill, who originally introduced the Act, acknowledged the challenge of transparency.  Ministers can move at the speed of light from long-term strategic questions to items of minute detail.  An information system sitting in the middle is easily by-passed.  

Another speaker, quoting from Derek Gill and Susan Hitchiner’s research, reminded the conference that “in practice, parliament and ministers do not reward transparency”. .

Opportunities to improve

The conference was reminded that Governments govern by consent.  Transparency about Sustainable Development Goals or Indicators Aotearoa New Zealand, will be most useful when they are relevant to citizens.  Internationally, we can observe what happens when the concerns of the elite become separated from, and are regarded as irrelevant to, the concerns of voters.

A number of innovative ideas for systems’ improvement were mooted by speakers including: whole-of-Government internal controls to manage the risks to whole-of-government objectives; a rethink of the founding principle of public sector accounting; and a focus on feedback mechanisms to adjust public service activities and strategies to ensure that expectations created are managed and met.  Another suggestion was for greater recognition that what matters regarding performance is the individual interactions the public has with the government, i.e. what they hear about and what they experience.   The conference thus provided plenty to chew on.

The Minister of Finance and the Treasury reported on ambitious reform programmes to tackle these issues, for example Bringing Wellbeing into the Public Finance Act.  There will be much for TINZ members to engage with in the coming months.

How do we ensure wellbeing falls equitably across New Zealand

Deloitte and Victoria University of Wellington have just released the first three articles in their new State of the State series, which looks at addressing the inequities in New Zealand society that can hinder our efforts to grow wellbeing.

The first three articles are now available, providing an introduction to the topic, a look at wellbeing inequities from a public policy perspective, and civic engagement. Upcoming articles will cover an equitable tax system, inclusive growth, diversity, digital inclusivity and recommendations on a way forward.

Don’t miss these topics and additional content on building a fair future for all – sign up to the series, or read and download them.

Open Government: Getting It Right

Keitha Booth, Open Government Partnership's, Independent Researcher

The Institute for Governance and Policy Studies at Victoria University in Wellington is hosting an Open Government Partnership (OGP) presentation on 27 September 2019 (revised date).

OGP plans 

The Open Government Partnership (OGP) is an international initiative of about 100 country members. It brings together government reformers and civil society leaders to create action plans that commit governments to be more inclusive, responsive and accountable to the public. New Zealand joined in 2013 and since, has prepared three National Action Plans. The OGP’s Independent Reporting Mechanism (IRM) assesses development and implementation of country plans to foster dialogue among stakeholders and improve accountability.  Four earlier reports have been released about New Zealand’s plans.

Keitha Booth, New Zealand’s IRM Independent Researcher, will launch her latest report. This reviews the design of New Zealand’s third OGP National Action Plan (2018-2020). She will outline what New Zealand’s OGP membership has achieved over the last six years, the OGP’s expectations for national action plans, and how much the New Zealand government has worked with the public for plan preparations.

She will also comment on the 12 new commitments in the current plan, and announce her recommendations to government for a bolder 2020-2022 National Action Plan that would commit to addressing long-standing, open government concerns.

New date: 27 September
Time: 12.30 pm – 1.30 pm
Venue: Old Government Building, lecture theatre 3, 55 Lambton Quay, Wellington
RSVP for this event

Submissions schedule

TINZ encourages its readers to exercise their democratic responsibilities by making submissions and responding to government consultation processes with your opinions on future direction-setting and legislation.

The following two centralised websites invite and facilitate public submissions on a variety of legislation, policies, levies, plans and projects currently being processed, together with updates about progress for recently closed submissions:

Not all government agencies utilise one or both of these facilities. Many government agencies conduct their own publicity when seeking submissions. In the spirit of the new and joined-up open government, TINZ’s ideal is a single submissions website link where all requests for submissions are listed. TINZ would also like the same website to constantly improve frameworks for making submissions and the process for following up submissions. This latter process would include an analysis of the number and content of submissions, how the content is included in policy development and legislation and the timeline/milestones as the results of submissions go through the process.

Submissions currently being sought

The following invitations to submissions known to and of relevance to TINZ, are currently open for public comment by their stated deadline. We encourage our readers to take the time to draft a submission, even if it is a short one. The submission process is an opportunity to exercise your democratic rights. 

Inquiry into New Zealand’s aid to the Pacific

  • Deadline Friday 30 August 2019
  • Public submissions are now being called  by The Foreign Affairs, Defence and Trade Committee
  • This Committee has opened an inquiry into New Zealand’s aid to the Pacific. 

