Transparency Times October 2017

From the Chair

Suzanne Snively

Suzanne Snively
TINZ Chair

A year and a half ago, Transparency International New Zealand (TINZ) was enthusiastic about our country’s direction with its anti-corruption strategy.

After the release of the Panama Papers, the Shewan Inquiry progressed policy change at a faster pace, including speeding up of the Phase 2 Anti-Money Laundering legislation (AML). There were also signs of greater support for the Open Government Partnership (OGP) through a more transparent consultative process.

Now just 18 months later, New Zealand is falling behind when compared with other countries’ anti-corruption initiatives.

Transparency International’s global Secretariat recently released a report tracking the commitments of all countries made at the 2016 global Anti-Corruption Summit (ACS) in London. It found that while New Zealand made seven ACS commitments, only one – New Zealand developing partnerships with international sporting bodies for combatting corruption in sport – is complete. The rest are either under-action or inactive. See New Zealand Government's pledges tracked from the Anti-Corruption Summit London 2016 in this newsletter.

New Zealand is falling behind global standards and needs to do more. For example little direct progress has been made addressing the important commitment of "exploring the establishment of a public central register of company beneficial ownership information.” Meanwhile the UK launched a public beneficial ownership register in 2017, and now all European Union countries are in the process of implementing a beneficial ownership register of companies. See Public register of beneficial owners saves time and money.

The lack of progress on the world stage is inconsistent with international perceptions that New Zealand is a leader in addressing corruption.

While lack of awareness and complacency remain, anti-corruption and transparency issues are now regularly discussed in the media and Government. We call on the new Government to turn the talk and commitments into action. Make New Zealand both the least corrupt public sector in the world and the world leader in corruption prevention.

Suzanne Snively, Chair
Transparency International New Zealand Inc.

6 October 2017

The New Zealand Government’s pledges tracked from 2016 Global Anti-Corruption Summit

David Dunsheath

TINZ Board Member

Delegated authority for Parliamentary Relations

Co-Editor Newsletter

In May 2016, 43 countries and six international organisations were convened at the Global Anti-Corruption Summit in London (ACS). The Summit encouraged the pursuit of ambitious individual action plans by asking countries to make specific commitments or pledges.

Following the Summit, Transparency International (TI) and a network of partner organisations including TINZ, began monitoring the implementation of ACS pledges: 384 made by governments and 69 by international organisations. Transparency International UK (TI UK) published in September 2017 a high-level report “Promise to Practice: Monitoring Global Progress of the 2016 Anti-Corruption Summit Commitments” based on TI’s pledge-tracing.

Of the New Zealand Government’s total of seven ACS commitments, one is reported to be completed namely:

INTERNATIONAL SPORT INTEGRITY PARTNERSHIP: “NZ will work with the international sports bodies to develop a partnership for combating corruption in sport.” (with no ongoing pledges).

New Zealand has five ACS commitments reported to be ‘Underway’ as follows:

  • TRANSPARENCY AND INTEGRITY (Public Procurement): “NZ will continue and intensify efforts to develop procurement capability, including initiatives that safeguard integrity in the procurement process”, as evidenced by the NZ Government Electronic Tenders Service (GETS).
  • PUBLIC REGISTER (Beneficial Ownership): “NZ commits to exploring the establishment of a public central register of company beneficial ownership information.” No evidence is offered (For details of TINZ concerns, refer to “Public register of beneficial owners saves time and money” in this newsletter).
  • FINANCIAL ACTION TASK FORCE (Anti-Money Laundering): “NZ will also explore how to appropriately incorporate the FATF standards on preventing money laundering in the non-financial professional services sector into domestic legislation”, as evidenced by The Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Amendment Bill passed in August 2017, establishing “Phase 2” of New Zealand’s AML/CFT laws. Work is underway.
  • DENIAL OF ENTRY (Denial of Entry): “NZ will also, where appropriate under New Zealand law, deny entry to specific individuals who are identified as being involved in grand scale corruption.” No evidence is offered.
  • ACCESS TO INTERNATIONAL LAW ENFORCEMENT (Beneficial Ownership): “NZ will also continue to implement bilateral arrangements that will ensure law enforcement in one partner country has full and effective access to the beneficial ownership information of companies incorporated in the other partner country.” – No evidence is offered.

