New Zealand: A Pacific Perspective on Corruption

“Being 100% Pure in a Changing World”

Adam FeeleyChief Executive

Serious Fraud OfficeNew Zealand

5th ICAC SymposiumHong Kong, 9-12 May 2012

100% Pure?

PM dismisses worries of taint to 'Pure' brand

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SFO Lays Charges In North Shore City Council Corruption Case

100% Pure?

The Role of SFO

The Role of SFO

Small law enforcement agency of fraud investigators, forensic accountants and lawyers, with external Prosecuting Panel of QCs and Crown Solicitors.

Serious Fraud Office Act: “to detect, investigate and prosecute cases of serious or complex fraud.”

Memorandum of Understanding with NZ Police: to be the lead referral agency for all complaints of corruption in New Zealand.

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The Role of SFO

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SFO lays 92 charges against Rockforte Finance directors

New Zealand’s place in the World

TI Corruption Perception Index: 1995-2011

NZ ranked 1st for 8 of 17 years, and Denmark 1st for 6 of 17 years

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Country Average ranking Average score

Denmark 2.0 9.53

New Zealand 2.0 9.46

Finland 2.3 9.48

Sweden 4.2 9.24

Singapore 5.0 9.19

Iceland 5.4 9.16

Australia 9.5 8.69

UK 12.9 8.35

Ireland 16.2 7.72

Samoa 62.2 4.23

Tonga 108.2 2.88

Factors in being ‘corruption-free’

Human development & national culture*

1. Increased human development (HD) = lower corruption

2. National cultures that strengthen the link between human development and low corruption:

• Citizens disinclination to accept power imbalances in society

• High levels of individualism • A society built on traits of achievement; advancement;

and material wealth • The ability to influence the decisions of others in power.

* A Contingency Theory of Corruption – Sims, Gong & Ruppel 10

NZ: The Good; The Bad; and The Ugly

New Zealand: The Good

Democratic Institutions:

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NZ Denmark

High voter participation 5th 9th

Free press 8th 1st

Apolitical public service

Independent judiciary and Govt. ‘watchdogs’

Independent law enforcement agencies

Wide-ranging civil/human rights legislation

Freedom of information legislation

New Zealand: The Good

Social factors:

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NZ Denmark

High life expectancy 15th 43rd

High literacy 10th 10th

High education enrolment 2nd 4th

High ‘life satisfaction’ 11th 1st

High human development 3rd 14th

High gender equality 6th 7th

International reputation for being ‘clean and green’

New Zealand: The Good

Economic Standards:

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NZ Denmark

High minimum wages 2nd n/a

Govt. global competitiveness 5th 11th

Economic freedom 4th 11th

Strength of business environment 8th 6th

Low poverty levels 21st 5th

GDP/head 38th 8th

New Zealand: The Bad

• NZ has not ratified UNCAC• Relevant legislation is from 1910 and 1961• No prosecutions for foreign corrupt practice

TINZ 2010 Global Corruption Barometer:• 4% of NZ’ers admit paying a bribe to win business

(c.f. 0% Denmark; 1% UK; 2% Australia) • 73% NZ’ers believe corruption is increasing • Only 44% of NZX top 50 companies have anti-bribery

policies (c.f. 72% UK; 69% USA; 50% Europe)

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New Zealand: The Bad

TVNZ website poll 2011

“Is NZ the least corrupt country in the world?”

47% “Yes, we’re squeaky clean”

57% “No, we’re deluding ourselves”

Auditor-General Public Sector Fraud Survey 2010•22.5% have seen internal fraud in the past year•Only 39% of known frauds are reported to enforcement authorities•Only 23% receive fraud awareness training

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New Zealand: The Ugly

Public corruption recent years•R v Field: Cabinet Minister convicted of accepting bribes perverting the course of justice

•R v Awatere Huata: MP convicted of fraud and perverting the course of justice

•R v Chapman: Auditor-General convicted of workplace theft

•R v Nua: Senior Customs official convicted of receiving bribes 17

New Zealand: The Ugly

Public corruption recent years•R v Palmer: Official within GSF convicted of insider trading on confidential government information

•R v Mason: Government property manager convicted of receiving bribes/hospitality for approving leasing contracts

•R v Griffiths: Government property manager convicted of receiving bribes to secure leases

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The Changing Face of NZ Society

The Changing Face of New Zealand

Ethnic diversity

Different values, different practices:

R v Field – Thai and Samoan “cultural expression of gratitude” included gifts and payments

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The Changing Face of New Zealand

Growing gap between rich and poor

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The Changing Face of New Zealand

• Increasing influence of transnational organised crime:

Vicam (Auckland) Ltd; SP trading Ltd – NZ ‘shelf’ companies aiding international criminal networks

• Increasing dependence of NZ companies on international trade:

“Kiwi Firms Must Work Around Corruption” – Prime Minister John Key

• Growing international links:

Oceania ‘vote selling’ for FIFA 201822

The Changing Face of New Zealand

‘Corruption’ a more frequent media issue

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Staying ‘Pure’

What Can Be Done – Domestically

• Promote much more discussion about corruption • Education for NZ companies at risk of FCP laws; e.g.

UK Bribery Act• Work to ratify UNCAC• Work to modernise bribery/corruption legislation • Work with TI, IBE etc. to promote public expectations

around ethical corporate behaviour• Acknowledge the economic link between the “100%

Pure” & “Clean and Green” brands and the international reputation for being corruption-free

There is no basis for complacency! 25

What Can Be Done - Internationally

1. An international crime needs international solutions

2. The law enforcement solutions are multi-layered• Prevention: Education• Detection: Intelligence sharing: International agreements: s.51

SFO Act: “The Director may enter into any agreement or agreements with any person in any other country whose functions include investigation or prosecution of fraud”

• Investigation: Joint operations: s.36 SFO Act• Prosecution: Common objectives; effective outcomes -

ICAC/NZ SFO • Reform: Alternative powers and sanctions

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Conclusion

Corruption in Society

History is no guarantee to future corruption trends

Corruption is a growing threat to previously ‘pure’ countries because:•Crime is increasingly trans-national•Rising social inequality in a post-GFC era•Societies are increasingly diverse and fragmented with differing and values

Every country will have (or need to find) their own unique motivators for deterring corruption. •The “100% Pure” reputation resonates emotionally with Kiwis, but also has important economic value

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Corruption & Law Enforcement

Cooperation and Coordination•The good must associate, but the talented must also teach•Operational pragmatism not legal bureaucracy•Forum for building operational links •Nothing succeeds like success…and trusted relationships•“100% Pure” is an admirable goal for us all

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THANK YOU.

QUESTIONS?

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