Corrupt practices lower New Zealand’s global rating

Corrupt practices lower New Zealand’s global rating
Transparency International NZ Chair Suzanne Snively (File Photo)

Wellington, December 21, 2019

What a year 2019 has been for exposing the inadequacies of our business sector in preventing corruption!

Overcoming these inadequacies is urgent if New Zealand is to maintain its reputation for integrity and its designation as the best place to do business.

Seven Key Practices that Prevent Corruption

It is important that businesses continually refresh Transparency International New Zealand (TINZ)’s seven key practices that prevent corruption: (a) tone at the top (b) living codes of ethics (c) anti-corruption communication and training (d) observance of the rule of law (e) whistleblowing and protective disclosure (f) robust procurement practices and (g) regular reviews/audits to uncover corrupt practice.

These practices need to be regarded as priorities for businesses to maintain and improve their competitiveness.

It is essential that both the private and public sectors follow these principles if our people and economy are to be protected from the international wave of corrupt financial flows, estimated to be equal to as much as 3% of the worlds’ GDP.

Increasing corruption

The year started with the news that 66 New Zealand business people surveyed by the World Economic Forum, ‎believed there to be increasing corruption in the public sector, including in our judiciary.

This group was one of the eight sources of survey information used to calculate Transparency International’s Corruption Perceptions Index (the TI-CPI) score for New Zealand. This survey impacted on our overall TI-CPI ranking. Our overall score fell, and our ranking slipped to Number 2 behind Denmark.

This was despite the public sector progress observed in TINZ 2018 update of its 2013 National Integrity System Assessment.

This assessment is based on detailed evidence about the way different sectors are addressing the identification, detection, and prevention of corruption.

Public Sector practices

Paradoxically, some of the progress in the public sector may itself have shaped the perceptions of those business people surveyed by the World Economic Forum, who marked down New Zealand’s performance.‎

Since 2013, the Serious Fraud Office has been given the mandate (though regretfully with limited resources) to prosecute cases of corruption.

Legal cases in the public sector, such as the Rodney District Council versus Borlase and Noone, are generally public with published judgments.

In contrast, most private sector cases of bribery, corruption or fraud are settled out-of-court with limited, or no, publicity. This gives the impression of greater corruption in the public sector than in the private (or NGO) sectors.

Conduct and Culture Shape Integrity Systems

In terms of culture and conduct that make up integrity systems, this impression is inaccurate. The exposure this past year of the large Australian-owned banks’ treatment of customers, their failure of attestation of capital adequacy, and breaking the laws relating to Anti-Money Laundering, show a breath-taking disregard for their social licence.

Surveys of the private sector paint a consistent picture of a sector that sees the detection and prevention of corruption as of very low priority.

It shouldn’t have been a surprise when Professor Dr Michael Macaulay reported this month that no business participated in the survey taken to provide evidence for his analysis of whistleblowing practice in New Zealand.

Role of Whistle-blowers

Whistle-blowers have been busy this year, nearly every week a new one has come forward. They are a key source of information in cases where organisations and some of their people prefer not to be transparent.

Protecting these whistle-blowers  is a challenge that must be addressed so that people have the courage to speak up about inappropriate conduct.

Open evidence

A recent media story described how the evidence about New Zealand First’s Foundation, was left out for a journalist near a school. While this provided a cute angle to the story, by telling it the journalist may have included sufficient information for those in the know to put the identity and career of the whistle-blower at risk.

This would be unfortunate as the now public evidence about some of the features of political party funding needs improved accountability.

Thanks to this whistle-blower’s initiative, the media has extensively explored different aspects of political party funding. Meantime new legislation has been introduced to tighten up on donations from overseas citizens. Separately, the Chair of the Electoral Commission has explicitly identified changes required to enable the Commission to carry out investigations in cases like this.

Peace on Earth

By always keeping vigilant it is possible to turn the saying of the season, “Peace on Earth,” from a cliché into a reality.

By fronting up to the alter of transparency and accountability, the private sector can enhance its reputation, easier market access, lower costs, better access to capital, higher returns on investment, better quality, committed staff, and customer loyalty.

These are the factors that generate better quality paid work for more people.

A strong private sector also enables greater innovation and trade in goods and services that are environmentally sustainable.

CPI 2019 Publication

The 2019 TI Corruption Perceptions Index will be published on January 23, 2020.

Let us hope that the business people responding to the World Economic Forum survey, are better informed about our public sector and judiciary than last time.

Suzanne Snively is Chair of Transparency International New Zealand Inc based in Wellington. The above article appeared in the December 2019 issue of Transparency Times.

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