Transparency Times July 2018

From the Chair

Suzanne Snively ONZM Chair Transparency International New Zealand

Suzanne Snively ONZM
Chair
Transparency International New Zealand

Over recent years, Transparency International New Zealand (TINZ) has become increasingly knowledgeable about the nature of transparency in the public, private and NGO sectors. TINZ newsletter articles have described how transparency and accountability strengthen integrity systems with real-time examples of how this works to prevent bribery, corruption and fraud while improving outcomes for people, business and communities. 

TINZ has made many recommendations about ways to further improve transparency, accountability and accessibility. 

Slow but determined progress in raising awareness and legislative action is being made in many sectors of New Zealand.  This issue highlights: the inaugural lecture from Victoria University’s newly formed Brian Picot Chair in Ethical Leadership; Victoria University’s Institute of Governance and Policy Studies (IGPS) recently published its second Public Trust Survey showing increased trust in New Zealand’s public sector (in contrast to most of the world); and New Zealand’s continuing Open Government Partnership initiative.

Commerce Minister Kris Faafoi is moving forward with a public register of beneficial ownership of companies.

TINZ is pleased to see practice and policy change across central government agencies that address several of the recommendations in our 2013 National Integrity System Assessment. Examples include: joining the Open Government Partnership; increasing resources to enhance the effectiveness of the Ombudsman and Electoral Office; ratifying the United Nations Convention against Corruption (UNCAC) – unanimously after passing omnibus anti-corruption legislation; online access to almost all current central government legislation; ability for all New Zealanders to follow select committees live on Facebook; and moves to better resource public broadcasting.

Unfortunately, the New Zealand Stock Exchange has not kept up with the pace of improvement in our public sector. In 2009, TINZ published a study of the top 50 listed companies, As Good as We are Perceived.  Our research found less than half of those companies published information that demonstrated the attributes of a culture of integrity, either in their annual reports or on their websites. While a high level analysis has found that companies are now better prepared to address corruption, the current challenge is that the lack of transparency in New Zealand Stock Exchange transactions may be driving investors away. This, as well as the lack of transparency in trading, are factors leading to New Zealand companies like Xero moving to the Australian Stock Exchange.

Suzanne Snively, ONZM

Chair

Transparency International New Zealand Inc.

Proposed transparency of beneficial ownership

Consumer Affairs Minister, Kris Faafoi, is working on law changes aimed at cracking down on overseas criminals potentially misusing companies in New Zealand.

According to Minister Faafoi, the goal is to curb money-laundering and the ability of overseas based criminals to use New Zealand’s well-regarded companies register to conceal some of their business. “Certainly we’re cracking down on beneficial ownership and figuring out who the beneficial owners are of companies that are registered here in New Zealand… [so we know] exactly who controls those and where the money flows are going to”, said Mr Faafoi.

As part of this process, the Ministry of Business, Innovation and Employment (MBIE) released a discussion paper on beneficial ownership.  MBIE seeks feedback on a proposal to develop a register of companies and limited partnerships which holds information on the true owners or controllers – the beneficial owners.  This relates to a commitment the government made at the 2016 Anti-Corruption Summit where New Zealand committed to exploring a beneficial ownership register.  

Transparency International New Zealand (TINZ) has consistently called for a beneficial ownership register of all legal entities, to enhance transparency of New Zealand companies and trusts. 

Transparency is essential to prevent New Zealand companies and trusts from being misused by criminals – this is why identification of the true owners or controllers of the entity is so important.  A beneficial ownership register will help protect our reputation by deterring criminals from using New Zealand companies and trusts, and by helping law enforcement to “look through” these corporate vehicles in their investigations. 

A beneficial ownership register would also help regulated businesses to comply with their AML obligations. A central, public register would save duplication of processes to collect ownership details, reducing the cost to local businesses of collecting all the required information themselves.

This process is a positive step in addressing a challenging issue. New Zealand can learn from global experience. Jurisdictions such as the United Kingdom, the European Union, Singapore, and Hong Kong have each established beneficial ownership registers.

Of concern is a decision to not consider trusts as a part of this initiative.

According to the discussion about, “We are aware that trusts can also be used by criminals. Trusts would be captured by the options in this paper where the beneficial owners of corporate entities are people who control a trust. However, we have not considered a beneficial ownership register for trusts in this paper.”

