19 October 2013

Last week the OECD working group on the Anti Bribery Convention published its Phase 3 report on compliance by New Zealand with its membership obligations. The report is a bit like the curate’s egg.  The substance of the report comprises the findings of an evaluation team with experts from Israel and Korea who examined officials and made site visits in April. It incorporates New Zealand’s responses. The “good in parts” aspect is that the Serious Fraud Office began two investigations into foreign bribery allegations while the evaluation team was in the country, the first – and perhaps symbolic –indication of a commitment to responding to unlawful conduct in overseas markets.

The tenor of the report is that the perceived wisdom in New Zealand is that organisations and their employees will not act in a corrupting way. That has led to minimal promotion of convention obligations and a reticence to adapt New Zealand law to ensure a framework for responding if foreign bribery is detected.

The bad egg bits are the slow response to previous recommendations.  The Phase 2 report in 2008 had 20 recommendations of which apparently only 3 were fully implemented. The focus this time around was on outstanding aspects including liability of legal persons, awareness-raising, reporting obligations, tax, accounting and auditing, investigation and prosecution, extradition, and sanctions.

Particular concerns were that New Zealand hasn’t clearly outlawed all conduct which breaches the convention, imposing serious consequences for both the organisations involved and their staff, and amended tax legislation not only to preclude any advantage from facilitation payments but requiring that relevant tax information is shared with agencies enforcing the convention .

The working group has again produced a list of recommendations, ranging from significantly stepping up an investigation and enforcement capability, legislating for a number of technicalities including aspects of a “legal person”,   raising commercial awareness, and promoting the Protected Disclosures Act as a compliance resource, to excluding offending organisations from government contracts.

Transparency International with its measurement report on international compliance with the Anti Bribery Convention has stolen much of the OECD thunder.  TI was an observer at the examination of agencies when the experts visited New Zealand in April, and published its report earlier in October, ahead of the Working Party’s.