Transparency Times March 2017

From the Chair

Suzanne Snively Chair Transparency International New Zealand

Suzanne Snively Chair Transparency International New Zealand

With daily news from the United States of yet another case pushing the boundaries of impunity and corruption, the Auckland Transport Case was a re-assuring example that New Zealand is instead gaining valuable experience about the identification and prosecution of white collar crime.

With last month’s sentencing, a key question is: “Does the punishment fit the crime?” The answer is a resounding no!

The case

Showing leadership and courage, held to account by a tenacious media, and working to support the Serious Fraud Office, Auckland Transport (AT) invested $2.5 million in the case. In addition, there are costs to the taxpayer of the work of the SFO to prepare the case.

The case was complex, being brought against three people in regards to a rich tapestry of bribes including entertainment, taxis, overseas trips, hotel nights, liquor, extravagant dinners and payment of personal phone accounts.

Former senior Auckland Transport and Rodney District Council (RDC) Manager, Barrie George was the first to be sentenced.

George pleaded guilty to two charges of accepting bribes relating to roading contracts Projenz carried out for RDC and AT between 2006 and 2013. He was convicted on 3 August 2016 for accepting bribes of gifts including travel vouchers, entertainment and liquor worth over $100,000 between 2005 and 2012.

Murray Noone and Stephen Borlase stood trial for over 8 weeks in 2016 after pleading not guilty to bribery and corruption charges brought against them by the SFO. On 9 December 2017, they were found guilty of corruption worth more than $1 million relating to Auckland roading contracts.

Noone, a former Director of Transportation at RDC and later an AT employee, was found guilty of all six charges of corruption or bribery. As an official, he made up “consultancy” payments of $1.1 million with gratuities of $56,000.

Despite a clear policy at RDC, Auckland Council and AT, neither George nor Noone disclosed the payments that they were receiving.

During the trial, Auckland Crown Solicitor, Brian Dickey, described how by overseeing, authorising, managing and receiving benefits with Projenz, George and Noone led the development of a culture tolerant of corruption within the Council’s roading maintenance divisions.

Projenz Director, Borlasse was found guilty of eight charges of corruption or bribery of a public official (in this case, a local government employee) and not guilty of four charges of obtaining a document of pecuniary advantage.

Findings

Justice Sally Fitzgerald’s process and judgement are an important case study for all those involved in procurement. Her findings provide a ground-breaking resource for both private sector contractors, as well public officials, for determining acceptable bounds for gifts and hospitality for public officials. Bell Gully Senior Associate and former TINZ Director Fiona Tregonning provides a nice recap table in her article: New Zealand public sector on top – but fight against corruption real

Sentencing

Judge Fitzgerald faced a major challenge because of the lack of precedent, internationally as well as nationally, for sentencing white collar crime.

George was sentenced to 10 months home detention, having pleaded guilty to the two charges against him. Noone, whose behaviour was described as “a gross breach of trust”, was sentenced to five years jail. Borlase was sentenced to five years, six months jail.

Commentators have made comparisons with life sentencing for murder, or reparations for fraud.

Corruption has the potential to be even more dangerous.

While nobody directly loses their lives, the environment created and the exchanges through bribery and corruption reduce the focus and productivity of public officials. In just about every form of public service, be they road maintenance or health provision or airline safety, breaches of duty may have a major impact on the safety of many more people than the total number murdered each year.

Further as Judge Fitzgerald said when sentencing Noone and Borlase: “Put simply, the public trust in the manner in which officials carry out their duties is seriously undermined.”

But even this is only a part of the damage corruption brings.

As Julie Read of the Serious Fraud Office (SFO) said at the trial, “It appears within the road maintenance division during this period [2005 – 2013] the acceptances of gratuities was considered the norm. That sort of behaviour cannot be tolerated if we are to continue to promote New Zealand as a safe place to invest and do business.”

Noone’s defence lawyer, Simon Lance, defended the allegations about the impact of his client’s behaviour on New Zealand’s reputation by saying there was no way to measure such an effect. He clearly has a lot to learn both about the importance of the reputation of organisations like AT that rely on the trust of 99% of its community of rate payers who honour their tax obligations and the importance of a reputation for integrity as a driver of a modern economy, including the value of brand.