Reasons for excluding trusts at this time include the need for more analysis. This is because a register would be a significant departure from historic recognition of privacy and confidentiality as among the essential virtues of trusts. Registering beneficial ownership of trusts requires system changes that could result in compliance costs for all involved parties. Based on this and other considerations, the Law Commission felt considerable analysis is still required before it is practical to consider beneficial ownership of trusts.

The ‘Panama Papers’ and other recent investigative media findings have highlighted how criminals are misusing companies and trusts for money laundering, tax evasion, corruption and other crimes, including those in New Zealand.  Criminals increasingly use corporate vehicles to disguise their ownership of assets or their involvement in transactions to avoid detection and to enjoy their criminal proceeds. 

TINZ welcomes the Government’s response to the ‘Panama Papers’, to make changes for foreign trusts and to extend anti-money laundering (AML) regulations to lawyers, accountants and real estate agents.

TINZ is preparing a response to MBIE’s consultation document. We encourage all of our readers to review the documents and consider responding as individuals or through organizations they represent.

A second associated discussion document was released at the same time. It relates to creation of director identification numbers and publication of directors’ residential addresses in the Companies Register.

The deadline for submissions on the discussion documents is 5pm, 3 August 2018.

Links:

The importance of culture with AML/CFT Phase 2

Nicholas Gilmour
Financial crime consultant

Nicholas Gilmour

Financial crime consultant

Guest author

Nicholas was involved in the development of the ‘Phase 2’ legislation as a member of the New Zealand Police Financial Intelligence Unit.

New Zealand is adopting new money laundering and terrorist financing preventative measures. The Phase 2 implementation programme – which extends existing Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) legislation – introduces new reporting entities into a compliance regime.

AML provisions now include lawyers, conveyances, businesses that provide trust and company services, accountants, real estate agents, businesses trading in high value goods, and sports including racing betting. The new reporting entities join banks, casinos, various financial service providers, and some trust and company service providers covered by the Phase 1 AML legislation.

These additional sectors are considered to play an active role in facilitating money laundering and terrorist financing – hence the sensible placement of new AML and CFT compliance requirements upon them.

The level of adherence and scope of applicability will vary from organization to organization. The variations in role, location, understanding and acceptance of the new compliance obligations will undoubtedly test the overall adoption of wide ranging AML/CFT regulations.

Many professionals in New Zealand remain bemused by the need for AML/CFT practices across their particular sector, making employee adherence especially important. Reporting entities – those participating in one or more activities described in the Act – are also challenged by the new obligations. Consequently, the ongoing success for an AML/CFT culture within New Zealand depends on the ability to manage any naivety and hesitation which undermine the intentions of the Act.

Should employees choose to ignore or neglect aspects of an AML/CFT compliance program or lack training in its importance, their commitment to enforce requirements will likely diminish. Not only will this undermine a reporting entities AML/CFT compliance, it will weaken the overall vision and strategy of the entity.

Reporting entities being brought under the Phase 2 legislation will be expected to assume responsibility and make common sense, calculated decisions when performing their duties. However, the culture within any organisation is critical to its overall AML/CFT compliance requirements. Senior management will be expected to play an active role in developing an applicable AML/CFT culture, as failures can have real consequences – none greater than when exposed by a regulator. 

Adoption of an AML/CFT culture needs to be beyond check-box exercises to have a meaningful and effective impact. Building an AML/CFT culture is going to be hard for many organisations. Even as the process of implementation unfolds, and audits are undertaken, regulators will seek to determine whether senior managers, the board of directors, and employees behave with integrity, understand their business areas, relevant risks and comply with the law.

Open Government Partnership reviewer seeks feedback

Keitha Booth
Independent Reporter on
NZ's Open Government Partnership National Action Plan 2016-2018

Keitha Booth

OGP Independent Reporter on NZ’s Open Government Partnership National Action Plan 2016-2018

Now is the chance to give feedback on changes in government’s openness that you have observed as a result of NZ’s OGP National Action Plan 2016-2018.

Keitha Booth, the Open Government Partnership’s independent NZ reviewer, would very much like to hear from you.