New Zealand’s remaining ACS commitment is deemed “inactive”, namely:

DEBARMENT DATABASE (Public Procurement): “NZ will explore establishing an accessible and central database of companies with final convictions for bribery and corruption offences, and ways of sharing information on corrupt bidders across borders.”

For comparison, global progress is summarised across 453 pledges (comittments) within status categories as follows:

global progress summarised across 453 pledges within status categories

The role of TINZ has been to:

  1. Select the New Zealand ACS commitments for Transparency International to monitor, after eliminating any which were too vague to track.
  2. Contact and work with our Government to: (i) identify the government department responsible for delivering each ACS commitment; (ii) inform the responsible department that their progress will be monitored; and (iii) identify the expected timeline for delivering each commitment.
  3. Track the ACS commitments by: (i) looking for and providing public evidence for each commitment where progress had been made; and (ii) making a note of which commitments were ‘inactive’, ‘overdue’, ‘ongoing’, ‘underway’ or ‘complete’.

Public register of beneficial owners saves time and money

By Suzanne Snively

Chair Transparency International New Zealand

It is useful to explore how New Zealand’s seven commitments (see previous article) were set at the London Anti-Corruption Summit (ACS) held in May 2016.

In 2015, the Commonwealth Secretariat and UK Government decided to take a world leadership role in anti-corruption, hosting two events in London in May 2016.

These events just so happened to begin on 11 May, the same date that Transparency International New Zealand (TINZ) hosted a Forum in Wellington at Parliament’s Banquet Hall. The purpose of this Forum was to learn more about the omnibus anti-corruption legislation which resulted in 15 new Acts passed (with cross-party support) in Parliament in November 2015. Amongst other things, the legislation was designed to implement practices to protect New Zealand from the impact of international organised crime and corruption.

All of these events had been organised prior to the publication of the Panama Papers just over a month earlier in early April 2016.

Eventful 11 and 12 May 2016

Commonwealth Leader Baroness Scotland

Commonwealth Leader Baroness Scotland hosted a packed Anti-Corruption Conference.

Former UK Prime Minister David Cameron 2016 London Anti-Corruption Summit

Former UK Prime Minister David Cameron at the 2016 London Anti-Corruption Summit.

The Honourable Judith Collins MP

Corrections Minister, Judith Collins

TINZ WorldCup20 New-Zealand First MP Tracey Martin May 2016

New Zealand First MP Tracey Martin describes her Party’s position in regards to the importance of addressing corruption during the Accountants and Lawyers World Cup 20 Forum held at the Parliamentary Banquet Hall 11 May 2016. Also on the panel left to right as Marama Fox, NZ Party, Paul Foster-Bell, National Party, Grant Robertson, Labour Party, James Shaw, Greens.

(At exactly 2pm, the panel broke up as the MPs all walked next door to the Parliamentary Chambers where the Prime Minister John Key was sent out by the speaker for disrespectful responses during the Panama Papers debate)

Prime Minister John Key about to be thrown out of Parliament

Prime Minister John Key about to be thrown out of Parliament

Imagine the show if viewers could have viewed four video cameras screening in four different locations over the 48-hour time frame of 11 and 12 May 2016.