New Zealand’s reputation for trusted public officials and being a good place to do business can be directly measured in terms of the continuing strong growth in tourism numbers, in inward investment, in the price of our wines offshore, the pricing of our imports and the premium value many of our locally produced/products receive offshore. These amounts alone justify the direct costs to the taxpayer for the Justice system’s involvement in this case, as wall as that of the SFO, Auckland Transport and others.

The clarity of Justice Fitzgerald’s convictions of the three individuals in this case adds to the growing awareness that doing the right thing can add even more to New Zealand’s GDP and in turn, to its tax base, the efficiency of public services and ultimately, the availability of jobs. It is because of this that criminals such as George, Noone and Borlase should receive sentences that suit the crime. That would include satisfactory completion of training in civics, the rule of law, teamwork, project management and economics prior to being released from prision after a lenghty sentence.

Suzanne Snively, Chair
Transparency International New Zealand Inc.

Message from the CEO

Janine McGruddy

Janine McGruddy
TINZ Chief Executive Officer

by Janine McGruddy

TINZ Chief Executive Officer

Kia ora koutou TINZ Members

I am very fortunate in my role as TINZ CEO to spend a lot of time working with a variety of organisations, from universities and other civil society organisations to government departments, unions and international entities. I have learned that it takes real effort, mutual respect, and good will on both sides to reach agreed understandings about how best to make progress on issues that are of great importance to all of us. We are all different, but that is what makes the collaboration stronger and more likely to last.

Unity amongst integrity stakeholders is the key to getting beyond differences of opinion or other areas of focus. In the current global political climate, it is essential as leaders that we put aside our minor differences, and unite around what we can achieve together.

Sadly, there are those out there that claim to want these things, but use every opportunity to knock the very organisations that have the most in common with the issues or values they claim to espouse. Some have even suggested that this is their goal. They deliberately divide and conquer as a perverse way to gain more glory or recognition for themselves.

And, as always, the best way to deal with that behaviour is to ignore it and to continue to put your energy into what you know can make a real difference, not just make headlines. There is a very real deep satisfaction from making connections and developing affiliations with like-minded people. Everybody wins from the fresh perspective and energy that arises from trust and willingness to work to find solutions to the problems we face as a planet.

We know that it can feel great to stand on the side lines and cast stones at those that do not meet our lofty standards – nothing better than thinking you are right and they are wrong. But that does not produce the outcomes that are needed. It is much better to use those stones to build paths and to help each other understand better ways of doing things and knowledge of the real issues the other faces.

He rangi tâ matawhâiti, he rangi tâ matawânui. A person with narrow vision has a restricted horizon; a person with wide vision has plentiful opportunities.

Ngâ mihi

Janine

2017 New Zealand Financial Integrity System Assessment

Deadline for wider formative consultation
extended to 19 April 2017

Transparency International New Zealand’s (TINZ) 2017 New Zealand Finance Integrity System Assessment (FISA) is the first ever review of the integrity systems of any country's financial system. It covers the Reserve Bank of New Zealand (RBNZ), the Financial Markets Authority (FMA), the Commerce Commission, the Department of Internal Affairs (DIA), Trustee Corporations, the Ministry of Business Innovation and Employment (MBIE), the Banking Ombudsman, the Insurance and Financial Services Ombudsman, Financial Services Complaints Limited and Financial Disputes Limited, registered banks, non-bank deposit-takers, co-operatives, KiwiSaver providers, and the payments system.

The financial system has an impact on all New Zealanders. Amongst other things, financial services organisations such as registered banks, financial services and money co-ops, play a key role in looking after your deposits. TINZ has had focussed comments from those organisations that will be assessed. It wants to hear from those who use the financial system to be sure that the questions being assessed reflect how public trust in the system is maintained.

View the draft assessment for consultation as of 6 February 2017. Please sign up to participate in the consultation by completing the form on the right. Alternatively download the FISA survey document file and return it to fisa@tinz.org.nz with tracked changes.

TINZ’s formative consultation is underway on the form of its proposed survey on the integrity of the financial system, namely the 2017 New Zealand Financial Integrity System Assessment (FISA). The aim is to integrate feedback from readers and others by the end of April into a final assessment package. Then, a survey of all the individual financial organisations that make up the financial system is planned. With the extension of the consultation phase, it will commence from 1 July 2017.