She has four questions:

  • In what way has government’s openness changed since 2016?
  • Has government disclosed more  information or improved the quality of the information disclosed to the public?
  • Has government created or improved opportunities or capabilities for the public to inform or influence decisions?
  • Has government created or improved opportunities to hold officials answerable to their actions?

The options for answering each question are:

  • Worsened
  • No changes
  • Marginal change
  • Major step forward
  • Outstanding reform

Please contact Ms Booth by 31 July 2018 at keithabooth@gmail.com with your replies and comment or to arrange a discussion.

NZX needs transparency and modernisation to support New Zealand’s future

Suzanne Snively ONZM Chair Transparency International New Zealand

Suzanne Snively ONZM
Chair
Transparency International New Zealand

Suzanne Snively ONZM
Chair
Transparency International New Zealand

The New Zealand Stock Exchange (NZX) seems to regard initiatives aimed at enhancing its culture or that of its members, as a low priority. This inactivity and the lack of transparency may be stifling the availability of quality equity capital in New Zealand.

The NZX is not keeping up with the pace of transparency and access compared with exchanges around the world and other segments of New Zealand business and government.

A comparison of the NZX and other exchanges in the recently published World Federation Exchange (WFE) Annual Statistics Guide for 2017, suggests that the NZX’s approach is contributing to its potential decline.

Between December 2015 and December 2017, the number of companies listed on our stock exchange declined by nearly 7 per cent while the total number of listed global companies increased by nearly 2 per cent. The NZX has been unsuccessful in attracting new companies to list, with only one last year and ten in 2016. In contrast, the Australian Stock Exchange (ASX) had 233 new listings over the same two-year period.

NZX’s trading activity lacks transparency.

Electronic Order Book (EOB) trades are the trades through an exchange’s electronic trading system where all buy and sell instructions are exposed to market users.  Globally, the proportion of electronic share market trades have been steadily increasing, averaging 72 per cent of all trades by value in 2017.

In stark contrast to international trends, the NZX has a large proportion of negotiated deals.  These are broker-driven, off-market transactions, where the buyer and seller agree on price and volume without the bids or offers being exposed to all participants through the electronic market. 

The NZX also has a larger than average number of “reported trades” – trades reported through a trade reporting facility where only one counter party provides information on the trade.

In other words, in New Zealand almost 70 per cent of share trading, in value terms, occurs off-market through broker negotiated deals. Between 2014-2017 less than a third of transactions, by value, went through the electronic market.

The WFE data shows that New Zealand and Palestine have the lowest number of brokers – eight – of any exchange.  This compares with 221 brokers operating in Australia.  The NZX is effectively controlled by a small number of brokers negotiating large off-market trades for their preferred clients. New Zealand’s exchange lacks transparency because these off-market buy and sell offers are not disclosed, or made available electronically in real time, to all market participants.

New Zealanders say that they want to live in a country that provides them with work they enjoy and that pays sufficiently to support wellbeing, including generating a tax base that funds quality education, health care and housing.  A major component of a growing tax base is a profitable business sector.  For businesses to innovate, expand profitable markets and grow the tax base they require sources of capital that are from informed investors and which are cost-effective and dependable.

Lack of transparency in NZX transactions is stifling the availability of quality equity capital in New Zealand.  The concentration of off-market trading contributes to a reduction in the integrity and transparency of the domestic market.  As the world’s investors increasingly look for places to invest responsively, lack of transparency of the NZX combined with the additional diligance required when there is less trust in an institution, has sucked equity capital away from New Zealand to Australia and elsewhere.

Opportunities and Challenges for Ethical Leadership

L-R: Professor Ian O. Williamson, Dean and Pro Vice-Chancellor, Victoria Business School; Professor Karin Lasthuizen, Brian Picot Chair in Ethical Leadership and Professor Grant Guilford, Vice-Chancellor, Victoria University of Wellington.

New Zealand may consistently score first on Transparency International’s annual Corruption Perception Index, but it should not be complacent and could still aim higher. So said Professor Karin Lasthuizen in her inaugural public lecture at Victoria University of Wellington’s Brian Picot Chair in Ethical Leadership.

“There are new risks to our integrity that we should not be naïve about,” Lasthuizen told her audience at Victoria Business School, where she is in the School of Management.

“Our geographical isolation might have helped New Zealand to create its own culture and good ethics, and it might have protected us for a long period of time, but this has changed – nowadays people can be here much faster and social media brings other worldviews within a mouse click.”

