Expect an extraordinary report on corruption and whistleblowing

NZ Politics Daily: Any day now, a report into corruption and whistleblowing in the New Zealand public service is expected to be released.

All the signs, so far, suggest that the report into whistleblowing might be an extraordinary account with the potential to shake up politics and governance in New Zealand.

This is the report that was ordered into the bizarre events at the Ministry of Transport, when fraudster Joanne Harrison stole over $700,000, despite numerous employees sounding the alarm.

Martin Matthews, who was then the Transport Ministry boss, now has the role of auditor general – top watchdog over the finances of government agencies. Hence the soon-to-be-released report deals with questions about whether Matthews should continue in that job – see my previous column from May, Can the Auditor-General be trusted to combat corruption?

Imminent release of an important report
The report, conducted by Sir Maarten Wevers, was delivered more than two weeks ago to both Martin Matthews and Parliament’s Speaker, David Carter. Mr Matthews has been asked to respond, and indications are that the report and his response will be released this week.

In anticipation of the report, the must-read article for anyone interested in issues of integrity, transparency, and whistle-blowing in public life is Peter Newport’s The Ministry of Transport fraud case: Why the rot goes deeper than Joanne Harrison.

This piece of investigative journalism, published on The Spinoff website, uncovers further details about what went on under Martin Matthews’ watch, and just how hard it has been to get an official investigation to occur. Some of the information in the article has been provided to Newport by a new whistle-blower from the Ministry of Transport (MOT), together with further relevant documents. You can see one document here: Timeline of events.

Much of the story paints a picture of Harrison’s illegal activity being highly detectable, with plenty of information and warnings offered to Mr Matthews. Here’s one of the main explanations: “Crucially, the MOT documents show that Harrison was not some sophisticated operator capable of bewitching and beguiling honest and astute civil servants. She was a brassy and clumsy fraudster who got spotted really early – three years before any action was taken at the top. She was spotted early by people who then subsequently suffered at the hands of Harrison. The document trail clearly shows Mr Matthews being told by his own senior legal and financial people, time and time again over a three year period, that Harrison was failing to comply with public service rules for contracts and invoices. The invoices were fakes. Amateur, rough fakes. Illegal travel to nonexistent conferences. Government jobs engineered for her husband and an acquaintance. It was a criminal romp. And yet the invoices were paid. Why? Mr Matthews appears to have personally shut down internal investigations into Harrison – amazingly, at Harrison’s request.”

Newport’s article also reveals “Matthews was assistant auditor general for eight years from 1990. One of his core responsibilities was fraud prevention. His boss for much of that time was Jeff Chapman. Chapman holds the dubious distinction of being New Zealand’s highest-ranking civil servant to be convicted and jailed for fraud.”

Furthermore, “According to our source, Mr Matthews had given MOT staff the impression he was aware his former boss, Chapman, had been cheating the system… If Matthews did have knowledge of Chapman’s crooked behaviour, however, there is no evidence that he blew the whistle himself.”

Labour MP Sue Moroney is clearly the hero of this account, with details of the lengths she had to go to to convince authorities to investigate further. Peter Hughes of the State Services Commission is shown as difficult to engage on the issue, and Ms Moroney says he was “reluctant” to give her support.

So could the report find in the auditor general’s favour? Newstalk ZB’s Gia Garrick says “on the face of it, you'd think he wouldn't be fit for the role of public sector watchdog given what this woman got away with under his watch” – see: Thank God Harrison whistleblowers are getting compensated

But then again, Garrick admits that plenty of senior people seemed to regard Harrison as a convincing con-artist: “She would have had to be a master liar to have been complained about eight times, and that not been followed up by the boss. But that's exactly what Mr Matthews, the new secretary of Transport Peter Mersi, Transport Minister Simon Bridges and State Services Commissioner Hughes, all say she was.”

Ministry of Transport whistle-blowers vindicated
Of course, there has already been one report released on the Harrison fraud case – about the plight of the Ministry of Transport staff who blew the whistle on her and were subsequently made redundant. The report, carried out by the State Services Commission was released late last week and found in favour of the whistleblowers. For the best coverage of this, see Jane Patterson’s Whistleblowers vindicated by inquiry into Transport Ministry.

