Dr Bryce Edwards
New Zealand can celebrate being pronounced the least corrupt country in the world. But that doesn’t mean we should be complacent – there are plenty of recent controversies that threaten the nation’s reputation for integrity.
Two weeks ago Transparency International declared New Zealand the least corrupt country on earth. Its annual Corruption Perception Index scored New Zealand at 90 out of 100, putting it first equal with Denmark – see Isaac Davison’s New Zealand reclaims title as world's least corrupt country. After last year’s fall to fourth place, it is something to celebrate. And the National Government and the public sector can rightly crow about this achievement.
Some care does need to be taken with interpreting this result, however. The main risk associated with returning to the top of the table is the increased possibility that complacency will now make New Zealanders, including politicians and public servants, less vigilant about any erosion of integrity in public life. New Zealand’s place at the top of the world doesn’t mean this country is free of corruption – it just means that it has less than other countries.
Below are four of the most recent concerning issues related to integrity in democracy and public life in New Zealand. Of course the biggest recent controversy has been the Peter Thiel citizenship scandal – a story that deserves its own column rounding up that issue.
Concern #1: Continued tax haven abuse
Thought the Panama Papers controversy was over and done with? Not at all, according to North & South magazine’s Graham Adams, who has nicely explained the latest controversy in his article, New Zealand: The little tax haven that could?
Adams explains how a “money-laundering scandal that has engulfed Malaysia and its 1Malaysia Development Berhad (1MDB) sovereign fund” has shifted focus to New Zealand because the trusts are based here, and a High Court hearing in Auckland last month brought this more out into the open. According to Adams, “From that court case, we caught yet another glimpse of the sorts of riches that are hidden behind New Zealand-based trusts and where they may have come from.”
Adams also discusses the current attempts by the Government to reform trusts, and suggests that the new legislation might only “establish little more than a halfway house between our current lax rules and a truly effective trusts regime”.
Much of the current information about the latest controversy was uncovered in the international Sarawak report: Trust Us - New Zealand Can Hide Your Money! Writer Clare Rewcastle Brown says: “one of the most popular places to set up these trusts just happens to be New Zealand. Time and again, investigators like Sarawak Report find themselves tracing large businesses linked to, for example, Malaysian politicians like Taib Mahmud, only to find the money disappearing behind New Zealand trusts.”
The story has also been covered in an article by Emily Cadman, published by the US Bloomberg news service – see: This Haven for Billionaires Has a Murky Trust Issue. This article discusses the current reform efforts of the Government, with a quote from Labour’s Grant Robertson: "The government's ongoing complacency risks seeing our reputation damaged”.
Concern #2: CERA alleged corruption
The State Services Commission is currently investigating allegations of improper business activities run by senior public servants working for the Canterbury Earthquake Recovery Authority (CERA) in Christchurch. Two staffers are said to have had a conflict of interest because they owned a company that was accepting fees for private property deals negotiated by their government organisation. For the original story, see Martin Van Beynen’s Cera staff running own property business on the side.
Christchurch local, John Minto, is aghast: “if it’s not corruption then what could it possibly be? What this situation shows most clearly is the complete lack of public service ethos in these individuals. It is a lack of ethical behaviour which now pervades the senior levels of our public services across the country – both in government and local body organisations” – see: It’s not a “perceived conflict of interest” – it’s corruption.
Minto argues this type of conflict could be more common elsewhere, too: “It’s the inevitable outcome of bringing private sector values into public services through the likes of public-private partnerships, council-controlled organisations and state-owned enterprises. We have developed a revolving door whereby private sector ‘experts’ are appointed to senior public servant roles only to return to the private sector and use their inside knowledge to ripoff ratepayers and taxpayers.”
But is the State Services Commission doing enough to investigate? The Labour Party has called for a more effective inquiry by the Auditor-General, as neither the SSC or the Department of Prime Minister and Cabinet have sufficient investigative powers – see Martin van Beynen and Chris Hutching’s Labour calls for Auditor-General to probe alleged conflicts of interest. This article also deals with other ongoing allegations in the Canterbury District Health Board.
