The recent London Anti-Corruption Summit (the Summit) saw New Zealand agree to explore some new measures in support of global efforts against corruption. The Summit, attended by over 40 countries, has kept corruption and transparency issues in the spotlight at a time when the Panama Papers had just reinvigorated debate.
The overall commitments emerging from the Summit demonstrate an increasingly hostile environment worldwide for those engaging in corrupt practices. As US Secretary of State John Kerry said, the goal is “no safe harbours anywhere” for the corrupt.1 And here at home, the Serious Fraud Office recently reiterated its part in this, warning “We are watching you. We are actively looking for offences and offenders”.2
While there is no major change yet imminent in New Zealand as a result of the Summit, companies would do well to read the tea-leaves and appreciate the need to have effective policies and procedures in place to ensure they are keeping corruption out of their businesses, both at home and abroad. That will require top-level leadership and commitment, but the alternatives – a loss of reputation and business opportunities, potential prosecutions – are well worth avoiding.
Beneficial ownership (still) on the agenda
Unsurprisingly in light of recent document leaks, a key theme of the Summit was the need for increased transparency around beneficial ownership.3 The United Kingdom and five other countries4 agreed to create public registers of beneficial owners, and the EU, Iceland, UAE and a number of UK overseas territories with major financial centres agreed to automatically exchange their entire registries of beneficial ownership information.5 The UK also announced its intention to “clean up” the UK property market, so that all foreign companies which own property in the UK will have to declare their beneficial ownership on a company register, and no foreign company will be able to buy UK property or bid for central government contracts without joining the register.6
New Zealand and five other countries7 have taken a more reticent approach: New Zealand has committed at this stage only to “exploring” the establishment of a public central register of company beneficial ownership information.8 New Zealand’s statement did not explicitly address the question of similar information for trusts, possibly in light of the current consideration of foreign trusts’ disclosure rules under the Shewan review. But the statement did perhaps leave the door open in that regard, in referring to ensuring that law enforcement agencies had effective access to beneficial ownership information for “companies and other legal entities of risk” registered in New Zealand.
Open procurement processes
The Summit’s Communiqué stressed the need for fair, open and accountable public contracting.9 Again, the UK has taken a strong lead on this, with New Zealand making encouraging statements but few actual commitments.
The UK committed to a “conviction check process” to prevent convicted corrupt bidders from winning public contracts.
For its part, New Zealand will “explore” establishing an accessible central database of companies which have convictions for bribery and corruption offences, and will look at ways of sharing information about corrupt bidders across borders.10
The UK has committed to the Open Contracting Data Standard and the whole process of public contracts, from bidding through building, will be visible from October 2016.11
New Zealand will “continue and intensify efforts to develop procurement capability”, including initiatives to safeguard integrity in the procurement process.
In relation to corporate economic crime more generally, the UK has indicated that it will build on UK Bribery Act 2010 “failing to prevent” provisions by introducing a penalty for UK companies which fail to prevent their employees from facilitating tax evasion, including overseas. Mid-year, they will also launch a consultation on whether to extend this to failures to prevent economic crimes such as fraud and money-laundering.12 There is no sign that New Zealand is following suit any time soon.
One initiative to which New Zealand has signed up, however, is the establishment of a new International Anti-Corruption Coordination Centre to bolster efforts to prosecute the corrupt and seize stolen assets. New Zealand’s police liaison officer in London will serve as our representative to the Centre, helping corruption investigators work across countries to stop illegal money flows caused by high level corruption.
New Zealand also indicated an intention to work with international sporting bodies to combat corruption in sport. (Interestingly, while some sporting organisations were represented at the Summit for a panel discussion on financial crime in sport, FIFA was a rather glaring omission from the guest list.)
Scrutiny on corruption only increasing
The Summit is not the dawn of a radical new era, and the New Zealand ‘commitments’ in London will not at this stage result in any significant changes to domestic practices. However, the Summit is part of the growing worldwide focus on corruption issues, and also reflects increasing international co-operation in investigating bribery and corruption.
Against that backdrop, and New Zealand having recently (finally) ratified the UN Convention Against Corruption and amended our anti-bribery legislation,13 we should expect more, not less, scrutiny on corruption issues. New Zealand businesses, particularly those operating overseas and in high risk jurisdictions and industries, more than ever before must ensure they have appropriate policies and procedures in place to protect against corruption risks. To assist with this, the Ministry of Justice has recently released guidance notes intended to help New Zealand businesses in complying with anti-corruption laws.14
The key is that New Zealand organisations need to reject complacency about our traditionally good reputation, and take positive action to keep it so.
Fiona Tregonning is a Senior Associate in Bell Gully’s Litigation Department and advises on bribery and corruption issues. She is also a former director of Transparency International (New Zealand) Inc, a non-profit anti-corruption organisation.
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.