NZ should toughen up political financing rules, Transparency International head says

As the country heads to a general election in September, the visiting head of anti-corruption group Transparency International says New Zealand’s political party financing should be made more transparent.

José Ugaz has been chairman of the global anti-corruption group, which has chapters in more than 100 countries including New Zealand, for the past three years.

He’s a Peruvian lawyer who was special state attorney in one of the biggest corruption cases in Latin American history – against former Peruvian president Albert Fujimori.

He says although New Zealand placed first equal with Denmark in Transparency International’s 2016 Corruption Perceptions Index, there is no room for complacency.

Mr Ugaz says introducing more openness for political financing should be one of the key priorities for New Zealand along with more investigation into properties bought by wealthy offshore buyers. 

New Zealand election law sets statutory limits for political spending by individuals, groups or organisations during election campaigns and parties and candidates have to file financial reports on donations that are over $15,000. However, the reports don’t cover expenses, a donor’s identity can be easily concealed, and the Electoral Commission overseeing this is fairly toothless.

The Greens campaigned for change after the 2005 general election which saw political scandals over donations to both major parties, including the Exclusive Brethren Church campaign for the National Party through an initially secret $1 million intervention.

Mr Ugaz is also critical of the New Zealand government for dragging its heels over the signing of the United Nations Convention Against Corruption in 2014 and in implementing the multilateral Open Government Partnership which it has also signed up to.

Recent investigations by TI chapters in the UK and Brazil into luxury property purchases in London, Manchester, Sao Paulo and Rio de Janiero have found nearly two-thirds of acquisitions were by secretive offshore companies. He says using offshore companies with obscure origins as the buyer typically points to money laundering and that the money behind the transaction has come from illicit means including organised crime.

Sports is another area where corruption is rife, he says, though he stopped short of pointing the finger at New Zealand’s national sport, rugby. A recent Transparency International report into sport corruption says while it is not new, poor governance and scandals threaten to undermine the joy sports can bring and the good it can do. The report said the indictment in May 2015 of nine current and former FIFA officials on money-laundering and racketeering charges changed the landscape overnight, even though the FIFA president who presided over that culture was re-elected two days later.

Mr Ugaz says sports corruption is most evident at big events such as the Olympics and the FIFA World Cup, both of which Russia is hosting next.

While New Zealand may not have the same level of corruption as countries in Latin America or Asia, he says living in a global world means every country is susceptible to money laundering, offshore companies, and illicit flows.

When asked whether corruption has become worse or better, Mr Ugaz says Transparency International asked itself that question three years ago on its 20th anniversary. On the plus side, corruption has been placed on the agenda of many major institutions including the UN.

On the downside, there is still plenty of evidence of corruption.

He points to the Lava Jato (car wash) corruption case which led to the conviction and sentencing this month of former Brazilian president Luiz Inacio Lula de Silva.  The Lava Jato investigation focused on deals made by politicians and businesspeople in exchange for big construction contracts and spread across 12 Latin American countries and two African countries.  He says that scandal alone wiped off 1% of the Peruvian’s equivalent of gross domestic product – money that could otherwise have been spent on trying to lift people out of extreme poverty.

An Oxfam report in January found the eight richest people in the world – all men – own the same wealth as the 3.6 billion people who make up the poorest half of humanity.

Several of those men are suspected of having obtained their wealth by illegal means, he says.

“We don’t know if we have more or less corruption than before. We do know we have too much corruption and corruption is an issue of human rights,” he says. “Corruption kills people, corruptions denies health, corruption for poor countries like mine or countries trying to reach basic standards for people is a tax paid by the poorest.”

If corruption is left unchecked, it will lead to social unrest and more conflict which is already occurring in countries with the greatest wealth inequality, he says.

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7 Comments & Questions

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Obviously their assessment system is flawed

NZ has various levels of corruption across all sectors right down to just pure cronyism

Political donations are filtered through entities or split to get under thresholds - none more so than with National

Many of our professionals and business people happily play this game to protect or grow their wealth at the expense of the other 90%

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New Zealand's political donations regime is quite robust and donations cannot be filtered as suggested. As usual with this blogger wild and unsubstantiated claims are made with no evidence to support them. If he or she was willing to use their name they would face defamation claims for their claims.

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Good to hear some emphasis on the social costs of corruption. New Zealand should not be complacent because the index is based on "perceived levels of corruption, as determined by expert assessments and opinion surveys" - perception being the key word.

Do we have sufficient transparency, oversight and investigative media to be able to substantiate that perception? Do we, as The Scribe alluded to, have a lot of subtler corruption like cronyism, nepotism, undisclosed conflicts of interest, and so on? I would be interested to know what José or Transparency International's view on this is.

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Having just returned from The Hague, the World Justice Project 2017 International Rule of Law Forum, as a proven NZ anti-corruption 'whistle-blower', I stated that I was Penny Bright from NZ, 'perceived' to be 'the least corrupt country in the world', according to the 2016 Transparency International 'Corruption Perception Index'.

That in my considered opinion, NZ was a 'corrupt, polluted tax haven, a banana republic without the bananas, and that the Transparency International 'Corruption Perception Index' should be screwed up and thrown into the rubbish bin of history.'

I later provided the evidence, in the form of my ACTION PLAN for transparency and accountability, for which I got some VERY positive feedback.

(NBR might like to do an article on this sometime soon? :)

Quite an honour to be invited to The Hague, and to be able to meet, mingle and network with 400 'Rule of Law experts' from 75 countries?

Think you'd probably be quite impressed with the list of 400 attendees?

Penny Bright
'The NZ whistle-blower'.

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Your usual unsubstantiated rubbish, Penny.

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Reference is made to a $1 million donation by the Exclusive Brethren to the National Party in 2005. I am almost certain that that claim is bollocks - I was certainly never aware of that. Yes, the Exclusive Brethren did help erect billboards for a number of National Party candidates that year; they did run several expensive anti-Green and anti-Labour ads off their own bat; and at one stage offered large amounts of money to the national campaign. To the best of my knowledge, there was no $1 million donation, or a donation approaching that amount.

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Reference is made to a $1 million donation by the Exclusive Brethren to the National Party in 2005. I am almost certain that that claim is bollocks - I was certainly never aware of that. Yes, the Exclusive Brethren did help erect billboards for a number of National Party candidates that year; they did run several expensive anti-Green and anti-Labour ads off their own bat; and at one stage offered large amounts of money to the national campaign. To the best of my knowledge, there was no $1 million donation, or a donation approaching that amount.

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