Application of discretion in s18D(2) of the Tax Administration Act 1994 – an exception to confidentiality

  • Deadline: Friday 30 August 2019
  • Public submissions are now being called  by Inland Revenue
  • The draft standard practice statement sets out the Commissioner’s practice regarding the new confidentiality rule of the Tax Administration Act 1994. 

Online Gambling in New Zealand

  • Deadline Friday, 30 September 2019
  • Public submissions are now being called by Department of Internal Affairs
  • The Government is interested in knowing what is important to you when it comes to regulating online gambling in NZ. How is online gambling is affecting the lives of New Zealanders. 

Recent TINZ submissions

For all earlier submissions by TINZ, search for ‘Submissions’ category at the bottom of TINZ homepage www.transparency.org.nz

Coming events

The free global online Massive Open Online Course (MOOC) is still available for a short time: ‘Ethical Leadership in a Changing World‘, Brian Picot Chair in Ethical Leadership, School of Management, Victoria University of Wellington. Course runs for during which late registration can be made (refer to earlier article in this edition for dates).

2 September 2019, Auckland: New Zealand Sustainable Development Goals Summit 2019 and Expo, Owen G Glenn building (12 Grafton Rd), University of Auckland. 

12 September 2019, Wellington: TINZ Brain Food Integrity Public Forum: ‘Modern Gangsters in New Zealand‘.  Presenters are: Paul O’Neil, General Counsel, Serious Fraud Office New Zealand, and Detective Superintendent Greg Williams, National Manager Operations Organised Crime, NZ Police.

26 September 2019, Wellington: Local Body Election forum with a focus on Integrity.  Free lunchtime forum with local body candidates.  More information to come.

27 September 2019, Auckland: Local Body election forum with a focus on Integrity.  Free Lunchtime forum with local body candidates.  More info to come.

27 September 2019, Wellington: Open Government: Getting It Right. Keitha Booth, New Zealand’s IRM, will launch her latest report. This reviews the design of New Zealand’s 2018-2020 Open Government Partnership National Action Plan.

3 October 2019, Wellington: TINZ Brain Food Integrity Public Forum: Where in the World are We? Presenters are: Vangelis Vitalis, Deputy Secretary Trade and Economic, MFAT, and Colin Keating, former Permanent Representative of NZ to the United Nations, Senior Research Fellow Columbia University, former Executive Director of Security Council Report.

10 October 2019, Wellington: TINZ Brain Food Integrity Public Forum: Hate Speech or free Speech. Presenters are: Distinguished Professor Paul Spoonley, College of Humanities and Social Sciences, Massey University, and Liam Hehir, Partner, Fitzherbert Rowe Lawyers, and regular blogger on this and other social topics.

 

In case you missed it

New Zealand transparency, integrity and accountability

Stats NZ establishes Data Ethics Advisory Group The Data Ethics Advisory Group has been established by Stats NZ to bring in perspectives and expertise from outside government on the use of data.

New Zealand needs to stop multinational tax avoidance Press Release: Tax Justice scoop.co.nz.

A SeafoodSource podcast series: The business case for seafood transparency The demand for greater transparency is growing exponentially by the year in the seafood industry. And with the cost of implementing greater transparency in seafood supply chains steadily decreasing, the seafood marketplace can now realise the numerous benefits of implementing efforts at transparency, including economic efficiencies.

Tim Dower: We deserve to know more about dodgy diplomat case The case of the diplomat caught trying to bring in $300,000 in cash…what was the purpose of this money, and where, or to whom, was it intended to go? Something smells really bad here. I believe we deserve to know a lot more about this.

Auckland Council worker charged with taking bribes for IT contract A former Auckland Council worker took bribes in exchange for awarding a contract worth over $150,000, a court has heard.

Holding the government to account improves governance Indian Newslink Lecture was the ninth of its kind. The series was formerly known as the Sir Anand Satyanand Lecture.The event this year was the first of the rebranded lecture series and therefore, the first one where the welcome address was not delivered by Sir Anand.

Forex broker Russell Maher pleads guilty to fraud A foreign exchange broker who used forged documents to disguise his company’s financial status has pleaded guilty to fraud.

Name suppression declined in Auckland Council bribery case The name of one of the men facing bribery charges brought by the Serious Fraud Office can now be revealed after his request for name suppression was declined.

Ponzi scheme operator Kelvin Wood jailed for six years A foreign exchange broker who defrauded his clients of more than $7 million has been sentenced to six years and three months’ imprisonment and a minimum period of imprisonment of two years and 11 months.

