Rising bribery and corruption tarnishing NZ image: Deloitte

DOMESTIC CORRUPTION: Actual numbers would almost certainly be higher than reported.
Deloitte

DOMESTIC CORRUPTION: Actual numbers would almost certainly be higher than reported.

An increase in bribery and corruption tarnishing New Zealand's ethical image may be due to an influx of migrants from countries where such practices are normal.

A new survey carried out by professional services firm Deloitte canvassed 269 public and private organisations across New Zealand and Australia.

It revealed almost a quarter had experienced domestic corruption in the last five years, with more than half the incidents occurring in the last twelve months. 

OFFSHORE EXPOSURE: Companies with overseas operations experienced an increase in corruption outside NZ.
Deloitte

OFFSHORE EXPOSURE: Companies with overseas operations experienced an increase in corruption outside NZ.

READ MORE: Read the full report here

Deloitte associate director, forensic Ian Tuke said the actual numbers would almost certainly be higher than reported.

"What we're talking about here is detected and known incidents," he said.

"If you're not actually opening your eyes and looking for the risks, you're not likely to find them."

Tuke said one working theory explaining the rise was the influx of migrants from countries such as China, which are in the red zone on Transparency International's index of perceived corruption.

"Where people are migrating to New Zealand from countries with high corruption levels, they may expect New Zealanders to behave in a similar way as they did back home," he said.

Earlier this week, Johnson Yuejun Li appeared in court after allegedly trying to bribe an Auckland Council officer while trying to get resource consent for a subdivision.

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The charges were laid by the Serious Fraud Office (SFO). Director Julie Read said the regulator prioritised corruption and bribery matters to protect New Zealand's reputation as a safe place to invest and do business.

The most common types of corruption in the Deloitte report were undisclosed conflicts of interest, supplier kickbacks and personal favours.

They were mostly uncovered through management reviews, internal controls and tip-offs from employees, or dedicated tip-lines in larger organisations.

The survey also revealed companies with overseas operations were experiencing an increase in corruption outside New Zealand.

One in three had an incident in the last five years, up from one in five in 2012 when a similar survey was conducted. 

Tuke said companies that did everything above board could take longer to get approvals they needed, or enter target markets.

"There's no question that if you're going to operate ethically and do the right thing, in the short term things can be more difficult."

However, he said organisations that compromised their integrity would have their reputations dragged through the mud if found out, which would be offputting to customers, employees and business partners.

"Putting aside things like massive fines and jail time for those in the thick of it, there's the bigger picture here," Tuke said.

That included the damage done to local communities by undermining good governance and continuing to support corrupt officials.

Tuke said the government of China, which is New Zealand's largest trading partner, had now cracked down on the issue and was taking it seriously.

Only 31 per cent of companies with overseas business had a comprehensive understanding of relevant laws overseas.

Forty per cent reported not having a formal compliance programme in place, or not knowing if they had one, although that was an improvement from 57 per cent in 2012.

"While their understanding of legislation has improved, the bulk are just not doing anything about it," said Tuke.

Read said it was surprising how few companies had adequate systems in place.

She said the SFO saw potential for an increase in foreign bribery cases, and encouraged companies trading overseas to be proactive.

The Transparency International index ranks countries based on perceptions of corruption in the public service.

In December New Zealand slipped from its top spot as the world's least corrupt out of 174 countries, replaced by Denmark.

READ MORE: NZ no longer least corrupt

An anti-bribery bill currently passing through the select committee process will bring New Zealand law closer in step with the likes of the United Kingdom.

"If all the recommendations make it through, that will improve our perception in the global marketplace," said Tuke.

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 - Stuff

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