New Zealand

New Zealand Corruption Report

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Snapshot

nz_250x125.jpgThe risk of corruption for businesses in New Zealand is minimal. The country routinely finds itself among the least corrupt countries in the world, according to all major ranking institutions and indexes. Transparent institutions and rigorous law enforcement effectively curtail corruption. The regulatory environment is favorable for businesses, and acquiring licenses or public services often takes only one day. Active and passive bribery in the private and public sector are prohibited by the Crimes Act and the Secret Commissions Act. Penalties range between fines of NZD 2,000 and 14 years of imprisonment. Public officials may not ask for or accept gifts according to the State Services Commission Code of Conduct. Facilitation payments are illegal, except for a narrow exception for foreign public officials.  

Last updated: February 2016
GAN Integrity

Judicial System

New Zealand's judicial systems carries a very low risk of corruption for companies. The judiciary operates in an open and transparent manner and is effective in enforcing property and contractual rights (ICS 2015). Surveyed business executives report that irregular payments to obtain favourable judicial decisions are never exchanged (GCR 2015-2016). For complaints about the conduct of judges, companies can turn to the Office of the Judicial Conduct Commissioner

Enforcing a contract takes significantly less time than on OECD average but is a little more costly (DB 2016). New Zealand is a member to the International Centre for Settlement of Investment Disputes and a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Police

The risk of encountering corruption within the New Zealand police service is very low. The government has effective mechanisms in place to prevent and detect corruption in the police (through, e.g., the Independent Police Conduct Authority), and there are no reported incidents of impunity (HRR 2014). Surveyed business executives place high trust in the New Zealand police services and report few business costs of violence and crime (GCR 2015-2016). 

Public Services

There is a very low risk of encountering corruption when acquiring public services in New Zealand. The New Zealand Government enforces a strong code of conduct for all state service employees (ICS 2015). Accordingly, companies in New Zealand report that bribes in connection with public utilities almost never occur (GCR 2015-2016). New Zealand's regulatory system is transparent, and foreign investors can make commercial transactions with ease (ICS 2015). Starting a business is nowhere as easy as in New Zealand: It takes on average half a day, requires only one procedure and costs less than in most OECD countries (DB 2016). 

There are no statistics available concerning public service bribery in New Zealand, but twenty-three percent of surveyed organizations in Australia and New Zealand reported to have encountered bribery in the last five years, most of which involved the private sector and only a small fraction involved public officials (Delloite 2015). 

Land Administration

Encountering corruption when dealing with New Zealand's land authorities is a very low risk. Property rights are generally well protected by an open and efficient judicial system (ICS 2015). New Zealand performs very well in regards to the quality of the land administration and registering property, which takes only one day (DB 2016).

New Zealand authorities rigorously enforce corruption-related offenses. In April 2015, The Serious Fraud Office (SFO) charged three individuals with bribery worth more than NZD 1 million involving previous employees of Auckland Transport and Rodney District Council (SFO, Apr. 2015). One individual allegedly received undisclosed payments or gratuities from the director of a supplier to Auckland Transport and Rodney District Council, while in various engineering and management roles either at Auckland Transport or Rodney District Council (SFO, Apr. 2015). The gratuities came in the form of cash, travel, accommodation and entertainment, and the SFO alleged a culture was created within the road maintenance division where the acceptance of gratuities was common in the working environment (SFO, Apr. 2015). 
In another case, in 2014 a property developer was sentenced to six years' imprisonment for orchestrating a NZD 47 million mortgage fraud (SFO, Feb. 2014).

Tax Administration

There is a very low risk for companies operating in New Zealand to be asked for undocumented extra payments or bribes in connection with tax payments (GCR 2015-2016).

Customs Administration

Corruption in the customs administration is not a concern for businesses in New Zealand, where irregular payments and bribes when importing or exporting goods are the least common in the world (GETR 2014). Company executives do not find customs procedures to be a burden on business (GCR 2015-2016).