Other factors to consider range from increased international trade, “including doing business with more corrupt countries in the Asia-Pacific region” to “new generations, like the millennials, [that] have a different outlook: what is considered ethical now is not the same as 20 years ago.”

Transparency International New Zealand (TINZ) is proud to have Karin as its Independent Chair of Ethics.

Before joining Victoria University of Wellington at the end of 2016, Lasthuizen was an associate professor within the Integrity of Governance research group at Vrije Universiteit Amsterdam in the Netherlands.

The Brian Picot Chair is named for a business leader who made his mark as director of major supermarket company, Progressive Enterprises and several other companies. Picot, who was known for his strong sense of ethics and concern for others, died in 2012.

Ethical Leadership is part of the antidote for corruption

Professor Lasthuizen’s lecture was entitled Leading for Integrity: Opportunities and Challenges for Ethical Leadership in Aotearoa New Zealand and drew on findings from interviews with 40 chief executives and other high-ranking figures she and colleagues conducted.

“In my view, we can become more aspirational than we are now,” said Lasthuizen. “And here I see an ethical leadership opportunity. We all know that the tone at the top in organisations is crucial and we are fortunate to have many leaders with strong integrity – within the public service, private firms, not-for-profit organisations and within our communities. By investing in ethical leadership, we can put ethics more explicitly on the agenda and raise the bar across sectors and organisations.”

One of her interviewees, Financial Markets Authority Chief Executive, Rob Everett, said “Ethical leadership is about ethics being very core to everything and not added on, and it’s about demonstrating those beliefs at every possible opportunity.”

“In many organisations, integrity management equals legal compliance and following rules, which is just a bottom-line approach,” said Lasthuizen. “Some things might be legal, but is it also ethical, the right thing to do?”

“A values-based approach for integrity management seems to be more promising when it encourages us to talk about what good ethical behaviour looks like and to share good practices. Because we can only maintain our high integrity standards when we want to excel and do the right things all the time.”

“What makes Wellington unique are the close connections between politics and the public, not-for-profit and private sectors,” said Lasthuizen. “Like many say, Wellington is ‘a small village’: everybody knows each other – within only two degrees of separation. Professional networks consist of strong ties and personal relationships. It creates a typical Kiwi culture of social cohesion, friendly people, easy interactions – and many catch-ups over coffee.

“The downside, however, is that in this micro cosmos the market of supply and demand is not optimal, and this increases the likelihood of conflicts of interest, intermingling of politics with the public service, nepotism in recruitment processes, and favouritism within work environments.”

Lasthuizen highlighted an urgent need for a more diverse pool of leaders and managers, and connected ethical leadership to “our social responsibility for people and the planet and for future generations”.

Being low in corruption (as measured by the Transparency International Corruption Perception Index) is not the same as being high on ethics, she said.

“Are we doing the right thing and making the most of it in terms of welfare and wellbeing for each and every one in our society?”

Lasthuizen says ethical leadership means those issues need to be addressed, and an ethical culture created “where we can have those conversations in a polite way and where we can give that feedback or have critical discussions. I don’t have the answer yet as to why people here don’t see that kind of question as the start of an open conversation.”

Editor note: members of the Institute of Directors New Zealand can read a related article “The importance of ethical leadership” in the June/July issue of Boardroom magazine. 

Combatting Bribery and Corruption across Asia and the Pacific

Dr. Karen Webster TINZ Director responsible for Local Government

Dr Karen Webster

TINZ Director 

Many innovative projects and initiatives for combating bribery and corruption were revealed at the recent Transparency International (TI) Asia Pacific Regional Meeting and Integrity Conference (Taiwan, June 2018). Transparency International New Zealand (TINZ) was represented by Operations Manager, Stephanie Hopkins, and Director, Dr Karen Webster. Hosted by Transparency International Chinese Taipei, 18 of the region’s 19 chapters were represented by 58 delegates, together with TI Secretariat staff.  

Contributors came from as far afield as Pakistan, Sri Lanka, Bangladesh, Nepal, Mongolia, The Maldives, Vietnam, Cambodia and Indonesia.  Australia and New Zealand were joined by their Pacific neighbours from Papua New Guinea, Vanuatu and the Solomon Islands.