Patterson reports that the whistleblowers were still unsatisfied: “They still have unanswered questions about how Harrison came to be employed at the ministry and the "culture in the ministry that meant its responses to our concerns were unsatisfactory." They also wanted to acknowledge the role Ms Moroney and the media, in particular RNZ, had in bringing this matter to light.”

NZ First leader Winston Peters is also cited as saying he found it hard to believe that “Mr Matthews didn't know what was going on” and also that “I do not think it's the only example of what has happened of this kind in the civil service." See also, Craig McCulloch’s Whistleblowers forced out of job too early – inquiry.

Research on whistle-blowing
A strong consensus has emerged from this controversy about the inadequacies of New Zealand’s whistleblower legislation, the Protected Disclosures Act. And coincidentally, academic research has recently been published about the problems with these rules. This is well explained by one of the researchers, Michael Macaulay – see: Transport Ministry report exposes flaws in public sector.

Macaulay says “we found that 30% of New Zealand public sector agencies had no particular system for recording and tracking wrongdoing concerns” and only “36% of New Zealand public sector agencies provided staff with a management-designated support person if they raised concerns.”

Such criticisms are also shared by Chief Ombudsman Peter Boshier, who says the Protected Disclosure Act needs "a shot of adrenaline" – see Ged Cann’s Kiwi whistleblowers left vulnerable by 'weak, patchy, and out-of-date' legislation. This article quotes Mr Boshier saying that there has been an "enormous" amount of fraud occurring, especially in New Zealand’s public sector. He says “When you look at our history and the sheer amount of money we are losing from people doing things unnoticed, surely we have a problem.”

Whistleblowing law reform
Following on from last week’s State Services Commission report on the whistleblowers, the Dominion Post has expressed concerns about New Zealand’s lackadaisical approach to wrong-doing, saying “It's obvious that most civil servants don't know what the systems are. Until they do, would-be whistleblowers will be in the dark and will all too likely be punished for what they do” – see the editorial, Whistleblowers need protection but usually they get punished.

The newspaper calls for “urgent” reform, “Otherwise the slack and ad hoc status quo will continue.” The editorial also expresses a lack of confidence in the auditor general: “He, like many other government CEOs, presided over a clearly inadequate system for protecting whistleblowers.”

In the weekend, State Services Minister Paula Bennett expressed her willingness to fix the problem – she said: “I’m open to changing the law if it’s not working, 'cause I think it's really important that we have integrity and transparency in our public services” – see Ryan Boswell’s Paula Bennett promises to protect whistleblowers who expose fraud within the public service.

Not all have confidence in the ability of the National government to bring about the necessary reform. The No Right Turn blogger has a strong view on this: “There are some vague recommendations for a review, but nothing concrete, despite the clear failure of the Act in this case. Reform was suggested in last year's Open Government Partnership consultation but was not taken up by the government. This case suggests very strongly that that was a mistake. We need an improved whistleblower law, one that empowers employees to go to MPs and the media if their bosses ignore them, and one which offers concrete protection against retaliation, with personal liability and jail terms for bosses who try to silence them. Anything less, and we are implicitly tolerating corruption in our public service and our society” – see: Unprotected disclosures.

There has been another disturbing incident at the Ministry of Transport – an attempt to hide further information about the whole scandal. Benedict Collins reports “Documents obtained by RNZ show the Transport Ministry was going to claim that information about the fraudster Joanne Harrison did not exist – despite knowing that it did” – see: Transport Ministry accused of dodging OIA request.

This led to Mr Hughes issuing “a statement saying the ministry's conduct did not meet his expectations for how Public Service departments deal with the Official Information Act.”

According to No Right Turn, this latest incident “illustrates the toxic culture of secrecy” in the ministry – see: A game of hide and seek. He says that “Agencies faced with a request which is obviously for certain information should not be playing these sorts of games to pretend that it does not exist. That both thwarts the purpose of the act and arguably violates the duty of assistance.” Furthermore, “We need a complete culture change around secrecy in our government agencies. It needs to be made clear to chief executives and to public servants in general that failing to properly comply with the OIA is a career-limiting move.”

Finally, for a tribute to whistleblowers from someone who appreciates their value for journalism and democracy, see Heather du Plessis-Allan’s We should be grateful to whistleblowers.

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