  • One camera could have focused first on Commonwealth Leader Baroness Scotland hosting a packed London Anti-Corruption Conference for Civil Society on 11 May and then on former UK Prime Minister, David Cameron, hosting world Presidents and Prime Ministers at the London Anti-Corruption Summit (ACS) on the 12th.
  • The second camera could have followed Corrections Minister, Judith Collins, who was New Zealand’s representative joining world leaders at Cameron’s ACS. Minister Collins’ involvement had been kept secret and was a surprise because less than six months earlier she returned to Cabinet after being on the back-benches because of emails she sent the Minister for the Serious Fraud Office. She also had an unexplained relationship with Oravida (a Shanghai based NZ export company) while Minister. At the time of the ACS, the seven commitments New Zealand made were a weak reflection of her Government’s robust anti-corruption legislation passed back in November 2015.
  • Minister Collins’ surprise selection meant that TINZ representatives in London were unable to provide background material that might have led to stronger leadership from New Zealand, the country with a world-wide reputation for integrity and whose public sector consistently is regarded as number one for its anti-corruption policy.
  • Meanwhile in New Zealand on 11 May 2016, another camera might have been focused on the top lawyers and accountants who were with TINZ members at the Forum in Parliament’s Banquet Hall listening to a panel of Parliamentarians and public servants presenting details of the omnibus anti-corruption legislation that Parliament passed in November 2015.
  • The fourth camera could have been focused right next door on Parliament. This is where all the action was. As public servants described aspects of the Government’s new anti-corruption legislation at the TINZ Forum, Parliamentarians were arguing about the Panama Papers.
  • Shortly into the debate, Speaker of the House, David Carter, threw out Prime Minister John Key for his un-parliamentary behaviour. Apparently poorly advised, the PM had responded defensively to questions about New Zealand’s vulnerability to harbouring the foreign proceeds of crime and corruption as had been revealed by the Panama papers.

Back to 11 May 2016, several TINZ directors stayed up all night – after hosting the Forum in Parliament – to provide background that would help shape the choice of the Government’s ACS commitments the next day. We were enthusiastic about our country’s direction in progressing anti-corruption policy. After all, Parliament had finally, unanimously, ratified the United Nations Convention Against Corruption (UNCAC) in November 2015 (10 years after committing to it). This was in conjunction with passing into law the comprehensive omnibus anti-corruption legislation. Unfortunately we were unable to deliver the background information to Minister Collins in time.

The Government has taken positive steps to combat the misuse of companies and trusts in recent years and TINZ applauds this work. The tightening of company director rules in 2014 and the introduction of AML reforms following the Panama Papers, are great examples of the Government taking action. The May 2015 events accelerated several additional, positive initiatives:

  • The implementation of phase 2 anti-money laundering (AML) practices that make it harder to hold bank accounts and assets in anonymous accounts or using fictitious names,
  • Very quietly, the Inland Revenue Department (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 Government's implementation of tougher disclosure requirements for foreign trusts as a result of the Shewan Inquiry. These requirements have produced a significant drop in registrations, strongly suggesting that there were a number of foreign trusts involved in activities that don't stand scrutiny.

Now, just over a year and a half on from May 2016, the record shows that New Zealand is falling behind when compared with other countries’ anti-corruption commitments as indicated the New Zealand Government's lack of progress in meeting its ACS commitments.

A particular shortcoming is the Government's progress on developing a public register of beneficial ownership. Its latest direction is to implement recommendations from the Shewan Inquiry which are limited to creating a central (unpublished) registration of beneficial owners of foreign trusts. There is no action on the ACS comitment to create a company beneficial ownership register or a strategy for making both public.

A wider database, including a public register of beneficial owners of all overseas legal entities (companies and trusts) will save costs and be much more effective in protecting New Zealand from the impact of offshore grand corruption.

Corrupt officials, drug dealers, fraudsters and tax evaders are increasingly using foreign companies and trusts to move their illicit funds anonymously. The implementation of AML practices has made it harder for them as explained above. As a consequence, criminals have turned to corporate vehicles to avoid detection when laundering their proceeds of crime.

A beneficial ownership register of all legal entities including companies as well as foreign trusts is the solution for New Zealand. It is a key tool for piercing the corporate veil. A beneficial ownership register increases transparency deferring criminals initially and then helping law enforcement agencies to trace criminals and their assets during investigations.

For over 14 years, TINZ has called on the Government to introduce a public beneficial ownership register. High profile scandals that provide visibility to the issue include the use of New Zealand companies to avoid North Korean sanctions in 2009, and to funnel $2 billion of corrupt funds out of Kyrgyzstan’s largest bank in 2012.

The Companies Office should be given sufficient resources to take a proactive role in this area.

