Christchurch Earthquake

23 February 2011

Poor Christchurch has been rocked apart by another major earthquake.

When the September 2010 quake struck, the amazingly minor consequences seemed to confirm a relationship between good governance and natural disaster protection. This is a theory of Daniel Kaufmann who, when at the World Bank, compiled annual good governance indicators. He used the difference in effect of earthquakes in Chile and Haiti, and mining incidents in Chile and China as illustrations. Trustworthy officials ensure regimes where public protection is effective. Unfortunately the coal mining disaster in New Zealand and the latest earthquake could raise questions about his theory. New Zealand always rates well in the world wide governance indicators.

http://thekaufmannpost.net/national-disasters-today-provide-governance-lessons/

http://www.brookings.edu/opinions/2010/0924_wgi_kaufmann.aspx

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February 24, 2011

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A link between corruption and democracy?

22 February 2011

International media have focused on the turmoil in a number of countries across North Africa and the Middle East as populations mobilise to capture democratic rights. A comparison of the extent to which these societies suffer corrupt governments provides an interesting perspective on conditions which may give rise to pressure for reform. Tunisia for example was rated by Transparency International as one of the middling corrupt public administrations in the region – despite the reports that the former President had assets of more than US$ 70 billion invested outside the country. There are strong monarchies topping the list with lower corruption rates and republics with very corrupt governments at the bottom where seeking constitutional change does not appear to be a high priority for their populations.

The 2010 TI Corruption Perceptions Index listed countries in the region as follows:

19th Qatar 7.7

28th UAR 6.3

41st Oman 5.3

48th Bahrain 4.9

50th Jordan / Saudi Arabia 4.7

54th Kuwait 4.5

59th Tunisia 4.3

85th Morocco 3.4

98th Egypt 3.1

105th Algeria 2.9

116th Ethiopia / Mali 2.7

127th Lebanon / Syria 2.5

143rd Mauritania / Pakistan 2.3

146th Libya / Yemen / Iran 2.2

171 Chad 1.7

172 Sudan 1.6

Transparency International rates New Zealand, where democratic processes are taken for granted, as the least corrupt public administration, with a score of 9.3.

http://transparency.org/policy_research/surveys_indices/cpi

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February 24, 2011

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Were banks “wilfully blind” to Madoff?

21 February 2011

Bernie Madoff, convicted of multi billion dollar frauds, has been interviewed by a reporter for the first time since being imprisoned on a 150 year sentence.  He commented that certain banks and hedge funds must have known about the shonky nature of his financial enterprises. He said that banks showed “wilful blindness.” A US legal academic is quoted saying wilful blindness can have the same effect as actual knowledg and that “you can’t shut your eyes and avoid having knowledge attributed to you that you would have known had you opened your eyes.”

A number of banks, facing action as a consequence of the Madoff affair, may well claim that as the SEC took no action against Madoff, they had acted reasonably. Public opinion however is against banks generally. The Edelman Trust Barometer published in January indicates that trust in banks, insurance and financial services are substantially lower than other business sectors.

The New Zealand Mood of the Nation report published in December 2010 places investment bankers at the bottom of the index of occupational respect ( 4.1). Bankers generally (5.5) earn less respect than public servants ( 6.2). Nurses and doctors (7.9) top the index with Police (7.8) in third position.

www.reuters.com/article/2011/01/25/us-corporate-trust-idUSTRE70O1JO20110125

www.edelman.com/trust/2011/uploads/Edelman%20Trust%20Barometer%20Global%20Deck.pdf

www.umr.co.nz/Reports/UMR%20Mood%20of%20the%20Nation_2010.pdf

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February 24, 2011

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Importance of business ethics

18 February 2011

This week’s edition of NZ Management magazine features an interview with the Director of the UK Institute of Business Ethics who visited New Zealand in late 2010. IBE supports multinationals by training senior managers in good corporate behaviour, including preventing employee theft and other corruption.  She spoke of how companies with a focus on ethics perform better than their competitors and are admired for the way they operate.

