New Zealand: A Pacific Perspective on Corruption “ Being 100% Pure in a Changing World”

1. New Zealand: A Pacific Perspective on Corruption“Being 100% Pure in a Changing World” Adam Feeley Chief Executive Serious Fraud Office New Zealand 5th ICAC Symposium Hong Kong, 9-12 May 2012

2. 100% Pure? • PM dismisses worries of taint to 'Pure' brand

3. 100% Pure? Former National MP sentenced SFO lays corruption charges in ACC investigation Ex-MP Roger McClay in court on perk abuse charges Update 100-year-old law, says SFO Corruption rears head in NZ business New Zealand link to FIFA corruption sting Time for Action on Corruption in New Zealand says Watchdog Ex-MP charged over $1.8m pokie scam Political round-up: Questions over 'corruption' Former Crafar farms bidder charged with bribery Former Cabinet Minister Phillip Field accused of bribery and corruption SFO Lays Charges In North Shore City Council Corruption Case

4. The Role of SFO

5. 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.

6. The Role of SFO GUILTY PLEA IN $103M PONZI-STYLE SCHEME SFO INVESTIGATES SWINDLE OF SEREPISOS FIVE STAR DIRECTOR PLEADS GUILTY TO CHARGES FORMER MP GILBERT MYLES SENTENCED JAIL SENTENCE HAD “CHILLING EFFECT” ON COMPANY DIRECTOR GOLD BULLION TRADER IN SFO PROBE SFO charges seven people with defrauding Motor Trade Finance NATIONAL FINANCE BOSS LUDLOW JAILED FOR SIX YEARS ROTORUA LAWYER FOUND GUILTY ON SFO FRAUD CHARGES SFO ALLEGES $1.7 BILLION FRAUD AGAINST SOUTH CANTERBURY FINANCE SFO charges four over Dominion Finance lending Third person charged in connection with Crafar Farm bid SFO lays 92 charges against Rockforte Finance directors

7. New Zealand’s place in the World

8. TI Corruption Perception Index: 1995-2011 • NZ ranked 1st for 8 of 17 years, and Denmark 1st for 6 of 17 years

9. Factors in being ‘corruption-free’

10. Human development & national culture* • Increased human development (HD) = lower corruption • 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

11. NZ: The Good; The Bad; and The Ugly

12. New Zealand: The Good • Democratic Institutions:

13. New Zealand: The Good • Social factors:

14. New Zealand: The Good • Economic Standards:

15. 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)

16. 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

17. 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

18. 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

19. The Changing Face of NZ Society

20. 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

21. The Changing Face of New Zealand • Growing gap between rich and poor

22. 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 2018

23. The Changing Face of New Zealand ‘Corruption’ a more frequent media issue

24. Staying ‘Pure’

25. 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!

26. What Can Be Done - Internationally • An international crime needs international solutions • 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

27. Conclusion

28. 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

29. 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

30. THANK YOU. QUESTIONS? WWW.SFO.GOVT.NZ