Standing still means New Zealand loses least corrupt status

3 December 2014

The 2014 Corruption Perceptions Index published today by Transparency International is a turn up for the books.   Denmark has been recognised as having the least corrupt public sector, a status that it has shared over the last three years with New Zealand.  However in 2014 Denmark is seen as having improved its situation, and has moved ahead of New Zealand – which has an unchanged rating from 2013.

Only Denmark and New Zealand have the accolade of being “very clean” – scoring over 90 – and coloured differently on the Transparency International World map!

Among the top 14 countries, the scores for Singapore, Canada, Australia and Iceland continue to drop.

Rank  Country 2014 2013 2012
         

 

1 Denmark 92       91       90
2 New Zealand 91       91       90
3 Finland 89       89       90
4 Sweden 87       89       88
5 Norway 86       86       85
5 Switzerland 86       85       86
7 Singapore 84       86       87
8 Netherlands 83       83       84
9 Luxembourg 82       80       80
10 Canada 81       81       84
11 Australia 80       81       85
12 Germany 79       78       79
12 Iceland 79       78       82
14 United Kingdom 78       76       74

 

 

www.transparency.org/cpi2014/results

www.transparency.org/news/pressrelease/corruption_perceptions_index_2014_clean_growth_at_risk

 

2014 Corruption Perceptions Index published tomorrow

2 December 2014

Tomorrow night Transparency International will publish its 20th annual Corruption Perceptions Index.  This year the index reports on the extent to which a panel of experts assess  corruption levels in the public administration of 175 countries (two fewer than in 2013).

The favourable perception that subject matters experts have consistently held of standards of integrity in government agencies has meant that New Zealand has never slipped lower than 4th on the index (in 1997 and 1998).  In the foundation CPI New Zealand was ranked as the least corrupt of the 41 countries assessed.   That ranking was consolidated in successive years, until in 2006 New Zealand was again ranked as the least corrupt.  It has kept that status in each index over the last eight years, in some years ranking equally with others.  The characteristics of the countries being added to the index have not increased the challenge to New Zealand’s ranking.

What is interesting is that the component surveys – including those managed by Bertelsmann, the Economist, Freedom House, World Economic Forum, World Bank etc  – often rank New Zealand below the Scandinavian countries because of other commercial and governance factors but the methodology used by Transparency International seems favourable to the New Zealand situation.

The leading CPI countries all have relatively small populations – ranging from Iceland at 320,000 through to Sweden as the largest of the Scandinavians with 8.9 million (the 89th largest country by population). Denmark has the 114th largest population ( 5.6 million) followed by Finland in 115th and Singapore in 116th (both about  5.4 million), Norway in 118th (5.1 million), New Zealand as 124th largest population (at 4.5 million), and Iceland in 182nd by population. But as many of the most corrupt states are the smallest, size and governance integrity do not necessarily correlate.

A range of surveys this year continue ranking New Zealand well.  The latest relevant indicators are possibly the World Bank Doing Business survey released in October ( New Zealand overall 2nd), the Legatum Prosperity Index (down from 2nd to 3rd), TRACE Matrix (3rd), Global Peace Index (4th), Forbes Best Countries for Business ( 2nd), OECD Better Life Index and so on.

The New Zealand position is unlikely to change markedly in tomorrow’s CPI.

Similarly Denmark ranked equally least corrupt last year is unlikely to change much , with a major commercial fraud uncovered in November being too recent to influence the assessment.

 

www.doingbusiness.org/data/exploreeconomies/new-zealand

www.agidata.org/site/Reports.aspx

www.prosperity.com/#!/ranking

www.visionofhumanity.org/sites/default/files/2014%20Global%20Peace%20Index%20REPORT.pdf

www.oecdbetterlifeindex.org/countries/new-zealand/

www.bloomberg.com/news/2014-11-06/ipo-that-raised-1-billion-implodes-in-denmark-after-8-months.html

Is corruption heading to a bank near you?

21 November 2014

“Corrupt” was a term used by the UK Chancellor last week when describing foreign exchange rigging  practices of numerous leading banks.  Regulators imposed a total of £2.6 billion in penalties on six institutions when settling five years of a “free for all culture” of rigging foreign exchange markets.

As part of settlements with the UK Financial Conduct Authority, record fines were imposed  – UBS was fined £233m,  Citibank £225m, JPMorgan  £222m, RBS  £217m, and HSBC  £216m.  Barclays has yet to settle.  In the US,  Citibank and JP Morgan were each fined $310m, RBS and UBS were fined $290m each, and HSBC $275m.