The assessment of the finance system as a whole begins 1 August 2017.

FISA is intended to offer customers, citizens, communities, civil society organisations and businesses detailed information about the way in which the financial system prevents corruption, reinforces core ethical values and strengthens integrity systems. Equipped with this knowledge, citizens and customers can both identify good performance and push for improvement. At the same time, financial institutions can choose to set out clear priorities to develop their activities aimed at preventing corruption while seeking the additional returns that come when organisations adopt a pro-active role to promote their integrity.

Through these additional returns, New Zealand financial institutions will be able to continuously innovate, upgrade their services and engage with international capital markets to bring down development-capital interest rates for New Zealand household and business borrowers. Financial institutions know that public trust is important and that corruption scandals, collusion, corrupt behaviour and a lack of transparency damage that trust.

The global financial crisis was a dramatic event that impacted strongly on economic and individual well-being – many financial institutions and organisations were found wanting. Yet afterwards, internationally, while there was change to their structures, many of the features that support unethical behaviour still exist. It may take the disruption of crypto-currency trading, peer-to-peer lending, crowd funding platforms and other technologies before the international system finally wakes up. Of course, it is also important to ensure these new electronic financial systems are built on strong integrity principles.

The FISA formative consultation is in the spirit of demonstrating how consultation can work when people are given the time to provide feedback while the approach is being developed. Two work-in-progress consultation drafts have been distributed to the TINZ database – one in November 2016 and an updated version in February. The first page of the latter sets out specific questions to help shape your feedback. DO TAKE A MOMENT NOW TO DOWNLOAD A COPY AND PROVIDE FEEDBACK. You are welcome to comment in detail by sending back a word version of the draft with tracked changes. Even single comments about what is good and what could be better for financial system integrity provide useful insights.

Note too that the focus of the assessment is the prevention of bribery and corruption in the financial system through an ethical, values-based culture (the integrity system) and then realising the benefits through process and strategic direction.

This initiative is one where yet again, New Zealand is in a position to show the way forward. Its position will be stronger the greater the engagement of our readers in shaping the assessment approach.

NZ banking and finance services

Brendon Wilson

by Brendon Wilson

TINZ Director

Writing for Employers and Manufacturers Association

BusinessPlus Magazine

By world standards, New Zealand’s banking and financial sector is small. Even so, the sector aims to be accessible to its retail and business clients. Australian and New Zealand banks have good credit ratings. The value of these were demonstrated as they came through the global financial crisis better than counterparts in most parts of the world.

It is important for New Zealand’s banking and finance sector to be resilient, efficient and innovative to enable business growth, export expansion, access to capital for investment in plant and innovative product development. Debt finance plays a pivotal role for NZ companies in meeting their customer expectations and facing the world’s competitive innovators.

So how can our banking and finance sector improve and show its responsiveness to the needs of New Zealand business?

As a New Zealand business, do you identify with some of these typical issues?

  1. Your earnings just cover your costs, with seasonal patches when they don’t
  2. You work long hours
  3. Your business’s tax regime is overly complex and compliance costs are high
  4. Health and safety requirements have recently become more demanding
  5. You receive next to no interest on your deposits
  6. You have to meet banks' timeframes for deposits – e.g. your biggest sales may be on week-ends when banks aren't open, so your deposits often can’t be made in time to cover outgoings
  7. When you borrow for expansion or working capital, your interest rates are 3-5 % above liber, meaning your competitors may be paying considerably less for their debt – even if your business is local, you are exposed to offshore competition and costs‎
  8. To borrow at all, banks require tangible, often personal assets, which means many mortgage their homes to acquire business capital – a serious disincentive to opportunity, growth and innovation, adding personal risk.

Transparency International New Zealand (TINZ) is undertaking a consultation process to design an assessment of the New Zealand financial sector’s current performance. Independent (not TINZ) professional assessors will work with banks and financial institutions to establish their real responsiveness and whether regulation is playing a suitable role. TINZ Financial Integrity System Assessment (FISA) aims to objectively assess our financial system’s approach to building trust with its customers.

The IMF reports that despite the GFC, only around 2% of the world's banks have changed the way they do business, including the strengthening of their governance and integrity systems to reduce risk, and preventive measures against bribery and corruption. Many of the features that support unethical, risky, costly financial behaviours still exist. TINZ’s FISA assessment aims to discover whether New Zealand banks and financial service providers are different, and in what areas.

