Many New Zealand agencies have contractors in controlling positions, although the State Sector Act precludes them having financial authorities. The probability is that similar risks exist. Some characteristics in the Australian case reflect events at Otago DHB four years ago. That agency’s IT manager was later convicted of corruptly acquiring approximately $17 million.
ICAC recommendations include reviewing the use, qualifications, ratio and management of contractors.
The Australian case is small beer compared with fraud by top management in Chinese agencies. According to media reports, the incidence of corruption by ”top executives” is increasing although the sums involved are reducing. In just 88 publicly reported cases last year in State Owned Enterprises, an average per incident of NZ$6.5 million was taken, compared with almost NZ$12 million per incident in 2010. The largest reported sum involved the controller of a State owned furniture manufacturing business who fraudulent extracted approximately $NZ 950 million. He was sentenced to death, as were five other agency leaders. (Two corrupt officials were executed last year). Eleven others were given life sentences.
An official survey apparently found that 60% of Chinese are ‘very confident’ or ‘relatively confident’ about the Chinese Government’s anti corruption measures.
www.icac.nsw.gov.au/media-centre/media-releases/article/4011#top
Integrity Talking Points 
Beith, in the case of Michael Swann, the Otago Health Boad IT Manager who stole $16.9 million, an aggravating feature of the case was the Board’s failure to ensure that Swann was a fit and proper person to have control of such large sums of public money, and its failure to monitor his delegated authorities over such a long period of time.
When Swann was being considered for appointment, the Board should have been aware that he was a former bankrupt. The Board admitted in a briefing paper to the then new Minister of Health that no verification of Swann’s background was undertaken before he was employed.
This failure to verify a job applicant’s background is precisely what Queensland Health is guilty of with respect to the current case of New Zealander Hophepa Morehu-Barlow, accused of stealing $21 million. The media has been reporting on the supposed “loophole” that allowed Morehu-Barlow to gain employment in Australia without his apparent New Zealand criminal convictions coming to light. Queensland Premier Anna Bligh was reported as having telephoned Prime Minister John Key about the matter.
However, there is no “loophole”. The New Zealand Ministry of Justice releases criminal and driving conviction histories to employers (with the candidate’s consent) and Queensland Health could have obtained Morehu-Barlow’s NZ criminal record, if they had bothered to request it.
There is a New Zealand parallel to the Australian case you mention of a contractor misusing his position. In October 2004, John Denison an Australian IT Project Manager working for the Ministry of Health in Wellington stole $2.3 million and during just six days unsuccessfully used his computer skills to try and steal a further $25 million from the Ministry.
Story here: http://www.verify.co.nz/news-theftnz.php#Consultant
What is interesting is that in all three of these cases, the victims are health agencies, responsible for managing very considerable budgets.
Craig Gubbins
Personal Verification Ltd
Auckland
Thanks Craig.
Your specialty of course is in helping organisations make sure that the right choices are made. What always surprises me is how few agencies require candidates to authorise checks on the information provided in a job application. Referees provided by an applicant are unlikely to be disinterested and only with incisive questioning is the prospective employer likely to get much more than supportive observations.
The Privacy Act precludes checks without a candidate’s consent. A responsible agency would ensure that it has the option to check all relevant aspects of a candidate. Your final comment about …”agencies responsible for managing very considerable budgets” is perhaps tongue in cheek. The obligation to be responsible seems to have been given insufficient attention in each of your examples.
The OAG in several pieces of guidance refers to the need for proper pre-employment checks, most recently in the report on the “Cleanest public sector in the world – keeping fraud at bay”. The report features 15 fraud prevention elements. One is that “New employees at my organisation undergo pre-employment screening that includes criminal history checks”. More structured guidance in the report on Immigration NZ and Mary Anne Thompson in 2009 seems to have slipped out of focus:
“It is reasonable to expect a more robust approach ….. those making senior appointments need to be aware of the risk that incorrect information in a CV potentially raises a question about an applicant’s integrity…. For …. the sector as a whole, it is important to ensure that any integrity risk raised by a credible source is addressed.”
http://www.oag.govt.nz/2009/immigration-volume-2/index.htm