But this week the corruption appears to have come closer to home. ANZ Banking Group is being investigated by the Australian Securities and Investments Commission for manipulating Australian interest rates since 2007.  Seven traders have been suspended. Australian rates appear to have been manipulated in much the same way as the London Inter-Bank Offer.

The SMH suggested yesterday that corrupt practices are entrenched. It reported a former trader saying that fixing was ingrained in the way trading desks have operated for more than a decade. …. It’s a culture that has been endemic in the industry.”

This seems to reflect the deteriorating ethical assessment of ANZ by Ethisphere, which each of the last nine years has published an index of the World’s 100 most ethical companies.   ANZ was one of five banks in the index in 2011 together with National Australia Bank, Westpac, Robobank and Standard Chartered.  But whereas NAB and Westpac have remained on the index in successive years, ANZ has lost its ethical rating (this year, Teachers Mutual ( another Australian bank ), rates among the 100 most ethical..

(All Good Organics which was among the 100 most ethical companies for 2014 is the only New Zealand registered company to be recognised by Ethisphere..)

God Defend New Zealand was recognised as the national anthem this day in 1977.

www.theguardian.com/business/2014/nov/12/foreign-exchange-fines-ubs-hsbc-citibank-jp-morgan-rbs-penalties-market-rigging

http://ethisphere.com/worlds-most-ethical/wme-honorees/

www.smh.com.au/business/banking-and-finance/anz-traders-stood-down-over-interest-rate-rigging-probe-20141119-11pxmn.html#ixzz3JbTdRux8

Focuses blurs when spotlight falls on departmental chief executives

17 November 2014

Chief executives of Public Service departments are employed by the State Services Commissioner.  That relationship preserves the largely apolitical character of appointments and the capacity of chief executives to work with Ministers of any government.  In terms of the State Sector Act, this enables chief executive to be responsible to the Minister for the functions of the agency, without being answerable for those activities to the Minister.

It puts the State Services Commissioner in an unenviable position.  Being the employer of chief executives he has a duty to support and develop them although from time to time the media may be leading a public outcry against an issue of the day in which a department – and for most legal purposes the chief executive is the department – is in the limelight.

And the last few days have provided a snap shot of this small but high profile aspect of the State Services Commission’s role.  Yesterday the State Services Commission published a media statement relating to conduct allegations against a departmental chief executive. As the employer, the State Services Commissioner has a duty to his employee and that requires discrete consideration of the circumstances despite – and in many ways because of – media generated fascination with precipitating allegations.

And earlier in the week several commentators were vocal in demanding the resignation of another chief executive when one case of the many thousands handled weekly by that chief executive’s department, went decidedly pear shaped.

What is interesting is how in the excitement of the moment, the carefully constituted triangular relationship involving the Responsible Minister, the State Services Commissioner and the departmental chief executive gets forgotten by the very people who have the opportunity to ensure public understanding of that special relationship which underpins the strength and character of the New Zealand system.

During the week we had the responsible Minister of a department currently in the spotlight being queried on several occasions about whether he had asked for, or had received, the resignation of his chief executive. It would be somewhat misguided of a chief executive – who is employed by the State Services Commissioner – to resign to a Minister. To do so would manifest a sad lack of awareness among the players of the checks and balances of our system.

And in the report on the SSC website yesterday about the alleged misconduct of a chief executive, the media statement referred to the SSC as the employer – whereas s6 of the State Sector Act, administered by the SSC specifies that it is the State Services Commissioner’s role to appoint leaders of the Public Service, and act as employer of chief executives of departments.

 

http://ssc.govt.nz/ssc-statement-cera-chief-executive

www.legislation.govt.nz/act/public/1988/0020/latest/DLM129446.html

 

New Zealand shines less brightly in new corruption index

14 November 2014

The TRACE Matrix is an Anti- Bribery Index first published this week.  The Matrix produces a markedly different picture of the interaction of good government components from the Transparency International Corruption Perceptions Index (first released 19 years ago). The focus is on assessing “… the propensity for public-sector bribery and its associated business risk while providing actionable intelligence to inform a company’s compliance processes…”

The TRACE Matrix produces a composite score for each of the 197 assessed countries, with a range from 1 to 100: the higher the score, the greater the business bribery risk.  The Matrix assesses countries across four domains-

  • business interactions with government,
  • anti-bribery laws and enforcement,
  • government and civil service transparency, and
  • the capacity for civil society oversight, including the role of the media.

The scores should enable businesses to tailor their compliance practices to the markets in which they trade.

The Scandinavian dominance of the CPI is much less evident in the Matrix. Iceland for example ranks in 35th place and Norway in 28th.  Australia is at 29th, ahead of Britain in 32nd.  Similarly there is a different mix of the “worst” countries.