Assessed, proven transparency, accountability, strong integrity systems and core ethical values will illuminate the qualities of our B&F services and will enable lowering costs of corruption risk and poor practice, and the risk margins they carry.

Given the importance of reputation to New Zealand business, are risks to economic growth being lessened through our financial system, or are risks adding costs to all our operations that stymie innovation, opportunity and growth?

TINZ has designed the FISA to give an independently-assessed, professional, objective overview of how well the New Zealand financial sector’s meets expectations and requirements, and will result in the development of initiatives and tools to reinforce a culture of integrity and realise greater benefits for business.

As the New Zealand economy continues to grow and become engaged with new patterns of business and new global partners, it increasingly needs to build relationships with and within countries with differing standards. For prudential purposes, the New Zealand financial sector needs to monitor risks that are associated with this diversity of business relationships.

The recently-announced sale of UDC Finance by ANZ to Chinese interests reminds us of the openness of New Zealand's financial organisations to global economics. It is important that we are open to world competitive capital and services, but it is important that all those providing financial services to New Zealand businesses are aware of what it takes to meet customer and integrity expectations here, and demonstrate how they design their processes to meet them. This contributes further to New Zealand’s reputation.

The assessment (FISA) examines the extent to which the financial system meets and adds to our reputation, and harvests for clients and our economy the benefits of a strong reputation.

It may take the disruption of cyber-currency trading, peer-to-peer lending, crowd funding platforms and other technologies before the international financial system finally recognises that change is needed to maintain the public's and business’s trust. It will also be important to ensure these new mould-breaking financial innovations are built on strong integrity systems, and meet our needs and expectations in open visible ways.

The progress of TINZ’s FISA assessment will feature in future articles [to the EMA].

We encourage you to look at the current FISA draft assessment, and let us know your thoughts. Click here View the latest draft assessment for consultation.

The Government’s role in protecting New Zealand’s important information

Andrew Hampton Director of the Government Communications Security Bureau

Andrew Hampton

Andrew Hampton, Director of the Government Communications Security Bureau (GCSB), spoke to Transparency International New Zealand’s February Board meeting.

He spoke about the role of Government in protecting New Zealand’s important information. In his conclusion he outlined his priorities listed below.

  • Implementation of the new legislation which is currently going through Parliament.
  • Continuing to build public trust and confidence – being more open and accessible through engagements like this is one of the factors which can contribute to this.
  • Increasing the Bureau’s effectiveness by working better with others, both internally and externally.
  • Involving the customers of our cyber security, information assurance and intelligence products more in how we design, deliver and evaluate services.
  • Developing our people and their capabilities – with additional investment from Government comes the need to grow our people, both in number and building their capabilities. This also creates opportunities broaden the diversity of our staff so we can better reflect the community we serve and bringing a greater range of perspectives to our decision-making.

Notes from the complete speech are available from our website.

Corruption prevention conference in Timor-Leste

Timor-Leste Conference panel

Corruption Prevention Conference in Timor-Leste panel. Left to right: Moderator: Dr. José Teixeira, Lawyer; Ms. Janine McGruddy, Chief Executive Officer, Transparency International New Zealand; Dr. Artidjo Alkostar, Judge of the Supreme Court of Indonesia; Prof. Jorge Cláudio Bacelar Gouveia, Professor of Law of the University Nova of Lisbon; Dr. Dionísio Babo Soares, Phd, Minister of State, Coordinator of State Administration Affairs and Justice and Minister of State Administration.

Timor-Leste – the challenge of corruption to nation building and the need to re-awaken its revolution leaders to the fight against corruption

Transparency International New Zealand was very honoured to be invited to present a paper in early February at a conference in Timor-Leste titled Parliament's Commitment to Preventing and Suppressing Corruption – Preventing Corruption vs Rights, Liberties and Guarantees.

Statue of Nicolau Lobato

Statue of Nicolau Lobato, a hero of the country’s independence movement and, briefly, its President. He was killed in 1978, three years into the 24-year Indonesian occupation that thwarted the former Portuguese colony’s independence until 2002.