Projects and initiatives to promote awareness of integrity across the public, private and civil society sectors included:

  • the establishment of anti-corruption agencies (Taiwan)
  • combatting impact of corruption on women (Indonesia, Australia)
  • improving climate governance (The Maldives)
  • the Walk for Integrity fundraising initiative in PNG
  • uncovering public sector bribery in the Solomon Islands
  • support and advocacy for rights to information in Vanuatu, and
  • the Wellington-based Leaders Integrity Forums promoting integrity amongst public sector leaders (New Zealand).
Taiwan Min of Justice Investigation Bureau cup with corruption hotline number

Highlights of the four-day event included an in-depth briefing and site visit to the Taipei Agency against Corruption, responsible for promoting integrity systems and combatting corruption in the Taiwanese public sector. This visit highlighted the rigorous investigation and streamlined prosecution facilities to bring corrupt officials to justice in a timely way.

A two-hour bullet train journey, traveling at up to 240 km per hour, took delegates to the agency’s office in Tainan, Taiwan’s old city in the very south of the country. Here we were treated to a briefing of the southern city’s operations, including protection for whistle blowers.

Most memorable were performances by the finalists of an elementary school competition raising awareness of bribery and corruption.

One of two young winners clearly acknowledged the old way of “no money, no way” (11 years old). The other spoke of the new protection for reporting “If you see something, say something“.

It was both inspiring and heart-warming to see these young advocates promoting a public sector with integrity.

Overall, the attendee Chapters’ placings on the TI Corruption Perceptions Index (CPI) ranged from New Zealand at number 1 with the least corrupt public sector, to Bangladesh at 145th.

Especially poignant was the strong and committed inspirational dedication of the representatives of three Pacific Island Chapters ‎to combating vested interests, bribery and corruption of public officials in their countries.

This was noticed by the Australian DFAT official attending the meeting to observe the impact of its funding provided to TI for its activities in the region. It strengthened the resolve of the Australian and New Zealand Chapters to coordinate with DFAT and MFAT to support the Solomons, Vanuatu and PNG Chapters in their challenges to fight corruption that cruelly undermines the opportunities for prosperity of their citizens.

 

How open is Government’s 2018 Budget data?

How would you rate the usefulness of the 2018 Budget-related information associated with The Minister of Finance, Hon Grant Robertson’s Budget delivery on 17 May 2018

The Treasury seeks your feedback on this information to improve the usability of future budget documents and data sets. Links to the relevant budget documents and to the brief ‘open data’ 4-question survey, are available from  https://treasury.govt.nz/publications/budgets/budget-2018 .

Refer also to Budget day gold nuggets in the June issue of Transparency Times.  

Public Trust Survey 2018: Greater trust in Government

Dr Michael Macaulay, Associate Dean Professional Education, Acting Director, MBA, Associate Professor (Public Management), Victoria University of Wellington Business School

Dr Michael Macaulay

TINZ Member with Delegated Authority

Open Government Partnership, Whistleblowing

Its findings run counter to the decline of trust in democratic political institutions as seen within many countries.

Asked whether they trust the government to do what is right for New Zealand, 65 per cent now answered ‘yes’ compared with 48 per cent in 2016. A total of 59 per cent say they trust government to deal successfully with national problems, up from 47 per cent in 2016. Furthermore, 49 per cent think New Zealand citizens’ interests are equally and fairly considered by the government, up from 39 per cent.

The Institute of Governance and Policy Studies (IGPS) Director, Dr Simon Chapple, stated “This large boost in trust surrounding government was unexpected and really positive.” As the former Director of the IGPS responsible for the original 2016 survey, I’m slightly less surprised but am no less pleased with such a positive development.

The IGPS work does not look for any rationale behind respondents’ choices. Without detailed further research, nobody can say with any certainty why there has been a rise in trust. But the above results are perhaps not quite so dramatic as some of the headline messages suggest. 

In our original 2016 survey, we found that only 9 per cent of respondents had either lots of or complete trust in government Ministers, with only 8 per cent across the same categories for MPs.  In 2018 those figures have risen only marginally to 14 per cent and 12 per cent respectively.  Whereas the upsurge of trust in the government generally has been notable, it is far less so specifically in relation to Parliamentarians (Members and Ministers).