The direct costs to the taxpayer involved in setting up a public register would be offset by significant costs savings to businesses through reduced duplication where, currently, every organisation dealing with foreign depositors or investors must keep a separate register. It would also make it easier and more cost effective for New Zealand organisations to comply with existing AML laws.

Most importantly, though, there are massive benefits to all New Zealanders.

Ultimately, a public register of beneficial ownership is necessary to send a strong message to corrupt officials and other criminals that they are not welcome in New Zealand. This message protects all New Zealanders from crime that contributes to higher priced goods, housing shortages and reduces the potential harm from the drug trade.

A public beneficial ownership registry will send a message reinforcing New Zealand’s reputation as a good country and as a good place to do business.

New Zealand’s 2nd International Fraud Film Festival

2 & 3 March 2018 at
the ASB Waterfront Theatre
138 Halsey St, Auckland

Following an outstanding inaugural event in 2016, New Zealand’s second Fraud Film Festival will bring the issue of fraud, and other forms of financial crimes, alive through the medium of film. The festival spans 2 full days of inspiring documentaries to stimulate debate and awareness, and to scrutinise the phenomenon of fraud in various contexts. Participants are able to join in the panel discussions and debate after each film.

Attendance on Friday 2nd March is by invitation only.

Open to the public on Saturday 3 March

Check the Fraud Film Festival website for programme and ticketing information.

Three themes: Corruption – Technology – Dishonesty

1. Corruption

Corruption typically occurs where someone has been entrusted with power and has abused it for personal gain. We have seen examples recently in the form of nepotism, drugs and bribery. Throughout 2017 there were allegations of corruption occurring at the highest levels of political office the world over.
The festival examines the pervasive effect that corruption can have on some of our most valued and important institutions.

2. Technology

As the way we use and interact with technology has changed and evolved over time, so too has its exploitation from fraud and other criminal activity become increasingly pervasive. Our data is increasingly vulnerable to cybercrime attacks upon social media, personal banking, and emerging technologies such as cryptocurrencies. Attacks range from breaches of privacy and identity theft through to digital piracy and money laundering.
The festival examines the impacts of increasing digitization, and the resulting evolution of cybercrime.

3. Dishonesty

Dishonesty itself is not uncommon, but for a small percentage of people it forms a core part of how they operate on a personal or professional level. It also underpins a majority of criminal offences relating to fraud and strikes at the heart of the trust required for basic human interactions to take place. Such people seek financial gain from money-making scams with promises they have no intention of meeting, or purport to be someone they are not or simply make claims that are false.
The festival examines the complex impact that dishonesty has on our lives and everyday society. 

Fraud is big business. The earnings are high, as are the risks. By showing films and documentaries and engaging in conversations, this complex and intriguing subject will be brought to the attention of a large audience.

Festival partners

Transparency International New Zealand is proud to support this festival, along with partners: Meredith Connell, Deloitte, NZI, Serious Fraud Office, ACC, ASB Bank,  Dave Clark Design, and the Financial Markets Authority.


Constitution Aotearoa: TINZ Submission

Sarah Mead TINZ Board Legal Secretary

Transparency International New Zealand (TINZ) has made a submission in support of a proposal to be included in Sir Geoffrey Palmer’s “A Constitution for Aotearoa New Zealand”, to give constitutional status to the right to access official information.

Former Prime Minister Sir Geoffrey Palmer addressed the TINZ Board earlier this year on the proposed constitution for New Zealand, and invited the Board to make a submission on certain provisions relating to transparency. The proposed Constitution has been drafted by him and constitutional lawyer Dr Andrew Butler. It is set out in their book and available online.

In his address to the Board, Sir Geoffrey emphasised the importance of having a constitution that clearly establishes the functions and power of government. Without clear rules, he warned of the possibility for public power to be abused by those in government. The book therefore “proposes a new constitution that is easy to understand, reflects New Zealand’s identity and nationhood, protects rights and liberties, and prevents governments from abusing power.”