The invitation came from President of the National Parliament H. E. Adérito Hugo da Costa, a leader with serious concerns on the effects of corruption on nation building in Timor-Leste.

TINZ was represented at the conference by its Chief Executive Officer, Janine McGruddy.

The conference was an ambitious undertaking for the young government. The objectives of the conference are listed below.

  • To reinforce the interest of citizens in fighting corruption.
  • Encourage the determination of competent institutions in decision-making and action to prevent and suppress corruption.
  • To raise the level of citizens' awareness of the content of the United Nations Convention against Corruption and its relationship with the national legal order.
  • To know the state of corruption in the country and the implementation of public policies in the field of prevention and repression of corruption.
  • Identify the obligations to criminalise conduct contained in the United Nations Convention against Corruption.
  • To assess compliance to the United Nations Convention Against Corruption within the limits set by the Constitution of the Democratic Republic of Timor-Leste.

Timor-Leste corruption challenges

The challenges facing anti-corruption efforts in Timor-Leste are quite formidable.

Corruption is a major challenge for any new developing nation. The opportunities for corruption are plentiful in a new, inexperienced and rapidly growing public administration. Timor-Leste in particular is dealing with considerable oil industry financial inflows, providing a ready source of funds for illegal activities.

Anti-corruption efforts

Since achieving independence in 2002 through determination, bravery and a strong desire to improve the lot of the people; Timor-Leste has made progress in its fight against corruption.

Fundamental values of democracy and the rule of law, including transparency and the integrity of public office, are explicitly enshrined in their constitution.

Timor-Leste is a signatory of the United Nations Convention on Anti-Corruption, making good progress on the convention's recommendations. Consistent with UNCAC they have:

  • stablished a dedicated agency to combat corruption in the form of the Anti-Corruption Commission;
  • worked with UNDP and other NGO’s on educating public and public servants by developing resources including television programmes on the misuse of public property by public servants, and explaining the role and work of Timor-Leste’s Anti-Corruption Commission (ACC);
  • published an Anti-Corruption Dictionary and a Strategic Guidance for Outreach Education for public servants.

These efforts have all helped shed light on the illegality and impact of corruption on Timor-Leste’s economy.

Ongoing work on whistle-blowing and freedom of information legislation, the development of e-portals for budgets and procurement in some government departments, indicate they are on the right track to fighting corruption.

The successful prosecution of high-level public officials is a tangible sign of Timor-Leste’s ongoing commitment to fighting corruption. Their efforts appear to be paying off. For example, their climb from #123 to #101 in the Corruption Perceptions Index is an impressive shift.

TINZ was asked to focus on public policies to prevent and fight corruption. It was an honour to be asked to be a part of this conference. Speaking engagements such as this reinforce New Zealand’s reputation for low public sector corruption and as a world leader in corruption prevention efforts.

Timor-Leste's Parliament was encouraged to build on the foundation they have already established through:

  • strengthening existing compliance tools;
  • building on the work of their Anti-Corruption Commission (ACC) – including strengthening the powers of the ACC to prosecute;.
  • prioritising sustainable levels of funding for anti-corruption institutions; and
  • by making further training and education available for all public servants.

Further, CEO McGruddy suggested that the their ACC hold monthly Leaders Integrity Forums for Parliamentarians and Public Sector Leaders. Operating under Chatham House rules, similar forums offer a safe place for conversations about Anti-Corruption activity, and keeps thinking fresh and focussed on issues and positive, practical examples of best practice.

The support and leadership from all parliamentarians for the implementation of public policies in the field of prevention and repression of corruption, will help Timor-Leste to build the integrity systems and integrity culture it needs to face the ongoing work of nation building.

Common reporting standard

Very quietly, IRD is implementing a Common Reporting Standard devised by the Organization for Economic Cooperation and Development (OECD). The new code aims to ensure automatic information sharing between tax authorities globally.

The Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act received Royal assent on 21 February 2017. The Bill was introduced in August 2016, reported back to Parliament by the Finance and Expenditure Select Committee in November 2016 and completed its third reading on 14 February 2017.

New Zealand is one of more than 100 countries implementing a Common Reporting Standard (CRS) devised by the OECD. The new code aims to ensure automatic information sharing between tax authorities globally.

