PACIFIC BASIN ECONOMIC COUNCIL
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Institutional Safeguards for Good Governance Judge Anand Satyanand Ombudsman New Zealand Combating Corruption in the Asia Pacific Seoul, Korea Tuesday, December 12, 2000 NEW ZEALAND IN THE CONTEXT OF ASIA AND THE PACIFIC may be characterised by three things. The first is its remoteness and small size. The second is its part Polynesian history and its indigenous Maori people. The third is its mode of government and administration. Each of those things have something to offer when the aims of this Conference are considered. Although small and far away, New Zealand has many linkages with Asia and energetically pursues links of trade and commerce and cultural contact, bilaterally with many countries, like Korea, and multilaterally by means of membership of Asian based organisations such as APEC and ASEAN. Its Polynesian connections make notions such as sharing well known and it is accordingly natural to share ideas and to accept insights from others. So far as government and administration is concerned New Zealand has adopted modern means of public sector management with a number of mechanisms available for redress of wrongs - the courts, recourse to ombudsmen for maladministration, freedom of information, and otherwise. New Zealand rates consistently as among the least corrupt countries in the world. Erstwhile Presence of Corruption: Yet New Zealand is not a country which is free from corruption. A few weeks ago the State Services Commissioner, the person in charge of the body which administers the country's public sector filed in Parliament his annual report and had to say "However well publicised cases this year of former employees of the Inland Revenue (Taxes) Department the Department of Work and Income (Social Welfare benefits) Department and the Immigration Service have reinforced the realisation that New Zealand is not immune from corrupt practice on the part of public servants. The cases have generated media comment and inevitably increased public disquiet. Confidence in the behaviour of public officials is so important that [I] have decided to use my annual report on the State services, the first of the new millennium, to confront these concerns directly." Because of the unprecedented nature of the cases mentioned, the Commissioner then devoted detailed attention to the matter of corruption, the importance of an honest State sector, definitions of corruption, the amount of risk and the action necessary to maintain high standards. In the course of this paper, these experiences will be shared and a picture of our country presented in order to have others make comparisons and to register both similar themes and different approaches - and thus a New Zealand contribution to this conference can be gauged by delegates and readers. Definition of Corruption: The question of definition of corruption will clearly be covered in many other contributions to this conference and in more detail than here. The State Services Commissioner said that in his view "corruption is not inefficiency, poor management or even theft as a servant or fraud. Corruption is the use of public office for personal gain, usually involving bribery. At least two people are involved, a buyer and a seller." This kind of definition is orthodox and can be compared readily with other contemporary sources. The Asian Development Bank Anticorruption Policy says it is "the misuse of public or private office for personal gain" The Oxford Unabridged Dictionary has corruption as "the perversion or destruction of integrity in the discharge of public duties by bribery or favour". Webster's Collegiate Dictionary on the other hand says corruption is "inducement to wrong by improper or unlawful means (as bribery)". In some contexts it is considered important and useful to distinguish between graft when the illicit act is proposed by the official and where corruption (so called) is limited to when the illicit act is proposed by the malefactor citizen. The OECD has it in a 1996 publication as follows "In examining conduct it is useful to make a distinction between behaviours: illegal, ie that is against the law which covers criminal offences to misdemeanours; unethical, ie against ethical guidelines principles and values and inappropriate ie against normal convention and practice. Corruption may fall under any of these headings. Its defining characteristics are the misuse of public office roles or resources for private benefit, material or otherwise". Challenges Wrought by Presence of Corruption [General]: At all events, the most notorious kinds of corruption can easily be recognised and described. So whether the corruption be of large or small scale it is the questions of identification and eradication that are important. In the context of India, then President Narayanan said in 1997 "Corruption is one of the greatest challenges now confronting [the country]". In another Asia Pacific state, Papua New Guinea, Simon Pentanu Chief Ombudsman of that country in a speech called "Dealing with Corruption" given in Canberra Australia in 1998, but published in June 2000, said "… the answer to corruption is becoming clear and plain. It is by and large about leadership. Honest creative competent leadership throughout all arms of government. This type of leadership is all about self-empowerment, which is the only viable antidote. ….We have to salvage ourselves and our ship of state." . It can thus be stated that agreement will be reached without difficulty that corruption is something which needs attention, even where in New Zealand for example, the number of cases may be small. Corruption is not confined to any country or continent because a small amount of reflection will bring to mind for example the Matrix - Churchill or "Cash for Questions" scandals of recent times in the United Kingdom, the Carrefours du Developpment scandal in France, each of the Flick, Barschell and Hesse controversies in Germany and either the Watergate or Iran-Contra affairs in the United States. Challenges Wrought By Corruption [New Zealand]: The New Zealand State Services Commissioner, in the Annual Report mentioned above, put the matter of challenge in the following way. "If corruption is so rare in the New Zealand State sector, why should we be concerned about a handful of cases. There are three reasons. First… such cases undermine citizens' confidence in public institutions on a scale disproportionate to the offence. In a country that relies largely on voluntary compliance with tax laws, benefit administration and range of licensing and registration arrangements, citizens' compliance is directly related to their trust in the way in which their personal information will be held, the honesty of the officials administering the law and citizens' perception that all are treated equitably. This public confidence is fundamental to a successful civil society. Secondly our [New Zealand's] admirable track record in these matters cannot be taken for granted. There are plenty of overseas examples to demonstrate that once it becomes established, corruption is difficult and costly to eliminate. Openness - that is a willingness to acknowledge the risks and to prosecute those who transgress - is fundamental to minimising such risks. Finally, a State sector and private sector free of corruption contribute to a fair society and a well-performing economy. Neither equity nor efficiency are served by corruption. In recent years international financial institutions which were once tolerant of, or at least philosophical about, a degree of corruption in countries where they were funding development programmes, have brought the eradication of corrupt practices closer to the top of their agenda." It may therefore be of interest to describe what may be termed the chemistry of the New Zealand public sector and the very limited amount of corruption that has been found to exist and to likewise examine some of the mechanisms that ensure, for the moment that it is kept to a minimum. Constituent Elements of New Zealand Public Sector: The New Zealand Public Service is comprised of 38 Government departments plus a number of Crown Entities and State Owned Enterprises. As at 30 June 1999, the number of staff employed calculated on a fulltime equivalent basis was just short of 30,000. Latest estimates put the population of the country at just over 3.8 million, there being two major ethnicities, European and Maori, the latter being 15%. To this should be added a smaller number of other groupings, people of Pacific Island descent comprising 6% and those of Asian origin 5%. In other words, New Zealand can be described as a predominantly European but significantly multi-cultural country where in day to day living there is considerable evidence of Maori and Polynesian themes. Something of that same ethnic mixture comes to be represented in those employed by the State. During the past 15 years the New Zealand public sector has been the subject of widespread reform as what is now known as New Public Management has come to be applied. This has had a number of constituent elements. Laws governing labour organisations and the negotiating environment were passed. State Owned Enterprises undertaking operations on a commercially viable basis were established. A number of activities more suited to the private sector - such as railways, insurance, telecommunications and banking were sold. A State Sector Act restructured public sector management and aligned the public sector with private sector employment regulations. Employment came to be undertaken by means of contracts renewable after specific terms rather than employment being on a long-term and sometimes lifetime basis. The foregoing and other items have had considerable effects on New Zealand life, a major one being reduction in the number of public sector employees from more than 90,000 to 30,000 in that 15-year period. As to employment, it can be observed that along with countries of a similar kind, namely Australia and Canada for example, employment patterns have been transformed during the 20th Century. In former times, whereas there were emphases upon manual work and bread winning being the role of the male waged person, these have been replaced by a number of more complex patterns - the involvement of both men, women and different ethnic groups, along with an expanding service sector, increased self-employment, part-time employment and job sharing. This has created, in the public sector as well, more demand for the highly skilled, with increased waged dispersion based on skill levels and greater variations in hours and conditions. In accordance with relatively new employment legislation, New Zealanders, by and large (inclusive of working in the public sector), enter individual contracts of employment with their department or Ministry. This is so at all levels with the Chief Executive very often having a specific contract with the responsible Minister. These contracts provide for particular levels of performance that are expected. It can be stated that, in the context of general employment, people in the State sector are well paid in New Zealand terms. Put in another way, there is no great disparity between ordinary wages earned in the public sector with ordinary wages earned by employees in the regular business community. The next relevant factor in describing the New Zealand community relates to general levels of education. Without going into detail, New Zealand can be described as a country with a high degree of general literacy where there is an emphasis upon learning up to tertiary level. Education is compulsory to the end of secondary school and, whilst most students attend State funded schools, there are a number of other choices for parents and students and many opportunities for community education and advanced education thereafter. With a tradition born of a colonial past, which emphasised things such as self-help and an egalitarian approach, New Zealanders can be said to dislike either excesses or abuses of power, which in the context of a small society they are able to remonstrate, when necessary. To describe the New Zealand