New Zealand, which has been perceived as having the least corrupt public sector for the last eight years according to the CPI, ranks 3rd place overall on the TRACE Matrix but is not an exemplar of any of the assessed domains.

The United States, which has never rated well on the CPI, is placed 10th on the Matrix. It rates best for Government and Civil Service Transparency.

Singapore rates best for Interactions with Government, South Korea for Anti-bribery and Enforcement, and Germany is assessed as  having the highest Capacity for Civil Society Oversight.

TRACE Matrix 2014 ( Top Ten )

Overall ranking   Interactions with Government Anti-bribery and Enforcement Government and Civil Service Transparency Capacity for Civil Society Oversight
1 Ireland 15 24 30 4
2 Canada 25 22 20 9
3 New Zealand 13 48 23 18
4 Hong Kong 4 51 27 30
5 Sweden 9 53 25 20
6 Finland 11 52 26 23
7 Singapore 1 54 37 35
8 Japan 33 17 6 10
9 Germany 28 31 33 1
10 United States 35 23 1 7

www.traceinternational.org/wp-content/uploads/2014/11/TRACE_Country-Risk-Scores-for-All-Countries.pdf

http://ethisphere.com/worlds-most-ethical/wme-honorees/

Turkey’s prosperity knocked about in war and peace

12 November 2014

The Dardanelles campaign, beginning with the Gallipoli landing, is treasured by New Zealand and Australia as a sentinel moment. Invading Turkey has become a symbolic of nationhood. New Zealand’s war against Turkey began as a consequence of the British declaration of hostilities against the Ottoman Empire on 5 November 1914. Those hostilities were brought to a conclusion before the armistice on the Western Front.  Although Allied armies were chased off the Gallipoli Peninsular in December 1915, by late 1917 the Ottoman Empire was collapsing, with the success of Allied campaigns in Mesopotania and Palestine.  We all know about the first engagement with Turkish forces on 25 April 2015.  Few know about Turkey’s surrender on 30 October 1918.

On 30 October 1918 the signing of the Treaty of Mudros ended Turkish participation in the war. Austria surrendered soon after on 3 November 1918. Bulgaria had already surrendered on 24 September 2014.

On 12 November 1914, the day after fighting ended on the Western Front, a Royal Navy flotilla sailed through the Dardanelles to Constantinople. The Dardanelles and the Sea of Marmora, where three British battleships sank in 1915, when a combined British and French fleet attempted to force a passage, were international waters again.

Turkey is now at 86th place overall on the Legatum Prosperity Index published last week. Placement in the component parts surveyed  are:

Entrepreneurship             48th

Education                            95th

Governance                       81st

Economy                             66th

Health                                  95th

Personal Freedom          114th

Safety and Security         134th

www.history.com/this-day-in-history/allied-fleet-enters-dardanelles

www.prosperity.com/#!/ranking

Prosperous NZ is a place to be – even if one prisoner prefers distant parts

11 November 2014

In a strange juxtaposition, the capitulation of Germany and its allies 96 years ago, ending the war to end all wars, is being used as a centennial marker for the horrors of the conflict that in 1914 was already being called the Great War, becoming increasingly known from the 1920s as the First World War.

By the time of the Armistice, the slogan of the British Prime Minister was that his government would create a land fit for heroes. The 2014 Prosperity Index, released over the weekend, suggests that whatever the benefits of victory were in 1918, Britain may still not have delivered on that aspiration.

As a snapshot in time the Prosperity Index suggests that some victor nations have held onto to spoils of that war,  some non belligerent countries have fared better, but none of the defeated nations make the Top 10.

The United States which emerged from the war as a great power, makes it into tenth place among the ten most prosperous nations.  The old Empire is represented by New Zealand (3rd), Canada (5th) and Australia (7th) but the United Kingdom doesn’t feature in the Top 10 (being 12th and below Ireland (11th) which seems to have benefitted by its independence.  Finland (8th) which was part of Russia at the start of the War, wrought its independence through a civil war in 1917.

Norway (1st), Switzerland (2nd), Denmark (4th) ,Sweden(6th) and the Netherlands (9th) avoided being embroiled in the conflict.

Germany  (14th) and Austria (15th) have not suffered in the same way as the Balkan states where events precipitated the war – Croatia (50th), Serbia (77th), Bosnia ( 91st), Montenegro (65th).

Other belligerents  are a mixed bag eg France (21st), Italy (37th), Czech Republic (29th), Hungary (39th) and Turkey (86th).

