Anti-corruption measures launched today could expand to cover private sector companies at risk of bribery and criminal subversion.
But for now, Police and Serious Fraud Office (SFO) leaders say the new Anti-Corruption Taskforce will focus on checking the health of potentially vulnerable public agencies.
“Every year we think that hundreds of millions, possibly billions of dollars, in public funds are lost to fraud and corruption in New Zealand,” SFO chief executive Karen Chang said.
“But that’s just our best estimate because we don’t have reliable data on the precise scale of the problem and therefore how to best respond.”
Chang launched the taskforce with Police Minister Mark Mitchell and Police Commissioner Richard Chambers in Auckland.
She said many SFO cases now involve public servants abusing their positions to the detriment of communities.
Chang said another risk involved “outsiders exploiting system weaknesses to steal taxpayer funds”.
An outsider in that context could mean somebody from outside the public sector, or a case of foreign interference.
Chang cited the recent fraud case involving businessman Hun Min Im’s abuse of pandemic-era wage subsidies.
“He was convicted of all charges where he defrauded and attempted to defraud more than $2 million worth of Covid-19 subsidies. So he is obviously an outsider, but he is taking advantage of the system.”
Chang said many corruption cases now involve risks to health and safety.
“A simple example of that would be bribing a building inspector to waive through building consents, or bribing a health official for a contract to supply medical equipment to our hospitals.”
Mitchell said it was too early to say if a new anti-corruption unit with special investigative powers should be established.
Across the Tasman, Queensland has the Crime and Corruption Commission (CCC) and New South Wales has the Anti-Corruption Taskforce.
The CCC has special investigative powers and has prosecuted multiple corrupt politicians in recent years, including disgraced former Ipswich Mayor Paul Pisasale.
Mitchell said the SFO was the natural choice for gathering information about corruption risks to the New Zealand public sector.
But the taskforce had no funding beyond what agencies already had in this year’s Budget, and no full-time staff.
The SFO said today that it would work with six agencies on the taskforce.
Those were Inland Revenue, ACC, Corrections, the Ministry of Social Development, Land Information New Zealand and Sport New Zealand.
The Herald asked if airlines and their luggage handlers might be scrutinised by the taskforce.
Auckland baggage handler Kimela Kolo Piukana was prosecuted for his role in a methamphetamine-smuggling syndicate last year.
And former Air New Zealand baggage handler Sese Vimah was last year exposed as the ringleader of corrupt baggage handlers.
“We need to start somewhere, and we’re starting with the public service, which represents a third of our economy,” Chang said.
Police Minister Mark Mitchell said: “My sense of it is, yes, I agree that there is private sector interest in this, because they obviously identify their own vulnerabilities.”
He said it was too soon to say exactly how that might work.
“My gut feeling on it with conversations that I have ... is that they welcome it and they want to engage, because it’s a health check for them and gives them a sense of security that they’re actually being able to deal with any criminal offending or corruption that may emerge in their own business.”
Chang said no agencies had displayed any reluctance to work with the taskforce.
The officials said the taskforce would conduct a “health check” on the six agencies selected.
They indicated an agency’s inclusion on the list did not mean it was assumed to have an existing corruption or bribery problem, but may be at risk, or comparable agencies abroad had problems with corruption.
Mitchell said Customs was not included in the taskforce because it was already proactive in tackling risks.
He said concerns about meth trafficking were not as big a driver of the taskforce as New Zealand’s slide down anti-corruption rankings was.
In the 2021 Corruption Perceptions Index, New Zealand ranked first-equal, but by this year it had slipped to fourth place.
“In a procurement system, whether it be responding to emergency management ... whether it be the delivery of education infrastructure, which is huge, then we will see lots of different opportunities and touch points where there is a chance for an official to be bribed or for corruption to creep into the system,” he added.
The taskforce, a pilot programme, is expected to prepare a public report and advice to ministers by the end of the year.
“My gut feeling is this is going to be a very successful pilot, and then we’re going to want to see how we roll this out and how we make it even more effective.”
Chambers said there was already some division of labour involving the SFO and police tackling bribery and corruption investigations.
“From time to time, we’ll pick up some work that needs to be done on these matters.”
A press conference in Auckland today also heard there was no legal requirement in many agencies to report fraud and corruption to auditors.
Mitchell said the taskforce findings could eventually result in law changes.
John Weekes is a business journalist mostly covering aviation and courts. He has previously covered consumer affairs, crime, politics and courts.