Is Corporate Corruption here to stay in NZ?

Is Corporate Corruption here to stay in NZ?

corruptionWith two of New Zealand’s largest public transport organisations investigating separate allegations of corruption have we now reached the point of having to accept that corruption is here to stay?

The Serious Fraud Office is waiting for the outcome of internal inquiries regarding contracts at Auckland Transport and KiwiRail.

Auckland Transport has put a senior manager in its road maintenance division on indefinite leave until it completes an internal investigation into what it says are “serious allegations relating to the potential misuse of public monies”.

A spokesman for Auckland Mayor Len Brown said he knew of the council-controlled transport organisation’s investigation but had no comment to make about the allegations which prompted it.

Auckland Transport chief executive David Warburton said a senior manager had been placed on indefinite leave after a review of procurement procedures in its road corridor maintenance operations.

He said the organisation would not make any further comment on the matter “as it may involve employment issues and or legal proceedings”.

KiwiRail has called in outside forensic accountants to make an independent review of infrastructure contracts after receiving what it says were anonymous allegations about them.

“There is no evidence of wrong-doing at this time and, as a result, we have not stood anyone down,” the state-owned rail operator’s chief executive, Jim Quinn said late yesterday in a statement to the Herald.

Mr Quinn said that as soon his company received anonymous allegations “asserting issues with some infrastructure contracts”, it commissioned an independent external review of them by PricewaterhouseCoopers.

“The SFO is also aware of the allegations and we will contact it should there be any evidence from the PWC review of any potential fraud,” he said.

“For some of the allegations it was clear immediately that they were factually inaccurate, while others needed deeper investigation to prove their accuracy or otherwise.

“The review is not yet complete, but is well-progressed.”

He would not disclose any details of the allegations until the investigation was completed, because of the potential for damaging reputations.

“We will not allow that to happen unless there is strong evidence of wrong-doing, which would, of course, have serious consequences.”

Not that many years ago corporate corruption in areas such as public capital works and maintenance contracts was unthinkable. We could look at many other countries (even first world ones) with a sense of smugness that our act was squeaky clean. What has changed that this corporate version of Didymo has arrived here and found a place to live in some of our most trusted public institutions.

I think it is a combination of a lot of small things that add up to a climate where dishonesty can flourish. New Zealand’s former technological isolation from the rest of the world meant we were able to maintain our corruption free culture for longer than most countries with nearer neighbours of varying socio-economic pedigree.

The fact that many of our businesses are fully connected with the rest of the world now and there are few barriers in this country to embracing full international trade. Our organisations competing internationally for tenders often have to negotiate the hurdle of the expectation of kickbacks from some potential customers.

Immigration into New Zealand may also have played a small part. The rich cultural diversity that successive immigration waves over the last 50 years has brought also has a darker side in that what we perceive as negative cultural and corporate norms such as bribery and corruption are part of the experience of everyday life for some immigrants to New Zealand. It is easy for there to be a blending of ways.

Publicly owned organisations can be an easier target for local and international businesses trying to stack the deck in their favour when it comes to the letting of contracts. Wage structures in public organisations in this country can hold their own v private companies in the upper echelons of the management tree. However if we drop a few rungs especially in areas that deal with tenders and contracts then we might find the occasional individual who is vulnerable to temptation and willing to supplement their comparatively meagre income.

Given the level of connection New Zealand now has with the global economy it is inevitable that some level of corruption will always be present. In our favour is that the perception of the public at large is that we should not tolerate corruption in any form – especially where public money is concerned. This prevailing attitude frees up the government to come down hard on instances of corruption that are uncovered. Perhaps not “China hard’with public executions but certainly punitive jail terms that can at least make the greedy think twice before dipping their fingers in someone else’s honey jar.

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