Why might this be?  And is it important?  Perhaps the broader question is: why do we trust people or institutions to begin with?  There are a number of reasons: we find them to be credible; we know them, or at least we feel we know them; they have proven themselves to be reliable.

All new governments are likely to score relatively highly on these subconscious measures.  The credibility of a new government is underlined by its success in an election.  There tends to be an upsurge of popularity, which relates to the intimacy factor and our sense of knowing a public figure as so many do with Prime Minister Ardern, for example.  Finally, a new government has not yet been tested on its reliability, with resultant reduced-capacity for a negative trust relationship to accrue in that respect.

But the main reason I’m not entirely surprised is that New Zealand continues to score highly on other trust measures both at home (e.g. the Kiwis Count Survey) and abroad (e.g. OECD trust measures).  In many respects it may have been that 2016 was the outlier with the new results showing a return to the mean.  Either way, there is no denying that a high trust culture has positive impacts, and long may New Zealand be inured from the political disruption that is affecting so many democracies at the minute.

Details of the IGPS Public Trust Survey and a RNZ interview with IGPS Director Simon Chapple, reveal other trends including a decline of trust in churches and charities.   

Procurement focus at Leaders Integrity Forum

Tod Cooper

TINZ Member with Delegated Authority for Procurement

Procurement – not your average crowd generating topic.  However, with recent high profile fraud and corruption cases across both public and private sectors, annual central government spend on goods and services in the order of $42 billion, it was no surprise there wasn’t a spare seat in the house at the Public Sector ‘Leaders Integrity Forum’ co-hosted by the OAG and TINZ in May. 

Forum Chair and Auckland Council Chief Executive, Stephen Town, introduced the theme by discussing the worrying skill gap in New Zealand. With $28 billion of Auckland Council spend planned over 10 years, the impact of failure would have significant consequences.  Stephen agonized over how we could attract the right skills, noting that with immigration comes diversity in cultural and business practices.  These groups often assume that backhanders and cash incentives are how business operates here too. This is far from the case!

Town introduced his General Manager of Procurement, Jazz Singh. Jazz described the huge scale of procurement by Auckland Council and the work done to lift their associated standards. The automation and investment in technology has made the team efficient, consistent, and paperless. This has enabled them to take a more principles-based approach, and free up valuable time to focus on knowing the business, knowing the market and clearly understanding the economic, environmental and social outcomes.  “This is what creates an actionable impact.”

The next guest Town introduced was Paul O’Neil, General Counsel for the Serious Fraud Office. O’Neil talked specifics on the Auckland Transport case and what we learn from others’ mistakes. For example, the most obvious red flags for fraud are people not taking leave, being overly protective of certain supplier relationships, being too keen to “help out” with tenders, or having a lifestyle out of keeping with their income.  Finally, O’Neil reminded everyone about the importance of never making exceptions to policy settings or controls based on seniority or force of personality. Senior leaders needed to understand and accept that good behaviour starts at the top and cascades through the whole organization, including suppliers. 

The final speaker was Mark Richards, Director Capability Services, New Zealand Government Procurement and Property at the Ministry of Business, Innovation and Employment (MBIE).  Richards discussed the need for chief executives and senior managers to involve themselves more. This would create clearer oversight of their organization’s procurement and more active engagement with key and critical suppliers. Richards also discussed the importance of encouraging innovation, starting at the beginning, rather than later within a strictly controlled procurement process.  “We need to engage the market early and talk to people inside and outside of our organizations”.

There were many varied questions, but a member of the audience praised Auckland Council’s use of procurement to not just provide great value and effective goods and services, but to develop and support the city’s people.  Now that’s money well spent!

blog prepared by the Office of the Auditor-General, further details this forum discussion.

Banking Ombudsman Scheme

Liz Brown
Member with Delegated Authority
Financial Integrity System Assessment, Local Government, National Integrity Assessment Programme

by Liz Brown

TINZ Member with Delegated Authority
Financial Integrity System Assessment

The Banking Ombudsman has become a structurally independent part of the finance sector.

Ombudsmen help address imbalances of power when an individual has a grievance against a large and powerful organisation. They originally dealt with grievances between individuals and government departments and agencies. While not an advocate for the individual, an ombudsman has experience, expertise and rights of access to information to make independent and authoritative assessments of grievances.