community in a sentence, the elements of a relatively small but reasonably well-educated and egalitarian minded community emerges, which dislikes unfairness and which will not tolerate corruption in the way adverted to by the New Zealand State Services Commissioner above. Constituent Elements Available to Combat Corruption: As indicated above in the definition of corruption, many corrupt actions will be illegal in the sense of breach of the criminal law. The New Zealand Police have responsibility for enforcement of the criminal law and principally the Crimes Act, the Summary Offences Act and Misuse of Drugs Act available for use in prosecutions before the Courts. In addition, for specific matters of fraud of a more serious complex and multiple kind, there was established in New Zealand in 1990 a specific Serious Fraud Office, which was set up to facilitate the detection, investigation and expeditious prosecution of serious and/or fraud offenders. This office involves the resources of multi-disciplinary teams of investigators, forensic accountants and prosecutors. The inception of the New Zealand Serious Fraud Office some 10 years ago reflected a trend around the world to establish similar agencies in the face of increasing difficulty for law enforcement agencies using traditional methods to come to grips with serious or complex fraud offending. In the decade to this year, over 100 prosecutions have been taken with a record of successful prosecution, it is said, of more than 90%. International fraud is now becoming a focus of interest for the Serious Fraud Office with a growing need for it to use modern technology in detection. New Zealand was the first English-speaking country in 1962 to adopt by legislation the previously Scandinavian notion of Ombudsman methodology. This envisages the independent investigation of citizens' complaints about an act of maladministration by a Government department or agency. The Ombudsman is furnished with sufficient powers to inquire and obtain such information as may be necessary to form a view of the matter under complaint and to make a recommendation for redress, where that is appropriate. The New Zealand Ombudsman office has functioned now for nearly 40 years with there being now two Ombudsmen undertaking some 6000 cases per year, brought to them by ordinary individuals. The ready availability of a complaint mechanism is thus something to which New Zealand citizens have relatively easy recourse. The work of the New Zealand Ombudsmen, though conducted according to an individual New Zealand statute, broadly accords with the internationally accepted definition of Ombudsman, that being "An office provided for by the Constitution or by action of the Legislature or Parliament and headed by an independent, high-level public official, who is responsible to the Legislature or Parliament, who receives complaints from aggrieved persons against Government agencies, officials and employees, or who acts on [his] own motion, and who has the power to investigate, recommend corrective action, and issue reports." All investigations undertaken by Ombudsmen are conducted in private. When an Ombudsman believes a complaint can be sustained, this opinion is reported to the Government department or organisation concerned along with any recommendation for action. A copy of this report may also be made available to the responsible Minister. At the local government level, over which, in New Zealand, the same Ombudsmen have jurisdiction, the Ombudsman reports the finding to the organisation and may provide a copy of that to the Mayor. Ombudsmen have no authority to investigate complaints against private companies and individuals or decisions of Judges. At the beginning of the 1980s, following a thoroughgoing study by a Government appointed Committee comprising senior civil servants, New Zealand passed an Official Information Act in 1982 and became a "freedom of information" country. This is based on the principle that information shall be made available unless there be a good reason for withholding it. The purposes of the Act are to increase the availability of official information to the people and provide for proper access by bodies corporate to official information relating to themselves but at the same time, where it is in the public interest, to protect official information from disclosure and to preserve such things as individual privacy. The Official Information Act, by and large, covers all Government departments, statutory bodies and State Owned Enterprises, with the exception of the Courts. Ombudsmen can review a decision by a Government organisation to refuse supply of information, and the formal recommendation of an Ombudsman, after such review, is binding unless overridden in very limited circumstances. The Official Information legislation also contains provisions enabling citizens to be advised of reasons for decisions. In short, the Ombudsmen, whether acting in their jurisdiction on complaints about maladministration, or in their jurisdiction to make available, where appropriate, official information, play a role in ensuring the transparency and accountability of Government. It follows that the Ombudsmen can in the course of this work become aware of evidence of corruption and can be in a position to recommend action regarding it. Statutory measures against corruption continue to be added to the law in New Zealand. The New Zealand Parliament in April 2000 passed legislation which will come into effect on 1 January 2001. This legislation, called the Protected Disclosures Act, enables employees who observe serious wrongdoing in or by an organisation to disclose that to what are called "appropriate authorities" such as the Ombudsmen, the State Services Commissioner, the Commissioner of Police, the Auditor-General, the Director of the Serious Fraud Office and others. In circumstances where that is done, the notifying person will be protected from civil, criminal or disciplinary proceedings, or retaliatory action which might be taken by an erstwhile employer. New Zealand thus joined during this year those