Bryan Gould: Niue contract damaging to Govt reputation

The Scenic Matavai Resort Niue, on Niue Island. Photo / Brett Phibbs

The bad news keeps coming. In the last couple of weeks, New Zealanders have discovered that our country is being touted to tax dodgers and other criminals as a good place to hide their money with no questions asked.

Our Prime Minister's initial response was to welcome the business, however disreputable it might be. It was only when the damage to our reputation became apparent that he agreed to set up an inquiry.

Then, we were alerted by the Morgan Foundation to the fact that our response to international pressure for action on climate change is a sham. We have, in reality, done little to restrain our emissions of harmful gases, but have instead relied on a carbon trading scheme that allows credits to be bought by New Zealand emitters from those who - like foresters overseas - actually reduce gas emissions.

It seems, however, that the credits we buy from foreign traders are not genuine but are issued by countries who are known to be scamming the scheme. Most countries have refused to sanction such a trade, but New Zealand, sadly, goes along with it, and is by far its biggest customer - another shady deal and another blow to our reputation as a good international citizen. We are, it seems, climate change cheats.

And then, we have the saga of the political donation and the Matavai resort on Niue. The facts can be simply stated. The owner of Scenic Hotels, Earl Hagaman - a well-known and perennial donor to the National party - made a donation of over $100,000 to the National party, and a month later his company was awarded the valuable contract to manage a resort on Niue.

The contract turned out to be even more valuable than had appeared at first sight when $7.5 million of taxpayer-funded aid money was paid to Scenic Hotels to upgrade the resort.

In any other country, and especially in those where such deals are commonplace, no one would be in any doubt as to what had really happened. In New Zealand, however, we are naively inclined to accept the blank-eyed, slack-mouthed assurances that it was all a coincidence and that nothing untoward had happened.

We are told by Scenic Circle that Mr Hagaman would not have been aware when he made his donation - one of the largest political donations on record - that his company was in the running for the Niue contract. We may safely assume that Mr Hagaman did not succeed in business by displaying such a lofty indifference to commercial opportunities and that he was not in the habit of shelling out more than $100,000.

We are then told by the office of the responsible Minister, Murray McCully, that he would not have been aware of the donation made by Mr Hagaman when the Niue contract came to be awarded. Mr McCully, however, is the most inside of National party insiders. It beggars belief that he did not know who was giving what to the National party coffers.

But, say the apologists, it was not Mr McCully who awarded the contract to Scenic Hotels. The deal was done by an independent board - but the board was one appointed by Mr McCully.

Mr McCully, after all, has form - think Saudi sheep. And the more worldly-wise will again recognise all too easily the tell-tale signs of a familiar device; when leaving fingerprints would be risky, set up an intermediary to distance the decision from the real decision-maker.

The chances are that the Auditor General, to whom the matter has been referred, will report, having made a genuine attempt to get at the truth, that it is not possible to reach a definitive conclusion. And that report will in any case be made some months from now, when memories have faded and the issue has dropped down the list of newsworthy items - again, think Saudi sheep.

The government will treat the issue as business as usual - as, sadly, it has become. Its supporters will gladly believe that it was all an invention by political opponents. But this is an issue that transcends party politics.

There are good political reasons for supporting or criticising a government on a whole range of issues, but those issues surely do not include attitudes towards sleaze and corruption. New Zealanders of all political persuasions can surely unite in insisting that the highest standards are met in our public life. The government's supporters have a special responsibility, since one hopes that the government will listen to them, to ensure that their government understands what is and is not acceptable.

In such issues, perception matters greatly. Unless we make it clear that we are not prepared to accept this erosion of our reputation for probity, the bad news will keep on coming and, little by little, our readiness to accept that erosion will grow. In that case, however, the bad news will not just be for the government but for New Zealand.

Bryan Gould is a former UK Labour MP and former vice-chancellor of Waikato University.

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