Businesses need to have ethical codes establishing how they operate. She said that they must ensure staff know what the code requires, there must be good internal controls and the ethics message must be constantly reinforced. This sounds remarkably like the 6 trust elements that the State Services Commission expects agencies to have in place so that the resulting trustworthy behaviour by staff will strengthen public trust and confidence in the State Services.

The trust elements are

  • Having standards
  • Promoting them, integrating them
  • Integrating them into the way agencies operate
  • Managers modelling the standards
  • Staff knowing there are consequence for breaches
  • Agencies taking decisive action when breaches occur.

The 2010 State Services integrity survey gathered data on the extent to which State servants saw their agency giving effect to the trust elements. Agencies should be adapting the way they operate to reflect the survey findings.

Each year IBE conducts a survey assessing public perceptions of ethics in British business.  In the last survey, 38% of respondents said business was more ethical than the previous year. This is a 7% improvement.

www.ibe.org.uk/userfiles/ibe-nz_management-2011-feb.pdf

www.ssc.govt.nz/display/document.asp?DocID=7815

http://ibe.org.uk/userfiles/ibe_report_2010.pdf

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February 21, 2011

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Increasing transparency

17 February 2011

Most State Services agencies have posted on websites their chief executives’ travel and hospitality expenses for the six months to 31 December 2010.  This follows a direction from the State Services Commissioner as part of his responsibility to set standards of integrity and conduct.

A number of jurisdictions require this sort of openness from a broader range of officials. Canada has probably the most transparent and user friendly disclosure process, with data relating to several tiers of senior officials being posted each month.

In the United States attention has focussed on federal employees using agency credit cards for improper purposes. A senator who promoted legislation requiring tighter agency controls, has identified fraud in the Defence Department, Federal Aviation Administration and the Forest Service. His claim is that agency cards have used to pay for a range of unofficial purposes.  Inevitably allegations include spending on entertaining, gambling and prostitutes.

http://www.data.govt.nz/catalog/

http://www.tbs-sct.gc.ca/pd-dp/gr-rg/index-eng.asp

http://www.natlawreview.com/article/grassley-targets-federal-charge-card-abuses

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February 18, 2011

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Revolving door jammed

14 February 2011

New Zealand has not experienced the disruptive abuse of power which can result when former officials apply information and skills acquired in public service roles to advance private interests. Most OECD countries have measures that constrain the ability of officials, and especially former members of government, from marketing their “inside” knowledge. Few countries share the New Zealand view that very few circumstances can justify constraints on the right to work.  By comparison, Canada has very rigorous prohibitions.

Circumstances in a US Supreme Court matter this week illustrate the effect of the Federal government revolving door prohibitions.  A law professor took leave left from Harvard University to work for the Justice Department. He then joined a law firm. In papers filed in the court this month he was listed as  counsel in a case against a government agency. He was required to withdraw from the case because of a statutory prohibition on former senior executive branch officials communicating with their former department with an intent to influence the department….

Some commentators believe that the circumstances were not intended to be covered by the legislation. There would certainly be no restriction on a former New Zealand State servant engaging in forensic advocacy even relating to matters where  they previously had  developed policy advice for government. The only statutory restrictions in New Zealand relate to officials becoming licensed immigration agents.

http://legaltimes.typepad.com/blt/2011/02/laurence-tribes-name-pulled-from-supreme-court-brief.html

http://www.oecd-ilibrary.org/governance/post-public-employment/foreword_9789264056701-1-en;jsessionid=7d947hmd2nsgo.delta

 

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February 17, 2011

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Not what we expect

15 February 2011

A former employee of the Accident Compensation Corporation  entered a guilty plea today to a charge of bribery and corruption. In what is a rare instance of an official being charged under the Crimes Act provision specifically addressing corrupt behaviour,  this property manager has admitted accepting cash payments and overseas travel in exchange for information, used for the advantage of others.