Public Procurement

There is a low risk of corruption in New Zealand's public procurement sector, but some fraud risks exist. The diversion of public funds is uncommon, and businesses report that officials do not show favoritism to well-connected firms and individuals when deciding upon policies and contracts (GCR 2015-2016). Companies report no irregular payments in connection with the awarding of public contracts (GCR 2015-2016), but a few companies report other forms of corruption: Out of the 33 percent of companies that have experienced economic crime in the past two years19 percent out of the New Zealand companies report to have experienced procurement fraud (PwC 2014). While globally fraud commonly occurs during the invitation of quotes and the bids process, New Zealand respondents report fraud-related concerns during vendor selection, the payment process, and vendor contracting or maintenance (PwC 2014). Accordingly, businesses in New Zealand are recommended to use a specialised due diligence public procurement tool to assess potential risks.

New Zealand actively enforces procuremen-related regulation. In December 2015, two former employees of Thermakraft Industries (NZ) Ltd (Thermakraft) were sentenced to for fraud and corruption as the two secretly received kickbacks for contracts between JMP Transport Ltd (JMP) and Thermakraft (SFO, Dec. 2015). The offenders were sentenced to ten months of home detention and to five months on community detention plus 200 hours of community work respectively (SFO, Dec. 2015).

Legislation

New Zealand has a comprehensive legal framework to combat corruption and enforces strict penalties for corrupt practices (ICS 2015). Two statues criminalize active and passive bribery: The Crimes Act (CA) in the public sector, and the Secret Commissions Act (SCA) in the private sector (NZGOV, 2016). Neither of the statutes allow for facilitation payments, but the CA provides an exemption if an offense is committed only to ensure or expedite the performance by a foreign public official of a routine government action, provided the value of the benefit is small (MoJ NZ GOV, 2016). Under the SCA, a corporation convicted of an offense is liable to a fine not exceeding NZD 2,000 (USD 1,700) (Norton Rose Fulbright, 2014). Any other person is liable on conviction to imprisonment of up to two years or to a fine of up to NZD 1,000 (US$900). Under the CA, most bribery offenses are punishable with imprisonment not exceeding seven years, except for convictions for judicial corruption, and corruption or bribery by Ministers of the Crown, which can be punished with up to fourteen years in prison (NRF, 2014). 

The passage of an organised crime and anti-corruption bill provides for a range of measures to tackle illicit activities such as money laundering, bribery and drug-related crime (NZ Law Society, Nov. 2015). Under this law, penalties for bribery and corruption in the private sector are aligned with public sector bribery offenses by increasing penalties from a maximum of two years’ imprisonment to a maximum of seven years’ imprisonment; foreign bribery offences are also strengthend to respond to recommendations made by the OECD Working Group on Bribery (NZGOV, 2016).

The New Zealand Public Service Code of Conduct states public servants may not abuse their functions or accept any giftsrewards or benefits which might compromise their integrity. Gifts may only be accepted following a transparent process of declaration and registration (NRF, 2014). The Protected Disclosures Act protects employees and other individuals in the private and public sectors who inform about serious wrongdoings in their workplace. It grants whistleblowers immunity from civil and criminal proceedings against them that are based upon them having made a disclosure, and it allows employees to pursue a personal grievance if the employer retaliates by dismissing or disadvantaging that employee (NRF, 2014).

New Zealand has ratified the OECD Anti-Bribery Convention but only signed theUnited Nations Convention against Corruption (UNCAC). Access the Ministry of Justice for an overview of bribery and corruption legislation and an anti-corruption guide for businesses.

Civil Society

New Zealand's media landscape free and diverse, with numerous independent outlets all of which operate without pressure from the government (FotP 2015). The law provides for freedom of speech and freedom of assembly and association, and the government fully respects these rights (HRR 2014).

New Zealand has an active and diverse civil society. Anti-corruption institutions such as the Ministry of Justice and the independent Serious Fraud Office actively collaborate with civil society (HRR 2014). 

Sources

Topics: East Asia & The Pacific