An interesting contrast is a World Economic Forum survey Outlook on the Global Agenda, which includes ratings on leadership and governance – of relevance to the APEC summit this week.   The Confidence in Leaders measures show most confidence in Switzerland (5.21).  Some other measures are Germany (4.95), China (4.93), Japan (4.69),  Canada (4.38)  United Kingdom (4.29), France (4.28), Australia (4.11) and United States (3.93).

A Pew Report published last week highlights the obverse of the Prosperity Index.  Crime and corruption top the list of problems faced by respondents in emerging and developing nations,  and are viewed as having a growing impact. The median across 20 countries surveyed in 2008 and again in 2014 shows the number of people citing these issues as a very big problem has jumped from 64% to 74% for crime, and 63% to 73% for corruption.  Poor quality schools has jumped from 38% to 51%.

Legatum Prosperity Index 2014 (Overall Top 10)

1  Norway

2   Switzerland

3   New Zealand

        Personal Freedom  1st

       Social Capital          2nd

      Governance               2nd

      Education                   7th

      Safety & Security      10th

     Economy                      15th

      Entrepreneurship   18th

      Health                          20th

 

4   Denmark

5   Canada

6   Sweden

7   Australia

8   Finland

9   Netherlands

10   United States

http://ww1centenary.oucs.ox.ac.uk/memoryofwar/the-war-the-great-war-the-first-world-war/

www.prosperity.com/#!/?aspxerrorpath=%2Fdefault.aspx

http://reports.weforum.org/outlook-global-agenda-2015/global-leadership-and-governance/global-leadership-index/

www.pewglobal.org/2014/11/06/crime-and-corruption-top-problems-in-emerging-and-developing-countries/

Will Act-Net be anything more than a clever acronym?

7 November 2014

One of the APEC ginger groups is the Anti Corruption and Transparency  Experts’ Task Force (ACT).  It was set up in 2004 under the Santiago Commitment. Representatives of member States now meet annually and coordinate a range of anticorruption meetings throughout the region.  An undeveloped element of the Santiago Commitment has been cross border cooperation on the recovery of assets. This year, China has taken the lead in two meetings to give momentum to such cooperation, formalised in August as the Beijing Declaration on Fighting Corruption. This gave rise to a network (hence Act-Net) to coordinate anti corruption measures.

There were media reports in October of the Australian Federal Police, acting on information provided by Chinese agencies, arresting migrants who for years had laundered money under the guise of investments. That may well be Act-Net at work. If so, this would fit with the July statement by the Chinese Government about operation Fox Hunt, a programme to recover the corruptly acquired assets of officials who had left China for new lives overseas. There may be reluctance on the part of APEC member States to deport offenders who have acquired citizenship, because of China’s unacceptable policing and judicial practices.

China’s enthusiasm for catching up with the expatriated proceeds of corruption creates an interesting juxtaposition with the United States role in championing membership of UNCAC as a tool for fighting corruption.  Contrastingly, neither country has exhibited any commitment to promoting awareness of the APEC Anti-corruption Code of Conduct for Business  or the APEC Conduct Principles for Public Officials , both of which have been in force for more than seven years.   New Zealand has shown even less enthusiasm despite having one of its nationals as the Executive Director of APEC.

One of the formalities at the APEC  CEO summit in Beijing next week will be the signing of the Beijing Declaration on Fighting Corruption by a number of APEC  leaders. China, the United States, and New Zealand are among the economies to be represented by heads of Government.

.

http://online.wsj.com/articles/china-set-to-host-regional-anticorruption-network-1415176815

www.apec.org/Groups/SOM-Steering-Committee-on-Economic-and-Technical-Cooperation/Task-Groups/~/media/Files/Groups/ACT/07_act_codebrochure.ashx

www.google.co.nz/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=APEC+code+of+condct+for+public+official

http://www.2014apecceosummit.com/apec/

 

 

UK health sector hopping mad with Civil Service chief‘s brewing interests

4 November 2014

A 180 degree turn last week by the UK Cabinet Office is example of how we see things involving others with a clarity which escapes us when we have a personal involvement.  When the appointment of John Manzoni as the chief executive of the Civil Service was announced  several months ago, the Cabinet Office indicated that there would be no conflict if he continued as a director at SABMillers, one of the largest transnational brewers, although he would give up another directorship and an advisory role with a third board.

Even someone with a minimal understanding of public sector ethics would see major and unavoidable conflicts.  The business of making and marketing alcohol is entangled in regulatory regimes. The interface with public health, public order and public revenue is unmistakeable Yet somehow, Ministers responsible for making very senior appointments in the British government, thought that one of the most highly paid civil servants would not only have time to spare to serve in the private sector as an executive director, but that accepting a director’s fee of £100,000 to champion the brewer’s interests was of no consequence.