The Serious Fraud Office chief executive indicated that this was the first such charge in four years. The Court will be asked to order payment to the Crown of the illicit benefits  when the offender is sentenced next month. Several other people, whose names are still suppressed, have been charged in relation to this matter.

The prosecution followed what was clearly criminal behaviour. However the State Services code of conduct is clear in expressing the trustworthy conduct expected of people working in government agencies.  The relevant standard is that “we must decline gifts or benefits that place us under any obligation or perceived influence”. SSC explanation is that this means State servants;

“must be very careful about accepting any form of gift or benefit that is not provided by our organisation. There will usually be perceptions of influence if we accept gifts, hospitality or ‘quid pro quo’ exchanges of favours.

  • We can accept something gifted to us in connection with our work only if specifically permitted by the policies of our organisation. To avoid perceptions of influence, it is essential that we are open about accepting any gifts or benefits.
  • We must not seek or accept favours from anyone, or on behalf of anyone, who could benefit from influencing us or our organisation…”

 

http://www.stuff.co.nz/national/crime/4662017/Public-servant-admits-accepting-bribe

http://www.ssc.govt.nz/display/document.asp?docid=7902&pageno=5#P277_25160

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February 17, 2011

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Transparency marking time

14 February 2011

The US Government backpedalled last week on a proposal to introduce greater openness in contracting.   Federal agencies will not have to post contract details on their websites.
Last May, agencies were given notice of the move towards greater transparency.  Although the intended publication would not have compromised contractors’ confidential commercial or financial information, perhaps unsurprisingly, many industry groups lobbied against the proposal.
The concern of one open government NGO is apparent from a statement that the Administration’s changed approach is seen to favour large, well connected suppliers, and that “despite many advances in technology, it appears that the president is now happy with the status quo and the ancient ways of gathering spending information.”

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February 15, 2011

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Measuring agency ethics in US

11 February 2011
The US Office of Government Ethics has published a report on the way agencies give effect to integrity obligations. The material discloses how the 15 “Cabinet level” Federal agencies have developed “strategies for addressing factors that are critical to the success of an ethics program”.  Agencies have self reported on their activities, including concrete measures taken regarding:
 
Leadership—the extent too which agency leaders and supervisors support and are involved in the program  
Awareness—how aware employees are of the ethics program and its role and their personal ethical responsibilities 
Resources—the way agency and ethics community resources are leveraged 
Oversight—processes for the control and oversight of agency ethics programs. 
 
The essence is the way agencies are setting standards, training all staff to understand what is expected of them, and ensuring that there is appropriate leadership, management and entrenchment of standards.
 
These can be seen as a variant of the “6 trust elements” which New Zealand State Services agencies are expected to adopt – having standards, promoting them, integrating them into operations, managers modelling them, staff knowing there are consequences for breaches, and agencies taking decisive action on breaches,
The scale of the commitment of US agencies is an eye opener. 

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February 14, 2011

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Big picture integrity

10 February 2011

A focus on integrity can have benefits far beyond strengthening the ethical conduct of an organisation. This is an outcome explored on the Baldridge website. Baldridge is an internationally recognised business model based on extensive research of the common characteristics found in high performing organisations around the globe.Ethics have an inherent value but also an expansive influence. They can rally people around ambitious goals and get them agreeing to changed policies and procedures. They can get a focus on results, the pursuit of process improvements and the celebrating of success. Ethics – and safety and diversity can have a similar mobilising effect – can be a lever for leaders to use to transform their organisations.

A number of State services agencies are using Baldridge methods in their pursuit of world-class performance. In 2009 the NZ Business Excellence Foundation identified three Baldridge Award winners. Two were State Services agencies – Royal New Zealand Navy (Gold Award), New Zealand Fire Service (Silver Award).

 

www.baldrige.com/criteria_leadership/backdoor-access-to-world-class-performance/

www.nzbef.org.nz/index.php?option=com_content&view=article&id=91&Itemid=128

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February 14, 2011

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