While the new trust register is not covered by CRS protocols, Prime Minister Bill English’s Government has made clear, in notes accompanying its legislation, that it intends to share details to other jurisdictions “as a matter of course.”

Open Government Partnership report on New Zealand’s first action plan

At the end of February 2017, the Open Government Partnership (OGP) Independent Reporting Mechanism (IRM) published the end of term report for New Zealand’s first National Action Plan (NAP). The report covers the full action plan implementation period of 1 July 2014 through 30 June 2016.

In the summary of findings from the IRM researcher Steven Price, it is noted that: “the government’s process falls short of OGP’s co-creation guidelines, the commitments lacked clear activities for implementation, and the gains were marginal.”

This assessment was as expected. It follows from a draft report that extensively described the shortcoming of the first NAP.

New Zealand is currently working to fulfil the commitments of its second National Action Plan submitted in September 2016.

The end of term report is available on the Open Government Partnership website.

Wellington whistleblowing event recap

Hero or traitor? The role of whistleblowing in our society

To be a truly democratic society we should all feel empowered to speak out and ‘blow the whistle’. But this is never as easy as it sounds.

On Tuesday the 21st of February, Transparency International New Zealand (TINZ) and Victoria University of Wellington (VUW) Institute of Governance and Policy Studies (IGPS), held a panel on the dilemma of whistleblowing.

Hero or Traitor? The Role of Whistleblowing in Our Society brought together experts from a range of backgrounds.

The Chair for the evening was Lyn McMorran, Executive Director of the Financial Services Federation, the industry body representing responsible, ethical finance and leasing providers in New Zealand.

Whistleblowing event panel Michael Macaulay &mdash VUW, Rebecca Rolls &mdash SFO, John Perham &mdash Crimestoppers and panel chair Lyn McMorran

Whistleblowing event panel Michael Macaulay of VUW, Rebecca Rolls of SFO, John Perham of Crimestoppers and panel chair Lyn McMorran

The speakers were:

  • Rebecca Rolls, Investigations General Manager from the Serious Fraud Office (SFO).
  • John Perham, Board Chairman of Crimestoppers – a charity, independent from Police, which offers nationwide channels through which people can provide information about crime and wrongdoing and be guaranteed anonymity.
  • Dr Michael Macaulay, Director of the Victoria University IGPS and Co-Lead Researcher on the biggest whistleblowing research in Australasia.

The aim was to discuss the current state of whistleblowing within New Zealand, the challenges whistleblowers face, and how we can all contribute to strengthening and understanding whistleblowing and its practice.

Lyn McMorran defined what whistleblowing is and why it is so important in the context of the Financial Services Federation. Presenters then made a brief presentation followed by a discussion session.

Rebecca Rolls, explained the role of the SFO in whistleblowing cases and provided some examples of successful whistleblowing cases she had witnessed in her time with the SFO.

John Perham provided an excellent overview of what Crimestoppers is, how it engages with the authorities and the importance of anonymity in protecting the identity of individuals to encourage successful whistleblowing.

Dr Michael Macaulay discussed the research he is doing in collaboration with Professor A.J Brown of Griffiths University: “Whistling While They Work 2: Improving managerial responses to whistleblowing in public and private sector organisations.” He noted that the whistleblowing dilemma is one that many grapple with. Nevertheless, it is essential to uncover corruption and preserve strong integrity systems. The two big questions the research seeks to address are:

  • How are our efforts to facilitate and manage whistleblowing, including support and protection, and tracking and performing? What’s most useful to know? And what are the best indicators for tracking improvement?
  • What factors make the difference in enabling managers (and management, i.e. whole organisation) to handle whistleblowing better? What helps managers make the right calls? And what explains the biggest problems / weaknesses?

During the discussion following question time, it was made clear that the Protected Disclosures Act is not easy to understand (and hence, employees often feel that it is unsafe to report evidence of inappropriate behaviour) and that whistleblowing needs to be strengthened in both the public and private sectors.

Ideas for improvement include a Whistleblowing Protection Agency, a reward system and the need for cultural change.

Recent events such as the Ministry of Transport fraud by Joanne Harrison suggest that public sector whistleblowing may need to be handled outside of the directly affected departments, either by the Serious Fraud office or the State Services Commission. Whistleblowers need to feel safe and heard when making disclosures.

