Introduction

"Mr Telea, what has happened here is a direct attack on the integrity of the Immigration Service and by extension on our system of government." -

Judge Unwin, when sentencing a former immigration officer to two-and-a-half years in prison on 17 bribery charges, Auckland District Court, 21 July 2000.

Such cases are rare in New Zealand. But such cases, and prosecutions of former employees of the Inland Revenue Department and the Department of Work and Income for the sale of personal information held by those departments, 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.

How does New Zealand rate?

A month ago Transparency International published its ratings of the perceived level of corruption, in both the public and private sectors, in more than 90 countries.

New Zealand rated third, slightly behind Finland and Denmark, among the least corrupt countries in the world.¹

Despite the rare cases that go before the courts, New Zealand public officials are among the most honest in the world.

The few cases that occur are characterised by opportunistic behaviour and usually involve only one person, rather than the entrenched and institutionalised corruption that characterises many of the countries further down Transparency International's list.

The importance of an honest State sector

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, as Judge Unwin remarked, 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 a range of licensing and registration arrangements, citizens' compliance is related directly 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 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.

My interest as State Services Commissioner

It is my statutory role as State Services Commissioner to establish a Public Service code of conduct and to ensure that the principles enshrined in it are recognised and practised in departments.

The Public Service in New Zealand is founded on three principles, set out in detail in the Public Service Code of Conduct. The principles can be summarised as:

As well as promulgating these principles, I will support Public Service chief executives, like the Secretary of Labour in the case of Mr Telea, in taking tough and decisive action to deal with isolated cases of corruption when they occur.

What is corruption?

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.

The risk of corrupt practice increases where: a government is the only source of a product or service; an official has a high level of discretion in the granting of the product or service; and his or her actions are subject to little scrutiny. The issuing of drivers' licences, passports, customs clearances and rights to residency are examples of transactions where, according to overseas experience, officials may be offered bribes.

Information has become a marketable and valuable commodity. Officials working in departments holding personal information that enables connections to be made between names, places of work and places of residence have been offered money by debt-collectors and private investigators for such information.

Is New Zealand at risk?

The environment in New Zealand is low risk for State sector corruption. Minimal import licensing and currency controls, a simplified tax regime, and a comparatively light-handed regulatory environment, reduce the incentives for corrupt practice. Greater transparency as a result of the Official Information Act 1982 and, from 1 January 2001, the Protected Disclosures Act 2000, the introduction of modern accounting and auditing practice, and clearer accountability between Ministers and officials have all helped create an environment in which corrupt practice is unlikely to take root and flourish.

There are two countervailing pressures. First, since the end of the Cold War there has been an increase in both political instability and international criminal activity in our region. International organised crime based in Asia is having an impact in the Pacific, including in New Zealand. Documents of national identity and residents' permits have a particular value in this milieu. The criminals have large sums at their disposal. The sums of money that can be offered to officials are very large compared with officials' annual salaries.

A second risk relates to the custody of personal information. As I stated above, this has become a marketable and valuable commodity. The New South Wales Independent Commission Against Corruption

has investigated the widespread, improper sale of such information, by State officials, to debt-collectors and private investigators. There are two characteristics of this black market. First, the individuals and agencies offering money for this information have often been commissioned by respectable organisations such as banks, credit card companies, and the credit departments of retail businesses. Mainstream businesses risk condoning the illegal trade in information. In my view, those who commission debt collection agencies need to make it absolutely clear that criminal acts committed in pursuit of debt recovery will not be tolerated.

The second characteristic is the degree of self-justification on the part of those selling personal information. They argue that the individuals who are being pursued have jumped bail, failed to repay debt or welched on hire-purchase commitments. Therefore, such individuals are not deserving of protection. The seller of personal information that will help locate them is contributing to the cause of justice. Such sophistry should be rejected out of hand. Unethical or unlawful behaviour on the part of a public servant cannot be condoned in any circumstance. Every citizen has a right to expect that their personal information will be held properly and safely by public organisations.

Urban myths

There is an urban myth that too much 'managerialism' has created an environment in which unethical or corrupt behaviour is more likely. Proponents of this argument hold that private sector practices, such as the wide delegation of authority for expenditure, and contracting-out a range of services rather than maintaining in-house capability, create a more risky environment than highly centralised, rule-bound administration.

I have seen no compelling evidence that this is the case. Exercise of delegations of financial authority and 'make or buy' management decisions should never be exercised in a vacuum. Conditions under which they are exercised should be specified, and decisions should be open to scrutiny, supported by excellent record-keeping and accounting, and subject to audit. This combination of conditional discretion, transparency and accountability is itself a safeguard against corrupt practice.

Does increasing casualisation of the Public Service workforce pose risks? It is debatable. On the one hand, there are people working in the Public Service who have not grown up, professionally, with a Public Service ethos. This may put them at a disadvantage if pressured to behave improperly. On the other hand, a Public Service that is open and more representative of society as a whole is likely to be less inward-looking and less open to entrenched and systematic corruption.

Action to maintain the high standards

New Zealand has an honest Public Service and State sector. To keep it that way, there are steps that can be taken by all involved in public management - elected representatives and officials alike.

Recognise the risks. In this overview, I have touched on several areas of central government activity where officials may be offered bribes. Local government is outside my jurisdiction, and I have no evidence that standards of honesty there differ from standards elsewhere in the public sector. Yet in that sector, through the administration of the Resource Management Act 1991, property rights (and therefore income and wealth) are directly affected by the decisions of elected representatives and local government officials. It is an area that also requires constant vigilance.

Declare and manage conflicts of interest. I require all Public Service chief executives to disclose to me any interests, of their own or of their immediate family, that might conflict with the interests of the Crown. Chief executives must take any steps that I recommend to resolve or manage any conflict of interest that they disclose to me. Chief executives should, in turn, ensure that potential conflicts of interest, financial or family, of staff in high-risk areas are identified and managed.

Welcome public interest and act upon allegations of misconduct. Those of us who have made a career commitment to the Public Service are instinctively defensive in the face of allegations of misconduct. But 'it couldn't happen here' is an unacceptable response. I expect any allegations to be taken seriously and followed up.

Practice zero tolerance. Any public servant who is discovered behaving corruptly can expect to be prosecuted. In the short run, court proceedings may increase public disquiet. In the long run, such an open and firm response is more likely to send a clear message to those contemplating breaking the law: it is not worth it.

Conclusion

As I was finalising the draft of this report, one of my staff asked me whether I should refer by name to the former immigration officer convicted of 17 bribery charges. I have no qualms about repeating his name. Those who misuse public office, and in doing so undermine the integrity of the State, should not expect anonymity.

The New Zealand Public Service has a fine record of honesty and integrity. I will do my best to keep it that way.

Michael Wintringham

State Services Commissioner

¹ Transparency International, Year 2000 Corruption Perceptions Index, Berlin, 13 September 2000.

² State Services Commissioner, Public Service Code of Conduct, May 2000, p.9.