The potential for a Banking Ombudsman was recognised in the late 1980s after deregulation of the finance sector, as a recourse for resolution of consumer problems (issues and complaints). The banking industry established this scheme in 1991. Nadja Tollemache, New Zealand’s first Banking Ombudsman, brought her prior experience as a parliamentary ombudsman. She introduced the techniques and practices of that office into the new organisation.

Although independent of government and of the banks, in practice, the scheme could have been disestablished by the industry at any time in its first 15 years of operation when participation of individual banks was voluntary. Law changes in 2008 provided for finance sector dispute resolution schemes meeting set standards, to become approved schemes. All financial services providers were required to belong to an approved scheme.

The Banking Ombudsman was among the first to achieve approval. Many of the criteria for becoming an approved scheme were based on its structure and practices. All New Zealand registered banks providing services to the public are members of the Banking Ombudsman, as are some credit unions and building societies.

The Global Financial Crisis severely tested the Banking Ombudsman who dealt with a wave of complaints between 2008 and 2012 about the selling of investments in two ING investment funds. When the last of over 650 investigations was closed, nearly $26.5 million had been paid in compensation. The Banking Ombudsman can make formal awards of compensation of up to $200,000 for financial loss and up to $9,000 for inconvenience, which banks must comply with.

The office has a strong focus on speed and informality and complaints are settled quickly. Alongside dealing with complaints, the Banking Ombudsman also works to prevent complaints and resolve systemic issues.

Its website, www.bankomb.org.nz provides useful information and advice about banking practices as well information about how to make a complaint and what to expect.

Transparency International re-accredits TINZ for three years

Stephanie Hopkins
TINZ Manager, Operations

Stephanie Hopkins
TINZ Manager, Operations

by Stephanie Hopkins
TINZ Manager, Operations

Editors Note: Stephanie in her role as TINZ Operations Manager was instrumental in marshalling TINZ’s accreditation through the process. We thank her for her hard work.

TINZ Accreditation

Starting late last year, Transparency International NZ (TINZ) underwent its three-yearly review process. We are pleased to report that we continue to be a fully accredited chapter.

Fully accredited national chapters are required to undergo a thorough review process every three years, aimed at ensuring continuous compliance with Transparency International (TI)’s standards and strengthening the work of the chapters.

The  accreditation letter from the international chair of the board, Delia Matilde Ferreira Rubio,  noted ….”Transparency International New Zealand will, therefore, continue as a fully accredited National Chapter of Transparency International, enjoying all the rights and privileges of a Member of TI under the TI Charter…

…We also are pleased to acknowledge that your Chapter continues to make a significant contribution to the TI Movement in your country and that the Movement is truly grateful to you and your colleagues for that.”

Transparency International national chapters

Delia Ferreira Rubio
Chair Transparency International

Transparency International consists of more than 100 chapters spread throughout the world – locally established, independent organisations – that fight corruption in their respective countries.

From small bribes to large-scale looting, corruption differs from country to country. As chapters are staffed with local experts, they are ideally placed to determine the priorities and approaches best suited to tackling corruption in their countries. This work ranges from visiting rural communities to provide free legal support, to advising their government on policy reform, which is in line with some of the work TINZ undertakes here in New Zealand.

Corruption does not stop at national borders. The chapters play a crucial role in shaping the collective work and realising TI’s regional and global goals, such as its Strategy 2020. TI’s multi-country research and advocacy initiatives are driven by the chapters. 

Transparency International’s chapter accreditation process

National Chapters and Individual Members are key components of the Transparency International movement. Accredited chapters account for two-thirds of the voting power at Annual Membership Meetings and, together with the individual members of TI, elect the Board of Directors.

The accreditation and policy aims is to:

  • Protect the integrity, cohesion and reputation of TI 
  • Strengthen and support the national chapters of the movement.

Under the direction of the Board, the secretariat and the Membership Accreditation committee run a transparent and collaborative accreditation process to ensure that chapters continue to uphold the values and principles of the movement.

The very thorough chapter accreditation process aims to ensure the quality and integrity of Transparency International’s work around the world. TINZ are pleased to continue this very important work in New Zealand as a fully accredited chapter.