In December 2016 State Services Commissioner, Peter Hughes, asked public service CEOs to strengthen their internal systems. In his media release, Commissioner Hughes also invited public servants to contact him directly if they failed to get sufficient responses elsewhere.

As the Australia/New Zealand whistleblowing research project is ongoing, anyone who would like to take part in providing information, particularly from the private sector, is encouraged to get in touch with Dr Macaulay at Victoria University – Michael.Macaulay@vuw.ac.nz .

Victoria University's recording of the event is available here.

Whistleblower resources include the following:

Information about ‘whistle-blowing’ under the Protected Disclosures Act Office of the Ombudsman

Making a protected disclosure “blowing the whistle” Office of the Ombudsman

Whistleblowing and informants Financial Markets Authority

www.nzme.co.nz Whistleblower Policy NZX companies have whistleblower policies (as required by the NZX code). This is a good example

Protected disclosures protection for whistle blowers chapter 17 communitylaw.org (see the sign language video)

https://www.crimestoppers-nz.org/crime-prevention/resources

Transparency International publishes Asia Pacific corruption poll

Many governments in Asia Pacific fail to stop corruption;
900 million people are paying bribes

From the media release, “Approximately 900 million — or just over one in four — people living in 16 countries in Asia Pacific, including some of its biggest economies, are estimated to have paid a bribe to access public services, according to a new public opinion poll from the anti-corruption movement Transparency International.”

While we have participated in the past, New Zealand was not included in the 2016 survey.

TI Global Corruption Poll: see Asia Pacific corruption poll 2016 media release and Asia Pacific corruption poll report

Counting on internal auditors to be the conscience of organisations

James Jong IIANZ Board member and Chair of its Advocacy Committee

James Jong IIANZ Board member and Chair of its Advocacy Committee

by James Jong

Board Member and Advocacy Committee Chair

Institute of Internal Auditors New Zealand

The Institute of Internal Auditors NZ is proud to partner with Transparency International New Zealand to raise awareness of, and demand for, effective internal audit functions in New Zealand as a means of maintaining strong integrity systems.

We share the view that internal audit is a key pillar of organisational governance. In turn, effective governance is a critical component of transparency and accountability, which are integral for maintaining trust and confidence. Organisational leaders and stakeholders should ask whether they are making the most of their internal audit functions.

Why is this important?

Organisational integrity is often dictated by the tone at the top. It doesn’t matter whether it is a small family business, large multinational conglomerate, state service agency or political movement. Leaders tend to exemplify acceptable behaviour – good, bad or indifferent. In first-world jurisdictions such as New Zealand, the public can rely to a large extent on the checks and balances of regulatory bodies and law enforcement authorities. But these are often activated after something has gone wrong. It might take a public complaint, a whistleblower on the inside, or a leaked document. Mostly, the damage is already done.

Transparency and accountability are rarely absolute. For some, it may be more about window-dressing and passing the buck. When that happens, whose job is it to call that out? Governors and board directors certainly have a key role in this responsibility. But they are generally not in the business to get close enough to see what’s really going on. Managers are in the business but they are often constrained by reporting hierarchy. Unless they risk breaking the law, many managers will find it easier to do as they are directed by their bosses. Who is left as the voice of organisational conscience?

A clear option is the internal audit function. Those established under the professional standards of the Institute of Internal Auditors will recognise the imperative to enhance and protect organisation value by providing risk-based and objective assurance, advice and insight. It sounds very promising. But like your own conscience, how much consideration you give the internal auditor depends on a few key factors.

  • First, it’s about audibility. An internal auditor could also be mired by bureaucratic hierarchy. If they cannot access the executive or governors, they are unlikely to be heard by those who can act on their advice. It is paramount for the head of internal audit to be empowered to “speak the truth to power”. Anything less won’t make the difference promised by the internal audit imperative.
  • Second, it’s about holding a mirror for the benefit of strong organisation governance. New Zealanders expect the highest levels of integrity in business conduct and public services. An effective internal audit function not only provides functional independence and professional objectivity to assure integrity, its presence alone can reinforce high expectations. They just need the backing of executives and board members who appreciate scrutiny and understand its value for effective governance.
  • Third, it’s about the demand for, and supply of, high impact assurance and advice. Internal audit functions risk relegation to low value compliance activities if they cannot operate consistently to a high standard or identify strategic relevance for their senior stakeholders. Internal audit’s effectiveness cannot be simply measured by their productivity, output or resource efficiency, but by what their work does to enhance or protect their organisation. Similarly, organisational leaders owe it to themselves to expect more from their internal auditors. Internal auditors are uniquely positioned to gain an enterprise view like no other function. But their value is markedly diminished if internal auditors are confined to the rear-guard rather than offered a post on the stewardship bridge.
iiA NZ logo

Do you demand voice for organisational conscience and how do you value the scrutiny and frank advice of the internal auditor?