The pathos in the situation is not only did those making the appointment not see the problem, but the appointee, selected for his excellence, intellect, insight, and integrity, seems to have been equally divorced from reality.  Or perhaps, captured by his exceptional capabilities, he believed he was special, would avoid conflicts and could negate any perception by others that there was potential for conflicts.

When the light of growing public criticism starting shining through this blinkeredness, the Cabinet Office issued a statement that the appointee would not accept the remuneration – as if the concern was only about accepting the director’s fee.  This just magnified concern. How could it possibly be acceptable for a senior civil servant to donate his services to a major player in the liquor industry? The rationale of course was that continued involvement in the governance of a substantial international business had interchangeable experiences which would benefit the Civil Service.

Unable to diffuse an increasing focus on the implications of this secondary employment, a further remedial attempt by the Cabinet Office has been to announce that the chief executive will give up the SABMillers directorship “next summer”, and that in the meantime he will carry out his director’s duties in his own time. This of course brings the value of the directorship into question.  If performing those duties is advantageous, why must they be carried out in his own time?

Media reports are that the John Manzoni has a substantial shareholding in SABMillers which was passed to a blind trust in anticipation of his appointment.  His enthusiasm for retaining his directorship together with that shareholding suggests that he has a strong and continuing interest in the company’s wellbeing. Remaining disinterested with these interests may be a stretch of human nature.

 

www.ft.com/cms/s/0/3233a7a6-5f93-11e4-986c-00144feabdc0.html#axzz3I0TZqXgQ

www.theguardian.com/politics/2014/oct/10/civil-service-boss-john-manzoni-sabmiller-director

https://integritytalkingpoints.com/2014/10/09/civil-service-chief-executive-not-doing-it-for-the-money/

Obama cares! President wants Open Government Partnership to focus on corruption

21 October 2014

The pattern of corruption reported each week by media around the World is sufficient to perpetually dishearten most who believe in human decency. Professions and vocations traditionally thought to embody honourable conduct and to deserve respect, have lost their sheen. Just this week

  • British bankers have again been found to have been manipulating the Libor,
  • India seems mortified that many of its elite are fraud beneficiaries with sums equivalent to much of the nation’s currency reserves being held in personal accounts with Swiss banks,
  • the Chinese National Peoples’ Congress is proposing better deterrents for fraud in a week when not only has a former Deputy Chairman of the Central Military Commission admitted to massive fraud, including the selling of military appointments, but the Supreme Peoples’ Protectorate  has reported that detected fraud over the last year has increased by almost 38%,
  • more than 50 senior Spanish politicians close to the Prime Minister have acquired sizeable Swiss bank accounts from payments throughout the GFC from property developers,
  • United States lobbyists are shown to have successfully “courted” States’ Attorneys-General to spike investigations into anti-competitive practices by big business,
  • Austrian banknote printers have engaged in large scale bribery in Azerbaijan,
  • Balkans corruption is pervasive, and a substantial proportion of $ 2bn US aid to the region is funding Manhattan condos and art collections for its political leaders,
  • New Zealand medical professionals are defrauding the Accident Compensation Corporation of about $2.5m a year,
  • An Australia mining executive has defrauded his company of at least $4 m over the last year,
  • A former NZ drug squad detective has pleaded guilty to stealing drugs stored for presentation as trial exhibits.

Similar incidents occur with undiminishing frequency.  If the UN Convention Against Corruption has had influence it is to slow down the growth of corruption, the incidence of corruption seems unaffected.  New institutions like the Open Government Partnership have adopted a broader approach to promoting trustworthy government, but the OGP looks increasing just like another international organisation.

In September President Obama criticised the OGP for not focusing on corruption.  Undue influence continues corrupting political systems, diverted public funds are still corrupting national development, weakened control agencies allow the corrupting of government integrity, and in too many places,  the payment of bribes is corrupting the delivery of basic services. The objective of Open Government is good government. Good government reflects public trust. There will be no trust without trustworthy officials.

Trust cannot coexist with corruption. The President emphasised the need to fight corruption  “….Corruption is not simply immoral, from a practical perspective it can be used to siphon off billions of dollars that would be better spent promoting development. Corruption leads to inequality, it fuels human rights abuses, it strengthens organised crime and terrorism, and ultimately leads to instability.”

http://news.yahoo.com/former-top-china-military-officer-says-took-massive-103237217.html

http://forumblog.org/2014/10/globalization-anti-corruption-world-bank/

www.worldmag.com/2014/10/the_7th_betrayal

www.youtube.com/watch?v=9wei-pO5fU4