countries which have what is termed "whistleblower" legislation. One of the functions of the State Service Commission, which superintends the Public Service and its staff, is to promote appropriate values and standards of behaviour for the Public Service. That organisation publishes a specific Public Service Code of Conduct, which comprises three principles, these being first that "employees should fulfil their lawful obligations to Government with professionalism and integrity", secondly that "employees should perform their official duties honestly, faithfully and efficiently, respecting the rights of the public and their colleagues", and thirdly "employees should not bring their employer into disrepute through their private activities". More recently, in mid November 2000, the New Zealand Government appointed a State Sector Standards Board comprised of a group of senior people from commerce and Government and the Trade Unions, the task of which will be to draft a statement of Government expectations of the State sector and the priorities that departments and agencies are to observe in responding to citizens. In other words, this Board will advise the Minister of State Services about acceptable corporate standards appropriate for Government bodies. In a small country there is the opportunity for a considerable amount of cross-fertilisation of ideas and concepts. There is available, when one talks of means to avoid corruption, the following, connected with Ombudsman methodology. It will be recalled from above, that the Ombudsman concept enables independent investigation of complaints of maladministration. That model, after having been applied for a great man years in the public sector, has come to be taken up in two New Zealand industries. First, the Banking Ombudsman scheme began in July 1992. It arbitrates unresolved disputes about banking services in an independent and impartial manner and such help is available free to the complainant. The Banking Ombudsman is, in the instance of that industry, furnished with power to award compensation to cover direct losses of up to $100,000, inconvenience of up to $2,000 and some costs. There is a reporting mechanism to a Banking Ombudsman Commission, which comprises representatives of the banks and consumer organisations. Episodes of corruption, if any, are able to be complained of through this means. In 1995 there was also commenced in New Zealand an office of Insurance and Savings Ombudsman, this being an independent body to help consumers resolve their complaints against participating insurance and savings companies. Again, this is a free service to consumers operating independently of the insurance and savings industry and funded by levies upon companies involved in the scheme. The Insurance and Savings Ombudsman's jurisdiction extends to investigation of personal and domestic insurance, where less than $100,000 is involved and the person is able to approach the Ombudsman after having taken it up with the insurance company in question. One can therefore see the mirroring or modelling in the private sector of something which has proven to be successful in the public sector. Parliamentary Ombudsman methodology has proved successful for New Zealand citizens and for the public sector. The shift to the private sector and the adoption of many of the methods employed by the Parliamentary Ombudsman - inquisitorial approach, informal resolution, use of alternative dispute resolution means - assist this in being successful. It is to be noted that there is a distinction with industry Ombudsmen having the power to make binding orders in certain circumstances, whereas Parliamentary Ombudsmen are restricted to recommendations which goes back to the original Scandinavian conception of Ombudsman. Conclusion: The foregoing has been a brief survey of measures available to combat corruption from the standpoint of a small country in the Asia-Pacific region. It is from the standpoint of a country which has registered a high placing in the well-known Transparency International Corruption Percentage Index for a number of years. That assessment, conducted each year, is not an assessment of the corruption level in any country but an assessment of the level at which corruption is perceived by people working for multi-national firms and institutions as impacting on the commercial and social life in that country. It can be said that New Zealand is fortunate in having very low levels of corruption and that, with the measures described above, such is likely to continue in the future. The principal New Zealand representative for Transparency International (an international non-governmental organisation) is Dr Peter Perry of the University of Canterbury in Christchurch, New Zealand, who recently said "corruption is an ever-present threat, globally increasing and better tackled before rather than after the event. All commentators agree that good governance is the best preventative". About the Author: Judge Anand Satyanand is one of New Zealand's two Parliamentary Ombudsmen, having in 2000 been appointed by Parliament to a second five-year term in that office. Of Fiji-Indian parentage, he was born and raised in Auckland and is married with three adult children. He trained as a lawyer and worked as a crown prosecutor and Court based practitioner in a private law firm from 1970 to 1982. In 1982 he was appointed a Judge with a specialist warrant for criminal jury trials and spent 12 years working in a number of New Zealand places in that capacity. He has pursued a number of interests alongside formal work as a Judge or Ombudsman, in legal education, law reform and prison parole work. He has also taken part in a number of community activities including sport and sporting administration. His work as an Ombudsman, which commenced in 1995, includes connections with the Education, Social Welfare, Police, Immigration, Agriculture, Statistics, Transport and Prisons cases. He has written a number of articles in journals about legal, judicial and Ombudsman matters and has presented lectures and papers to a variety of audiences.