Institute of Directors announces new Chief Executive

IIANZ Board member and Chair of its Advocacy Committee

Kirsten Patterson
New Institute of Directors Chief Executive

The Institute of Directors in New Zealand (IoD) has appointed of Kirsten Patterson as its new Chief Executive.

Ms Patterson is currently the Country Head of Chartered Accountants Australia and New Zealand. Ms Patterson, a qualified lawyer and Fellow of the Human Resources Institute of New Zealand, brings extensive governance and leadership experience, alongside advocacy on diversity issues.

“Good governance makes a difference to our businesses, our economy, and through to our communities. In these globally uncertain and changing times, strong governance and leadership is needed now more than ever. The IoD has a significant role to play in ensuring the New Zealand governance community is ready for the challenges ahead and that their voice is heard in the policy debates impacting New Zealand.” according to Ms Patterson in the IoD announcement of her appointment.

The full announcement is available at the IoD website.

In case you missed it

New Zealand transparency, integrity and accountability

This Haven for Billionaires Has a Murky Trust Issue A flamboyant Malaysian financier linked to an international money-laundering probe has laid bare New Zealand’s surprising appeal as a destination for the ultra-rich to park their wealth.

OIA statistics released State Services Commissioner Peter Hughes has today published the first set of Official Information Act (OIA) statistics covering 110 different government agencies.

First release of OIA statistics New Zealand is taking great strides in transparent governance with the release of detailed data examining the public sector’s response to official information requests.

CERA staff to be investigated over private company dealings Revelations that Canterbury Earthquake Recovery Authority (CERA) staff tried to do commercial property deals for their own company will be investigated by the Prime Minister's Department and the State Services Commission.

Avoiding complacency about corruption Bryce Edwards.

Govt moves to end NZ's tax haven reputation  Legislation passed by the Government in February led by Inland Revenue Minister, Judith Collins led to TINZ Chair being interviewed by RNZ for its midday news, who outlines whythe benefits to New Zealand of a trusted reputation far exceeded any contribution to GDP the advisers to foreign trusts were adding.”

Panama Papers law firm Mossack Fonseca quits NZ

Political Roundup: New Zealand's beautiful democracy Bryce Edwards.

Grant McLachlan: NZ should raise the bar on corruption

Auckland Transport corruption

Corrupt Auckland Transport execs jailed for five years

Two jailed, six leave jobs in country's largest bribery case

Sentences handed down in Auckland roading corruption case

Men guilty of corruption and bribery will spend time in jail

Prison sentence for two men in bribery case

Bribes are a sickness that threatens the democratic system

Common Reporting Standard

New Zealand to Enact Tighter Foreign Trust Disclosure Rules

International

Measuring corruption: why it is important

Transparency PNG says sacked whistleblowers should be honoured Transparency International PNG says reports nine Defence Department civilian staff have been sacked should be of concern to everyone in Papua New Guinea.

Most fans don’t believe Gianni Infantino’s first year has won back trust in FIFA

ISIS cannot be defeated without addressing corrupt conditions in which they thrive Transparency International UK

Trump's Conflicts Could Undercut Global Efforts To Fight Corruption, Critics Say

Pacific

Open Govt Partnership Report on NZ finds little improvement

Asia Pacific corruption poll 2016 media release TI global corruption barometer

Blog Posts

Responding to the Panama Papers is a blog post by Ann Webster, Assistant Auditor-General for Research & Development, about the way the Shewan Inquiry was scoped for faster policy to tighten controls over foreign trusts. Her observations derive from presentations by John Shewan and Raj Kirshnan (GM of Regulatory Services, DIA) at the recent Transparency International NZ's Leaders Integrity Forum (March 2017).