In case you missed it

Money laundering

ASB bank owner receives largest fine in Aus corporate history The Commonwealth Bank has agreed to pay the biggest fine in Australian corporate history for breaches of anti-money laundering and counter-terrorism financing laws that resulted in millions of dollars flowing through to drug importers.

Anti-money laundering rules ineffective, says study. Anti-money laundering rules are almost completely ineffective in stopping criminals, according to this new study.

Lawyers required to report money laundering suspects As of 1 July, lawyers are now subject to anti-money laundering legislation, which will require them to dob in clients making suspicious transactions. But at least one expert is dismissing the new law as a box-ticking exercise that won’t catch the vast majority of criminals. RNZ Audio (including comment by TINZ Chair.  “….. It doesn’t mean using laws as  something that becomes a constraint on how we do things, but instead ….. as guidelines as to how we can do things better“).

New Zealand limited partnerships, in combination with Nevis limited liability companies, being peddled as ‘one of the best and unique products’ in the murky world of offshore finance Interest.co.nz has come across an offshore finance product that combines corporate structures from Nevis and NZ for use by those wanting to hide money and/or assets from prying eyes.

Why choose New Zealand as an offshore financial centre? ‎Vivier and Company media release published on openPR.

New Zealand Beneficial Ownership

Government pushes for beneficial ownership register for NZ companies & limited partnerships to stop ‘erosion’ of New Zealand as a good place for honest business By Gareth Vaughan -The Government plans to exclude trusts from beefed up company beneficial ownership requirements due to their historic privacy and confidentiality strengths, and to avoid increased costs for individuals, businesses and the Government itself.

New Zealand not immune to international financial crime – minister The government has unveiled a potential set of law changes to crack down on overseas criminals potentially misusing companies in New Zealand – RNZ

NZ director rules face review in wake of scandals More people could be barred from being company directors as the Government seeks to improve New Zealand’s tarnished reputation for clean business.

Increasing the Transparency of the Beneficial Ownership of New Zealand Companies and Limited. MBIE discussion document (June 2018). 

Auckland Council

Auckland mayor Phil Goff defends stalled report Auckland Mayor Phil Goff says claims his office withheld a report to RNZ about a future downtown stadium are “misinformation”.

International

Women and corruption: What positions must they hold to make a difference? New research looking at 125 different countries has found having women in Government significantly reduces corruption.

Parliamentary ‘man-ban’ would reduce corruption – study New research looking at 125 different countries has found having women in Government significantly reduces corruption.

‘Murdered’ Russian journalist Arkady Babchenko turns up alive

Russian journalist and Kremlin critic Arkady Babchenko killed in Kiev Arkady Babchenko, a Russian journalist critical of the Kremlin, has been killed in Kiev.

Modern Slavery

Is Australia’s anti-slavery bill tough enough? The Australian Government introduced a new bill to Parliament to improve conditions for workers by stamping-out egregious exploitation in supply chains supplying goods to Australian consumers. A Modern Slavery Act could be enacted in Australia within the year. Opinions differ about whether the imminent law is fit for purpose, with investor groups arguing that, without an accompanying list of reporting entities, its value is limited.

Pacific

NZ investigators expose slavery and human trafficking at sea Investigators from New Zealand are behind a global operation that has exposed shocking incidents of human trafficking, slavery and abuse at sea aboard international fishing fleets

Fiji Human Rights head cleared of corruption Fiji’s corruption agency says it has cleared the head of the Human Rights Commission of any misconduct 

Fiji’s Human Rights and Anti-Discrimination Commission searched Fiji Village is reporting that it understands the search relates to a complaint that was lodged with FICAC against the commission’s director, Ashwin Raj.

Corruption investigation launched into Samoan top civil servant The police in Samoa have launched an investigation following a complaint alleging corrupt practises by the chief executive of a state entity.

Fiji’s Rabuka pleads not guilty The leader of Fiji’s largest opposition party, Sitiveni Rabuka, has pleaded not guilty to charges brought by Fiji’s anti corruption authorities.

Sport

Sport NZ launches review into athlete welfare as cycling, football scandals emerge Sport NZ is examining whether national sporting bodies are failing in their duty of care to athletes as Cycling NZ and NZ Football grapple with allegations of bullying, intimidation and inappropriate behaviour in its elite programmes.