10 November 2011

In an interesting juxtaposition, the Auditor General launched the New Zealand public sector Fraud Survey just a week after the Supreme Court dismissed the Philip Field appeal – he being the first MP convicted of corruptly accepting benefits in connection with his political role.  The outcome of both is “keeping fraud at bay”.  The Fraud Survey identifies areas of threat to the integrity of public entities and promotes measures to minimise that threat.  In keeping with all international research the survey confirms that a strong ethical culture is the primary factor in countering fraud. That culture depends on a zero tolerance for fraud; promoting fraud awareness, establishing relevant policies and procedures, encouraging managers and their staff to talk regularly about doing the right thing, and reporting suspected fraud to enforcement agencies..

The judgment of the Supreme Court focuses on the legal test for assessing a bribe.  The Court was clear that … “it is simply wrong for an official to accept money or like benefits in return for what has been done in an official capacity”. In a somewhat circular statement the Court said that “the offering and accepting of substantial benefits in relation to official acts is corrupt because it has a tendency to promote corruption”.  This is because officials will then come to expect benefits and the public will develop a belief that the way to obtain public services is to provide officials with such benefits.

The Supreme Court was emphatic that there is a “fundamental inconsistency between the performance of official functions and the acceptance of private rewards for doing so”.

In what is a reinforcement of OAG guidance that items like pens and calendars are the only acceptable tokens of appreciation that officials may keep, the Supreme Court found that “there must be a de minimis defence in relation to gifts of token value which are just part of the usual courtesies of life”.

Agencies must ensure that their staff understand what is of “token value”. The State Services Commissioner’s advice to chief executives that gifts of less than $100  need not form part of their six monthly gift and hospitality disclosures,  suggests he has an interesting perspective of what is “token”. It would seem to be a departure from the plain English meaning of perfunctory, minimal or merely symbolic.

Gifts costing more than $ 100  are unlikely to be considered “of token value” and within the de minimis defence referred to by the Supreme Court.  Acceptance of such a benefit by anyone working in the public sector, whether elected, appointed or employed, may constitute a corrupt act, regardless of whether they declare receipt and openly record it in their agency gift register.