This week, New Zealand regained its top position in the annual Transparency International Corruption Perceptions Index (CPI)1, marking it as perceived to be – jointly with Denmark – one of the two countries with the least public sector corruption in the world.
This was a welcome return to the top for New Zealand, after having slipped down the ranks to second and fourth place in 2014 and 2015, following a number of years holding the number one CPI ranking.
Engaging with corruption issues
As Transparency International New Zealand’s Chairperson noted in commending New Zealand’s 2016 CPI result, our public sector agencies are increasingly moving away from defensiveness and past complacency about corruption issues, and are providing training and monitoring of bribery and corruption in order to stop it.2 This is a positive trend, and one that New Zealand businesses should also be taking on board.
The need for such action is apparent from less positive developments late last year. In December, the High Court found two individuals guilty of multiple bribery and corruption offences in the high profile corruption case,
R v Borlase & Noone.3 The offences spanned a seven year period and related to benefits well in excess of NZ$1 million. In another case involving corruption allegations, in September 2016 Sir Ngatata Love was found guilty of obtaining by deception. This was an alternative charge to the Secret Commissions Act offence he was charged with, similar to that to which his son had pleaded guilty.4 These recent cases underline that corruption risks in New Zealand are real, and both businesses and the public sector need to be conscious of that and taking active steps to combat the risks.
Borlase & Noone case is helpful for those looking to ensure they have appropriate gifts and entertainment policies in place, as the judgment provides a lengthy analysis of the acceptability of the extensive travel, accommodation and other gifts which were provided to the officials in question.
Public sector gifts and hospitality guidance
By way of background,
Borlase & Noone involved a (now former) senior manager at Rodney District Council and then Auckland Transport (the ‘official’) receiving undisclosed payments for non-existent ‘consulting services’ as well as numerous gifts or ‘gratuities’ from a director of a supplier company. Both the ‘consulting’ payments and a number of the gratuities were found by the Judge to be in breach of the Crimes Act prohibitions on bribery of a public official.
As the Judge made clear, there are no ‘hard and fast rules’ about what falls within the acceptable bounds for gifts and hospitality for public officials. In each case the value and the context will have to be considered.5 While there therefore are and always will be grey areas, the findings in the case about whether various gratuities were bribes, as outlined in the table below, should provide some guidance for organisations looking at what should and should not be offered to (or accepted by) New Zealand public officials.
travel, accommodation and attendance at industry-related conferences in Australia and New Zealand by the official (even where accompanied by the official’s spouse), were consistently found by the Judge to be acceptable, despite a range of views having been put forward at trial about what conference costs were acceptable. The context was that much of the travel was ‘partnered’, i.e. the conference was attended also by a representative of the supplier.
business class upgrades for the official, even to an industry conference in Singapore, was not acceptable. The Judge considered there was no reason to pay for such an upgrade other than to influence the official in respect of future management of the supplier’s work; given its value and context it was a bribe.6
overseas travel (for leisure) by the official (including travel with or solely by family members) crossed the line:7 they were consistently found to be bribes, without any legitimate rationale for payment. The value ranged from NZ$1,748 per trip to over NZ$10,000.
Payments for repeated (over 50)
overnight stays in Auckland hotels were, in the context, inappropriate. It was clear that the hotel stays were because of the official’s marital difficulties, rather than being needed for work reasons.
‘long lunch’ or dinner – if relatively infrequent or for a specific celebration, and particularly if disclosed in compliance with the organisation’s gifting policy – may be acceptable, and may in some cases fall within the ‘de minimis’ exception to the Crimes Act offence (i.e., being just one of the ‘usual courtesies of life’). The meals in this case, none of which exceeded NZ$304, were found to be unobjectionable.
However, the Judge noted that meals on a very regular basis and for no apparent reason may be an offence under the Crimes Act.8
Three sets of nine or ten
taxi charges over several years, each set totalling just over NZ$1,000, were not considered bribes.
But 47 taxi charges totalling almost NZ$3,500 were found to be a bribe. The frequency and scale of these taxi charges, and the lack of any control over the official’s use of taxi vouchers, meant this was a bribe and did not fall within the ‘de minimis’ exception.
Various gifts, including the occasional
bottle of wine or whisky, were considered to be acceptable and fell within the ‘de minimis’ exception.
Cases of wine, including a case of Chardonnay sent to the official’s wife at home - were considered a bribe. The context and value of the cases of wine pushed them outside the ‘de minimis’ exception.9
Technology gifts of iPads, and an iPhone for the official’s daughter, were considered bribes. The Judge found that their nature and value made them inappropriate and there was no logical reason to supply them, other than in an attempt to influence the official.10
Payment of the official’s
personal phone bills (totalling almost NZ$15,000) were also bribes. The Judge considered that there was no legitimate reason someone would pay the personal phone bill of an official.11
Managing your organisation’s corruption risks
Having appropriate policies and procedures in place to deal with corruption risks is essential - despite New Zealand’s good CPI ranking and generally ‘clean’ image, recent cases show the importance of avoiding complacency. Factors your organisation should consider in relation to whether it is appropriately managing its corruption risks, whether at home or abroad, include:
Whether your organisation has assessed its corruption risks?
Does your organisation have an anti-bribery and corruption policy in place and internal procedures to back it up?
Is the policy appropriate for your industry/sector, the people you do business with and the jurisdictions you operate in?
Does the policy cover your organisation’s agents or intermediaries?
Does your organisation have a gifts and hospitality policy, and declarations register? Is it consistent with the approach to what is/is not acceptable as set out in
R v Borlase & Noone?
Are staff aware of and do they understand the policies and what they can/cannot pay, offer or receive?
Do you monitor compliance with the policies?
Do you have mechanisms to encourage internal reporting of suspected breaches of the policies?
Please contact our team if you would like any advice or assistance on developing appropriate anti-corruption policies and training staff, or on any other anti-corruption matters.
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.