The Christchurch Press seems to agree, with an editorial saying that “the State Services Commission is primarily concerned with employment issues and the results of the investigation may end up being deemed a confidential employment matter. That makes it important that the auditor-general, Martin Matthews, focused on public accountability and who can compel witnesses to give evidence, also focuses the resources of his agency on the case” – see: Allegations of earthquake recovery double-dipping must be thoroughly investigated.
Concern #3: Official Information Act abuses and reform
Data about how well government agencies are fulfilling their obligations under the Official Information Act is now being regularly released by the Ombudsman’s Office. This is a major step forward for transparency. But the first results released show a very mixed picture.
The detail is covered well in the Dominion Post editorial: Officials are ratting on the Official Information Act, which draws attention to the very poor OIA performance of Te Puni Kokiri, the police, DOC, the Ministry for the Environment, and the Ministry of Foreign Affairs and Trade.
The editorial concludes: “That crazy quilt of results is not a good advertisement for a democratic state that requires ready access to the facts, whichever agency happens to hold them. These results should have bureaucrats blushing scarlet.”
District Health Boards have also been found wanting – see Benedict Collins’ DHBs told to speed up official information responses. This article quotes Labour’s health spokesperson Annette King blaming ministers for the delays, an allegation that Health Minister Jonathan Coleman refers to as "just political nonsense".
However, last week’s Otago Daily Times certainly points the finger at politicians for the decline of the OIA: “the availability of information has, if anything, deteriorated over the past 15 years. The Act has been cynically and regularly abused and politicised. Agencies and their so-called "communications" officers see themselves as protecting and ‘‘spinning’’ on behalf of the government of the day and their organisations rather then being public servants. Their role seems to be to minimise any embarrassment or awkwardness rather than promoting the free flow of information” – see: Reinvigorating the OIA.
Concern #4: Roading rorts
Late last year a number of people in the road construction industry were convicted of corruption and bribery offences. Ironically, the convictions were delivered on World Anti-Corruption Day, 9 December.
The conviction of an Auckland Transport senior manager, Murray Noone, was covered in December by Matt Nippert – see: Road to corruption paved with holidays. According to the article, Noone and an industry manager were “found to have engaged in a pattern of transactions that saw Noone receive $1.1m in cash, and $84,000 in travel and other benefits – including international holidays”.
So was this case an aberration in an otherwise clean tax-payer funded industry? Not according to an important series of articles written by investigative reporter Karen Scherer, and published by the National Business Review. This investigation was partly sparked by a government shake-up that is currently going on in the area: “A new focus on the billions of dollars that central and local government spend each year on roads has prompted a radical shake-up of the civil construction industry. NZTA has slashed its number of highway contracts from more than 300 to just 23. And councils have also been urged to review their spending on roads, after a decade-long blowout. But some fear the shake-up could increase, rather than decrease, the potential for corruption” – see: Roading revamp or highway robbery?
The most important of Scherer’s articles surveys engineers in the roading industry, with various participants agreeing to talk to her on condition of anonymity. One engineer is quoted as saying: “Corruption is right through this industry”; “They say that New Zealand’s not corrupt. It’s a load of shit” – see: Auckland Transport scandal highlights corruption claims (paywalled).
Another engineer says: “The system doesn’t create corruption – people do,” he says. “It starts off with a bottle of wine, then a box of beer, then a lunch, then a dinner, then tickets to the rugby, then a trip. Before you know it, you’re in donkey deep.”
To accompany this series of articles, the business newspaper also polled its subscribers about the extent of corruption, asking the question: “How widespread is corruption in New Zealand?” Accordingly, the results showed “more than half (56%) believe that corruption in New Zealand is more common than most people think. A significant number (14%) believe that corruption is “everywhere," and that New Zealanders are in denial about it. Only 30% believe corruption is “extremely rare” in this country” – see: NBR poll reveals the extent of corruption in NZ (paywalled).
Finally, for debate about New Zealand regaining its title of least corrupt country on earth, it’s worth reading Beith Atkinson’s NZ public sector seen again as the World’s least corrupt, Carlo Berti’s New Zealand's honesty-based culture toxic to corruption, and most importantly, Graeme Edgeler’s New Zealand rockets up the anti-Corruption ratings: a non-Spinoff investigation. In this, Edgeler delves into the methodology of the index rating for New Zealand, and finds errors that call into question the validity of such rankings.