Government

The ‘but’ in ‘least corrupt’

ANALYSIS: The type of corrupt behaviour our country is most vulnerable to is a lot more subtle than cash in a duffel bag writes Dileepa Fonseka

New Zealand is the least corrupt country in the world, but when that statement is whispered over here it is almost always followed by a "however". 

After "however" comes: Serious Fraud Office investigations surrounding donations to two mayoralty campaigns and three political parties, allegations of unethical behaviour which dog everything from emergency housing to the recognised seasonal employment (RSE) scheme and a procurement scandal which has left a bitter aftertaste within the construction industry after a damning report from Deloitte.

Statistical measures like the transparency index lump us in with famously non-corrupt Scandinavian countries, but fail to distinguish between "third world corruption" - which is often illegal even in the countries where it is endemic - and "rich world corruption" which is sometimes completely legal. 

University of Waikato political science lecturer Olli Hellmann says the image we have of corruption as outright bribery can cause us to lose sight of just how vulnerable we are to other types of influence or mismanagement harmful to the public interest. 

Ironically our highly developed legal system can make us more prone to this type of corruption. Company and trust structures are the hallmark of an advanced legal system, but they can allow ownership details to remain opaque and make conflicts of interest harder to discover. 

So too can more flexible decision-making powers that make it easier for our country's bureaucrats to adapt government departments to changed circumstances, but harder to enforce strict rules. 

"If we wanted to invest more money to increase our awareness of corruption we would find more corruption."

University of Otago head of accounting and finance Helen Roberts says as a country we have a good reputation for ethical behaviour. However, every new case of corruption is a "tear in the fabric" that could undo it all so we have to be vigilant with the systems we erect in our government departments and companies.

"When a director has to step down or someone is made accountable because of bad judgment or poor conduct their reputation is immediately damaged and the same is true at an organisational level and at a national level."

To a certain extent our reputation as a relatively corruption-free nation is decided not just by the amount of unethical conduct in our country, but our willingness to catch it. 

University of Auckland associate professor Timothy Kuhner says you could almost say we have as we want to pay to be aware of.

"If we wanted to invest more money to increase our awareness of corruption we would find more corruption."

The revolving door

One of the major opportunities for this subtler form of corruption is the "revolving door" that exists between the private and public sectors. 

For a small country the crossover between the industries governed or regulated by government departments is almost essential.

Agencies regulating things like roads need engineers with experience who know how those roads work. Equally, government departments are a good recruiting ground for private sector organisations in need of trained personnel.

However, that revolving door between the public and private sectors can open governments up to a lot of accusations as Hellmann illustrates with these questions:

"Why do politiicians end up in comfortable jobs in the business sector after retiring from politics? Why are companies interested in hiring these people? Is it their skills or is it maybe their connections into government?

"It's often very useful to have close connections between politics and business, but on the other hand if you have close relationships they can easily morph into practices that undermine the public well-being and may end up wasting public money."

Others, like Massey University school of management lecturer Andy Asquith, have a different problem with the revolving door: the way it can erode the "public service" mindset government departments need.

Asquith says the public sector needs to be governed by high standards of transparency and ethical conduct while attitudes towards both of those things in the private sector are "flakier" and more likely to be pushed to the side in pursuit of the final goal.

Procurement

A major area where all of this can come into question is in the field of government procurement. Perhaps most aptly demonstrated by a recently released Deloitte report into the New Zealand Transport Agency's Zero Harm Unit.

A series of contracts and agreements were highlighted as having financially benefited the friend of an NZTA manager. The report gave 23 recommendations so NZTA could avoid something similar happening again which included some fairly basic recommendations for declarations of financial interests.

When it comes to procurement Victoria University of Wellington School of Government lecturer Barbara Allen says a balance always has to be struck between flexibility - allowing managers and government departments to make purchasing decisions on their own - and rules.

"In terms of the procurement rules themselves. We call them rules and we say things are mandatory, but it still leaves a tonne of flexibility for a senior leader in an organisation to make a choice about how they want to procure [and] who they want to procure from."

She says building more flexibility in the system has worked well for us, but we're reliant on having people trained up in the ins and outs of procurement to really make it work.

Such training isn't necessarily a prerequisite for politicians or bureaucrats who might find themselves in these decision-making positions, but that's changing.

"You can get very far in your career without knowing much about contracts and procurement and PPPs [Public Private Partnerships] and all these sorts of things because it's not always part of your degree or it's not always part of your training along the way and everybody assumes that you know about these things," Allen says.

'It's not about excellence'

And then there's the question of what role politicians should play in all of this. Asquith says they should be setting the tone for of these organisations, but he also acknowledges they're in a position where they can't. 

Why not? For starters, the political terms politicians are elected for are one year too short to really change the departments that need changing or overcome deeply ingrained resistance to that change.

"It wasn't about excellence and doing things better. It was about protecting the Minister because the Minister was a bit prone to gaffes."

Then there are the attitudes of those reporting to Ministers which in practice can fall short of high public service ideals. Asquith says a piece of research conducted by an MBA student at Massey six years ago found keeping Ministers out of trouble was a higher priority for many in government than achieving excellence or a high level of performance. 

"The one thing that they had in common was they were all determined that they had to keep their Minister off the front page of the Dominion Post. That was the one thing that united them." Asquith says.

"It wasn't about excellence and doing things better. It was about protecting the Minister because the Minister was a bit prone to gaffes."

The watchdogs

Workers in the RSE scheme who sought to complain about their situation expressed their frustration earlier this year about the overlapping conflicts of interest they encountered that made it impossible for them to complain to anybody who could be considered truly objective.

Roberts says there is space for more truly independent watchdogs and metrics around transparency for individual government departments.

"The transparency index is measured at a national level. It would be nice if there were organisational measures of integrity so that management and higher levels of individuals within the organisation were constantly aware of the fact of 'well the way I'm represented on this measure is going to reflect on me'."

She says there's also case for an independent reporting authority or a "watch-tank" to investigate whistleblower claims and keep an eye on public organisations.

A watch-tank could sit outside of government and be privately funded by a set of philanthropists committed to the public good.

"There are a few research watch-tanks [overseas] that do act in the public interest. They source private money in order to actively engage in making sure that parties are adhering to their responsibilities."

'You will always have corruption in a system'

Hellman says on one level it's reassuring that so many of these cases are coming to light.

It shows people are continuing to keep watch and the media are fulfilling their role as a watchdog too, he says. 

And he makes the point that no matter how many controls you put in place, some corrupt behaviour will always squeeze through, especially if a set of determined individuals at the heart of it really want to push the system.

"You will always have corruption in a system.

"There's just no way of eradicating corruption completely and I think it's quite it's important to be clear about that as well."

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