New Zealand has been called “the world’s cleanest country.” It has topped the Corruption Perceptions Index for seven straight years (sometimes sharing the top slot with Nordic countries or Singapore).
But Nick Paterson, left, the chief anti-corruption investigator for New Zealand’s Serious Fraud Office (SFO), won’t let Kiwis coast on their country’s reputation.
At a forensics conference held last month in Auckland, Paterson said New Zealand companies “must be paying bribes” to foreign officials. He said “two weeks ago” his office received a complaint about a New Zealand company or individual paying bribes overseas, only the second such complaint in the SFO’s 23-year history.
The first, lodged sometime in 2012, “went nowhere,” Paterson said.
We reached out to him via email for more on these developments.
What led you to conclude New Zealand companies were paying bribes to foreign officials?
The notion that New Zealand companies “must be paying bribes” is more a call to action than statement of fact. We know that NZ companies and organisations operate and are successful in jurisdictions identified by organisations including Transparency International as being high-risk for bribery and corruption. We see investigations being carried out into companies based overseas, i.e. competitors of our companies. I would like to see NZ organisations doing more in the anti-bribery and corruption space. I think we can raise the bar in terms of prevention.
If New Zealand’s reputation as the world’s cleanest country isn’t factual, what accounts for the discrepancy?
It’s not that it isn’t factual: it is regarding a TI report [Corruption Perceptions Index], which states that NZ is perceived as having the least corrupt public sector in the world. There is no suggestion that there is no corruption, just that there comparably less than all other countries.
We have a very strong and apolitical public sector, high voter participation, free press, independent judiciary and law enforcement, transparent legislation, and the formal processes for citizens to challenge decisions and request information, and a relatively low Gini index. All these factors and others combine to support relatively low corruption levels. BUT there is more we can do not only to prevent but also to identify any current issues. TI is currently carrying out a National Integrity Systems assessment in New Zealand, with support from the Office of the Auditor General, Ministry of Justice, and other agencies including the SFO.
How is the SFO proceeding with its investigations into foreign bribery, given the agency’s inexperience with this type of case?
While we have little experience of investigations into foreign bribery, given the lack of reports to date, we have extensive experience in the investigation of domestic bribery and corruption, and additionally domestic general fraud, i.e. white collar problems. Hence, we are and will be combining the experience of the SFO’s forensic accountants, investigators, and investigating lawyers with the expertise of other agencies we have close relationships with such as the Australian Federal Police, the Singaporean CPIB, the UK SFO, and the FBI.
Do you feel your background as a fraud investigator prepared you to tackle foreign bribery cases?
Absolutely. You are fundamentally talking about a similar part of human nature, whether it be domestic white collar fraud or a case of foreign bribery.
The SFO is pushing for New Zealand’s anti-bribery laws to be strengthened. What, specifically, would you like to see changed?
It should be noted that the current legislation in New Zealand presents a stable and functional platform for us to investigate and prosecute issues. The laws apply to both private and public sectors, and extend extra-jurisdictionally. Hence, there are no major flaws.
However, there would be benefit in particularly considering the private sector bribery legislation, the Secret Commissions Act 1910. The issue predominantly is that the penalty on conviction is law, i.e. a maximum of two years imprisonment or a $2,000 fine. That said, the offences themselves are worded insightfully given they are over 100 years old, and directly apply now to complex scenarios we come across regularly.
Furthermore, in the future, and given the recent changes in the UK, consideration may be given to bringing all the anti-bribery law together in a single piece of legislation, extending to books and records offences which we don’t currently have. The ultimate benefit of this will, of course, be in the prevention and detection of problems, rather than the enforcements, investigation, and prosecution.
Critics of NZ’s anti-corruption regime have pointed out the nation has yet to ratify the United Nations Convention Against Corruption (UNCAC). What is your position on this, and are there plans for New Zealand to ratify?
Officials are working hard to progress towards ratification, and would hope to ratify the convention in due course.
Do you have any response to NZ First party leader Winston Peters’s recent statements on Chinese influence? Are you concerned about the deals Peters referred to?
We are a changing society, and that is something we should be embracing. Different cultures can bring different approaches to business, but it must be remembered that statistics within the SFO do not show that one culture is more corrupt than another. Rather, unfortunately fundamental human greed (or on occasion need) is consistent across all cultures. As a result, I think we would be remiss to concentrate in one area within New Zealand alone. If we can up the ante with organizations as a whole with respect to corruption prevention, then all organizations will improve irrespective of individuals or deals.