TINZ’s submission, which relates to Part 14,  article 114 ( Integrity and Transparency, Official Information) of the proposed Constitution, strongly supports the proposal to codify the right to official information. As noted by TINZ Chair, Suzanne Snively, a “written Constitution, which gives the principles of open government and transparency constitutional status, directly contributes to TINZ’s vision for a world with trusted integrity systems”.

TINZ also supports the re-establishment of an Information Authority to oversee the operation of the official information legal regime. Such an authority was initially set-up to oversee the operation of the Official Information Act, but its functions expired in 1988 and were never transferred to another agency. TINZ would, however, prefer to see that the complaints investigation function not be transferred to the Information Authority as proposed, but rather remain with the Ombudsman to ensure robust protection.

Finally, TINZ supports the proposal to remove the power of Cabinet to veto recommendations issued by the Ombudsman in respect of official information. TINZ considers that “it is inconsistent with the principles of open and transparent government for the Executive to have the ability to override independent recommendations issued by the Ombudsman, or a newly established Information Authority, following an independent investigation”.

TINZ looks forward to the outcome of the consultation process for the proposed constitution, which ends on December 1st 2017.

Authors of A Constitution for Aotearoa New Zealand: Dr Andrew Butler and Sir Geoffrey Palmer

Dr Andrew Butler and Sir Geoffrey Palmer

2015 Corruption Perceptions Index revised

Transparency International’s Corruption Perceptions Index (CPI) is the leading global indicator of public sector corruption. Several results for 2014 and 2015 have recently been corrected by the Transparency International Secretariat to adjust for errors discovered in auditing of past CPI results.

As a result, New Zealand's CPI 2015 score was raised from ‘88’ to ‘91’ with resultant improved global ranking from 4th place to 1st equal with Denmark.

In a recent announcement to its national Chapters, it was stated: “Transparency International is aware of the CPI's importance to our movement's overall reputation and aspire to the highest standards of accuracy. We have conducted a thorough review of all 2012 to 2016 CPIs. We have also changed our quality control process. We are confident that there are no further errors in these CPIs.”  For more please see Transparency International's public media release.

An early warning to New Zealand’s forthcoming government was a key conclusion of the 2016 CPI in January.

Although New Zealand again ranked first equal with Denmark, the warning is: “This year’s results highlight the connection between corruption and inequality, which feed off each other to create a vicious circle between corruption, unequal distribution of power in society, and unequal distribution of wealth. The interplay of corruption and inequality also feeds populism. When traditional politicians fail to tackle corruption, people grow cynical.”

See Oxfam’s article in this newsletter about the new measure of inequality, the Commitment to Reducing Inequality Index. New Zealand’s poor showing in this index suggests we are at risk of increased corruption from within.

Fact, fallacy or simply wishful thinking?

Barry Gordon Victoria University Wellington

Barry Gordon

Lecturer in Health and Physical Education

Victoria University of Wellington


Sport has traditionally been presented as a positive force in society, a means to integrate diverse fractions, to generate peace and of developing “good character”.

How true then are the claims that sport acts as a catalyst for moral development and has the ability to turn around people’s lives? There is little doubt that sport has been successful in many occasions in guiding participants towards better futures. What is also clear, however, is that participation in sport does not automatically lead to positive outcomes or that when positive experiences do occur in sport they are necessarily transferred to other area of the participant’s lives

The veracity of the belief that sport is good for participants was examined by Clarke (2012) who interviewed young men incarcerated in New Zealand prisons. She suggested that their experiences of rugby and rugby league had led to the boys being dehumanised and more willing to be involved in physical acts against others out in society. That sport participation was an active ingredient in the mix that led these young men into incarceration is sobering to contemplate. Her thesis titled “Stepping off the court and into court” directly challenges the narrative that participation in sport is a good thing and warns of the potential for negative socialisation occurring through sporting involvement.

The degree to which sport actually achieves positive socialization is impossible to identify. It largely depends on what occurs in the name of sport and how participants experience the process. What does appear clear is that sports status is such that it often remains unexamined and unchallenged in its goodness. As a consequence, the degree which sport can be a positive force for good in society is reduced and unintended harm can occur.