Kiwi Andrew Pearse admits receiving millions of dollars from Credit Suisse loan fraud, reports say A New Zealand-born ex-banker has pleaded guilty to a fraud charge relating to a multi-billion loan scheme that nearly sent Mozambique bust, international media reports say.

Banking and Finance

BNZ knew it was charging too much for KiwiSaver, but didn’t cut fees for nearly a year BNZ continued to charge its Kiwisaver customers millions in unnecessary fees for months after its own chief executive identified it should be cutting costs and improving performance

Westpac agrees how it will refund $7m to customers Westpac has formally agreed on the steps it will take to refund fees to 93,000 customers being overcharged $7 million

ANZ loses the Key to transparency How ANZ Bank fought for more than three years to keep its role in New Zealand’s biggest Ponzi scheme quiet, and stop a regulator telling out-of-pocket investors the details.

Financial watchdog says new banking laws needed to protect customers Chief financial watchdog Rob Everett says laws must be passed to regulate banks’ treatment of customers because “bad things happen” when banks are not regulated.

Exposing the banks: the journalist who sparked a royal commission The story of Adele Ferguson is the journalist whose work was instrumental in bringing about the Royal Commission into the Australia’s banks and financial institutions. (podcast)

FISA

Insurers’ complacency over misconduct is ‘hard to comprehend’ – FMA The Financial Markets Authority (FMA) has said that the complacency of New Zealand banks and insurers in the face of Australian inquiry into misconduct was “frustrating” and “hard to comprehend.”

Banks, insurers’ complacency ‘hard to comprehend’ – FMA The complacency of the New Zealand banking and life insurance sectors in the face of the Australian inquiry into financial services misconduct was “frustrating” and “difficult to comprehend,” the chief executive of the Financial Market Authority, Rob Everett, said today.

Sustainable Development

NZ’s first SDG People’s Report launched A group of organisations launched New Zealand’s first People’s Report on the 2030 Agenda and Sustainable Development Goals (SDGs) this week at Victoria University of Wellington. The report is hosted at www.sdg.org.nz/peoples-report. scoop.co.nz

Why sources matter in a climate of ignorance Joel Rindelaub explains why it’s so important for those weighing on climate science to be transparent about their funding sources and conflicts of interest. 

NZ turns in development report card to UN, emphasising wellbeing framework New Zealand has returned its first sustainable development report card to the United Nations, with a huge emphasis on the Government’s wellbeing framework

International

South Korea’s FSS launches special judicial police South Korea’s Financial Supervisory Service (FSS) has launched a “special judicial police” with investigative power to deal with unfair practices in the financial market

Mauritius Leaks New leak reveals how multinational companies used Mauritius to avoid taxes in countries in Africa, Asia, the Middle East and the Americas. International Consortium of Investigative Journalists

The International Consortium of Investigative Journalists Newsletter Including “Mauritius Leaks: Luxury hotels lavish guests while depriving tax collectors”

Four anti-corruption takeaways from the 2019 G20 Summit Transparency International – Voices for Transparency

Transparency International

25 corruption scandals that shook the world We compiled a list of some of the biggest corruption scandals over the last 25 years that inspired widespread public condemnation, toppled governments and sent people to prison.

Where are Africa’s billions? Foreign companies and financial centres aiding corruption in Africa

SDG 16 is the key to the 2030 Agenda “Whether the focus is ending hunger and poverty, ensuring access to health, education, and clean water for all, or protecting marine environments and combating climate change, fighting corruption is an essential pre-requisite for advancing the 2030 Agenda,” said Delia Ferreira Rubio, Chair of Transparency International.

One in four people in Africa pay bribes to access services, survey says Corruption disproportionately affects the poor and young. The tenth edition of Global Corruption Barometer (GCB) – Africa

Transparency Times reprints

Never a better time for Good Governance “As Warren Buffet says, it takes years to build a reputation and 20 minutes to lose it. Over the last month, the ANZ’s reputation has been severely tarnished.” Those were the comments of Suzanne Snively, Chair of the Wellington-based Transparency International New Zealand Inc in the Leader in Transparency Times (July 2019). Please read more under Businesslink.

ANZ demonstrates poor tone at the top Indian Newslink

Audit firms disclosure should be made mandatory Indian Newslink

TINZ Team

TINZ engages New Zealand and the 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. Below is a list of TINZ Subject Matter Experts as of June 2019.

To view by topic, visit the category page which lists TINZ topics and respective current subject matter experts. The TINZ Team when this newsletter was published can be found at TINZ Team August 2019